Many a times candidates especially freshers come across this very common banking interview question “What is the difference between Private Bank and Public Banks”. To make things simple, we decide to put down some basic difference between the two. Part of the Indian banking sector is made up of private and public sector banks. We will discuss about Public sector banks and private sector banks in India and their difference below.
Public Sector Banks:
Public sector banks in India are the banks which are owned by the Government of India. The capital of those banks are contributed by either the people or the Government of India. Government holdings are more than fifty percent in case of public sector banks. The State Bank of India, seven other subsidies of State Bank , plus the fourteen major nationalised banks which were nationalised in 1969 and 1980 comprise the public sector banks.
The shares of these banks are listed on stock exchanges. There are a total of twenty one public sector banks in India. (reference Wikipedia).
(checkout our section on Public Sector Bank Jobs)
Private Sector Banks:
The Private Sector banks are banks where the major part of the stake or equity are held by the private shareholders and not by government.
The private sector banks comprises of old and new private sector banks. The old private sector banks are those which existed before the nationalisation in 1969 and kept their independence because they were either very small or too specialist in function to be included in nationalisation. The new private sector banks are those that got their banking license after the liberalisation in the 1990s.
(checkout our section on Private Sector Bank Jobs)
Both the Public Sector and Private Sector Banks can be differentiated on the basis of the following points –
• Shareholders : A public sector bank is one where more than fifty percentage of the stake is owned by the Government. In a private sector majority of the stake belong to private shareholders.
• Interest Rate : Interest Rates provided by public sector bank are slightly higher compared to private sector banks.
• Cost & Service : Private Sector Banks do provide better service but may cost for the extra services provided by them. For e.g Cash Pick Up, Tab Banking etc. A lot of public sector banks still follow the traditional methods of functioning.
• Customer Base : The public sector banks cater to a lot of Govt Sector Departments, their salaries, fixed deposits, lockers etc whereas private sector bank in India target Private Companies Employees, their salary accounts, credit cards and net banking.
List of Public Sector Banks in India (reference www.imsindia.com)
1. Allahabad Bank
2. Andhra Bank
3. Bank of Baroda
4. Bank of India
5. Bank of Maharashtra
6. Canara Bank
7. Central Bank of India
8. Dena Bank
9. IDBI Bank
10. Indian Bank
11. Indian Overseas Bank
12. Oriental Bank of Commerce
13. Punjab and Sind Bank
14. Punjab National Bank
15. Syndicate Bank
16. UCO Bank
17. Union Bank of India
18. United Bank of India
19. Vijaya Bank
20. State Bank of India
21. Associated Banks of State Bank of India
a. State Bank of Bikaner and Jaipur
b. State Bank of Hyderabad
c. State Bank of Mysore
d. State Bank of Patiala
e. State Bank of Travancore
List Private Sector Banks in India (reference www.business.tm-india.com)
• Bank of Rajasthan
• Bharat Overseas Bank (currently a part of Indian Overseas Bank)
• Catholic Syrian Bank
• City Union Bank
• Dhanalakshmi Bank
• Federal Bank
• ING Vysya Bank
• Jammu and Kashmir Bank
• Karnataka Bank
• Karur Vysya Bank
• Lakshmi Vilas Bank
• Lord Krishna Bank (currently a part of HDFC Bank)
• Nainital Bank (associate of Bank of Baroda)
• Ratnakar Bank
• Sangli Bank (currently a part of ICICI Bank)
• SBI Commercial and International Bank
• South Indian Bank
• Tamilnad Mercantile Bank
• Axis Bank
• Centurion Bank of Punjab (currently a part of HDFC Bank)
• Development Credit Bank
• HDFC Bank
• ICICI Bank
• IndusInd Bank
• Kotak Mahindra Bank
• Yes Bank
(checkout our post on Frequently Asked Bank Interview Questions)
These are certain common difference between the working and functionality of Private Sector Banks and Public Sector Banks.