Difference between programmed and nationalized bank with table

difference between programmed and nationalized bankWe explain that what is the difference between programmed and nationalized bank with table. A bank is a financial institution, in addition to receiving deposits and lending money to companies and individuals, it also involves protecting people’s money, disbursing payments and investing funds in securities.

The concept of the banking system in India was developed during the British era. The British East India Company established three banks in India during the 19th century. The three banks were merged into one imperial bank later.

The Indian banking sector is broadly classified as registered and unregistered banks. Registered banks are those banks which are incorporated in the Second Schedule of the Reserve Bank of India Act 1934.

In addition, they are classified into nationalized banks, State Bank of India and its associates, regional rural banks, foreign banks and other private sector banks.

The terminology Commercial Banks implies both registered and unlisted banks governed by the Banking Regulation Law of 1949.

There are many similarities between the two, however there are also some differences. The main difference between a programmed bank and a nationalized bank that is, the registered bank comprises all, but is not limited to the nationalized banks, but the nationalized banks are totally under the control of the government.

Comparison table between registered and nationalized bank (in table form)

Comparison parameter Scheduled banks Nationalized banks

Customer service The programmed banks are part public and part private, so the service will be customer-centric. Comparatively the service is better, although it is not as efficient as in private sector banks.
Purpose The programmed banks were started for productive purposes Nationalized banks were started for political purposes
Governance Semi-government or quasi-government As the majority of the shares are owned, it is fully governed by the Government.
Reason It provides financial assistance to the economically weaker sectors of society. Provides financial assistance to everyone in the country.
Operations Larger-scale, nationwide operations with numerous branches Operations are relatively smaller in scale as there are only a few nationalized banks in India

What is the programmed bank?

Registered banks are those banks which are incorporated in the Second Schedule of the Reserve Bank of India Act 1934.

Reserve Bank of India has the supreme supervisory authority. All scheduled banks are under RBI and scheduled banks are classified as,

  1. Commercial banks
    1. Public sector banks
      1. State Banks of India
      1. Other nationalized banks
    1. Private sector banks
      1. Old
      1. New
    1. Foreign banks
    1. Regional rural banks
  2. Cooperatives
    1. Urban cooperatives
    1. State cooperatives

All banks classified in the programmed rate can obtain debts or loans at the RBI bank rate. Registered banks enjoy the benefits of obtaining clearinghouse membership automatically.

Registered banks regularly submit all information on their activities to the Reserve Bank of India. Registered banks are classified into commercial banks and cooperative banks.

Registered banks explicitly follow two conditions, that the fund raised and the paid-up capital of the bank cannot be less than five lakhs of rupees. Another condition is that none of the bank’s actions must affect the interests of the depositor.

What is the Nationalized Bank?

Indian private banks became public sector banks through the nationalization operation, which is the root cause of the origin of nationalized banks in India.

Nationalization is nothing more than the government’s taking of authority over assets and companies, generally acquiring the majority of the shares in the company.

The reasons for starting to nationalize banks were to improve banking habits, expand banking in India, control private sectors, minimize regional differences and for social welfare.

There were about 19 nationalized banks in India. Even though the State Bank Of India is often considered a nationalized bank, it is a state-owned organization undertaken as a public sector.

Any bank in which the government has a majority stake is called a nationalized bank. This means that the government calls many of the policies for the bank and it also has an important role in the appointments of directors and even in the decisions about loans.

Main differences between regular and nationalized bank

  1. Both registered banks and nationalized banks are interrelated, as nationalized banks belong to the subcategory of public sector commercial banks. The main difference between registered banks and nationalized banks is, all nationalized banks are programmed banks, while all programmed banks are not nationalized banks, which explains that all nationalized banks are included in the second list of the RBI completely. .
  2. Listed banks are not wholly owned by the government, but are in the hands of individual shareholders of the public, while nationalized banks are governed and a significant part of the shares are in the hands of the government.
  3. Nationalized banks have a service motive, while regular banks have a profit motive.
  4. A nationalized bank offers less attractive and less efficient customer service. On the other hand, regular banks provide good customer service and more attractive features for customers.
  5. The expansion rate is higher in regular banks, since public and private sector banks are inclusive. On the contrary, the ease of expansion is relatively less in nationalized banks.

Final Thought

Banks are the financial institutions that are authorized to accept deposits and grant loans and credits. They play an important role in supporting and promoting the economic balance of a country. Both registered and nationalized banks were established for the welfare of the people to provide financial assistance and other benefits.

Registered banks are classified into different types, where nationalized banks are one of them. Registered banks are primarily profit oriented as they include private sector banks and other foreign banks.

Nationalized banks are primarily service-oriented as they are fully supervised and acquired by the government. The programmed banks are part of the cooperative banks that are under the control of the Cooperative Society.

They serve the needs of rural and agricultural segments, while nationalized banks serve all people. The characteristics provided by the nationalized bank are not on par with those of a private bank that falls under the category of programmed bank. To conclude, the tenure pattern is the key difference between a programmed bank and a nationalized bank.

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