Private Bank and National is Ed Bank Doc 2

8/9/2019 Private Bank and National is Ed Bank Doc 2

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Private Bank andPrivate Bank and

Nationalised BankNationalised Bank

Prepared by:Ankit.H.BhattPrepared by:Ankit.H.Bhatt

Roll No:01Roll No:01

S.Y.BMSS.Y.BMSSubject:Banking and InsuranceSubject:Banking and Insurance

Submit to :Reshma MissSubmit to :Reshma Miss


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DefinitionDefinition

Private banksPrivate banks areare banksbanks that are notthat are not incorporatedincorporated..A private bank is owned by either an individual or aA private bank is owned by either an individual or ageneral partner(s) with limited partner(s). In anygeneral partner(s) with limited partner(s). In any

such case, the creditors can look to both thesuch case, the creditors can look to both the

"entirety of the bank's assets" as well as the entirety"entirety of the bank's assets" as well as the entiretyof the soleof the sole--proprietor's/generalproprietor's/general--partners' assets.partners' assets.

Nationalised bankNationalised bank is the government bank that is theis the government bank that is the

repository of all deposits payable to the government . It is arepository of all deposits payable to the government . It is abank that has been taken over by the governmentbank that has been taken over by the government -- in otherin otherwords, it is no longer privately owned.words, it is no longer privately owned.


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History of Private Banks in IndiaHistory of Private Banks in India

Private bankPrivate bank

The new private banks emerged on theThe new private banks emerged on theIndian financial topography inIndian financial topography in1994.narsimha committee envisaged a large1994.narsimha committee envisaged a largerole for the private sector banks in 1991.role for the private sector banks in 1991.

The RBI issued the fresh banking licensesThe RBI issued the fresh banking licenses

to the private sector banksto the private sector banksThe new private sector banks have grownThe new private sector banks have grown

through the mergers and acquisitions.through the mergers and acquisitions.


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History of nationalised bank in IndiaHistory of nationalised bank in India

Commercial banks were operating like anyCommercial banks were operating like any

other business and they were mainlyother business and they were mainly

concerned with the maximisation of theirconcerned with the maximisation of theirprivate gains. They were lacking in socialprivate gains. They were lacking in social

purpose.purpose.

Therefore, On July 19th ,1969 fourteenTherefore, On July 19th ,1969 fourteen

commercial banks with deposit worth Rs. 50commercial banks with deposit worth Rs. 50

corer or more were nationalised by thecorer or more were nationalised by the

government. This was hailed as a historicgovernment. This was hailed as a historic

event by the people.event by the people.


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Objectives of nationalised bankObjectives of nationalised bank

Provision of adequate credit for agricultureProvision of adequate credit for agriculture

and small scale industry and exportand small scale industry and export

Encouragement of anew class ofEncouragement of anew class ofentrepreneurs.entrepreneurs.

The provision of adequate training as well asThe provision of adequate training as well as

terms of service for the bank staff.terms of service for the bank staff.


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Objectives of private banksObjectives of private banks

Profit maximisationProfit maximisation

customer satisfactioncustomer satisfaction

Enabling Conditions for businessEnabling Conditions for business


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Which is better nationalised bank orWhich is better nationalised bank or

private bankprivate bank

Nationalised banks are one grade safer than theNationalised banks are one grade safer than theprivate banks .because if nationalised bank goesprivate banks .because if nationalised bank goesbankrupt than the money of depositors will bebankrupt than the money of depositors will be

paid from the budget of government of Indiapaid from the budget of government of India But it doesnt mean that you should not doBut it doesnt mean that you should not do

banking with the private sector banks .privatebanking with the private sector banks .private

sector banks sometimes can give you moresector banks sometimes can give you moreservices like internet banking, at door serviceservices like internet banking, at door serviceetcetc


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ContCont

Any banks health weather it is a private or aAny banks health weather it is a private or anationalised is depending on certain ratiosnationalised is depending on certain ratios

The health indicators of any bank are as belowThe health indicators of any bank are as below

NPANPA--Non Performing asset ratioNon Performing asset ratio-- the lower thethe lower theNPA, the betterNPA, the better

CARCAR-- Capital adequacy ratioCapital adequacy ratio the minimumthe minimum

CAR is 9%,the higher the betterCAR is 9%,the higher the better NIMNIM--Net interest marginNet interest margin the higher the NIM,the higher the NIM,

the betterthe better


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ContCont

Cost to income ratioCost to income ratio The lower the betterThe lower the better

CD RatioCD Ratio-- credit to deposit ratiocredit to deposit ratio-- higher CDhigher CD

ratio reflect more credit being given out ,lowerratio reflect more credit being given out ,lowerthe betterthe better


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Other main points to be rememberedOther main points to be remembered

If a private sector bank goes bankrupt stocksIf a private sector bank goes bankrupt stocks

,government bonds, government securities,government bonds, government securities,mutual funds units , and any other demat,mutual funds units , and any other demat

holding is absolutely safe and secureholding is absolutely safe and secure

Because according to the law, all the dematBecause according to the law, all the demat

holding are in custody of SEBI and in theholding are in custody of SEBI and in the

custody of bank weather it is nationalised orcustody of bank weather it is nationalised orprivateprivate


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ContCont

According to laws of the government of india,According to laws of the government of india,

the banks guarantee up to Rs.1 lakh in case athe banks guarantee up to Rs.1 lakh in case acrisis affecting the bank .crisis affecting the bank .

So deposits up to Rs. 1 lakh in any private bankSo deposits up to Rs. 1 lakh in any private bankis also safe in case of bankruptcy of privateis also safe in case of bankruptcy of private

bank . But any amount in excess of Rs.1 lakhbank . But any amount in excess of Rs.1 lakh

will be not refund to you and lost in case of ifwill be not refund to you and lost in case of ifprivate bank goes bankruptprivate bank goes bankrupt


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Differences between private bankDifferences between private bank

and nationalised bankand nationalised bank Nationalised bankNationalised bank

Public Sector bank meansPublic Sector bank meansany Government Sectorany Government Sector

Bank/Institute that goesBank/Institute that goespublic... that the main mottopublic... that the main mottoof social welfare other thanof social welfare other thanMaximising Profit remains.Maximising Profit remains.


Where as Private SectorWhere as Private SectorBanks are those Banks whereBanks are those Banks where

the management is controlledthe management is controlledby Private individualsby Private individuals.Maximising profit is the.Maximising profit is thebasic motto.basic motto.


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Differences between private bankDifferences between private bank

and nationalised bankand nationalised bank Nationalised bankNationalised bank

Nationalised banks followNationalised banks followthe RBI Interest rules strictlythe RBI Interest rules strictly


private banks couldprivate banks could

have some changeshave some changesbut only after thebut only after the

approval from theapproval from the

RBI!RBI!


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Thank YouThank You

Documents

Private Bank and National is Ed Bank Doc 2