Private-sector banks in India

The private-sector banks in India represent part of the indian banking sector that is made up of both private and public sector banks. The "private-sector banks" are banks where greater parts of stake or equity are held by the private shareholders and not by government.

Banking in India has been dominated by public sector banks since the 1969 when all major banks were nationalised by the Indian government. However since liberalisation in government banking policy in 1990s, old and new private sector banks have re-emerged. They have grown faster and bigger over the two decades since liberalisation using the latest technology, providing contemporary innovations and monetary tools and techniques.^[1]

The private sector banks are split into two groups by financial regulators in India, old and new. The old private sector banks existed prior to the nationalisation in 1969 and kept their independence because they were either too small or specialist to be included in nationalisation. The new private sector banks are those that have gained their banking license since the liberalisation in the 1990s.

History and evolution

Private-sector banks have been functioning in India since the very beginning of the banking system. Initially, during 1921, the private banks like bank of Bengal, bank of Bombay and bank of Madras were in service, which all together formed Imperial Bank of India.

Reserve Bank of India(RBI) came in picture in 1935 and became the centre of every other bank taking away all the responsibilities and functions of Imperial bank. Between 1969 and 1980 there was rapid increase in the number of branches of the private banks. In April 1980, they accounted for nearly 17.5 percent of bank branches in India. In 1980, after 6 more banks were nationalised, about 10 percent of the bank branches were those of private-sector banks.^[2] The share of the private bank branches stayed nearly same between 1980 and 2000.^[3]

Then from the early 1990s, RBI's liberalisation policy came in picture and with this the government gave licences to a few private banks, which came to be known as new private-sector banks.

There are two categories of the private-sector banks: "old" and "new".

The old private-sector banks have been operating since a long time and may be referred to those banks, which are in operation from before 1991 and all those banks that have commenced their business after 1991 are called as new private-sector banks.^[4]

Housing Development Finance Corporation Limited was the first private bank in India to receive license from RBI as a part of the RBI's liberalization policy of the banking sector, to set up a bank in the private-sector banks in India.^[5]

Old private-sector banks

The banks, which were not nationalized at the time of bank nationalization that took place during 1969 and 1980 are known to be the old private-sector banks. These were not nationalized, because of their small size and regional focus.^[6] Most of the old private-sector banks are closely held by certain communities their operations are mostly restricted to the areas in and around their place of origin. Their Board of directors mainly consist of locally prominent personalities from trade and business circles. One of the positive points of these banks is that, they lean heavily on service and technology and as such, they are likely to attract more business in days to come with the restructuring of the industry round the corner.

List of the old private-sector banks in India

New private-sector banks

The banks, which came in operation after 1991, with the introduction of economic reforms and financial sector reforms are called "new private-sector banks". Banking regulation act was then amended in 1993, which permitted the entry of new private-sector banks in the Indian banking s sector. However, there were certain criteria set for the establishment of the new private-sector banks, some of those criteria being:#The bank should have a minimum net worth of Rs. 200 crores.

1. The promoters holding should be a minimum of 25% of the paid-up capital.
2. Within 3 years of the starting of the operations, the bank should offer shares to publicand their net worth must increased to 300 crores.^[7]

List of the new private-sector banks in India

Name	Year established
1. Axis Bank (earlier UTI Bank)	1994
2. Bank of Punjab (actually an old generation private bank since it was not founded under post-1993 new bank licensing regime)	1989
3. Centurion Bank Ltd. (Merged Bank of Punjab in late 2005 to become Centurion Bank of Punjab, acquired by HDFC Bank Ltd. in 2008)	1994
4. Development Credit Bank (Converted from Co-operative Bank, now DCB Bank Ltd.)	1995
5. HDFC Bank	1994
6. ICICI Bank (previously ICICI and then both merged;total merger SCICI+ICICI+ICICI Bank Ltd}	1996
7. IndusInd Bank	1994
8. Kotak Mahindra Bank	2003
9. Yes Bank	2005
10. Times Bank (Merged with HDFC Bank Ltd.)	Unknown
11. Global Trust Bank,India (Merged with Oriental Bank of Commerce)	Unknown
12. UP Agro Bank Corporation Limited	2011 References ↑ "Introduction to private sector banks". Retrieved 10-09-2011.  Check date values in: |accessdate= (help) ↑ "Private banks Nationalisation".  ↑ D. Muraleedharan. Modern banking- theory and practice. PHI.  ↑ Dr. Mukund mahajan. Indian banking system. Nirali prakashan. pp. 2.1–2.2.  ↑ "HDFC Bank". Retrieved 11-09-2011.  Check date values in: |accessdate= (help) ↑ "Nationalization of Banks".  ↑ "Criteria set for the new private sector banks".  v t e Banking in India Reserve bank Reserve Bank of India Public sector banks Allahabad Bank Andhra Bank Bank of Baroda Bank of India Bank of Maharashtra Bharatiya Mahila Bank Canara Bank Central Bank of India Corporation Bank Dena Bank IDBI Bank Indian Bank Indian Overseas Bank Oriental Bank of Commerce Punjab & Sind Bank Punjab National Bank State Bank of Bikaner & Jaipur State Bank of Hyderabad State Bank of India State Bank of Mysore State Bank of Patiala State Bank of Travancore Syndicate Bank UCO Bank Union Bank of India United Bank of India Vijaya Bank Private sector banks Axis Bank Catholic Syrian Bank City Union Bank Development Credit Bank Dhanlaxmi Bank Federal Bank HDFC Bank ICICI Bank IndusInd Bank ING Vysya Bank Jammu & Kashmir Bank Karnataka Bank Karur Vysya Bank Kotak Mahindra Bank Lakshmi Vilas Bank Nainital Bank South Indian Bank Tamilnad Mercantile Bank Limited Yes Bank Cooperative banks Cosmos Bank Saraswat Bank Shamrao Vithal Co-op. Bank Pune Peoples Cooperative Bank Anyonya Co-operative Bank Mahila SEWA Cooperative Bank Mahesh Co-operative Bank Foreign banks ABN AMRO Abu Dhabi Commercial Bank Antwerp Diamond Bank Australia and New Zealand Banking Group Bank Internasional Indonesia Bank of America Bank of Bahrain and Kuwait Bank of Ceylon The Bank of Tokyo-Mitsubishi UFJ Barclays Citibank India Credit Suisse Deutsche Bank HSBC The Royal Bank of Scotland Scotiabank Standard Chartered Regional Rural Banks Andhra Pragathi Grameena Bank Kerala Gramin Bank Bangiya Gramin Vikash Bank Gramin Bank of Aryavart North Malabar Gramin Bank Paschim Banga Gramin Bank Sarva UP Gramin Bank South Malabar Gramin Bank Uttar Bihar Gramin Bank Vananchal Gramin Bank List of regional rural banks in Uttar Pradesh Interbank networks BANCS Cashnet CashTree Cirrus IMPS MITR NFS PLUS RuPay Defunct banks Alliance Bank of Simla Arbuthnot & Co Bank of Bombay Bank of Calcutta Bank of Chettinad Bank of Madras Bank of Madura Bank of Rajasthan Bengal Central Bank Bharat Overseas Bank Centurion Bank of Punjab Chartered Bank of India, Australia and China Commercial Bank of India Dass Bank Grindlays Bank Imperial Bank of India Lord Krishna Bank Mercantile Bank of India, London and China Nath Bank Oriental Bank Corporation Palai Central Bank State Bank of Indore State Bank of Saurashtra Related topics Banking Codes and Standards Board of India ATM usage fees in India De-Materialisation (DEMAT) Foreign Exchange (FOREX) Indian Financial System Code (IFSC) List of banks in India National Electronic Fund Transfer (NEFT) National Payments Corporation of India Real Time Gross Settlement (RTGS) Structured Financial Messaging System (SFMS) Prepaid Payment Instruments in India