Public Sector Banks are such financial entities in our country in which the majority stake is with the central government, which should be more than 50%. The number of Public Sector Banks is presently 27 throughout the country, where 21 are Nationalized banks and 6 are of State Bank group, including its 5 associates. IDBI and Bharatiya Mahila Bank got nationalized in the years 2011 and 2014 respectively taking the number higher. These banks are responsible for the overall banking needs of the people around the country. The motif behind nationalizing the banks were to break the ownership and control of banks by the influential and business families in the country in order to make it free from the shackles of private hands. The decision of the government also prevented the concentration of wealth and economic power into certain hands. It also became an important entity as it mobilized the savings of the people from every corner of the country, making it possible to connect the entire nation into one string. Since the year 2002-03, due to the economic growth and other financial factors globally, the public sector banks have shown phenomenal business and a growing profit has been registered since then by these banks, which is continuing even today.
Functions of Public Sector Banks
The public banking sector has travelled a long path since its inception in the country. With the advancement of technology, core banking has been introduced in the country which has spread to every nook and corner presently. It has made lot of things quite easier for both customers and employees in the bank. The basic function of any public sector or private sector bank is to mobilize the resources and capitals garnered through various deposits and schemes for varied period and lend the same at higher rates of interest to its own customers in order to garner more profit from the money. The bank also provides facilities like lockers, remittance, draft creation, cheque collection and transfer, bank guarantee credit to its esteemed customers. It also offers insurance and mutual fund plans to its customers along with providing loan schemes and savings of their money.
Public Sector Banks as Developmental Entities
It also acts as the body that carries the objective of the central government by providing facilities to the people connected with the bank of the various government schemes, loans and pensions. Recently the linking of lakhs of people with bank accounts through the ‘Jan Dhan Yojna’ programme is one such example of such objectives of the government, which needs to be fulfilled by the banks over requirement. It is also responsible for the collection of taxes and carrying various developmental schemes for the underdeveloped. It is also responsible for providing banking facility to the rural and sub-urban areas in order to connect more and more people with their individual bank accounts and increase business of the banks. It is the reason behind the increasing number of rural branches of such nationalized banks over the country. The motif of public sector banks doesn’t always remains profit making, but they also see through the developmental aspect of the region they are operating in.