Principles of Banking: Scheduled & Non-Scheduled Banks

Principles of Banking
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According to the Syllabus of FBISE & BISE Rwp.
CHAPTER: 4
SCHEDULED & NON-SCHEDULED BANKS
1. Define scheduled bank.

The banks which are registered in the list of central bank under its charter are known as
schedule banks. They are bound to perform banking services according to the policies
and instructions of the central bank. For example
 Allied Bank Limited.
 Askari Bank Limited.
 Askari Islamic Bank.
 Bank Alfalah Limited.
2. Define Non-scheduled bank
The banks which are not registered in the list of central bank under its charter are known as
schedule banks. They are not bound to perform banking services according to the policies and
instructions of the central bank.
For examples Bank of Azad Jammu & Kashmir
3. Give any five advantages/merits of scheduled banks

1) Guidance of central bank
2) Dealing in foreign exchange
3) Advisor of his client
4) Trust of public
5) Expansion in business
4. Which documents are submitted in to central bank to become a scheduled bank?
Central bank has the sole power to change over non-scheduled bank into scheduled bank. At
whatever point a nonscheduled bank needs to change its status to scheduled bank then it is need
to submit following documents.
1) Memorandum of association of bank
2) Article of association of bank.
3) Audited Annual report of bank for previous years.
City Standard College

Al Ahmed Plaza Range Road Near Shallay Valley Rwp. Cantt.
Ph: 051-8434139, 0345-5820808 , 0333-5323805 Page 1
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Q 1: What is difference between Schedule & Non-Schedule bank?
■ Define Scheduled bank:

The banks which are registered in the list of central bank under its charter are known as
schedule banks. They are bound to perform banking services according to the policies
and instructions of the central bank.
For example HBL, ABL.
■ Define Non-scheduled bank:

The banks which are not registered in the list of central bank under its charter are known
as schedule banks. They are not bound to perform banking services according to the
policies and instructions of the central bank.
For examples Bank of Azad Jammu & Kashmir
■ Difference Between Scheduled bank & Non-scheduled:
Point of Difference Schedule Bank Non Schedule Bank

Registration Schedule Banks are registered under the Non Schedule Banks are not registered in
act of 1956 sec 37(1) in Pakistan central Bank
Clearing House Clearing House facility is available for Clearing House facility is not available for
scheduled bank scheduled bank
Central Banks Scheduled Banks are liable to follow the Non Scheduled Banks are not liable to follow the
Instruction instructions of central bank instructions of central bank
Paid up Capital Paid up capital for schedule Banks are Paid up capital for Non schedule Banks are not
fixed by central bank. fixed but can be vary.
Performance Report Schedule Banks are liable to submit their Non Schedule Banks are not liable to submit their
performance report to central bank. performance report to central bank.
Loan Facility Central Banks provide loan Facility to Central Banks do not provide loan Facility to
schedule banks in case of emergency schedule banks in case of emergency
Degree of Control Scheduled banks are subject to greater Non Scheduled banks are subject to poor degree of
degree of control and more obligations control and less obligations in their day-to-day
in their day-to-day operations operations
Rate if Interest The prevailing rate of interest for The prevailing rate of interest for Non schedule is
schedule is low as compare to non high as compare to schedule banks
schedule banks
Public Confidence Schedule Banks earn greater degree of Non Schedule banks find it difficult to create
confidence of public due to back by public confidence
central bank
Cash Reserve ratio Schedule Banks are Liable to maintain Non Schedule Banks are not Liable to maintain
minimum cash reserve ratio as per minimum cash reserve ratio.
central banks instruction

Ph: 051-8434139, 0345-5820808 , 0333-5323805 Page 2
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Foreign Braches Schedule banks can open their new Non Schedule banks can not open their new
branches in foreign countries branches in foreign countries
Rediscounting Schedule banks can rediscount their bills Non schedule Banks are not allow the
of exchange from central banks in case rediscounting facility.
need of funds.
Safety and Security They are generally more financially The banks are riskier to do business with them
sound and unlikely harm the interests
and welfare of the depositors.
Annual Reports Are mandated to file their reports with No such provision exists. However, they have to
the SBP periodically, preferably once a publish and submit reports to their shareholders.
year.

Ph: 051-8434139, 0345-5820808 , 0333-5323805 Page 3

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Principles of Banking

1. Define scheduled bank.

3. Give any five advantages/merits of scheduled banks

City Standard College

Q 1: What is difference between Schedule & Non-Schedule bank?

■ Define Scheduled bank:

■ Define Non-scheduled bank:

■ Difference Between Scheduled bank & Non-scheduled:

Point of Difference Schedule Bank Non Schedule Bank

City Standard College

City Standard College

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