Difference Between Scheduled and Non Scheduled Banks

Published: 20 November 2025

India has a large banking system. People use banks for saving money, taking loans, and making payments. Banks are grouped into two main types by the Reserve Bank of India. These two types are Scheduled Banks and Non-Scheduled Banks. The RBI uses these groups to check the safety and strength of banks. This helps protect customers. It also helps keep the banking system stable. Many people do not know how these two groups differ. The idea is simple. The RBI bank classification lists some banks in a special schedule. These banks receive some extra support. Other banks are not listed in this schedule. Both types work in the country, but their roles and rules are not the same. Let us understand everything about scheduled and non-scheduled banks in this blog.

What Are Scheduled Banks

According to the Reserve Bank of India, a Scheduled Bank is a bank that is included in the Second Schedule of the RBI Act, 1934. This means the RBI has checked the bank and found it fit to be listed. The bank must follow strict rules. It must also maintain the strength required to protect the deposits of customers. Scheduled Banks include public sector banks, private sector banks, foreign banks, small finance banks, and regional rural banks.

Key Features of Scheduled Banks

These banks are listed in the Second Schedule of the RBI Act, 1934.
They must have a minimum paid-up capital of five lakh rupees.
They receive permission to borrow funds from the RBI.
They can keep deposits with the RBI.
They follow strict rules set by the RBI.
They maintain high levels of financial stability.
Their customers get better safety due to stronger supervision.
They take part in the clearing house system of the RBI.

What Are Non-Scheduled Banks

Non-Scheduled Banks are banks that are not listed in the Second Schedule of the RBI Act. They can be small banks or local banks. They still come under the rules of the Reserve Bank of India, but they do not get the special support that Scheduled Banks receive. These banks may have limited operations. Some serve local areas only. They do not have the same financial strength as Scheduled Banks. They cannot borrow money directly from the RBI, except in special situations.

Key Features of Non-Scheduled Banks

They are not included in the Second Schedule of the RBI Act, 1934.
They may have less capital than Scheduled Banks.
They cannot borrow funds directly from the RBI for regular needs.
They do not take part in the clearing house system of the RBI.
They follow banking rules but have fewer privileges.
They may operate in small regions only.
Their risk level can be higher because they are smaller.
Their services may be limited compared to Scheduled Banks.

Difference Between Scheduled and Non-Scheduled Banks

Let us understand the difference between scheduled and non scheduled banks:

Basis of Difference	Scheduled Banks	Non Scheduled Banks
RBI Act Status	Listed in the Second Schedule of the RBI Act, 1934	Not listed in the Second Schedule
Minimum Capital	Must have at least five lakh rupees in paid-up capital	No fixed minimum capital set under the Schedule rule
Permission to Borrow from RBI	Yes. They can borrow from the RBI for normal banking needs	No. They cannot borrow unless there is a special case
Participation in Clearing House	Yes	No
Size and Reach	Large. Present across many areas	Small. Often local
Regulation Level	High level of RBI regulation	Lower compared to the Scheduled Banks
Stability Level	Higher financial strength	Lower financial strength
Customer Safety	Strong due to RBI support	Comparatively lower
Types Included	Public banks, private banks, foreign banks, small finance banks, and regional rural banks	Small local banks or private institutions
Creditworthiness	Higher	Lower

Conclusion

Both scheduled and non scheduled banks play a role in the Indian financial system. Scheduled Banks are stronger and more secure because they follow strict rules set by the RBI. They have more support from the RBI. This gives customers better safety. Non-Scheduled Banks are smaller and do not receive the same level of support. Their services may be limited. Understanding the difference helps customers choose the right bank for saving, borrowing, and daily use. A clear choice leads to better money management and fewer risks.

Also Read:
- List of Government Banks in India 2025
- Top 10 Banks & NBFCs for Low-Interest Personal Loans in India

Frequently Asked Questions

Which banks are called Scheduled Banks in India +

Banks listed in the Second Schedule of the RBI Act, 1934, are called Scheduled Banks. They follow strict rules and have strong financial strength.

Are Non-Scheduled Banks unsafe? +

They are not unsafe, but they are smaller and have fewer privileges. They do not receive the same level of support from the RBI.

Which type of bank is better for customers +

Scheduled Banks are usually better because they provide more safety, wider services, and stronger support systems.

Can Non-Scheduled Banks become Scheduled Banks in the future? +

Yes. A Non-Scheduled Bank can become a Scheduled Bank if it meets the conditions set by the RBI. The bank must show that it has enough capital. It must also show that its work does not harm depositors. The bank must follow all rules properly. If the RBI is satisfied, it may add the bank to the Second Schedule. This gives the bank more support and better standing.

Do both types of banks offer the same services? +

Many services are similar, such as savings accounts, fixed deposits, and loans. However, Scheduled Banks offer more services because they are larger and more stable. They have more branches, better technology, and wider networks. Non-Scheduled Banks may provide fewer services. They may focus on simple banking needs. Their reach is also limited to certain local areas.

How can I find out if a bank is scheduled or non-scheduled? +

The RBI publishes a list of Scheduled Banks. Anyone can check it on the RBI website. Most well-known banks in India are Scheduled Banks. These include public banks, private banks, and small finance banks. If a customer is not sure, they can ask the bank. They can also search online for basic information.

Share:

Anjali Singh Assistant Manager

Hey there, I'm Anjali Singh. With over 6 years of experience in finance, I specialize in creating content on banking, loans, and financial planning. My goal is to simplify complex financial topics and help readers make informed decisions through my articles.