Thinking of opening a new account but not sure about the type of bank you should be investing in? Don’t worry; this article will go over what are the differences between private or government banks. You will be given a definite answer to whether Indian Bank is right for you or not.
Is Indian Bank Private or Government Controlled?
Indian Bank is a government-owned bank, and it was nationalized on 19 July 1969. It is one of 12 Public State Unit(PSU) banks and is currently the seventh-largest bank in the country.
Why was the Indian Bank Nationalized?
The Indra Gandhi government nationalized Indian Banks with the objective of better servicing the national objectives. It was the pre-1990s liberalization, and socialism was at the forefront. In one of her speeches, she laid down three reasons for these reforms-
- To provide better credit and at a fairer interest rate to the farmers, small entrepreneurs.
- To bring more professionalism to the banking culture and management.
- To avoid the banks getting controlled by a few interest groups and powerful leaders.
Private Vs Government Banks
In the age of privatization and banking becoming more market-driven should you invest in Indian Bank? There are many pros and cons to both sides of the argument.
|Private banks||Government Banks|
|Private banks are more agile to banking needs than government-owned banks.||Government-owned banks are less agile, but they tend to be more stable.|
|They give out high-interest loans but low rates at savings. The customer base for private banks is much smaller, and there is a lack of trust.||They give out low interest on loans but high rates on savings The majority of the base is in Government Banks and has been around for a long time.|
|Profit-Driven Institutions.||Socially conscious Institutions.|
|Much more balanced in terms of Non-Performing Assets(NPA)||Higher issues regarding the NPA’s but are Government Backed.|
Choosing which bank is right for you comes down to your financial status and your age.
If you are in your 20s and want to build wealth quickly, private banks are a right fit. It’s riskier, but the rewards are greater.
If you are a retiree and want to preserve your wealth, an Indian bank is your best option.
In 2021, however, we’ve seen private institutions fail like YES Bank, Punjab, and Maharashtra Cooperative Bank (PMC).
In the current scenario going with Indian Bank is the best option. Private Institutions are too shaky and Govt banks are rock solid.