(i) There are several types of banking systems which can be combined by any of the above banks. They are: Unit banking, branch banking, retail banking, merchant banking, universal banking, relationship banking, wholesale banking, pure banking, mixed banking, chain banking, group banking, green banking and so on. These are not separate banks recognised as such by the RBI.
(ii) Islamic banking is a system of banking based on Islamic principles of banking or Sharia. It is based on two principles. First no interest is charged on loans and no interest is given on deposits. The business firms which received loans from banks will give a share of profit to the banks and banks will give a share of profit to the depositors. It is practiced in UAE~Qatar, Pakistan, Kuwait, Bahrain, etc.,

Yes. India is in need of large sized banks.Because Industrial and Commercial bank of Chinais the first ranked bank in the world with an asset size of USD 3,893.23 billion. Punjab National Bank,the largest nationalised bank in India has an asset base of USD 100 billion and its rank is 717.SBI a public sector bank merged with its five associates and Bharatiya Mahila Bank with effect from April 1, 2017 and after merger its asset size is USD 573 billion. This will boost it among the top 50 banks(SBI earlier rank 272). National Bank of Australia has an asset base of USD 578.46 billion and it's rank is 49.To compete with large sized banks in the world India needs more large sized banks.Therefore merger of many nationalised banks is under consideration.

Payment Banks are formed to widen the spread of payment and financial services to small businesses,low-income households, and migrant labourers These banks should be fully networked from the beginning. They offer doorstep banking payment for a small fess prescribed on the basis of amount.They issue ATM/Debit cards, Internet banking and third party fund transfers.But they can't lend money and issue credit cards.In August 2015, the RBI gave 'in principle' licenses to Payment Banks.

Based on the Functions the banks can be classified into the following:
1) Central Bank:
According to Bank of International Settlemgnt (BIS), "A Central Bank is the bank in any country to which has been entrusted the duty of regulating the volume of currency and credit in that country."Central banks are known by different names in different countries.Their functions also vary from country to country.A Central bank is a set up as an . autonomous or quasi-autonomous body.Stability and growth of the country's economy are the main goals of a central bank.In India the Reserve Bank of India (RBI) is the central bank.
2) Commercial Bank:
Banks which accept deposits from the public and grant loans to traders, individuals,agriculture,industries,transport, etc.in order to earn profit.They also provide other services like remittance of funds,safe keeping of valuables, collection of cheques, issue of letters of credit,etc.They operate with a head office and a network of branch offices spread throughout the country.E.g: State Bank of India, Karurvysa Bank.
3) Development Banks:
Huge finance required for investment,expansion and modernisation of big industries and others are granted by a separate type of banks called development Banks.They are also called industrial banks.The objective of development banks is notprofit.Their aim is to develop the country and create employment opportunities.Finance is provided for medium and long terms ranging from five to twenty years.E.g.Industrial Finance Corporation of India- IFCI; MUDRA bank (for the development of micro industries).
4) Cooperative Banks:
All the agriculture and cooperative banks in India are owned by its customers and members who are farmers, small traders and others.These banks are either urban based or rural based.Their main objective is to provide service to its members for rural and agricultural development and not profit earning.Compared to the commercial banks they offer less variety of services as the bye laws do not permit all conimercial bank activities.National cooperative Development Corporation (NCDC) concentrates in providing loans and grants to State Governments for financing cooperative societies. NCDC concentrates on projects like water conversation, irrigation, agri -insurance, rural sanitation, etc.
5) Foreign Banks:
Banks which have registered office in aforeign country and branches in India are called foreign banks.These banks opentheir offices in big cities and port towns only. Their profitability is higher than Indian banks. In2017, there were 42 Foreign Banks in Indiaand all of them were scheduled banks.Eg: Bank of America - USA, Deutsche Bank - Germany.

(i) Central Bank:
(1) Every nation has one central bank. It is owned by the government of that country.
(2) The control over the entire banking system of a country is vested with this apex bank.
(3) Central banks are known by different names in different countries. In India, the Reserve bank is the central bank.
(ii) Commercial Banks:
(1) Banks which accept deposits from the public and grant loans to traders, individuals, agriculture, industries, transport, etc. in order to earn profit.
(2) Their lending is in comparatively small amounts and mostly for short and medium period.
(3) They also provide other services like remittance of funds, safe keeping of valuables, collection of cheques, issue of letters of credit, etc.
Examples: State Bank of India, Karur Vysya Bank, Standard Chartered Bank.
(iii) Development Banks:
(1) Huge finance required for investment, expansion and modernisation of big industries and others are granted by a separate type of banks called development Banks. They are also called industrial banks.
(2) Finance is provided by them for medium and long terms ranging from five to twenty years. They do not accept deposits from the public. They subscribe shares and debentures of industries. Examples: IDBI, IFCI, SIDBI.
(iv) Co-operative Banks :
(i) All co-operative banks in India are owned by its customers or members who are farmers, small traders and others.
(2) Co-operative. banks in India are either urban based or rural based. Their foremost objective is providing service to its members for rural and agricultural development and not profit earning.
(3) They are set up in towns and villages rather than cities.
(4) Examples: Tamil Nadu State Co-operative bank, Madurai District Central Co-operative bank, Batlagundu Co-operative Urban bank, Dindigul District.
(v) Foreign Banks:
(1) Banks which have registered office in a foreign country and branches in India are called foreign banks.
(2) These banks open their offices in big cities and port towns only. Mostly they serve the interests of the multinational companies, employees and other business institutions.
(3) Examples: Bank of America, Barclays Bank, Deutsche bank, etc.
(vi) Regional Rural Banks - RRBs:
(1) The RRBs were formed under the Regional Rural Bank Act 1976, jointly by the Central Government, State Government, and a sponsor bank.
(2) Their share capital is contributed by these sponsors. Their objective is to develop rural economy and play supplementary role to co-operative societies.
(3) Examples: Pallavan Grama Bank (Salem), Pandian Grama Bank (Madurai) Vallalar Grama Bank (Cuddalore & Chidambaram).
(vii) Specialised  Banks:
(1) Some banks, are created for special purposes by the Government. Export and Import Bank of India was set up through Export-Import Bank of India Act, 1981.
(2) Its main objective is to facilitate international trade of Indian businessmen.
(viii) Local Area Banks:
(1) Local Area Bank scheme was introduced by the RBI in August 1996. These are small private sector banks established in rural and semi-urban areas.
(2) Each bank serves two or three adjoining districts only. Their main objective is to mobilise rural savings (accept deposits) and invest them in the same areas.
(3) Examples: Coastal local Area Bank, Vijayawada, Andra Pradesh and Subhadra Local area bank limited, Kolhapur, Maharashtra.
(ix) Small finance banks:
(1) Small Finance Banks are private sector banks set up in unbanked and underbanked regions of the country to achieve financial inclusion.
(2) Examples: ESAF SFB Thiruvananthapuram, Kerala and Ujjivan SFB Limited, Bengaluru Karnataka.
(x) Payment Bank:
(1) Payment banks are formed to widen the spread of payment and financial services to small businesses, low-income households, and migrant labourers.
(2) These banks should be fully networked from the beginning.
(3) They offer doorstep banking payment for a small fees prescribed on the basis of the amount.
(4) Examples: Airtel payment bank limited, Paytm payment bank limited, Indian post payment bank limited.
(xi) Multilateral Development Banks (MDBs):
(1) A Multilateral Development Bank is formed by the Governments of a group of countries.
(2) The member countries consist of developed donor countries and borrower countries.
(3) International Bank for Reconstruction and Development, Asian Development Bank, European Investment Bank are some of the MDBs.