INDIAN BANKING INDUSTRY A Comparative Analysis of Government Sector Banks with Private Sector Banks

SUBMITTED BY: ANSHUL GUPTA A104611036 B.com(H) ACCF

PURPOSE OF THE STUDY

The main objective of this research is to find out whether Private sector banks which have made their presence felt in India are providing good services or not, and if they are then, how are they providing a better service. To compare the services of the Private sector banks with that of the Indian nationalized banks so as to know how are they providing good services and in what ways. To see why Government Banks are not being able to do what the others banks are doing so successfully.

INTRODUCTION

Bank has moved a long way from the safe deposit houses that they were. They have now taken the role of an agent, a Private sector investor etc. In simple words they have increased their scope by a wide margin. Private sector banks brought with them personalized banking which has attracted major parts of the Indian population. Major industrial houses and a large part of the business sector do bank with these Private sector institutions. These Private sector banks are providing new and innovative services like Tele banking Internet banking Credit cards Cash delivery at door step and ATM

BANKING INDUSTRY IN INDIA

Public Sector Banks

The Indian Banking industry is largely dominated by the public sector banks. These banks till the early 90s were involved in the traditional banking business of deposits and credit lending. They performed a supportive role in the overall growth of the economy. While most of these banks used to focus on the growth of balance sheet, profitability was not a significant factor in the competition. In most of the banks, the government has a holding of 100% .

Private Sector Banks

The Banking Regulation Act was amended in 1993 permitting the entry of new private sector banks. With emphasis on service and technology, it is for the first time that Indian banks are challenging the foreign banks. These banks are making heavy use of technology to give good service on par with foreign banks but to a much wider audience e.g. branch size has been reduced considerably by using technology and having less manpower. In addition the ATM helps drawing large customers to one branch.

Foreign Banks

Foreign banks have been doing the normal banking business in the country. During the period of nationalization, the entry of new foreign banks and expansion by existing foreign banks were prohibited. Even, when the norms were relaxed later on, RBI was very slow in granting any further approvals to these banks. But most of these banks have concentrated on the metropolitan cities of the country and have been able to do reasonably well. These banks have used the latest technology to compensate for the limited number of branches they have.

 Banking Regulation Act 1993

It was amended in 1993 permitting the entry of new private sector banks. The criteria are as follows : The banks should have a minimum net worth of Rs1bn. The promoters holding should be minimum 25% of the paid up capital. The banks should offer shares to the public within three years of their operations. With emphasis on service and technology, it is for the first time that Indian banks are challenging the foreign banks. These banks are making heavy use of technology to give good service on par with foreign banks but to a much wider audience .

Research Methodology

Primary as well as secondary data was used for my research.

Primary research will include the usage of questionnaires. For secondary research the information will be collected from various sources like: Web Sites Magazines Newspaper articles Internet

ANALYSIS

85% of the samples having both Indian as well as Private sector bank accounts have said that Private sector banks are providing better and good services than the Government banks. Whereas 15% feel that both of them i.e. the Private sector and Indian banks are providing them with good services. No respondent has said that Government Banks alone are providing better services than the Private sector banks.

PERSONAL OPINION REGARDING SECURITY 15% of the sample size believes that the Government Banks are more safer and their money is more secure in these banks than in Private sector banks. But majority of the sample size i.e. 77% of the respondents feel that their money is more secure in the Private sector banks. Only 8% believe that their money is safer in both the banks. PERSONAL OPINION REGARDING CONVENIENCE

COMPARISON OF SERVICES 100% of the respondents agree unanimously that the Private sector banks are providing better services than the Government Banks.

CONCLUSIONS
Respondent who are holding accounts both in the Government Banks as well as the Private sector banks agree to the fact that they are being offered more variety of services by the Private sector banks. Most people of the Private sector bank account holders have rated the transaction with their banks as excellent and also rated the time taken for remitting cash as very fast. Therefore from this we can conclude that these Private sector banks are providing good services by knowing and understanding that every minute is important for every human being. Therefore they do not make their customers wait. Since 100% of the respondents agree to the fact that Private sector banks are providing better services than the Government Banks. Hence we can say that Private sector banks in India are providing quality services to their customers.

 RECOMMENDATIONS

Because of the stiff competition of various banks in the market, focus of Indian Bank should be immense on advertisement and promotion. ATM facility should be given to the students with "Zero balance of debit" so that the students can easily get money at any time and at anywhere they want. News papers mainly, Times of India, Hindustan Times and Economic Times and different magazines should be kept for the customers by which they feel relaxation until their transactions are over. Proper feedback system should be there and feed back forms should be kept for the customers. These forms should be filled up by the customers coming into the bank and it should be collected on daily basis.

Interior space should be extended so that people will freely move during business/rush hours. Information regarding the bounced cheques should be immediate informed to the concerned person so that he/she can arrange some alternatives. Proper water and toilet system should be provided in both the branches for customers and bank employees and that should be well noticed to everybody.

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