In most countries, the central bank regulates and controls banks. The Reserve Bank of India is India’s central bank, and it is in charge of overseeing the whole financial system, including banks.
Have you ever wondered how a bank operates behind the scenes? When you deposit money in a bank, it is added to a bigger pool of funds that includes deposits from other account holders. This money is then utilized to make loans to persons who need them for personal, commercial, residential, automobile, or other reasons. Nonetheless, the bank is required by law to maintain a reserve of roughly 3% of total deposits, and it must be able to return your money if you remove it from your account. And the money will always be there. Let’s look at the many sorts of banks, government vs. private banks, and the top private banks in India.
What is Bank?
- What is Bank?
- Types of Banks in India
- Government Banks in India vs Private Banks in India – The Difference
- Top Private Banks in India List
- 1) HDFC Bank
- 2) ICICI Bank
- 3) Axis Bank
- 4) Kotak Mahindra Bank
- 5) IndusInd Bank
- 6) Yes Bank
- 7) Federal Bank
- 8) IDFC First Bank
- 9) South Indian Bank
- 10) Bandhan Bank
- 11) City Union Bank
- 12) CSB Bank
- 13) Dhanlaxmi Bank
- 14) DCB Bank
- 15) IDBI Bank
- 16) J&K Bank
- 17) Karnataka Bank
- 18) Karur Vysya Bank
- 19) RBL Bank
- 20) Nainital Bank
- 21) Tamilnad Mercantile Bank
- Top 10 Private Banks in India – A Comparison
- Final Thoughts
- Frequently Asked Questions
A bank, by definition, is a financial entity that is licensed by the government to handle money and provide loans. It can accept deposits into accounts and invest the money with the approval of the account holder because it handles money. Aside from that, banks offer currency swaps, deposit safes for storing real estate, and other wealth management services.
Types of Banks in India
The Indian banking sector is not only one of the most advanced, but also one of the most diverse. It all started with the Bank of Calcutta at the end of the 18th century. The State Bank of India is the new name for the same bank. At the time of writing, India has 34 banks, 12 of which are public sector banks (wholly owned by the government) and the rest are private banks.
Let’s take a closer look at each form of bank classification.
1) Public Banks in India
These banks are classified as commercial banks. Because of their history and high penetration rates, they are the most popular in the country. They hold nearly three-quarters of the country’s entire banking reserve. SBI is the country’s largest bank at the moment. The bank is among the world’s top 50 financial institutions. Because the central bank or the government owns the bulk of these banks, they are classified as public sector banks.
2) Private Banks in India
They are categorized as commercial banks. Private companies are the largest shareholders in India’s private banks. However, they must adhere to all of the Reserve Bank of India’s rules and regulations.
3) Foreign Banks
As the name implies, they are banks based outside of India that operate as private banks in India. HSBC, Standard Chartered, Deutsche Bank, and other well-known international banks have operations in India. These banks must abide by the rules and regulations of both their home country and the Reserve Bank of India.
4) Cooperative Banks
They are organized through the acts of state governments and are intended to promote financial freedom to the lower-income portions of society. Cooperative banks aim to develop their people and promote social welfare by giving concessional loans. Cooperative banks are organized into three levels: state, district, and village.
5) Small Finance Banks
Small farmers, micro-industries, and other unorganized elements of society benefit from this sort of bank. It empowers people by providing loans and other financial support. The Reserve Bank of India regulates these institutions as well. There are ten small finance banks in the country at the time of writing.
6) Regional Rural Banks
These are banks that offer rural and agricultural businesses tax breaks and low-interest loans. The Regional Rural Bank Act of 1975 established these types of banks. They’re basically a partnership between the federal government, state governments, and commercial banks. According to the rules, a Regional Rural Bank cannot open branches in more than three districts that are connected to one another.
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Government Banks in India vs Private Banks in India – The Difference
Both bank divisions are extremely popular with the Indian public. Yet, there are some major distinctions between the two that may influence your decision to open your next bank account with one over the other. Here’s the distinction.
|Sr. No.||Government Banks in India||Private Banks in India|
|1||More than half of the share of the bank is owned by the Government.||Majority of the share of the bank is held by private firms or individuals.|
|2||Since government banks have been in the banking scene for a long time, their customer base is much larger||The customer base of private banks in India is slowly increasing due to the efficiency of their services, but currently, is still less than that of government banks|
|3||The interest rates on the deposits by the public is a little bit higher in public sector banks||Depending on the bank, the interest rates may be a little lower for your deposits. However, there can be exceptions|
|4||The banking fee of public sector or government banks are lesser||Private banks in India offer better and quicker service, but that comes with higher fees.|
|5||The financial performance of Government banks is not higher compared to private banks in India. This financial performance is measured in terms of non-performing assets||The non-performing assets of private banks in India are lower than public sector banks. Again, there may be exceptions with some banks. The private banks in India tend to post more profits or lesser losses due to this.|
Top Private Banks in India List
They have a continually growing consumer base, mainly in India’s cities. Here’s everything you need to know about private banks in India in 2021.
1) HDFC Bank
It is one of India’s largest private banks and one of the first to be allowed by the Reserve Bank of India to operate as a private bank. HDFC was founded in 1994 and is now one of India’s major functioning banks in terms of assets.
With over 5000 branches and 15,000 ATMs across the country, the banking network is also one of the largest. Personal, retail, and corporate banking, demat, trading accounts, wealth management, insurance, and other financial services and products are all available. Via its net banking and m-banking services, HDFC Bank provides a secure and reliable banking experience.
2) ICICI Bank
Another of India’s leading and fastest-growing private banks. As of September 30, total assets exceeded INR 14 trillion.
ICICI Bank offers a variety of financial services and products to individuals, small businesses, corporations, and retail customers. Customers can buy and sell stocks, mutual funds, and other securities through their trading and Demat platform. The bank has over 5000 branches in practically every state and over 15,000 ATMs across the country.
They also have one of the most advanced and secure mobile banking and online banking systems among all private banks in India.
3) Axis Bank
It is one of India’s most popular private banks, and it is the country’s third-largest at the time of writing (June 2021). Axis Bank was founded in 1984 and has its headquarters in Mumbai. Axis Bank offers a wide range of financial products and services, from savings accounts to small and large corporations. Across the country, the bank has more than 4000 branches, 12,000 ATMs, and more than 10 corporate offices/branches.
4) Kotak Mahindra Bank
It was an NBFC before receiving its banking license from the RBI in 2003. It was the first non-bank financial institution to be turned into a bank. The bank has been constantly profitable, with profits exceeding 5000 crores in 2019. It offers high-quality modern banking to its consumers around the country through Kotak 811. Kotak Mahindra Bank offers personal banking, corporate banking, home loans, personal loans, and investment opportunities.
Kotak Mahindra has about 2000 ATMs and 1000 branches spread across the country.
5) IndusInd Bank
The bank was founded with the intention of serving NRIs. As a result, the bank has a significant presence in all of the country’s major cities. It also has international offices in London, Dubai, and Abu Dhabi. From debit cards to loans, IndusInd Bank has practically all of the conventional banking goods and services. The bank has about 1500 branches and around 2,400 ATMs across India. Mumbai is the headquarters of IndusInd Bank.
6) Yes Bank
It is one of India’s fastest-growing private banks, thanks to its customer-centric approach. Yes Bank offers a diverse range of products and services to both individuals and businesses. Yes Bank now has over 1000 locations around the country and is expanding.
7) Federal Bank
It is one of India’s first private banks to use technology to improve its banking operations. The bank was founded in 1931 and has its headquarters in Aluva, Kerala.
The bank has steadily expanded its footprint across the country since then. It has about 1200 branches and more than 1500 ATMs in the majority of the country’s states. The bank has a representative office in Dubai and Abu Dhabi that serves the Malayali community there.
8) IDFC First Bank
It began as IDFC Bank, but after merging with Erstwhile Capital First in 2018, it became IDFC First. It has a headquarters in Mumbai and serves over 70 lakh consumers across the country, with rural users accounting for little under half. With only about 250 branches and 140 ATMs across India, the company has a limited presence.
9) South Indian Bank
South Indian Bank, situated in Kerala, was one of the first banks to deploy the Core Banking System. It has about 800 branches, mostly in the south, and about 1,300 ATMs throughout the country. It offers virtually all traditional banking goods and services.
10) Bandhan Bank
It is one of India’s newest private banks, having opened its doors in 2015. The headquarters of Bandhan Bank are in Kolkata, West Bengal. Bandhan Bank offers financial products and services tailored to the needs of urban, semi-urban, and rural customers. It is one of the few banks that has successfully bound all three sorts of consumers. The bank’s mission is to focus on people who, for whatever reason, do not have access to the official banking system.
11) City Union Bank
Its headquarters are in Kumbakonam, Tamil Nadu, where it was founded as Kumbakonam Bank. The bank first opened its doors in 1904, and its first branch outside of Tamil Nadu was opened in 1980. With over 700 locations and 1700 ATMs across the country, the bank’s customer base is continually growing.
12) CSB Bank
Originally known as Catholic Syrian Bank, it is one of India’s oldest private banks, serving the people of Kerala. The bank’s headquarters are in Thrissur, Kerala. The bank has a significant presence in Maharashtra and South India. It has roughly 400 branches and 300 ATMs spread over 18 states and two UTs at the time of writing. Retail banking, SME banking, corporate banking, and treasury are the CSB Bank’s main operations.
13) Dhanlaxmi Bank
Dhanlaxmi Bank, one of India’s oldest private banks, was established in 1927. Since then, the bank has been a customer favorite, and its headquarters are in Thrissur, Kerala. The bank has been designated as a scheduled commercial bank by the RBI. The bank is well-known for its Dhan Bank App, which was released in 2015 and allows clients to do banking transactions on the go. Dhanlaxmi Bank has more than 500 customer service touchpoints across the country.
14) DCB Bank
It is a scheduled commercial bank that was created in 1930 in Mumbai, Maharashtra, as one of India’s new-generation private banks. DCB Bank offers retail, SME, micro-SME, public sector, agro, NBFC, and other commercial services and products. The DCB Bank has more than 6 lakh customers and is growing.
DCB Bank has around 300 high-functioning branches in practically all of India’s states, including the south, north, east, and west.
15) IDBI Bank
The Industrial Development Bank of India, abbreviated as IDBI, is one of India’s most popular private banks. Personal banking, loans, investments, and other services are available to all types of customers. The bank is headquartered in Mumbai, but it has nearly 2,000 branches and approximately 3000 ATMs across the country.
16) J&K Bank
It is one of the most important banks in Jammu and Kashmir’s UT, but it also has a presence throughout the country. The bank, which has its headquarters in Srinagar, began operations in 1938.
One of the bank’s goals is to expand lending in J&K while also pursuing particular lending possibilities elsewhere in the country. Yet, with over 1000 branches and 1300 ATMs around the country, the bank has a substantial presence. The bank’s customers are largely individuals and small businesses.
17) Karnataka Bank
Karnataka Bank, one of India’s top private banks, has a substantial presence even outside of the state. The Karnataka Bank was founded in 1924 and has its headquarters in Mangaluru, Karnataka.
Karnataka Bank has a customer base of over ten million people and over 800 branches across the country in practically every state. The bank has succeeded to harness the power of technology to provide its customers with high-quality and powerful banking. As a result, it has been able to draw customers from outside of Karnataka.
18) Karur Vysya Bank
It has been in operation for 100 years and is one of India’s leading private banks. Karur, Tamil Nadu, is the bank’s headquarters. Retail banking, corporate banking, wholesale banking, and treasury are the bank’s primary segments. MSME and NRIs are two of the bank’s main target audiences. It has over 1,700 ATMs and around 800 branches across India.
19) RBL Bank
Ratnakar Bank, which was founded in 1943, has evolved into RBL Bank. In Maharashtra, notably in the Kolhapur belt, it has a history of offering high-quality banking services to SME and business merchants. Customers can discover all traditional banking goods and services, from personal banking to loans. It has approximately 300 branches and ATMs throughout the country.
20) Nainital Bank
It began operations in 1922 to serve the people of Nainital as a subsidiary of Bank of Baroda. The majority of its branches, which number around 150, are located in neighboring states.
21) Tamilnad Mercantile Bank
It all began with the Nadar Bank, which is situated in Thoothukudi, Tamil Nadu. Almost all of the bank’s facilities use current technology and banking. It has over 11,000 ATMs and around 500 branches across the country. The majority of the locations are in non-metropolitan, semi-rural, and rural areas.
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Top 10 Private Banks in India – A Comparison
|Sr.No||Bank Name||Number of ATMs||Number of Branches||Facts / Motive||Establishment||Headquarter|
|1||HDFC Bank||13160||5103||Among the first to receive RBI approval to set up a private sector bank||1994||Mumbai|
|2||ICICI Bank||14987||4874||Initiative of World Bank, formed to develop a financial institution for businesses in India||1994||Mumbai|
|3||Axis Bank||11801||4094||One of the first private banks to begin operations after Indian Government’s acceptance of private banks||1993||Mumbai|
|4||Kotak Mahindra Bank||2352||1500||Started to address financial needs of NRI||2003||Mumbai|
|5||IndusInd Bank||2605||1938||One of the new generation private sector banks||1994||Pune|
|6||Yes Bank||1450||1120||Started to operate as a ‘full service commercial bank’||2004||Mumbai|
|7||Federal Bank||1606||1251||History dates back to before independence, started as Travancore Federal Bank Limited||1931||Aluva|
|8||IDFC First Bank||199||279||Set up to finance and support infrastructure in the private sector||2015||Mumbai|
|9||South Indian Bank||1400||870||One of the first banks in Kerala to become a scheduled bank||1929||Thrissur|
|10||Bandhan Bank||481||999||Started to provide financial inclusion and enable women empowerment. Initially started in rural Bengal||2001||Kolkata|
Also Read: How to Make Use of an ATM
This is everything you need to know about India’s private banks in 2021. If you want to open an account, seek for a bank that has a large client base, is easily accessible, and offers fees and service charges that meet your needs.
Frequently Asked Questions
Which is better for me – private or government bank?
It is dependent on your requirements and the availability of banks in the area where you are staying. Banks operate in two sectors, each with advantages and disadvantages.
How to open an account in one of the private banks in India?
The majority of institutions allow you to open a personal bank account online. Simply upload the necessary paperwork to open your bank account. You can also go to your local bank branch.
What is the difference between savings and current accounts?
Individuals have a savings account, whereas businesses have a current account.
Are net banking and m-banking compulsory?
Most banks offer them free of charge. Nonetheless, having them is advantageous because you can do practically all financial transactions online without having to visit a branch.