Differences between Nationalized Banks and Private Banks

A nationalized bank is any commercial bank that is bought and controlled by the government. Private Banks are owned, controlled and managed by an individual or conducted by a partnership. A nationalized bank is formed by taking a bank and its assets into the public ownership. The national government of the country holds the ownership of nationalized banks. In nationalized banks the government controls the bank. This could refer to taking control of the public shares, change in management and new corporate strategy.

Private Banks and nationalized banks differ in the powers that control them, and hence they both differ in many characteristics. These ares-

• Private sector banks are owned by the private lenders while private banks are managed and controlled by private promoters and these promoters are free to operate according to the market forces.

• The interest rates of private banks are costly as compared to public sector banks.

• The role of government is very important in nationalized banks. These banks sustain easily with the aid of the government.

• Many of the commercial banks were nationalized in order to save them from financial debts. These banks provide more security to the customers in comparison to the banks that are private.

• The nationalized banks are often associated with the social welfare and thus the policies of such banks also reflect the same. On the other hand, the private banks focus on profitability but are also known for providing better and quick services.

• The high end customers of private banks are very important for the private banks. However, in case of a major financial loss, the future of a private bank remains unpredictable and the customers remain confuse about the actual scenario.