Private Sector Banks

Banks whose ownership vested in the private sector are called Private Sector Banks. They fall under three categories

  1. Old Private Banks
  2. New Private Banks
  3. Foreign Banks

Since 1991 , subsequent to economic reforms ,Reserve Banks has been giving acceptance to the establishment of new banks in the private sector . Even Non Resident Indians (NRIs) and foreign companies can buy shares of private sector banks . Now private banks  provide high level of modern customer services. As a consequence ,  level of customer services has improved appreciably . At present, out of 30 private banks ,22 are old private banks and 8 new private banks.

Foreign banks are those banks whose head quarters are situated in foreign countries. In the past, these banks used to confine activities mainly to foreign exchange and so were called Foreign Exchange Banks. Presently , they are called Foreign Banks. They now perform all sorts of banking functions. There are 40 foreign banks in the countries.

  • Presently, there are 288 scheduled commercial banks in India.
  • Of these, 20 are Public Sector Banks, 196 Regional Rural Banks,33 Foreign Banks and 30 Private Sector banks.
  • There is  1 non-scheduled banks in india.
  • In 2010 there were 85636 branches of all the  commercial banks in india , against only 8262 in 1969 , of which 32627 are rural branches.

Foreign Banks

Foreign banks have their registered and head offices in a foreign country but operate their branches in india. The RBI permits these banks to operate either through branches; or through wholly – owned subsidiaries. The primary activity of most foreign banks in India has been in the corporate segment. However, some of the  large foreign banks have also made consumer  financing  a significant part of their portfolios. These banks offer products such as automobile finance, home loans , credit cards, household consumer finance etc. Foreign  Banks in India are required to adhere to all banking regulations , including priority sector  lending  norms as applicable to domestic banks. It may be noted that two important erstwhile development financial institutions , viz. Industrial Development Bank of India (IDBI) and Industrial Credit and Investments Corporation of India (ICICI) converted themselves into commercial banks after the new bank licensing policy was announced in july 1993. In addition, a foreign  institution  could also invest up to 74% in domestic private bank, in which up to 49% can be via portfolio investment.  


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