1. PSU banks
  2. History
  3. Process of PSB
  4. Advantages of Public sector banks
  5. Disadvantages of Public sector banks
  6. Mergers

PSU banks

Banks area unit the foremost necessary monetary establishments within the world. Due to the banking industry, all monetary transactions are attainable while not a lot of problems. Individuals will save their cash in banks, take loans, and transfer funds simply through bank accounts. However, all banks don’t seem to be constant. In line with their stakeholders, banks are often classified into 2 sorts. These area unit Public sector banks and personal sector banks. Even if each sort of bank provides similar services to the general public, however there are some major variations that mediate them. Let’s take a better look and see what’s public sector banks and the way will it work.


The emergence of public sector banks

The Central Government entered the banking business with the nationalization of the Imperial Bank of Indian in 1955. A stake was taken by the banking concern of India and therefore the new bank was named depository financial institution of India. The seven different state banks became subsidiaries of the new bank in 1959 once the depository financial institution of Asian nation (Subsidiary Banks) Act, 1959 lapsed the Union government.

The next major government intervention in banking passed on nineteen Gregorian calendar month 1969 once the Indira government nationalized an extra fourteen major banks. The overall deposits within the banks nationalized in 1969 amounted to fifty crores. This move magnified the presence of nationalised banks in India, with eighty-four of the overall branches returning beneath government management.

Before the economic relief

The share of the banking sector controlled by the general public banks continued to grow through the Nineteen Eighties, and by 1991 public sector banks accounted for ninetieth of the banking sector. A year later, in March 1992, the combined total of branches controlled by public sector banks was 60,646 across Indian, and deposits accounted for ₹1,10,000 crore. The bulk of those banks was profitable, with only 1 out of the twenty-one public sector banks news a loss.

Process of PSB

Public sector banks area unit those banks wherever the government holds over five hundredth possession. With these banks, the government regulates the monetary tips. As a result of government possession, most depositors believe that their cash is additionally secured by publically sector banks. As a result, most public sector banks have an oversized client base.

Relative to different banks, the staff of public sector banks relishes additional job security. They additionally relish different perks like pension once retirement. For this reason, several of those workers are reluctant to offer their best service. As a result, the speed of loan defaulters is way higher publically sector banks. The promotion within the public sector banks relies on seniority, that de-motivates several workers.

Most public sector banks provide less made-to-order service to customers. As a result, client grievance thanks to poor service is incredibly common in publically sector banks. However, public sector banks provide additional charges per unit to the client. Customers can even get completely different loans with little charge per unit.

Advantages of Public sector banks

Multiple blessings area unit related to exploitation public sector banks. For this reason, these banks have scores of customers. Here are some blessings customers get from public sector banks.

  • High-interest rate on deposits
  • Low-interest charge on loans
  • workers get full job security
  • These workers additionally get a pension once retirement
  • provide service to an oversized client base
  • provide their service to the agricultural a part of the state
  • provide monetary service through multiple branches

Disadvantages of Public sector banks

Most public banks around the world face multiple challenges. These challenges are creating them less-traveled publically. Here are some disadvantages related to public sector banks.

  • The massive functionary system at the management level
  • Inability to an enormous monetary call quickly
  • Provide less made-to-order service to the shoppers
  • To several complaints against the staff for his or her poor service
  • Most public sector banks are affected by massive corruption scandals
  • High defaulter rate from the client
  • Public sector banks pay numerous cash on a monetary operation


The consolidation of SBI-associated banks started initially by depository financial institution of Asian nation merging its subsidiary depository financial institution of Saurashtra with itself on thirteen August 2008. Henceforth it united the depository financial institution of Indore with itself on August twenty-seven, 2010. The remaining subsidiaries, specifically the depository financial institution of Bikaner & Jaipur, depository financial institution of Hyderabad, depository financial institution of Mysore, depository financial institution of Patiala, and depository financial institution of Travancore, and Bharatiya Mahila Bank were united with the depository financial institution of Indian with the result from one April 2017.

Vijaya Bank and Dena Bank were united into Bank of Baroda in 2018.IDBI Bank was classified as a personal banker with the result from Jan 2019.

On thirty August 2019, government minister Nirmala Sitharaman proclaimed the governments arrange for additional consolidation of public sector banks: Indian Bank’s merger with Allahabad Bank (anchor bank – Indian Bank); geographic area National Bank’s merger with Oriental Bank of Commerce and United Bank (anchor bank – geographic area National Bank); Union Bank of India’s merger with Andhra Bank and Corporation Bank (anchor bank – Union Bank of India); and geographical area Bank’s merger with Syndicate Bank (anchor bank – geographical area Bank). The mergers took result from one April 2020.

About the Author

BankReed Admin

Banking Professional with 16 Years of Experience. The idea to start this Blogging Site is to Create Awareness about the Banking and Financial Services.

View All Articles