Transforming The Indian Banking Sector Into Private Banks
Government Bank or Private Bank which one is better in both of these, which one is more trusted by a public. who gives the most employment, who earns the most profit, whose money sinks the most, how banks works from internally, ours is sale, purchase back, profit As you heard these words,Asset Quality, NPA, NIM what is this, what it meant we will learn all these technical terms in native language today and by doing analysis of these terms we will learn, how personal finance of the common man and the business finance of the businessman can be improved, then Jai Janata Janardan
Let's start that private banks used to operate in India from the beginning, but in 1969, the government nationalized the private banks,from that time, government banks or PSU banks came into the limelight Being a government bank means a lot of rules. The government run these banks as per their convience that bind law, their top management cap is chosen by the government, approved by the government and the entry of private banks took place in India in the 90s, almost 30 years after this, but even after starting after 30 years, these private Banks have gone much ahead as compare to government banks on many fronts, let's see in which fronts they are ahead and how they came out and in the coming time the future of private bank is good, or government bank has a good future, if you invest in stock market then which banking sector will be good for the investment.
Will help you out in that decison. talk about the number of employees, first of all, what do you think, which bank will have the maximum number of employees, in private or in government, many people will speak. In government bank because brother is 30 years old, they have more branches, beacuse private banks is more inclined towards technology, so they need less human resources, as in government, brother, need more human resource, plus brother, in government, employee does not fired easily, so they sustain for a longer time, so because of all of these reasons then there should be more people in the PSU bank. if this is our guess than our answer is correct.
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If you give this answer last year,because history of 53 years decipts that private banks has less no of people employed as compare to government banks and, if we talk about today's date, then in today's time, there are more people in private, less in government, there is not much difference, there are total of 7,70,000 employees in government bank and 7,90,000 in private bank and This gap of 20,000 is not big because last year this has happened for the first time in the history of 53 years.
If we compare the last 9 years from March 13 to March 22, then the overall staff of public sector banks has decreased by 13% as compare to the increasement of 240% in private bank, which is almost 2.5 times in ratio. In March 2013, where 73% were government and 27% were private, now these ratios have changed to 51 in private and 49 in government. Sitting in the story discussion, you should know these numbers among the people because the whole world also understands the PSU but the game has turned upside down and you got to 30 00:02:58,440 --> 00:03:03,780 know this knowledge from this channel, if you want to know the exclusive news of what is going on in the market.
The story which is not available anywhere is obtanible on this channel, so subscribe to the channel brother, beacuse when you will sit among 4 people, as you are already intelligent, but you should also sound that, now let's talk about operation excellence, how banks makes the money, now you tell me that we know this and that's easy to answer. We deposit our money in bank and on that money bank gives us interest, Bank also lend that money in market as a loan, bank gives us interest upto 4% to 5% and charges up to 10% to 12% on loan amount, the diffrence between both interest rate is revenue for the bank and by 35 00:03:26,160 --> 00:03:31,440 substracting expenses bank now left with profits, as general public know this, now we turn this into more in technical form, because when you talk and listen about this, you will sound more intelligent.
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Now in technical language, I will make you understand how bank makes the money, but brother, You must be wondering how we will able to make money, tell us, then I will also tell you this secret right now, in today's date, we all know that in non- IT jobs, thier is less money as compare to IT jobs. We all listen that in IT people are getting packages upto somewhere about 25lakh to 50lakhs or crores. but now you will think that we are not from IT background, so now what's we will do. 00:03:58,260 --> 00:04:03,780 so let me introduce you with the amazing company or app name Coding Invaders their main work is to train people who have absolutely no experience of IT,and with that teach about the data analyst course which is completed in 6.5 months and after completing this course guy who has no knowledge of IT at all becomes capable of doing a job in IT field now tell me.
Who will get you job, Coding Invaders itself assure you placement of our job. give you heart, then you will enroll the day, on this day you will be provided with a kind of agreement that brother, your 6.5 After a month, when it is confirmed, then you will also feel that brother is safe and sound and it is not that you are given theoretical knowledge which will not be less in actual, you are given very practical knowledge which is a project based study which is done by the industry. Expert is that you are taught real time data which is going on in the real problem world, which you can learn in actual practical less, that thing is taught, in this you will be given training from scratch level to expert level and the experts of big industry Yes, they will tell you the study of real business and these experts come from such big companies as Amazon Philips, Zee TV, Deloitte, then you also get one to one mental shift.
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If my saree thing attracts you, then the link is given in the description below, click on it, there is a course of data science, you should understand that, enroll and if you want a discount, then aam 27 By typing, you will also get 27% discount from my side, now let's talk about how the bank makes the money in technical language, the raw material of the bank is money, it accept money and lend money and earn money in that process. Where does money comes to the Banks, when you deposit money in current account, saving account, fD. This deposited money act as a raw material for the work. As we know that bank give more interest on FD. Raw money that comes on fD is a bit expensive for the bank, for them money on CASA is the cheapest, Which mean current account and savings account, because no matter how many current accounts are opened, the bank does not have to pay interest on it.
Then the money is cheaper and on saving account they just have to pay somewhere 3% to 4% of interest, so it will also cheaper. wheather public or private bank which one have more CASA ruled the market.So now we will examine based upon CASA, deposit, loan, Asset quality, weather government is good or private is good, if I talk about 2005, then Brother government bank had tremendous dominance 85% of the deposit is with the government ₹ 100 is deposited in the bank isn't it 85 government bank 15 private bank people had more trust on the government bank, at that time government bank hold 57 lakh crores in the saving account and 96 lakh crores were deposits in FD, that much fund was available with the bank which later they utilize to earn huge sums of money to finance so many branches and so many employees, even after serving them, the bank's earns good amount of profit but slowly Slowly rise of private banks has started so if I talk about 2009-10, if someone had to do fD, then 97% people used to say.
We will go to government, 3% people were in private, the figure of 97% decreased and decline to 57% means people's confidence in private banks has gone to increase, and gone back a bit for government bank, the same thing applies to savings till 2009-10, 77% people used to open savings account in government banks, now that figure has gone to 52%. So still PSUs are still on the top, but brother, their lead is slowly decreasing.
It is a matter of 3-4 years and then private banks will take over, so what is the conclusion, government bank is leading in CASA at some point of time but slowly their share is decreasing,still they are still ahead with more than 50%, but its just a matter of time that in somewhere 5 years to 10 years there position is takeover by private banks In case of assest quality and loan.
If we talk about 2009-10 then government banks gave 77% loan whereas private bank gave 23% loan compare to 2021-22, 58% of the loan given has been given by our government and the rest 42% has been given by the private bank, so now people were not feel insecure to deposit in the private bank and take loan from it. If I talk about incremental loan, leave the old loan, all the new loans have been sanctioned, if I compare with 2009-10, 89% loans were not given by the government and only 11% but in 2014-15 governmnet left with only 57% where private acquired 43%, and from 2015-16 to 2021, the private bank has led, the governments have lagged behind and now in 2021-2022.
The matter is a bit equal, but in my own way, we are seeing Future brother is looking forward to private banks, now let's talk about asset quality asset, what it meant, I told you now that the loan given to you is the asset of the bank and the quality means how much money was returned from it, so if I returned ₹ 100 dear 100 Gone my asset quality was great and i gave 100 and out of that 90 is 10 not come So means those 10 quality was not good, so what they are is NPA (Non performing asset), one asset which is performing and another asset which is not performing i.e. sinking PSU had 14.6% bad-debts in March 2018 i.e. ₹100 Out of this, ₹ 1460 money will be bad-debts, this situation has improved a bit, now out of ₹ 100, it only ₹ 9.10% that sinkes, but still if we compare with private bank, than the private bank's rough situation keeps sinking between 4.5% - 5% today, simply means condition of PSU is much poorer, now you think why does this happen with only PSU, why does this happen brother, one, your governments make promises all over the world, saying, forgive farmer's loan, forgive this loan of borrowers, brother, banks have given it.
When government instruct to wave the loan it directly impacts the banks financial conditions, Second government banks have customer's like Vijay Mallya and Nirav Modi, as they use political connections to pressurise managers for loan clearence. It does not meant that private banks are unaffected from this, lot of stuff is going around in private banks also but less in comparison of PSU. Plus when its comes to recovery time public sector banks have their own limitations, as government do not harass people or follow up too much but in case of private banks, they don't not leave anyone, brother, and that's why their bad-debts is less, now it's time to discuss upon profits, so who will get the most profit, there is no question of guess in this, obviously it will be of private banks because government banks have their own limitations, the government banks easily opens saving accounts for ₹ 1000 or ₹ 10000 and for current accounts they open in 20,000-25,000, but in this case of private banks they have their own tanturums. As they urge account holder's to maintain and multiply balance in saving accounts as well as in current account, also come up with multiple charges. 7 110 00:10:34,920 --> 00:10:40,440 which is not charged much in the government bank, like charge of check bouncing, anything will be charged,
The charge will be limited, private banks do not leave the opportunity, there is a charge for every small thing and where there is a mistake, they charge it double or triple times from account holder. private banks has high charges and high incomes rates with low expenses because they use more of technology, and that's why because of all of these reason they always left with huge profits in hand I will tell you the example of top three private banks profits.
The profit of the HDFC bank is Rs 44,138 crores, then comes the profit of ICICI Bank which is 31,896 crores, and the number third comes up with Axis bank whose profit is Rs 13,000 crores, this is the data of last year's, now listen to government bank's profit, only SBI can confidently come and compete with the private banks and say that we still in league, which is SBI because their profit is somewhere settle around 31,675 crores, on second number you will eventually understand what is going on. Bank of Baroda hold second position with profit of 7,270 crores. Where amounts like 40,000 30,000 12,000 compare to just of 7,000. On third number Union Bank will come with 5,232 crores. If i will add the profit of above three top private banks on one side and on another side add profit of 10-15 government banks, than these three banks will beat all 10-15 banks.
After profit, market cap comes, which means market capitalization. Simply all private banks and governmnet banks that are listed in share market and What are the prices of their share prevailing in the market, they are at the same level as the required total market capitation of the market, but if you look at it closly, than private banks are sitting at very high stakes.
As I told you that SBI is the only bank that compete equally with its market cap of ₹5,00,000 crore. SBI is the only bank that is above market cap of 1 lakh crore, BOB comes on second position with 94,000 crore, Canara Bank comes on third position with total of 56,000 crore rupees. Now come on private bank side, HDFC bank hold first position with ₹932000 crore and on Second comes ICICI Bank with 6,38,000 crore rupees, if these two banks get together, against all PSU banks including SBI will be look hefty, third comes Kotak Mahindra, that too is 3,70,000 crores, than comes Axis Bank, that too with ₹ 2,72,000 crores rupees. Means four banks are above 2,50,000 crore and on government bank side SBI is only bank that is sitting above 1 lakh crore, by the way, I have gone to the results of this quarter, in March, government banks have given tremendous performance, some banks profit has been increase 1/2, someone's double but this is happened only on matter of one quarter, beacuse when year will be completed, then it will be known that who has been in real profit and who has not, but historic data give more priority to private banks, now brother let's talk about the Future of PSU Bank, is there a future of PSU Bank, or not, what is the matter,
Every bussiness need money for going further, bank itself is a bussiness institution, that's why it also needs money, so where is the money comes from, may bank net profit will come? So with that they move ahead, but the amount of net profit they get, somewhere equal to thier losses, So every year like 9% advance gains, if 9% of the money is bad- debts, then capital gains of banks will reduced, Only option with them is to generate bumper profit, above 90 rupees, than only there work will resume or there market cap is very good or if the government gives them traditional money then there work will resume.
All three ways has problem now, neither the market cap is increasing nor the profits are increasing, well profits are bumper in this quarter ,may train continue in next quarter, but government is also not giving full attention to this situation, as government bank is going downwards, some private banks are also taking full advantage, so for me in future private banks, like if we talk about financial services, then total Nifty Fifth is 37% of financial service sector, where private bank has more dominance in it, so personally
I am bullish about the private bank, I am not talking that go and buy the stocks of private banks. It is your wish but if you enter in bank stock then I think personally that private banks is much better as comparison of PSU, rest please don't make a biased opinion based on this blog, take this blog as base and do your own research and apply your mind and if you have confidence in banking sector then you can plan your investment according to it and if you have interest in this sector then tell me in the comment box, I will bring many more videos related to banking sector, until thank you and Jai hind and yes don't forget to enroll in the Coding Invaders data science course and please remember to use code RM27.
