“A Comparative Study of

Nationalized & Private

Banks with Respect to Loan
Process & Facilities for
SMEs”
 History of Indian Banking
Sector
Banking in India originated in the first decade of 18th
century
The General Bank of India coming into existence in 1786.
The first fully Indian owned bank :- Allahabad Bank :-
established in 1865.
In 1935, The Reserve Bank of India formally took on the
responsibility of regulating the Indian banking sector.
After independence in 1947, the Reserve Bank was
nationalized and given broader powers.
 Current Scenario of Indian
Banking Sector
Banking Industry in India is going through a transitional
phase.

Private sector Banks have pioneered modern banking

facilities

The PSBs are still grappling.

Flow Chart of Indian Banking Sector
 Small & Medium Enterprises
Retail
In small enterprise the investment
Manufacturing in plant and machinery is more than
Rs. 25 lakh but does not exceed Rs. 1
Professional crores.
8%
6% 20% Services
Hospitality
8%
Education
8% 12%  In medium the investment in plant
Travel and machinery is more than Rs.1
crore but does not exceed Rs.10
9% crores.
Real State
10% 19%
Logistics Source : Ministry of
Micro, Small & Medium
Others Enterprises
Year 2014
Market Share of Nationalized
Banks and Private Banks
SBI -19.10%
2.73%
2.91% SBI
ICICI – 10.34%
ICICI Bank
PNB – 5.48% 5.20%
19.10% PNB
5.48%

BOI – 5.20% 10.34%

Bank Of
India
HDFC
HDFC – 2.91%
Bank
Axis Bank
Axis - 2.73% Fig 1.1 Market share
Source : NDTV Profit
Year 2010
 Market Cap of Nationalized
Banks and Private Banks
Bank of India 17,669.64
IndusInd Bank 29,573.88

Canara Bank 18,431.90 73,658.22

Kotak Mahindra

PNB 34,626.56 Axis Bank 92,388.98

Bank of Baroda 37,497.07 182,145.1 ICICI Bank 170,367.11

7
SBI HDFC Bank
200,816.60
0.00 50,000.00
100,000.00
150,000.00
200,000.00 0.00 100,000.00 200,000.00

Fig 1.2 Market Cap of Nationalized Banks(in Cr) Fig 1.3 Market Cap of Private Banks(in Cr)

Source : Money Control

Year 2012
 Major Players of Nationalized
Banks and Private Banks
15,000.00 10000 9430.69
8478.38
12,131.36
8000

10,000.00 6217.67
6000

4,541.08
4000
5,000.00
3,342.58 2,729.27
2000 1617.78 1502.52
1,711.46

0.00 0

Fig 1.4 Major Players of Nationalized banks Fig 1.5 Major Players of Private banks
in terms of net profit(Rs. Cr) in terms of net profit(Rs. Cr)

Source : NDTV Profit

Year 2012
 Current Trends
Tele Banking Point of Sale Terminal

Real Time Gross Settlement Automatic Teller Machine (ATM)

(RTGS)

Electronic Funds Transfer (EFT)

Electronic Clearing Service (ECS)
 SWOT Analysis of SBI
SWOT Analysis

1. The biggest bank in the country

2. Has a separate act for itself. Thus, a special privilege.
3. Biggest branch network in the country
Strength 4. First public sector to move to CBS
1. Huge amount of staff
2. Expected to experience high level of attrition due to
retirement of its top management
Weakness 3. Still carries the image of the old Govt. sector bank
1. Pool in talent to replace the going top management to serve
the next generation
2. Make better use of its CRM
Opportunity 3. Expansion into rural areas
1. Consolidation among private banks
2. New bank licenses by RBI
Threats 3. Foreign banks that have sophisticated products
 1. Front runner in the Indian Private Banking Sector
2. Strong presence via its branches
3. High use of technology to make life simpler for the
SWOT Analysis of ICICI Bank
customers
4.Large no. of facilities for the customers in terms of products
and services
5. Over 75,000 employees at ICICI
6. Decades of Experience in the Banking sector along with
marketing has added to the brand name
Strength 7. Presence in over 19 countries
1. Too much competition in the banking sector affecting
employee and customer management
Weakness 2. Many branches in urban areas has led to high cost
1. Opening more branches in the rural areas
2. Use of technology to penetrate rural markets
3. Venturing into countries like Africa where the economy is
Opportunity coming up
1. Ever changing RBI policies
2. International and other Competitors
Threats 3.Inability to adapt to changing conditions due to large size
Analysis of Questionnaire
for SMEs
 Years In Business

> 10 yrs 10

5-10 yrs 6
Years

1-5 yrs 4

< 1 yr 0

0 2 4 6 8 10 12
No. of SME’s

Fig 1.1 No. of years in business

 Annual Turnover
8
7
7
6
6
5
5
No. of SME’s

4
3
2
2
1
0
20-30 Lakhs 31-50 Lakhs 51-100 Lakhs > 1 crore

Turnover

Fig 1.2 Annual Turnover

Preferred Banks by SMEs

5%
Nationalized

Private
50%
45%

Both

Fig 1.3 Banks Preference (%)

Analysis of Banks Based on Preference
Others
ING Vysta Others
9%
0.00% 0.00%
IDBI Kotak
9% 10.00%

AXIS
SBI 10.00%
UNION
Bank 37%
9%
ICICI
20.00% HDFC
60.00%

BOB
18%
BOI
18%
Fig 1.5 National Banks Fig 1.6 Private Banks
 Convenience of Interest Rates of
Banks
Can't Say, Can't Say
9.09% 10.00%

No,
18.18%
No 30.00%
Yes,
72.73% Yes 60.00%

Fig 1.8 Private Banks

 Analysis of Unnecessary Charges
Applied by Banks
Can't Say
Can't Say 10.00%
18.18% Yes 18.18%

Yes
No 50.00%
40.00%

No 63.64%

Fig 1.9 National Banks Fig 1.10 Private Banks

 Ratings Based on Services
4 4 4 4 4 4
4

3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3

2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2
2

1 1 1 1

0
SBI

BOI

BOB

UNION

IDBI

ICICI

HDFC

AXIS

KOTAK

OTHERS
Loan Services Staff Knowledge Staff Behaviour
Speed of issuing knowledge Easy Access Abilty to address problems

Fig 1.11 Average Ratings

 Issues in Nationalized Bank
Banks SBI BOI BOB UNION CANARA DNSB
Lack of
1 2 1 1
assistance
Security
2 1 1 1
Concern
High interest
1
rate

Limited service 1 2
Quality of
1
service
Waiting 4 2 1

Impersonality
of the service

No
disadvantage
 Issues in Private Bank

Banks IDBI ICICI HDFC AXIS KOTAK

Lack of assistance 1

Security Concern 1 1 1

High interest rate 2 1 1

Limited service 1 1

Quality of service
Waiting 1
Impersonality of the service 1 1

No disadvantage 1 1
 Ratings For Banks

4.5
4 4 4
4
3.5 3.33
3 3 3 3
3
2.5
Ratings

2.5
2
2
1.5
1
0.5
0
SBI BOI BOB UNION IDBI Other ICICI HDFC AXIS Kotak
Bank

Fig 1.12 Overall Rating ( Avg )

Analysis of Response
Sheet for Banks
 Why do you provide loans to
SMEs?
Great growth chances and low risk involved

To promote entrepreneurship

To bailout SMEs

Government of India guidelines

 Documents Required

18.18%
Financial Stability

63.64% Last 3 years Balance

36.36% Sheet
Project Cost

Future Balance Sheet

81.82%

Fig. 1.13 Documents Required

 What is the Interest Rate ?

16%
14% 14%
14%
Interest Rate

12% 12% 12% 12% 12% 12%

12% 11% 10%
10%
8%
6%
4%
2%
0%

Fig 1.14 Interest Rates

What Guaranty do you take?
No Gurantee, Collateral
18.18% Securities,
Collateral Securities
27.27%

Mortgage of company

Personal gurantee of
owner
No Gurantee

Personal Mortgage of
gurantee of company,
owner, 45.45% 27.27%

Fig 1.15 Guarantee Preferences

Time for Completion of Loan
Procedure
ICICI 21
HDFC 18
Axis 20
DNSB 18
Canara 7
BOI 21
BOB 4
Yes 9
Union 30
SBI 15
Dena 1
0 5 10 15 20 25 30 35

Fig 1.16 No. of Days

 Loan Recovery Process

Monthly Installments

Post Dated Cheques on ECS

 What about Loan Defaulters?

Send legal notice

Hire 3rd party recovery agents

Taking possession of company assets

 Any Special Facilities for SMEs?

Cash credit facility

Overdraft
Term Loan
Salary Accounts
Special interest Rates
 Current Trends in Lending
w.r.t SME
SMEs continued to face the dual challenges of an uneven
recovery and bank deleveraging.
Despite monetary easing, credit availability was a
constraint for SMEs.
Credit conditions remained tighter for SMEs in relation to
large firms.
Alternative sources of finance for SMEs and entrepreneurs
were limited and volatile.
Most governments extended SME finance support
measures and adopted new instruments.
 Analysis of Core indicators in
financing SMEs
The allocation of credit by size of firm.

Varied interest rates.

Payment delays.

Bankruptcies.
BIBLIOGRAPHY
Internet websites:

Statistical Tables Related to Banks in India, Reserve Bank of India, Retrieved

from http://www.rbi.org.in
Micro, Small and Medium Enterprises, Reserve Bank of India, 30 December
2013, Retrieved from http://www.rbi.org.in
Shareholding Pattern, 30 June 2013, Retrieved from MoneyControl.com.
Market share, Retrieved from http://www.profit.ndtv.com
Top Companies in India by Market Capitalization – BSE, 6th August 2014,
Retrieved from
http://www.moneycontrol.com/stocks/marketinfo/marketcap/bse/banks-
public-sector.html
Indian Banking Sector, January 2013, Retrieved from http://www.ibef.org
Top Companies in India by Net Sales, August 2013, Retrieved from
http://www.moneycontrol.com/stocks/marketinfo/netsales/bse/banks-public-sector.html
Top Companies in India by Net Sales, August 2013, Retrieved from
http://www.moneycontrol.com/stocks/marketinfo/netsales/bse/banks-private-sector.html
http://www.moneycontrol.com/financials/icicibank/profit-loss/ICI02#ICI02
RECENT TRENDS IN INDIAN BANKING INDUSTRY, Sanjay Kumar Dhanwani, Retrieved from
http://www.abhinavjournal.com
https://www.sbi.co.in
History, ICICI bank, Retrieved from http://www.icicibank.com/aboutus/history.page
SME Segment, Loan Schemes, Retrieved from http://www.sbi.co.in/portal/web/interest-
rates/sme-segment
Loans for SME Segment, Retrieved from http://www.icicibank.com/business-
banking/business-loans/working-capital/loans-for-sme-segment.page?
 Presenters:
Sumeet Bomblat 03
Shivkumar Chauhan 04
Shounak Dasgupta 06
Nitesh Walke 60
Tanay Mishra 29
Advait More 28
Rushabh