Index : 1,483 | 1Yr : +38.81% | 1Mo : +1.97%
Category : Sectoral Trackers
Min Investment : 9,511
The old & niche private banks continued to exist even after Nationalization of banks in 1969. In the wake of India's economic liberalization, the Banking Regulation act was amended in 1993 which allowed the setup of new private banks in India. The story of the banking sector has changed since then. Private players were aggressive, adopted new-age technology, employed qualified personnel, paid their top employees well and had better risk management than their public sector undertakings (PSU) peers. The existing monopoly structure of PSU banks was considered impossible to break but yet, these these enterprising organizations have beat the odds and managed to build the trust factor among the general public in India who once shunned the idea of banking with private players. The growth rates of private banks far surpasses PSU banks even to this date. Many of these banks have managed to avoid lending to the stressed sectors which whose loans have gone bad. This has put them way ahead of their public sector peers. Meanwhile public sector banks are starved of capital and are suffering from heaps of bad debts.
The managements of private banks are swift in taking decisions and more expert in circumventing troublesome situations. Over the years, they have adopted the use of Credit / Debit cards, ATMs, Internet & Mobile banking much more efficiently. Their infrastructure and customer experience is far more superior to PSU banks.
The share of public sector bank credit is down from 90% before liberalization to around 70-75% in 2016. It is estimated that by 2020, the ratio will be closer to 50:50. The opportunity at hand is exponential and it is very likely that private banks will continue to grow as there is wider acceptance and user base of young and brimming population in India.