customer preference towards private vs public sector banks during the curren ttime of recession

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CUSTOMER PREFERENCE TOWARD PRIVATE Vs. PUBLIC SECTOR BANKS DURING THE CURRENT TIME OF RECESSION

Transcript of customer preference towards private vs public sector banks during the curren ttime of recession

Page 1: customer preference towards private vs public sector banks during the curren ttime of recession

CUSTOMER PREFERENCE TOWARD PRIVATE Vs. PUBLIC SECTOR BANKS DURING THE CURRENT

TIME OF RECESSION

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INTRODUCTIONINTRODUCTION Banking in India originated in the last decades of the 18th century. The Banking in India originated in the last decades of the 18th century. The

oldest bank in existence in India is the State Bank of India, a government-oldest bank in existence in India is the State Bank of India, a government-owned bank that traces its origins back to June 1806 and that is the largest owned bank that traces its origins back to June 1806 and that is the largest commercial bank in the country. Central banking is the responsibility of commercial bank in the country. Central banking is the responsibility of the Reserve Bank of India, which in 1935 formally took over these the Reserve Bank of India, which in 1935 formally took over these responsibilities from the then Imperial Bank of India, relegating it to responsibilities from the then Imperial Bank of India, relegating it to commercial banking functions. After India's independence in 1947, the commercial banking functions. After India's independence in 1947, the Reserve Bank was nationalized and given broader powers. In 1969 the Reserve Bank was nationalized and given broader powers. In 1969 the government nationalized the 14 largest commercial banks; the government government nationalized the 14 largest commercial banks; the government nationalized the six next largest in 1980.nationalized the six next largest in 1980.

Currently, India has 88 scheduled commercial banks (SCBs) - 27 public Currently, India has 88 scheduled commercial banks (SCBs) - 27 public

sector banks (that is with the Government of India holding a stake), 31 sector banks (that is with the Government of India holding a stake), 31 private banks (these do not have government stake; they may be publicly private banks (these do not have government stake; they may be publicly listed and traded on stock exchanges) and 38 foreign banks. They have a listed and traded on stock exchanges) and 38 foreign banks. They have a combined network of over 53,000 branches and 17,000 ATMs. combined network of over 53,000 branches and 17,000 ATMs.

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According to a report by ICRA Limited, a rating agency, the public sector According to a report by ICRA Limited, a rating agency, the public sector banks hold over 75 percent of total assets of the banking industry, with the banks hold over 75 percent of total assets of the banking industry, with the private and foreign banks holding 18.2% and 6.5% respectively.private and foreign banks holding 18.2% and 6.5% respectively.

The most significant achievement of the financial sector reforms has been The most significant achievement of the financial sector reforms has been the marked improvement in the financial health of commercial banks in the marked improvement in the financial health of commercial banks in terms of capital adequacy, profitability and asset quality as also greater terms of capital adequacy, profitability and asset quality as also greater attention to risk management. Further, deregulation has opened up new attention to risk management. Further, deregulation has opened up new opportunities for banks to increase revenues into investment banking, opportunities for banks to increase revenues into investment banking, insurance, credit cards, depository services, mortgage financing, insurance, credit cards, depository services, mortgage financing, securitization etc. At the same time, liberalization has brought greater securitization etc. At the same time, liberalization has brought greater competition among banks, both domestic and foreign, as well as competition among banks, both domestic and foreign, as well as competition from mutual funds, Non-Banking Financial Corporations, post competition from mutual funds, Non-Banking Financial Corporations, post office etc.office etc.

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The various Public Sector Banks The various Public Sector Banks in India are:-in India are:-

Indian BankIndian Bank Bank of IndiaBank of India Union BankUnion Bank Syndicate BankSyndicate Bank Sate Bank of SaurashtraSate Bank of Saurashtra State Bank of TravancoreState Bank of Travancore Bank of Maharashtra Bank of Maharashtra Vijaya BankState Vijaya BankState Bank of IndiaState Bank of IndiaState Bank of Mysore Bank of Mysore State Bank of IndoreState Bank of Indore Corporation BankCorporation Bank Oriental BankUTI Bank Oriental BankUTI Bank

UCO Bank UCO Bank Indian Overseas BankIndian Overseas Bank Punjab National BankPunjab National Bank Dena Bank Dena Bank State Bank of HyderabadState Bank of Hyderabad State Bank of Bikaner & JaipurState Bank of Bikaner & Jaipur Allahabad BankAllahabad Bank Andhra BankAndhra Bank Canara BankCanara Bank Bank of BarodaBank of Baroda Punjab & Sind Bank Punjab & Sind Bank IDBI BankIDBI Bank ICICI BankICICI Bank United BankUnited Bank

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The various Private Sector The various Private Sector Banks in India are:-Banks in India are:-

• Federal BankFederal Bank• City Union BankCity Union Bank• Catholic Syrian BankCatholic Syrian Bank• Saraswat Bank Saraswat Bank • DhanLakshmi BankDhanLakshmi Bank• Kotak BankKotak Bank• Cosmos BankCosmos Bank• Lakshmi Vilas BankLakshmi Vilas Bank• Bank of RajasthanBank of Rajasthan• Kalyan BankKalyan Bank• Karur Vysya BankKarur Vysya Bank

• South Indian Bank• IndusInd Bank • HDFC Bank• Jammu & Kashmir Bank• Nedungadi Bank• Development Credit Bank• Ratnakar Bank• Mandavi Bank• Centurian Bank• Bank of Punjab• ING-Vysya Bank • United Western Bank

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HISTORY OF BANKING INHISTORY OF BANKING ININDIAINDIA

For the past three decades India's banking system has several outstanding 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 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 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 system has reached even to the remote corners of the country. This is one of the main reason of India's growth process.main reason of India's growth process.

Not long ago, an account holder had to wait for hours at the bank counters for Not long ago, an account holder had to wait for hours at the bank counters for getting a draft or for withdrawing his own money. Today, he has a choice. Gone are getting a draft or for 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 days when the most efficient bank transferred money from one branch to other in two days. Money has become the order of the day. The first bank in India, though two days. 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 conservative, was established in 1786. From 1786 till today, the journey of Indian Banking System can be segregated into three distinct phases. Banking System can be segregated into three distinct phases.

They are as mentioned below:They are as mentioned below: Early phase from 1786 to 1969 of Indian Banks Early phase from 1786 to 1969 of Indian Banks (Phase 1)(Phase 1) Nationalisation of Indian Banks and up to 1991 prior to Indian banking sector Nationalisation of Indian Banks and up to 1991 prior to Indian banking sector

Reforms. Reforms. (Phase II)(Phase II) New phase of Indian Banking System with the advent of Indian Financial & New phase of Indian Banking System with the advent of Indian Financial &

Banking Sector Reforms after 1991. Banking Sector Reforms after 1991. (Phase III)(Phase III)

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PHASE I:PHASE I: The General Bank of India was set up in the year 1786. Next came Bank of Hindustan and The General Bank of India was set up in the year 1786. Next came Bank of Hindustan and

Bengal Bank. The East India Company established Bank of Bengal (1809), Bank of Bengal Bank. The East India Company established Bank of Bengal (1809), Bank of Bombay (1840) and Bank of Madras (1843) as independent units and called it Presidency Bombay (1840) and Bank of Madras (1843) as independent units and called it Presidency Banks. These three banks were amalgamated in 1920 and Imperial Bank of India was Banks. These three banks were amalgamated in 1920 and Imperial Bank of India was established which started as private shareholders banks, mostly Europeans shareholders.established which started as private shareholders banks, mostly Europeans shareholders.

In 1865 Allahabad Bank was established and first time exclusively by Indians, Punjab In 1865 Allahabad Bank was established and first time exclusively by Indians, Punjab National Bank Ltd. was set up in 1894 with headquarters at Lahore. Between 1906 and National Bank Ltd. was set up in 1894 with headquarters at Lahore. Between 1906 and 1913, Bank of India, Central Bank of India, Bank of Baroda, Canara Bank, Indian Bank, 1913, Bank of India, Central Bank of India, Bank of Baroda, Canara Bank, Indian Bank, and Bank of Mysore were set up. Reserve Bank of India came in 1935. During the first and Bank of Mysore were set up. Reserve Bank of India came in 1935. During the first phase the growth was very slow and banks also experienced periodic failures between phase the growth was very slow and banks also experienced periodic failures between 1913 and 1948. There were approximately 1100 banks, mostly small. To streamline the 1913 and 1948. There were approximately 1100 banks, mostly small. To streamline the functioning and activities of commercial banks, the Government of India came up with functioning and activities of commercial banks, the Government of India came up with The Banking Companies Act, 1949 which was later changed to Banking Regulation Act The Banking Companies Act, 1949 which was later changed to Banking Regulation Act 1949 as per amending Act of 1965 (Act No. 23 of 1965). Reserve Bank of India was 1949 as per amending Act of 1965 (Act No. 23 of 1965). Reserve Bank of India was vested with extensive powers for the supervision of banking in india as the Central vested with extensive powers for the supervision of banking in india as the Central Banking Authority. During those days public has lesser confidence in the banks. As an Banking Authority. During those days public has lesser confidence in the banks. As an aftermath deposit mobilisation was slow. Abreast of it the savings bank facility provided aftermath deposit mobilisation was slow. Abreast of it the savings bank facility provided by the Postal department was comparatively safer. Moreover, funds were largely given to by the Postal department was comparatively safer. Moreover, funds were largely given to traders.traders.

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PHASE IIPHASE II:: Government took major steps in this Government took major steps in this

Indian Banking Sector Reform after Indian Banking Sector Reform after independence. In 1955, it nationalised independence. In 1955, it nationalised Imperial Bank of India with extensive Imperial Bank of India with extensive banking facilities on a large scale banking facilities on a large scale specially in rural and semi-urban areas. It specially in rural and semi-urban areas. It formed State Bank of india to act as the formed State Bank of india to act as the principal agent of RBI and to handle principal agent of RBI and to handle banking transactions of the Union and banking transactions of the Union and State Governments all over the country.State Governments all over the country.

Seven banks forming subsidiary of State Seven banks forming subsidiary of State Bank of India was nationalised in 1960 Bank of India was nationalised in 1960 on 19th July, 1969, major process of on 19th July, 1969, major process of nationalisation was carried out. It was nationalisation was carried out. It was the effort of the then Prime Minister of the effort of the then Prime Minister of India, Mrs. Indira Gandhi. 14 major India, Mrs. Indira Gandhi. 14 major commercial banks in the country was commercial banks in the country was nationalised. Second phase of nationalised. Second phase of nationalisation Indian Banking Sector nationalisation Indian Banking Sector Reform was carried out in 1980 with Reform was carried out in 1980 with seven more banks. This step brought seven more banks. This step brought 80% of the banking segment in India 80% of the banking segment in India under Government ownership. under Government ownership.

After the nationalisation of banks, the After the nationalisation of banks, the

branches of the public sector bank India branches of the public sector bank India rose to approximately 800% in deposits rose to approximately 800% in deposits and advances took a huge jump by and advances took a huge jump by 11,000%.11,000%.

Banking in the sunshine of Government Banking in the sunshine of Government ownership gave the public implicit faith ownership gave the public implicit faith and immense confidence about the and immense confidence about the sustainability of these institutionssustainability of these institutions..

YEARYEARSTEPS TAKEN STEPS TAKEN

BY THEBY THE

GOVERNMENTGOVERNMENT19491949 Enactment of Enactment of

Banking Regulation Banking Regulation Act.Act.

19551955 Nationalisation of Nationalisation of State Bank of India.State Bank of India.

19591959 Nationalisation of SBI Nationalisation of SBI subsidiaries.subsidiaries.

19611961 Insurance cover Insurance cover extended to extended to deposits.deposits.

19691969 Nationalisation of 14 Nationalisation of 14 major banks.major banks.

19711971 Creation of credit Creation of credit guarantee guarantee corporation.corporation.

19751975 Creation of regional Creation of regional rural banks.rural banks.

19801980 Nationalisation of Nationalisation of seven banks with seven banks with deposits over 200 deposits over 200 crore.crore.

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PHASE IIIPHASE III:: This phase has introduced many more products and facilities in the This phase has introduced many more products and facilities in the

banking sector in its reforms measure. In 1991, under the banking sector in its reforms measure. In 1991, under the chairmanship of M Narasimham, a committee was set up by his chairmanship of M Narasimham, a committee was set up by his name which worked for the liberalisation of banking practices.name which worked for the liberalisation of banking practices.

The country is flooded with foreign banks and their ATM stations. The country is flooded with foreign banks and their ATM stations. Efforts are being put to give a satisfactory service to customers. Efforts are being put to give a satisfactory service to customers. Phone banking and net banking is introduced. The entire system Phone banking and net banking is introduced. The entire system became more convenient and swift. Time is given more became more convenient and swift. Time is given more importance than money. The financial system of India has shown a importance than money. The financial system of India has shown a great deal of resilience. It is sheltered from any crisis triggered by great deal of resilience. It is sheltered from any crisis triggered by any external macroeconomics shock as other East Asian Countries any external macroeconomics shock as other East Asian Countries suffered. This is all due to a flexible exchange rate regime, the suffered. This is all due to a flexible exchange rate regime, the foreign reserves are high, the capital account is not yet fully foreign reserves are high, the capital account is not yet fully convertible, and banks and their customers have limited foreign convertible, and banks and their customers have limited foreign exchange exposure.exchange exposure.

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OBJECTIVES OF THE STUDYOBJECTIVES OF THE STUDY

The objectives of this research are as follows:The objectives of this research are as follows:

To know about the customer preference toward Public To know about the customer preference toward Public Sector Banks Vs. Private Sector banks during the current Sector Banks Vs. Private Sector banks during the current time of recession in our Indian economy.time of recession in our Indian economy.

To know about the services availed by people from their To know about the services availed by people from their bank(s).bank(s).

To know if the recession has affected the banking sector in To know if the recession has affected the banking sector in India and if yes, then to what extent.India and if yes, then to what extent.

To know the overall performance of Private Sector Banks To know the overall performance of Private Sector Banks vs. Public Sector Banks.vs. Public Sector Banks.

To know that performance of which amongst public sector To know that performance of which amongst public sector banks vs. private sector banks is better.banks vs. private sector banks is better.

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RESEARCH DESIGNRESEARCH DESIGN According to Clifford Woody, “research comprises defining According to Clifford Woody, “research comprises defining

and redefining problems, formulating hypothesis or and redefining problems, formulating hypothesis or suggested solutions; collecting, organizing and evaluating suggested solutions; collecting, organizing and evaluating data; making deductions and reaching conclusions; and at data; making deductions and reaching conclusions; and at last carefully testing the conclusions to determine whether last carefully testing the conclusions to determine whether they fit the formulating hypothesis.they fit the formulating hypothesis.

This research is an exploratory research based on a survey This research is an exploratory research based on a survey of the concerning literature. A sample survey was of the concerning literature. A sample survey was conducting with the help of Scheduling Method of collecting conducting with the help of Scheduling Method of collecting data i.e. personally the enumerator visited and got the data i.e. personally the enumerator visited and got the questionnaires filled from the respondents. The enumerator questionnaires filled from the respondents. The enumerator in this method helps the respondents in recording their in this method helps the respondents in recording their answers to various questions in the said schedules. In this answers to various questions in the said schedules. In this research this method was used while collecting data from research this method was used while collecting data from people from domestic help class and small shopkeepers.people from domestic help class and small shopkeepers.

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RESEARCH PROBLEMRESEARCH PROBLEM

The main problem this research is based on is how The main problem this research is based on is how recession is affecting the Public Sector Banks as compared recession is affecting the Public Sector Banks as compared to the Private Sector Banks in India.to the Private Sector Banks in India.

SCOPE OF THE STUDYThe scope of this study is to provide an insight into the

current situation of recession in our Indian economy and how it is affecting the banking sector of India. I future it will help the people who read this report as to how are banking sector can be improved so as to make banking sector in India more better in terms of its performance and current standing in the market.

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SOURCES OF DATASOURCES OF DATA

There are two types of data viz. primary and There are two types of data viz. primary and secondary. The secondary. The primary dataprimary data are those which are those which are collected afresh and for the first time, and are collected afresh and for the first time, and thus happen to be original in character.thus happen to be original in character.

The The secondary datasecondary data, on the other hand, are , on the other hand, are those which have already been collected by those which have already been collected by someone else and which have already been someone else and which have already been passed through the statistical process.passed through the statistical process.

For this research report, primary data was For this research report, primary data was collected and there was no bias on the part of the collected and there was no bias on the part of the enumerator while selecting the sample. enumerator while selecting the sample.

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METHOD OF DATA COLLECTIONMETHOD OF DATA COLLECTION

Scheduling Method was undertaken to collect the data from the Scheduling Method was undertaken to collect the data from the respondents. In scheduling method of collecting the data, the respondents. In scheduling method of collecting the data, the enumerator along with schedules (here questionnaires) goes to enumerator along with schedules (here questionnaires) goes to the respondents, put to them the questions from the proforma. In the respondents, put to them the questions from the proforma. In certain situations, schedules maybe handed over to the certain situations, schedules maybe handed over to the respondents and enumerators may help them in recording their respondents and enumerators may help them in recording their answers. Enumerators explain the aims and objectives of the answers. Enumerators explain the aims and objectives of the investigation and also remove the difficulties which any investigation and also remove the difficulties which any respondent may feel in understanding the implications of a respondent may feel in understanding the implications of a particular question or the definition or concept of difficult terms.particular question or the definition or concept of difficult terms.

SAMPLE SIZE For this research, a sample size of 100 respondents were taken.

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SAMPLE AREASAMPLE AREA

The sample area was Chandigarh and involved respondent from The sample area was Chandigarh and involved respondent from Sector 8, Sector 9 and Sector 44.Sector 8, Sector 9 and Sector 44.

STATISTICAL TOOLS USED

The various statistical tool used were median, standard deviation, mean (average), data distribution tables, graphs and pie charts.

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LIMITATIONS OF THE STUDYLIMITATIONS OF THE STUDY

Following were the limitations of the study:Following were the limitations of the study:

Time was limited.Time was limited. The sample size of 100 is very small and more The sample size of 100 is very small and more

than that could not be possible.than that could not be possible. The study was only based on the survey of The study was only based on the survey of

respondents in CHANDIGARH and no other area respondents in CHANDIGARH and no other area could be undertaken for the survey due to lack of could be undertaken for the survey due to lack of transport and time.transport and time.

This research ignores the foreign and non This research ignores the foreign and non banking financial institutions in our economy.banking financial institutions in our economy.

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OVERALL DISTRIBUTION OF OVERALL DISTRIBUTION OF DATADATA

On the basis of occupation:

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No. of respondents

25%

10%

5%

22%

20%

18%

Service

Business

Lecturers/Teachers

Housewives

Students

Others

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On the basis of Income Class:On the basis of Income Class:

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No. of respondents

54%

25%

7%4% 10%

0-10000

10000-20000

20000-30000

30000-40000

Above 40000

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On the basis of Age Group:On the basis of Age Group:

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On the basis of AGE GROUP

22%

28%

12%

10%

16%

12%

18-25

25-32

32-37

37-42

42-60

Senior Citizens(60+)

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Q1 Are you aware of the term Q1 Are you aware of the term “RECESSION”?“RECESSION”?

On the basis of Occupation:-On the basis of Occupation:-

OCCUPATIOOCCUPATIONN

YESYES NONO TOTALTOTAL

Service Service 2525 00 2525

Businessmen Businessmen 1010 00 1010

Lecturers/Lecturers/Teachers Teachers

55 00 55

Housewives Housewives 1818 44 2222

Students Students 1919 11 2020

Others Others 66 1212 1818

TOTAL TOTAL 8383 1717 100100

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0

5

10

15

20

25

No. of Respondents

YES NO

RESPONSE

On the basis of Occupation

Service

Busincess

Lecturers/Teachers

Housewives

Students

Others

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On the basis of Income Group:-On the basis of Income Group:-INCOME INCOME CLASSCLASS (Rs.) (Rs.)

YESYES NONO TOTALTOTAL

0-10000 0-10000 3838 1616 5454

10000-2000010000-20000 2424 11 2525

20000-3000020000-30000 77 00 77

30000-4000030000-40000 44 00 44

Above 40000Above 40000 1010 00 1010

TOTALTOTAL 8383 1717 100100

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0

20

40

60

80

100

No. of Respondents

YES NO

Responses

On the basis of Income Group

Above 40000

30000-40000

20000-30000

10000-20000

0-10000

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On the basis of Age Group:-On the basis of Age Group:-

AGE GROUPAGE GROUP YESYES NONO TOTALTOTAL

18-2518-25 2020 22 2222

25-3225-32 2525 33 2828

32-3732-37 88 44 1212

37-4237-42 99 11 1010

42-6042-60 1414 22 1616

Senior Senior Citizens(60+)Citizens(60+)

77 55 1212

TOTALTOTAL 8383 1717 100100

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On the basis of Age Group

05

1015202530

AGE GROUP

No. o

f Res

pond

ents

YES

NO

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ANALYSIS AND INTERPRETATION

We can see from the above tables that:

• On the basis of Occupation:All are aware of the term recession that is 83 out 100 respondents. The few people who don’t know about recession are from the class of housewives, students, Others (domestic help and shopkeepers).

• On the basis of Income Group:People who are not aware about the term recession are from the income class of 0-10000(mostly) and from 10000-20000• On the basis of Age Group:

People who are not aware of the term recession are from all the age groups but majority from 32-37 and Senior citizens.(People who were not aware of the term recession were first explained about the term recession.)

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Q2.) In which bank(s) do you have Q2.) In which bank(s) do you have your account?your account?

OCCUPATIONOCCUPATION PUBLIC PUBLIC BANKSBANKS

PRIVATE PRIVATE BANKSBANKS

TOTALTOTAL

ServiceService 1818 1111 2929

BusinessmenBusinessmen 1212 1818 3030

Lecturers/Lecturers/TeachersTeachers

77 99 1616

HousewivesHousewives 2121 33 2424

StudentsStudents 1717 55 2222

OthersOthers 1818 33 2121

TOTALTOTAL 9393 4949 142142

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On the basis of Occupation

0

5

10

15

20

25

PUBLIC BANKS PRIVATE BANKS

Types of Banks

No

. of

Res

po

nd

ents

Service

Business

Lecturers/Teachers

Housew ives

Students

Others(Domestic Helpand shopkeepers)

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On the basis of Age Groups:On the basis of Age Groups:

AGE GROUPSAGE GROUPS PUBLIC BANKSPUBLIC BANKS PRIVATE PRIVATE BANKSBANKS

TOTALTOTAL

18-2518-25 1010 1919 2929

25-3225-32 1919 1111 3030

32-3732-37 55 1111 1616

37-4237-42 1818 66 2424

42-6042-60 2020 22 2222

Senior Citizens Senior Citizens (60+)(60+)

2121 00 2121

TOTALTOTAL 9393 4949 142142

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On the basis of Age Group

05

10152025

Age Groups

No. o

f Res

pond

ents

PUBLIC BANKS

PRIVATE BANKS

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On the basis of Income Class:On the basis of Income Class:

INCOME(Rs.)INCOME(Rs.) PUBLIC BANKSPUBLIC BANKS PRIVATE PRIVATE BANKSBANKS

TOTALTOTAL

0-100000-10000 3333 1212 4545

10000-2000010000-20000 2929 99 3838

20000-3000020000-30000 2020 22 2222

30000-4000030000-40000 1010 88 1818

Above 40000Above 40000 11 1818 1919

TOTALTOTAL 9393 4949 142142

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On the Basis of Income

PUBLIC BANKS PRIVATE BANKS

Types of Banks

No. o

f Res

pond

ents

Above 40000

30000-40000

20000-30000

10000-20000

0-10000

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ANALYSIS AND ANALYSIS AND INTERPRETATIONINTERPRETATION

On the basis of occupation: On the basis of occupation: Public banks are preferred by service class, housewives, students Public banks are preferred by service class, housewives, students

and others (domestic help and shopkeepers). On the other hand, and others (domestic help and shopkeepers). On the other hand, private banks are opted by businessmen and lecturers/teachers.private banks are opted by businessmen and lecturers/teachers.

On the basis of Income Group: On the basis of Income Group: Public banks are preferred by people in age groups of Rs. 0-10000, Public banks are preferred by people in age groups of Rs. 0-10000,

Rs. 10000-20000, very minute difference in the Rs. 30000-40000 Rs. 10000-20000, very minute difference in the Rs. 30000-40000 income class and private banks are preferred by people in income income class and private banks are preferred by people in income class of Rs. 40000 and above.class of Rs. 40000 and above.

On the basis of age Groups:On the basis of age Groups: Public banks are preferred by people in age groups of 25-32, 37-Public banks are preferred by people in age groups of 25-32, 37-

42, 42-60 and senior citizens; whereas private banks are preferred 42, 42-60 and senior citizens; whereas private banks are preferred by people in age groups of 18-25, 32-37.by people in age groups of 18-25, 32-37.

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Q3.) What influences the choice Q3.) What influences the choice of your bank?of your bank?

On the basis of Occupation:On the basis of Occupation:

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On the basis of Occupation

0

5

10

15

20

25

PUBLIC BANKS PRIVATE BANKS

Types of Banks

No

. of

Res

po

nd

ents

Service

Business

Lecturers/Teachers

Housew ives

Students

Others(Domestic Helpand shopkeepers)

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On the basis of INCOME CLASS:On the basis of INCOME CLASS:

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On the basis of INCOME CLASS:On the basis of INCOME CLASS:On the Basis of Income

PUBLIC BANKS PRIVATE BANKS

Types of Banks

No. o

f Res

pond

ents

Above 40000

30000-40000

20000-30000

10000-20000

0-10000

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On the basis of AGE GROUPS:On the basis of AGE GROUPS:

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On the basis of Age Group

05

10152025

Age Groups

No. o

f Res

pond

ents

PUBLIC BANKS

PRIVATE BANKS

Page 47: customer preference towards private vs public sector banks during the curren ttime of recession

ANALYSIS AND ANALYSIS AND INTERPRETATIONINTERPRETATION: :

From the above tables:From the above tables:

On the basis of Occupation:On the basis of Occupation: Majority of people in all the classes keep in mind SECURITY as a Majority of people in all the classes keep in mind SECURITY as a

factor while choosing their bank. The second rank goes to factor while choosing their bank. The second rank goes to SERVICES, third to FAMILY & FRIENDS, fourth to REPUTATION OF SERVICES, third to FAMILY & FRIENDS, fourth to REPUTATION OF THE BANKS and last to ADVERTISEMENT AND MEDIA.THE BANKS and last to ADVERTISEMENT AND MEDIA.

On the basis of Income Class: On the basis of Income Class: 1st Rank to SECURITY, Second to SERVICES, third to FAMILY AND 1st Rank to SECURITY, Second to SERVICES, third to FAMILY AND

FRIENDS, fourth to ADVERTISEMENT AND MEDIA, last to FRIENDS, fourth to ADVERTISEMENT AND MEDIA, last to REPUTATION.REPUTATION.

On the basis of Age Group:On the basis of Age Group: 1st rank to SECURITY, second to SERVICES, third to REPUTATION, 1st rank to SECURITY, second to SERVICES, third to REPUTATION,

fourth to FAMILY AND FRIENDS and last to ADVERTISEMENT and fourth to FAMILY AND FRIENDS and last to ADVERTISEMENT and MEDIA.MEDIA.

Page 48: customer preference towards private vs public sector banks during the curren ttime of recession

Q4.)Before Recession You trusted: Q4.)Before Recession You trusted: PUBLIC BANKSPUBLIC BANKS

or PRIVATE BANKSor PRIVATE BANKS

Page 49: customer preference towards private vs public sector banks during the curren ttime of recession

BEFORE RECESSION PREFERENCE of BANKS

Public Banks63%

Private Banks37%

Public Banks

Private Banks

Page 50: customer preference towards private vs public sector banks during the curren ttime of recession

ANALYSIS AND ANALYSIS AND INTERPRETATION:INTERPRETATION:

Before recession people trusted Before recession people trusted public Banks more and those who public Banks more and those who trusted Private Banks were mostly trusted Private Banks were mostly businessmen and in the income class businessmen and in the income class of Rs. 40000 and aboveof Rs. 40000 and above..

Page 51: customer preference towards private vs public sector banks during the curren ttime of recession

Q5.) In the present situation of our economy, is Q5.) In the present situation of our economy, is there a change in your preference?there a change in your preference?

Page 52: customer preference towards private vs public sector banks during the curren ttime of recession

NO. OF RESPONDE

NTS, 36

NO. OF RESPONDE

NTS, 64

0

10

20

30

40

50

60

70

Yes No

DURING RECESSION(Preference of Banks)

NO. OFRESPONDENTS

Page 53: customer preference towards private vs public sector banks during the curren ttime of recession

ANALYSIS AND ANALYSIS AND INTERPRETATION:INTERPRETATION:

Those who said yes were mostly who Those who said yes were mostly who had their accounts in private banks had their accounts in private banks before recession.before recession.

Those who said no were those who Those who said no were those who already had their accounts in public already had their accounts in public banks before recession.banks before recession.

Page 54: customer preference towards private vs public sector banks during the curren ttime of recession

Q6.) What services do you avail Q6.) What services do you avail from your bank?from your bank?

Page 55: customer preference towards private vs public sector banks during the curren ttime of recession

SERVICES

Loans13%

ATM38%Online

Banking26%

Mobile Banking

12%

Easy Credit Facility

11%Loans

ATM

Online Banking

Mobile Banking

Easy Credit Facility

Page 56: customer preference towards private vs public sector banks during the curren ttime of recession

ANALYSIS AND ANALYSIS AND INTERPRETATIONINTERPRETATION

Mostly the people are availing Mostly the people are availing services of banks in the form of ATM services of banks in the form of ATM at first rank, Online banking at at first rank, Online banking at second, Loans at third, Mobile second, Loans at third, Mobile Banking at fourth and easy credit Banking at fourth and easy credit facility ranked last. facility ranked last.

Page 57: customer preference towards private vs public sector banks during the curren ttime of recession

Q7.) Are the services provided Q7.) Are the services provided by your bankby your bank : :

Page 58: customer preference towards private vs public sector banks during the curren ttime of recession

3

33

54

82

0

10

20

30

40

50

60

NO. OF RESPONDENTS

RATING OF SERVICES

EXCELLENT

VERY GOOD

SATISFACTORY

POOR

VERY POOR

Page 59: customer preference towards private vs public sector banks during the curren ttime of recession

ANALYSIS AND ANALYSIS AND INTERPRETATION INTERPRETATION

The overall rating of services of banks by The overall rating of services of banks by the respondents is SATISFACTORY by 54% the respondents is SATISFACTORY by 54% people, 33% rank the services as VERY people, 33% rank the services as VERY GOOD. Those who rated SATISFACTORY GOOD. Those who rated SATISFACTORY were those who had their accounts in public were those who had their accounts in public banks but did not prefer to shift due to banks but did not prefer to shift due to security of public banks during the current security of public banks during the current time of recession. Those who rated time of recession. Those who rated EXCELLENT and VERY GOOD were people EXCELLENT and VERY GOOD were people who had their accounts in private banks who had their accounts in private banks and mostly the business men.and mostly the business men.

Page 60: customer preference towards private vs public sector banks during the curren ttime of recession

Q8.) If you have accounts in both Public and Q8.) If you have accounts in both Public and Private Banks then services of which Private Banks then services of which amongst them appeal to you the most? amongst them appeal to you the most?

Page 61: customer preference towards private vs public sector banks during the curren ttime of recession

Public Banks , 46

Private Banks, 54

0%

20%

40%

60%

80%

100%

NO. OFRESPONDENTS

CHOICE OF BANKS

Private Banks

Public Banks

Page 62: customer preference towards private vs public sector banks during the curren ttime of recession

ANALYSIS AND ANALYSIS AND INTERPRETATION INTERPRETATION

Though public banks are preferred by Though public banks are preferred by people as per earlier tables, people as per earlier tables, according to this table we can see according to this table we can see that services of private banks are that services of private banks are liked by people. The only thing is that liked by people. The only thing is that Private sector banks are not backed Private sector banks are not backed up by the Government and hence not up by the Government and hence not secure.secure.

Page 63: customer preference towards private vs public sector banks during the curren ttime of recession

Q9.) If in future, our economy prospers, will it Q9.) If in future, our economy prospers, will it change you preference towards your change you preference towards your

bank? bank?

Page 64: customer preference towards private vs public sector banks during the curren ttime of recession

FUTURE PREFERENCE

Yes41%

No59%

Yes

No

Page 65: customer preference towards private vs public sector banks during the curren ttime of recession

ANALYSIS AND ANALYSIS AND INTERPRETATION INTERPRETATION

Those who said NO to this question Those who said NO to this question were mostly people who had their were mostly people who had their accounts in public banks. Those who accounts in public banks. Those who said yes were mostly people who had said yes were mostly people who had their accounts in private banks their accounts in private banks

Page 66: customer preference towards private vs public sector banks during the curren ttime of recession

Q10.) How has the recession Q10.) How has the recession affected the Banking Sector?affected the Banking Sector?

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028

72

72

271

0

20

40

60

80

100

PublicBanks

PrivateBanks

TYPES OF BANKS

AFFECT OF RECESSION on BANKING SECTOR

NOT AFFECTED

BADLY

VERY BADLY

Page 68: customer preference towards private vs public sector banks during the curren ttime of recession

ANALYSIS AND ANALYSIS AND INTERPRETATION INTERPRETATION

We can see from the above table We can see from the above table that private sector banks are more that private sector banks are more affected according to the affected according to the respondents than the public sector respondents than the public sector banks. banks.

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Page 70: customer preference towards private vs public sector banks during the curren ttime of recession

FINDINGSFINDINGS

Following were the findings of the study:Following were the findings of the study:

Before Recession, customer trusted on Public Banks rather Before Recession, customer trusted on Public Banks rather Private banks (these were held by businessmen and people Private banks (these were held by businessmen and people having income of Rs.40000 and above.having income of Rs.40000 and above.

Service class people, Students, Senior citizens, Housewives, Service class people, Students, Senior citizens, Housewives, domestic help and shopkeepers prefer public banks domestic help and shopkeepers prefer public banks whereas lecturers and businessmen prefer private banks.whereas lecturers and businessmen prefer private banks.

During the current time of recession, those who have their During the current time of recession, those who have their accounts in private banks are shifting to public banks and accounts in private banks are shifting to public banks and those who have their accounts in public banks are not those who have their accounts in public banks are not shifting towards private banks.shifting towards private banks.

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In future public bank account holders are likely to In future public bank account holders are likely to shift to private banks, given the good economic shift to private banks, given the good economic conditions.conditions.

Services of Private banks are more better but are Services of Private banks are more better but are low preferred because of lack of security of low preferred because of lack of security of private banks.private banks.

Public Sector is not affected by recession whereas Public Sector is not affected by recession whereas

private sector is badly affectedprivate sector is badly affected..

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CHALLENGES AHEADCHALLENGES AHEAD (i) Improving profitability(i) Improving profitability: : The most direct result of the above changes is increasing The most direct result of the above changes is increasing

competition and narrowing of spreads and its impact on the competition and narrowing of spreads and its impact on the profitability of banks. The challenge for banks is how to manage with profitability of banks. The challenge for banks is how to manage with thinning margins while at the same time working to improve thinning margins while at the same time working to improve productivity which remains low in relation to global standards. This is productivity which remains low in relation to global standards. This is particularly important because with dilution in banks’ equity, particularly important because with dilution in banks’ equity, analysts and shareholders now closely track their performance. analysts and shareholders now closely track their performance. Thus, with falling spreads, rising provision for NPAs and falling Thus, with falling spreads, rising provision for NPAs and falling interest rates, greater attention will need to be paid to reducing interest rates, greater attention will need to be paid to reducing transaction costs. This will require tremendous efforts in the area of transaction costs. This will require tremendous efforts in the area of technology and for banks to build capabilities to handle much bigger technology and for banks to build capabilities to handle much bigger volumes.volumes.

(ii) Reinforcing technology: (ii) Reinforcing technology: Technology has thus become a strategic and integral part of Technology has thus become a strategic and integral part of

banking, driving banks to acquire and implement world class banking, driving banks to acquire and implement world class systems that enable them to provide products and services in large systems that enable them to provide products and services in large volumes at a competitive cost with better risk management volumes at a competitive cost with better risk management practices. The pressure to undertake extensive computerisation is practices. The pressure to undertake extensive computerisation is very real as banks that adopt the latest in technology have an edge very real as banks that adopt the latest in technology have an edge over others. Customers have become very demanding and banks over others. Customers have become very demanding and banks have to deliver customised products through multiple channels, have to deliver customised products through multiple channels, allowing customers access to the bank round the clock.allowing customers access to the bank round the clock.

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(iii) Risk management(iii) Risk management: : The deregulated environment brings in its wake risks along The deregulated environment brings in its wake risks along

with profitable opportunities, and technology plays a crucial with profitable opportunities, and technology plays a crucial role in managing these risks. In addition to being exposed role in managing these risks. In addition to being exposed to credit risk, market risk and operational risk, the business to credit risk, market risk and operational risk, the business of banks would be susceptible to country risk, which will be of banks would be susceptible to country risk, which will be heightened as controls on the movement of capital are heightened as controls on the movement of capital are eased. In this context, banks are upgrading their credit eased. In this context, banks are upgrading their credit assessment and risk management skills and retraining staff, assessment and risk management skills and retraining staff, developing a cadre of specialists and introducing developing a cadre of specialists and introducing technology driven management information systems.technology driven management information systems.

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CONCLUSIONCONCLUSION

The face of banking is changing rapidly. The face of banking is changing rapidly. Competition is going to be tough and with financial Competition is going to be tough and with financial liberalisation under the WTO, banks in India will liberalisation under the WTO, banks in India will have to benchmark themselves against the best in have to benchmark themselves against the best in the world. For a strong and resilient banking and the world. For a strong and resilient banking and financial system, therefore, banks need to go financial system, therefore, banks need to go beyond peripheral issues and tackle significant beyond peripheral issues and tackle significant issues like improvements in profitability, efficiency issues like improvements in profitability, efficiency and technology, while achieving economies of and technology, while achieving economies of scale through consolidation and exploring available scale through consolidation and exploring available cost-effective solutions. These are some of the cost-effective solutions. These are some of the issues that need to be addressed if banks are to issues that need to be addressed if banks are to succeed, not just survive, in the changing milieu.succeed, not just survive, in the changing milieu.

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