Distinguish between Public Sector Banks & Private Sector Banks.
1. Presentation on
Public Sector & Private Sector Bank.
Presented To:
Prof. Prasad Joshi
By:
Somnath Pagar Abhishek Mahale
MET IOM, Nashik.
2. What is Bank?
Bank is a lawful organization, which accepts
deposits that can be withdrawn on demand. It also
lends money to individuals and business houses that
need it.
MET IOM, Nashik.
4. Commercial Bank
Definition-
Commercial Banks are banking institutions that accept
deposits and grant short-term, medium and long term loans and
advances to their customers.
Public sector banks –
Majority stake is held by the Government of India or
Reserve Bank of India.
Ex – SBI, Bank of Baroda, Dena Bank, etc.
Private sector banks –
Majority of share capital of the bank is held by private
individuals, Registered as companies with limited liability.
Ex – ICICI Bank, HDFC Bank, YES Bank etc.
MET IOM, Nashik.
5. Market Shares of Indian Financial Sectors
63%
19%
8%
6%
4%
Banks
Insurance Companies
Non-Banking Financial
Institutions
Mutual Funds
Provident And Pension
Funds
*Source: Banking Str MET IOM, Nashik. ucture Report by- D. Subbarao.
6. Market Shares of Indian Banking Sectors
67.2
18.7
6.5 2.7 3.4 1.5
80
70
60
50
40
30
20
10
0
Public Sector Bank Private Sector bank Foreign Banks Regional and Rural
Banks
Rural and Urban Co-operative
Banks
Local Area Banks
*Source: Banking Str MET IOM, Nashik. ucture Report by- D. Subbarao.
7. Public & Private Sector Banking Structure
Public Sector Banks (26)
State Bank of India
Associates Banks (6)
Nationalized (19)
Private Sector Banks (20+2)
Old Private Sector Banks (13)
New Private Sector Banks (7+2)
New Banking Licenses issued by RBI in 2014
Infrastructure Development Finance Company(IDFC)
Bandhan Micro-finance
MET IOM, Nashik.
8. Licensing Policy
The RBI issues bank licences under section 22 of the Banking
Regulation Act, 1949. The licence enables the bank to do banking and other
financial services activities listed in the Banking Regulation Act.
For Public Sector & Private Sector Banks-
1) Eligible Promoters
2) Foreign shareholding in the bank – Not exceed 49 %.
3) Capital Requirement
Minimum capital requirement Rs 1 Billion(1991)
Minimum capital requirement Rs 3 Billion(2001)
Minimum capital requirement Rs 5 Billion(2013)
MET IOM, Nashik.
9. Legal Framework for Banking
At present, commercial banks are governed by the following six statutes-
The Banking Regulation Act, 1949
Banking Companies (Acquisition & Transfer of Undertaking) Act, 1970/1980
State Bank of India Act 1955
State Bank of India (Subsidiary Banks) Act, 1959
Industrial Development Bank (Transfer of Undertaking and Repeal) Act, 2003 and
The Companies Act, 2013 ( Old-1956).
MET IOM, Nashik.
10. Presence of Indian Public & Private banks abroad
Indian banks are allowed to expand overseas under a policy framework of
Reserve Bank of India and Government of India. In February 2005, RBI had
come out with a press release stating that the applications from Indian banks for
setting up representative offices / branches / subsidiary’s outside India.
State Bank of India accounted for the largest share (29.71%) in the total assets of
the overseas branches of Indian banks as on March 31, 2013.
Bank of Baroda with 20.53%
Bank of India with 16.08% and
ICICI Bank with 15.47%.
Spread across
17 countries.
MET IOM, Nashik.
11. Comparative Analysis:
Public vs. Private Sector Banks
Return on Assets and Return on Equity
Bank Sector
Return on Assets Return on Equity
2012-13 2013-14* 2012-13 2013-14*
Public Sector Banks
SBI 0.78 0.89 13.24 15.25
Nationalised Banks* 0.74 0.88 12.34 14.65
SBI Group 0.88 0.94 15.29 14.95
Private Sector banks
Old Pvt. Sector Banks 1.26 1.42 16.22 17.05
New Pvt. Sector Banks 1.74 1.86 16.51 17.94
Source: RBI Published data
Notes: 1. Return on Assets = Net profit/Average total assets.
2. Return on Equity = Net profit/Average total equity.
3. *The data for 2014 is provisional.
4. * Nationalised banks include IDBI Bank Ltd.
MET IOM, Nashik.
12. Priority Sector Advances
(Amount in billion)
Notes: 1. Figures in brackets are percentages to ANBC or CE of
OBE, whichever is higher, in the respective groups.
2. The data for 2014 is provisional.
Source: RBI Annual Report 2014.
MET IOM, Nashik.
13. Ranking of Indian banks in the global league
Name of Indian Bank Ranking
SBI 38
ICICI Bank 99
HDFC Bank 126
Axis bank 175
PNB 189
BOB(Baroda) 206
*Source: http://brandirectory.com/league_tables/table/banking-500-2013
MET IOM, Nashik.
