The banking system in India is regulated by the Bank of banks “Reserve bank of India. The apex bank “Reserve Bank of India” is monetary authority governs all types of banks if India such as commercial banks, cooperative banks, and also development banks.
The banks like private sector banks, public sector banks, foreign banks, local area banks, and regional rural banks are part of the commercial bank of India. After independence till 1969, there were only eight public sector banks which included SBI and its associate banks and rest all banks were private sector banks after that, in July 1969, 14 commercial banks got nationalized and 6 commercial banks got nationalized in 1980.
In the year 1993, after the introduction of liberation policy, private sector banks came in India. However, at present, both types of banks are working efficiently by providing a variety of services and facilities to people. However, because of the large number of banks in the country, tough competition can be observed among the banks.
In this article, you will learn about both public sector banks versus private sector banks and key differences between both types of banks.
What is a Public Sector Bank?
Central or State Government holds more than 50% shares of a Public Sector Bank. Public sector banks are listed on stock exchange. Public Sector banks are the largest category of banks and they were originated after the independence of the country. in India, around 75% share of the market in Indian Banking sector is controlled by Public Sector Banks.
Public sector banks can be classified into two broad categories which are State bank and its associates and nationalized banks. There is a total of 21 Public Sector banks in India. These banks are of different sizes and value.
All public sector banks have their own organizational structure, business model, and human resource policies. These banks have cut-throat competition among them in the market sector.
Following is a list of all Public Sector Banks in India in 2019.
- Andhra Bank
- Allahabad Bank
- bank of India
- Bank of Baroda
- bank of Maharashtra
- Central Bank of India
- Corporation Bank
- Canara Bank
- Dena Bank
- Indian bank
- Indian Overseas Bank
- Oriental Bank of Commerce
- Punjab & Sind Bank
- Punjab National bank
- State Bank of India
- Union Bank of India
- United Bank of India
- UCO Bank
- Vijaya Bank
- 20 Syndicate Bank
- Indian Post payment Bank
What is a Private Sector Bank?
In private Sector banks, a large portion of market shares is held by private entities or private shareholders and a government holds a smaller portion of market shares of these banks. However, almost all old private sector banks got nationalized in two tranches, but there are still a few banks which carry out their operations on their own. such types of banks are referred to as “Old Generation Private Sector banks”.
On the other hand, there are a few “New Generation Private sector banks” such as HDFC Bank, Axis Bank, ICICI Bank, etc. came into existence when liberalization policy was introduced in India.
After the introduction of “Liberalization Policy” Banking Sector of India has observed a drastic change because of the emergence of Private Sector banks. The number of Private Sector Banks in India are constantly increasing and they provide a varied range of products and services to their customers.
Private sector Banks has started a tough competition among the banks by offering enhanced products and services and raised up the banking experience for their customers.
Following is a list of all Private Sector banks in India:
- Axis Bank
- Catholic Syrian Bank
- City Union Bank
- DCB Bank
- Dhanlaxmi Bank
- Digibank (DBS)
- Federal bank
- HDFC Bank
- ICICI Bank
- IDFC Bank
- Indusland Bank
- Jammu and Kashmir Bank
- Karnataka Bank
- Karur Vysys Bank
- Kotak Mahindra Bank
- Lakshmi Vilas Bank
- Nainital bank
- RBL Bank
- South India Bank
- Tamilnad Mercantile Bank
- YES Bank
- Bandhan Bank
Key differences between the Public Sector Banks versus Private Sector Banks
| Public Sector Banks | Private Sector banks |
|---|---|
| The complete or more than 50% ownership of Public Sector banks lies in the hands of Public Sector Banks. | The majority of ownership of private sector banks lies in the hands of private entities or individuals. |
| There are 20 public sector banks in India as of 2019. | There are 21 Private sectors banks in India as of 2019 |
| Public Sector banks have a 75% share in the banking industry. | Private Sector Banks have a 19.7 % share in the banking industry. |
| Public sector banks have quite a large customer base. | Private Sector Banks have a relatively small customer base. |
| Public Sector banks provide a relatively high interest rate on the deposits to its customers. | Private Sector Banks provide a relatively low interest rate on the deposits to its customers. |
| Promotion is given to employees on the basis of their seniority level. | Promotion is given to employees on the basis of their merit level. |
| There are low growth opportunities in Public sector banks. | There are comparatively high growth opportunities in Private sector banks. |
| There is job security in public sector banks. | There is less job security in private sector banks. |
| There are provisions of pensions to ex-employees of the banks. | There are no provisions of pensions to ex-employees of the banks. |
Conclusion
whether someone wants to make monetary investments or a career in the banking sector, people need to think 100 times because making a choice in about any of these due to the presence of cut-throat competition. However, it finally comes down to your personal choice as everyone has their own personal priorities. Therefore, you should take a decision by scheduling down your preferences and go for the one that suits you best.
