Public Sector Banks is the major player in the Indian Banking Sector with 92% of countries banking segment is under state control. In India, the public sector banks are divided into three categories – State Bank Group, Natioanlised Banks, Regional Rural Banks.
- State Bank Group – This group consist of State Bank of India and Five Sate Bank of India Associate banks. The RBI owns the majority of the shares of the SBI and some of it’s associates. State Bank of India is the first public sector bank in india. Imperial bank of india acquired by the government to form the State Bank of India in 1955. In 1959 the State Bank of India Subsidiary act was passed and by the virtue of this act seven princly states bank were made the subsidiary of State Bank of India. Now State Bank of India has only five subsidiary as two of it subsidiary bank merged with the parent concern.
- Nationalised Bank – In 1969 the government of India effected the nationalization of of 14 scheduled commercial banks in order to expand the branch network followed by six more bank in 1980. Total 20 commercial banks were nationalized in two bank nationalization process but in 1993 New Bank of India was merged with Punjab National Bank.
- Regional Rural Banks – In 1975, the state bank group and nationalized banks were required to sponsor and set up Regional Rural Banks in partnership with individual states to provide low cost financing and credit facilities to the rural masses. On the recommendation of the Banking Commission (1972), on October 2 1975 five Regional Rural Bank were established. Their main function is to provide financial help to small and marginal farmers and rural workers to help the rural economy to grow.