Private banks are businesses that are owned by individuals and aim to make money. Private Banking provides expert and open handling to various types of clients. Also, the State has rules and laws to control it. Private banking is a special service for rich people who are clients of a bank. Private banking involves personalized financial and investment services and products provided by a personal banker who focuses specifically on the needs of the individual.
IndusInd Bank started in 1994 and was the first private bank in India. Previously, the government had full ownership and control over all banks in India. In 1993, the Reserve Bank of India gave instructions to create new private banks in India. Currently there are 21 Private banks in India, they are:
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| 2. Bandhan Bank |
| 3. CSB Bank |
| 4. City Union |
| 5. DCB Bank |
| 6. Dhanlaxmi Bank |
| 7. Federal Bank |
| 8. HDFC Bank |
| 9. ICICI Bank |
| 10. IDBI Bank |
| 11. IDFC FIRST Bank |
| 12. IndusInd Bank |
| 13. J&K Bank |
| 14. Karnataka Bank |
| 15. Karur Vysya Bank |
| 16. Kotak Mahindra Bank |
| 17. Nainital Bank |
| 18. RBL Bank |
| 19. South Indian Bank |
| 20. Tamilnad Mercantile Bank |
| 21. YES Bank |
Private and Public banks are constantly compared on grounds advanced systems, more effective and convenient customer support, service delivery, infrastructure, etc. Before we dive into the difference lets recognise the functions of a private bank. The major role of the private banks in the Indian economy are as follows:
- Retail banking refers to the services offered by private banks to individuals. These services include things like savings accounts, checking accounts, fixed deposits, and recurring deposits.
- Corporate banking is a service provided by private banks that helps businesses with their financial needs. This can include providing loans for day-to-day operations, assisting with international trade transactions, and managing business finances.
- Private banks team up with insurance companies to provide life insurance, health insurance, and other types of insurance to customers.
- Private banks give people personal loans and credit cards that have low interest rates and special programs for earning rewards.
- Private banks offer special services to help rich people manage their money and investments. They give advice on where to invest and take care of their investment portfolios.
- Corporate banking is a service provided by private banks that helps businesses with their financial needs. This can include providing loans for day-to-day operations, assisting with international trade transactions, and managing business finances.
- Investment banking is a service offered by private banks. It includes activities like underwriting, mergers, and acquisitions, and giving advice on capital markets.
- Private banks provide special services for Indians who do not live in the country. These services include accounts to save money, fixed deposits, and the ability to send money abroad.
- Trust and estate planning is a service provided by private banks to help customers with organizing their assets and wealth for the future. This includes creating trusts, managing family wealth, and planning for the transfer of assets to future generations.
- Private banks team up with insurance companies to provide life insurance, health insurance, and other types of insurance to customers.
- Banks have modern digital banking platforms, like mobile apps and online banking, for easy and safe transactions.
- Foreign exchange services are provided by private banks for people traveling, conducting business, or making investments in foreign countries.
- Trade finance means that private banks can help with the financial aspects of international trade. This includes offering services like letters of credit, bank guarantees, and export-import financing. These services make it easier for companies to buy and sell goods across borders.
- Some banks have special departments that invest in new and promising businesses and startups.
- Even the new Private banks have adopted the customer centric approach quicker than public banks, i.e Bandhan Bank customer care number is equally efficiently focus on individual customer need, like its private bank contemporaries. You can even use Bandhan Bank mobile banking for all such customer assistance or bank services
Now to discuss the difference in the two sectors of the commercial banks of India, we notice the following major disparities in the structure of the financial institutions.
- The Indian government owns the largest share in the public banks (more than 50%) in India. In private sector banks, private players own the banks.
- Public sector banks have many customers because they are owned by the government. However, private banks are much better at providing good service to customers compared to public banks. Customers of government-owned banks continue to express unhappiness with the lengthy waiting times and slow processing methods used by these banks.
- Public sector banks also face problems with their online services. These services are frequently in maintenance, which is mostly because of the accounting issues. More customers are choosing to use private banks rather than public banks.
- Private companies’ banks are introducing different deals for businesses and attracting more customers by opening free salary accounts for private-sector workers.
- Private banks are becoming more popular because they offer quicker service, strong systems, and the newest technology. Public sector banks are trying to get better but they are not able to keep up with the improvements happening in the private sector.
However, the public banks are adopting measures to catch-up with their competing sector and has come a long way. Few inclusions made by the public sectors banks in India are as follows:
- Government banks are leaning towards technology for optimising their processes like customer care all way up to data analysis for risk predictions.
- Public banks are paying more attention to making customer service better and more tailored to fit each customer’s specific needs and wants. So just like federal bank customer care number, SBI customer care will be equally effective, efficient, and interactive.
- Some banks are working with fintech companies to use new ideas and improve their ability to do things digitally.
- Public banks are trying to bring their services to people living in rural and underserved areas. This is so that more people have access to banking services and can be included in the financial system.
- They are bringing out new and creative banking products to meet the changing needs of customers and provide competitive options.
Private banks that are not government-owned are making use of their improved technology to offer fast services. They are doing this to increase their market share and to become more popular with consumers, especially those living in cities. Out of the top 5 banks in India, only one is a government bank (SBI), while the other four are private banks. This shows that more people are using private banks instead of public banks.