Private V/S Public Bank in India

Volume II, Issue VI, June 2015 IJRSI ISSN 2321 - 2705 Private v/s Public bank in India

Priya Kedia

Asst. Prof. D.N.P.G. College Hisar

Abstract: - A public sector bank is a bank that is operated II. PUBLIC SECTOR BANK through institutions owned by the people through their representative governments. In these banks, the government  A public sector bank is a bank in which the controls the bank. A well-run public sector bank can help state government holds a major portion of the shares. For and local governments in getting through cash crunches. The public banking model has been devised in order to work for the eg. SBI is public sector bank., the government benefit of the people. It also includes nationalized banks. holding in this bank is 58.60%. Similarly PNB is a public sector bank, the government holds a stake of Keywords— Banks 58.87%.  Government holdings are more than fifty percent. I. INTRODUCTION  All nationalised banks are public sector banks.

nationalized bank is formed by taking a bank and its  There are 27 Public Sector Banks in India A assets into the public ownership. The national government of the country holds the ownership of III. NATIONALISED BANKS nationalized banks. In nationalized banks the government controls the bank. This could refer to taking control of the  A nationalized bank is formed by taking a bank and public shares, change in management and new corporate its assets into the public ownership. strategy. This is a common practice in the countries of the  The government holds the majority shares of west, where it is used as an emergency method to help the nationalised banks. banks during rough times.  There are currently more than 20 Nationalized Banks in India. However, a success cannot be guaranteed with the act of  SBI was known as Imperial Bank of India. after nationalization of banks. France had nationalized its banking 1955, RBI took over the majority shares (60%). sector and later the government sold it to private hands. State Thus the bank was nationalized and renamed as Bank of India was nationalized in 1955 under the SBI Act. State Bank of India. Similarly, PNB was founded in Later in 1960, seven state banks were also nationalized. The 1894 under companies Act. Lala Lajpai Rai was one second phase in India took place is 1980, when seven more one of the founding members. This bank was banks were nationalized. nationalized by GoI in 1969. The interest rates of private banks are generally slight costly  BMB or Bhartiya Mahila Bank founded in 2013 is a as compared to public sector banks. Banking has been public sector bank by Government of India.III originated in the form of private banking. Generally, the Hydrogen Atom Orbitals. private banks are looked as a large organization with global operations. A private bank may have retail banking facilities IV. PRIVATE SECTOR BANKS for their clients. They are known for better customer services and investment opportunities. Shareholders of the private  Private sector banks are owned by private lenders. banks generally seek short-term profits as their highest  The private banks are managed and controlled by priority. The private banks are known for being well private promoters. equipped with all kinds of contemporary tools and  The private sector banks comprises of old and new techniques. private sector banks.  The old private sector banks are those which existed The banks, which were not nationalized at the time of bank before the nationalisation in 1969 and kept their nationalization that took place during 1969 and 1980 are independence because they were either very small known to be the old private-sector banks. These were not or too specialist in function to be included in nationalized, because of their small size and regional nationalised Banks. focus.[2] Most of the old private-sector banks are closely  The new private sector banks are those that got their held by certain communities their operations are mostly banking license after the liberalisation in the 1990s. restricted to the areas in and around their place of origin.  The interest rates of private banks are generally Their Board of directors mainly consist of locally prominent slight more as compared to public sector banks. personalities from trade and business circles. One of the  There are 20 Private Sector Banks. positive points of these banks is that, they lean heavily on service and technology and as such, they are likely to attract more business in days to come with the restructuring of the Both the Public Sector and Private Sector Banks can be industry round the corner. differentiated on the basis of the following points – www.rsisinternational.org/IJRSI.html Page 88

Volume II, Issue VI, June 2015 IJRSI ISSN 2321 - 2705 • Shareholders : A public sector bank is one where more than 19. Vijaya Bank fifty percentage of the stake is owned by the Government. In 20. State Bank of India a private sector majority of the stake belong to private 21. Associated Banks of State Bank of India shareholders. a. State Bank of Bikaner and Jaipur b. State Bank of Hyderabad • Interest Rate : Interest Rates provided by public sector bank c. State Bank of Mysore are slightly higher compared to private sector banks. d. State Bank of Patiala e. State Bank of Travancore • Cost & Service : Private Sector Banks do provide better service but may cost for the extra services provided by them. List Private Sector Banks in India (reference For e.g Cash Pick Up, Tab Banking etc. A lot of public sector www.business.tm-india.com) banks still follow the traditional methods of functioning. • Bank of Rajasthan • Bharat Overseas Bank (currently a part of Indian • Customer Base : The public sector banks cater to a lot of Overseas Bank) Govt Sector Departments, their salaries, fixed deposits, • Catholic Syrian Bank lockers etc whereas private sector bank in India target Private • City Union Bank Companies Employees, their salary accounts, credit cards • Dhanalakshmi Bank and net banking. • Federal Bank • ING Vysya Bank The private-sector banks in India represent part of the indian • Jammu and Kashmir Bank banking sector that is made up of both private and public • Karnataka Bank sector banks. The "private-sector banks" are banks where • Karur Vysya Bank greater parts of stake or equity are held by the private • Lakshmi Vilas Bank shareholders and not by government. • Lord Krishna Bank (currently a part of HDFC Bank) • Nainital Bank (associate of Bank of Baroda) Banking in India has been dominated by public sector banks • Ratnakar Bank since the 1969 when all major banks were nationalised by the • Sangli Bank (currently a part of ICICI Bank) Indian government. However, since liberalisation in • SBI Commercial and International Bank government banking policy in the 1990s, old and new private • South Indian Bank sector banks have re-emerged. They have grown faster & • Tamilnad Mercantile Bank bigger over the two decades since liberalisation using the • Axis Bank latest technology, providing contemporary innovations and • Centurion Bank of Punjab (currently a part of HDFC monetary tools and techniques.[1] Bank) • Development Credit Bank • HDFC Bank The private sector banks are split into two groups by • ICICI Bank financial regulators in India, old and new. The old private • IndusInd Bank sector banks existed prior to the nationalisation in 1969 and • Kotak Mahindra Bank kept their independence because they were either too small or • Yes Bank specialist to be included in nationalisation. The new private sector banks are those that have gained their banking license REFERENCES since the liberalisation in the 1990s. [1] www.differencebetween.info/difference-between-public- List of Public Sector Banks in India (reference sector-bank-and-private-sector-bank www.imsindia.com) [2] www.bankjobsindia.net/common-interview-query- 1. Allahabad Bank difference-between-private-and-public-banks-in-india/ 2. Andhra Bank [3] www.academia.edu/6807201/Comparison_Between_Priva 3. Bank of Baroda te_Bank_and_Public_Bank [4] "Introduction to private sector banks". Retrieved 10-09- 4. Bank of India 2011. Check date values in 5. Bank of Maharashtra [5] "Nationalization of Banks" 6. Canara Bank [6] "Criteria set for the new private sector banks" 7. Central Bank of India [7] en.wikipedia.org/wiki/Private-sector_banks_in_India 8. Dena Bank [8] "A Profile of Banks : 2012-13" (PDF). Reserve Bank of 9. IDBI Bank India. 2013. Retrieved 22 February 2015. 10. Indian Bank [9] "Bharatiya Mahila Bank included in second schedule to RBI Act". The Economic Times. 21 May 2014. 11. Indian Overseas Bank Retrieved 13 March 2015. 12. Oriental Bank of Commerce [10] "Government may take Post Bank of India public after 13. Punjab and Sind Bank establishing it". The Economic Times. 20 January 2015. 14. Punjab National Bank Retrieved 13 March 2015. 15. Syndicate Bank [11] "Kotak Mahindra, ING Vysya extend gains after RBI approves amalgamation". Business Standard. 6 April 16. UCO Bank 2015. Retrieved 12 April 2015. 17. Union Bank of India 18. United Bank of India www.rsisinternational.org/IJRSI.html Page 89

Volume II, Issue VI, June 2015 IJRSI ISSN 2321 - 2705 [12] "RBI decides to grant “in-principle” approval for banking February 2015. licences". Reserve Bank of India. 2 April 2014. Retrieved 22 [13] "List of Foreign banks in India as on January 31, 2015" (PDF). Reserve Bank of India. 31 January 2015. Retrieved 22 February 2015. [14] "Financial Intermediaries - Regional Rural Banks". Reserve Bank of India. Retrieved 22 February 2015. [15] "State Co-operative Banks". Reserve Bank of India. Retrieved 4 May 2015. [16] "List of Scheduled Urban Co-operative Banks" (PDF). Reserve Bank of India. Retrieved 4 May 2015.