COMPARISON BETWEEN PUBLIC SECTOR BANK AND PRIVATE SECTOR

BANK OF KOTTAYAM MUNICIPALITY

Sherin Anna Abraham

B.Ed. Student (Social Science)
Mount Carmel College of Teacher Education for Women, Kottayam

ABTRACT
The present article “Comparison between public sector bank and private
sector bank of Kottayam Municipality” is survey carried out with the objective to study the
comparison between public and private sector bank to determine whether there is any
significant difference of public and private sector bank. Private and public bank also
provides the services like online banking, internet banking. ATM, telephone banking etc. and
have made banking transactions easy and convenient. The customers received the services
with limited from private bank. Thus ii can conclude that private bank is efficient in
providing the services.

INDROUCTION
Banks play a very important role in the economic development of every modern state.
Banks operate at the heart of modern economy. Traditionally, banking had been restricted
from private participation I India and public sector banks had been enjoying complete
protection. This scenario has changed since 1990. The decade of 90s witnessed a sea change
in the working of banking in India. Technology made tremendous impact by introducing
“anywhere banking”. The financial sector now operates in a more competitive environment
than before and involves relatively large volume of international financial flows. In the wake
of greater financial deregulation and global financial integration, the biggest challenge before
the public sector banks is to match the market requirement rather than being promoted by
government or regulator. Foreign banks and the new private banks have embraced technology
right from the inception of their operations and therefore, they have adapted themselves to the
changes in the technology easily. Deregulation, liberalization and globalization have
produced intense competition in banking industry resulting into declining margins in
traditional businesses, increased cost pressures and greater risks. Market positioning, cost of
intermediation and service delivery are likely to be determinants of the efficiency of banks
with the respect to their competitiveness. In the changed environment creating new customers
and retaining the existing ones have become difficult tasks for banks.

Objectives of the Study

1. To analyse the performance of both private and public sector bank
2. To compare the performance between private and public with special focus on customer
satisfaction
Research Methodology
The present study is secondary data based collected from various journals, reports of
RBI and annual reports of banks, money control. . The study period is limited, from 2004-05
to 2013-14.
Growth is the concept for banking sector to grow in a profitable manner, in assets, in
number of branches and networks in number of ATMs, in capital adequacy ratio, but less in
percentage of NPA.
Every year targets are fixed by the banks to achieve it, various types of scheme are
launched, and interest on deposits and loans are adjusted. The increase in business per
employee of the bank in comparison to the previous year is evaluated. Operating profits, net
profits, earning per share, dividend per share, return on capital employed, return on equity,
interest coverage ratios are the other yardsticks to measure the growth of a business entity
over a period of time. Growth also means to compare the net profit of current year to the
previous year’s profit.

Definition of Public Sector Bank

Public Sector Banks are the banks whose more than 50% shareholding lies with the
central or state government. These banks are listed on stock exchange. In the Indian Banking
System, PSB’s are the largest category of banks and emanated before independence.

Definition of Private Sector Bank

Banks whose greater part of the equity is held by private shareholders and entities
rather than government is known as private sector banks. After most of the banks had got
nationalised in the two tranches, but those non-nationalised banks carried on their operations,
known as Old Generation Private Sector Banks. Further, when the liberalisation policy was
coined in India, the banks which got a license like HDFC bank, ICICI bank, Axis bank, etc.
are considered as New Generation Private Sector Banks.

Table 4.1: Gender Wise Classification

Category Number Percentage

Male 19 63
Female 11 37
Total 30 100
Source: primary data
Diagram
 63

femal e

Table 4.2: Occupation wise classification of respondents

Respondents may be classified on the basis of occupation. There are business persons,
employees, agriculturists, and other like housewife’s etc. the following table depicts the
classification in numbers.

Educational status number %

Business people 10 33
Employees 9 30
Agriculturists 8 26
Others 3 11
total 30 100
Source: Primary data
The above table shows the occupation wise classification of respondents. Of the total
respondents 33% are business people, 30% are employed persons, 26% are agriculturists and
remaining 11% are others. From this we can see that most of the customers constitute the
business people and employees.

Column1

busi ness empl oyees

agri cul turi st others

Table 4.3: Education wise classification

Total customer respondents the occupation wise classification of respondents. Of the total
respondents 33% are business people, 30% are employed person26% are agriculturists and
remaining 11% are others. From this we can see that most of the customers constitute the
business people and employees.
Educational status number %
Primary education 1 3
SSLC 3 10
Higher secondary 7 23
Degree 9 30
Post graduate 6 20
Technical 4 14
qualification
Total 30 100
Table4.4
Income Wise Classification
On the basis of annual income there are six categories of persons below 25000 of annual
income, 24% are in between 25000-50000, 20% are in between 50000-750000, 13% are in
between 75000-100000, 7% re in between 100000-125000 and 3% are in the level of above
RS 125000/
income Business Employmen Agricultur Others total %
t ist
Below 25000 1 1 6 2 10 33

25000-50000 2 2 2 1 7 24
50000-750000 3 3 0 0 5 20
750000-100000 2 2 0 0 4 13
100000-125000 1 1 0 0 1 3
Above 1250000 1 0 0 0 1 3

Source primary: Primary data

Column1

publ i c pri vate both

Findings of the Study

 The study shows 60% the customers depend on private bank for their needs and other
40% only depend on public bank for their facilities.
 The customers received the services with limited from private bank. Thus it can
conclude that private bank is efficient in providing the services.
 By the introduction of IT Based services, banking transactions become speedy and
there is less chance for the mistakes.
 Private and public bank also provides the services like online banking, internet
banking. ATM, telephone banking etc. and have made banking transactions easy and
 convenient. Thus the application of information technology in banking services to the
customers.
 The study reveals that 40% of customers are using ATM once in a while and 60% of
customers are using ATM once in a while.
 Of the 30 customers 22 customers are Private bank ATM holder and they are regular
users or using ATM once or twice in a week.
 Using ATM, customers can withdraw and deposit cash besides availing a variety of
facilities. It improves customer service and reduce transaction cost.
 On account of ATM customer are benefited from fast transaction, convenience, 24 hrs.
Service etc. it is more useful the business and employed people.

Suggestions
The customer service has a greater importance today. The private bank and public
bank are now vigilant to ensure better services in banks. The government provides various
guidelines to banks for better customer services. The management of banks has implemented
these guidelines and other measures to improve the customer in banks. However, is it true
that the customers are not cent percent satisfied with services provided by the bank.
There are some reasons for it, one area of compliant is the fact that banks charge for
the mistakes made on account. The employees and customers of banking organisation are not
well aware of new technology on account of techno-phobia. They are if fear of fraud with
increased use of telephones or computers. Customers are greatly confused with new concept
of banking transaction with electronic devices. The success of IT lead banking depends upon
customer awareness.

Conclusion
Information technology has a lot of influence on banking transactions. It is ensuring
quick service with low transaction cost to the customers. There can be no end to the variety
through the electronic channel by banks and financial institutions. Every institution is trying
constantly to innovate and offer new products to woo the customer. The benefit to customer
on account of the internet is that he is able to know at a time the type of facilities being
provided by different institutions an he is able to make the best choice suited for his needs.
Private Sector Banks performance is much better than that of Public Sector Banks. Customers
especially the higher income groups are more satisfied with the private sector banks due to
their good quality customer service.