Month: April 2017

Friends in my today’s article, we will try to understand types of banks operating in India.

Let us take a very simplistic approach of classifying banks by their ownership structure. Simply going by ownership structure of the banks, we can classify banks as below:

1. PSU Banks
2. Private Banks
3. Co-operative Banks
4. Foreign Banks

1. PSU Banks:

Public Sector Undertaking Banks are banks in which Govt. Holding is more than 50%. So in a way these banks are primarily controlled by the Govt. of India. Most of these banks were nationalized by Indira Gandhi Govt. So many people identify them as nationalized banks.

E.g. State Bank of India, Punjab National Bank, Bank of Baroda, Canara Bank, Bank of India, Union Bank of India etc.

2. Private Banks:

Private Sector Banks as the name suggests are majority owned by private players. In India, due to professional management, higher standards of customer service and adoption of technology private banks have grown to be a significant part of banking sector, which two decade back was a very negligible part of banking system.

E.g. ICICI Bank, HDFC Bank, Axis Bank, Kotak Bank, DCB Bank, IDFC Bank etc.

3. Co-operative Banks:

Co-operative Banks as the name suggests have a co-operative ownership structure. These banks basically came into the existence and then later on very widely promoted when the nation went through co-operative revolution. Many district co-operative, commercial co-operative, multi-state co-operative banks came into existence and are now part of mainstream banking serving large part of customer base.

E.g. Saraswat Bank, Kalupur Bank, Ahmedabad District Co-operative Bank, Cosmos Bank etc.

4. Foreign Banks:

As the name suggests foreign banks are owned by their foreign parent. RBI issues separate license to these foreign entities to carry out operations in India. Foreign banks have not been able to make a mark in mainstream banking are mostly serving their foreign customers in India apart from serving some HNI as well as limited set of customers in India.

E.g. Citi Bank, HSBC, BNP Paribas etc.

GST is the biggest Indirect tax reforms in India. After implementation of GST there will be One Nation and One Tax.

At Present there are various indirect taxes levied by central as well as by state government.

Taxes levied by Central Government are

• Central Excise duty
• Additional duties of excise
• Excise duty levied under Medicinal & Toiletries Preparation Act
• Additional duties of customs (CVD & SAD)
• Service Tax • Central Sales Tax
• Surcharges & Cesses

Taxes levied by State Government are

• State VAT / Sales Tax
• Purchase Tax
• Entertainment Tax (other than those levied by local bodies)
• Luxury Tax
• Entry Tax (All forms)
• Taxes on lottery, betting & gambling
• Surcharges & Cesses

When GST is being implemented there will be only one tax that is called GST. There are four components of GST to be levied at different situation. These are SGST, CGST, UTGST and IGST.

If purchase and selling of goods or rendering of services done within a state then there will be CGST and SGST applicable on goods or services.

If inter-state or from foreign territory purchase and selling of goods or rendering of services done then there will be IGST applicable on goods or services.

If purchase and selling of goods or rendering of services done within a union territory then there will be CGST and UTGST applicable on goods or services.

We will talk more about GST in the next article.