Banking forms the backbone of a modern economy, facilitating transactions, safeguarding deposits, and providing access to credit. A robust banking sector supports economic growth; a World Bank study found that countries with well-developed banking systems experience faster GDP growth.
Banking in India is a vast network of financial institutions that plays a vital role in the nation’s economic development. This sector needs strong regulation to maintain stability across the economy. From personal finance to powering businesses, banking is essential for spending, investment, and overall growth. Innovations in Indian banking, such as online banking and UPI, have improved financial access and literacy for urban, suburban, and rural populations alike. This has helped connect rural markets and spread awareness of financial services.
The banking sector is governed under the Reserve Bank of India Act, 1934, and functions under the guidelines of the Reserve Bank of India (RBI). The entire banking sector in India is divided into various segments according to their undertakings and functions including
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Public Sector Banks
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Private Sector Banks
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Regional Rural Banks (RRBs)
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Payments Banks (PBs)
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Small Finance Banks (SFBs)
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Local Area Banks (LABs)
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A. Types of Banks
Banking is directly or indirectly linked to a country’s trade and each individual’s existence. It is a business that handles credit, currency, and other types of financial transactions. There are 4 types of banks:
1. Central Bank: Banking is directly or indirectly linked to a country’s trade and each individual’s existence. It is a business that handles credit, currency, and other types of financial transactions.
2. Commercial Bank: Commercial banks are financial institutions that accept deposits and provide customers with short-term loans and advances. They provide medium-term and long-term loans to businesses in addition to short-term loans. Functions of Commercial Bank are
- Primary Functions: Accepting Deposits and Advancing of Loans are the two primary functions performed by commercial banks.
- Secondary Functions: Overdraft Facility, Discounting Bills of Exchange, Agency Functions, and General Utility Functions are the four secondary functions performed by commercial banks.
3. Cooperative Bank: Cooperative banks in India are established under the State Cooperative Societies Act and provide members with simple loans. Cooperative banks’ primary duty is to provide financial resources to rural people overall. Types of Cooperative Bank
4. Specialised Bank: Banks which are formed to cater to specific needs of society, country or people are called Specialised Banks. SIDBI, EXIM, NABARD, etc., are some of the prominent examples of Specialised banks in India.
B. Types of Banking
Banking denotes the network of financial institutions comprising commercial banks, credit unions, savings banks, and other financial services firms. The banking sector is highly regulated to ensure the stability of national currencies and economies. It serves as the backbone for personal and commercial financial activities, fueling spending, investment, business operations, and economic growth. There are 7 types of banking:
1. Retail Banking: Retail banking, often known as consumer banking or personal banking, is a financial service provided to individuals rather than enterprises. Individual customers can use retail banking to manage their finances, obtain credit, and securely deposit money.
2. Investment Banking: It is a part of a Banking System specialized in raising funds for an Organisation (or Individuals), Governments, and other entities along with providing financial aid in important decision-making like Mergers, Acquisitions, Diversification, and Reorganisation.
3. Cooperative Banking: Cooperative banks stand out as member-owned and member-operated entities, emphasizing community-based financial services.
4. Wholesale Banking: Wholesale banking, often referred to as capital markets, caters to corporate and institutional clients with specialized financial services.
5. Universal Banking: Universal banks provide a holistic suite of financial services, seamlessly combining retail, commercial, and investment banking.
6. Rural Banking: Rural banks specialize in meeting the unique financial needs of rural communities. Beyond traditional banking services, they often play a vital role in promoting financial literacy, providing agricultural financing, and supporting local economic development.
7. Commercial Banking: Commercial banks engage in a wide array of financial services, acting as financial intermediaries between depositors and borrowers.
C. Bank Account
Bank Accounts serve as the cornerstone of modern financial systems, offering individuals and businesses a secure and convenient way to manage their money. There are 7 types of bank accounts:
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How to Open a Bank Account?
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SBI Bank
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HDFC Bank
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Axis Bank
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Indian Overseas Bank
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Union Bank
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Kotak Bank
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ICICI Bank
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Punjab National Bank
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Induslnd Bank
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Bank of Baroda
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D. Debit Card
A debit card is a type of payment card that lets its owner make purchases online by taking money straight from a bank account that is linked to the card.
- How to Apply for Debit Card
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E. Credit Card
Credit card is a payment card issued to certain individuals based on their income, credit score and existing debts by a financial institute like Banks and NBFCs, it has a pre-set credit limit for doing transactions.
Types of Credit Cards
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Rewards Credit Cards
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Shopping Credit Cards
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Co-branded Credit Cards
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Cashback Credit Cards
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Travel Credit Cards
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Fuel Credit Cards
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Lifetime Free Credit Cards
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Secured Credit Cards
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Lifestyle Credit Cards
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Premium Credit Cards
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Business Credit Cards
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How to Apply for Credit Card?
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SBI Bank
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HDFC Bank
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Axis Bank
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Indian Overseas Bank
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Union Bank
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Kotak Bank
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ICICI Bank
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Punjab National Bank
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Induslnd Bank
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Bank of Baroda
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IDFC Bank
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Bank of India
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Canara Bank
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YES Bank
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Punjab and Sind Bank
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SBI Bank
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HDFC Bank
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Axis Bank
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Indian Overseas Bank
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Union Bank
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Kotak Bank
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ICICI Bank
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Punjab National Bank
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Induslnd Bank
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Bank of Baroda
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IDFC Bank
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Bank of India
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Canara Bank
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YES Bank
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Punjab and Sind Bank
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F. Fixed Deposit
A fixed deposit is a type of term deposit that is made by the investor for a fixed time period at applicable FD interest rates and generates interest income. FD investment scheme is considered to be one of the safest modes of investment for any investor who has a preferred low-risk appetite.
Fixed Deposit Interest Rates 2024
G. Recurring Deposit
Recurring Deposit Interest Rates 2024
H. Payments
Payments refer to the process of transferring value (typically money) in exchange for goods or services. Modern payment methods offer a wide array of options, including UPI, cash, checks, credit and debit cards, mobile wallets, and online payment systems.
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- NPA: Full Form, Types, Impact and Examples
- Top 10 Best Payment Gateways in India 2023
1. UPI
Unified Payments Interface (UPI) is one of the most useful and acceptable banking facility, provided by NPCI to this decade. In our day to day life, we use it daily for many purposes such as Bill Payment, Mobile Recharge and many more services.
2. Net Banking
Net banking, also called online banking or Internet banking, is a service offered by banks and financial institutions, allowing individuals to perform a wide range of banking transactions and activities through the Internet.
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3. RTGS
RTGS is a real-time and secure money transfer system through which we can transfer money 24×7, even on bank and public holidays as well. RTGS or Real Time Gross Settlement is a funds transfer service or a method for instant money transfer launched by RBI in 2004.
4. NEFT
NEFT, or National Electronic Funds Transfer, is an electronic payment system introduced by the Reserve Bank of India (RBI) in November 2005. It serves as a convenient and secure method for electronically transferring funds between bank accounts across India.
5. IMPS
IMPS is a payment service or a method for instant money transfer. It has been developed by the National Payments Corporation of India (NPCI). IMPS is a real-time and secure money transfer system through which we can transfer money 24×7, even on public holidays.
6. Cheque
Cheque is a written, dated, and signed document that instructs a bank to pay a specific amount of money to the bearer, or the person named on the cheque. Cheques provide a convenient and relatively secure way to transfer money without the need to carry large sums of cash.
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Open Cheque
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Crossed Cheque
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Crossing is a unique feature associated with a cheque affecting to a certain extent the obligation of the paying banker. The crossing is like an instruction to the paying bank not to make payment on the bank counter rather payment shall be made through a bank account only so that no wrong person can take the payment to the said cheque. There are 4 Types of crossing of cheques:
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General Crossing
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Special Crossing
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Account Payee Crossing
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Not Negotiable Crossing
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The Cheque Truncation System (CTS) is a technologically driven technique for processing physical paper cheques quicker with greater effectiveness. It is a technology that seeks to eliminate the need for paper cheques to be physically transported from one bank to another during the clearing process. Many countries use CTS to streamline and improve the cheque-clearing process.
I. Payment Apps
Payment apps, such as Paytm, PhonePe, and Google Pay, have revolutionized how people in India make transactions. They offer a convenient and secure way to pay for everything from groceries to utility bills, all from your smartphone. These apps often include features like money transfers, QR code payments, and even cashback rewards.
1. Paytm
Paytm is a leading Indian digital payments and financial services company that offers mobile payments, recharges, bill payments, and a wide range of other financial products.
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2. PhonePe
PhonePe is a popular Indian digital payments app that allows users to make seamless transactions. It utilizes the Unified Payments Interface (UPI) for convenient money transfers, bill payments, recharges, and more. PhonePe offers a safe and user-friendly experience for financial transactions.
- How to do KYC in PhonePe?
- How to Transfer Money from PhonePe Wallet to Bank Account?
- How to Delete PhonePe History?
- How to Delete Messages in PhonePe?
3. Google Pay
Google Pay is a digital wallet and contactless payment app developed by Google. It lets users make secure and convenient in-app, online, and in-store smartphone payments.
- Google Pay: History, Uses, Benefits and Features
- How to Change or Remove Bank Account in Google Pay?
- How to Delete Transaction History in Google Pay?
4. Amazon Pay
Amazon Pay is a digital payments platform that eliminates the need to re-enter your payment information on external merchant websites. By using your Amazon credentials, you enjoy a faster, more secure checkout experience. Amazon Pay also offers features like fraud protection and order tracking, enhancing your online shopping experience.
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- How to Close or Unblock Amazon Pay Later?
J. Insurance
Insurance acts as a vital safety net, shielding individuals and businesses from the financial consequences of unexpected events. Insurance industry data reveals a strong link between insurance coverage and financial resilience in the face of disasters. An insurance premium is the price you pay for an insurance policy, essentially the cost of transferring risk to the insurance’s respective company.
There are 9 types of insurance
1. Life Insurance: Life Insurance is a contract in which the insurer in consideration of a certain premium, either in lump sum or by other periodical payments, agrees to pay the assured, or to the person for whose benefit the policy is taken, the assured sum of money, on the happening of a specified event contingent on the human life or at the expiry of a certain period.
2. Term Insurance: Term insurance, or term life insurance, is a type of life insurance that provides coverage for a specified period or term. Unlike whole life insurance, term insurance does not accumulate cash value and is designed to offer a straightforward death benefit.
3. Health Insurance: Health Insurance is a contract between an insurer and an individual or a group in which the insurer agrees to provide health insurance at an agreed-upon price, which is premium. Premium can be paid in instalments or in lump-sum depending upon the policy taken. Health insurance claims can be made either immediately in cash or through payment after treatment.
4. Car Insurance: Car insurance provides financial protection against unexpected events like accidents, theft, or damage to your vehicle.
5. Bike Insurance: Bike insurance protects you financially in the event of an accident, theft, or damage to your motorcycle, offering coverage for your own bike and potential liability for injuries or damage to others.
6. Travel Insurance: Travel insurance is a smart investment for any trip, safeguarding you against unexpected events like medical emergencies, flight cancellations, or lost baggage
7. Home Insurance: Home insurance offers invaluable financial protection by safeguarding your home and belongings against unexpected disasters, accidents, or theft.
8. Fire Insurance: A contract whereby the insurer, in consideration of the premium paid, undertakes to compensate the insured for any loss that may result due to the occurrence of fire is known as Fire Insurance.
9. Marine Insurance: Marine insurance is a contract in which the insurer agrees to compensate the insured against maritime losses in the way and to the extent agreed upon.
Insurance Tax Benefits
Insurance premiums for many types of policies may be tax-deductible. This includes life insurance, certain health insurance plans, and in some cases, even long-term care insurance. Insurance Tax Deductions Under Section 80C , a premium paid by the taxpayer for a life policy or endowment policy shall be covered under this Section. Maximum Qualifying Amount for premium shall be restricted to 10% of the capital sum assured under the policy (20% if the policy is issued before 1st April 2012).
K. Official Valid Document
Identity and Address Proof (Pan Card Aadhaar Card, Voter ID card, Driving licence, Birth certificate, Passport, School leaving certificate, and Ration card)
1. Pan Card
PAN is a government-issued identity card with a unique 10-digit alphanumeric code that serves many purposes. PAN is the short form of “Permanent Account Number”. The Department of Income Tax issues the Permanent Account Number (PAN) card, which has ten alphabetic and numeric digits.
2. Aadhaar Card
Aadhaar card is a 12-digit individual identifying number issued under the authority of the Indian Government by the Unique Identifying Authority of India. The number may be used to prove one’s identity and address, wherever in India.
L. Credit
Credit is an essential financial instrument that enables economic activity by providing people & businesses with access to money for a wide range of purposes. When you apply for credit you enter into a loan agreement with a lender where you agree to pay back the loan amount plus interest over a certain period. Responsibly managing your credit is important because it impacts your credit score, which lenders use to determine your eligibility for loans and interest rates.
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M. Loan
A loan represents a financial arrangement wherein one party, commonly a financial institution, government, or corporation, extends funds to another party, typically an individual or entity, under the condition that the borrower commits to repaying the borrowed amount along with interest within a predetermined timeframe.
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Personal Loan
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Home Loan
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Business Loan
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Mortgage Loans
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Personal loans are a type of unsecured loan offered by financial institutions such as banks, credit unions, and online lenders. Unlike secured loans, personal loans are not backed by collateral, meaning borrowers do not need to pledge assets such as their home or car to qualify. Instead, lenders assess the borrower’s creditworthiness based on factors such as credit history, income, employment status, and debt-to-income ratio.
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A home loan, also known as a mortgage, is a secured loan that allows individuals to finance the purchase of a house or property. The property acts as collateral for the loan, and borrowers make regular payments over a set period to repay the principal and interest.
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Business loans are financial products offered by banks, credit unions, or alternative lenders to businesses to provide funding for various business purposes. These loans are specifically designed to meet the financial needs of businesses, including financing expansion, purchasing inventory or equipment, covering operational expenses, or funding other growth initiatives.
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Mortgage loans are loans provided by financial institutions, such as banks or mortgage lenders, to individuals or families to purchase real estate, typically residential properties like homes or condominiums. The property being purchased serves as collateral for the loan, meaning if the borrower fails to repay the loan, the lender has the right to take ownership of the property through a process called foreclosure.
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Education Loan
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Gold Loan
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Car Loan
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Bike Loan
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Education loans help students and their families finance the costs of higher education, such as tuition, fees, and living expenses. Repayment terms often include a grace period after graduation.
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Gold loans offer quick financing where borrowers pledge gold jewelry or ornaments as collateral. These loans typically have fast processing times and minimal documentation requirements.
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A car loan provides financing specifically for the purchase of a new or used vehicle. The vehicle itself serves as collateral for the loan.
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A bike loan is designed to finance the purchase of a motorcycle or scooter. The bike acts as collateral for the loan.
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Loan Against Security
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Loan Against Property
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Agriculture Loan
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A loan against securities (LAS) allows borrowers to use financial assets, such as stocks, bonds, or mutual funds, as collateral to secure a loan. These loans can provide access to funds without having to sell the underlying securities.
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With a loan against property (LAP), borrowers mortgage their residential or commercial property to obtain a loan. These loans often offer larger amounts and longer repayment terms compared to unsecured loans.
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Agriculture loans are tailored to farmers and those involved in agricultural activities. They provide financing for expenses such as crop cultivation, equipment purchases, and farm improvements.
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Instant Loan Apps
Instant loan apps offer quick and convenient access to small, short-term loans through a streamlined mobile application process. These apps often have minimal documentation requirements and can disburse funds within minutes or hours of approval.
O. Bank Frauds
Bank fraud is a serious crime where criminals steal money from banks or individuals through means like phishing scams or identity theft. It can cause financial hardship and highlights the importance of staying vigilant about your bank accounts and personal information.
P. List of Top 10 Banks in India in 2024
- HDFC Bank
- ICICI Bank
- State Bank of India (SBI)
- Kotak Mahindra
- Axis Bank
- IndusInd Bank
- Bank of Baroda
- Punjab National Bank
- Union Bank of India
- IDBI Bank
Check out this article to know more about List of banks in india
Q. List of the Top 10 Largest Private Banks Worldwide
- UBS Group AG
- J.P. Morgan
- Bank of America
- Citi Bank Group
- Goldman Sachs
- Morgan Stanley
- BNP Paribas
- Julius Baer
- DBS Group
- HSBC Group
Check out this article to know more about Top 10 best private banks in the world 2023.
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