Public and Private Sector Banks Difference

Public and Private Sector Banks Difference

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Before delving into the differences between the public and private sector banks in India, it will be worthwhile to conceptualise both, in brief.

Public Sector Banks - Institutions that the federal or state governments own a majority stake in are referred to as public sector banks. Banks classified as private sector are those whose stock is mostly owned by private businesses or individuals. Parliamentary acts are used to establish public sector banks. India currently has 34 nationalised banks, including 12 state-owned organisations and 22 private financial institutions. Banks in the public sector are well known for having a bigger client base and a more structured management system. Employees are also less likely to be concerned with attaining goals and giving their best effort on a team, and the work environment is less competitive as compared to the private banks. Providing employees with the right training is often given more importance since it helps them stay current with their knowledge and abilities, which ultimately improves performance. In public sector banks, job security is substantially higher than in private sector banks, and for some people, this may be the most important factor in developing a long-term career.

Private Sector Banks - Banks in the private sector are well known for their advanced technology and fierce competitiveness. As a result, private banking positions are more competitive, and people who want to develop in their careers must set and meet high standards of performance. Although the income and risk-to-reward ratio may be higher, there may not be as much job security as there is at publicly held institutions.

The distinctions between banks in the public and private sectors are as follows:

• Banks in the public sector are those whose stock is primarily owned by the government. On the other hand, private sector banks are those where the largest percentage of equity is held by individuals and organisations.

• There are currently 27 public sector banks in India, as opposed to 22 private sector banks and 4 local private banks.

• Private sector banks only account for 19.7% of the total market share held by public sector banks in the Indian banking system. Public sector banks have been around for some time now, whereas the private sector banks have been there for only a few decades. As a result, the public sector banks have a larger customer base than the private ones.

• The interest rate policy in the public sector is open and accessible. Compared to private sector banks, public sector banks provide their customers somewhat greater interest rates on deposits.

• Seniority is a starting point for promotions in public sector banks. Private sector banks, on the other hand, reward employees based on merit. The potential for development of public sector banks is much slower when compared to private sector banks.In a public sector bank, job security is always present, but in a private sector bank, performance is everything, so job security is only present when performance is good.

The pension is an additional benefit of working for a public sector bank, in addition to stable employment. Private sector banks, on the other hand, do not provide pension schemes to their employees. However, the bank does offer extra retirement perks like gratuities and the like.