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Difference between Interest rates of Private and Public sector Banks

by Desk on    0 |

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First of all let us see what the core difference between public sector bank and a private sector banks is. Public sector banks are those which are operated by govt. bodies and the employees get salaries from the government funds.

Private sector banks are the banks which are controlled by the private lenders with the approval from the RBI their interest rates are slightly higher as compared to Public sector banks.

Nationalized banks are different from private banks because of its lower cost of funds, bigger customer base and customer trust. They are also widely believed to be safer and secure. All these factors are reflected on the interest rates of loan also. Generally the public sector banks have lesser interest rates.

Home Loan borrowers, to take advantage of the falling interest rates in Public Sector Banks are increasingly opting for these rather than going with the Private Banks. Say for example nationalized banks provide home loan at lower interest rate to new customers than private bank. The ones who shift from any other bank to SBI will also be considered the new borrowers and the loan will be offered at same rate. So customers may shift loans from private to public sector banks.

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