Scheduled vs Nationalized Bank: Difference and Comparison

A bank is a financial institution, aside from receiving deposits and lending money to businesses and individuals, also involves protecting people’s money, disbursing payments, and investing the funds in securities.


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The concept of the banking system in India was developed during the British Era. The British East India Company established three banks in India during the 1800s.

All three banks were merged into one imperial bank later.

The banking sector in India is widely categorized as Scheduled and Non-Scheduled Banks. The Scheduled Banks are those banks that are incorporated in the Second Schedule of the Reserve Bank of India Act 1934.

They are further classified into Nationalized Banks, State Bank of India and its associates, Regional Rural Banks, Foreign Banks, and other Private Sector Banks.

The terminology Commercial Banks implies both Scheduled and Non-scheduled banks governed under the Banking Regulation Act of 1949.

Key Takeaways

  1. Scheduled banks are banks listed in the Second Schedule of the Reserve Bank of India Act 1934, while nationalized banks are banks owned by the government.
  2. Scheduled banks must meet specific criteria, such as minimum paid-up capital and reserve requirements, while nationalized banks are subject to government control and management.
  3. Both scheduled and nationalized banks operate under the central bank’s supervision, but nationalized banks have a more direct relationship with the government.

Scheduled vs Nationalized Bank

The difference between Scheduled Bank and Nationalized Bank is that Scheduled bank comprises all but is not limited to Nationalized banks, but Nationalized banks are entirely under the control of the Government.

Scheduled vs Nationalized Bank


Comparison Table

Parameter of ComparisonScheduled BanksNationalized Banks
Customer ServiceScheduled banks are partly public and partly private, so that service will be customer-centricComparatively, the service is better, although it is not as efficient as in Private Sector banks.
PurposeScheduled banks were started for productive purposeNationalized banks were started for political purposes
GovernanceSemi-government or quasi-governmentAs the majority of stake is held, it is entirely governed by the Government.
MotiveProvides financial assistance to economically weaker sections of the societyProvides financial assistance to all the people of the country
OperationsLarger scale and countrywide operations with numerous branchesOperations are relatively on a smaller scale as there are only a few Nationalised banks in India


What is Scheduled Bank?

Scheduled banks are incorporated in the Second Schedule of the Reserve Bank of India Act, 1934.

Reserve Bank of India has the supreme monitoring authority. All Scheduled Banks come under RBI, and Scheduled banks are classified as,

  1. Commercial banks
    1. Public sector banks
      1. State Banks of India
      1. Other Nationalized banks
    1. Private sector banks
      1. Old
      1. New
    1. Foreign banks
    1. Regional rural banks
  2. Co-operatives
    1. Urban cooperatives
    1. State cooperatives

All the banks classified under scheduled type can obtain debts or loans at the bank rate from the RBI. Scheduled banks enjoy the benefits of procuring the membership of the clearinghouse automatically.

Scheduled banks regularly submit all their activity information to the Reserve Bank of India. Scheduled banks are categorized into Commercial Banks and Co-operative Banks.

Scheduled banks explicitly follow two conditions, the collected fund and paid-up capital of the bank cannot be less than five lakh rupees. Another condition is that any of the bank’s actions should not impact the depositor’s interests.

scheduled banks

What is Nationalized Bank?

Indian private banks were converted into public sector banks through the operation of nationalization, which is the root cause of the origin of nationalized banks in India.

Nationalization is nothing but the Government taking authority over assets and corporations, generally by procuring the majority of stakes in the corporation.

The reasons to commence Nationalized banks were to improve banking habits, expand banking in India, control private sectors, minimize regional differences and for social welfare.

There were around 19 nationalized banks in India. Even though the State Bank Of India is often considered a nationalized bank, it is a state-owned organization undertaken as a public sector.

Any Bank where the Government has a majority of stake is called a Nationalized Bank. This means that the Government calls many of the policies for the bank and also has a significant role in the appointments of directors and even in decisions on loans.

nationalized bank

Main Differences Between Scheduled and Nationalized Bank

  1. Both the scheduled banks and nationalized banks are interrelated as nationalized banks come under the sub-category of scheduled commercial, public sector banks. The main difference between Scheduled banks and Nationalized banks is all nationalized banks are scheduled banks. In contrast, all scheduled banks are not nationalized banks which explains that all nationalized banks are included in the second schedule of RBI ultimately.
  2. Scheduled banks are not owned by the government entirely but held by individual shareholders from the public. In contrast, nationalized banks are governed, and the government holds a significant portion of the shares.
  3. Nationalized banks are service motives, whereas scheduled banks are a profit motive.
  4. A nationalized bank provides less attractive and less efficient customer service. On the other hand, scheduled banks provide good customer service and more attractive features for the customers.
  5. The expansion rate is higher in scheduled banks as both Public and Private sector banks are inclusive. On the contrary, ease of expansion is relatively lesser in Nationalized banks.
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