Research Prposal Final Gp

7/30/2019 Research Prposal Final Gp

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A

REASERCH PROPOSAL

ON

A Comparative Profitability Analysis of Public and Private sector Banks

Submitted in partial fulfillment for

MASTER OF BUSINESS ADMINISTRATION

Submitted by:

DIVYESH KASHIYANI (117350592109)

PRITESH VADERA (117350592031)

Under Guidance of:

PROF. GURMEET SINGH

N.R INSTITUTE OF BUSINES MANAGEMENT

Batch:-2011- 2013


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PREFACE

Someone has rightly said that practical experience is for better and closer to the real world then

mere theoretical exposure. The practical experience helps the students view the real world closely,

which in turn widely influences their perceptions and argument their understanding of the real

situation.

Research work constitutes the backbone of any management education programme. A management

student has to do research work quite frequently during his entire span.

The research work entitle comparative study between private sector banks and public sector

banks aims to analyze various services provided by private sector banks and public sector banks.


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ACKNOWLEDGEMENT

We feel immense pleasure to give the credit of our Grand Project work not only to one individual

effort of all those who concern with it. We want to thanks to all those individual who guided us to

move on the track.

The Grand Project entitled COMPARATIVE STUDY BETWEEN PRIVATE SECTOR AND

PUBLIC SECTOR BANKS

We are gratefully indebted to PROF. GURMEET SINGH for providing us all the necessary help

and required guideline for the completion of our project and also for the valuable time that he gave

us from his schedule.

We would like to thanks all the people who directly or indirectly help us to complete this grand

project.

DIVYESH KASHIYANI

PRITESH VADERA


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Table of ContentsRESEARCH METHODOLOGY.................................................................................................... 5

SOURCES OF DATA .................................................................................................................... 6

SECONDARY DATA ......................................................................................................... 6

Banks annual reports:- ............................................................................................................ 6

Journals and publications of different banks:- ........................................................................ 6

Manuals and broachers of different banks:-............................................................................ 6

Internet:- .................................................................................................................................. 6

Period of study ................................................................................................................................ 7

Statement of Problem ...................................................................................................................... 7

Scope of study ................................................................................................................................. 7

Objectives of Study ......................................................................................................................... 8

Chief Objectives of this study are ................................................................................................... 8

Sampling ......................................................................................................................................... 9

Tools Used In Study...................................................................................................................... 10

Limitations of Study ..................................................................................................................... 10

Literature Review.......................................................................................................................... 11

A Case of Comparative Study of Loan Performance in Selected Indian Private Banks: An

Important Tool of Profitability.................................................................................................. 11

Relative Financial Performance of Public Sector Banks .......................................................... 11

Testing the Performance of Leading Banks in India - An Experimental Study ....................... 12

Operating Efficiency of Public Sector Commercial Banks in India during the First and SecondGeneration Reforms .................................................................................................................. 12

Consistent Growth for Perpetual Sustenance: A Study of Select Banks .................................. 13

Financial Performance of Banks in Bank assurance: a Study with Special Reference to State

Bank of India............................................................................................................................. 14

NPA Management: A Study of New Private Sector Banks in India ........................................ 14

Profitability Performance Of Public Sector Banks In India...................................................... 15

A Comparative Profitability and Operating Efficiency Analysis of State and Private Banks in

Turkey ....................................................................................................................................... 15

An analysis on the profitability, risk and Growth indicators of public and private sector Banks

By Mayank malviya .................................................................................................................. 16


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RESEARCH METHODOLOGY

Research is an art of scientific investigation. In other word research is a scientific and systematic

search for pertinent information on a specific topic. The logic behind taking research methodology

into consideration is that one can have knowledge about the method and procedure adopted for

achievement of objectives of the project. With the adoption of this others can evaluate the results

also. Its main aim is to keep the researchers on the right track.

The methodology adopted for studying the objectives was surveying a comparative study on

profitability of public and private sector banks. So keeping in view that, nature of requirement of

the study to collect all relevant information regarding profitability comparison of public and private

sector banks. Secondary data has been collected through the various magazines and newspapers and

by surfing on Internet. And the guide in the organization was consulted at many times.


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SOURCES OF DATA

SECONDARY DATASecondary data is the data which is available in readymade form and which is already used by

people for some purposes. There may be various sources of secondary data such as-newspapers,

magazines, journals, books, reports, documents and other published information.

Our study is based on secondary data. The data will be collected from the published annual reports

of the selected banks taken from their websites, magazines and journal on finance will also be used

as source of data.

Banks annual reports:-

Banks issues their annual reports to get the people informed with the profitability and growth of the

bank. These annual reports helps us a lot to get the latest data and other related information for our

research. It tells us about the increase or decrease in profits and other facilities.

Journals and publications of different banks:-

We also take into consideration the journals and publications issued by the bank at different times.

We come to know about the Branches, ATM, locations and other useful information.

Manuals and broachers of different banks:-

We take the help of bank staff and other people who give us deep information and data which may

not be available at anywhere. They gives us there full co-operation.

Internet:-

We also take into consideration the internet facility with which we collect lot of latest information.


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Period of study

The study covers a period of 5 years from 2007-2011.

Statement of Problem

Here comparison is of public sector bank and private sector bank with the help of profitability,

because of it is important to know that which sector is growing with market whether public or

private.

Scope of study Profit planning and growth projection Funding and capital planning Trend of peoples preference


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Objectives of Study

This study has been conducted with a variety of important objectives in mind. The following

provides us with the chief objectives that have tried to achieve through the study. The extent to

which these objectives have been met could judge from the conclusions and suggestions, which

appear in the later of this study.

Chief Objectives of this study are

To find the bank sector that is largely availed by the customer. To study the factors influencing the choice of a bank for availing services. To find and compare the satisfaction level of customers in public sector as well in private

sectors bank.

To study the problem faced by customer. To get suggestions for improvement or change in the services of public and private sector

banks.

To study what do people expect in the new era of banking


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Sampling

The universe of private and public sector banks consists of ten banks. For the study, the universe as

a whole is taken irrespective of their size to what extent they are profitable. The list of such banks is

presented in below table;

Sr. No. Particulars

Table 1: List of private and public Sector Banks


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Tools Used In Study

Profitability Ratio CAMEL modal

Limitations of Study

The scope of the report is mainly depends on the information extracted from secondary sources. So,

lack of the availability of the first hand information may act as a limitation to the project report.

Due to constraints of time and resources, the study is likely to suffer from certain limitations. Some

of these are mentioned here under so that the findings of the study may be understood in a proper

perspective.

We have taken data of five years only so we cannot come to the final conclusion.


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Literature Review

A Case of Comparative Study of Loan Performance in Selected Indian

Private Banks: An Important Tool of Profitability

The banking sector is the wheel of any economy. This sector is the most dominant sector of the

financial system in India, with good valuations and increasing profits. After liberalization in 1991,

the banking industry underwent major changes. Private Banks came into force, and now, they are

playing a major role in the development of the Indian banking industry. In the process, they have

jolted the public sector banks out of complacency and have forced them to become more

competitive.

The objective of present paper is to analyze the major component of the lending policy of the Indian

private sector banks. This attempt also sheds light on a comparative study of financial performance

between few selected private banks through their different lending options. In this attempt, the

authors have just tried to emphasize the role of loan performance as a key agent in the profitability

of private banks during the years 20022007.

Relative Financial Performance of Public Sector Banks

Financial performance is the key indicator for any business organization. The survival, growth and

development of a business depend on profitability, which helps to measure the financial

performance of business and indicates how far it has been successful. The present study attempts to

analyze the financial performance of public sector banks in India, with the basic objective of

examining the growth rate index values for various parameters through overall profitability indices.

The variables taken for the study are spread ratios, burden ratios, and profitability ratios. The study

brings out the relative financial performance of public sector banks.


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Testing the Performance of Leading Banks in India - An Experimental Study

This study tests the performance of leading banks of India during the financial year 2008-2009. The

year 2008-2009 was chosen as this year faced the greatest financial crisis in the human history. The

banks selected for study are the top ten banks rated as per the Business today KPMG survey and

includes Axis Bank, Bank of India, Punjab National Bank, Bank of Baroda, HDFC bank, Indian

Bank, Federal Bank, Corporation Bank, Union Bank of India and Citibank. Performance of these

banks were tested with the help of eight performance parameters like Operating Profit , Net Interest

Income, Cost to Income Ratio, Capital Adequacy Ratio, Net NPAs, Deposit growth, Return on

Assets and Return on Capital Employed. This study helps to know the strength and weakness of

each bank. It also sheds light on the performance of the Indian Banking Industry during financial

recession.

Operating Efficiency of Public Sector Commercial Banks in India during the

First and Second Generation Reforms

Indian Banking system has historically evolved under the impetus of economic, social and

institutional forces. Public sector banks act as backbone of economic growth, prosperity and they

support the implementation of successive five year plans by the government. During the post

nationalization era, Public Sector Banks (PSBs) faced serious erosion in the productivity and

profitability due to tough competition among the different bank groups. The overall operational

efficiency of the banking system depends on the relative efficiency of each unit of the banking

system. To assess the relative performance of each public sector banks in relation to the Operating

efficiency, the Herfindhals index of concentration has been computed using few selected

parameter. The five parameters used are: Net Profits, Total income, Total Expenditure, spread and

Burden. This index was calculated for each State bank of India (1) and its associates (7) and

nationalized banks (19) on Absolute Volume concentration index for the period of 18 years as first

generation reforms (1991 to 1997) and the second generation reforms (1998 to 2008). This paper

highlights the financial health of PSBs in selected parameters to find out the necessity to rejuvenate

the Indian banking sector as it happened in the U.S. banking industry due to the Subprime crisis. It


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also helps the State bank of India and its associates as well as nationalized banks to improve the

Interest income and Non-interest income and reduce the Non-performing assets, investing in free

risk securities etc., in order to increase the profit margin to meet the competitions from the private

and foreign banks.

Consistent Growth for Perpetual Sustenance: A Study of Select Banks

The sustained growth and performance of a bank signify that it has a consistent growth in its

sources and applications of funds over a period of time and also evidences the efficacy of its

professional management. The funds grow up year after year as the growth and expansion are

inevitable for a bank, and it perpetuates longer, provided that there is a consistent growth in itsfunds. A study on the growth, efficiency, performance, strength and soundness and profitability of

banks, thus, assumes a great significance in the formulation of policies and setting the norms for the

smooth and proper functioning. The present study analyzes the consistent growth in the sources and

the applications of funds of four; each Public Sector Banks and Private Sector Banks and the data

were collected for a period of ten years, i.e. from 2000 to 2009. This paper is an attempt to endorse

that the consistent growth in both the funds is a strong indicator of perpetual sustenance in the life

cycle of a bank. The main objective of the study is to assess the consistent growth in both the funds

and to rank the banks. The hypotheses set for each variable were tested by t-Test value at 5% level

of significance, and the fund wise and the sector wise ranks were assigned to each bank. The

findings of the study reveal that Punjab National bank, ICICI bank and HDFC bank have a

consistent growth, whereas, other banks have a less consistent growth in their funds during the

study period. The study suggests that the depositors, the customers and the investors need to take

into account the consistent growth in the funds of the bank while dealing with it from the safety

point of view.


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Financial Performance of Banks in Bank assurance: a Study with Special

Reference to State Bank of India

One of the most significant changes in the financial service sector over the past few years has been

the growth and development of bank assurance. In present scenario, Banking institutions and

insurance companies have found bank assurance to be an attractive and profitable compliment to

their existing activities. This research study endeavors to diagnose some realities behind bank

assurance business of State Bank of India. To judge the financial viability of the bank in bank

assurance, the CAMEL Model, which is the approved model of Reserve Bank of India has been

used. The reason behind the use of the CAMEL model is that it measures the performance of bank

assurance in almost all the variables.

NPA Management: A Study of New Private Sector Banks in India

The Indian Banking Industry has played a pivotal role in the socio- economic augmentation of the

country. The Financial Sector Reforms initiated in 1991 have commendably changed the visage of

Indian Banking. The banking industry has transmogrified in a phased manner from a regulated

environment to a deregulated market economy. The RBI has accorded its approbation for the

inception of new banks in the private sector acting on the recommendations of the Narasimham

Committee. The banking industry, which already enjoys a privileged status as far as public sector

banks are concerned, have assumed a more aggressive and cut throat competitive position on

account of establishment of private sector banking. A recent survey conducted by McKinsey & Co.,

in association with the Indian Banks Association, revealed that new private banks have a strong

competitive advantage over public sector banks on several dimensions such as use of low cost

technology and operations to address the urban mass market, alignment between IT and business

heads, more focus on value adding activities, better talent management, superior complexity

handling, and the ability to use infrastructure optimization facilities. In spite of efficiently managing

their financial resources, akin to public sector banks, these new generation banks have also become

a victim of Non Performing Assets (NPAs). A Non Performing Asset is an asset or account of

borrower, which has been not been serviced by the borrower, and the bank has stated the same as


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sub-standard, doubtful or loss asset, as per the norms and directions of the RBI. Non-Performing

Assets (NPA) have emerged as an alarming threat to the Indian banking industry and their reduction

has become synonymous with professional functioning and management of banks. However, NPAs

should not be seen as a dilemma but as a challenge for the banking sector. The global recession

coupled with consequential slow down in the domestic markets had cast their shadow on the Indian

banking sector, resulting in the growth in NPAs in absolute and relative terms since 2005-06. This

evoked the researchers interest to conduct a research on the management of NPAs by the new

private sector banks in India.

Profitability Performance Of Public Sector Banks In India.

The banking industry, one of the most important instruments of the national development occupies

a unique place in a nations economy. Profit is the main reason for the continued existence of every

commercial organization and profitability depicts the relationship of the absolute amount of profit

with various other factors. The main source of operating income of a commercial bank are- interest

and discount earned, commission, brokerage, income from non banking assets and profit from sale

of or dealing with such assets and other receipts. The expenditure broadly consists ofinterest paid

on deposits and borrowings and non interest cost or charges incurred on staff salary, stationery, rent,

law charges, postage, telegram, telephone etc. In this context, some attempts have already been

made at individual as well as at the official level and various aspects of commercial banking

profitability have been discussed.

A Comparative Profitability and Operating Efficiency Analysis of State and

Private Banks in Turkey

Although bank privatizations have accelerated all over the world since the beginning of the 1990s,

the case of Turkey reflects unique consequences. Turkish banking industry has not gone into

privatization process, at least in conventional ways. Even more interestingly, a number of troubled

private banks have been nationalized after the financial crisis of 2001. Despite the fact that they

were either liquidated or sold to private capital again after restructuring, this cannot be treated as

privatization. Therefore, we currently had the chance to identify relative performances of


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government and private banks, and to reach insights whether our results are in line with findings on

other countries experiences. First, it should be noted that even though the number of government

banks are considerably less than that of private banks, government banks financial figures are

massive in amount. That is attributable to their much larger sizes as a result of over branching. The

studys statistical test results clearly show that performance of state-owned banks does not differ

from that of private banks with respect to the proxies employed. Moreover, government banks even

outperform their private counterparts. The results are important for both the rationale behind bank

privatization and the policy implications. Moreover, the study provides valuable information for

further researches to make meaningful comparisons before and after privatization performances of

state banks when their privatization occurs in the future. Majority of privatization studies in the

literature stand in favor of privatization regarding both non-banking and banking firms. However,

there are a number of studies presenting inconclusive results. As opposed to the majority, our study

finds its place in the latter. Its findings make bank privatization questionable, at least for the Turkish

case. Therefore, it is worth rethinking about bank privatization. In this study, a comparative

performance analysis between state-owned and privately-owned Banks of Turkey is carried out over

the period between 1997 and 2006. On the contrary to expectations, statistical findings of the study

produce surprising results. The results suggest that state-owned banks are as efficient as private

banks, and even more efficient at some aspects. Thus , it raises the question of whether to privatize

banks or not?

An analysis on the profitability, risk and Growth indicators of public and

private sector Banks By Mayank malviyaThis paper consolidates the summarized financial statements of the main banks operating in India

during the financial year 2010-11, the public and private sector. The profitability, risk and growth

prospects of the two types of institutions are analyzed through Return on Equity decomposition and

the use of other financial ratios. Various differences between public and private institutions have

emerged. In particular, public sector institutions realized higher profitability and cost control; they

were more capitalized in absolute terms and relied relatively less on income earned through interest.

While Private sector institutions generated comparatively more revenue; they were more capitalized

in relative terms and were relatively more provisioned against loan losses and held a higher

proportion of liquid assets.


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INTRODUCTION

Banks play an active role in the economic development of a country. Their ability to make a

positive contribution in igniting the process of growth depends on the effective banking system.

These banks mostly deal with money collected in the form of deposits along with their own funds in

the form of share capital and resources constituting around 5% of the total resources of the banks.

So the banks have the obligation of meeting the demand of the customers promptly, interest for the

amount and meeting the expenses to carry out its activities. This necessitates the banks to maintain

adequate liquidity and earn required profit from their activities. Maintenance of liquidity and

profitability are contradictory in nature. (Therefore, the banks have to perform the difficult task of

maintaining equilibrium between liquidity and profitability). The maintenance of liquidity is

necessary to prove the fact that the bank is able to meet its commitments without fail and is paying

the day to day expenses. Thus, liquidity refers to the ability of the concern to fulfill its obligation

promptly. Whereas, profitability is primarily the measure of the overall success of business and so,

it is the ability to earn profit. Profitability is the most powerful motivational factor in any business.

The larger the profit, the more efficient and profitable a business is deemed to be. It is the engine

that drives a business concern. It also enables a concern to discharge its obligation to the various

segments of the society.


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Meaning of bank

An establishment for the custody of money, which it pays out, on a customers order.

According to Whitehead,

A Bank is defined as an institution which collects surplus funds from the public, safeguards

them, and makes them available to the true owner when required and also lends sums be their true

owners to those who are in need of funds and can provide security.

Banking Company in India has been defined in the Banking Companies act 1949,

One which transacts the business of banking which means the accepting, for the purpose of

lending or investment of the deposits of money from the public, repayable on demand, or otherwise

and withdraw able be cheque, draft, order or otherwise.

The banking system is an integral subsystem of the financial system. It represents an important

channel of collecting small savings from the households and lending it to the corporate sector.

The Indian banking system has Reserve Bank of India (RBI) as the apex body for all matters

relating to the banking system. It is the central Bank of India. It is also known as the Banker To All

Other Banks.


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Evolution of Indian banking

Ancient banking system of India constituted of indigenous bankers. They have been carrying on

their age-old banking operations in different parts of the country under different names. The modern

age of banking constitutes the fundamental basis of economic growth. The term Bank is being used

since long time but there is no clear conception regarding its beginning. According to the viewpoint,

in good old days. Italian money leaders were known as Banchi because they kept a special type

of table to transact their business.

Importance of banks

Today banks have become a part and parcel of Kotak Bank's life. There was a time when dwellers

of the city alone could enjoy their services. Now banks offer access to even a common man and

their activities extend to areas hitherto untouched. Banks cater to the needs of agriculturalists,

industrialists, traders and to all the other sections of the society. In modern age, the banking

constitutes the fundamental basis of economic growth. Thus, they accelerate the economic growth

of a country and steer the wheels of the economy towards its goals of self reliance in all fields. It

naturally arouses Kotak Bank's interest in knowing more about the Bank and the various men and

the activities connected with it.

Indian Banking System

Banking in India has its origin as early as the Vedic period. It was believed that transition from

money lending to banking must have occurred even before Manu, The great Hindu Jurist, who has

devoted a section of his work to deposit advance and laid down rules relating to rates of interest.

During the Mogul period, the indigenous Bankers played a very important role in lending money

financing foreign trade and commerce. During the days of East India Company, it was turning over

the agency houses to carry on the business. The General Bank of India was the first to join sector

in the year 1786.The others that followed were the Bank of Hindustan and the Bengal bank. The

bank of Hindustan is reported to have continued till 1906 while the other two failed in the

meantime.


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In the first half of the 19th

century the East India Company established three banks:

Bank of Bengal (1809) Bank of Bombay (1840) Bank of Madras (1843)

These three banks are also known as Presidency Banks were independent units and functioned well.

These three banks were amalgamated in 1920 and Imperial Bank of India was established on 27th

january1921, which started as private shareholders banks, mostly Europeans shareholders, with the

passing of time Imperial bank was taken over by the newly constituted State bank of India act

in1955.In 1865 Allahabad Bank was established and first time exclusively by Indians, Punjab

National Bank Ltd. was set up in 1894 with headquarters at Lahore. Between 1906 and 1913, Bank

of India, Central Bank of India, Bank of Baroda, Canara Bank, Indian Bank, and Bank of Mysore

were set up. Reserve Bank of India came in 1935. On July, 1969, 14 major banks of India were

nationalized and on 15th

April, 1980 six more commercial private banks were also taken over by the

government.


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Reserve Bank of India

The Banking system is an integral sub-system of the financial system. It represents an important

channel of collecting small savings from the households and lending it to the corporate sector. The

Indian banking system has The Reserve Bank of India (RBI) as the apex body from all matters

relating to the banking system. It is the Central Bank of India and act as the banker to all other

banks.

Functions of RBI

Currency issuing authority Banker to the government. Banker to other Bank. Framing of monetary policy. Exchange control. Custodian to foreign exchange and gold reserves. Development activities Research and development in the banking sector.


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Classification of banks

On the basis of ownership

Public sector banksPublic sector banks are those banks that are owned by the government. The government owns these

banks. In India 20 banks were nationalized in 1969 and 1980 respectively. Social welfare is there

main objective.

Private sector banksThese banks are those banks that are owned and run by private sector. An individual has control

over these banks in proportion to the shares of the banks held by him.

Co-operative banksThese are those banks that are jointly run by a group of individuals. Each individual has an equal

share in these banks. Its shareholders manage the affairs of the bank.

According to law

Scheduled bankSchedule banks are the banks, which are included in the second schedule of the banking regulation

act 1965. According to this schedule bank:

1. Must have paid-up capital and reserve of not less than Rs500, 000.

2. Must also satisfy the RBI that its affairs are not conducted in a manner Determinate to the

interest of its depositors.

Schedule banks are sub-divided as:-

a) State co-operative banks

b) Commercial banks


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Non-scheduled banks

Non -schedule banks are the banks, which are not included in the second schedule of the banking

regulation act 1965. It means they do not satisfy the conditions lay down by that schedule. These

are the banks having paid up capital, less than Rs.5Lakhs. They are further classified as follows:-

A. Central Co-operative banks and Primary Credit Societies.

B. Commercial banks

According to function

COMMERCIAL BANKSThese are the banks that do banking business to earn profit. These banks make loans for short to

business and in the process create money. Credit creation is the main function of these banks.

FOREIGN BANKSThese are those banks that are incorporated by foreign company. They have set up their branches in

India. These banks have their head offices in foreign countries. Their principle function is to make

credit arrangement or the export and the import of the country and these banks deals in foreign

exchange.

INDUSTRIAL BANKSIndustrial banks are those banks that offer long term and medium term loan to the industries and

also work for their development. These banks help industries in sale of their shares, debentures and

bonds. They give loan to the industries for the purchase of land and machinery.


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AGRICULTURAL BANKSAgricultural banks are those banks that give credit to agricultural sector of the economy.

SAVING BANKSThe principle function of these banks is to collect small savings across the country and put them to

the productive use. In India department of post office functions a savings banks.

CENTRAL BANKCentral Bank is the apex bank of the banking system of the country. It issues currency notes and

acts a banker's bank. Economic stability is the principle function of this bank. In short, it regulates

and controls the banking system of the country. RBI is the Central Bank of India.


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PRIVATIZATION OF INDIAN BANKING

For the public sector banks, the era of bumper profit is over. For much of the last decade the process

of collaborated financial liberalization had cleared up the Banks balance sheet enabling them to

with stand increased competition, global financing, turmoil and even unprotected industrial slow

down. But the cycle of liberalization has run its full course. Now it is the time for the big structural

leap, rationalization, mergers, and privatization. Unless the banks undertake these fundamental

changes, their profit will stay under pressure.

There are two areas of competitions which banking industry is facing internationally and nationally.

In the pre-liberalization era, Indian banks could grow in a closed economy but the banking sector

opened up for private competition. It is possible that private banks could become dominant players

even within India. It has been recorded a rapid rise of the new private sector banks and it has

tracked the transformation of the public sector banks as they grapple with the changes of financial

deregulation.

Use of ATM cards, Internet Banking, Phone Banking, Mobile Banking are the new innovative

channels of banking which are being widely used as they result in saving both time and money

which are two essential things that everyone is short of and is running to catch hold of them.

Moreover private sector banks are aligning its infrastructures, marketing quality and technology to

build deep commitment in building consumer and retail banking. The main focus of these banks is

on innovative range of services or products.


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STRUCTURE OF BANKING SYSTEM

Different countries of the world have different types of banking systems. However, commercial

banking had grown under all these banking systems. To understand the structure of banking system,

let us take up various types of banking systems one by one. These types are:

UNIT BANKINGUnit Banking originated in the United State of America. It grew in the United States of America. As

a counter part of independent or industrial units.

An independent unit bank is a corporation that operates one office and that is not related to other

banks through either ownership or control.

Shaper, Solomon and White.

Thus under unit banking, a single bank is a complete organization in itself having its own

management. The scale of operation is small and the area is restricted to a locality only. Unit

banking is localized banking and is much more responsive to the needs of the locality. It has better

understanding of the local problems and conditions, which helps it to cater to the needs of the area

in a better way. The staff of the unit bank is generally local and is in a better position to determine

the standing or desirability of the customers. The failure of the unit bank will not endanger the

banking system and economy. It is free from the difficulties and diseconomies of large scale

operations. It will not drain out the financial resources of villages and small towns to big industrial

centers and will ensure a balanced growth.

BRANCH BANKING

Economic and Managerial problems faced by the unit banks let to the emergence of bankingsystem. Now, This the most popular and important banking system. In branch banking, a bank has a

large network of branches scattered all over the country. Branch banking developed in England.

Subsequently most of the countries of the world adopted the system. In terms of branches, the State

Bank of India has emerged as one of the largest banks in the world.


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As under the system the resources of a number of branches get pooled under the same management,

any individual branch is in a better position to face excessive withdrawals by the customers. It

facilitates diversification of activities because the area covered by the branches is generally

widespread. Under the system branches can operate without keeping large idle cash reserves. It

becomes possible for the bank to hire the services of competent and professionally qualified

managers, capable of understanding the handling technical problems and complex situations. The

cost of remitting or transferring funds from one place to another works out to be less. The staff stays

at a branch only for a limited period, so the chances of objective decision making in the branch

banking are high.

Branch Banking tends to bring homogeneity in the prevailing Interest Rates as it increases the

mobility of resources from one place to another. It is easier for the Central Bank to exercise

Control. It will communicate only with a few Registered /Head Offices of the Banks and not with

each individual branch. In this system there more safety and liquidity of funds. The choice of

securities and investments is larger. Branch banking makes complete banking services available to

the smallest communities. The branches in small localities can be initially operated at loss in

expectation of future gains.

The comparative study of unit banking and branch banking is a case of small scale banking versus

large scale banking. It is evident that the scale is clearly titled towards branch banking. With the

growth of large scale business it is no wonder that the trend is almost every country towards the

branch banking i.e. big banks with a network of branches all over the country. Even in the U.S.A.

The birthplace of unit banking. The Bank of America has now more than 500 branches in the state

of California itself.

CHAIN BANKING

Shaper, Solomon and White have defined Chain Banking as

An arrangements by which two or more banks each of which retains its identity, capital and

personnelare brought under common control by any device other than a Holding Company.


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Under the system there is pooling of resources. Chain banking overcomes certain limitations of unit

banking. But the system suffers from certain limitations of its own. There may be a lack of co-

ordination, proper control etc. The system is inflexible.

GROUP BANKING

It is similar to Chain Banking, the difference being that under Group Banking two or more banks

are brought under the control of the same management through a Holding Company. Both the

systems aim at gaining the advantages of large scale operations. The banks are able to pool their

resources in case of emergency or when large amount of cash is required to meet the loan

requirements of the customer. The advantages and disadvantages of both the systems are similar.

Both the systems developed in the United State of America as a result of attempts to overcome the

difficulties or limitations of unit banking.

CORRESPONDENT BANKING

Under Correspondent banking, small banks serving local communities hold deposits with joint

banks serving in big cities. This kind of banking is prevalent in U.S.A. The correspondent banks

perform two important services of outstation cheque clearing and loan participation for the

respondent banks while they benefit for the deposit funds of respondent banks.


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PRIVATE BANKS

ICICI BANK

ICICI Bank (Industrial Credit and Investment Corporation of India) is India's largest private

sector bank by market capitalization and second largest overall in terms of assets. The Bank has

a network of 1,626 branches and about 4,883 ATMs in India and presence in 18 countries. ICICI

Bank 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 and

affiliates in the areas of investment banking, life and non-life insurance, venture capital and asset

management.

The Bank currently 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. Their UK subsidiary has established branches in

Belgium and Germany.

ICICI Bank's equity shares are listed in India on Bombay Stock Exchange and the National

Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the

New York Stock Exchange (NYSE).


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HDFC BANK

HDFC Bank is a commercial bank of India, incorporated in August 1994, after the Reserve Bank

of India allowed establishing private sector banks. It was one of the first banks to receive an 'in

principle' approval from RBI, for setting up a bank in the private sector. The Bank was promoted

by the Housing Development Finance Corporation, a premier housing finance company (set up

in 1977) of India. HDFC Bank has 1,725 Branches and over 3,898 ATMs, in 771 cities and

towns in India, and all branches of the bank are linked on an online real-time basis.

Times Bank Limited was merged with HDFC Bank Ltd., effective February 26, 2000. This was

the first merger of two private banks in the New Generation of Private Sector Banks. As per the

scheme of amalgamation approved by the shareholders of both banks and the Reserve Bank of

India, shareholders of Times Bank received 1 share of HDFC Bank for every 5.75 shares of

Times Bank.

On May 23, 2008, the amalgamation of Centurion Bank of Punjab with HDFC Bank was

formally approved by The Reserve Bank of India. As per the scheme of amalgamation,

shareholders of CBoP received 1 share of HDFC Bank for every 29 shares of CBoP. The value

of the all-share deal worked out to INR 95100 million. The merged entity will have a strong

deposit base of around INR 1,220 billion and net advances of around INR 890 billion. The

Balance sheet size of the combined entity would be over INR 1,630 billion.
http://www.wikinvest.com/wiki/Balance_sheethttp://www.wikinvest.com/wiki/Balance_sheet


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AXIS BANK

Axis Bank was the first of the new private banks to have 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) and General Insurance Corporation of India (GIC) and

other four PSU insurance companies, i.e. National Insurance Company Ltd., The New India

Assurance Company Ltd., The Oriental Insurance Company Ltd. and United India Insurance

Company Ltd.

The Bank's Registered Office is at Ahmedabad and its Central Office is located at Mumbai. The

Bank has a very wide network of more than 896 branches and Extension Counters (as on 31st

December 2009). The Bank has a network of over 4055 ATMs (as on 31st December 2009)

providing 24 hrs a day banking convenience to its customers. This is one of the largest ATM

networks in the country.

The Bank has strengths in both retail and corporate banking and is committed to adopting the

best industry practices internationally in order to achieve excellence.


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YES BANK

YES BANK, India's new age private sector Bank, is an outcome of the professional

entrepreneurship of its Founder, Rana Kapoor and his highly competent top management team,

to establish a high quality, customer centric, service driven, private Indian Bank catering to the

"Future Businesses of India". YES BANK is the only Greenfield license awarded by the RBI in

the last 15 years, associated with the finest pedigree investors. YES BANK has fructified into a

"full service" commercial Bank that has steadily built Corporate and Institutional Banking,

Financial Markets, Investment Banking, Corporate Finance, Branch Banking, Business and

Transaction Banking, and Wealth Management business lines across the country, and is well

equipped to offer a range of products and services to corporate and retail customers.

The Bank has adopted international best practices, the highest standards of service quality and

operational excellence, with innovative state-of-the-art technology, and offers comprehensive

banking and financial solutions to all its valued customers. A key strength and differentiating

feature of YES BANK is its knowledge driven approach, which goes beyond the traditional

realm of banking, and helps adoption of a diagnostic and prescriptive approach towards superior

product structuring.

YES BANK has formed a specialized 'Development and Knowledge Banking Division' focusing

on key growth sectors like Infrastructure, Food & Agribusiness, Telecommunications,

Information Technology, Life sciences, Infrastructure, Renewable Energy, Media &

Entertainment, Manufacturing and Textiles, among others. YES BANK's unique knowledge

driven sectoral approach provides industry specific financial solutions which facilitate superior

structuring and tailored financial solutions. Based on efficient product delivery, industry

benchmarked service levels, and strong client orientation, YES BANK already services a

number of leading companies in India.


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KOTAK BANK

The Kotak Mahindra group is a financial organization established in 1985 in India. It was

previously known as the Kotak Mahindra Finance Limited, a non-banking financial company. In

February 2003, Kotak Mahindra Finance Ltd, the group's flagship company was given the

license to carry on banking business by the Reserve Bank of India (RBI). Kotak Mahindra

Finance Ltd. is the first company in the Indian banking history to convert to a bank. Today it has

more than 20,000 employees and Rs. 10,000 crore in revenue.

The bank is headed by K.M. Gherda as Chairman and Uday Kotakas Executive Vice Chairman

& Managing Director. Shankar Acharya is the chairman ofboard of Directors in the company.
http://en.wikipedia.org/wiki/Kotak_Mahindra_Finance_Ltdhttp://en.wikipedia.org/wiki/Non-banking_financial_companyhttp://en.wikipedia.org/wiki/Chairmanhttp://en.wikipedia.org/wiki/Uday_Kotakhttp://en.wikipedia.org/wiki/Managing_Directorhttp://en.wikipedia.org/wiki/Shankar_Acharyahttp://en.wikipedia.org/wiki/Board_of_Directorshttp://en.wikipedia.org/wiki/Board_of_Directorshttp://en.wikipedia.org/wiki/Shankar_Acharyahttp://en.wikipedia.org/wiki/Managing_Directorhttp://en.wikipedia.org/wiki/Uday_Kotakhttp://en.wikipedia.org/wiki/Chairmanhttp://en.wikipedia.org/wiki/Non-banking_financial_companyhttp://en.wikipedia.org/wiki/Kotak_Mahindra_Finance_Ltd

Documents

Research Prposal Final Gp