Public or private? The future of banking in India and the US

Owing to the Pandemic situation which had witnessed its peak in both the US and India, the economic structure in both the aforementioned countries has faltered. Unrecoverable liabilities to the extent of banking closure had led to the degradation in the economic resources of the country and thereby there is a complete imbalance in the equilibrium framework of the country’s economy. Thus a move towards growth in public banking institutions has been witnessed in both India and the US.

Initially, during the early stages of economic development in the 1960s in the US, most of the banking institutions were publicly funded. It was a social thought process that public financial institutions were better politically and institutionally managed with better political management and intervention of the government institutions. However, with the advancement of knowledge of banking institutions, privatization as a banking move was emphasized leading to financial inclusion, growth of financial development, and therefore improvement of financial lending in the economy. Therefore slowly the US became a center of economic privatization for the banking institution. However, a bastion of public banking institutions is on the rise when it comes to banking institutions in the US. The situation is also similar in India.

About 60% of the Financial Banking Institutions are dependent on Public Funding and therefore Public Banking Institutions are a majority in the country. However, with the advent of the liberalization move in the 1990s, a move of banking privatization was initiated. Banking Institutions were owned and slowly acquired by private lenders and therefore infusion of capital was introduced into the economy thereby leading to the development of the financial infrastructure in the country. The public banking movement can also help with efficient government transfers and financial inclusion via universal checking accounts.

Getting the optimal mix of financial inclusion and lending should be the main objective of all the banking institutions in the country.




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