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Indian Economy After Independence - Public Sector and Private sector banks | 11th Economics : Chapter 8 : Indian Economy Before and After Independence

Chapter: 11th Economics : Chapter 8 : Indian Economy Before and After Independence

Public Sector and Private sector banks

Public sector bank is a bank in which the government holds a major portion of the shares.

Public Sector and Private sector banks

 

Public Sector Banks

 

Public sector bank is a bank in which the government holds a major portion of the shares. Say for example, SBI is public sector bank, the government holding in this bank is 58.60%. Similarly PNB is a public sector bank, the government holds a stake of 58.87%. Usually, in public sector banks, government holdings are more than 50 percent. Public sector banks are classified into two categories: 1. Nationalised Banks 2. State Bank and its Associates.

 

In case of nationalized banks, the government controls and regulates the functioning of the banking entity.Some examples are SBI, PNB, BOB,  OBC, Allahabad Bank etc. 

 

However, the government keeps reducing the stake in PSU banks as and when they sell shares. So, to that extent they can also become minority shareholders in these banks. This is in accordance with the privatization policy.


 

Private Sector Banks

 

In these banks, most of the equity is owned by private bodies, corporations, institutions or individuals rather than government. These banks are managed and controlled by private promoters.

 

Of the total banking industry in India, public sector banks constitute 72.9% share while the rest is covered by private players. In terms of the number of banks, there are 27 public sector banks and 22 private sector banks.As part of its differentiated banking regime, RBI, the apex banking body, has given license to Payments Bank and Small Finance Banks (SFBs). This is an attempt to boost the government’s Financial Inclusion drive. (But, there may be other problems).

 

As a result, Airtel Payments Bank and Paytm Payments Bank Limited have come up.

 

How far these banks would help the poor people is not known.

 


 

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