COMMERCIAL BANKS :

1. Public Sector Banks

The term ‘public sector banks’ by itself connotes a situation where the major/full stake in the banks are held by the Government. Till July,1969, there were only 8 Public Sector Banks (SBI & its 7 associate banks). Then 14 commercial banks were nationalized in 1969, 100% ownership of these banks were held by the Government of India. Subsequently, six more private banks were nationalized in 1980. However, with the changing in time and environment, these banks were allowed to raise capital through IPOs and thereby the shareholding pattern has changed. By default the minimum 51% shares are kept by the Government of India, and the management control of these nationalized banks is only with Central Government. Since all these banks have ownership of Central Government, they can be classified as public sector banks. Apart from the nationalized banks, State Bank of India, and its associate banks, IDBI Bank and Regional Rural Banks are also included in the category of Public Sector banks. The total number of public sector banks as on March, 2014 were 83 as per the following categorization:

(a) State Bank of India and its Associate Banks	-6
(b) Nationalised Banks	-19
(c) Regional Rural Banks	-56
(d) IDBI Bank	-1
(e) Bhartiya Mahila Bank	-1

Further, public sector banks opened 7840 branches in the year 2013-14.

2. Private Sector Banks

The major stakeholders in the private sector banks are individuals and corporates. When banks were nationalized under two tranches (in 1969 and in 1980), all banks were not included. Those non nationalized banks which continue operations even today are classified as Old Generation Private Sector Banks.. like The Jammu & Kashmir Bank Ltd, The Federal Bank, The Laxmi Vilas Bank etc. Further, the banks which were given licences on the account of banking sector reforms are known as new private sector banks. Banks which were given licenses are: UTI bank (presently called Axis Bank) ICICI Bank, HDFC Bank, Kotak Mahindra Bank, Yes Bank etc., These banks are recognized as New Generation Private Sector Banks. Ten banks were licensed on the basis of guidelines issued in January 1993. The guidelines were revised in January 2001 based on the experience gained from the functioning of these banks, and fresh applications were invited.

Of the 10 licences issued in 1993, four banks merged with other lenders over a period of time. Times Bank merged with HDFC Bank, while Global Trust Bank was amalgamated with the state-owned Oriental Bank of Commerce. Centurion Bank took over Bank of Punjab to become Centurion Bank of Punjab, which merged with HDFC Bank in 2008. On account of these new generation private sector banks, a new competitive environment was created in the Indian Banking System. These banks are having competitive advantages over their counterparts (of the existing old private banks, public sector banks) in their IT support system, innovative products, and pricing of their products. Private sector banks have been rapidly increasing their presence, offering a variety of new services to the customers and posing a stiff competition to the group of public sector banks. Total private sector banks as on 31st March 2014 were 22. Besides these, four Local Area Banks are also categorized as private banks.

3. Foreign Banks

The other important segment of the commercial banking is that of foreign banks. Foreign banks have their registered offices outside India, and through their branches they operate in India. Foreign banks are allowed on reciprocal basis. They are allowed to operate through branches or wholly owned subsidiaries. These foreign banks are very active in Treasury (forex) and Trade Finance and Corporate Banking activities. These banks assist their clients in raising External Commercial Borrowings through their branches outside India or foreign correspondents. They are active in loan syndication as well. Foreign banks have to adhere to all local laws as well as guidelines and directives of Indian Regulators such as Reserve Bank of India, Insurance and Regulatory Development Authority, Securities Exchange Board of India. The foreign banks have to comply with the requirements of the Reserve Bank of India in respect to Priority Sector lending, and Capital Adequacy ratio and other norms. Total foreign banks as on 31st January 2014 were 43 having 314 branches. Besides these, 45 foreign banks have their representative offices in India as on 31st January 2014.