A comparative Study on Public and Private Sector Banks in India
A public sector enterprise is an organisation which is
The private sector enterprise is an organisation which is owned, managed & controlled by private individuals or a group of individuals or both. This is also engaged in business activity but with the motive of profit maximisation rather than public service like in case of public sector enterprise.
The first Private Bank in India to receive an in principle approval from the Reserve Bank of India was Housing Development Finance Corporation Limited, to set up a bank in the private sector banks in India as part of the RBI’s liberalization of the Indian Banking Industry. It was incorporated in August 1994 as HDFC Bank Limited with registered office in Mumbai and commenced operations as Scheduled Commercial Bank in January 1995.
ING Vysya, yet another Private Bank of India was incorporated in the year 1930. Bangalore has a pride of place for having the first branch inception in the year 1934. With successive years of patronage and constantly setting new standards in banking, ING Vysya Bank has many credits to its account.
Established on April 24, 1865 in Allahabad by a group of European, Allahabad Bank is also the oldest Joint Stock Bank of India .Allahabad Bank is one of the leading banks in India. Allahabad Bank was one of those. Currently it offers a whole range of financial services to thousands of customers across the nation through its 2260 branches, besides its Internet banking services. In the year 1969, the Government of India nationalized 13 commercial banks Allahabad Bank has its headquarter located in Kolkata.
After its establishment in 1865, Allahabad Bank became a part of P & O Banking Corporation in 1920 with a bid price of Rs. 436 per share. In 1923, considering the business opportunities, the headquarter of the bank was shifted to Kolkata. On July 19, 1969, when the Government of India nationalized Allahabad Bank along with 13 other banks, it had 151 branches across the nation with deposits of Rs. 119 crore and advances of Rs. 82 crore. In 1989, United Industrial Bank Ltd. merged with nationalized Indian bank. Allahabad Bank also instituted a wholly owned subsidiary for Merchant Banking, called Allahabad Bank Finance Ltd.
Allahabad Bank released its first Initial Public Offer (IPO) of 10 crore (face value Rs. 10 per share) in October, 2002. It reduced the Government shareholding to 71.16%. It again released Follow on Public Offer in April, 2005 of 10 crore equity shares . It again reduced the Government shareholding to 55.23%.
It was June, 2006 when the Allahabad Bank went international to open up its first Representative Office at Shenzen in China. In October, 2006, Allahabad Bank went high-tech for roll out its first branch under Core Banking Service. It opened up its first overseas branch at Hong Kong in February 2007. In March 2007, the business of Allahabad Bank crossed Rs. 1,00,000 crore mark.
Following are the list of products offered by Allahabad Bank to its customers:
The Following are the list of other services offered by Allahabad Bank.
Bank of Baroda India from an organization based on private capital and state ownership, at present is embodiment of enterprise and corporate governance, situated in Mumbai. The new logo of the bank comprises dual B alphabet, holding the sun rays. It was founded by Maharaja Sayajirao Gaekwad in 1908 in Baroda. It is referred as the Baroda Sun.
The general product and services offered by the Bank of Baroda India are,
Andhra Bank was registered on 20 November 1923 and commenced business on 28 November 1923 with a paid up capital of Rs 1.00 lakh and an authorised capital of Rs 10.00 lakhs. The Bank crossed many milestones and the Bank’s Total Business as on 30.06.2008 stood at Rs.83,256 Crores with a Clientele base over 1.74 Crores.The Bank is rendering services through 2139 Business Delivery Channels consisting of 1371 branches, 66 Extension Counters, 38 Satellite Offices and 664 ATMs spread over 21 States and 2 Union Territories as at the end of June, 2008. To provide value-added services to Customers, the Bank has set up its own 664 ATMs as on 30.06.2008. Of which 03 Mobile ATMs and two with Biometric access. Besides, ATM sharing arrangements with several Banks including SBI group, IDBI Bank, UTI Bank, HDFC Bank, Indian Bank and others under National Financial Network Switch covering 24856 ATMs.All Branches are 100% computerized, 1186 units viz., 1101 Branches, 68 Extension Counters, 15 Service Centres networked under Cluster Banking solution and providing “Any Branch Banking”. Real Time Gross Settlement Facility and National Electronic Fund Transfer facility has been introduced in 723 Branches.
Bank of India was established on 7th September, 1906 by a group of reputed businessmen from Mumbai. The Bank was under private ownership and control till July 1969 when it was nationalized along with 13 other banks.
It is starting with just one office in Mumbai, with a paid-up capital of Rs.50 lakh and 50 employees; the Bank has made fast progress over the years and blossomed into a mighty institution with a strong national presence and sizable international operations. The Bank gets a premier position among the Nationalized Banks in India.
Amongst the standard services provided by Bank of India the special service that it provides is Multi Branch Banking. Multi Branch Banking service is available to customers of networked branches of the Bank. Under this service, the customer of one branch will be able to transact on his account, from any other networked branch of the Bank. This facility is at present available at 200 cities/towns across the country. A list of MBB branches is available at the end of this page. Services available in MBB
Other Value Added Services such as “Centralized Telebanking”, “SMS Banking”, “PC Banking” would also be available at these networked branches.
Punjab National Bank of India, the first Indian bank started only with Indian capital, was nationalized in July 1969 and now the bank has become a front-line banking institution in India with 4525 Offices including 432 Extension Counters. The corporate office of the bank is at new Delhi. Punjab National Bank of India has set up representative offices at Alm Kazakhistan Shanghai and in London and a full fledged Branch in Afghanistan
The total expense was Rs. 2830.44 crore and the net profit was Rs.237.70 crore.The total income of the Punjab National Bank of India as recorded in the quarter ending 31st march 2007 was Rs. 3712.79 crore as compared to Rs. 2926.93 crore on 31st march 2006.
The Punjab National Bank of India has launched the concept of “Any Time, Any Where Banking” through the introduction of Centralized Banking Solution and has recently introduced On line Payment Facility for railway reservation through IRCTC Payment Gateway Project and On line Utility Bill Payment Services, allowing Internet Banking account holders to make their payments anytime from anywhere. Another step taken by Punjab National Bank of India is the launch of its ATM- cum- Debit card.
Initially all the banks in India were private banks, which were founded in the pre-independence era to cater to the banking needs of the people. In 1955, after the declaration of first-five year plan, Imperial Bank of India was subsequently transformed into State Bank of India. In 1921, three major banks i.e. Banks of Bengal, Bank of Bombay, and Bank of Madras, merged to form Imperial Bank of India. In 1935, the Reserve Bank of India was established and it took over the central banking responsibilities from the Imperial Bank of India, transferring commercial banking functions completely to IBI. Allahabad Bank, Canara Bank, Central Bank of India, etc. Thus, public sector banks revived to take up leading role in the banking structure. In 1980, the GOI nationalized 6 more commercial banks, with control over 91% of banking business of India.
Following this, occurred the nationalization of major banks in India on 19 July 1969. The Government of India issued an ordinance and nationalized the 14 largest commercial banks of India, including Punjab National Bank . In 1994, the Reserve Bank Of India issued a policy of liberalization to license limited number of private banks, which came to be known as New Generation tech-savvy banks. Global Trust Bank was, thus, the first private bank after liberalization; it was later amalgamated with Oriental Bank of Commerce . Then Housing Development Finance Corporation Limited became the first to receive an ‘in principle’ approval from the Reserve Bank of India to set up a bank in the private sector. At present, Private Banks in India include leading banks like ICICI Banks, ING Vysya Bank, Jammu & Kashmir Bank, Karnataka Bank, Kotak Mahindra Bank, SBI Commercial and International Bank, etc. Undoubtedly, being tech-savvy and full of expertise, private banks have played a major role in the development of Indian banking industry. They have made banking more efficient and customer friendly. In the process they have jolted public sector banks out of complacency and forced them to become more competitive.
A leading private sector bank, the Bank of Rajasthan was founded on the auspicious day of Akshya Tritiya on May 8, 1943, at Udaipur. Shri Rai Bahadur P.C. Chatterji, the then finance minister of the erstwhile Mewar Government, extensively contributed towards the establishment of the Bank.
With the Swadeshi Movement of early 20th century as its base, Catholic Syrian Bank was incorporated on 26th November 1920, in the Thrissur district of Kerala. The bank commenced its operations on 1st January 1921, with an authorized capital of Rs. 5 lakhs and a paid up capital of Rs. 45270.
The foundation of Dhanalakshmi Bank Limited was laid down on 14th November 1927in Kerala. A group of innovative entrepreneurs had started the bank with a capital of Rs.11,000 and only 7 employees.
Federal Bank Limited was founded as Travancore Federal Bank Limited in the year 1931, with an authorized capital of Rs. 5000. It was established at Nedumpuram, a place near Tiruvalla, in Central Travancore (a princely state later merged into Kerala), under Travancore Company’s Act 1956.
Housing Development Finance Corporation Limited, more popularly known as HDFC Bank Ltd, was established in the year 1994, as a part of the liberalization of the Indian Banking Industry by Reserve Bank of India . It was one of the first banks to receive an ‘in principle’ approval from RBI, for setting up a bank in the private sector.
ICICI Bank started as a wholly owned subsidiary of ICICI Limited, an Indian financial institution, in 1994. Four years later, when the company offered ICICI Bank’s shares to the public, ICICI’s shareholding was reduced to 46%. In the year 2000, ICICI Bank offered made an equity offering in the form of ADRs on the New York Stock Exchange .
ING Vysya Bank Ltd came into being in October 2002, when erstwhile Vysya Bank Ltd was merged with ING, a global financial powerhouse boasting of Dutch origin. Vysya Bank Ltd, one of initial banks to be set up in the private sector of India
The origin of Jammu and Kashmir Bank Limited, more commonly referred to as J&K Bank, can be traced back to the year 1938, when it was established as the first state-owned bank in India. The bank was incorporated on 1st October 1938 and it was in more precisely on 4th July 1939. It commenced its business, in Kashmir (India).
Karnataka Bank Limited is a leading private sector bank in India. It was incorporated on 18th February 1924 at Mangalore, a town located in the Kannada district of Karnataka. The bank emerged as a major player during the freedom movement of 20th Century India.
The Karur Vysya Bank Limited commonly known as KVB was set up by Late Shri M.A. Venkatarama Chettiar and the Late Shri Athi Krishna Chettiar, the two great visionaries in 1916 in Karur, a textile town in the Tamil Nadu state of India.
Kotak Mahindra Bank is one of India’s leading financial private banking institutions. It offers banking solutions that covers almost every sphere of life. Some of its financial services include commercial banking, stock broking, mutual funds, life insurance and investment banking.
SBI Commercial and International Bank, SBI Commercial is a completely owned private auxiliary of India’s biggest banking and financial services set up, the State Bank of India. Established in 1995 to back SBI’s corporate and international banking services, the SBI Commercial and International Bank is the only bank in India to be been awarded ISO-9002 quality systems certification for the Bank as a whole
Axis Bank was formed as UTI when it was incorporated in 1994 when Government of India allowed private players in the banking sector. The bank was sponsored together by the administrator of the specified undertaking of the Unit Trust of India, Life Insurance Corporation of India (LIC) and General Insurance Corporation ltd.
Yes Bank is one of the top most private Indian banks. Awarded by the only Greenfield license award by RBI in last 14 years, this bank is established and run by Rana Kapoor and Ashok Kapur with the financial support of Rabobank Nederland, the world’s single AAA rated private Bank.
Citibank India, since 1902, is at present one of the leading consumer finance lender providing its customers best products and services.
The Citibank India offers a varied range of financial assistance to its customers like:
There is a relationship manager who guides the clients on the investment issues along with foreign exchange, transaction requests and trade services. Citibank India by launching the CitiBusiness Card have for the first time offered the customers a vast range of benefits, services, business intelligence, deals and discounts that are generally at the disposal of large corporations so far. Moreover without paying any extra charges the customers are assured of world-class transactional convenience like pay orders, demand drafts and payable-at-par cheques .There is a relationship manager who guides the clients on the investment issues along with foreign exchange, transaction requests and trade services
The Union Budget of India for the year 2008-2009 was announced by the Indian Finance Minister, Mr. P Chidambaram, on 29th February 2008. The policies and initiatives taken in the Union Budget of India 2008-2009 on the Indian Banking sector were in tandem with the requirements of the Indian economy.
Small and marginal farmers have been relieved of all farm loans, disbursed till March 2007 and also all loans, which are due till December 2007 and was unpaid till February 2008. These farm loan waivers would be facilitated by all the concerned Public Sector Banks and Regional Rural Banks of India. A total of Rs 60,000 crores would be waived-off under such scheme. The settlement of these loan-waivers will be offered through special type of scheme. Further, the Public Sector Banks and Regional Rural Banks of India were also suggested, to bring within their fold, a minimum of 250 rural household accounts at every branch every year.
The Indira Awas Yojana was brought under the ambit of Public Sector Banks. Loan limit up to Rs 20,000 per unit at 4% interest was fixed under differential rate of interest (DRI) scheme. The Finance Minister also advised the Indian PSU Banks to open 288 branches in minority districts of India. Further, he also asked the Indian banking industry to embrace total financial inclusion. In another landmark decision, the Finance Minister, Mr. P. Chidambaram said that the Ex-banking servicemen in India would be offered employment opportunities in the banking sector.
Another major announcement was that, the much talked-about ‘Banking Cash Transaction Tax (BCTT)’ would be withdrawn from the financial year 2009-2010.
Experts believe the impact of the decisions and policies taken during the Union Budget of India 2008-2009 on the Indian Banking sector would be mixed. It is expected that the Indian PSU banks will face pressure on their net interest margins due to the waiving-off of agricultural loans. Further, the cumulative cost that will be incurred for opening up of new Regional Rural Banks in India may substantially increase the operating cost for the banks. The inclusion of the Indira Awas Yojana houses under the differential rate of interest scheme and at 4% interest will increase the proportion of sub-PLR lending for the concerned banks.
The major Public Sector Banks of India like the State Bank of India, Bank of Baroda, Punjab National Bank may see their net interest margins shrinking till the subsidy for waiver of agricultural loans is being completely released. Moreover, experts are skeptical about the long term benefit of such agricultural loan waiver as offered through the Union Budget of India 2008-2009.
The Development Credit Bank, a private sector lender has launched its credit card business called ‘DCB Advantage Card’ on 4th March 2008. The Bank has tied up with ICICI Bank in order to extract the best skills out of it as well as to utilize its experience for a successful execution of the task. The credit card business launched by the Development Credit Bank is available to all its potential customers all across India. The credit card holders of DCB will enjoy a wide
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