The correct answer is second. Explanation & Key Takeaways: • Non-scheduled banks are those that do not adhere to the RBI’s regulations. • They are not mentioned in the Second Schedule of the RBI Act, 1934, and are therefore deemed incapable of serving and protecting depositors’ interests. • Non-scheduled banks must also meet the cash reserve requirement, but not with reserve banks, but with themselves. • They are generally smaller in size and have a range of influence that is somewhat narrow. • Banks with a reserve capital of less than 5 lakh rupees qualify as non-scheduled banks. • Baroda City Co-op. Bank Limited, Bardoli Nagrik Sahakari Bank Ltd. AHMEDABAD are a few examples. Related Concepts: Scheduled banks : • A scheduled bank is any bank that is listed in the 2nd schedule of the Reserve Bank of India Act, 1934. • Schedule banks satisfy various parameters, criteria under clause 42 of this act. • Examples - State Bank of India, ICICI Bank Limited, HDFC Bank Ltd, etc. • The paid-up capital and collected funds of the bank must not be less than Rs5 lakh. • Scheduled banks are eligible for loans from the Reserve Bank of India at bank rate.