Difference Between Scheduled Banks and Non-Scheduled Banks

Apart from public and private banks, there is another categorization of banks viz scheduled and non-scheduled banks.

Scheduled Banks vs Non-Scheduled Banks

The difference between Scheduled Banks and Non-Scheduled Banks is that Scheduled banks can take money from Reserve Bank of India, while non-scheduled banks cannot take any money from RBI. The cash reserve in a scheduled bank is kept with RBI, whereas a non-scheduled bank keeps the cash reserve itself.

Scheduled Banks vs Non Scheduled Banks

Scheduled banks can be the member of clearing house while non-scheduled banks cannot be the member.

Comparison Table

Parameter of ComparisonScheduled BanksNon-Scheduled Banks
Reserve RequirementsThese are banking institutions that have no less than 5 lakh rupees in their reserves.Their reserves are less than the mandatory 5 lakh rupees.
Safety and SecurityThey are generally more financially sound and unlikely to harm the interests and welfare of the depositors.These banks are riskier to do business with.
MeaningScheduled banks are those that are listed and governed by the rules that are prescribed in the Reserve bank of India Act of 1934The non-scheduled banks are those that are exempt from the rules that govern the stronger financial institutions in India.
Cash Reserve RatioMaintained with Reserve Bank of India.Each bank takes it upon itself to maintain the cash reserve ratio.
BorrowingThey are allowed to borrow money from the Reserve Bank of India for the purposes of undertaking regular banking activities.Do not qualify to borrow any loans from the Reserve Bank of India. If they have to, they do so from other like-minded banks.
ReturnsAre mandated to file their returns with the Reserve Bank of India periodically, preferably once a year.No such provision exists. However, they have to publish and submit their returns to the shareholders and stock exchange where they are listed.
Membership of the clearinghouseThese may qualify to join the clearinghouse. For this reason, they allow for interbank financial transfers and clearance of checks.Are ineligible for membership in the clearinghouse. Because of this, the non-scheduled banks cannot facilitate the interbank financial transfers and the clearance of checks.

What are Scheduled Banks?

Under Indian law, scheduled banks are financial institutions that are listed in the second schedules of the Reserve Bank of India Act 1934.

For a large part, these banks are foreign-owned, private, and nationalized financial institutions that have a footprint in India. They are safer and more reliable to transact with.

scheduled banks

What are Non-Scheduled Banks?

Non-scheduled banks, on the other hand, are those which are not listed in the stated schedule above. These banks contain reserve capitals of less than 5 lakh rupees.

Generally speaking, they are smaller in size and have a somewhat limited sphere of influence. Given their limited financial strengths, they are unsafe to do business with.

non scheduled banks

Main Differences Between Scheduled and Non-Scheduled Banks

Paid-up capital

The scheduled banks have to keep no less than 5 lakh rupees of paid-up capital. Their non-scheduled counterparts may, however, maintain a value that is lower than this.


Scheduled banks are covered by the second schedule of the Reserve Bank of India Act of 1934 while the non-scheduled banks are not covered or governed by this.


Apart from being covered by the aforementioned act, the scheduled banks are also under the serious scrutiny of the Reserve Bank of India. The non-scheduled banks are however exempted from this scrutiny.

Borrowing Power

Scheduled banks may borrow from the Reserve Banks.

The non-scheduled banks lack this leeway though. They may only do so from other willing banks.


By law, the scheduled banks have to submit their returns to the public periodically, mostly annually. Their non-scheduled counterparts are however loyal to their shareholders and proprietors only.

Membership of the Clearing House

One other privilege enjoyable by the scheduled banks is that they can apply and indeed qualify to join the clearinghouse. The non-scheduled banks do not enjoy this privilege though.

Cash Reserve Ratios

Given that the scheduled banks are under the radar of the Reserve Bank of India, they are mandated to maintain some cash reserve ratios with the bank. The non-scheduled banks have the leeway to deposit it with themselves only though.


  1. https://www.researchgate.net/figure/Classification-of-Scheduled-Banks-in-India_fig1_321489158
  2. https://pdfs.semanticscholar.org/4e0c/48c933d31bca154d80458d1996f0735e8090.pdf
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I came here from your Facebook page and I really like how well scheduled and non-scheduled banks have been explained here.

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Piyush Yadav
Piyush Yadav
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We also love our social media fans.


you write good content on banks.