Private Sector Banks In India Research Articles

Measuring Consumer Expectation in Banking Sector: A Comparative Analysis”

This study is intended to compare the expectations of Indian consumers from their banks with what bank actually provides. Additionally, the study helps to determine if there is any significant difference in consumers’ expectations and banks’ offerings between public sector and private sector banks in India. This paper reports on a quantitative study of executives working in private and public sector organizations and colleges in Northern India. The objective of this study is to determine the factors that have the significant gap between expectations and actual in terms of banks’ service quality. There is not any significant difference between consumers’ expectations between private and public sector banks. There is significant difference between private and public sector banks’ actual offerings. There is significant difference (except Tangible factor) between consumers’ expectations and bank’s actual offerings for Private sector banks. There is significant difference between consumers’ expectations and bank’s actual offerings for Public sector banks. The deviation of consumers’ expectations and bank’s actual offerings is more in public sector banks as compared to private sector banks.

Performance evaluation of public and private sector banks in India using DEA approach

This paper seeks to measure the OTE, PTE and SE of PuSBs and PrSBs for the year 2009 to 2010 using DEA. The findings show that: 1) PuSBs outperformed PrSBs in all categories of efficiencies; 2) the contribution of scale inefficiency in overall technical inefficiency has been observed to be smaller than the contribution of pure technical inefficiency; 3) in PuSBs, State Bank of India (SBI) & its Associates outperformed nationalised banks and in PrSBs, new PrSBs outperformed old PrSBs; 4) the highest and lowest levels of average overall technical inefficiency have been seen for old PrSBs (48.8%) and SBI & its Associates (2.2%), respectively; 5) the results of the present study, by sensitivity analysis, are quite robust to discriminate between efficient and inefficient banks.

A Study on Profitability Analysis of Private Sector Banks In India

A Study on Profitability Analysis of Private Sector Banks In India

A Comparison of Relationship Marketing in Public and Private Sector Banks in India

Relationship Marketing is a new phenomenon in marketing. It is a multifunctional approach, describing marketing as “an integrative activity involving functions across the organization, with emphasis on facilitating, building and maintaining relationship over time.” This trend has been catalyzed by the general shift to information highway, IT, database management, whereby marketers have leveraged this new technology to create closer ties with their customers. The overall objective of relationship marketing is to build and facilitate long-term/life-time customer relationships. The present study examines Relationship Marketing in the context of banking. The primary objective of the study is to analyze customer perceptions of Relationship Marketing in public and private sector banks in India. It further discusses various barriers to the implementation of Relationship Marketing in Indian Banking Sector. The study is based on a survey of a random sample from the of customer databases of five public sector and five private sector banks. The data was collected using a structured questionnaire, pertaining to five dimensions of Relationship Marketing, viz. Trust, Bonding, Communication, Relationship Quality, and Conflict-handling, and the overall Customer Satisfaction with the service. The findings of the study indicate that Relationship Marketing in both public sector and private sector banks has to go a long way to go to become effective. There was found to be a significant gap between expectations and perceptions in the Bonding, Communication, and Conflict-handling aspects of Relationship Marketing. Further, Communication and Conflict-handling aspects were found to be significant drivers of overall Customer Satisfaction.

A Comparison of Indian Public and Private Sector Banks Based on Banking Service Quality Model

Indian banks are amongst the most technologically advanced in the world, with vast networks of branches empowered by strong banking systems, and their product and channel distribution capabilities are on par with those of the leading banks in the world. The Indian banking system was heavily dominated by nationalised commercial banks until globalisation. The financial regulation and credit controls imposed by the government created a system in which competition was very less. A more competitive banking environment has gradually been achieved through the deregulation measures and permission granted to many private and foreign banks into the Indian banking industry. These changes have also caused a compression of profits and a re-orientation of banking strategy towards quality service provision. The introduction of new private sector banks and foreign banks has decreased margins and revenues to banks. As a result of the heightened competition, bank service quality has become an increasingly important factor in determining market shares and profitability in banking sector. With a high potential in the Indian banking industry, all leading banks are differentiating themselves based on service quality offering. The results of the study show that there is a significant difference between the expectations and the perceptions of banking service quality of the respondents for all of the variables under the Banking Service Quality (BSQ) model. It was found that public banks fared better overall than private/foreign banks in terms of perceptions of banking service quality. This can be explained partially by the experience with private/foreign banks worldwide. With the sudden collapse of some of the oldest and most well-established international banks and the onset of the global financial meltdown, customers have become more cautious about private/foreign banks. At the same time the trust level on public banks have increased. Therefore, private/foreign banks would have to concentrate on meeting customer expectations better.

Economic Value Added in Banks and Development Financial Institutions

Economic Value Added (EVA) has become a popular and powerful tool for managers to measure performance and for guiding investment decisions. Several leading companies have adopted EVA as the metric for evaluating performance and they have also been successful in enhancing the wealth of their shareholders. In India also, EVA is gaining acceptance. EVA is operating profit after adjusting for taxes minus a charge for the capital that is used. Alternatively, EVA can be seen as a performance measure where the returns earned are bench marked against the cost of capital. In this paper, we measure the performance of both public and private sector banks in India using the EVA yardstick.The results of the study reveal that most banks in the public and private sector, as well as the development financial institutions in India are not earning positive EVA. This means that the return on capital employed by these financial firms are less than the cost of capital. In other words the return on investors capital is less than the opportunity cost of capital which means that investors wealth is being destroyed to the extent to which the returns are lower than what would have been required.As the banks and DFIs are increasingly relying on the capital markets to meet their capital adequacy requirements, it is important that they pay adequate attention to earning a positive EVA. Inadequate return on the capital employed by the banks would make it difficult to access the capital markets to expand their capital base, which could lead to lower growth in loans and advances, causing a slowdown in the general economic activity.

Efficiency for Indian public sector and private sector banks in India: assessment of impact of global financial crisis

Indian banking is undergoing major transformation since the financial sector reforms in 1990s. The objective of this paper is to investigate the extent to which global financial crisis has affected the efficiency of Indian banks. We measure production efficiency through application of data envelopment analysis. Data envelopment analysis is non-parametric technique of data envelopment analysis (DEA). In the research, interest income and non-interest income were used as outputs and interest expenses and non-interest expenses were used as inputs. Efficiency scores were calculated for the financial year 2007–2008 to financial year 2009–2010. We have observed that efficiency of banks came down in the year 2008–2009. However, the 2009–2010 shows encouraging results as the efficiency figures have surpassed figures of earlier years. This indicates that Indian banking is on a path of revival.

Service in Times of Recession: A Comparative SERVQUAL Study of Retail Banking between Axis Bank and HDFC Bank in Kolkata, India

“If there is any secret of success, it lies in the ability to get the other person’s point of view, and seeing things from his angle” - Henry Ford. The above statement shows how important is a customer’s point of view and perception. Any organization which aspires to enjoy sustained preference from its target group of customers would do well to put a significant effort in knowing the key elements which determine loyalty and preference of the prospective/present customer. As a result of globalization and technological advancements, today, the competition has peaked. In this environment, only those companies can survive which offer the best services and products to the customers. Due to so many options available to the customers in the same place, attracting customers has become a tough job for the companies. Companies should possess knowledge about consumer behavior and customer satisfaction in order to survive in the market. Once the company understands the expectations of the customers, it enables the management to innovate better products/services with added benefits. This, in turn, increases its market share/profitability or even both. This stands true for the Banking sector too; also the dynamic and flexible nature of the communication channel as well as its ubiquitous reach has helped in leveraging a variety of banking activities.Naturally the banks have become more customer oriented and offer customized services to meet individual needs. There is an increased focus on the high net-worth customers as they contribute more to the business. Banks have been offering 24-hour service to customers all 365 days of the year through their customer care centers and anytime banking services.Since liberalization of the Indian Economy in the early 90’s the market environment has turned turbulent & dynamic the going has got a lot tougher and after coming through a global recession, the service element in banking sector has turned even more important. In such a back drop it becomes interesting to study the perceived quality of the services rendered by the Axis Bank and the HDFC Bank during the height of recession and to ponder over as to whether their operations in those difficult times has anything to do with their present market status.Through the following pages we would reflect upon the present market status of the Axis Bank and the HDFC Bank in India and try to understand how and if at all the respective customer’s (customers of retail banking) of the above mentioned banks expected and perceived the service levels during recession through a SERVQUAL study (which was conducted during fourth quarter of 2008).The SERVQUAL study aims to measure the service quality of the HDFC and AXIS banks by understanding customers’ perception and expectation. For this purpose questionnaires have been developed by taking into consideration the five dimensions of the SERVQUAL model. A quantitative research (same questionnaire for every respondent) has been carried out by with a sample of 150 customers. After collecting the primary data through survey, an in-depth analysis has been done by comparing the service quality of the two banks. This study aims at comparing two leading private sector banks of India; the Axis Bank and the HDFC Bank.

Excellency in banking services - A new road map for banks in the emerging new competition

The widening gap between desirability and availability is becoming a major cause of dissatisfaction in the banking industry. The bridging of this gap is one of the solutions to make the customers delight. The present study analyzes the widening gap between desirability and availability regarding reliability, accuracy, confidentiality, flexibility, e-channels, high attention to customers, low service charges and overall satisfaction of customers in three bank groups i.e. public sector banks, Indian private sector banks and foreign banks. The survey was conducted in Chandigarh in the month of October, 2008. Three banks have been selected one each from three bank groups; PNB from public sector banks, HDFC bank from Indian Private Sector banks and Amro bank from foreign banks have been taken for consideration. On the basis of five point Likert type scale, survey concludes that desirability regarding all the parameters is very high as compared to availability of banking services and on the basis of this empirical survey, study recommends some measures to bridge this gap between the D/A of service quality parameters in the banking sector in the emerging competition.

'E-banking' initiatives in Indian banks – a case of business process reengineering (BPR) implementation

The intention of the paper is to find out whether e-banking initiatives in Indian public sector banks (PSBs) can be considered as a successful case of BPR implementation. Attempt has been made to study e-banking solutions adopted by Indian PSBs and to evaluate their performance in improving the level of customer satisfaction and the business performance of the PSBs. The study is based on secondary data on selected Indian public and private sector banks. The research shows that there is a growth in the usage of ATMs and in the volume of electronic funds transfer which reflects that customers prefer electronic delivery channel more than traditional branch banking. The growth of productivity indicators of reengineered banking process is higher than that of the partially computerised banks and banks following traditional mode of operation. The research work brings out that information technology (IT) application has a very prospective future in India.

Job satisfaction in private sector banks in India

Job satisfaction is considered to be one of the primary requirements of a well-run organisation. This study focuses on employees of private banks in India and aims to identify the factors/variables instrumental for their job satisfaction and to empirically test such identified variables with the help of a survey. Several factors/variables have been clubbed as: work aspects, compensation, training, career development, supervision and work life balance. Sample comprised managerial and non-managerial staff of selected private sector banks in India; total sample size was 102. Reliability analysis was carried out using Cronbach alpha and, thereafter, factor analysis was conducted to understand factor loadings on the identified variables.

Service Quality Gap Analysis in Indian Banks: An Empirical Study

Introduction of Liberalisation Privatisation and Globalisation (LPG) in Indian economy has affected almost all the sectors and industries of the economy. Indian banking industry is no exception to that. The net result of such policy initiatives has been increased competition at the marketplace. The fight for customers has got intensified. Literatures establish a direct link between service quality and marketing performance of banks thus concluding that loyal customer base can only be created through superior service. Hence effectiveness of service quality of banks is largely being tested to forecast the marketing performances of the banks. It has also been seen that degree and effectiveness of service quality has been said to be different in case of public and private sector bank. The paper investigates the service quality gaps existing with the offerings of the leaders of public and private sector banks of India, viz., SBI and HDFC Bank. An attempt has also been made to identify the weak links of select banks and enable the banks to understand the areas of their strengths and weaknesses and work upon to infuse efficiency and effectiveness.

Customer Relationship Management in Indian Banks

Indian Banks have recorded a phenomenal growth in the past decade with the initiation of Economic Reforms. The banks, both Public and Private, have transformed themselves into profit-oriented business organizations besides playing a developmental role in the economy. In an attempt to be more profitable, the banks have become competitive and more customer-oriented. This new orientation has compelled them to take a more pragmatic approach for conducting the business. In the backdrop of this scenario, the study reviewed implementation of Customer Relationship Management (CRM) and the impact of CRM on service quality and customer retention in ten public and private sector banks of India. It was found that the Private Sector Banks have been able to implement the CRM practices more effectively as compared to their Public Sector counterparts. This fact has further been corroborated by the findings of the service quality level being provided by these banks. Further, it was observed both the public and private sector banks scored the least on responsiveness and empathy factors. Public Sector Banks have fared better in terms of reliability and assurance whereas the Private Sector Banks have fared better in terms of tangibility, reliability and assurance. Further, the results suggest that the banks (whether public or private) are equally affected by CRM initiatives they undertake to retain the customers.

Comparative Study of Promotional Strategies adopted by Public and Private Sector Banks in India

Marketing strategies become more crucial when they are executed to design, distribute and promote banking services. The present study is descriptive in nature and takes out significant differences in the promotional strategies adopted by private and public sector banks in India. The study shows noteworthy results and opinions of customers, which can be very useful for designing effective promotional strategies for banks. The study reveals remarkable facts connected with customers’ perception about promotional tools of both sectors’ banks and also about the most effective tools to promote banking services.

An Assessment of Internal Market Orientation in Jammu and Kashmir Bank Through Internal Customers Perspective

The study aims at measuring the level of Internal Market Orientation (IMO) through internal customers' perspective particularly with regard to its three behavioural components viz., intelligence generation, intelligence dissemination and responsiveness. Inadequate research inputs to examine the extent of IMO particularly with respect to banking sector have encouraged the efforts of undertaking the present initiative. The study is primarily based on first hand information gathered from 611 internal customers of one of the best Indian private sector banks viz., Jammu and Kashmir Bank Pvt Ltd (J&K). The findings of the study indicate all three components of IMO viz., intelligence generation, intelligence dissemination and responsiveness, having a significant impact on increasing the level of IMO vis-à-vis the basic ingredients of IMO playing a significant role in determining overall internal customers' satisfaction.

Comparative Analysis of Financial Performance of Private Sector Banks in India: Application of CAMEL Model

Banking in India is mature in terms of supply, product range and reach-even in rural India through rural banking and remote banking. In terms of quality of assets and capital adequacy, Indian banks are considered to have clean, strong and transparent balance sheets. The present research work analyses the overall financial performance of major private sector banks in India through application of CAMEL Model. Besides it also attempts to compare the performance of these Banks with the help of Composite Ranking Method.

The Impact of New Private Sector Banks on Old Private Sector Banks in India

The process of economic liberalization and implementation of the reforms measures have encouraged the entry of many new private players in Indian banking sector. This paper examines the effect of the entry of new private banks on the business and efficiency of old private banks. To achieve this objective, T-test has been applied to find out the difference in the performance of old private banks before and after the entry of new private sector banks. Here financial ratios have been taken as the parameters for ascertaining the changes in the business of old private banks in India. The results indicates that the presence of the new private sector banks does pose threat to old private sector banks at the moment, however, the same cannot be said in the future.

Impact of Merger Announcements on Shareholders' Wealth: Evidence from Indian Private Sector Banks

This study analyses five mergers in the Indian banking sector to capture the returns to shareholders as a result of the merger announcements using the event study methodology (Brown and Warner, 1980, 1985; and MacKinlay, 1997). These are mergers of the Times Bank with the HDFC Bank, the Bank of Madura with the ICICI Bank, the ICICI Ltd. with the ICICI Bank, the Global Trust Bank with the Oriental Bank of Commerce, and the Bank of Punjab with the Centurion Bank. The Fama and Miller (1972) market model and Cox and Portes. (1998) twofactor model form the theoretical framework of this study. The aim is to understand the shareholder wealth effects of bank mergers. Using the single-factor model, the study finds that the average cumulative abnormal return (CAR) of the bidder banks is positive and substantial. These results are also statistically significant. Thus, the bidder banks got significant positive abnormal returns. The two-factor model results reveal that the merger announcement in the Indian private sector banks generated a positive and statistically significant CAR of 5.24 per cent, 7.83 per cent, and 8.59 per cent in a one-day, two-day, and three-day run-up window respectively to the shareholders of the bidder banks. The single-factor model finds that the combined CAR for all the target banks is positive, significant, and substantial. The combined CAR has been propped up due to very high CAR registered by the Bank of Madura. The bidder banks created a wealth of Rs 4,117.98 million in a one-day window (singlefactor model) as a result of the merger announcements. In the case of target banks, the shareholders of the Global Trust Bank and the Bank of Punjab appear to be the losers; they lost Rs 382.55 million in a one-day run-up window (single-factor model) and Rs 128.74 million in a one-day window (single-factor model) respectively. The Oriental Bank of Commerce and the Global Trust Bank combined lost 14.78 per cent in value on a weighted average basis in a 11-day period (-5, 5) window. This merger was the first major move to bail out a sick bank. The merger announcements in the Indian banking industry have positive and significant shareholder wealth effect both for bidder and target banks. The market value weighted CAR of the combined bank portfolio as a result of merger announcement is 4.29 per cent in a threeday period (-1, 1) window and 9.71 per cent in a 11-day period (-5, 5) event window.

Financial Performance of Private Sector Banks in India - An Evaluation

Private sector banks play an important role in development of Indian economy. After liberalization the banking industry under went major changes. The economic reforms totally have 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 situations have changed new generation banks with used of technology and professional management has gained a reasonable position in the banking industry. The main idea of this article is to make an evaluation of the financial performance of Indian private sector banks.

Does liberalization reduce agency costs? Evidence from the Indian banking sector

On February 16, 2002, the Reserve Bank of India issued a circular that signaled a policy liberalization facilitating acquisition of private sector banks in India by foreign entities. Portfolios of private sector and nationalized banks posted significant value gains in the days surrounding the announcement. The gains by private sector banks were almost double those of nationalized banks. We further analyze the firm specific abnormal returns using cross-sectional regressions and find a significant relation between firm-specific abnormal returns and factors typically associated with a bank’s potential for takeover. These results provide the first empirical support for Stulz’s hypothesis that one cause of the valuation gains associated with liberalization is the expected gain from a reduction of agency costs.