Tuesday, April 12, 2016

Public Sector and Private Sector Banks

Public sector banks and Private sector banks
Public Sector Banks: Public Sector Banks are those banks in which majority stake (i.e., more than 50% of the shares) is held by the government of the country. The words such as “The” or “Ltd” will not be found in their names because the ownership of these banks are with the government and the liability is unlimited in nature. Some examples of public sector banks in India include Andhra Bank, Canara Bank, Union Bank of India, Allahabad Bank, Punjab National Bank, Corporation Bank, Indian Bank and so on.
Private Sector Banks: Private Sector Banks are those banks which are owned by group of private shareholders. They elect board of directors which manages the affairs of the banks. Some examples of private banks in India include The Lakshmi Vilas Bank Ltd., The Karur Vysya Bank Ltd., The City Union Bank Ltd., HDFC Bank, Axis Bank and son.
Difference between Public sectors banks and Private sectors banks


Basis
Public Sectors Banks
Private Sectors Banks
1. Ownership
Public sector banks are owned, managed and controlled by the government.
On the other hand, private sector banks are owned, managed and controlled by the private individuals or general citizens.
2. Indian and foreign bank
Public sector banks are Indian banks and they do not include foreign banks.
Private sector banks may be Indian banks as well as foreign banks.
3. Objective
Public sectors banks aims at serving the society besides earning profit.
Private sector banks are mainly driven by profit motive.
4. Shareholding
In public sector banks more that 50% of capital or full capital is supplied by the Government.
But, in private sector banks, all total capital is supplied by the shareholders of the bank.
5. Employees
In public sector banks required employees are appointed by the Government.
But in case of private sectors banks required employees are appointed by the owner of the banking company.
6. Sharing of profit
The profits earned by the public sector banks go to the Government.
The profits earned by the private sector banks goes to the shareholders of the bank.

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