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The financial framework plays an important role in monetary development by effectively allocating assets. It contributes to the economy’s advancement by converting your reserve funds into business enterprises. The Reserve Bank of India, India’s apex bank, is in charge of the country’s banks. It is India’s most influential financial oversight expert. Banks in India are organised into distinct groups, each with its distinct working style, target business sectors, advantages, and barriers.
Types of Banks in the Indian Banking System
Private sector banks: In these types of banks, private corporations or people own the bulk of the bank’s shares.
Public sector banks: Banks that are classified as public sector banks have the bulk of their shares held by the government or, more precisely, government agencies such as the Reserve Bank of India.
Foreign bank: In the Indian financial sector, foreign banks operate and function outside of India.
Private Indian Banks
These are the banks where the highest number of shares are maintained and claimed by private individuals. Initially, at the very start of the Indian banking system, we can see the dominance of the public sector bank, but in recent years (after 1990), we can see the dominance of private sector banks because of the emergence of technology used in private sector banks. They have grown more than public sector banks and are still growing because they are taking advantage of the most recent technology, such as new financial equipment and providing modern innovations.
We can group these banks into two divisions according to their year of start:
Old Private Sector banks (these banks started before 1968)
New Private Sector banks (these banks started after the 1990s)
Difference between Private and Public Sector Banks
Some other differences between public and private sector banks:
The client base of public sector banks is significantly larger than that of private banks. When compared to commercial banks, private sector banks have less transparency when it comes to bank policies like interest rate policy. Commonly the major concerns are the high rated services in public sector banks, such as the costs of loans made in public sector banks are higher than those made in private sector banks.
ICICI Bank is an example of a private sector bank. In terms of total resources and market capitalization, it is one of India’s largest private banks. In 1994, as a part of RBI’s improvement of the Indian banking sector, this bank got authorisation for its establishment. We can also consider ICICI among the top 100 most important bank brands in the world.
As far as income is concerned, ICICI Bank is the biggest bank in the private sector in India, while the State Bank of India (SBI) is the biggest public sector bank in the country.
List of Private Indian Banks
As of 2022, there are 21 banks in the Indian banking system that are private Indian banks:
Conclusion
Private Indian bank is a type of bank in which the majority of the shares are handled or owned by some private firms or individuals. They are focused majorly on the benefit of an individual or an organisation other than the government. In this article, we have discussed the private banks in India and how they are different from public sector banks.
