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.

Pradeep Yuvaraj

About Pradeep Yuvaraj

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Pradeep Yuvaraj is a Co-Founder and Director at Finerva Financial Solutions Private Limited, a financial education company focused on personal finance education. He has penned over 250 articles relating to Personal Finance and clocked over 500 hours of educating individuals on managing personal finance.He is a serial entrepreneur and has been associated with 7 Start-ups. His entrepreneurial experience spans industries as varied as Education, Gas Engineering, Automobile Design, Software development and more recently a Pure play presentation design company. Prior to turning entrepreneur in 2005, he has worked for 3 of the top ten companies of the world - Shell, ExxonMobil and Total SA. This experience included handling Branch Operations, Channel Sales and Business Development across 5 states over a period of 8 years. He holds an MBA from Symbiosis and an Electronics Engineering Degree from the University of Pune.

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