Kinds of Banks

A) Kinds According to Function:

1. Central Bank: A bank that supervises and regulates the whole banking system is called central bank. The state bank of Pakistan is the central bank of Pakistan. It is the head of all other banks. Every country has its own central bank. It works without profit motives. It regulates the monetary system of the country. It has right of note issue. It serve as an adviser to the government.
2. Commercial Bank: A bank that is established primarily to earn profit is called commercial bank. The banks accepts deposits from general public and advance loans to the borrowers. The banks provide agency services like collection of dividend, collection of cheques, bills of exchange, payment of regular charges,purchase and sale of securities, transfer of money etc.
3. Exchange Bank: A bank which deals in foreign currencies is called exchange bank. These banks provide foreign exchange to the importers and exporters of the country.Exchange banks purchase, sell and collect foreign bills, issue letter of credit, facilitate foreign remittance through bank draft, telegraphic transfer etc.Some examples of such banks are Bank of America, Bank of Oman, Bank of Tokyo Ltd., Grindlays Bank, American express Bank Ltd., etc.
4. Saving Bank: A bank which collects the savings of people by providing them incentives of interest is called a saving bank.People can withdraw their savings when they require. Government sponsors these banks to develop and promote saving habits among people.
5. Co-operative Bank: Co-operative banks are basically opened to help the small farmers and producers. They are not profit making institutions. Their working is based on service motives. They are registered under the co-operative societies act.
6. Agricultural Bank: Agricultural bank, as its name indicates, is established to provide short and long term loans to the farmers. These loans are provided for the purchase of seeds, fertilizers, agricultural machinery and for any type of permanent improvement in land.
7. Industrial Bank: Industrial banks are established purely to finance the industrial sector. These banks provide normally long term loans to the industrialists. Industrial bank of Pakistan was established in1961 for this purpose.
8. Investment Bank: Investment banks buy and sell shares, bonds other securities. They also provide loans for the purchase of shares and debentures etc. They help the new companies by providing under writing services. They finance different projects which are vital for economic prosperity. Investment Corporation of Pakistan, National Investment Trust Limited (NIT), Bankers Equity Ltd., are serving as Investment banks in Pakistan.
9. Micro Finance Bank: Micro finance banking (MFB) is a newly introduced concept in banking system. Dr.Yunas of Bangladesh is considered pioneer of micro finance banking. He is also awarded "Noble Prize" for his valuable services in the development of micro finance banking. MFB has been more appreciated in developing countries like Pakistan because of its key function of encouraging small business community like shopkeepers, small traders and farmers etc.

B) Kinds According to Ownership:

1. Government Banks: These are the banks that are owned and managed by the government. They are also called state-owned and public sector banks.
2. Private Banks: Private banks are the banks that are owned and managed by the general public i.e., private shareholders. They are under the ownership of private sector. Bank Al-flah is the example of private bank.
3. Semi-Government Banks: These are the banks that are jointly owned by the government and private individual or group of person. Government and private representatives jointly make the policies to control and manage these types of banks.

C) Kinds According to Domicile:

1. Domestic Banks:  These are the banks which are incorporated (registered) in Pakistan.They are called Pakistani banks. National bank and Habib banks Ltd. are the examples of Pakistani / Domestic banks.
2. Foreign Banks: The banks which are incorporated (registered) outside Pakistan are called foreign banks. These banks have the head office outside the Pakistan. City bank is the example of Foreign Bank.

D) Kinds According to Status:

1. Scheduled Banks: Scheduled banks are those which are declared by the State Bank of Pakistan (SBP) as scheduled banks. They are included in the list of the banks maintained by the SBP under section 37(2) of its Act, 1956. They must have paid-up capital and reserves of at least Rs. 6 billion and must function to the satisfaction of the SBP.
2. Non-Scheduled Banks: Non-scheduled banks are those which are not declared by the State Bank of Pakistan (SBP) as scheduled banks and are not included in the list of banks maintained by the SBP under section 37(2) of its Act, 1956, are called non scheduled banks.

E) Development Banks:

1. International Development Banks: These are the banks, which provide assistance for the progress and economic development of all the countries. They work for the development of industry, agriculture and social welfare of all countries e.g. International Bank of Reconsideration and Development (IBRD).
2. Regional Development Banks: These banks are established to develop to particular region of the world. They help to improve the living conditions and to obtain modern technology for the development e.g., Asian Development Bank (ADB).
3. Agricultural Development Banks: These banks are formed to develop the the agriculture sector of the country. They provide loans to purchase modern machinery, fertilizers and seeds etc. For example Zarai Taraqiati Bank of Pakistan (ZTBL).
4. Industrial Development Banks: These banks are established to promote the industrial sector of the country. They provide loans to set up new industries and rehabilitation of sick units e.g., Industrial Development bank of Pakistan (IDBP).

F) Other Banks:

1. Consortium Banks: These are the banks established and run by other banks from their own sources provide the funds to consortium banks. These banks provide finance to big business houses and industries to meet their long-term requirements.e.g., Orion Bank and British Middle East Bank etc.
2. School Banks: School Banks are established to develop the habit of saving among school children. In this system of banking, the bank officials provide banking facilities to students at their schools. This system is not prevailing in Pakistan. The first school bank was Beloit saving bank, which was established in USA in 1882.
3. Labour Banks: The first labour bank was established in America. A labour union can establish this bank for the welfare of workers. The employees contribute in different funds  e.g.,pension fund, group insurance, union fund and social security fund during their employment which can be kept these banks on the behalf of employees. Moreover, the employees also deposit their savings in these banks. For example Saving bank of Chicago etc.
4. Islamic Banks: Islamic bank are those banks which are working under the golden principals of Islam. It is interest free banking system and Islamic banks are working under profit and loss sharing principals. Islamic banks offer the sharia complaint products and services only."Sharia complaint products and services" means banking products and services offered by banks to their clients duly approved by their Sharia Advisers/Sharia Supervisory Committee. In Pakistan, Mezan Bank is an example of such bank.