IFS CIA 3.

1
Comparative Study of Commercial Banks in India

MIHOBY SAFIDY 1820352

SAHITHI PYDE 1820355
IFS SECTION - 4 BBA D
 Introduction

State Bank of India (SBI)

The State Bank of India (SBI Bank) was established in 1806, in Kolkata. Three years after that,
it acquired its charter and was re-designed as Bank of Bengal in 1809. It was the very first
joint-stock bank of India, which the Bengal Government sponsored. Apart from Bank of
Bengal, the Bank of Madras and the Bank of Bombay was also part of this joint stock and
remained at the centre of the modern banking.

Initially, all three banks were Anglo-Indian creations and they came into play due to the
following three reasons-

1) Lack of modernization of the Indian economy due to several arbitrary reasons

2) Local European commerce needs and requirements
3) Compulsions imperial finance

The transformation or evolution of the State Bank of India came about due to the ideas adopted
from the same movements happening in England and Europe. Another reason that contributed
to this evolution was the changes and modifications in the local trading environment, along
with India’s economic relationships with that of Europe and the global economic structure.

Presently, the bank is getting into a couple of new business with strategic tie-ups, which have
quite a large growth potential. Some of these tie-ups are General Insurance, Pension Funds,
Private Equity, Custodial Services, Mobile Banking, Structured Products, Advisory Services,
and Point of Sale Merchant Acquisition etc.

Additionally, it is concentrating on wholesale banking capacities and the top end of the market,
in order to offer India’s corporate sector with numerous services and products.
As of now, the State Bank of India is the biggest arranger responsible for external commercial
borrowings in the country and is the biggest provider of infrastructure debt. In addition, it is
the sole Indian bank to be a part of the Fortune 500 list.

Apart from banking, State Bank of India was also associated with non-profit ventures since
1973, such as Community Services Banking. In such cases, administrative offices and branches
all over the country sponsor and take part in a huge number of social causes and welfare
activities.

IndusInd Bank

IndusInd Bank Ltd is one of the new generation private sector banks in India. The Bank's
business lines include corporate banking retail banking treasury and foreign exchange
investment banking capital markets non-resident Indian/high-net-worth individual banking and
information technology. The Bank business divisions include Retail/ Consumer Banking
Consumer Finance Global Markets Group Corporate & Commercial Banking Transaction
Banking Group and Investment Banking.

As on 31 December 2017 the bank had 1320 branches and 2162 automated teller machines
(ATMs) spread across 702 geographical locations of the country. The bank also has
representative offices in London Dubai and Abu Dhabi. The bank provides multi-channel
facilities which includes automated teller machines (ATMs) net banking mobile banking phone
banking multi-city banking and international debit cards. The Bank has multi-lateral tie-ups
with other banks providing access to more than 18000 ATMs for their customers. They enjoy
clearing bank status for both major stock exchanges - BSE and NSE - and three major
commodity exchanges in the country - MCX NCDEX and NMCE. They also offer DP facilities
for stock and commodity segments.

IndusInd Bank Ltd was incorporated in the year 1994 and was promoted by Mr Srichand P
Hinduja a leading Non-Resident Indian businessman and head of the Hinduja Group. The Bank
started their operations with a capital amount of Rs 1000 million among which Rs 600 million
was donated by the Indian Residents and Rs.400 million was raised by the Non-Resident
Indians. The bank is a pioneer in launching internet banking.

They are rated as one of the Top Performing Banks in various survey reports. During the year
2001-02 the Bank increased their network from 36 to 77. During the year 2002-03 the Bank
entered electronic money transfer arrangements with MoneyGram International Ltd USA and
Zoha Inc USA for attracting beneficiaries of small value remittance from overseas. Thus, they
became the first to implement the RBI-Electronic Funds Transfer scheme.

Also, they entered bullion trading activities and financial services to Indian entities setting up
joint ventures and wholly owned subsidiaries abroad. IndusInd Enterprises & Finance Ltd a
Non-Banking Finance company and one of the promoters of the Bank amalgamated with the
Bank with effect from July 11, 2003. As a result, IndusInd Information Technology Ltd became
a subsidiary of the Bank. During the year the bank increased their network to 127 from 77
outlets. During the year 2003-04 the Bank opened their representative office in Dubai.
 Comparison of the Services Offered by SBI and IndusInd

Services Offered By SBI:

1) Deposit Accounts:
(i) Current Account

SBI offers 8 types of current accounts with low maintenance charges to satisfy
customer’s needs and expectations. SBI current account can be opened with a minimum
balance of Rs. 10,000.

(ii) Savings Account

SBI offers 5 types of savings account with which account holders can earn up to 4%
p.a. interest on their account balance. Account can also link it to MOD account to earn
higher interest.

2) Loans:
(i) Home Loan

SBI home loans have catered to the need of owning a home of over 30 lakh families in
India. SBI loans come with low processing charges, low-interest rates, and no hidden
costs.

(ii) Personal Loan

SBI offers 4 types of personal loans for tenure ranging from 1 to 5 years. SBI Personal
Loans cater to the financial needs of any account holder at low-interest rates.

(iii) Loan against property

SBI offers 2 types of loans against property, namely, Mortgage of Immovable Property
and Rent Plus. Customers can avail loan against property at low EMIs and flexible
tenures.

(iv) Gold Loan

SBI account holders can avail Gold Loan (from Rs. 20000 to Rs. 20 lakh) by a pledge
of gold ornaments including gold coins. It comes with less paperwork and affordable
interest rates.

(v) Education Loan

 SBI offers 5 types of education loans. Using SBI Education Loan, customers can opt
for leading institutions in India. Customers can avail a loan amount of up to Rs. 1.5
crore. It also provides concession for girl students.

(vi) Two- Wheeler Loan

SBI offers 2 types of two-wheeler loans with no advance EMI and low-interest rates.
The interest of two-wheeler loans is calculated on daily reducing balance. SBI also
offers the flexibility of payment of EMI anytime during the month.

(vii) Business Loan

SBI offers secured and unsecured business loan options to its customers. To fulfill the
business requirements easily, SBI provides hassle free documentation, attractive
interest rates and flexible tenure options.

(viii) Car Loan

SBI offers 4 types of car loans. It helps its customers in financing a car for its customers
at low-interest rates, low EMIs, less paperwork, and quick disbursement. SBI car loan
offers the longest tenure of 7 years.

3) Investment:
(i) Fixed Deposit

SBI offers a wide array of fixed deposit schemes to regular individuals and senior
citizens. SBI FD rates vary from 5.00% to 6.80% for regular individuals and 5.50% to
7.30% for senior citizens.

(ii) Recurring Deposit

SBI offers a recurring deposit with tenure ranging from 12 months to 120 months.
Customers can avail loan/overdraft up to 90% against SBI recurring deposit.

4) Cards:
(i) Credit Card

SBI offers a wide range of credit cards to its customers to provide various benefits in
the form of cashback, reward points, welcome bonus across categories such as
lifestyle, traveling, shopping, etc.

(ii) Debit Card

 SBI offers various types of debit cards specially designed to cater to the needs of its
customers. Each debit card comes with a lot of benefits, flexible withdrawal limits,
rewards on shopping, traveling, etc.

5) Banking:
(i) Balance Enquiry

SBI account holders can use SBI net banking, toll-free number, mobile banking,
passbook, missed call service, SMS banking (SBI Quick), USSD, ATM to check their
SBI account balance instantly.

(ii) Mobile Banking

SBI offers mobile banking facility to its users through the SBI Anywhere Personal
Banking App. Customers can check their account balance, transfer funds, pay bills &
much more via SBI mobile banking.

(iii) Net Banking

SBI offers net banking services to its customers to provide great customer experience
through which they can easily check their account balance, transfer funds within &
outside the bank, & more.

(iv) Customer Care

SBI account holders can avail the facility of customer care for any queries, complaints,
feedback, etc. Customers can contact via SMS, e-mail, toll-free number which is
available 24 x 7.

Services Offered by IndusInd Bank:

1) Deposit Account:
(i) Savings Account

IndusInd Bank offers various savings account to serve its customer’s needs. These accounts
provide a host of banking benefits including high interest rates, reward points etc.

(ii) Current Account

IndusInd Bank offers various types of current account to its customers to cater to the
financial needs of regular businesses, large corporates, importers, and exporters.
2) Loan:
(i) Home Loan

IndusInd Bank offers home loan to its customers to fulfil their dream of owning a house at
attractive interest rates and make repayments up to 30 years of tenure with no hidden
charges.

(ii) Personal Loan

IndusInd Bank offers personal loan to its customers with simple documentation, quick
processing and disbursal. They can choose the tenure as per their convenience ranging from
1 to 5 years

(iii) Loan against Property

IndusInd Bank offers loan against property to its customers to meet personal or business
needs at attractive interest rates flexibility of repaying in 15 years.

(iv) Gold Loan

IndusInd Bank Gold Loan offers attractive interest rates & easy documentation. It provides
an additional discount for women borrowers & agricultural professionals.

(v) Two-Wheeler Loan

IndusInd Bank provides two-wheeler loan to its customers at attractive interest rates. It
comes with flexible repayment options and quick loan disbursement.

(vi) Car Loan

IndusInd Bank helps in financing a car for its customers by providing car loan at affordable
interest rates, faster processing and disbursement of the loan amount.

3) Investment:
(i) Fixed Deposit

IndusInd Bank offers various fixed deposit to its customers with a flexible range of tenures
to suit their investment plans. It comes with auto-renewal facility, preferential rates for
senior citizens, etc.

(ii) Recurring Deposit

IndusInd Bank Recurring Deposit comes with tenure ranging from 12 to 120 months and a
minimum deposit of Rs. 500. Account holders can also avail premature withdrawal and
nomination facilities.

4) Cards:
(i) Credit Card

IndusInd Bank offers a wide range of credit cards to its customers and provides various
benefits across categories like traveling, dining, lifestyle, etc. Customers can also earn
reward points, discounts and cashback.

(ii) Debit Card

IndusInd Bank offers various debit cards with a host of benefits including reward points,
offers and deals on shopping. Customers and use their debit cards for utility bills, traveling,
dining, shopping, etc.

5) Banking:
(i) Balance Enquiry

IndusInd Bank customers can check their account balance through Net Banking, Mobile
Banking, SMS Banking, ATM, Passbook and Customer Care Number.

(ii) Mobile Banking

IndusInd Bank customers can avail the facility of IndusMobile app to check the account
balance, transfer money, recharge mobile or DTH and host of other banking and payment
services.

(iii) Net Banking

IndusInd Bank customers can avail the facility of net banking to check their account
balance, transfer funds, pay bills and many more from anywhere and at any time.

(iv) Customer Care

Account holders can contact IndusInd Bank customer care toll-free number (24×7) for any
queries, questions and feedback related to their account.
DIFFERENCES IN OPERATIONS:

1) SHAREHOLDERS:

a) SBI:

Since it is a public sector bank more than fifty percentage of the stake is held by the
Government.

b)IndusInd bank:

As it is a private sector, majority of the stake owned to private shareholders, including

corporations and individuals.

2) EMPLOYEE BENEFITS:

a) SBI:

There are provisions of pensions to ex-employees of the banks.

Promotion is given to employees on the basis of their seniority level.

b) IndusInd bank:

There are no provisions of pensions to ex-employees of the banks.

Promotion is given to employees on the basis of their merit level.

3) TARGET GROUP:

a) SBI
People in India from both rural and urban area.
b) IndusInd:
Earning individuals, Corporates, HNIs
4) BASE RATE:

a) SBI:

SBI MCLR Base Rate History. 8.20% p.a. 8.20% p.a. 8.25% p.a.

b) IndusInd:
Current MCLR rate of IndusInd Bank ranges from 8.75% to 9.40% varying by reset
frequency of the loan. IndusInd Bank revises MCLR rates on a monthly basis and
benchmark its interest rates for home loan and other loans to MCLR rates of different
tenor.

5) INTEREST RATE:
a) SBI
In case of loans, interest rates are marginally lower as for example SBI introduced a
new home loan offering for its women customers with an interest rate of 8.35% for a
ticket size of upto Rs 30 lakhs.

b) IndusInd
IndusInd Bank gives an interest rate of 7.00% on maturity between 270 days or below 1
years. IndusInd Bank offers a consistent rate of 7.5% on its medium-term deposits across all
tenures. FDs with maturities above 1 years 2 months to below 3 years will fetch an interest of
7.5%

STRENGTHS AND WEAKNESSES OF SBI:

STRENGTHS:

Below is the Strengths, Weaknesses, Opportunities & Threats (SWOT) Analysis of State Bank
Of India (SBI). Strengths are:

1. SBI is the biggest bank in India with more than 14000 branches:
A network of the bank: The bank around 198 offices in 37 countries; 301 correspondents in 72
countries, 278,000 employees, 420 million customers, and around 24,000 branches and 59,000
ATMs making it the owner of one of the largest banking networks in the world.

2. State Bank Of India (SBI) has a separate act for itself. Thus, a special privilege for the bank
Special privileges: Being one of the most popular nationalized banks, the bank has a lot of
special privileges including a special act for itself.

3. Biggest branch network in the country means good reach

4. First public sector to move to CBS
5. SBI has close to 300,000 people employed with it
6. Backing of the Govt of India gives a huge boost to the bank
7. State Bank Of India offers services like consumer banking, enterprise banking, insurance etc

8. It has a good brand visibility and awareness due to extensive marketing:

Goodwill: The bank is one of the oldest in the region and has been having a steady inflow of
customers from all income brackets. They have also had good relationships with stakeholders
which have created a goodwill amongst customers.

9. SBI has its presence in more than 35 countries with close to 200 offices

WEAKNESS:

Here are the weaknesses in the State Bank Of India (SBI) SWOT Analysis:

1. Immense competition means limited market share growth for SBI:

Earlier when banking was not privatized SBI had undoubted leadership. But with the
privatization of banking, there has been a surge in the competition which has resulted in a drop
in market share.

2. International presence is less as compared to global banks:

Compared to foreign banks in India, SBI's overseas presence is minuscule. The number of
foreign offices increased from 142 as on 31st March 2010 to 190 as on 31st March 2014 spread
across 36 countries.
the lack of significant contribution from international operations increases the business risk for
the bank. Susceptible to political interventions The Government of India (GOI) is the largest
shareholder in SBI.

3. Huge size: After the merger with five of its associate banks, SBI has become the largest
banker in India and the network in huge with branches even in remote locations. This huge size
can create serious challenges in management.

STRENGTHS AND WEAKNESSES OF INDUSIND BANK:

STRENGTHS:

Below is the Strengths, Weaknesses, Opportunities & Threats (SWOT) Analysis of IndusInd
Bank. Strengths are:

1. Backing of the Hinduja group

2. Increasing revenue over the past 8 quarters:
77.1% returns for Nifty 500 over 4.5 years

3.Gives importance to customer experience

4. Offers a large variety of products and service pan India

5. FII/FPI increasing their shareholdings:

79.1% returns for Nifty 500 over 6.4 years
WEAKNESSES:

Here are the weaknesses in the IndusInd Bank SWOT Analysis:

1. Lags behind many banks in capital structure

2.Few no. of branches across the country in comparison with leading banks

3.Low durability company:

53.9% returns for Nifty 500 over 4.5 years.
 References

 https://www.oliveboard.in/blog/sbi-bank-history/
 https://www.goodreturns.in/company/indusind-bank/history.html
 https://www.equitymaster.com/stock-research/compare/SBI-INDIN/Compare-
SBI-INDUSIND-BANK
 https://www.paisabazaar.com/sbi-bank/
 https://www.paisabazaar.com/indusind-bank/