Over the years, the Indian banking system has evolved to attain excellence and transparency in providing financial services to customers. It holds the financial conditions of various social classes of the country.
Public and private banks in India are coming with more flexibility in terms of their offerings and schemes. But private banks have come in a better position to be people’s best choices. Private banks in India are better in terms of operational efficiency and innovation level. They are profit-driven, due to which they provide a better service level.
Private banks were recognized in the 1990s after the LPG policy came into existence. Amongst the oldest and most famous private banks, Axis Bank and IndusInd Bank are regarded as the oldest private banks in India started in 1993-94 when the government allowed them to launch such banks.
Learn more about – Government Banks In India – Explore The List Of Public Sector Banks In India
Private banks in India are exceptional service providers as they work in a more converse and competitive environment. They offer more products and services than nationalized banks. They ensure the privacy and security of the customers.
Their main functions & activities include:
- They provide services of opening deposit accounts with high-interest rates on savings accounts and other benefits.
- These banks suggest and decide on different investment strategies for clients to meet their end results. In other words, they also offer investment planning services.
- They give suggestions and recommendations of finance options for real estate.
- They provide loans and credit at cheap rates.
- Various banks in India assist the clients regarding tax compliance and the future trends in taxation.
- Similar to tax trends, banks aid customers with future uncertainties and risks including market conditions, interest rate changes, liquidity risks, etc.
- They offer cash flow management of different clients by managing bills and receipts.
Everything to know about private banks
At present, there are 21 active & swiftly operating banks in India. With dwindling and developing financial circumstances, a user should consider the best banking options in different private banks in India.
The following section will give an overview of all the private banks in India.
1. HDFC Bank
The HDFC bank is the most famous bank in India due to its large banking network. It is undoubtedly the largest bank in the country in terms of the assets it holds. With an amazing market capitalization, it has a decent reach of more than 5500 bank branches all over the country.
The bank was started in 1994, with its headquarters based in Mumbai, Maharashtra. It is one of the topmost employment providers in India. Over the years, the bank had various mergers. The first one came in 2000 with the Times Bank.
Furthermore, in 2008, it acquired and took over the Centurion Bank of Punjab, marking one of the largest acquisitions in the banking or financial area. Later in 2021, it also acquired shares in the TATA Group business entity named ‘FERBINE’. In the same year, it collaborated with Paytm to offer many credit cards.
2. Axis Bank
Axis Bank is a great financial services bank in India founded on December 3, 1993. It was initially known as UTI Bank, but in 2007, it modified its name to Axis Bank. Its headquarters are located in the country’s financial capital (Mumbai).
Axis Bank mainly serves retail enterprises, SMEs, medium and large-scale businesses. It has decent connectivity with over 4530 branches. It also has different subsidiaries in India and abroad like Axis Capital Ltd., Axis Finance Ltd., Axis Securities Ltd., etc. In 2017, the bank acquired a digital company named ‘Freecharge’.
3. ICICI Bank
ICICI Bank has a vast growing banking system with more than 5270 bank branches and numerous subsidiaries. Known as the 2nd largest bank in India, it was founded in January 1955. It was initially called Industrial Credit and Investment Corporation of India Bank, later shortened to the acronym ICICI Bank.
It is one of the finest services providers rendering services such as investment banking, life, non-life insurance, venture capital, and asset management. Its main headquarters are located in Vadodara, Gujarat.
ICICI Bank has been involved in several acquisitions. It acquired different banks, including ITC Classic Finance, Bank of Madura, Bank of Rajasthan, Sangli Bank, Grindlays Bank branches in Darjeeling and Shimla, Anagram Finance, Investitsionno-Kreditny Bank, and SCICI.
4. Kotak Mahindra Bank
According to current statistics, Kotak Mahindra Bank is the third-largest bank in India (in assets), with a banking system of 1600 branches present in over 740 locations. It was founded in 1985 by the prominent bank Uday Kotak.
It has several subsidiaries, including Kotak Mahindra Capital, Kotak Mahindra Life Insurance, Kotak Capital Company, and Kotak Mahindra General Insurance, among many others.
It regularly participates in CSR activities besides providing financial services. It is headquartered in Mumbai. In the past 10 years, Kotak Mahindra acquired two entities – ING Vysya Bank in 2015 and Ferbine in 2021.
5. YES Bank
Yes Bank Limited is a significant bank specializing in providing aid to corporate and retail customers. It was founded in 2004 by two bankers Ashok Kapur and Rana Kapoor. It recently hit the news when the bank was about to collapse. The RBI took control of the same and handled the system.
The registered office of the bank is situated in Mumbai, Maharashtra. Recent developments of Yes Bank include an initiative of digital wallet named ‘Yes Pay’ in 2017. It collaborated with BHIM and UPI to launch this service. Moreover, they also got fundings worth Rs. 1000 crores from the government for their food processing projects.
This bank in India is one of the most customer-focused and service-driven banks that cater to the employment needs of more than 18000 Indians.
6. Federal Bank
Headquartered in Aluva, Kochi, Federal Bank consists of a banking network of over 1272 branches in the nation. It has its representative offices in foreign countries. It was founded in 1931 with the sole goal of becoming the most reputed bank in India.
It provides a wide spectrum of services to its customers ranging from depository services to NRI banking and many more schemes. It holds a massive customer base of more than 10 million users. It was named Travancore Federal Bank when it was established, but later on, it changed.
It also has a branch in the country’s first IFSC in Ahmedabad (GIFT city).
7. Bandhan Bank
Founded in August 2015, Bandhan Bank is the subsidiary of the renowned company Bandhan Financial Holdings Limited (BFHL). It is in the initial process of expanding its network with the current number of branches at 501. It was started by Chandra Shekhar Ghosh, who is currently serving as the CEO of the bank as well.
In 2019, it announced the acquisition of a Housing Development Finance Corporation Ltd. named ‘GRUH’. It initially started the bank with the aim of serving the underprivileged social classes of Indian society. Currently, its headquarters are located in Kolkata, West Bengal.
8. City Union Bank
Formerly known as Kumbakonam Bank Limited, this Indian bank was established in 1904 by three prominent figures – R. Santhanam Iyer, S. Krishna Iyer, and V. Krishnaswami Iyengar.
The City Union Bank offers a wide variety of finance options and digital banking facilities. These facilities include – chatbot facility, social media banking transfer funds through Facebook, passbook printing kiosk, cheque clearing kiosk, CUB QR facility, etc. Headquartered in Tamil Nadu, the bank did not have expansion plans for30 years of its foundation.
7. IDBI Bank
Established in 1964, this bank consists of a network range of 1892 bank branches and 3683 ATMs. It was started to assist industries and agriculture with long-term credit facilities. The bank had one acquisition in 2006. It acquired Union Western Bank that raised its number of branches.
8. CSB Bank
One of the most historical banks in India, Catholic Syrian Bank was founded way back in 1920. The bank is not a famous one with a base of mere 450 bank branches. The number of employees in the bank is over 3200 that provides services in mainly 4 key sectors – corporate banking, retail banking, SME banking, and treasury operations.
9. DCB Bank
Spread across 18 Indian states and 2 Union territories, DCB Bank Limited is a well-equipped bank with upgraded infrastructure. They inculcate technological advancements and provide quality financial services in areas like SMEs, retail sectors, cooperative banks, etc.
It was founded in the 1930s, and since then, it has been controlled and operated by industry professionals. It believes in innovation, keeping in mind the needs of the current and future generations.
10. Dhanlaxmi Bank
Dhanlaxmi Bank is one of the most trustworthy and dignified banks in India. It was set up in 1927 with its registered office in Thrissur, Kerala. It is expanded across the country with 245 branches. It had previously collaborated with various service providers & companies like AGS Infotech and Bajaj Allianz Life Insurance.
11. IDFC First Bank
With its extravagant product offerings, IDFC First Bank is gaining more customers daily. Founded in 2015, it was primarily focused on the development of infrastructure for private sector companies. After three years, they announced a merger with Capital First. They have around 260 branches spread across the country.
12. IndusInd Bank
Inspired by the Indus Valley CIvilization, this bank is commonly used as the top bank in India. The headquarters of the IndusInd Bank is situated in the financial capital, Mumbai.
Founded by S. P. Hinduja in 1994, the bank has a rich banking network spread across 760 regions of India. The bank was initiated primarily to focus on the needs of NRI residents, but later on, they expanded the spectrum of their products, aiming at different classes.
13. RBL Bank
The RBL Bank is a lesser-known bank yet marks one of the banks established before independence. It was founded in 1943 as Ratnakar bank. Based in Mumbai, the bank was started by Babgonda Bhujgonda Patil from Sangli & Gangappa Siddappa Chougule. The bank name was changed after a long gap in 2014 to RBL Bank. It is expanded in PAN India with more than 403 branches.
14. Karnataka Bank
Karnataka Bank is one of the private banks in India that values its customers at a supreme level. They consider the different types of customers in different manners, making them feel special. The bank provides an excellent array of products suited for traders, marketers, and personal family use.
Karnataka Bank was incorporated in 1924 by B. R. Vysaray Achar in a small town in Karnataka. It consists of 857 bank branches and as many as 952 ATMs. It offers great services like insurance policies, forex services, digital banking, etc.
15. Nainital Bank
With 162 bank branches, Nainital serves a small customer base with extensive focus. It was established in 1922 in Nainital to meet the financial needs of the region. It was started by Govind Ballabh Pant. However, in 1975, the bank’s 99% shares were acquired by the Bank of Baroda. Apart from this, the bank is also linked with HDFC Bank, National Insurance Company Ltd., etc.
16. South Indian Bank
The bank was formed in 1929 with the rise of the Swadeshi movement. Headquartered in Kerala, South Indian Bank has a decent national presence with 924 bank branches. It is known to be the first Kerala bank to execute the core banking system. They have a good market reputation because of their transparency in operations.
17. J&K Bank
Founded in 1938, this bank is a key financial service provider in the state. The Jammu and Kashmir Bank was established by Maharaja Hari Singh. The bank is recently known for its massive contributions to the mission of Digital India.
It is expanded in different parts of the country with 964 bank branches. The bank was involved in collaborations and partnerships with several banks and companies like PNB Bank, Mahindra & Mahindra, etc.
18. Karur Vysya Bank
Karur Vysya Bank is one of the leading banks in India, which was founded in 1916. The bank was established by M. A. Venkatarama Chettiar and Athi Krishna Chettiar to facilitate financial conditions and business requirements in Karur, Tamil Nadu. The bank has a great network, with 779 bank branches spread nationwide. They believe in providing services combining the aspects of traditionality and technology.
19. Tamilnad Mercantile Bank
Tamilnad Mercantile Bank is a renowned bank in Thoothukudi. Set up in 1921, the bank serves the Indian population with its 509 bank branches and 1135 ATMs. It was started as ‘Nadar Bank’ and today provides services such as internet banking, video conferencing feature, mobile banking, tab banking, etc.
Major Differences Between Private Banks & Government Banks in India
The following points highlight the key differences between two types of banks in India, i.e., nationalized banks and private banks.
- The major distinction between them is ‘who controls them’. On one hand, the government is the chief controlling body of nationalized banks, and private individuals are the main owners of banks.
- The formation of public banks is laid on the basis of passage of an act in the Parliament whereas private banks are required to register themselves under the Indian Companies Act.
- FDI stake in public banks is 20% of the foreign investment whereas it is much higher in private banks at 74%.
- Private banks use more sophisticated technology than public banks. The latter are slower in adapting to new changes than the banks.
- The scope and reach of public banks is broader than that of the banks. But, the former does not provide attractive customer service options.
- The major aim of banks is profit whereas the public banks try to serve marginalized societies of the country majorly.
- Public banks have a broader customer base due to its exceptional reach and trustworthy services.
- The promotion to high levels in banks is purely on the basis of performance. But, it is not the same in the case of public banks where seniority is given more preference for promotion.
With the banks mentioned above, the current banking system offers several options to choose from. To get the expert advice and suggestions on several finance & banking options, visit MSMEx.in
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