THE EFFICACY OF FINANCIAL SERVICES-A COMPARATIVE STUDY OF SBI & HDFC BANK SUBMITTED
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Date
2010
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
SAM HIGGINBOTTOM INSTITUTE OF AGRICULTRE,TECHNOLGY & SCIENCES (DEEMED TO BE UNIVERSITY) ALLAHABAD-NAINI
Abstract
The present study tries to unearth such issues which has been in the mind of the researcher, since the beginning of the research, i.e. how a layman can determine which bank is more reliable, the queries and confusions of one’s mind, as the common man is not well verse with the technical language of the financial world, as in the pre independence era of India, mostly the banks were owned by the big merchants and they were providing financial services to the Europeans and the rich citizens only, the nationalisation of all the banks in the 1969, (Austin G. , 1999) gave certain assurance to the common households, that now they will also have an equal access to the banks, because prior to the nationalisation the banks were bias in providing financial services to the commoner as comparison to the rich, but with the introduction of, The New Economic Policy in 1991 government opened the financial services sector for both the private and foreign players, with this a new breed of banks entered the market which brought new product and better financial services.
In the present study the parameters which had been considered for evaluating the efficacy of financial services were namely, Employee satisfaction, Customer Satisfaction, Profitability Ratios, Efficiency Ratios & last but not the least CAMELs Model for assessing the performance of banks.
Analysing the employee satisfaction level of SBI and HDFC banks, the researcher has reached to an understanding that both the banks have to work a lot for increasing the satisfaction level as results in overall employee satisfaction for SBI and HDFC shows that employees has marked their responses for somewhat dissatisfied, but percentage of SBI employees is less as compare to the percentage of HDFC employees.
As the results of customers’ satisfaction, clearly shows that lot of work has to be done by both the bank. The policy makers for banks, has to focus on the requirement of improvisation of their services, as far as overall satisfaction is concerned, majority of the customers have responded for very satisfied and somewhat satisfied option and only one customers has responded for extremely satisfied option with the SERVQUAL five dimensions as suggested by (Leonard L. Berry, 1988). Therefore there is a scope of more
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efforts to be put it, both the banks, but as comparing the percentages customers of HDFC bank are more satisfied than customers of SBI bank.
Analysing the Profitability of both the banks with the help of several ratios, the researcher, is at conclusion that being a premier government owned and the oldest bank of India SBI formerly known as the Imperial Bank of India has managed itself well in Profitability still being a new player HDFC bank as compared to SBI has also a secured place with outperforming the SBI in ROA & ROE ratios, and only far behind in the NOM as the being a new and private player its operational expenses are more.
The results of Efficiency ratios for the period of 2004-05 to 2014-15 suggests that, HDFC has been a better player in utilising its assets for generating income for the bank, as compare to the SBI which has spent a long time in the banking business. The results suggests that except Cost of funds ratio HDFC bank has outperformed SBI in all other parameters of efficiency ratios, like Operating Efficiency, Cost to income ratio, Burden ratio. This means that the bell has rung for SBI as the results claims that a lot has to be done by the SBI for improving its efficiency of utilising the assets in generating income.
An in depth analysis of CAMELs model for SBI and HDFC reveals that in Capital Adequacy, Asset Quality measures SBI has easily outperformed the HDFC bank but interestingly when moving towards the other ratios gave us shocking results that for the period of 2004-05 to 2013-14 HDFC has emerged a competitive force and has outperformed the SBI on the front of Management Efficiency, Earnings Quality and Liquidity Ratios.
Table 5. 1 Overall Comparison of Efficacy of Financial Services of SBI and HDFC Bank
Parameters
SBI
HDFC
Employee Satisfaction
1
2
Customer Satisfaction
2
1
Profitability
1
2
Efficiency
2
1
CAMELs
2
1
On the basis of the Table No.5.1 it can be, concluded that HDFC has outperformed SBI, a premier bank of Indian banking sector, securing Rank 1 in Customer satisfaction, Efficiency
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and CAMELs model analysis, however it has to go a long way and needs to formulate policies which could lead it towards delivering more and better services to its employees which has a direct effect on the Profitability of a Banking Company.
The findings of the sub hypothesis forms the basis of the rejection of Main Null Hypothesis H0 There is no significant difference between the efficacy of financial services of SBI & HDFC Bank, therefore alternative Main hypothesis is accepted.
The study focuses the important parameters which could be considered for determining the bank, i.e, where households can park their savings, in the form of different accounts in the banks. As one chooses his/her banks in anticipation that in future, one can avail different services in the later stages of life, may be education loan, home loan, or investments in the different schemes offered by the bank.
Description
SBI & HDFC BANK
SUBMITTED
Keywords
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