Public Sector Bank in India vs Private Sector Bank in India
It is a surprise that we are today talking about differences between public sector banks and private sector banks in India. Banks in India remained private till 1969 when the then Prime Minister of India, nationalized all of them through an act of the parliament. From 1969 till 1994 there were only public sector banks in India when government allowed HDFC to start the first private bank. The roaring success of HDFC made other private banks to come into the picture and today private banks are giving stiff competition to public sector banks. This article will try to peep into the working styles of public and private sector banks to differentiate between the two.
Though State Bank of India is in reality the oldest bank in India having come into existence much before the Allahabad Bank, State Bank of India was called the Imperial Bank of India before independence. Imperial bank was formed in 1921 with the merger of presidency banks known as Bank of Madras, bank of Bengal, and bank of Bombay. Not much headway was made till the nationalization of banks but soon after their nationalization, the banks became a policy instrument of the government of India and the banks started to offer loans to poor and farmers. Thousands of branches of public sector banks were opened in rural areas which allowed people in villages to take advantage of banking facilities. These commercial banks looked after the requirements of industrialists, agriculturists and traders thus becoming a backbone of the Indian economy. They accelerated the growth of Indian economy and worked as wheels of growth taking India to the goal of self reliance in all fields.
Public sector banks are the banks owned by the government of India or are an undertaking of the government of India. On the other hand private sector banks are those set up by private bodies. It was the process of liberalization, initiated in 1991 under the then Prime Minister of India that the government recognized the need to allow participation of private sector banks in the field of banking. The entry of private banks provided the much needed boost in the quality of services and woke public sector banks from a deep slumber of self praise and inefficiency. The pace at which private sector banks grew in India under the leadership of banks like HDHC and ICICI was phenomenal and made public sector banks work for the betterment of performance and efficiency.
Private sector banks, though they were costly, provided consumer friendly services and customers were attracted to them as they were never so comfortable while dealing with public sector banks. In the process, these banks jolted public sector banks out of their complacency and literally forced them to become better and competitive.
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Public Sector Bank in India vs Private Sector Bank in India • There were only public sector banks in India from 1969 to 1994 as all banks were nationalized. • These public sector banks fulfilled their social responsibilities and provided the much needed thrust to Indian economy • It was the liberalization process started in 1991 that private sector banks were allowed to be set up by RBI • Today the great performance of private sector banks have made private sector banks more competitive and forced them to provide better customer services.
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