Banks are licensed financial institutional bodies that accept and store deposits and provide credit to their customers and uses the deposited money to grant loans to the customers as needed and Banking refers to the system of financial institutions, such as banks and credit unions, that provide various financial services to individuals, businesses, and governments which mainly include services like accepting deposits, lending money, facilitating transactions, and offering various financial products like savings accounts, loans, and credit cards.

Functions of Banks in India: Banks in India offer a wide range of banking services such as saving and checking accounts, loan( personal business and mortgages) credit cards, investment services and electronic banking options like online and mobile banking. Some of the major functions of the banks are mentioned below:

1. Accepting deposits: Bank provides a safe place for individuals and businesses to deposit their money which can be withdrawn when needed.
2. Providing loans: Bank lends money to individuals and businesses for various purposes such as home mortgages, business expansion, or personal loans.
3. Payment and settlements: The bank enables transactions through various payment methods like cheques, debit cards, credit cards, and electronic transfers.
4. Currency exchange: Many banks offer foreign exchange services allowing customers to buy, sell, or exchange foreign currencies.
5. Safekeeping of valuables: Some banks offer safe deposit boxes for customers to securely store valuable items and documents.
6. Investment Services: Banks also provide investment products like mutual funds, stocks, and bonds, helping customers grow their wealth.
7. Internet banking services: Banks offer internet banking services that make it convenient for customers to access their accounts, pay bills, and transfer funds online.

Types of Banks : Banks in India can be classified into Eight types which are mentioned below;

1. Central bank
2. Commercial bank
3. Cooperative bank
4. Payment bank
5. Small finance banks
6. Scheduled bank
7. Non scheduled bank
8. Specialized bank

Types of Banks and Their Functions

1. Central Bank: In India, Reserve Bank acts as the central bank and as the apex body which monitors and regulates all the other Banks of India. In some situations, it also plays a vital role as a banker to the Govt.
   • Functions of the Central bank:
   • The main function of a central bank in a country is to regulate all the other banks, thus acting as the apex body for the economic sector.
   • It is the Bankers bank and hence acts as a guide to other banks.
   • Central Bank is also responsible for issuing currency in the country. The Reserve Bank of India supervises the financial system of our country.
      
2. Commercial bank: Commercial banks are organised under the Banking Companies Act 1956. They perform their functions for the public. They accept credit and grant loans. The main objective of a commercial bank is to make a profit. They are owned by the state, any private entity, or the government. That poses a well-unified structure. The main source of income of a commercial bank is public deposit. Commercial banks can be further classified into 3 categories.:
   
   1. Public Sector Banks ;Owned and operated by the government. For example, SBI, PNB, Private bank, sectors.
   2. Private Sector Banks ; These are privately owned and managed banks such as HDFC Bank, ICICI Bank, Axis Bank
   3. Foreign Banks. These banks have branches in India and are headquartered in foreign countries. Some examples are Citibank, HSBC.
   Function of commercial bank:
   It accepts deposits from the public, which is their most important function, provide loans to the customers and also provide advanced loan or overdraft facilities. They also invest their surplus funds in different securities.
    
3. Cooperative Bank: A cooperative bank is registered under the Cooperative Societies Act of 1912 and is run by an elected managing committee. It works on a non-profit, no-loss basis and mainly serves entrepreneurs, small businesses, self-employment, and more in urban areas. In rural areas, it mainly functions to finance agriculture-based activities like farming, livestock, and hatcheries.
   • Function of the Cooperative Bank:
   • The primary function of the cooperative bank is to promote social welfare. As they provide loans at low-interest rates, they play an important role in providing financial resources to the rural population.
   • They provide an alternative to the traditional defective credit system of village money lenders.
   • They play an important role in financial inclusion, especially in rural areas.
      
4. Payment Bank: The payment banks are a relatively new banking model in the country that has been conceptualized by RBI. The bank is allowed to accept a restricted deposit which is limited to rupees 1,00,000 for a customer. The bank also offers services such as ATM cards, net banking, and more.
    
5. Small Finance Bank: This bank serves the unserved and unreserved section of the population including small business and low income individuals. Small Finance Bank is licensed under section 22 of the Banking Regulation Act 1949 and it is governed by the Provision Act of 1934. Some examples of Small Finance Bank are North East Small Finance Bank Limited, Fincare Small Finance Bank Limited, Utkarsh Small Finance Bank Limited, Ujjivan Small Fines Bank Limited
   
    
6. Scheduled bank: The banks are covered under the second schedule of RBI Act, 1934, and they need to have a paid capital of Rupees 5,00,000 or more.
    
7. Non-scheduled bank: The non-scheduled banks are local area banks that are not listed in the second schedule of the RBI Act 1934.
    
8. Specialized bank: Banks formed with specific goals to deal with the needs of a particular industry or a particular sector are called specialized banks. Some examples of specialized banks are Small Industrial Development Bank of India (SIDBI), Export and Import Bank (EXIM Bank), National Bank for Agriculture Rural Development (NABARD), etc.

Function of specialized bank:

The focus on import and export of particular industries. They also provide financial services to the industries for which they are working.

Conclusion:
Banks are considered as the backbone of the Indian economy as they play a crucial role in shaping and maintaining the country's economic condition and enables a country's economic growth and maintains its financial stability. They also play an important role in supporting existing businesses and empowering new ones.