NAME: DISHA CHOUDHARY

SEMESTER: 6TH

COURSE: BACHELOR OF BUSINESS ADMINISTRATION

SPECIALIZATION: FINANCE

ROLL NO: 080

REGISTRATION NO.: 143250 of 2017-20

SUPERVISOR: DR. MADAN MOHAN DUTTA

TITLE: COMPARATIVE PERFORMANCE ANALYSIS OF HDFC BANK AND SBI

DISSERTATION OF THE PROJECT TO BE SUBMITTED IN PARTIAL

FULFILMENT OF THE REQUIREMENTS OF THE GRADUATE
DEGREE

IN

BACHELOR OF BUSINESS ADMINISTRATION

J.D. BIRLA INSTITUTE (MANAGEMENT SECTION)

AFFILIATED TO

JADAVPUR UNIVERSITY

IN

KOLKATA

SIGNATURE OF THE STUDENT SIGNATURE OF THE SUPERVISOR

1
To,
The Controller of Examination,
Jadavpur University,
Kolkata

Respected sir,
I, Disha Choudhary, take full ownership of the work titled (Comparative
performance analysis of HDFC Bank and SBI) The references used have been
acknowledged in the Bibliography.

This research is partial fulfilment of the requirement for the BBA degree to be
awarded by Jadavpur University.

Yours Sincerely,
Signature:
Name: Disha Choudhary
Registration No: 143250
Roll No: BBA2018080

2
 DECLARATION

I hereby declare the following:

The word count of the dissertation is 8,395 words approximately.
The material contained in this dissertation is the end result of my own work.
Due acknowledgement has been given in the bibliography and references to all sources
used be they electronic, personal and printed.
I am aware that my dissertation may be submitted to a plagiarism detection service
where it will be stored in a database and compared against work submitted from this
institute or from any other institute.
In the event that there is a high degree of similarity in content detected, further
investigations may lead to disciplinary actions including the cancellation of my degree
according to Jadavpur University rules and regulations.
I declare that the ethical issues have been considered, evaluated and appropriately
addressed in this research.
I agree to maintain an electronic copy or section of the dissertation to be placed on the e
learning portal, if deemed appropriate, to allow future students the opportunity to see
examples of the past dissertations and to be able to print and download copies of they so
desire.
I also agree that I will not publish this project in any portal without the permission of
the college.

Signature:
Date:
Name: Disha Choudhary
Roll No: 80
Batch: 2018-2021

3
Supervisor: Dr. Madan Mohan Dutta

4
 ACKNOWLEDGEMENT

I would like to thank J D Birla College Kolkata for giving me this opportunity to prepare
this project as a part of the curriculum of Bachelors in Business Administration and our
Principal Prof. Dr Deepali Singe for giving us immense support to carry out this project
even in such tough times.
I would like to thank my Professor from J D Birla Institute, Professor Dr. Madan
Mohan Dutta whose eagle’s eye of details of my project was of a constant motivation to
strive for perfection. I would also like to thank him for all the insights and expertise
which he shared with me along with the guidelines to complete this project.
I would now like to thank my parents for constant motivation and involvement in
preparing this project which kept me on my toes at all times
I would also like to show my gratitude to my friends for sharing their pearls of wisdom
with me during the course of this research and also helping me critically evaluate certain
aspects of this project.
I am also immensely grateful to siblings for their Insights on an earlier version of the
Project for the Improvement, although any errors are my own and should not tarnish the
reputations of these esteemed persons.

5
 ABSTRACT

In the current scenario in June, 2021 if we think about the two largest of banks of India one
from the private segment and other from the public sector segment, there is no doubt about it
being HDFC Bank from the Private sector and SBI from the Public sector looking at their
balance sheet, reach and customer base. In the private banking space HDFC Bank is one of
bank large bank having more than 5,000 branches across the country and most commercially
successful bank with net profit 21078 crores being the highest across the banking industry with
lowest Gross NPAs below 2% for the FY 2018-19. At the same time if we look at the SBI
which is most prominent public sector bank in the public sector space and oldest bank of India
with more than 200 years background doing better as compare to its peer public sector banks
but not as good as it’s private sector peers in different parameters like profitability, NPAs
management, annual growth and key parameter management. However, bank has managed to
post the net profit of 862.23 crores in the fiscal 2018-19.

Keywords: HDFC Bank, SBI, Gross NPAs, Net Profit, PCR, CAR

SERIAL NUM- TABLE OF CONTENTS PAGE

BER NUM-
BER

1 ABSTRACT 5

2 INTRODUCTION 8-12

3 INDUSTRY PROFILE 14-23

6
4 LITERATURE REVIEW 24-26

5 RESEARCH METHODOLOGY 28-29

6 DATA ANALYSIS & INTERPRETATION 31-39

7 FINDINGS AND CONCLUSION 41-42

8 BIBLIOGRAPHY 43-44

TABLE OF CONTENT

7
 CHAPTER 1
INTRODUCTION TO INDIAN BANKING SYSTEM

1.1 HISTORY OF BANKING IN INDIA

Without a sound and effective banking system in India it cannot have a healthy economy.
The banking system of India should not only be hassle free but it should be able to meet
new challenges posed by the technology and any other external and internal factors.
For the past three decades India's banking system has several outstanding achievements
to its credit. The most striking is its extensive reach. It is no longer confined to only
metropolitans or cosmopolitans in India. In fact, Indian banking system has reached even
to the remote corners of the country. This is one of the main reasons of India's growth
process. The government's regular policy for Indian bank since 1969 has paid rich
dividends with the nationalization of 14 major private banks of India. Long time ago; an
account holder had to wait for hours at the bank counters for getting a draft or for

8
withdrawing his own money. Today, he has a choice. Gone are days when the most
efficient bank transferred money from one branch to other in two days. Now it is simple
as instant messaging or dials a pizza. Money has become the order of the day.
The first bank in India, though conservative, was established in 1786. From 1786 till
today, the journey of Indian Banking System can be segregated into three distinct phases.
They are as mentioned below:
 Early phase from 1786 to 1969 of Indian Banks
 Nationalization of Indian Banks and up to 1991 prior to Indian banking sector
Reforms.
 New phase of Indian Banking System with the advent of Indian Financial &
Banking Sector Reforms after 1991.

1.2 BANKING SYSTEM IN INDIA

The Indian banking can be broadly categorized into nationalized (government owned),
private banks and specialized banking institutions. The Reserve Bank of India acts a
centralized body monitoring any discrepancies and shortcoming in the system. Since the
nationalization of banks in 1969, the public sector banks or the nationalized banks have
acquired a place of prominence and has since then seen tremendous progress. The need to
become highly customer focused has forced the slow-moving public sector banks to
adopt a fast-track approach. The unleashing of products and services through the net has
galvanized players at all levels of the banking and financial institutions market grid to
look anew at their existing portfolio offering. Conservative banking practices allowed
Indian banks to be insulated partially from the Asian currency crisis. Indian banks are

9
now quoting al higher valuation when compared to banks in other Asian countries (viz.
Hong Kong, Singapore, Philippines etc.) that have major problems linked to huge Non-
Performing Assets (NPAs) and payment defaults. Co-operative banks are nimble footed
in approach and armed with efficient branch networks focus primarily on the ‘high
revenue’ niche retail segments. The Indian banking has finally worked up to the
competitive dynamics of the ‘new’ Indian market and is addressing the relevant issues to
take on the multifarious challenges of globalization. Banks that employ IT solutions are
perceived to be ‘futuristic’ and proactive players capable of meeting the multifarious
requirements of the large customer’s base. Private Banks have been fast on the uptake
and are reorienting their strategies using the internet as a medium The Internet has
emerged as the new and challenging frontier of marketing with the conventional physical
world tenets being just as applicable like in any other marketing medium. The Indian
banking has come from a long way from being a sleepy business institution to a highly
proactive and dynamic entity. This transformation has been largely brought about by the
large dose of liberalization and economic reforms that allowed banks to explore new
business opportunities rather than generating revenues from conventional streams (i.e.,
borrowing and lending). The banking in India is highly fragmented with 30 banking
units contributing to almost 50% of deposits and 60% of advances. Indian nationalized
banks (banks owned by the government) continue to be the major lenders in the economy
due to their sheer size and penetrative networks which assures them high deposit
mobilization. The Indian banking can be broadly categorized into nationalized, private
specialized banking institutions The Reserve Bank of India act as a centralized body
monitoring any discrepancies and shortcoming in the system. It is the foremost
monitoring body in the Indian financial sector. The nationalized banks (i.e., government-
owned banks) continue to dominate the Indian banking arena. Industry estimates indicate
that out of 274 commercial banks operating in India, 223 banks are in the public sector
and 51 are in the private sector. The private sector bank grid also includes 24 foreign
banks that have started their operations here. Under the ambit of the nationalized banks
come the specialized banking institutions. These co-operatives, rural banks focus on
areas of agriculture, rural development etc., unlike commercial banks these co-operative
banks do not lend on the basis of a prime lending rate. They also have various tax sops

10
because of their holding pattern and lending structure and hence have lower overheads.
This enables them to give a marginally higher percentage on savings deposits. Many of
these cooperative banks diversified into specialized areas (catering to the vast retail
audience) like car finance, housing loans, truck finance etc. in order to keep pace with
their public sector and private counterparts, the co-operative banks too have invested
heavily in information technology to offer high-end computerized banking services.

1.3 MAJOR PLAYERS IN PRIVATE SECTOR BANKS

ICICI Bank: ICICI Banking is commercial Banking arm of ICICI group. It received its
banking license from RBI on May 17 May 1994 and its branch was started in Madras in
June 1994. ICICI Bank has a network of about 560 branches and extension counters and
over 1,900 ATMs. ICICI Bank offers a wide range of banking products and financial
services to corporate and retail customers through wide 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. ICICI Bank set up its
international banking group in fiscal 2002 to cater to cross border needs of clients and
leverage on its domestic banking strengths to offer product internationally. ICICI Bank’s
equity shares are listed in India on the Stock Exchange, Mumbai and the National Stock
Exchange of India Limited and its American Depositary Receipts are listed on New York
Stock Exchange. It is the first bank to start Internet banking service in India. In 1999,
ICICI become the first Indian Company and the first bank or financial institution from
non-Japan Asia to be listed on NYSE.

UTI Bank: - UTI 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
United Trust of India (UTI-I), Life Insurance Corporation of India (LIC) and General
Insurance Corporation Ltd. and its associates viz. National Insurance Company Ltd., The
New India Assurance Corporation, The Oriental Insurance Corporation and United
Insurance Company Ltd. The bank today is capitalized to the extent of Rs.278.12 cores
with public holding at 56.18 %. The bank’s registered office is at Ahmadabad and its
central office is at Mumbai. The bank has wide network of more than 350 branch offices

11
and Extension Counters. The Bank has network of over 1657 ATMs providing 24hrs a
day banking convenience to its customers. The bank was setup with capital of Rs.115
core, with UTI contributing Rs.100 core, LIC-Rs.7.5 core and its four subsidiaries
contributing Rs. 1.5 core each.

HDFC Bank: ---- HDFC Bank is headquartered in Mumbai Bank at present has an
enviable network of over 495 branches spread over   218 cities across India. All branches
are linked on an online real-time basis. Customers in over 120 locations are also serviced
through Telephone Banking. The Bank’s expansion plans take into account the need to
have a presence in all major industrial and commercial centers where its corporate
customers are located as well as the need to build a strong retail customer base for both
deposits and loan products. Being a clearing/settlement bank to various leading stock
exchanges, the Bank has branches in the centers where the NSE/BSE has a strong and
active member base. The authorized capital of HDFC Bank is Rs.450 core (Rs.4.5
billion). The paid-up capital is Rs.309.9 core (Rs.3.09 billion). The HDFC Group holds
22.2% of the bank’s equity and about 19.5% of the equity is held by the ADS Depository.
The Bank has made substantial efforts and investments in acquiring the best technology
available internationally, to build the infrastructure for a world class bank.

1.4 PUBLIC SECTOR BANKS

a. State Bank of India and its associate banks called the State Bank Group

b. 20 nationalized banks

c. Regional rural banks mainly sponsored by public sector banks

12
13
 CHAPTER 2
INDUSTRY PROFILE OF SBI AND HDFC BANK

2.1 EVOLUTION OF SBI

The origin of the State Bank of India goes back to the first decade of the nineteenth
century with the establishment of the Bank of Calcutta in Calcutta on 2 June 1806.Three
years later the bank received its charter and was re-designed as the Bank of Bengal (2
January 1809). A unique institution, it was the first joint-stock bank of British India
sponsored by the Government of Bengal. The Bank of Bombay (15 April 1840) and the
Bank of Madras (1 July 1843) followed the Bank of Bengal. These three banks remained
at the apex of modern banking in India till their amalgamation as the Imperial Bank of
India on 27 January 1921. Primarily Anglo-Indian creations, the three presidency banks

14
came into existence either as a result of the compulsions of imperial finance or by the felt
needs of local European commerce and were not imposed from outside in an arbitrary
manner to modernize India's economy. Their evolution was, however, shaped by ideas
culled from similar developments in Europe and England, and was influenced by changes
occurring in the structure of both the local trading environment and those in the relations
of the Indian economy to the economy of Europe and the global economic framework.

The eight banking subsidiaries are:

1-State Bank of Bikaner and Jaipur (SBBJ)

2-State Bank of Hyderabad (SBH)
3-State Bank of India (SBI)
4-State Bank of Indore (SBIR)
5-State Bank of Mysore (SBM)
6-State Bank of Patiala (SBP)
7-State Bank of Saurashtra (SBS)
8-State Bank of Travancore (SBT)

2.2 PRODUCTS AND SERVICES PROVIDED BY SBI

 Savings Accounts
 Current Accounts
 Fixed Deposit
LOANS
 Personal Loans
 Home Loans
 Two-Wheeler Loans
 New Car Loans

15
  Used Car Loans
 Overdraft against Car
 Express Loans
 Gold Loan
 Educational Loan
 Loan against Securities
 Loan against Property
 Loans against Rental Receivables

CARDS
 Credit Cards
 Debit Cards

ACCESS YOUR BANK

 Net Banking
 ATM

2.3 SWOT ANALYSIS

STRENGTHS:
1. Brand Name: SBI Bank has earned a reputation in the market over the period of time
(Being the oldest bank in India tracing history back to 1806)
2. Market Leader: SBI is ranked at 380 in 2008 Fortune Global 500 list, and ranked 219
in 2008 Forbes Global 2000. With an asset base of $126 billion and its reach, it is a
regional banking behemoth.

16
3. Wide Distribution Network: Excellent penetration in the country with more than
10000 core branches and more than 5100 branches of associate banks (subsidiaries).
4. Diversified Portfolio: SBI Bank has all the products under its belt, which help it to
extend the relationship with existing customer. SBI Bank has umbrella of products to
offer their customers, if once customer has relationship with the bank. Some Products,
which SBI Bank is offering are: Retail Banking Business Banking Merchant
Establishment Services (EDC Machine) Personal loans & Car loans Insurance Housing
Loans Government Owned: Government owns 60% stake in SBI. This gives SBI an edge
over private banks in terms of customer security.
5. Low Transition Costs-SBI offers very low transition costs which attracts small
customers.

WEAKNESSES:
1. The existing hierarchical management structure of the bank, although strength in some
respects, is a barrier to change.
2.Though SBI cards are the 2nd largest player in the credit card industry, it has the
highest no performing assets (NPAs) in the industry, which stand out to be at 16.28 %
(Dec 2007).
3. Modernisation: SBI lags with respect to private players in terms of modernisation of
its processes, infrastructure, centralisation, etc.

OPPORTUNITIES:
1. Merger of associate banks with SBI: Merger of all the associate banks (like SBH,
SBM, etc) into SBI will create a mega bank which streamlines operations and unlocks
value.
2. Planning to add 2000 branches and 3000 ATMs in 2008-2009. This will further
increase its reach.
3. Increasing trade and business relations and a large number of expatriate populations
offers a great opportunity to expand on foreign soil.

17
 THREATS:
1. Advent of MNC banks: large numbers of MNC banks are mushrooming in the Indian
market due to the friendly policies adopted by the government. This can increase the
level of competition and prove a potential threat for the market share of SBI bank.
2. Consumer expectations have increased many folds in last few years and the bank has
not been responsive enough to meet them on time.
3. Private Banks have started venturing into the rural and semi-urban sector, which used
to be the bastion of the State Bank and other PSU banks
4. Employee Strike: There was an employee strike in the year 2006 which disrupted
SBI’s activities. This can be repeated in the future.

2.4 OVERVIEW OF HDFC BANK

HDFC Bank began operations in 1995 with a simple mission: to be a "World-class Indian
Bank". They realized that only a single-minded focus on product quality and service
excellence would help them to get there. HDFC Bank, one amongst the firsts of the new
generation, tech-savvy commercial banks of India, was set up in august 1995 after the
Reserve Bank of India allowed setting up of Banks in the private sector. The Bank was
promoted by the Housing Development Finance Corporation Limited, a premier housing
finance company (set up in 1977) of India. Net Profit for the year ended March 31, 2006

18
was up 30.8% to Rs 870.8 cores. Currently (2007), HDFC Bank has 583 branches located
in 263 cities of India, and all branches of the bank are linked on an online real-time basis.
The bank offers many innovative products & services to individuals, corporate, trusts,
governments, partnerships, financial institutions, mutual funds, insurance companies. Bank
also has over 1471 ATMs. In the next few months, the number of branches and ATMs
should go up substantially. The Housing Development Finance Corporation Limited
(HDFC) was amongst the first to receive an 'in principle' approval from the Reserve Bank
of India (RBI) to set up a bank in the private sector, as part of the RBI's liberalization of
the Indian Banking Industry in 1994. The bank was incorporated in August 1994 in the
name of 'HDFC Bank Limited', with its registered office in Mumbai, India. HDFC Bank
commenced operations as a Scheduled Commercial Bank in January 1995.HDFC Bank's
mission is to be a World-Class Indian Bank. The objective is to build sound customer
franchises across distinct businesses so as to be the preferred provider of banking services
for target retail and wholesale customer segments, and to achieve healthy growth in
profitability, consistent with the bank's risk appetite. The bank is committed to maintain
the professional integrity, corporate governance and regulatory compliance. HDFC Bank's
business philosophy is based on four core values Operational Excellence, Customer Focus,
Product Leadership and People. The Housing Development Finance Corporation
Limited (HDFC) was amongst the first to receive an 'in principle' approval from the
Reserve Bank of India (RBI) to set up a bank in the private sector, as part of the RBI's
liberalization of the Indian Banking Industry in 1994.

ACTIVITIES
HDFC Bank mainly provides three kinds of banking services:
a. Personal Banking
b. NRI Banking
c. Wholesale Banking
The following are the products and services provided by the HDFC bank

19
  HDFC Bank provides loans like Personal Loans, Home Loans, Educational
Loans, Two-Wheeler Loans, New car Loans, Used Car Loans, Overdraft Against
Car, Express Loans, etc.
 HDFC Bank provides Credit, Debit and Prepaid Cards to help you meet your
financial objectives.
 HDFC Bank provides facilities like Mutual Funds, Insurance, General & Health
Insurance, Bonds, Financial Planning, Knowledge Center, Equities & Derivatives,
Mudra Gold bar.
If you need to deal in foreign currency and keep tabs on exchange rates every now and
then, transfer funds to India, make payments etc., HDFC Bank has a range of products
and services that you can choose from to transact smoothly, efficiently and in a timely
manner.
HDFC Bank has designed two programs to make banking easier for the customers and
they are
 HDFC Bank Preferred Programme
 HDFC Bank Classic Programme.
 HDFC Bank offers Private Banking services to high-net-worth individuals and
institutions.
 HDFC Bank offers you quick, economical and convenient options to remit and
transfer funds to India.
 Corporate Banking reflects HDFC Bank’s strengths in providing our corporate
clients in India, a wide array of commercial, transactional and electronic banking
products.
 HDFC Bank acts as an active medium between the government and the customers
by means of various services.
Distribution network
HDFC Bank is headquartered in Mumbai. The Bank at present has an enviable network
of over 684 branches spread over 316 cities across India. All branches are linked on an
online real-time basis. Customers in over 120 locations are also serviced through
Telephone Banking. The Bank's expansion plans take into account the need to have a
presence in all major industrial and commercial centers where its corporate customers are

20
located as well as the need to build a strong retail customer base for both deposits and
loan products. Being a clearing/settlement bank to various leading stock exchanges, the
Bank has branches in the centers where the NSE/BSE have a strong and active member
base. The Bank also has a network of about over 1,740 networked ATMs across these
cities. Moreover, HDFC Bank's ATM network can be accessed by all domestic and
international Visa/MasterCard, Visa Electron/Maestro, Plus/Cirrus and American Express
Credit/Charge cardholders. HDFC Bank operates in a highly automated environment in
terms of information technology and communication systems. All the bank's branches
have online connectivity, which enables the bank to offer speedy funds transfer facilities
to its customers. Multi-branch access is also provided to retail customers through the
branch network and Automated Teller Machines. The Bank has made substantial efforts
and investments in acquiring the best technology available internationally, to build the
infrastructure for a world class bank. In terms of software, the Corporate Banking
business is supported by Flex cube, while the Retail Banking business by Fin ware, both
from I-flex Solutions Ltd. The systems are open, scalable and web-enabled. The Bank has
prioritized its engagement in technology and the internet as one of its key goals and has
already made significant progress in web-enabling its core businesses. In each of its
businesses, the Bank has succeeded in leveraging its market position, expertise and
technology to create a competitive advantage and build market share.

2.5PRODUCTS AND SERVICES PROVIDED BY HDFC BANK

SAVINGS ACCOUNTS
 Regular Savings Account
 Savings Plus Account
 Savings Max Account
 No Frills Account

21
 Retail Trust Account
 Salary Accounts
 Payroll
 Classic
 Regular
 Premium
 Defense Salary Account
 Kid's Advantage Account
 Pension Saving Bank Account
 Family Savings Group
CURRENT ACCOUNTS
 Plus, Current Account
 Trade Current Account
 Premium Current Account
 Regular Current Account
 Reimbursement Current Account
 RFC - Domestic Account
FIXED DEPOSITS
 Regular Fixed Deposit
 Super Saver Account
 Sweep-in Account

LOANS
 Personal Loans
 Home Loans
 Two-Wheeler Loans
 New Car Loans
 Used Car Loans

22
  Overdraft Against Car
 Express Loans
 Gold Loan
 Educational Loan
 Loan Against Securities
CARDS
 Credit Cards
 Silver Credit Card
 Gold Credit Card
 Platinum Plus Credit Card
 Debit Cards
 Easy Shop International Debit Card
 Easy Shop Gold Debit Card
 Easy Shop International Business Debit Card
ACCESS YOUR BANK
 Net Banking
 Mobile Banking
 ATM
 Phone Banking

2.6 SWOT ANALYSIS

STRENGTHS: -
1. Right strategy for the right products.
2. Superior customer service vs. competitors.
3. Great Brand Image.
4. Products have required accreditation.
5. High degree of customer satisfaction.
6. Good place to work
7. Lower response time with efficient and effective service.

23
8. Dedicated workforce aiming at making a long-term career in the field.
WEAKNESS: –
1. Some gaps in range for certain sectors.
2. Customer service staff needs training.
3. Processes and systems, etc.
4. Management cover insufficient.
5. Sector growth is constrained by low unemployment levels and competition for
staff.
OPPORTUNITIES: –
1. Profit margins will be good.
2. Could extend too overseas broadly.
3. New specialist applications.
4. Could seek better customer deals.
5. Fast-track career development opportunities on an industry-wide basis.
6. An applied research center to create opportunities for developing techniques to
provide added-value services.
THREATS: -
1. Legislation could impact.
2. Great risk involved
3. Very high competition prevailing in the industry.
4. Vulnerable to reactive attack by major competitors.
5. Lack of infrastructure in rural areas could constrain investment.
6. High volume/low-cost market is intensely competitive.

LITERATURE REVIEW

1. Denise K. Conroy: - In his study titled (Customer satisfaction measures in the public
sector: what do they tell us?) attempts to devise customer satisfaction measures,

24
according to him there are a number of factors which can affect the interpretation of
results - the nature of the customer, service provision, service quality and, for the public
sector, the extent to which consumer sovereignty exists. Resources may be better directed
towards setting and maintaining high levels of standard of service. This study addresses
the difficulties and highlights the complex nature of a customer or service beneficiary
who can be, at the same time, a taxpayer, voter, recipient of financial benefits, with
expectations of the public sector and its delivery agent, yet cannot choose another
provider.
2. Harry Nowka, Southwestern Oklahoma State University, Nancy Buddy, Southwestern
Oklahoma State University Robert Reeder, Southwestern Oklahoma State University and
Daniel Hart, Southwestern Oklahoma State University in their study titled (Customer
Responses: A Comparative Study) wants to determine various variables which influence
customers of a bar and grill. This comparative analysis includes customer responses with
comparisons made to the major competitor's customer responses, student customer
responses, and responses of a panel of non-customers assembled to assess potential
customer responses. This study indicates that location can be a significant deterrent to
expansion of the customer base. The personality of the owner can have a positive impact
on customer flow. Analysis of spending patterns indicates that food and pool were
underutilized. The male/female ratio was a determinate of customer flow.
3. Dawn Iacobucci, Amy Ostrom, Kent Grayson: - In their study titled
(Distinguishing Service Quality and Customer Satisfaction: The Voice of the
Consumer) presents two studies that rely on divergent methodologies to examine
whether or not quality and satisfaction have distinct antecedent causes, consequential
effects, or both (i.e., whether or not they should be considered a single construct, or
distinct, separable constructs). They focus on consumers’ understanding and use of the
word’s quality and satisfaction; in both studies, respondents report whether or not they
think quality and satisfaction differ, and if so, on what dimensions or under what
circumstances. In the first study, they use the qualitative “critical incident” technique to
elicit service attributes that are salient to respondents when prompted to consider quality
and satisfaction as distinct. The code the responses to these open-ended survey questions
to examine whether quality can be teased apart from satisfaction, from the respondents’

25
(consumers’) perspective. In the second study, to triangulate on the qualitative data, they
experimentally manipulated a number of service attributes drawn from both the first
study and from the literature to see whether or not they have differential impacts on
judgments of quality and satisfaction. They did not presuppose that quality and
satisfaction differ—rather, they asked respondents to make a judgment either of quality
or of satisfaction, defining the term as they saw fit.
4. Entrees D. Athanassopoulos: -In this study titled (Customer Satisfaction Cues to
Support Market Segmentation and Explain Switching Behavior) examined the
customer satisfaction cues in retail banking services in Greece. The study proposes an
instrument of customer satisfaction that contains service quality and such other attributes
as price, convenience, and innovation. The proposed framework of customer satisfaction
was verified empirically yielding four distinct facets for business customers and five for
individual customers. The performance implications of the customer satisfaction
instrument are also explored. What is shown is that customer segments, in fact, yield
statistically different satisfaction scores, which verifies the managerial value of customer
segmentation practices. Finally, the facets of customer satisfaction as explanatory cues
for the switching behavior of individual and business customers were tested successfully.

5. Rengasamy Elango and Vijaya Kumar Guide: - In their study titled (A

Comparative Study on the Service Quality and Customer Satisfaction among
Private, Public and Foreign Banks) focuses on the service quality and customer
satisfaction among the private, public and foreign banks in India. An analysis is carried
out to examine the level of awareness among customers and to identify the best sector
which provides qualitative customer service. This becomes relevant in the context of
recommendations of various committees constituted by the Government of India and the
RBI, from time to time, to suggest measures to improve customer service systems of the
public sector commercial banks of India. A well-structured questionnaire is used to
collect the views of respondents across the three banking sectors. The survey instrument
includes various dimensions, pertaining to the quality of customer services in terms of
banking personnel, convenient working hours, Web-based services, error free value-
added services and efficient grievance redressed mechanism etc. Apart from the basic

26
statistical tools such as measures of central tendency, authors also use `factor analysis'
and the `One-way ANOVAs' classification. The idea behind this is to extract the relevant
factors and analyze whether there is any significant difference with respect to service
quality within the three banking sectors. The results indicate that the level of awareness
among the customers improved significantly during the study period. It is interesting to
note that the results are consistent with the previous studies conducted on customer
service aspects, and it has been observed that the foreign and the new generation private
sector banks are serving the customers better. This has larger implications on the public
sector commercial banks in India with respect to customer service delivery aspects. It is
high time the public sector commercial banks made efforts to revamp their approach
towards customers, so as to perform better and derive competitive advantage in the long
run.

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 CHAPTER 3
RESEARCH METHODOLOGY

3.1 RESEARCH METHODOLOGY

It describes the data collection method, the sampling plan, the tools of investigation,
planning and testing of questionnaire and the limitations of the study. The study requires

28
the data to be collected from two different sources i.e., the primary source and the
secondary source. The primary data is collected with the help of structured questioners
which is being modified & reliable and the secondary data through the various journals,
newspapers and websites

3.2 OBJECTIVES OF THE STUDY

The following objectives were set within the scope of this research and served as
guideline to effectively fulfill the purpose of this study:

1. To analyse NPAs correlation of HDFC Bank to CAR, PCR and net profit.
2. To analyse NPAs correlation of SBI Bank to CAR, PCR and net profit.
3. To compare the HDFC Bank and SBI’s ratios to understand their neck to neck
standing.

DATA SOURCE:

(a) Primary Data: - Primary data was collected by means of questionnaires

(b) Secondary data: - Secondary data collected by referring to various books,

newspapers, magazines, journals and internet (details in bibliography)

RESEARCH DESIGN:
The universe of the study consists of all the different ratios and variables of HDFC Bank
and SBI for the study purpose. Here, research has been done on HDFC Bank and SBI’s
correlation analysis of their ratios and comparative study of both banks.

PERIOD OF THE STUDY:

The study has been carried out from 2010 to 2019.

DATA COLLECTION TOOL AND TECHNIQUES

As per the nature of study following tools and techniques are used for testing the
hypotheses,

29
  Tools - Ratio Analysis, Excel
 Statistical Techniques - Mean, Standard deviation and Correlation Analysis

RESEARCH INSTRUMENT USED:

Secondary Data

3.3 LIMITATIONS:
The present study has the following limitations such as,
1. Comparison is restricted to the HDFC Bank and SBI only.
2. The study is based on secondary data as published in various publications of RBI
and other reports. These data are based on historical accounting concept.
3. The study, as limitations, is confined only to the selected and restricted indicators
and the study is confined only for a period of ten years.

30
 CHAPTER 4
DATA ANALYSIS & INTERPRETATION

TERMS USED FOR THE DATA ANALYSIS

31
 Non-Performing Assets (GNPA & NNPA)

1. Definition of NPA
For a bank, an asset is anything that offers income. Therefore, the loans offered by banks
are their assets. The interest paid by borrowers is the primary source of income for most
banks. As long as the borrower pays the instalments, the asset is said to be performing.
However, if the borrower starts defaulting and reaches a stage where repayment of the
loan is not possible, then the asset is said to be non-performing.
“An asset, including a leased asset, becomes non-performing when it ceases to generate
income for the bank. A ‘non-performing asset’ (NPA) was defined as a credit facility in
respect of which the interest and/ or instalment of principal has remained ‘past due’ for a
specified period of time.”

2. GNPA – Gross Non-Performing Assets

Gross NPA is the total value of non-performing assets of the bank. This is an absolute
number and can tell you the amount of loans that the bank is not earning money on.

GNPA can also be expressed as a percentage of the total loans issued by the bank. This
can tell you the percentage of the total loans that are currently non-recoverable.

Example: If a bank has issued a total of Rs.100 crore as loans and has a GNPA of Rs.5
crore, then the GNPA percentage will be 5%. In other words, five percent of the loans
issued by the bank are currently non-recoverable.

Remember, a high GNPA means the bank has a poor quality of assets.

3. NNPA – Net Non-Performing Assets

32
As explained above, banks set aside funds for uncertain loans issued by them. Therefore,
the net impact of the non-performing assets can be understood by subtracting the NPA
Provisioning amount from GNPA. This is the Net NPA.

NNPA = GNPA – NPA Provisioning

Example: Like GNPA, NNPA can also be expressed as a percentage. If a bank has issued
a total of Rs.100 crore as loans, a GNPA of Rs.5 crore, and NPA Provisioning of Rs.2
crore, then the NNPA will be Rs.3 crore and the NNPA percentage will be 3%.

Provisioning Coverage Ratio (PCR)

A Provisioning Coverage Ratio or PCR is the percentage of funds that a bank sets aside
for losses due to bad debts. A high PCR can be beneficial to banks to buffer themselves
against losses if the NPAs start increasing faster.

A quick glance at the PCR ratio of the bank can tell you if the bank is vulnerable to NPAs
or not. Typically, a PCR ratio of 70%+ is considered healthy for banks.

Provision Coverage Ratio = Total provisions / Gross NPAs.

Capital Adequacy Ratio (CAR)

One of the best ways to assess a bank’s potential to absorb losses is to look at its Capital
Adequacy Ratio or CAR. In simple terms, this ratio measures how much capital does a
bank have in comparison to its credit exposure. The CAR is enforced by banking
regulators to ensure that banks don’t take excess leverage and turn insolvent.

A high CAR indicates that the bank has enough capital to manage sudden losses. On the
other hand, a low CAR indicates a bank that carries the risk of failure. RBI announces the

33
CAR required for banks in accordance with Basel norms time to time. A CAR of 8-12%
is usually considered average.

4. DATA ANALYSIS

34
 COMPARATIVE STUDY OF SBI AND HDFC BANK
As below mentioned, data is collected from the different sources mentioned in the references
section like RBI website, Annual reports of Banks etc. below mentioned belongs to HDFC
Bank and State bank India and also ratios collected from the annual reports are shown in the
below table.

Year Gross NPA’s CAR Net Profit PCR Ratio

HDFC SBI HDFC SBI HDFC SBI HDFC SBI
2010 1.43 3.05 17.44 13.39 2948 9166 78.42 59.23
2011 1.05 4.44 16.22 11.98 3926 8265 82.51 64.95
2012 1 5.3 16.52 13.86 5167 11707 82.38 68.1
2013 0.95 4.75 16.8 12.92 6726 14105 79.91 66.58
2014 0.91 4.95 16.1 12.44 8478 10891 72.57 62.86
2015 0.89 4.25 16.8 12 10216 13102 73.93 69.13
2016 0.25 6.5 15.5 13.12 12296 9951 69.94 60.7
2017 1.04 6.9 14.6 13.11 14550 10484 68.67 65.95
2018 1.28 10.91 14.8 12.6 17487 -6547 69.78 66.17
2019 1.35 7.53 17.1 12.72 21078 862 71.36 78.73
*Figures in Crore

Above table shows the data of HDFC Bank and State bank of India for the analysis
purpose. From the above data there are the 3 kind of correlation analysis we are
performing. First is the both banks common correlation analysis and other 2 analysis we
are doing is their individual analysis.

35
 4.1 CORRELATION ANALYSIS OF VARIABLES WITH GROSS
NPAS OF BOTH THE BANKS

Gross CAR Net PCR

NPAs Profit Ratio
Gross NPAs 1.00
CAR -0.77 1.00
Net Profit -0.45 0.08 1.00
PCR Ratio -0.45 0.68 -0.30 1.00

Correlation Analysis of Variables

1.00
0.80
0.60
Gross NPAs
0.40
CAR
0.20
Net Profit
0.00
Gross NPAs CAR Net Profit PCR Ratio PCR Ratio
-0.20
-0.40
-0.60
-0.80

As per the correlation study of the both the banks together we can see that Capital
adequacy ratios to gross NPAs seems to be negative and showing the negative
strength of association. This shows that there is strong inverse relationship between
both the variables if we look at the case of Gross NPAs to Capital Adequacy ratios.
In the another variable Gross NPAs to Net profit analysis of both banks shows that
strength of association is negative between both the variables. This shows that both
share the inverse relationship to each other however it is not stronger like CAR.

36
 Gross NPAs to PCR ratios analysis of correlation shows that both share the negative
strength of association. This shows that once the gross NPAs of the bank are
increasing maintaining the PCR ratios becomes the challenges for the bank and
hence showing the negative strength of associations.

If we look the CAR to net profit it shows the both share the week positive strength
of association, this means both having the similar set of association to each other.
Also, to maintain the CAR it is necessary to have profits with banks. Also, CAR and
PCR are showing the positive strength of association to each other. This shows that
both the variables requirement of maintenance is same. This means if one banks is
able to maintain CAR then it is also able to maintain the PCR ratios.

Net profits to PCR ratios are showing the negative correlation to each in the case
to both banks if we put them together to study. It shows that net profits are hampered
to maintain the PCR ratios.

4.2 CORRELATION ANALYSIS OF HDFC BANK

Gross CAR Net PCR Ra-

NPAs Profit tio
Gross NPAs 1.00
CAR 0.30 1.00
Net Profit 0.07 -0.41 1.00
PCR Ratio 0.17 0.59 -0.82 1.00

HDFC Bank's Correlation Analysis

1.00

0.50 Gross NPAs

CAR
0.00 Net Profit
Gross NPAs CAR Net Profit PCR Ratio
37 PCR Ratio
-0.50

-1.00
 As per the correlation study of HDFC Bank the bank, we can see that Capital
adequacy ratios to gross NPAs seems to be weak positive and showing the positive
strength of association. This shows that there is similar relationship between both the
variables if we look at the case of Gross NPAs to Capital Adequacy ratios. In the
another variable Gross NPAs to Net profit analysis of both banks shows that strength
of association is neutral between both the variables. This shows that both share the
no association to each other. This shows HDFC Bank has managed the NPAs to net
profit in an efficient manner hence net profit is not decreasing. Gross NPAs to PCR
ratios analysis of correlation shows that both share the positive strength of
association. This shows that gross NPAs of the bank and PCR ratios both the
maintained the by the bank in very systematic manner so that NPAs and PCR share
showing the positive strength of association.

If we look the CAR to net profit it shows the both share the negative strength of
association, this means both have inverse set of association to each other. Also, to
maintain the CAR it is necessary to have profits with banks. Also, CAR and PCR
are showing the positive strength of association to each other. This shows that both
the variables requirement of maintenance is same. This means if one banks is able to
maintain CAR then it is also able to maintain the PCR ratios.

Net profits to PCR ratios are showing the negative correlation to each in the case
to both banks if we put them together to study. It shows that net profits are hampered
to maintain the PCR ratios.

4.3 CORRELATION ANALYSIS OF STATE BANK OF INDIA

Gross CAR Net PCR
NPAs Profit Ratio
Gross NPAs 1.00

CAR -0.02 1.00

Net Profit -0.83 0.14 1.00

PCR Ratio 0.33 -0.17 -0.31 1.00

38
 Correlation Analysis of SBI

1.00
0.80
0.60
0.40 Gross NPAs
0.20 CAR
0.00 Net Profit
-0.20 Gross NPAs CAR Net Profit PCR Ratio
PCR Ratio
-0.40
-0.60
-0.80
-1.00

As per the correlation study of the SBI we can see that Capital adequacy ratios to
gross NPAs seems to be negative and showing the negative strength of association.
This shows that there is strong inverse relationship between both the variables if we
look at the case of Gross NPAs to Capital Adequacy ratios. In the another variable
Gross NPAs to Net profit analysis of both banks shows that strength of association is
strong negative between both the variables. This shows that both share the inverse
relationship to each other however it is not stronger like CAR. Gross NPAs to PCR
ratios analysis of correlation shows that both share the positive strength of
association. This shows that once the gross NPAs of the bank are increasing
maintaining the PCR ratios not becomes the challenges for the bank and hence
showing the positive strength of associations.

If we look the CAR to net profit it shows the both share the week positive strength
of association, this means both having the similar set of association to each other.
Also, to maintain the CAR it is necessary to have profits with banks. Also, CAR and
PCR are showing the negative strength of association to each other. This shows that

39
both the variables requirement of maintenance is different. This means if one bank is
able to maintain CAR then not necessary it is also able to maintain the PCR ratios.

Net profits to PCR ratios are showing the negative correlation to each in the case
to both banks if we put them together to study. It shows that net profits are hampered
to maintain the PCR ratios.

40
 CHAPTER5
FINDINGS AND CONCLUSIONS

41
5.1 FINDINGS

From the correlation analysis of the above mentioned two banks there are different
finding we have observed.

Below are the lists of findings which we observed in both banks.

i. HDFC Banks net profits is not declining with NPAs as reason being NPAs are
also found steady in case of this bank.
ii. Also, gross NPAs and net profits are not showing any correlation to each other
that shows the efficiency of NPAs management by the HDFC Bank.
iii. Correlation analysis shows that the capital adequacy ratio of HDFC Bank is
positive with Gross NPAs that shows that at given level of NPAs, bank is
able to maintain the CAR and also its being showing the positive strength of
association.
iv. Here provision coverage ratios also showing the week but positive correlation
to GNPAs, this indicates that banks having enough capacity in terms of gross
profits to maintain the PCR as when NPAs and PCR showing the positive
strength of associations.
v. CAR and net profits are showing the negative strength of association and at the
same time HDFC Bank is managing all the ratios as per requirement of regu-
lator at individual level. But correlation between both the variable suggests
that HDFC Bank should focus in future on both ratios as both are showing
the inverse relationship.
vi. State Bank of India’s net profits is being strongly negatively associated with
Gross NPAs. This shows that NPAs and net profits are not correlated and
moving in the inverse direction to each other. This also states that these GN-
PAs are hammering the bank net profits.

vii. Also, gross NPAs and net profits are not showing strong negative correlation
to each other that shows the inefficiency of NPAs management by the SBI.
viii. Correlation analysis shows that the capital adequacy ratio of SBI is negative but
if we look at the data it is neutral with Gross NPAs that shows that at given

42
 level of NPAs, bank is able to maintain the CAR and also its being showing
the neutral strength of association.
ix. Here provision coverage ratios also showing the week but positive correlation
to GNPAs, this indicates that banks having enough capacity in terms of gross
profits to maintain the PCR as when NPAs and PCR showing the positive
strength of associations. But at the same time PCR are showing the negative
strength of association with the net profit. This suggest that requirement of
PCR is hampering the profits of the banks.
x. CAR is showing the positive strength of associations with net profits in case of
SBI, this show that SBI managing the net profits with CAR in a systematic
way in order to maintain the ratios as required by regulators.

5.2 CONCLUSIONS

After the above study on comparative study of HDFC Bank and State Bank India,
it is found that both the banks managing their ratios at the best in their capacities in
given boundaries. However, if we compare both the banks it suggests that HDFC
Bank having the edge on the SBI reason being HDFC Bank having lower NPAs than
the SBI. HDFC Bank having Gross NPAs less than 1.5% while SBI having the
GNPAs near about 7.5% as per the annual report of both banks for the fiscal 2019.
Also, the comparative study of both bank shows the NPAs never been easy handling
for the state bank of India and in every two to three year they are doing the
provisioning of their NPAs while in case of HDFC Bank these restructuring
incidents are rare. However, findings of the study are suggesting that HDFC Bank
has managed their ratios like NPAs, CAR and PCR in a very efficient manner and
managed the net profits in a systematic way and paying the great role of successful
commercial bank while in case of SBI they are managing their ratio but are not
that much efficient in case of Net profits and NPAs while CAR and PCR are being
managed by them. SBI need to be more focused on managing the net profits and
NPAs part to be a commercially successful bank

43
 BIBLIOGRAPHY
WEBSITE USED
http:// www.statebankofindia.com
http://www.banknetindia.com/banking/index_1.htm
http://www.asiatradehub.com/india/banking/finance.html
http://www.finance.indiamart.com/investment_in_india/standard_chartered_bank.

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[2]. Nirmal, Anil Kumar. (2019). NPAs comparison of PSL and Non PSL of Yes
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[3]. Purvi Derashri, Anil Kumar. Nirmal. (2019). NPAs, A Nightmare for Banking
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[4]. PunjabNational Bank. (n.d.). Retrieved February 16, 2020,
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[5]. Avani Ojha, H. C. (2018). The Comparative study regarding impact of NPAs on
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[6]. India, t. o. (2019, November 6). Pnb posts Rs 507cr profit in q2 as provisions
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[7]. Press Information Bureau Government of India, M. o. (2018, July). Measures to
recover loan Amount from NPAs.
Ministry of Finance, NA.
[8]. RBI. (2019, September). Reserve Bank of India. Retrieved from
WWW.RBI.GOV.IN

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 [9]. Santhanakrishnan, D. G. (2013). Non-Performing Assets: A Study of SBI. Asia
Pacific Journal of Research, 1 (X).81-88.
[10]. Times, E. (2019, AUGUST (Swathi.M. S, 2019) 02). PNB plans aggressive
recoveries to contain gross NPA below 12%. Mumbai, Maharashtra, India:
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BOOKS FOLLOWED

Research methodology by C.R. Kothari

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