What is the difference between private and public sector banks?
What is private sector banks? These banks are privately owned and controlled by shareholders. There has been an increase in the number of privately-owned banks the 1990 liberation. The increase is possible thanks to the economic liberalization that has made it a lot simpler to get them licensed.
Public Sector Banks
The majority of the stocks of this type of bank is owned by the government. An example of this is the State Bank of India that has more than half of their shares owned by the government. This is generally the staple for public sector banks. Being mostly owned by the government is the main reason these banks are referred to as the official banks. The nationalized banks of India are completely owned by the government.
Difference between private and public sector banks
The main difference between the private and the public sector is in the ownership of the bank’s stocks. The public sector banks are mostly owned by the government and private sector banks are completely owned privately.
More than fifty percent of the stock of a public sector bank is owned by the government. The stocks of the private sector banks are completely owned by their stock holders. Public sector banks offer higher interest rates and a lot of flexibility in the interest rates of loans.
The banks that are in the private sector provides better service and faster turnaround. It is apparent that the private banks charge for the convenience they offer. This is not the case with the public sector banks that tries to offer better services without lesser fees for convenience.
One of the things that try public sector has that a private sector bank does not is the account of most of the government employees. The main reason for this is because the salary of these employees is paid via these accounts, including locker facility and fixed deposit. For private sector banks they target employees in the private sector. Similar to what public sector do for employees in the public sector including accounts for salary and credit card facilities and net banking service.
Private sector banks do provide better performance than those in the public sector. This is the factor that make private sector banks more favorable than the alternative. This is also the factor that makes private bank shares more expensive than the public sector. You can check the internet for a list of the top private sector banks on private sector banks wiki.