MATUSHRI PUSHPABEN
VINUBHAI VALIA COLLEGE OF ​+

MATUSHRI PUSHPABEN VINUBHAI VALIA COLLEGE OF

COMMERCE
BORIVALI (W), MUMBAI- 400092
A PROJECT ON:

COMPARATIVE STUDY BETWEEN

PRIVATE BANKS AND
PUBLIC BANKS

PREPARED AND SUBMITTED BY:

KISHAN PARESH VADODARIYA

ROLL NO. 616
TYBMS
SEMESTER VI

PROJECT GUIDE:
PROF. MR MANOJ UPADHYA

SUBMITTED TO:
UNIVERSITY OF MUMBAI ACADEMIC YEAR 2019-2020

   
  

DECLARATION

I the undersigned ​Mr. Kishan vadodariya here by, declare that the work embodied in this project
work titled ​
“COMPARATIVE STUDY BETWEEN PUBLIC ​& PRIVATE SECTOR BANK”​
,
forms my own contribution to the research work carried out under guidance of is the result of my
own research work and has not been previously submitted to any other university for any other
degree/diploma to this or any other university.

Wherever reference has made to previous work of other, it has been clearly indicate as such and
included in the bibliography.

I, here by further declare that all the information of this document has been obtained and presented
in accordance with academic rules and ethical conduct.

Signature of the student

   
  

ACKNOWLEDGEMENT

To list who all have helped me is difficult because they are so numerous and depth is
so enormous.

I would like to acknowledge the following as being idealistic channels and fresh
dimensions in the completion of this project.

I take this opportunity to thank the ​‘University of Mumbai’​ for giving me chance to
do this project.

I would like to thank my Principal, ​V. Manikandan​ for providing the necessary
facilities required for completion of this project.

I take this opportunity to thank our Coordinator Prof. ​Manoj Upadhya​ for his moral
support and guidance.

I would also like to express my sincere gratitude towards my boss -------------------

whose guidance made the project successful.

I would like to thank my College Library, for having provided various reference
books and magazines relate to my project.

Lastly, I would like to thank each and every person who directly or indirectly helped
me in the completion of the project especially ​My Parents and peers who supported
me through my project.

   
  

INDEX
CHAPTER SR TITLE PAGE
NO. NO. NO.
1 1 COMPANY PROFILE & INTRODUCTION
1.1 Banking in India
1.2 Structure of Organized Indian Banking system
1.3 Role of commercial banks in the economy
2 2 PRIVATE BANKS
2.1 List of private sector banks
2.2 Advantages & Disadvantages of private banks
3 3 PUBLIC BANKS
3.1 List of public sector banks
3.2 Advantages & Disadvantages of public banks
4 4 Functions of commercial banks
Difference in saving Ac interest rate after The
4.1 Budget 2019
5 5 SCAMS IN BANKING SECTOR
5.1 Scams in private banks
5.2 Scams in public banks
5.3 MOBILE BANKING
6 6.1 OBJECTIVES OF THE STYDY
6.2 LITERATURE REVIEW
6.3 RESEARCH METHODOLOGY
6.4 DATA INTERPRETATION
6.5 FINDINGS OF THE STUDY
6.6 CONCLUSION
6.7 SUGGESTION
6.8 BIBLIOGRAPHY
6.9 ANEXXURE

   
  

EXECUTIVE SUMMARY

The objective of the study is to have a comparative study of the public sector and private sector
banks and also to find out the most preferred banking sector among them.
For the above study a questionnaire was designed and the same was provided to the respondents for
their valuable inputs. Some of the inputs were taken from hard copies.

All aspects of the study included introduction of the study, objective of the study, research
methodology, literature review, data interpretation and analysis, findings, suggestions and
recommendations.
The study suggests that people prefer both private sector and public sector banks. The main reasons
according to our study are trust and reliability factor.
The data collection of the study was mainly taken from primary source i.e. questionnaire. And the
secondary data is taken from various websites and newspapers.

   
  

CHAPTER 1
COMPANY PROFILE & INTRODUCTION

DEFINITION OF BANK:

The ​
Oxford dictionary​defines the Bank as,

“An establishment for the custody of money, which it pays out, on a customer’s order.”

According to Whitehead,
“A bank is defined as an institution which collects surplus funds from the public, safeguards them,
and makes them available to the true owner when required and also lends funds to those who are in
need and can provide security.”

1.1 banking sector in india

Banking in India, in the modern sense, originated in the last decade of the 18th century. Among the
first banks were the Bank of Hindustan, which was established in 1770 and liquidated in 1829–32;
and the General Bank of India, established in 1786 but failed in 1791.

The largest bank, and the oldest still in existence, is the State Bank of India (S.B.I). It originated and
started working as the Bank of Calcutta in mid June 1806. In 1809, it was renamed as the Bank of
Bengal. This was one of the three banks founded by a presidency government, the other two were
the Bank of Bombay in 1840 and the Bank of Madras in 1843. The three banks were merged in
1921 to form the Imperial Bank of India, which upon India's independence, became the State Bank
of India in 1955. For many years the presidency banks had acted as quasi-central banks, as did their
successors, until the Reserve Bank of India was established in 1935, under the Reserve Bank of
India Act, 1934.

In 1960, the State Banks of India was given control of eight state- associated banks under the

   
  

State Bank of India (Subsidiary Banks) Act, 1959. These are now called its associate banks In
1969 the Indian government nationalised 14 major private banks, one of the big bank was Bank of
India. In 1980, 6 more private banks were nationalised. These nationalised banks are the majority of
lenders in the Indian economy. They dominate the banking sector because of their large size
and widespread networks.

The Indian banking sector is broadly classified into scheduled and non- scheduled banks. The
scheduled banks are those included under the 2nd Schedule of the Reserve Bank of India
Act, 1934. The scheduled banks are further classified into: nationalized banks; State Bank of
India and its associates; Regional Rural Banks (RRBs); foreign banks; and other Indian private
sector banks. The term commercial banks refers to both scheduled and non-scheduled
commercial banks regulated under the Banking Regulation Act, 1949.

   
  

1.2 Structure of Organized Indian Banking System:

The organised banking system in India can be classified as given below:

Reserve Bank of India (RBI):

The country had no central bank prior to the establishment of the RBI. The RBI is the supreme
monetary and banking authority in the country and controls the banking system in India. It is called
the Reserve Bank’ as it keeps the reserves of all commercial banks.

   
  

Scheduled and Non-Scheduled Banks:

The scheduled banks are those which are enshrined in the second schedule of the RBI Act, 1934.
These banks have a paid-up capital and reserves of an aggregate value of not less than Rs. 5 lakhs,
they have to satisfy the RBI that their affairs are carried out in the interest of their depositors.

All commercial banks (Indian and foreign), regional rural banks, and state cooperative banks
are scheduled banks. Non- scheduled banks are those which are not included in the
second schedule of the RBI Act, 1934. At present these are only three such banks in
the country.

Regional Rural Banks:

The Regional Rural Banks (RRBs) the newest form of banks, came into existence in the middle of
1970s (sponsored by individual nationalised commercial banks) with the objective of developing
rural economy by providing credit and deposit facilities for agriculture and other productive
activities of all kinds in rural areas.

The emphasis is on providing such facilities to small and marginal farmers, agricultural labours ,
rural artisans and other small entrepreneurs in rural areas.

Other special features of these banks are:

(i) their area of operation is limited to a specified region, comprising one or more districts in any
state; (ii) their lending rates cannot be higher than the prevailing lending rates of cooperative credit
societies in any particular state; (iii) the paid-up capital of each rural bank is Rs. 25 lakh, 50 percent
of which has been contributed by the Central Government, 15 percent by State Government and 35
percent by sponsoring public sector commercial banks which are also responsible for actual setting
up of the RRBs.

These banks are helped by higher-level agencies: the sponsoring banks lend them funds and advise
and train their senior staff, the NABARD (National Bank for Agriculture and Rural Development)
gives them short- term and medium, term loans: the RBI has kept CRR (Cash Reserve Ratio) of
them at 4% and SLR (Statutory Liquidity Ratio) at 18.25% of their total net liabilities, whereas for

   
  

other commercial banks the required minimum ratios have been varied over time.

Cooperative Banks:

Cooperative banks are so-called because they are organized under the provisions of the Cooperative
Credit Societies Act of the states. The major beneficiary of the Cooperative Banking is the
agricultural sector in particular and the rural sector in general.

The cooperative credit institutions operating in the country are mainly of two kinds: agricultural
(dominant) and non-agricultural. There are two separate cooperative agencies for the provision of
agricultural credit: one for short and medium-term credit, and the other for long-term credit. The
former has three tier and federal structure.

At the apex is the State Co-operative Bank (SCB) (cooperation being a state subject in India), at the
intermediate (district) level are the Central Cooperative Banks (CCBs) and at the village level are
Primary Agricultural Credit Societies (PACs).

Long-term agriculture credit is provided by the Land Development Banks. The funds of the RBI
meant for the agriculture sector actually pass through SCBs and CCBs. Originally based in rural
sector, the cooperative credit movement has now spread to urban areas also and there are many
urban cooperative banks coming under SCBs.

Commercial Banks:
Commercial banks mobilize savings of general public and make them available to large and small
industrial and trading units mainly for working capital requirements. Commercial banks in India are
largely Indian-public sector and private sector with a few foreign banks. The public sector banks
account for more than 92 percent of the entire banking business in India—occupying a dominant
position in the commercial banking. The State Bank of India and its 7 associate banks along with
another 19 banks are the public sector banks.

   
  

   
  

1.3 Role of commercial banks in the economy:

As we know that main objectives of a commercial bank is to earn profit by the process of accepting
of deposits and advancing loans through different methods. Although these functions are the basic
function of commercial banks, but there are a lot more functions which enhances the importance of
banks today.

Acceptance of deposits, by opening different kinds of bank accounts

Advancing of loans to needy persons through different methods and requirements
Provisions of agency and general utility services to his customers.

Making new investments in different organizations and increasing the productive capacity of the
country
Promote capital formation in the country by mobilizing and collection of savings for the purpose of
investments. Development of industries in the country according to the requirements of the
economy
A balanced development in the economy is achieved in different sectors & regions through the
resources of bank funds
Development in agricultural production is made possible by providing different kinds of loans
These banks help in reducing reliance in foreign assistance by their efforts in the mobilization of
domestic savings
These banks help in the implementation of an effective monetary policy according to the objective
to central bank.
Commercial banks also help in the creation and distribution of money through the sales and
purchase of securities.
Commercial banks are the custodian and distributor of liquid capital of the country, which is the life
blood of all commercial and economic activities of a country.

   
  

CHAPTER 2

PRIVATE BANKS

The private sector banks in India are banks where the majority of the shares or equity are not held
by the government but by private shareholders.

In 1969 all major banks were nationalized by the Indian government. However, since a change
in government policy in the 1990s, old and new private sector banks have
re-emerged. The private sector banks are split into two groups by financial regulators in India,
old and new. The old private sector banks existed prior to nationalization in 1968 and kept their
independence because they were either too small or specialist to be included in
nationalization.

The new private sector banks are those that have gained their banking license since the change
of policy in the 1990s
In these banks, most of the equity is owned by private bodies, corporations, institutions or
individuals rather than government. These banks are managed and controlled by private promoters.
Post- liberalization in the 1990s, banks such as ICICI, HDFC which got the license are the new age
Private sector banks.

They owing to their improved service offerings give a tough competition to the players in the
public sector. Of the total banking industry in India, Public sector banks constitute 72.9% share
while the rest is covered by private players. In terms of the number of banks, there are ​20 public
sector banks whereas 21 private sector banks​. As part of its differentiated banking regime, RBI,
the apex banking body, has given license to Payments Bank and Small Finance Banks or SFBs. This
is an attempt to boost the government's Financial Inclusion drive. As a result Airtel Payments Bank
has come up and Paytm Payments Bank Limited have commenced its operations from May 2017.

   
  

2.1 List of private sector banks in India

NAME OF THE BANK ESTABLISHED

DCB Bank 1930
ICICI Bank 1990
Axis Bank 1993
HDFC Bank 1994
IndusInd Bank 1994
Kotak Mahindra Bank 2001
Yes Bank 2004
IDFC Bank 2015
Bandhan Bank 2015
City Union Bank 1904
Karur Vysya Bank 1916
Catholic Syrian Bank 1920
Nainital Bank 1922
(Wholly owned subsidiary of Bank Of
Baroda)

Karnataka Bank 1924

Lakshmi Vilas Bank 1926
Dhanlaxmi Bank 1927
South Indian Bank 1929
Federal Bank 1931
Jammu and Kashmir Bank 1938

   
  

2.2a advantages of private banks

Competitive Work Environment:

They provide a highly competitive and exciting work atmosphere to grow as a professional.
Professionals are encouraged to take up challenging tasks and enterprising individuals are rewarded
accordingly.

Performance-Based Incentives:

Private Banks usually offer a number of performance-linked incentives both in monetary and
non-monetary forms. This promotes a spirit of competitiveness in employees and helps boost their
morale further.

Instant Work Recognition:

Some of the best private banks focus on recognizing merit over experience and top performers
usually receive instant recognition for their work. The best thing is that recognition and rewards go
hand in hand.

Hand on learning experience:

Greater stress is placed on acquiring necessary skills and knowledge on- the-job instead of solely
relying on training programs. Although those who perform well could be selected for prestigious
training programs at some of the best institutes.

Technology-Oriented Outlook:

Individuals with a keen interest in technology are among the preferred choices for premium private
banking institutions of the day. This is aimed at strengthening their resources for continuing digital
expansion of banking services.

Fast-Paced Career Growth:

Professionals can grow at a fast pace and acquire higher positions along with greater emoluments
within the first few years. This propels even average performers to do well and keep themselves in

   
  

the hunt for the next promotion.

Additional Benefits:

Employees are also offered special benefits including higher rate of interest on fixed deposits and
paid holidays among other things.

2.2b DISADVANTAGES OF PRIVATE BANKING

Longer working Hours:

Working hours are typically longer and the stress is on meeting targets instead of leaving
office on time. This is one of the low downs in almost any competitive job and in the long-term, it
may potentially affect the health and personal life of an individual.

Lesser Job Security:

This is one of the biggest disadvantages with private banks that despite occupying the best of
positions, there is no assurance that one cannot be asked to leave, if the situation demands it. Some
of the possible reasons might include the banking industry or the banking institution in question
passing through a bad phase. This is exactly what happened in the wake of 2008
meltdown when thousands of private bank employees were shown
The door.

Average Performers Might Suffer:

Most of the job roles are cut-out for go-getters where there is little place for slow learners or
average performers. Though not everyone can be a top performer but those who do not perform
very well or are not comfortable taking on challenging roles may not be able to benefit much.

   
  

CHAPTER 3

PUBLIC BANKS
Public Sector Banks (PSBs) are a major type of bank in India, where a majority stake (i.e. more
than 50%) is held by a government. The shares of these banks are listed on stock exchanges.
There are a total of 21 Public Sector Banks alongside 1 state-owned Payments Bank in India.
Public sector bank is a bank in which the government holds a major portion of the shares. Say for
example, SBI is public sector bank, the government holding in this bank is 58.60%. Similarly PNB
is a public sector bank, the government holds a stake of 58.87%. Usually, in public sector banks,
government holdings are more than 50 per cent. Public sector banks are classified into two
categories further-
1. Nationalized Banks.
2. State Bank and its Associates.
In nationalized banks the government control and regulates the functioning of the banking entity.
Some examples are SBI, PNB, BOB, OBC, Allahabad Bank etc. However, the government keeps
reducing the stake in PSU banks as and when they sell shares. So to that extent they can also
become minority shareholders in these banks.

3.1 List of public sector bank in india

Name Established
Allahabad bank (Merged with Indian 1865
Bank)
Andhra bank (Merged with Union Bank 1923
of India)
Bank of baroda 1908
Bank of india 1906
Bank of Maharashtra 1935
Canara bank 1906
Central bank of india 1911
Corporation bank (Merged with Union 1906
Bank of India)

 
  

Dena bank (Merged with Bank of 1938

Baroda)
IDBI bank 1964
Indian overseas bank 1937
Oriental bank of Commerce (Merged 1934
with Punjab National Bank)
Punjab and sind bank 1908
Punjab national bank 1894
State bank of India 1955
Syndicate bank (Merged with Canara 1925
Bank)
UCO Bank 1943
Union bank of India 1919
United bank of India (Merged with 1950
Punjab National Bank)
Vijaya bank (Merged with Bank of 1931
Baroda)

3.2a Advantages of public bank

Less Competitive Work Atmosphere:

In general, the work environment is comfortable and there is usually no rush to meet some
pre-defined targets. Professionals get enough time to gear up for the role and learn things at their
own place.

Regular Training Programs:

There is a lot of stress on conducting training programs at regular intervals to help employees
upgrade their finance, people and technical skills and be able to perform better.

 
  

Greater Job Security:

There is little risk of sudden termination waiting around the corner even if the performance of
an individual is not upto the mark. This may not sound like the best of incentives in terms of
encouraging employees to do better but it certainly attracts a lot of talent looking for secure job
roles. In an event similar to 2008 meltdown, there is little chance of being sent home due to market
conditions, unlike private banks.

Better Work Hours:

Work hours are pre-defined and there is no rush to meet targets, no overbearing sense of
competition and no additional working hours as well. It offers enough time to spend with family
and friends.

Attractive Additional Benefits:

In keeping with the professional designation, certain additional benefits are defined by public sector
banks. These include home and a car for higher-ranked professionals along with some common
benefits for most roles. These include lower rate of interest on loans, higher rate of interest on fixed
deposits and pension packages among other things. However, these benefits may vary based on the
professional role and the institution one is working with.

3.2b disadvantages of public banks

Less Rewarding for Competitive Individuals:

A career with public sector banks could be a relatively less exciting experience for competitive
individuals who are looking to achieve more in a short span of time. There would be comparatively
fewer rewards for performing well and this may not work well for more ambitious individuals.

Slow Career Progress:

Career growth would be rather lethargic with most of the promotions and pay hikes based on
experience instead of merit. Unlike private banks, one would need seniority for desired career
progress which can be a bit of a dampener, although there are other benefits which might
compensate for it to an extent.

 
  

Lesser Motivation to Perform Better:

With little competition and fewer performance-based rewards, there is but little motivation for
average performers to do better and prove their mettle.

Work-Life Balance:
Private banks are relatively worse on this count with longer and intense working hours which tends
to affect the balance between work and personal life. There is usually little time left for recreation or
relaxation and it becomes difficult to spend quality time with friends and family.
PSU bank employees have comparatively much better working hours which leave a lot of time to be
spent with family, for recreation or other activities. Lesser competition at work also helps them
enjoy a more balanced existence as compared with private bank employees.

CHAPTER 4

 
  

Functions of commercial banks

A: Primary Functions:

Refer to the basic functions of commercial banks that include the following:
Accepting Deposits:​Implies that commercial banks are mainly dependent on public deposits.
There are two types of deposits, which are discussed as follows:
Demand Deposits: ​Refer to kind of deposits that can be easily withdrawn by individuals without
any prior notice to the bank. In other words, the owners of these deposits are allowed to withdraw
money anytime by simply writing a check. These deposits are the part of money supply as they are
used as a means for the payment of goods and services as well as debts.
Receiving these deposits is the main function of commercial banks.
Time Deposits: ​Refer to deposits that are for certain period of time. Banks pay higher interest on
rime deposits. These deposits can be withdrawn only after a specific time period is completed by
providing a written notice to the bank.

Advancing Loans: ​Refers to one of the important functions of commercial banks. The public
deposits are used by commercial banks for the purpose of granting loans to individuals and
businesses. Commercial banks grant loans in the form of overdraft, cash credit, and discounting
bills of exchange.

B: Secondary Functions:
Refer to crucial functions of commercial banks. The secondary functions can be classified under
three heads, namely, agency functions, general utility functions, and other functions.
These functions are explained as follows:
Agency Functions: ​Implies that commercial banks act as agents of customers by performing
various functions, which are as follows:

Collecting Checks: Refer to one of the important functions of commercial banks. The banks collect
checks and bills of exchange on the behalf of their customers through clearing house facilities
provided by the central bank.

 
  

Collecting Income: ​Constitute another major function of commercial banks. Commercial banks
collect dividends, pension, salaries, rents, and interests on investments on behalf of their customers.
A credit voucher is sent to customers for information when any income is collected by the bank.

Paying Expenses: ​Implies that commercial banks make the payments of various obligations of
customers, such as telephone bills, insurance premium, school fees, and rents. Similar to credit
voucher, a debit voucher is sent to customers for information when expenses are paid by the bank.

General Utility Functions:

Include the following functions:

Providing Locker Facilities: ​Implies that commercial banks provide locker facilities to its
customers for safe keeping of jewellery, shares, debentures, and other valuable items. This
minimizes the risk of loss due to theft at homes.

Issuing Traveler’s Checks: ​Implies that banks issue traveler’s checks to individuals for traveling
outside the country. Traveler’s checks are the safe and easy way to protect money while traveling.

Dealing in Foreign Exchange: ​Implies that commercial banks help in providing foreign exchange
to businessmen dealing in exports and imports. However, commercial banks need to take the
permission of the central bank for dealing in foreign exchange.

Transferring Funds: ​Refers to transferring of funds from one bank to another. Funds are
transferred by means of draft, telephonic transfer, and electronic transfer.

Other Functions: ​Include the following:

Creating Money: ​Refers to one of the important functions of commercial banks that help in
increasing money supply. For instance, a bank lends Rs. 5 lakh to an individual and opens a demand
deposit in the name of that individual.
Bank makes a credit entry of Rs. 5 lakh in that account. This leads to creation of demand deposits in
that account. The point to be noted here is that there is no payment in cash. Thus, without printing

 
  

additional money, the supply of money is increased.

Electronic Banking: ​Include services, such as debit cards, credit cards, and Internet banking.

Types of Credit Offered by Commercial Banks:

A commercial bank offers short-term loans to individuals and organizations in the form of bank
credit, which is a secured loan carrying a certain rate of interest.
There are various types of bank credit provided by a commercial bank, as shown in Figure:

Bank Loan:
Bank loan may be defined as the amount of money granted by the bank at a specified rate of interest
for a fixed period of time. The commercial bank needs to follow certain guidelines to extend bank
loans to a client. For example the bank requires the copy of identity and income proofs of the client
and a
guarantor to sanction bank loan. The banks grant loan to clients against the security of assets so that,
in case of default, they can recover the loan amount. The securities used against the bank loan may
be tangible or intangible, such as goodwill, assets, inventory, and documents of title of goods.

advantages of the bank loan are as follows:

1) Grants loan at low rate of interest

2) Involves very simple process of loan granting
3) Requires minimum document and legal formalities to pass the loan

 
  

4) Involves​​
good customer relationship management
5) Consumes less time because of modern techniques and computerization
Provides door-to-door facilities

In addition to advantages:
the bank loan suffers from various imitations, which are as follows:

a) Imposes heavy penalty and legal action in case of default of loan

Charges high rate of interest, if the party fails to pay the loan amount in the allotted time

b) Adds extra burden on the borrower, who needs to incur cost in preparing legal
documents​​for procuring loans

c) Affects the goodwill of the organization, in case of delay in payment

4.1 Difference in saving account interest rate after the budget of 2019

SAVINGS ACCOUNT-NEW RATES

BANK INTEREST RATE (%) LIMIT

State bank of India 3.5 Below Rs 1 crore

PNB 3.5 Upto Rs 25 lakhs

 
  

4 Above RS 25 lakhs

HDFC Bank 3.5 Upto Rs 50 lakhs

4 Above Rs 50 lakhs

Yes bank 5 Below Rs 1 lakh

6 Rs 1 lakh to
Rs 1 crore

ICICI Bank 3.5 Upto Rs 50 lakhs

4 Above Rs 50 lakhs

Indian bank 3.5 Upto Rs 50 lakhs

4 Above Rs 50 lakhs

Dena bank 3.5 Upto Rs 25 lakhs

4 Above Rs 25 lakhs

Axis bank 3.5 Upto Rs 50 lakhs

 
  

Bank of Baroda 3.5 Upto Rs 50 lakhs

Karnataka bank 3 Upto RS 1 lakh

3.5 Rs 1 lakh to Rs 50 lakhs

 
  

CHAPTER 5

Scams in Banking sector:

5.1 Scams in private banks ICICI Bank:

ICICI Bank has topped the list of banks with maximum number of employees on whom action has
been taken in the last three years for involvement in frauds. In the last three years, action has been
taken against 13,949 bank officials belonging to 60 PSU banks and private banks.
ICICI Bank officials alone account for 2,236 or 16% (one-sixth) of the total such cases, Minister of

State for Finance Shiv Pratap Shukla told the Rajya Sabha in a written reply on Tuesday. In each of
these three years, 2015, 2016 and 2017, the number of ICICI Bank officials against whom the action
has been taken was in the range of over 600 to under 900.

For loan defaults of Rs 1 crore and above which have been reported to CIBIL, this figure was even

 
  

higher for private banks. In December 2017, such defaults accounted for 42.9% of the NPAs of
private banks. For the public sector banks, this figure was 33.1%. These numbers were higher for
the public sector banks till 2012, but the trend changed from 2013 onwards.

5.2 Scams in public banks:

PNB scam: ​
On February 14 this year, the state-run lender PNB shocked the entire banking industry
of India by revealing that it had been defrauded by Rs 11,400 crore allegedly by billionaire jeweler
Nirav Modi, his family members and business partner Mehul Choksi, owner of the Gitanjali Gems
at PNB's Brady House Branch in Mumbai. Following the scam, employees of PNB including people
at the general manager level were suspended from their post for their suspected involvement in the
biggest scam in the Indian banking sector. Also, the government has revoked passports of Nirav
Modi and Mehul Choksi.

Rotomac case: ​Rs 3,700 Rotomac fraud unearthed after the sensational PNB scam. Kanpur based
Rotomac Global is being probed by the CBI and Enforcement Directorate (ED) for allegedly
cheating a consortium of seven banks of Rs 3,700 crore. The investigation agency filed case against
Vikram Kothari and Rahul Kothari, directors of the business group for misusing credit sanctions
provided by Bank of Baroda (BoB), the member of consortium banks at its International Business
Branch (IBB) at The Mall Kanpur to the tune of Rs 456.63 crore.

SBI fraud case: ​State Bank of India (SBI) is at the forefront of a bank scam involving jewellery
network Kanishk Gold Pvt Ltd (KGPL). The KGPL has been accused of defrauding a consortium of
14 banks amounting Rs 824.15 crore bank fraud led by the SBI. The Enforcement Directorate (ED)
and CBI registered a case against Kanishk Gold.

R P Infosystem scam: ​In January the CBI has booked two directors of R P Info Systems and its
directors for allegedly cheating a consortium of banks including PNB, SBI, and Canara bank to the
tune of Rs 515.15 crore. The banks alleged that loans were taken on the basis of fabricated
documents.
PNB 91 million scam: ​After witnessing a scam of Rs 12,000 crore allegedly committed by Nirav

 
  

Modi, the PNB has unearthed another 91 million fraud in March. It involves officials of a
little-known company called Chandri Paper and Allied Products Pvt Ltd. The fraud has been spotted
at the PNB's Brady House Branch in Mumbai where the Nirav Modi scam had unfolded.

Karnataka Bank fraud case: ​Private sector lender Karnataka Bank on March 28 reported a fraud
worth Rs 86.47 crore in the fund based working capital facilities extended to Gitanjali Gems
Limited- the jewelry network which has been under the scanner in connection to the alleged
involvement of the promoter Mehul Choksi in the mega banking scam.

United Bank of India case: ​On March first week the Central Bureau of Investigation (CBI) has
filed a disproportionate assets (DA) case against Archana Bhargava, former chairperson and
managing director of United Bank of India (UBI). The CBI alleges that Archana Bhargava acquired
movable and immovable assets disproportionate to her income between 2004 and 2014

5.3 ​Mobile banking

Mobile banking is a service provided by a bank or other financial institution that allows its
customers to conduct financial transactions remotely using a mobile device such as a smartphone or
tablet. Unlike the related internet banking it uses software, usually called an app, provided by the
financial institution for the purpose. Mobile banking is usually available on a 24-hour basis. Some
financial institutions have restrictions on which accounts may be accessed through mobile banking,
as well as a limit on the amount that can be transacted. Mobile banking is dependent on the
availability of an internet or data connection to the mobile device.

Transactions through mobile banking depend on the features of the mobile banking app provided
and typically includes obtaining account balances and lists of latest transactions, electronic bill
payments, remote check deposits, P2P payments, and funds transfers between a customer's or
another's accounts. Some apps also enable copies of statements to be downloaded and sometimes
printed at the customer's premises.

From the bank's point of view, mobile banking reduces the cost of handling transactions by
reducing the need for customers to visit a bank branch for non-cash withdrawal and deposit

 
  

transactions. Mobile banking does not handle transactions involving cash, and a customer needs to
visit an ATM or bank branch for cash withdrawals or deposits. Many apps now have a remote
deposit option; using the device's camera to digitally transmit cheques to their financial institution.

Mobile banking differs from mobile payments, which involves the use of a mobile device to pay for
goods or services either at the point of sale or remotely, analogously to the use of a debit or credit
cardBanks that provide

Mobile banking services:

Public banks Private banks

State bank of india ICICI Bank

IDBI Bank INDUSSIND Bank

SBBJ Bank HDFC Bank

OBC Bank AXIS Bank

With the ongoing digital drive in India, the number of users opting for online banking is expected to
double to reach 150 million mark by 2020, from the current 45 million active urban online banking
users in India, according to a report drafted by Facebook and The Boston Consulting Group (BCG).

 
  

CHAPTER 6

6.1 Objectives of the study:

To find out which sector of banking is preferred more by the consumer, private sector bank or
public sector bank.
To find out the factors which influences the customer to choose a bank.
To study the problems faced by the customers in public as well as private sector banks and also to
compare between them.

6.2 Literature review:

A literature review provides an overview and a critical evaluation of a body of literature relating to
a research topic or a research problem. It analysis a body of literature in order to classify it by things
or categories , rather than simply discussing individual work one after the other.
A literature review often form part of a larger research project such as within a thesis, or it may be
an independent written work , such as a synthesis written paper .

Purpose of literature review:

A literature review situates a topic in relation to previous researches and illuminates a spot for our
research. It accomplishes several goals Provides backgrounds for topic using previous research.
Shows we are familier with previous, relevant research.
Evaluates the depth and breadth of the research with reguards to our topic
Determines relating questions or aspects of our topic in need of research
In our research the main source of information has been the questionnaire filled up by the
respondents as well as the internet. The topic of my research. ‘Comparative study between private
banks and public banks’ has not been published earlier .
The internet, questionnaire served by us to the respondents , website of particular banks have been
the major source of information.

6.3 Research methodology:

Research is an art of scientific investigation. In other words research is a scientific and systematic

 
  

search for pertinent information on a specific topic. The logic behind taking research methodology
into consideration is that one can have knowledge regarding the method and procedure adopted for
achievements of objective of the project. With the adoption of this others can also evaluate the
results too.
The methodology adopted for studying the objective of the project was surveying the bank account
holders of the respondents. So keeping in view the nature of requirement of the study to collect all
the relevant information regarding the comparison of public sector banks and the private sector
banks direct personal interview method with the help of structured questionnaire was adopted for
collection of primary data.
Secondary data has been collected through the various magazines and newspaper and by surfing on
internet and also by visiting the websites of Indian Banking Association

SAMPLE DESIGN:
A sample design is a definite plan for obtaining a sample from a given population It refers to the
techniques or the procedures that the researchers would adopt in selecting items for the samples.
Sample Design May as well lay down the number of items to be included in the sample ie the size
of the sample. Sample design is determine before data are collected. Here we select the population
as sample in our sample design. The selected respondents should be as representatives of the total
population.

POPULATION:
The people holding bank accounts were taken into consideration.

DATA COLLECTION:
Data was collected by using two main methods i.e. primary data and secondary data.

 
  

Primary data:
primary data is the data which is used or collected for the first time and it is not used by anyone in
the past. There are number of sources of primary data from which the information can be collected.
We took the following resources for our research.

Questionnaire:
This method of data collection is quite popular, particularly in case of big enquiries. Here in our
research we set 14 simple questions and requested the
respondents to answer these questions with correct information.

Secondary data:
Secondary data is the data which is available in readymade form and which has already been used
by other people for various purposes. The sources of secondary data are newspaper, internet,
websites of IBA. journals and other published documents.

Sample size:
Keeping in mind all the constraints the size of the sample of our study was selected as 56.

Sample unit:
Salaried people, self-employed people and citizens holding bank accounts in different sector banks.

Sampling technique:
Stratified convenient sampling. All the bank account holders were taken into considerations.
Research was conducted on clear assumptions that the respondents would give frank and fair
answer in a pragmatic way without any bias.

Sampling description:
In order to understand the nature and characteristics of various respondents in this study, the
information was collected and analysed according to their socio-economic background like
education, occupation, age, gender, etc This descriptions show that these respondents that have been
included in the study belong to different background and this in tum enhances the capability and

 
  

accuracy of the study.

Hypothesis:
H1- People prefer either public sector bank or private sector bank Ho- People do not prefer private
sector or public sector banks.

 
  

6.4 DATA INTERPRETATION

Age-

Analysis and interpretation- from the above result we come to know that out of 56 respondents 8 are
below 20 years of age, 30 belong to 21-30 years, 13 belong to 31-40 years, and 5 are above 45 years
of age.
This shows that majority of our respondents are young people between the age 21 to 30.

 
  

Gender-

Analysis and interpretation- from the above result it can be inferred that
The number of female respondents is the same as the number of male respondents. The ratio of
male respondents to female respondents id the same

 
  

Occupation-

Analysis and interpretation- the above result shows that 18 respondents are salaried people, 18 are
self-employed and 20 of them are students
The proportion of occupation of our respondents are almost equal.

 
  

The respondents were asked about which are they maintaining their account. The
result is as follows-

Analysis and interpretation- from the above graph we come to know that maximum respondents
holding bank accounts is in SBI bank. The count is 19 people. The second is bank of baroda
, with 17 people and the third highest is HDFC bank with 12 respondents.
It is also inferred that majority of people are holding accounts in a public sector bank.

 
  

Awareness of the difference between private sector and public sector banks

Analysis and interpretation- from the above pie chart we come to know that majority of people
completely know the difference between private and public sector banks. And there are only few
who are partially aware but not sure about it.

 
  

The respondents were asked which banking sector they prefer the most ? the results are-

Analysis and interpretation- from the above pie chart it can be inferred that majority of people
prefer both private sector and well as public sector banking. Out of 56 respondents 18 prefer public
banks, 14 prefer private banks and 24 respondents prefer banking in both sectors.

 
  

The respondents were asked about which type of account they have in their preferred bank.

Analysis and interpretation- from the above graph it can be inferred that majority of people are
availing saving bank account. Almost 85% of our respondents are saving bank account holders. 48
of our respondents are holding savings account, 24 of them are holding current account and 19 of
them are having fixed deposits.
Some respondents have de mat account and recurring deposit account.

 
  

The respondents were asked to rank the factors that are important in choosing a particular bank, the
results are-

Analysis and interpretation- from the above pie chart it can be inferred that 26 of our respondents
pick banks according to trust and reliability, 18 of them choose banks according to behaviour of the
employees, 18 of them look for quick and fast services, 17 of them choose banks according to their
location and 20 of the respondents look for interest rates of the banks that they are providing.

 
  

The respondents were asked about the facilities availed by them, the result is-

Analysis and interpretation- from the above analysis it can be inferred that majority of respondents
use automate teller machine (ATM) services that is being provided by almost all the banks. ATM
users are 50 out of 56 respondents which more than even 80%. Mobile banking is used by 31
respondents, insurance services is availed by 11 respondents while credit card services are used by
35 people.

 
  

The respondents were asked if they use mobile banking. The results were as follows-

Analysis and interpretation- from the above pie chart it can be inferred that 60% of people are using
mobile banking.

 
  

The respondents were asked about their satisfaction level towards their preferred bank. The results
are as follows-

Analysis and interpretation- from the above graph it can be inferred that 23 respondents are satisfied
by the services provided by their bank, 11 of our respondents are highly satisfied with their
preferred banks, 19 of them are neutral .

 
  

The respondents were asked reguarding the reasons for choosing public sector banks-

Analysis and interpretation- from the above graph it can inferred that public sector banks can
choosen by respondents mainly due reasons that are safety, security, trust and reliability
45 of our respondents choose safety and security, 36 choose trust and reliability, 24 of them think
interest rates can be the reason to choose a public bank.
Only 7 of them have chosen quick and fast services.

 
  

The respondents were asked regarding the reasons for choosing private sector banks-

Analysis and interpretation- from the above graph it can be inferred that the reasons for choosing
private banks are due to their quick and fast services, and the type of services they provide.
35 of our respondents choose private sector bank due to quick and fast services, 24 because of
fulfilment of individual requirements, 25 due to interest rates offered by the bank.

 
  

The respondents were asked if they will change their banks if better services are provided-

Analysis and interpretation- from the above pie chart we come to know that 50% of people are
ready to change their banks if better services are provided by the other banks. 16% are not ready to
change their banks and 33% of the respondents are not sure if they want to change or not.

 
  

The respondents were asked if any other facilities they want from their banks-

Analysis and interpretation- the following were the responses :

Mobile banking
More ATM centers must be opened in the village
Good interest rates and safety
More customer services
Ease in deposits
Fast settlement of transactions
Online payments, etc

 
  

The respondents were asked for their suggesions in improving public sector banks

Analysis and interpretation- the following were the responses

Quick and fast services

Timely availability of staff Proper communication and suggestions from staff to customern
There should be quick and fast services
Make staff more customers friendly like Private Sector Banks
Fast n easy..a variety of services provided
Efficiency of the staff should be improved
Improve the quality of services
Good Staff behaviour
They should improve their ATM facilities
Nothing
Provide services like private bank does
Improve the quality of services

The respondents were asked for their suggesions in improving private sector
banks
Analysis and interpretation- the following responses were recorded
Less rates of interest
The functioning should be made more transparent
Create more security in the minds of people

 
 
  

LIMITATIONS OF THE STUDY:

Due to constraints of time and resources the study is likely to suffer from certain limitations. Some
of them are mentioned below so that the findings of the study are understood in proper perspective.

The limitations of the study are:

Some of the respondents of the survey were unwilling to share information.

The research was carried out in a short period of time, therefore the sample size and other
parameters were selected accordingly so as to finish the work in given time frame.

The information given by the respondents might be biased because some of them ​might not be
interested in providing correct information.

6.5 FINDINGS OF THE STUDY:

More number of people have account in public sector banks.

Majority of the respondents whether public sector or private sector banks have saving banks
account in their respective banks

People want a change in the behaviour of the staff towards customers in public sector banks. And
require more quick and fast services from the public sector banks

There needs to be more awareness regarding the trust factor in private sector banks and the amount
deposited in the particular bank

People are more satisfied with their respective banks. The main reason for their satisfaction is Trust
factor and the services they provide

The private sector banks need to enhance trust factor among the people

 
 
  

The facility that was availed most was the ATM/Debit card facility whether in private sector bank
or in public sector bank.

Majority of the respondents agreed to shift from their current bank if better services were provided
to them, even if they were satisfied with their banks.

The most favoured bank among our respondents is the SBI and BANK OF BARODA and in the
private sector the most favoured is HDFC.

 
 
  

6.6 Conclusion:
From the above study we can conclude that the people have more trust on public sector banks than
private sector bank.
The customers are not only exposed of what type of service is being provided by banks in India but
in the world as a whole.
They expect much more than what is actually being provided.
So the new coming banks has to provide and cater to all the needs of the customers otherwise it is
difficult to survive in the competition.
They not only expect safety of money but also best ways to invest that money which needs to be
fulfilled.
Banks need to have a better outlook towards to what customers are requiring.

6.7 Suggestions:
Banks should increase the interest rate of savings account.
Banks should provide loan at lower interest rate and education loans should be given with ease
without much documentation.
Internet banking facility must be made available in all the banks with proper server.
There must be prompt dealing with permanent customers and speedy transactios.
Each section of every bank should be digitalized even in rural areas as well.

 
 
  

6.8 Bibliography:

www.wikipedia.com

www.goodreturns.com

www.ijser.org

www.economictimes.com

www.competitiondigest.com

www.timesofindia.com

Newspapers

 
 
  

6.9 Anexxure

1) In which bank are you maintaining your account

● SBI
● Bank of baroda
● HDFC
● ICICI
● OTHER

2) Are you aware of the difference between private sector banks and public sector
banks?
● Yes
● No
● Partially

3) Which sector bank do you prefer?

● Public
● Private
● Both

4) Which type of account you have in your bank?

● Savings account
● Current account
● Fixed deposit
● Other

5) Rank the factors that are important for choosing a particular bank?
● Trust and reliability
● Behaviour of the employees
● Quick and fast services
● Location of the bank
● Spectrum of products

6) Facilities availed by you from your bank

● ATM/Debit card
● Credit card

 
 
  

● Insurance
● Mobile banking
● Other

7) Do you use mobile banking?

● Yes
● No
● The facility is not available

8) Tour satisfaction level towards your preferred bank?

● High
● Low

9) what can be the reasons for selecting public sector banks

● Safety and security
● Trust and reliability
● Interest rate
● Quick and fast services
● Easy access to the bank
● Services provided by the bank
● Fulfillment of individual requirements

10) What can be the reasons for choosing a private sector bank?
● Safety and security
● Trust and reliability
● Interest rate
● Quick and fast services
● Easy access to the bank
● Services provided by the bank
● Fulfillment of individuals requirements

11) Will you think of changing your bank if better services are provided
● Yes
● No

12) Any specific service you want from your bank?

13) Any suggestions in improving PSU BANK?
14) Any suggestions in improving private sector banks?