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

News-CRUX-10     1st January 2024        
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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.

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