COMPERATIVE

STUDY

ON

PERFORMANCE OF PUBLIC & PRIVATE SECTOR BANKS

CHAPTER-1 HISTORY OF BANKING IN INDIA

There are three different phases in the history of banking in India. 1) Pre-Nationalization Era. 2) Nationalization Stage. 3) Post Liberalization Era.

1) Pre-Nationalization Era: In India the business of banking and credit was practices even in very early times. The remittance of money through Hundies, an indigenous credit instrument, was very popular. The Hundies were issued by bankers known as Shroffs, Sahukars, Shahus or Mahajans in different parts of the country. The modern type of banking, however, was developed by the Agency Houses of Calcutta and Bombay after the establishment of Rule by the East India Company in 18th and 19th centuries. During the early part of the 19th Century, at volume of foreign trade was relatively small. Later on as the trade expanded, the need for banks of the European type was felt and the government of the East India Company took interest in having its own bank. The government of Bengal took the initiative and the first presidency bank, the Bank of Calcutta (Bank of Bengal) was established in 180. In 1840, the Bank of Bombay and IN 1843, the Bank of Madras was also set up. These three banks are also known as Presidency Bank. The Presidency Banks had their branches in important trading centers but mostly lacked in uniformity in their operational policies. In 1899, the Government proposed to amalgamate these three banks in to one so that it could also function as a Central Bank, but the Presidency Banks did not favor the idea. However, the conditions obtaining during world war period (1914-1918) emphasized the need for a unified banking institution, as a result of which the Imperial Bank was set up in1921. The Imperial Bank of India acted like a Central bank and as a banker for other banks.
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The RBI (Reserve Bank of India) was established in 1935 as the Central Bank of the Country. In 1949, the Banking Regulation act was passed and the RBI was nationalized and acquired extensive regulatory powers over the commercial banks. In 1950, the Indian Banking system comprised of the RBI, the Imperial Bank of India, Cooperative banks, Exchange banks and Indian Joint Stock banks.

2) Nationalization Stages: After Independence, in 1951, the All India Rural Credit survey, committee of Direction with Shri. A. D. Gorwala as Chairman recommended amalgamation of the Imperial Bank of India and ten others banks into a newly established bank called the State Bank of India (SBI). The Government of India accepted the recommendations of the committee and introduced the State Bank of India bill in the Lok-Sabha on 16th April 1955 and it was passed by Parliament and got the presidents assent on 8th May 1955. The Act came into force on 1st July 1955, and the Imperial Bank of India was nationalized in 1955 as the State Bank of India. The main objective of establishing SBI by nationalizing the Imperial Bank of India was to extend banking facilities on a large scale more particularly in the rural and semi-urban areas and to diverse other public purposes. In 1959, the SBI (Subsidiary Bank) act was proposed and the following eight State-associated banks were taken over by the SBI as its subsidiaries. Name of the Bank Subsidiary with effect from 1) State Bank of Hyderabad 1st October 1959 2) State Bank of Bikaner 1st January 1960 3) State Bank of Jaipur 1st January 1960 4) State Bank of Saurashtra 1st May 1960
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5) State Bank of Patiala 1st April 1960 6) State Bank of Mysore 1st March 1960 7) State Bank of Indore 1st January 1968 8) State Bank of Travancore 1st January 1960 With effect from 1st January 1963, the State Bank of Bikaner and State Bank of Jaipur with head office located at Jaipur. Thus, seven subsidiary banks State Bank of India formed the SBI Group. The SBI Group under statutory obligations was required to open new offices in rural and semi-urban areas and modern banking was taken to these unbanked remote areas. On 19th July 1969, then the Prime Minister, Mrs. Indira Gandhi announced the nationalization of 14 major scheduled Commercial Banks each having deposits worth Rs. 50 crore and above. This was a turning point in the history of commercial banking in India. Later the Government Nationalized six more commercial private sector banks with deposit liability of not less than Rs. 200 crores on 15th April 1980, viz. Andhra Bank Corporation Bank New Bank in India Oriental Commercial Bank Punjab and Sind Bank Vijaya Bank

In 1969, the Lead Bank Scheme was introduced to extend banking facilities to every corner of the country. Later in 1975, Regional Rural Banks were set up to supplement the activities of the commercial banks and to especially meet the credit needs of the weaker sections of the rural society.

Nationalization of banks paved way for retail banking and as a result there has been an alt round growth in the branch network, the deposit mobilization, credit disposals and of course employment. The first year after nationalization witnessed the total growth in the agricultural loans and the loans made to SSI by 87% and 48% respectively. The overall growth in the deposits and the advances indicates the improvement that has taken place in the banking habits of the people in the rural and semi-urban areas where the branch network has spread. Such credit expansion enabled the banks to achieve the goals of nationalization, it was however, achieved at the coast of profitability of the banks.

3) Post-Liberalization Era---Thrust on Quality and Profitability: By the beginning of 1990, the social banking goals set for the banking industry made most of the public sector resulted in the presumption that there was no need to look at the fundamental financial strength of this bank. Consequently they remained undercapitalized. Revamping this structure of the banking industry was of extreme importance, as the health of the financial sector in particular and the economy was a whole would be reflected by its performance. The need for restructuring the banking industry was felt greater with the initiation of the real sector reform process in 1992. The reforms have enhanced the opportunities and challenges for the real sector making them operate in a borderless global market place. However, to harness the benefits of globalization, there should be an efficient financial sector to support the structural reforms taking place in the real economy. Hence, along with the reforms of the real sector, the banking sector reformation was also addressed.

Private Sector Banks

Private banking in India was practiced since the beginning of banking system in India. The first private bank in India to be set up in Private Sector Banks in India was IndusInd Bank. It is one of the fastest growing Bank Private Sector Banks in India. IDBI ranks the tenth largest development bank in the world as Private Banks in India and has promoted a world class institution in India. The first Private Bank in India to receive an in principle approval from the Reserve Bank of India was Housing Development Finance Corporation Limited, to set up a bank in the private sector banks in India as part of the RBI's liberalization of the Indian Banking Industry. It was incorporated in August 1994 as HDFC Bank Limited with registered office in Mumbai and commenced operations as Scheduled Commercial Bank in January 1995. ING Vysya, yet another Private Bank of India was incorporated in the year 1930. Bangalore has a pride of place for having the first branch inception in the year 1934. With successive years of patronage and constantly setting new standards in banking, ING Vysya Bank has many credits to its account.

Entry of Private Sector Banks: There has been a paradigm shift in mindsets both at the Government level in the banking industry over the years since Nationalization of Banks in 1969, particularly during the last decade (1990-2000). Having achieved the objectives of Nationalization, the most important issue before the industry at present is survival and growth in the environment generated by the economic liberalization greater competition with a view to achieving higher productivity and efficiency in January 1993 for the entry of Private Sector banks based on the Nationalization Committee report of 1991, which envisaged a larger role for Private Sector Banks.

The RBI prescribed a minimum paid up capital of Rs. 100 crores for the new bank and the shares are to be listed at stock exchange. Also the new bank after being granted license under the Banking Regulation Act shall be registered as a public limited company under the companies Act, 1956. Subsequently 9 new commercial banks have been granted license to start banking operations. The new private sector banks have been very aggressive in business expansion and is also reporting higher profile levels taking the advantage of technology and skilled manpower. In certain areas, these banks have even our crossed the other group of banks including foreign banks.

Overview of Banking: Banking Regulation Act of India, 1949 defines Banking as accepting, for the purpose of lending or of investment of deposits of money from the public, repayable on demand or otherwise or withdrawable by cheque, draft order or otherwise. The Reserve Bank of India Act, 1934 and the Banking Regulation Act, 1949, govern the banking operations in India.

Broad Classification of Banks in India:

1) The RBI: The RBI is the supreme monetary and banking authority in the country and has the responsibility to control the banking system in the country. It keeps the reserves of all scheduled banks and hence is known as the Reserve Bank.

2) Public Sector Banks: State Bank of India and its Associates (8) Nationalized Banks (19) Regional Rural Banks Sponsored by Public Sector Banks (196)

3) Private Sector Banks: Old Generation Private Banks (22) Foreign New Generation Private Banks (8) Banks in India (40)

4) Co-operative Sector Banks: State Co-operative Banks Central Co-operative Banks Primary Agricultural Credit Societies Land Development Banks State Land Development Banks

5) Development Banks: Development Banks mostly provide long term finance for setting up industries. They also provide short-term finance (for export and import activities) Industrial Finance Co-operation of India (IFCI) Industrial Development of India (IDBI) Industrial Investment Bank of India (IIBI) Small Industries Development Bank of India (SIDBI) National Bank for Agriculture and Rural Development (NABARD) Export-Import Bank of India

Role of Banks: Banks play a positive role in economic development of a country as repositories of communitys savings and as purveyors of credit. Indian Banking has aided the economic development during the last fifty years in an effective way. The banking sector has shown a remarkable responsiveness to the needs of planned economy. It has brought about a considerable progress in its efforts at deposit mobilization and has taken a number of measures in the recent past for accelerating the rate of growth of deposits. As recourse to this, the commercial banks opened branches in urban, semi-urban and rural areas and have introduced a number of attractive schemes to foster economic development. The activities of commercial banking have growth in multi-directional ways as well as multi-dimensional manner. Banks have been playing a catalytic role in area development, backward area development, extended assistance to rural development all along helping agriculture, industry, international trade in a significant manner. In a way, commercial banks have emerged as key financial agencies for rapid economic development. By pooling the savings together, banks can make available funds to specialized institutions which finance different sectors of the economy, needing capital for various purposes, risks and durations. By contributing to government securities, bonds and debentures of term-lending institutions in the fields of agriculture, industries and now housing, banks are also providing these institutions with an access to the common pool of savings mobilized by them, to that extent relieving them of the responsibility of directly approaching the saver. This intermediation role of banks is particularly important in the early stages of economic development and financial specification. A country like India, with different regions at different stages of development, presents an interesting spectrum of the evolving role of banks, in the matter of inter-mediation and beyond.
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Commercial banks provide short-term and medium-term financial assistance. The short-term credit facilities are granted for working capital requirements. The medium-term loans are for the acquisition of land, construction of factory premises and purchase of machinery and equipment. These loans are generally granted for periods ranging from five to seven years. They also establish letters of credit on behalf of their clients favoring suppliers of raw materials/machinery (both Indian and foreign) which extend the bankers assurance for payment and thus help their delivery. Certain transaction, particularly those in contracts of sale of Government Departments, may require guarantees being issued in lieu of security earnest money deposits for release of advance money, supply of raw materials for processing, full payment of bills on the assurance of the performance etc. Commercial banks issue such guarantees also.

PRODUCTS AND SERVICES OFFERED BY BANKS Broad Classification of Products in a bank: Retail Banking Trade Finance Treasury Operations

Retail Banking and Trade finance operations are conducted at the branch level while the wholesale banking operations, which cover treasury operations, are at the hand office or a designated branch. Retail Banking: Deposits Loans, Cash Credit and Overdraft Negotiating for Loans and advances Remittances Book-Keeping (maintaining all accounting records) Receiving all kinds of bonds valuable for safe keeping
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Trade Finance: Issuing and confirming of letter of credit Drawing, accepting, discounting, buying, selling, collecting of bills of

exchange, promissory notes, drafts, bill of lading and other securities

Treasury Operations: Buying and selling of bullion Foreign exchange Acquiring, holding, underwriting and dealing in Purchasing and selling of bonds and securities on behalf of

shares, debentures, etc. constituents. The banks can also act as an agent of the Government or local authority. They insure, guarantee, underwrite, participate in managing and carrying out issue of shares, debentures, etc. Apart from the above-mentioned functions of the bank, the bank provides a whole lot of other services like investment counseling for individuals, short-term funds management and portfolio management for individuals and companies. It undertakes the inward and outward remittances with reference to foreign exchange and collection of varied types for the Government.

Common Banking Products Available: Some of common available banking products are explained below:

1) Credit Card: Credit Card is post paid or pay later card that draws from a credit linemoney made available by the card issuer (bank) and gives one a grace period to pay. If the amount is not paid full by the end of the period, one is charged interest. A credit card is nothing but a very small card containing a means of identification, such as a signature and a small photo. It authorizes the holder to
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change goods or services to his account, on which he is billed. The bank receives the bills from the merchants and pays on behalf of the card holder. These bills are assembled in the bank and the amount is paid to the bank by the card holder totally or by installments. The bank charges the customer a small amount for these services. The card holder need not have to carry money/cash with him when he travels or goes for purchasing. Credit cards have found wide spread acceptance in the metros and big cities. Credit cards are joining popularity for online payments. The major players in the Credit Card market are the foreign banks and some big public sector banks like SBI and Bank of Baroda. India at present has about 3 million credit cards in circulation.

2) Debit Cards: Debit Card is a prepaid or pay now card with some stored value. Debit Cards quickly debit or subtract money from ones savings account, or if one were taking out cash. Every time a person uses the card, the merchant who in turn can get the money transferred to his account from the bank of the buyers, by debiting an exact amount of purchase from the card. To get a debit card along with a Personal Identification Number (PIN). The major limitation of Debit Card is that currently only some 3000-4000 shops country wide accepts it. Also, a person cant operate it in case the telephone lines are down.

3) Automatic Teller Machine: The introduction of ATMs has given the customers the facility of round the clock banking. The ATMs are used by banks for making the customers dealing easier. ATM card is a device that allows customer who has an ATM card to perform routine banking transaction at any time without interacting with human teller. It provides exchange services. This service helps the customer to withdraw money even when the banks ate closed. This can be done by inserting the card
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in the ATM and entering the Personal Identification Number and secret Password. ATMs are currently becoming popular in India that enables the customer to withdraw their money 24 hours a day and 365 days. It provides the customers with the ability to withdraw or deposit funds, check account balances, transfer funds and check statement information. The advantages of ATMs are many. To transfer money to and from accounts. To view account information. To order cash. To receive cash.

Advantages of ATMs: To the Customers ATMs provide 24 hrs. 7 days and 365 days a year service Service is quick and efficient Privacy in transaction Wider flexibility in place and time of withdrawals. The transaction is completely secure you need to key in Personal Identification Number (Unique number for every customer). To Banks Alternative to extend banking hours. Crowding at bank counters considerably reduced. Alternative to new branches and to reduce operating expenses. Relieves bank employees to focus an more analytical and innovative Work. Increased market penetration.

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ATMs can be installed anywhere like Airports, Railway Stations, Petrol Pumps, Big Business arcades, markets, etc. Hence, it gives easy access to the customers, for obtaining cash. The ATM services provided first by the foreign banks like Citibank, Grind lays bank and now by many private and public sector banks in India like ICICI Bank, HDFC Bank, SBI, UTI Bank etc.

4) E-Cheques: The e-cheques consists five primary facts. They are the consumers, the merchant, consumers bank the merchants bank and the e-mint and the clearing process. This chequering system uses the network services to issue and process payment that emulates real world chequeing. The payer issues a digital cheque to the payee ant the entire transactions are done through internet. Electronic version of cheques are issued, received and processed. A typical electronic cheque transaction takes place in the following manner: The customer accesses the merchant server and the merchant server presents its goods to the customer. The consumer selects the goods and purchases them by sending an echeque to the merchant. The merchant validates the e-cheque with its bank for payment authorization. The merchant electronically forwards the e-cheque to its bank. The merchants bank forwards the e-cheque to the clearing house for cashing. The clearing house jointly works with the consumers bank clears the cheque and transfers the money to the merchants banks. The merchants bank updates the merchants account. The consumers bank updates the consumers account with the Withdrawal information.

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The e-chequeing is a great boon to big corporate as well as small retailers. Most major banks accept e-cheques. Thus this system offers secure means of collecting payments, transferring value and managing cash flows.

5) Electronic Funds Transfer (EFT): Many modern banks have computerized their cheque handling process with computer networks and other electronic equipments. These banks are dispensing with the use of paper cheques. The system called electronic fund transfer (EFT) automatically transfers money from one account to another. This system facilitates speedier transfer of funds electronically from any branch to any other branch. In this system the sender and the receiver of funds may be located in different cities and may even bank with different banks. Funds transfer within the same city is also permitted. The scheme has been in operation since February 7, 1996, in India. The other important type of facility in the EFT system is automated clearing houses. These are the computer centers that handle the bills meant for deposits and the bills meant for payment. In big companies pay is not disbursed by issued cheques or issuing cash. The payment office directs the computer to credit an employees account with the persons pay.

6) Tele banking: Tele banking refers to banking on phone services.. a customer can access information about his/her account through a telephone call and by giving the coded Personal Identification Number (PIN) to the bank. Telebanking is extensively user friendly and effective in nature. To get a particular work done through the bank, the users may leave his instructions in the form of message with bank. Facility to stop payment on request One can easily know about the cheque status Information on the current interest rates
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 Information with regard to foreign exchange rates Request for a DD or pay order D-Mat Account related services And other similar services

7) Mobile Banking: A new revolution in the realm of e-banking is the emergence of mobile banking. On-line banking is now moving to the mobile world, giving everybody with a mobile phone access to real-time banking services, regardless of their location. But there is much more to mobile banking from just on-lie banking. It provides a new way to pick up information and interact with the banks to carry out the relevant banking business. The potential of mobile banking is limitless and is expected to be a big success. Booking and paying for travel and even tickets is also expected to be a growth area. According to this system, customer can access account details on mobile using the Short Messaging System (SMS) technology6 where select data is pushed to the mobile device. The wireless application protocol (WAP) technology, which will allow user to surf the net on their mobiles to access anything and everything. This is a very flexible way of transacting banking business. Already ICICI and HDFC banks have tied up cellular service provides such as Airtel, Orange, Sky Cell, etc. in Delhi and Mumbai to offer these mobile banking services to their customers.

8) Internet Banking: Internet banking involves use of internet for delivery of banking products and services. With internet banking is now no longer confirmed to the branches where one has to approach the branch in person, to withdraw cash or deposits a cheque or requests a statement of accounts. In internet banking, any inquiry or transaction is processed online without any reference to the branch (anywhere Banking) at
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any

time.

The Internet Banking now is more of a normal rather than an exception due to the fact that it is the cheapest way of providing banking services. As indicated by McKinsey Quarterly research, presently traditional banking costs the banks, more than a dollar per person, ATM banking costs 27 cents and internet banking costs below 4 cents approximately. ICICI bank was the first one to offer Internet Banking in India. Benefits of Internet Banking: Reduce the transaction costs of offering several banking services and diminishes the need for longer numbers of expensive brick and mortar branches and staff. Increase convenience for customers, since they can conduct many banking transaction 24 hours a day. Increase customer loyalty. Improve customer access. Attract new customers. Easy online application for all accounts, including personal loans and mortgages.

9) Demat: Demat is short for de-materialization of shares. In short, Demat is a process where at the customers request the physical stock is converted into electronic entries in the depository system. In January 1998 SEBI (Securities and Exchange Board of India) initiated DEMAT ACCOUNTANCY System to regulate and to improve stock investing. As on date, to trade on shares it has become compulsory to have a share demat account and all trades take place through demat.

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BANKING SERVICES Banking covers so many services that it is difficult to define it. However, these basic services have always been recognized as the hallmark of the genuine banker which is as follow The receipt of the customers deposits The collection of his cheques drawn on other banks The payment of the customers cheques drawn on himself There are other various types of banking services like: 1) Advances Overdraft, Cash Credit, etc. 2) Deposits Saving Account, Current Account, etc. 3) Financial Services Bill discounting etc. 4) Foreign Services Providing foreign currency, travelers cheques, etc. 5) Money Transmission Funds transfer etc. 6) Savings Fixed deposits, etc. 7) Savings Fixed deposits, etc. 8) Status Debit Cards, Credit Cards, etc

BANKS SOURCES AND USE OF FUNDS: Sources: 1. Deposits from public: Saving deposits Current Deposits Fixed deposits

2. Borrowings from banks: Inter-bank borrowings and Inter-bank deposits.

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3. Borrowings from RBI 4. Borrowings from financial institutions. 5. Paid-up Capital/Reserves.

Uses: 1. Term loans. 2. Overdraft. 3. Cash credit. 4. Loans and advances. 5. Investment.

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CHAPTER-2 MAJOR COMPANY IN THE INDUSTRY

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STATE BANK OF INDIA

History of State Bank of India The evolution of State Bank of India can be traced back to the first decade of the 19th century. It began with the establishment of the Bank of Calcutta in Calcutta, on 2 June 1806. The bank was redesigned as the Bank of Bengal, three years later, on 2 January 1809. It was the first ever joint-stock bank of the British India, established under the sponsorship of the Government of Bengal. Subsequently, the Bank of Bombay (established on 15 April 1840) and the Bank of Madras (established on 1 July 1843) followed the Bank of Bengal. These three banks dominated the modern banking scenario in India, until when they were amalgamated to form the Imperial Bank of India, on 27 January 1921. An important turning point in the history of State Bank of India is the launch of the first Five Year Plan of independent India, in 1951. The Plan aimed at serving the Indian economy in general and the rural sector of the country, in particular. Until the Plan, the commercial banks of the country, including the Imperial Bank of India, confined their services to the urban sector. Moreover, they were not equipped to respond to the growing needs of the economic revival taking shape in the rural areas of the country. Therefore, in order to serve the
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economy as a whole and rural sector in particular, the All India Rural Credit Survey Committee recommended the formation of a state partnered & state sponsored bank. The State Bank of India emerged as a pacesetter, with its operations carried out by the 480 offices comprising branches, sub offices and three Local Head Offices, inherited from the Imperial Bank. Instead of serving as mere repositories of the community's savings and lending to creditworthy parties, the State Bank of India catered to the needs of the customers, by banking purposefully. The bank served the heterogeneous financial needs of the planned economic development. Branches The corporate center of SBI is located in Mumbai. In order to cater to different functions, there are several other establishments in and outside Mumbai, apart from the corporate center. The bank boasts of having as many as 14 local head offices and 57 Zonal Offices, located at major cities throughout India. It is recorded that SBI has about 10000 branches, well networked to cater to its customers throughout India. Subsidiaries The State Bank Group includes a network of eight banking subsidiaries and several non-banking subsidiaries. Through the establishments, it offers various services including merchant banking services, fund management, factoring services, primary dealership in government securities, credit cards and insurance.

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The eight banking subsidiaries are State Bank of Bikaner and Jaipur (SBBJ) State Bank of Hyderabad (SBH) State Bank of Indore (SBIR) State Bank of Mysore (SBM) State Bank of Patiala (SBP) State Bank of Saurashtra (SBS) State Bank of Travancore (SBT)

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BANK OF BARODA

History of Bank of Baroda Prior to independence from the British Rule, the ancient India was ruled by princely states, scattered over the width and breadth of the large Indian nation. The Maharajas of the inner States of colonial India contributed to the welfare of their respective regions as well as the Indian nation as a whole. Their vision and foresight in founding various financial, charitable, social and philanthropic organizations during their time is still cherished by any one going into the history of modern India and its achievements in every walk of life. The Maharaja of Baroda, a princely state of British India, by name Sir Sayyajirao Gaekwad III, had the same vision in establishing a bank for servicing the public at large and the citizens of Baroda State, a Guajarati population in particular. On 20th July 1908, Bank of Baroda was established under the rules of Companies Act 1897, in a small building at Baroda, by the Maharaja with a paid up capital of Rs.10 Lakhs. The guidelines set by the Maharaja for the bank was to serve the people of the State of Baroda as well as the neighboring regions with money lending, saving, transmission and encouraging the development of arts, science, commerce and trade for the people.
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The success story of the Bank of Baroda is studded with many a leaps and strides it made in the International presence, apart from establishing branches all over the Indian nation, by acquisition of already popular banking entities, as also commencing new commercial banking establishments, in the unique Guajarati style. During the years of 1908 to 2007 (and the century year being round the corner) Bank of Barodas growth owes to the excellence in rendering financial products and services to the national and international population. Countries beginning from America to Zambia, in the alphabetical order have been enjoying the services of Bank of Baroda as of today. A brief statistics will reveal the magnitude of growth Bank of India has achieved today : fifth largest bank in India; total assets over 1,78,000 crores; number of offices and branches 2800; more than 1000 ATMs, notwithstanding affiliates, subsidiaries and delivery channels all over the world. Mission statement To be a top ranking National Bank of International Standards committed to augmenting stake holders' value through concern, care and competence. Bank of Baroda believes in the strength and integrity of relationships built with its customers like you. With over 102 years of experience in the banking industry and a wide network of over 3365 branches all over the country, we have always been active in extending financial support and adapting to your changing needs. BOBs Deposit Products, Retail Loans, Credit Cards and Debit Cards help customers with growing financial needs. With facilities like Lockers it ensures that customers valuables are safe with BOB.

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BOBs countrywide branches offer convenience and ease in operating account wherever the customer is. Its 24-hour ATMs enable customer to withdraw cash, check account balance and request for a new cheque book even after banking hours.

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CENTRAL BANK OF INDIA

It was established on 21 December 1911 by Sir Sorabji Pochkhanawala with Sir Pherozesha Mehta as Chairman, and claims to have been the first commercial Indian bank completely owned and managed by Indians. In 1923, it acquired the Tata Industrial Bank in the wake of the failure of the Alliance Bank of Simla. In 1969, the Indian Government nationalized the bank on 19 July, together with 13 others. Central Bank of India, a government-owned bank, is one of the oldest and largest commercial banks in India. It is based in Mumbai. The bank has 3,563 branches and 270 extension counters across 27 Indian states and three Union Territories. Mr. M.V TANKSALE has been appointed as Chairman & Managing Director, Central Bank of India with effect from June 29, 2011. Prior to his appointment as Chairman & Managing Director, Central Bank of India Shri Tanksale was the Executive Director, Punjab National Bank since March 2009. Central Bank of India, one of the leading Public Sector Banks in the country has paid a Dividend of 192.66 crore to the Government of India for the Financial Year 2010-11. Shri M V Tanksale, Chairman & Managing Director, Central Bank of India has handed over the Dividend Cheque of 192.66 crore to (Centre) Honble Union Finance Minister Shri Pranab Mukherjee on 19/08/2011 at New Delhi.

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Central bank of India is one of 18 Public Sector banks in India to get recapitalization finance from the government over the next 24 months. The infusion of funds will improve the financial health of the banks as their capital adequacy ratio (CAR) will be raised more than desired level of 12 percent. The increase in CAR of the banks will also enable them to lend more money. The CAR of Central Bank of India was less than 12 percent as on 30 June 2006. The wholly owned public sector bank, based in Mumbai, will convert an amount of 800 crore out of its 1,124.14-crore total equity capital into perpetual non-cumulative preference shares. The preference shares would carry an annual floating coupon rate of eight per cent, which would be benchmarked to 100 basis points above the repo rate. It will shore up the balance-sheet of the bank and enable it to raise capital from the markets. According to an official statement, the equity capital restructuring would lead to an improvement in the bank's credit rating as also facilitate the adoption of Basel II norms. For financial year 2008-2009, Central Bank of India's Q3 standalone net profit went up at 353.26 crore from 201.01 crore (YoY). The bank's standalone net interest income, NII was up at 671.94 crore versus 544.85 crore (YoY). Central Bank of India has approached the Reserve Bank of India (RBI) for permission to open representative offices in five locations Singapore, Dubai, Doha, London and Hong Kong. This is the first time the bank is venturing an independent overseas foray after the Sethia scam in the 1970s forced the bank to close down its London office. RBI had then asked the other two banks, who had operations in London, to close down. As on 31 March 2011, the bank's reserves and surplus stood at 6,868.85 crore. Its total business at the end of the last fiscal amounted to 2, 09,757.33 crore. The bank had staff strength of 37,241 as on Nov 2006. Central Bank of India partnered with TCS [Tata Consultancy Services] for its Core Banking Solution. The solution set to be implemented will include B@NCS from Sydney29

based Financial Network Solutions (FNS), Exim Bills Trade Finance software from China Systems and treasury from TCS. With all of its branches in the core banking system (CBS).

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BANK OF INDIA
Mission "To provide superior, proactive banking services to niche markets globally, while providing cost-effective, responsive services to others in our role as a development bank, and in so doing, meet the requirements of our stakeholders".

Vision "To become the bank of choice for corporate, medium businesses and up market retail customers and to provide cost effective developmental banking for small business, mass market and rural markets" Bank of India was founded on 7th September, 1906 by a group of eminent businessmen from Mumbai. The Bank was under private ownership and control till July 1969 when it was nationalized along with 13 other banks. Beginning with one office in Mumbai, with a paid-up capital of Rs.50 lakh and 50 employees, the Bank has made a rapid growth over the years and blossomed into a mighty institution with a strong national presence and sizable international operations. In business volume, the Bank occupies a premier position among the nationalized banks. The Bank has 3752 branches in India spread over all states/ union territories including specialized branches. These branches are controlled through 50 Zonal Offices. There are 29 branches/ offices (including five representative offices) and 3 Subsidiaries and 1 joint venture abroad. The Bank came out with its maiden public issue in 1997 and follow on Qualified Institutions Placement in February 2008. . Total number of shareholders as on 30/09/2009 is 2, 15,790.

While firmly adhering to a policy of prudence and caution, the Bank has been in the forefront of introducing various innovative services and systems.
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Business has been conducted with the successful blend of traditional values and ethics and the most modern infrastructure. The Bank has been the first among the nationalized banks to establish a fully computerized branch and ATM facility at the Mahalaxmi Branch at Mumbai way back in 1989. The Bank is also a Founder Member of SWIFT in India. It pioneered the introduction of the Health Code System in 1982, for evaluating/ rating its credit portfolio. The Bank's association with the capital market goes back to 1921 when it entered into an agreement with the Bombay Stock Exchange (BSE) to manage the BSE Clearing House. It is an association that has blossomed into a joint venture with BSE, called the BOI Shareholding Ltd. to extend depository services to the stock broking community. Bank of India was the first Indian Bank to open a branch outside the country, at London, in 1946, and also the first to open a branch in Europe, Paris in 1974. The Bank has sizable presence abroad, with a network of 29 branches (including five representative offices) at key banking and financial centers viz. London, Newyork, Paris, Tokyo, Hong-Kong and Singapore. The international business accounts for around 17.82% of Bank's total business.

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HDFC BANK

INTRODUCTION:HDFC is India's premier housing finance company and enjoys an impeccable track record in India as well as in international markets. Since its inception in 1977, the Corporation has maintained a consistent and healthy growth in its operations to remain the market leader in mortgages. Its outstanding loan portfolio covers well over a million dwelling units. HDFC has developed significant expertise in retail mortgage loans to different market segments and also has a large corporate client base for its housing related credit facilities. With its experience in the financial markets, a strong market reputation, large shareholder base and unique consumer franchise, HDFC was ideally positioned to promote a bank in the Indian environment.

MISSION:HDFC Bank's mission is to be a World-Class Indian Bank.

OBJECTIVES:The objective is to build sound customer franchises across distinct businesses so as to be the preferred provider of banking services for target retail and wholesale customer segments, and to achieve healthy growth in profitability, consistent with the bank's risk appetite. The bank is committed to maintain the highest level of ethical standards, professional integrity, corporate governance and regulatory compliance. HDFC Bank's business

33

philosophy is based on four core values Operational Excellence, Customer Focus, Product Leadership and People. MANAGEMENT:Mr. Jagdish Kapoor took over as the bank's Chairman in July 2001. Prior to this, Mr. Kapoor was a Deputy Governor of the Reserve Bank of India. The Managing Director, Mr. Aditya Puri, has been a professional banker for over 25 years and before joining HDFC Bank in 1994 was heading Citibank's operations in Malaysia. The Bank's Board of Directors is composed of eminent individuals with a wealth of experience in public policy, administration, industry and commercial banking. Senior executives representing HDFC are also on the Board. Senior banking professionals with substantial experience in India and abroad head various businesses and functions and report to the Managing Director. Given the professional expertise of the management team and the overall focus on recruiting and retaining the best talent in the industry, the bank believes that its people are a significant competitive strength.

34

KOTAK MAHINDRA BANK LTD

Kotak Mahindra Bank Limited (KMBL) is the holding company and the flagship of the Kotak Mahindra Group. It was actually incorporated as Kotak Capital Management Finance Limited on November 2, 1985 and obtained its Certificate of Commencement of Business on February 11, 1986. It commenced operations with Bill Discounting and soon started other fund-based activities like corporate leasing and hire purchase, automobile finance and money market operation. Subsequently, It also entered the funds syndication and the investment banking business. With the liberalization of the Indian economy and the opening up of the financial markets, the Company diversified and started offering a wider spectrum of financial services. To meet the increasing competition, from global players, in the Indian financial markets in terms of capital knowledge base, technology and systems, the company decided to restructure its investment banking and car finance divisions into joint venture companies.

35

ICICI BANK

ICICI Bank was established in 1996 by the Industrial Credit and Investment Corporation of India, an Indian financial institution, as a wholly owned subsidiary. The parent company was formed in 1955 as a joint-venture of the World Bank, India's public-sector banks and public-sector insurance companies to provide project financing to Indian industry. The bank was initially known as the Industrial Credit and Investment Corporation of India Bank, before it changed its name to the abbreviated ICICI Bank. The parent company was later merged into ICICI Bank. ICICI Bank launched internet banking operations in 1998. ICICI's shareholding in ICICI Bank was reduced to 46 percent, through a public offering of shares in India in 1998, followed by an equity offering in the form of American Depositary Receipts on the NYSE in 2000. ICICI Bank acquired the Bank of Madura Limited in an all-stock deal in 2001, and sold additional stakes to institutional investors during 2001-02. In the 1990s, ICICI transformed its business from a development financial institution offering only project finance to a diversified financial services group, offering a wide variety of products and services, both directly and through a number of subsidiaries and affiliates like ICICI Bank. In 1999, ICICI become the first Indian company and the first bank or financial institution from non-Japan Asia to be listed on the NYSE. In 2000, ICICI Bank became the first Indian bank
36

to list on the New York Stock Exchange with its five million American depository shares issue generating a demand book 13 times the offer size. In October 2001, the Boards of Directors of ICICI and ICICI Bank approved the merger of ICICI and two of its wholly owned retail finance subsidiaries, ICICI Personal Financial Services Limited and ICICI Capital Services Limited, with ICICI Bank. The merger was approved by shareholders of ICICI and ICICI Bank in January 2002, by the High Court of Gujarat at Ahmedabad in March 2002, and by the High Court of Judicature at Mumbai and the Reserve Bank of India in April 2002. In 2008, following the 2008 financial crisis, customers rushed to ATM's and branches in some locations due to rumors of adverse financial position of ICICI Bank. The Reserve Bank of India issued a clarification on the financial strength of ICICI Bank to dispel the rumors. ICICI Bank Limited (NSE: ICICIBANK, BSE: 532174, NYSE: IBN) is an Indian diversified financial services company headquartered in Mumbai, Maharashtra. It is the second largest bank in India by assets and third largest by market capitalization. It offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialized subsidiaries in the areas of investment banking, life and non-life insurance, venture capital and asset management. The Bank has a network of 2,630 branches and 8,003 ATM's in India, and has a presence in 19 countries, including India. The bank has subsidiaries in the United Kingdom, Russia, and Canada; branches in United States, Singapore, Bahrain, Hong Kong, Sri Lanka, Qatar and Dubai International Finance Centre; and representative offices in United Arab Emirates, China, South Africa, Bangladesh, Thailand, Malaysia and Indonesia. The company's UK subsidiary has established branches in Belgium and
37

Germany. ICICI Bank is one of the Big Four banks of India, along with State Bank of India, Punjab National Bank and Bank of Baroda.

38

AXIS BANK

Axis Bank Limited, formerly UTI Bank, (BSE: 532215, LSE: AXBC) is an Indian financial services firm that had begun operations in 1994, after the Government of India allowed new private banks to be established. The Bank was promoted jointly by the Administrator of the Specified Undertaking of the Unit Trust of India (UTI-I), Life Insurance Corporation of India (LIC), General Insurance Corporation Ltd., National Insurance Company Ltd., The New India Assurance Company, The Oriental Insurance Corporation and United India Insurance Company UTI-I holds a special position in the Indian capital markets and has promoted many leading financial institutions in the country. The bank changed its name to Axis Bank in April 2007 to avoid confusion with other unrelated entities with similar name. After the Retirement of Mr. P. J. Nayak, Shikha Sharma was named as the bank's managing director and CEO on 20 April 2009. As on the year ended 31 March 2009 the Bank had a total income of 137.4504 billion (US$2.74 billion) and a net profit of 18.1293 billion (US$361.68 million). On 24 February 2010, Axis Bank announced the launch of 'AXIS CALL & PAY on atom', a unique mobile payments solution using Axis Bank debit cards. Axis Bank is the first bank in the country to provide a secure debit card-based payment service over IVR.

The Bank's Registered Office is at Ahmedabad and its Central Office is located at Mumbai. At the end of December 2011, The Bank has a very wide
39

network of more than had a network of 1,493 domestic branches and extension counters and at end of March 2012 there were 10,000 ATMs situated in 971 cities and town. The Bank has loans now (as of June 2007) account for as much as 70 per cent of the banks total loan book of 20 trillion. For HDFC Bank, retail assets are around 57 per cent ( 280 billion) of the total loans as of March 2007. In the case of Axis Bank, retail loans have declined from 30 per cent of the total loan book of 258 billion in June 2006 to around 23 per cent of loan book of 412.8 billion (as of June 2007). Even over a longer period, while the overall asset growth for Axis Bank has been quite high and has matched that of the other banks, retail exposures grew at a slower pace. If the sharp decline in the retail asset book in the past year in the case of Axis Bank is part of a deliberate business strategy, this could have significant implications (not necessarily negative) for the overall future profitability of the business. Despite the slower growth of the retail book over a period of time and the outright decline seen in the past year, the banks fundamentals are quite resilient. With the high level of mid-corporate and wholesale corporate lending the bank has been doing, one would have expected the net interest margins to have been under greater pressure. The bank, though, appears to have insulated such pressures. Interest margins, while they have declined from the 3.15 per cent seen in 2003-04, are still hovering close to the 3 per cent mark. (The comparable margins for ICICI Bank and HDFC Bank are around 2.60 per cent and 4 per cent respectively. The margins for ICICI Bank are lower despite its much larger share of the higher margin retail business, since funding costs also are higher). The Bank today is capitalized to the extent of 4.099 billion with the public holding (other than promoters and GDRs) at 53.63%. It is also listed in the top 100 most trusted brands of India in the Brand Trust report. Axis Bank operates the worlds highest ATM site at Thegu, Sikkim at 13,200 feet above sea level.

40

CHAPTER-3 INTRODUCTION OF THE STUDY

41

3.1 LITERATURE REVIEW:

1.) Roma Mitra, Shankar Ravi (2008), A stable and efficient banking sector is

an essential precondition to increase the economic level of a country. This paper tries to model and evaluate the efficiency of 50 Indian banks. The inefficiency can be analyzed and quantified for every evaluated unit. The aim of this paper is to estimate and compare efficiency of the banking sector in India. The analysis is supposed to verify or reject t the hypothesis whether the banking sector fulfils its intermediation function sufficiently to compete with the global players. The results are insightful to the financial policy planner as it identifies priority areas for different banks, which can improve the performance. The paper evaluates the performance of the banking sector in India. 2.) B.Satishkumar (2008), in his articles of evaluation of the financial

performance of Indian private sector banks wrote private sector banks play an important role in development of Indian economy. After liberalization of banking industry underwent major changes. The economic reforms have totally changed the banking sector. RBI permitted new banks to be started in the private sector as per the recommendation of Narashiman Committee. The Indian banking industry was dominated by public sector banks. But now the situation have changed new generation bank with used of technology and professional management has gained a reasonable position in the banking industry. 3.) Petya Koeva (July 2003), in his study on the performance of Indian banks.

During financial liberalization states that new empirical evidence on the impact of financial liberalization on the performance of Indian commercial banks. The analysis focus on examining the behavior and determinants of bank intermediation cost and profitability during the liberalization period. The empirical result suggests that ownership type has significant effect on some performance indicators and that the observed increase in competition during financial

42

liberalization has been associated with lower intermediation cost and profitability of Indian banks.

3.2 PROBLEM STATEMENT:

We have selected the topic Comparative study on performance of public & private sector banks. We have tried to explain the comparison of performance between public sector and private sector bank. We have tried to explain that what is the better between private and public sector bank for different aspects.

3.3 OBJECTIVE OF THE STUDY:

banks. To know the better performance sector. To know the safety and security of the customers savings. To know the growth of the particular sector. To compare the performance between private and public sector

43

CHAPTER-4 RESEARCH METHODOLOGY

44

4.1 RESEARCH DESIGN:

Research design describes as a master plan a series of key decision that services a model for conducting a research project. We have used descriptive research design.

4.2 DATA SOURCES:

Primary Data: --- collected by the survey Secondary data ---collected by the websites

4.3 DATA COLLECTION METHOD

Observation method Interview method Through Questionnaires Through schedules

4.4 POPULATION: Public sector banks Private sector banks

4.5 SAMPLING METHOD:

A population is a group of individual persons, objects, or items from which samples are taken for measurement.
45

Sampling is the act, process, or technique of selecting a suitable sample, or a representative part of a population for the purpose of determining parameters or characteristics of the whole population. Methods of Sampling: The random sample This may be the most important type of sample. A random sample allows a known probability that each elementary unit will be chosen. For this reason, it is sometimes referred to as a probability sample. This is the type of sampling that is used in lotteries and raffles. Here in this research project we have used random sample method for sampling.

4.6 DATA COLLECTION INSTRUMENT:

Structured Questionnaire

46

CHAPTER-5 DATA ANALYSIS AND INTERPRETATION

47

ANALYSIS ON THE BASIS OF THE QUESTIONNAIRE (A)PRIMARY ASPECTS

1. WHICH TYPE OF ACCOUNT DO YOU HAVE? SECTOR Saving Current Salary F.D NO. OF RESPONDENT 156 60 06 26 PERSANTAGE 62.4% 24% 2.4% 10.4%

CHART-1

ACCOUNT TYPE
SALARY 2% F.D 11%

CURRENT 24% SAVING 63%

Majority accounts holders have saving account. 24% customers have current account. Only 2.4% customers have salary account. 10.4% customers have fixed deposit in bank.
48

2. IN CASE OF MORE THAN ONE ACCOUNT, MOST PREFFERED BANK.

SECTOR Public Public Other

NO.OF RESPONDENTS 115 65 20

PERCENTAGE 61% 29% 10%

CHART-2

PREFFERED SECTOR
OTHER 2% PRIVATE 22%

PUBLIC 76%

61% customers preferred public sector bank. 29% customers preferred private sector bank. Only 10% customers belong from other bank (co-operative and credit societies.)

49

(B)QUALITATIVE ASPECTS
1. CLEANNESS, VISIBILITY AND SIGNBOARD.

SECTOR PUBLIC PRIVATE

V.GOOD 39 24

GOOD 76 41

AVERAGE 00 00

POOR 00 00

CHART-1

PUBLIC 66% 63%

PRIVATE

33%

36%

0 V.GOOD GOOD

0 POOR

AVERAGE

About the cleanness, visibility and signboards of the banks, both the public and private sectors customers have same answer. There is no variation in answer from the customers of public and private sector banks.

50

2. SPACE AVAILABLE FOR SITTING, WRITING AND WAITING.

SECTOR PUBLIC PRIVATE

V.GOOD 37 22

GOOD 78 43

AVERAGE 00 00

POOR 00 00

CHART-2

PUBLIC 68% 66%

PRIVATE

32%

33%

0 V.GOOD GOOD

0 POOR

AVERAGE

Both the customers of public and private sectors bank like the space available for sitting, writing and waiting same. There is no major difference in the answer of customers of both the sector bank.

51

3. EASY AVAILABLE OF LOOSE PAY SLIP, WITHRAWAL SLIP, DDs / TTs FORMS & CHALLANS.

SECTOR PUBLIC PRIVATE

V.GOOD 45 23

GOOD 70 42

AVERAGE 00 00

POOR 00 00

CHART-3

PUBLIC 61% 60%

PRIVATE

39%

35%

0 V.GOOD GOOD

0 POOR

AVERAGE

The facility of Easy available of loose pay slip, withdrawal slip, DDs / TTs forms & challans is better in public sector bank than the private sector bank by 5%.

52

4. GENERAL BEHAVIOUR OF STAFF.

SECTOR PUBLIC PRIVATE

V.GOOD 55 26

GOOD 40 20

AVERAGE 18 19

POOR 00 00

CHART-4

PUBLIC 47% 38% 34% 30%

PRIVATE

29%

15%

0 V.GOOD GOOD AVERAGE POOR

The general behavior of the staff of public sector banks is better than the private banks.

53

5. EXPERIENCE ABOUT LOCKER SERVICES.

SECTOR PUBLIC PRIVATE

V.GOOD 00 10

GOOD 56 25

AVERAGE 09 00

POOR 00 00

CHART-5

PUBLIC

PRIVATE

48% 38%

15% 8% 0 V.GOOD GOOD 0 AVERAGE 0 POOR 0

In the locker facility the majority customers preferred co-operative and other banks. But as a comparison, the customers of the private banks are more satisfied than the public sector bank.

54

6. INTERST RATE OF FIXED DEPOSITS.

SECTOR PUBLIC PRIVATE

V.GOOD 40 20

GOOD 65 32

AVERAGE 10 08

POOR 00 00

CHART-6

PUBLIC 56% 49%

PRIVATE

35% 30%

8%

12% 0 0 POOR

V.GOOD

GOOD

AVERAGE

The rate of fixed deposit is better in the public sector banks than the private banks.

55

7. INTEREST RATE OF LOAN.

SECTOR PUBLIC PRIVATE

V.GOOD 15 8

GOOD 50 24

AVERAGE 25 15

POOR 10 13

GRAPH-7

PUBLIC 43% 36%

PRIVATE

21% 13% 12%

23%

20%

8%

V.GOOD

GOOD

AVERAGE

POOR

According to the account holders, the rate of the loan more comfortable in public banks than the private banks.

56

8. IMMEDIATE SOLUTION OF YOUR COMPLAINT.

SECTOR PUBLIC PRIVATE

V.GOOD 30 30

GOOD 70 35

AVERAGE 15 00

POOR 10 00

CHART-8

PUBLIC 60% 53% 46%

PRIVATE

17%

13% 0 0 POOR 0

V.GOOD

GOOD

AVERAGE

The solution of immediate complaint is better in private banks than the public sector banks.

57

9. SECURITY OF THE INVESTED FUND.

SECTOR PUBLIC PRIVATE

V.GOOD 55 14

GOOD 60 20

AVERAGE 00 18

POOR 00 13

GRAPH-9

PUBLIC 52%

PRIVATE

48%

30% 21%

27% 20%

0 V.GOOD GOOD AVERAGE

0 POOR

One of the important aspects of all the customers that the security of the fund. The public sector bank provides best security of the invested fund than the private sector banks.

58

(c) QUANTITATIVE ASPECTS

1. PAYMENT OF CASH, CHEQUE & DEMAND DRAFTS.

SECTOR

WITHIN 15 MNT

15

TO MORE THAN MNT 25

25 MNT

PUBLIC PRIVATE

75 45

40 20

00 00

GRAPH-1

PUBLIC

PRIVATE

65%

69%

34%

30%

0 WITHIN 15 MNT 15 TO 25 MNT

MORE THAN 25 MNT

For the payments of cash, cheques and demand drafts both the sectors perform well. There is minor difference of 4%.

59

2. RECEIPT OF CASH, CHEQUE AND PURCHASE OF DDs.

SECTOR

WITHIN 15 MNT

15

TO MORE THAN MNT 25

25 MNT

PUBLIC PRIVATE

25 25

75 30

15 10

GRAPH-2

PUBLIC

PRIVATE

65%

38% 30% 21% 13% 15%

WITHIN 15 MNT

15 TO 25 MNT

MORE THAN 25 MNT

For the receipts of cash, cheques and purchase of DDs, the private banks performed well than the public sector banks. But the private sector banks leading in time limit of 15 minute where the public sector banks leading in time limit of 15 to 25 minute. So overall both the banks performed well.
60

3. DELIVERY OF FIXED DEPOSIT RECEIPTS.

SECTOR

WITHIN 15 MNT

15

TO MORE THAN MNT 25

25 MNT

PUBLIC PRIVATE GRAPH-3

15 20

80 35

20 10

PUBLIC

PRIVATE

69% 53%

30% 17% 15%

13%

WITHIN 15 MNT

15 TO 25 MNT

MORE THAN 25 MNT

Time taken into delivery of fixed deposit receipt, private sector leading in time limit of 15 minute and public sector bank leading in time limit of 15 to 25 minute. So if we assume as average of both time limit than both the public and private sector banks performed well.
61

4. UPDATING OF PASSBOOK.

SECTOR

WITHIN 15 MNT

15

TO MORE THAN MNT 25

25 MNT

PUBLIC PRIVATE

45 45

65 20

00 00

GRAPH-4

PUBLIC

PRIVATE

69% 56%

39% 30%

0 WITHIN 15 MNT 15 TO 25 MNT

MORE THAN 25 MNT

For the updating of pass books, the private sector banks performed well according to the customers experience.

62

5. ISSUE OF CHEQUE BOOK.

SECTOR

WITHIN 15 MNT

15

TO MORE THAN MNT 25

25 MNT

PUBLIC PRIVATE

25 25

65 40

25 00

GRAPH-5

PUBLIC

PRIVATE

61% 56%

38%

21%

22%

0 WITHIN 15 MNT 15 TO 25 MNT MORE THAN 25 MNT

The private sector banks also performed well in issuing of cheque books than the public sector banks. Private sector banks taking less time for issuing of cheque books than the public sector banks.

63

6. TIME TAKEN IN SANCTIONING LOAN AGAINST BANKS DEPOSIT.

SECTOR

WITHIN 30 MNT

30

TO MORE THAN 1 HR 00 00

60 MNT 70 40

PUBLIC PRIVATE

35 20

GRAPH-6

PUBLIC

PRIVATE

60%

61%

30%

30%

0 WITHIN 30 MNT 30 TO 60 MNT

MORE THAN 1 HR

According to the customer for the loan against the deposit both the sectors performed at the same level.

64

3. COMMON ASPECTS 1. SATISFACTION LEVEL OF THE CUSTOMER SECTOR PUBLIC PRIVATE H.SATISFIED 30 15 SATISFIED 65 35 NEUTRAL 20 15 DISSATISFIED 00 00

GRAPH-1

PUBLIC 56% 53%

PRIVATE

26%

23% 17%

23%

0 HIGHLY SATISFIED SATISFIED NEUTRAL

DISSATISFIED

The customers of the public banks are more satisfied than the private banks.

65

2. IF OPTION GIVES TO THE CUSTOMER, WOULD YOU LIKE TO SHIFT FROM THE PRESENT BANK?

SECTOR PUBLIC PRIVATE

YES 35 25

NO 80 40

GRAPH-2

PUBLIC

PRIVATE 69% 62%

38% 31%

YES

NO

The percentages of the customer who want to change the bank are more in private sector bank than the public sector bank.

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3. WHICH BANK (SECTOR) WOULD YOU LIKE TO GO?

SECTOR PUBLIC PRIVATE

PUBLIC 25 17

PRIVATE 10 8

GRAPH-3
PUBLIC 71% PRIVATE 68%

29%

32%

PUBLIC

PRIVATE

There are more customers who want to go from private to public sector than the public to private sector banks. 71% customers of public banks remain in same and only 29% change the sector. In private sector 68% customers go for the public banks and only 32% customers remain same sector.
67

HYPOTHESIS ON THE BASIS OF THE QUESTIONNAIRE

1) Satisfaction level and the qualitative aspects are related or not. ASPECTS H.SATISFIED SATISFIED NEUTRAL V.GOOD 30 25 00 GOOD 15 60 10 00 85 AVG. 00 15 25 00 40 POOR 00 00 00 00 00 TOTAL 45 100 35 00 180

DISSATISFIED 00 TOTAL 55

Step: 1 Ho: Satisfaction level and qualitative aspects are independent. H1: Satisfaction level and qualitative aspects are not independent. Step: 2 The appropriate statistical test is chi-square X2= (fo-fe) 2 fe Step-3 Step-4 Degree of freedom= row (4-1) =3 * column (4-1) =3 = 9 X2 0.01,9 = 21.66. An observed chi-square value of more than 21.66 must be obtained to reject the null hypothesis.
68

Alpha is 0.01

Step-5 Fo 30 15 00 00 25 60 15 00 00 10 25 00 00 00 00 00 Fe 13.75 21.25 10 00 30.55 47.22 22.22 00 10.69 16.53 7.77 00 00 00 00 00 Fo-Fe 16.25 -6.25 -10 00 -5.55 12.78 -7.22 00 -10.69 -6.53 17.23 00 00 00 00 00
(Fo-Fe)2 (Fo-Fe)2/Fe

264.06 39.06 1e00 00 30.80 163.33 52.12 00 114.27 42.64 296.87 00 00 00 00 00

19.20 1.84 10 00 1.01 3.46 2.35 00 10.69 2.58 38.21 00 00 00 00 00

X2 = 89.34
69

Step-6. Business conclusion:- And as calculated value of Chi Square statistic is above table value the Null hypothesis is rejected and accept alternatives. Step-7 The customers of the bank are satisfied with the services provided by the banks. So we can say that the qualitative aspects and satisfaction level are dependent.

70

2) Satisfaction level and issue of statement of account ASPECTS Same day Next day WITHIN 2 TOTAL DAYS H.SATISFIED 35 SATISFIED NEUTRAL 58 00 10 32 15 00 57 00 10 20 00 30 45 100 35 00 180

DISATISFIED 00 TOTAL 93

Step: 1 Ho: Satisfaction level and issue of statement of account are independent. H1: Satisfaction level and issue of statement of account are not independent. Step: 2 The appropriate statistical test is chi-square X2= (fo-fe) 2 fe Step-3 Step-4 Degree of freedom= row (4-1) =3 * column (3-1) =2 = 6 X2 0.01,6 = 16.81. An observed chi-square value of more than 16.81 must be obtained to reject the null hypothesis.
71

Alpha is 0.01

Step-5 Fo 35 10 00 58 32 10 00 15 20 00 00 00 Fe 23.25 14.25 5.83 51.66 31.66 16.66 18.08 11.08 5.83 00 00 00 Fo-Fe 11.75 -4.25 -5.83 6.34 0.34 -6.66 -18.08 3.92 14.17 00 00 00
(Fo-Fe)2 (Fo-Fe)2/Fe

138.06 18.06 33.99 40.19 0.12 44.35 326.89 15.37 200.79 00 00 00

5.93 1.27 5.83 0.78 0.004 2.66 18.08 1.38 34.44 00 00 00

X2= 70.38

Step-6. Business conclusion:- And as calculated value of Chi Square statistic is above table value the Null hypothesis is rejected and accept alternatives.

72

Step-7 The customers of the bank are satisfied with the time taken for the issue of statement of account of the provided by the banks. So we can say that the quantitative aspects and satisfaction level are dependent.

73

3) Satisfaction level and time taken in proceeds of outstation cheque ASPECTS Same day Next day WITHIN 2 TOTAL DAYS H.SATISFIED 40 SATISFIED NEUTRAL 69 00 05 31 15 00 51 00 00 20 00 20 45 100 35 00 180

DISATISFIED 00 TOTAL 109

Step: 1 Ho: Satisfaction level and time taken in proceeds of outstation cheque are independent. H1: Satisfaction level and time taken in proceeds of outstation cheque are not independent. Step: 2 The appropriate statistical test is chi-square X2= (fo-fe) 2 fe Step-3 Alpha is 0.01

74

Step-4 Degree of freedom= row (4-1) =3 * column (3-1) =2 = 6 X2 0.01,6 = 16.81. An observed chi-square value of more than 16.81 must be obtained to reject the null hypothesis. Step-5

Fo 40 05 00 69 31 00 00 15 20 00 00 00

Fe 27.25 12.70 05 60.55 28.33 11.11 21.19 9.91 3.88 00 00 00

Fo-Fe 12.75 -7.7 -05 8.45 2.67 -11.11 -21.19 5.09 16.12 00 00 00

(Fo-Fe)2

(Fo-Fe)2/Fe

162.56 59.29 25 71.40 7.13 123.43 449.01 25.91 259.85 00 00 00

5.96 4.67 05 1.18 .25 11.11 21.19 2.61 66.97 00 00 00

X2=68.31
75

Step-6. Business conclusion:- And as calculated value of Chi Square statistic is above table value the Null hypothesis is rejected and accept alternatives. Step-7 The customers are satisfied with the time taken for the proceeds of outstation cheque by the banks. So we can say that this quantitative aspects and customer satisfaction are dependent.

76

4) Satisfaction level and time taken in loan against deposits ASPECTS Same day Next day WITHIN 2 TOTAL DAYS H.SATISFIED 40 SATISFIED NEUTRAL 69 00 05 31 15 00 51 00 00 20 00 20 45 100 35 00 180

DISATISFIED 00 TOTAL 109

Step: 1 Ho: Satisfaction level and time taken in loan against deposits are independent. H1: Satisfaction level and time taken in loan against deposits cheque are not independent. Step: 2 The appropriate statistical test is chi-square X2= (fo-fe) 2 fe Step-3 Alpha is 0.01

77

Step-4 Degree of freedom= row (4-1) =3 * column (3-1) =2 = 6 X2 0.01,6 = 16.81. An observed chi-square value of more than 16.81 must be obtained to reject the null hypothesis. Step-5 Fo 34 11 00 55 35 10 07 15 13 00 00 00 Fe 24 15.25 5.75 53.33 33.88 12.78 18.66 11.86 4.47 00 00 00 Fo-Fe 10 -4.25 -5.75 1.67 1.12 -2.78 11.66 3.14 8.53 00 00 00
(Fo-Fe)2 (Fo-Fe)2/Fe

100 18.06 33.06 2.79 1.25 7.73 135.96 9.86 72.76 00 00 00

4.17 1.18 5.75 0.052 0.04 0.60 7.29 0.83 16.28 00 00 00

X2=36.19

78

Step-6 Business conclusion:- And as calculated value of Chi Square statistic is above table value the Null hypothesis is rejected and accept alternatives. Step-7 The customers are satisfied with the time taken for the proceed of loan against the deposit of the customer provided by the banks. So we can say that customer satisfaction and this quantitative aspect are dependent.

79

Now we will see the major aspects on the basis of which we will come to know that which sector bank is better performed.
No of Customer of the individual sector:SECTOR Public Public Other NO.OF RESPONDENTS 115 65 20 PERCENTAGE 61% 29% 10%

PREFFERED SECTOR
OTHER 2% PRIVATE 22%

PUBLIC 76%

The majority of the customers have an account with the public sector bank like 76%. There are only 22% people who are using the services of the private sector bank. We can say that the public sector banks performed well in terms of no. of customers.
80

 Security of the fund invested in individual sector of the customers:SECTOR PUBLIC PRIVATE V.GOOD 55 14 GOOD 60 20 AVERAGE 00 18 POOR 00 13

PUBLIC 52%

PRIVATE

48%

30% 21%

27% 20%

0 V.GOOD GOOD AVERAGE

0 POOR

Every customers want to security of invested fund in the bank. On the basis of the data collection we can say that the public sector banks provide the efficient security of the fund. Because of government controlling bank there is no chance at all to loose the invested fund of the customer. For the security of fund the public sector banks performed very well than the private sectors bank.
81

 Satisfaction level of the customer by individual sector:SECTOR PUBLIC PRIVATE H.SATISFIED 30 15 SATISFIED 65 35 NEUTRAL 20 15 DISSATISFIED 00 00

PUBLIC 56% 53%

PRIVATE

26%

23% 17%

23%

0 HIGHLY SATISFIED SATISFIED NEUTRAL

DISSATISFIED

On the basis of the collected data we can say that the customers who are

using the services of the public sector banks are more satisfied than the private sector banks. There is not more than 5% variation but the public sector banks are leading and performed well.

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 Do the customer shift from the present bank:-

SECTOR PUBLIC PRIVATE

YES 35 25

NO 80 40

PUBLIC

PRIVATE 69% 62%

38% 31%

YES

NO

There are fewer customers who are shifted from the present bank in public

sector than the private sector.

There are only 31% customer shifts from the present bank in public sector

banks while in private sector banks 38% customers want to shift from the present bank.
The public sector banks performed well that is why 69% customer dont

want to shift from the present bank.

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 In which sector the customer would like to shift:SECTOR PUBLIC PRIVATE PUBLIC 25 17 PRIVATE 10 8

PUBLIC 71%

PRIVATE 68%

29%

32%

PUBLIC

PRIVATE

There are 31% customer want to shift from the present bank but among the 71% customer go for the public sector and only 28% customer go for the private sector. There are 38% customer want to shift from private sector banks among the 68% customer go for the public sector which proves that public sector performed well in the market.

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 General behavior of the staff by individual sector banks:SECTOR PUBLIC PRIVATE V.GOOD 55 26 GOOD 40 20 AVERAGE 18 19 POOR 00 00

PUBLIC 47% 38% 34% 30%

PRIVATE

29%

15%

0 V.GOOD GOOD AVERAGE POOR

The behavior of the staff is important for the relation between the bank and the customers. On the basis of the data collection we can say that the according to the customer point of view the staff of public sector banks behave better than the private sector banks.

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 Return on fixed deposits by individual sector:SECTOR PUBLIC PRIVATE V.GOOD 40 20 GOOD 65 32 AVERAGE 10 08 POOR 00 00

PUBLIC 56% 49%

PRIVATE

35% 30%

8%

12% 0 0 POOR

V.GOOD

GOOD

AVERAGE

The return on the fixed deposits provided by the banks, better in the public sector banks than the private sector banks. There is a variation of 6 to 7% between public and private sector banks, but the customer want higher return with the safety of the fund.

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CHAPTER-6 RESULT AND FINDINGS

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Qualitative Aspects: The cleanness, visibility and signboards facility provided by the private sector banks are better than public sector banks by 3% variation. The availability of space for sitting, writing and wing are same in the both the public and private sectors banks. All types of slip, challans and others form are easily available in both the public and private sectors banks. According to the customer point of view the behavior of the staff are better in the public sector banks leading by 7 to 8% than the private sector banks. According to the customer the facility of locker services is better in private sector banks. One of the important is return on FDs, public sector banks provide more than the private sector banks. The customers are more comfortable with public sector banks in terms of interest rate of loans. The solution of the complaint provides immediately in private sectors bank. One of the important aspects securities of the fund, the public sector banks provides best security of the customers fund.

Quantitative Aspects: Time taken into payment of cash, cheque and demand drafts are same in both the public and private sectors banks. Time taken in sanctioning loan against the deposit are quit same in both public and private sectors banks. Time taken into receipt of cash, cheque and purchase of DDs are not so different between public and private sector banks.

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 Time taken into delivery of fixed deposit is less in private sector banks than the public sector banks. For the updating of passbooks, private sector banks takes less time than the public sector banks. for the issuing the cheque books, private sector banks taking less time than the public sector banks. Common Aspects: Customers are more satisfied with the public sector bank than the private sector banks, but there is no major variation between them. The no. of customers is more in shifting from the present bank in private sector. Only 29% customers of public banks go for the private banks, where as 68% customers of private banks go for the public banks. The public sector banks leading with the no. of customer by 61%.

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CHAPTER-7 CONCLUSION/ SUGGESTION

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 According to the customer point of view the public sectors bank performed well. The most important reason of public sector bank performed well are: 1. Security of the customers fund 2. Satisfaction level of the customer 3. General behavior of staff are good 4. Return on invested funds are better 5. Less time taken in different operation of services. Public sector banks should provide the better facility in terms of quantitative and qualitative aspects 1. Issuing the cheque book 2. Updating the passbook 3. Delivery of fixed deposits receipt 4. Provide better locker facility 5. Provide better immediate solution of complaint The interest rate of loan is high in the private sector banks. The interest rate on fixed deposit should increase. The private sector banks cant provide the security of customers fund as public sector banks provide. The majority of customers are using the locker facility in other sector banks like co-operative banks.

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CHAPTER-8 BILIOGRAPHY

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 www.google.com www.wikipedia.com http://en.wikipedia.org/wiki/Banking_in_India www.scribd.com www.icicibank.com www.bankofbaroda.com

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QUESTIONNAIRE
This data will be used for the only academic purpose. It can not be disclose anywhere and will be confidential.
PART-A PRIMARY ASPECT

Sr. No.

Questions

Answer

1. 2.

Do you have an account? Which bank do you have an account?

Yes Bank name Public

No

Private

Other

3. 4.

Which type of account do you have? In case of you have account with more than one bank, which one is your most proffered bank? Bank name Public Private Other

PART- B QUALITATIVE ASPECTS Sr. No. Services V.Good Good 1. 2. 3. 4. Cleanliness, visibility of signboards Space available for sitting, waiting, writing Easy available of loose pay slip, withdrawal slip, DDs / TTs forms & challans. General behavior of staff members
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Rating Average Poor

5. 6. 7. 8. 9. 10.

Your experience about locker service Interest rate of F.Ds Interest rate on loan Expert service available in handling of import-export business Immediate solution of your complaint Security of your fund

PART-C QUANTITATIVE ASPECTS Sr. No. Questions

Within 15 Min.

Answers
15 to 25 Min. More than 25 Min

1. 2. 3. 4. 5. 6. 7. 8. 9.

Payments of cash, cheque and Demand drafts Receipts of cash, cheque and purchase of DDs Delivery of fixed deposits receipts Updating of passbook Issue of cheque book Credit of proceeds of domestic transfer Issue of statement of account Time taken in realization of proceeds of outstation cheque Time taken in sanctioning loan against banks deposit Same day
First day Within 14 days Within 30 Min

Next Day
Within 7 days 14-21 days

Within 2 days
7-15 days More than 21 days More than 1 hr

30-60 Min

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OTHER COMMON ASPECTS

1. Are you satisfied with overall services provided by the bank? Highly satisfied Dissatisfied 2. If an option given to you, would you like to shift from the present bank? Yes If yes 3. Which bank would you like to go? Name: _______________________ Private Public No Satisfied Neutral

PERSONAL DETIALS

1. Name 2. Age 3. Gender 4. Profession 5. Address

: _______________________________________ :____________ :____________ :_______________ :_______________

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