PUBLIC SECTOR BANKS (Syllabus: GS Paper 3 – Economy)

Context: Finance Minister of India asked state-owned banks to come out with innovative and attractive schemes to mobilise deposits from the public as this will enable them to extend more credit.

Public Sector Banks

• Ownership Structure: Public Sector Banks (PSBs) are characterized by government ownership exceeding 50%.
• Government Regulation: Due to government ownership, financial guidelines for PSBs are regulated by the government, instilling a sense of security among depositors.
• Customer Base: Public sector banks typically boast a large customer base, owing to the perceived security of deposits.
• Exemplary Case: The State Bank of India (SBI) stands as the largest public sector bank in India, with the Indian government holding more than 63% of its shares.

Private Sector

• Ownership Dynamics: Private sector banks are defined by significant ownership by private individuals or companies.
• Independent Financial Strategy: Despite adhering to the central bank's guidelines, private sector banks have the autonomy to formulate their independent financial strategies for customers.