India with more than 12 crores of population has a lot of potential to improve in the banking sector. The Indian banking sector has 27 public banks, 26 private banks, 46 foreign-backed banks. The share of public sector banks is more than 70 percent of the banking assets. It is estimated that the credit growth of India’s banking sector will be at 7-8 % in the 2017-18 financial year. Today the major challenges of Indian banking sector are Band Loans, Cyber threats and Frauds in banks (Internal & External)
Public Sector Banks
In public sector banks, government agencies hold a majority of shares, holding is more than 50% or more shares. Public sector banks are further divided into two subcategories
- Nationalized /Scheduled Banks
- State controlled Bank and its subsidiaries
Public sector banks are covering 70% of market share in India as they established more than 100 years ago. Another reason for having strong market capital is all government organizations use PSB for their routine transactions purpose.
At nearly Rs10 lakh crore, India’s pile of bad loans is bigger than the gross domestic products of at least 137 countries. But so far, the RBI’s attempts to reduce Non-Performing Assets (NPAs) in the banking sector have yielded little result.
The share of gross NPAs in India could inch up to 10.2% by March 2018, from 9.6% in March 2017, according to the FSR. In September 2016, gross NPAs were at 9.2%. Source - Reserve Bank of India
Top Public Sector Banks
- State Bank of India
- Panjab National Bank
- Allahabad Bank
Private Sector Banks
In private sector banks, shares are distributed between organizations, individuals, joint ventures and government also in some banks. Unlike public sector banks, private sector banks operate complete different approach. The history of private banks started only a few decades ago in India, they are trying to increase their customer base and we need to admit that they are very much success with their plans. Private Banks are providing better opportunities to its customer base and charging a very high fee when compared to public banks.
Top Private Sector Banks
- ICICI Bank
- HDFC Bank
- Axis Bank
Challenges
Lack of Training in Public Sector Banks: Most of the public banks in India not adopting proper steps to compete with private banks. Lack of training to employees in latest technologies to assist customers. All employees are promoted as per seniority instead of skills.
More Interest Rate in Private Sector Banks: It is considered that getting a loan in private banks is much easier than government banks. Private Banks provide loans because they can charge high interest rates to customers as they have no choice. People are paying EMI’s more than their salaries in emerging cities in India.
Bad Loans: While providing loans both Public and Private sector banks are following necessary steps to check if an individual or an organisation will repay the loan or not. But banks always get hold of small fish and leave big fish. In many examples, banks are giving Loan waiver to big companies. In fact, that is tax payer’s money.
Banks are a means to an end. With the invention of crypto, decentralization, and, and automation it won't be long for some system is developed to where you're credit score is what effects the interest you pay and instead of banks loaning money it will be small groups of thousands of investors who are taking the risk.
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I'm new in steemit. afraid of long comments. the post you share is very good thank you for sharing. success always ya friend!
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Detailed information shared...
Btw bad loans are big problem of indian banking system. Lalit modi, anil ambani reliance communications are few examples of these bad loans...
Thnks again for such a detailed article.
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Good info, I thought private sector has already dominated public sector, Good example of big fish for bad loans is Vijay Malya not Ambani’s .. they aren’t running anywhere..
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Axis Bank and ICICI Bank are government promoted private banks and therefore it seems that the reach of the government has always been better than the private players, also the interest rate is some thing that should change as per inflation and not just because the government is pushing the Banks to change them or depress them frequently. The NPA's are a major problem as the previous government forced the Banks to lend money to such industrialist who had bad credit rating. This government too has not done much to recover these loans.
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State-owned banks offer stability and access to a wide range of services, but often with long queues and less flexible terms. Private banks, such as heritage bank nw customer service , on the other hand, delight with innovation, fast service and personalized offers. If efficiency and new technologies are important to you, private banks may be better. But if reliability and state support are more important, the public sector is also a good option.
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