Difference Between Public Sector Banks and Private Sector Banks (With Table)

A bank is considered a financial institution that has the license to receive deposits and provide loans in need to its customers. Whenever one goes out to open a savings account or deposit their money or whether to take a loan for various reasons, there are two options available for people.

The two types of major bank sectors are:-

  1. Public Sector
  2. Private Sector 

A public sector bank is one that is controlled by the government of the nation, and the financial profit goes to the financial development of the nation.

Private sector banks are owned by private individuals and business entities with sharing the profits directly to the private shareholders.

Public Sector Banks vs Private Sector Banks

The difference between Public Sector and Private Sector Banks is that the Public Sector Banks are government-owned banks, which are solely controlled and operated by the government sharing the profits to the financial profits to the nation’s development. Whereas, Private sector banks are owned by individuals having their shareholders for the private banks.

Public sector banks are considered to cover the major portion among other types of banks. It also provides pensions to their employees as controlled by a government and tends to contribute to the nation’s financial status. The customers in the public sector are provided with immense security of their belongings, for the government takes the whole responsibility.

Private sector banks are mostly entitled to by private individuals or business associates and possess control over the private sector. It solely focuses on providing many more additional benefits than that of the public sector while charging more for its services. Though the risk factor is slightly higher here due to lower interest rates for loans, customers rely on them.

Comparison Table Between Public Sector Banks and Private Sector Banks

Parameters of ComparisonPublic Sector BanksPrivate Sector Banks
Authorization Public sector banks are controlled and authorized by the Government.Private Sector Banks are owned and authorized by private individuals and entities.
ObjectiveServing the public over making their profits.Mostly driven by making their profits by private banks.
Profit-sharingThe profits owned go to the government.The profits owned go straight to the private bank shareholders.
Interest ratesLower interest rates for savings and higher rates for loans.Higher interest rates for savings and lower interest rates for loans.
Employees Employees are appointed by the Government.Employees are appointed by the private owners of the bank.

What are Public Sector Banks?

Public sector banks being controlled by the Government covers a major part of the banking sector.  

The public sector banks covering a major part of the banking sector contribute mostly to the nation’s financial system. Even though the Public Sector gives higher rates on the loans but banks, as controlled by the Government, provide higher security to their customers. The public sector banks focus on providing service over just making profits for themselves as they hold a reputation.

The customers are assured of keeping their money as it is the liability of the government to cover for the money if somehow any theft or fault occurs to the money. The assurance of safety lures the customers into public sector banks. The public sector banks also prove ideal for employees looking for jobs, as it provides the certainty of job for it is owned by the Government with the assurance of pension also. 

What are Private Sector Banks?

The Private Sector Banks are solely owned by the major public shareholders, which tends to take the profit entirely that the Private banks make. When it comes to the question of security, there are certain cases whenever something happens in these public sector banks; small private banks may even close off on their customers. And the customer may not be assured of their savings.

These Private Sector Banks tend to focus on fulfilling the goals of their customers way rapidly than the government-owned public banks. Private Sector Banks also introduce additional services to attract customers to convince them into making investments. It is worth mentioning the customer service that private sector banks provide, which are highly commendable.

The employees treat the customers with utmost care and make them understand the whole process quite patiently, for they are building up recently and have to work accordingly. The private sector banks quite often come up with new policies in favour of customers to provide better service for the customers.

Main Differences Between Public Sector Banks and Private Sector Banks

  1. The Public sector banks are institutions owned by the Government and have been there for a long time now, creating a trustworthy image among the public. Whereas, Private Sector Banks are institutions recently been into the market and are giving competition being new with comparably much less customer base than that of the Public Sector Banks. 
  2. In terms of accessibility, the Public Sector having such a broader base, are easily accessible to the greater masses, and the branches are found in almost every other place. While the Private Sector banks are yet to get that broader with their customers as starting much later than the former.
  3. The Public Sector Banks contribute the profits earned by the banks to the nation’s finance department. Whereas the profits earned by these Private sector Banks are solely taken by the shareholders and private entities funding the banks.
  4. The Public Sector Banks may have higher interest rates on loans, but they have the trust of the customers being a much broader network and providing service for ages. On the contrary, the Private Sector is still new as compared to the Public Sector while getting their customers.
  5. The employees appointed by the Government for the Public Sector are provided security for their job and stability as well. They even get promoted based on seniority. On the other hand, the employees of a Private Sector Bank do not have any job security for that matter and may get fired for any small mistake on his/her part. And the employees have to go through a constant performance check based on which they get promoted.


Both the Sectors compete with each other with services and experiences of years. 

As for the employees of the banks, being technology advanced Private Sector top the progress keeping themselves up to date with the changes compared to the Public which makes the job of an employee easy providing them with certainty in the job.

Even though both the sectors of Banks are known to provide service to the masses, there are both advantages and disadvantages of both. It solely depends on the customers whether they are focusing on the interest rates or the security, which both sectors are constantly competing for. These two Sectors are in a way constantly growing to have their pros and cons to better themselves with.


  1. https://www.aijssnet.com/journals/Vol_1__No_2_December_2012/3.pdf
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