Pramana Research Journal ISSN NO: 2249-2976

E.Commerce: A comparative Study of SBI and HDFC Bank

Roop Kamal, Assistant Professor, Chandigarh University

E.mail id: Roope7606@cumail.in

Introduction

Banking Industry in India has travelled a long path to assume its present status. It has
undergone a major structural transformation after the independence including the assumption
of social banking. The success in transformation has been achieved by overcoming hurdles and
impediments, stresses and strains. Thus, the development in the banking industry covers the
activities of money lenders with their limited resources and of large scale operations by banks
with huge resources and diversified activities.

The earliest banking system played a significant role till the Mughal period. Their importance is
reduced during the British period as they could not make much use of their services on account
of difference in language and style. In order to meet their financial requirements and banking
assistance, the English agency houses started their own banking business in Calcutta and
Bombay. This was the beginning of the modern banking system in India. So, the history of
modern banking in India dates back to the last quarter of 18th Century. The earliest European
Bank was started by the English agency houses along with their trading activities in 1710 in the
name of Bank of Hindustan. This was followed by setting up of the Bengal Bank in 1984,
General Bank of India in 1786 etc. However, all these banks failed sooner or later due to
various reasons.

ESTABLISHMENT OF RESERVE BANK OF INDIA

The Hilton Young Commission in 1926 recommended the establishment of a separate bank in
the country known as Reserve Bank of India. So a bill was introduced in the Legislative
Assembly in 1933 which led to the establishment of Reserve Bank in 1935. After the
establishment of Reserve Bank of India, the Imperial Bank was authorized to function as a sole

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agent of the Reserve Bank of India at all places in India where the Reserve Bank had no
branches.

GROWTH POTENTIALS FOR INDIAN BANKING SYSTEM

Banking sector has remained the backbone of Indian economy since independence. After the
reformative measures of 1991, this industry has been undergoing major changes. Advent of hi-
tech communication and information technology has facilitated growth in Internet banking.
Various other modern services are provided by the banks these days like, ATM services, Mobile
banking, plastic money, paytm etc. these services has improved the banking system to a great
extent. Also, now a days, along with the consumer durable goods, there is marketing of
financial products, like mutual funds, investment policies and insurance policies as well. This is
possible due to the modern banking practices. And also, various initiatives are taken by the
government of India, in the regard of financial inclusion. Various schemes are launched by the
government to promote financial inclusion like Pradhan Mantri Jan Dhan Yojana, with a slogan
of Mera khata, Bhagya Vidhata, as this scheme is providing the option of zero balance account
to its clients. This was done to cover the unbanked population as most of the people, especially
financial illiterate people remain unbanked just because of lack of financial knowledge, so the
government id providing the financial education to the clients through various programs. And
to promote financial inclusion, various banks are appointing its business facilitators and
business correspondents by following the BCBF model initiated by RBI. In this model, various
banking services and functions are performed by the facilitators or correspondents appointed
by the banks. Here, in this model, Business facilitators acts as a agent for its principle bank. So
by following these initiatives, banking system has improved to the great extent and also the
coverage of banking has increased to a great extent.

Internet banking is changing the banking industry and is having the major effects on banking
relationships. Banking is now no longer confined to the branches were one has to approach the
branch in person, to withdraw cash or deposit a cheque or request a statement of accounts. In
true Internet banking, any inquiry or transaction is processed online without any reference to

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the branch (anywhere banking) at any time. Providing Internet banking is increasingly becoming
a "need to have" than a "nice to have" service. The net banking, thus, now is more of a norm
rather than an exception in many developed countries due to the fact that it is the cheapest
way of providing banking services

Literature Review

Gupta, 2008, Kamel, 2005, has explained the e banking system as an invaluable and powerful
tool that is developing the banking system t the great extent.

Mahdi and Mehrdad, 2013; Dube, et. al., 2012 has described e banking as a important and
technical tool that is to be used more extensively, for the overall development of banking
system. And e banking also helps in marketing of banking products and services and also in
making the business strategies.

Goi, 2005, he explained the concept of e banking in the light of technological advancement, and
concluded that, it contribute to the distribution channel of banks.

Chang, 2003; Gallup Consulting, 2008, said that the evolution of banking technology has been
driven by changes in distribution channels as evidenced by automated teller machine (ATM),
Phone- banking, Tele-banking, PC-banking and most recently internet banking

Objectives of study

 To know the performance of SBI and HDFC on the grounds of E Banking

 To know the level of satisfaction among customers on the basis of electronic services
offered by the banks.

Research Methodology

Both primary and secondary data is used for this study. For comparing the performance of both
the banks, the secondary data is collected from the bank’s websites, bank brochures, annual

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reports, IBA bulletins etc. And for studying the customer satisfaction, primary data Is collected
from the customers on the basis of questionnaires, one to one interaction etc.

Data Analysis & Interpretation

State Bank of India

CURRENT RATIO:

Formula: Current ratio/ current liability

Table no.1 Shows the current assets, current liability and current ratio 2012-2016 of SBI Bank

YEAR 2012 2013 2014 2015 2016

Current assets 142137.07 131296.61 166652 150276.19 162712.19

Current liabilities 169280.15 146920.78 170869.43 165537.33 195022.78

Current ratio 0.839 0.839 0.975 0.907 0.834

Graph. 1

Current ratio
Current ratio

0.975
0.907
0.839
0.839 0.834

2012 2013 2014 2015 2016

PROFITABILITY RATIO:

Gross profit ratio: gross profit ×100/sale

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Table no.2 Shows the Gross profit , sales and GP ratio 2012-2016 of SBI bank

Years 2012 2013 2014 2015 2016

Gross profit 10403.06 11831.63 4764.19 5133.87 6595.7

Sales 74880.76 85909.36 81394.36 106521.45 119657.10

G.P ratio 13.89 13.77 5.85 4.81 5.51

Graph. 2

Gross profit
Gross profit

11831.63
10403.06
6595.7
4764.19 5133.87

2012 2013 2014 2015 2016

LEVERAGE RATIO:

Formula: Short term debt +long term debt/shareholder fund

Table no.3 shows that total debt , shareholder funds and leverage ratio.

Years 2012 2013 2014 2015 2016

Total debt 795786.81 907127.83 1053501.77 1170652.93 1371922.28

Shareholder 57947.7 65949.2 64986.04 83951.2 98883.68

fund

Ratio 13.73 13.75 16.21 13.94 13.87

Graph: 3

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Leverage Ratio SBI Bank

Ratio

16.21

13.73 13.75 13.94 13.87

2012 2013 2014 2015 2016

LIQUID RATIO:

Formula: Quick assets/ current liability

Table no.4 Shows the Quick assets, Quick liability and Quick ratio 2012-2016 of Sbi bank

Year 2012 2013 2014 2015 2016

Quick assets 105338.93 70325.69 119409.41 27044.03 18607.61

Quick 169280.15 146920.78 170869.43 165537.33 195022.78

liabilities

Quick ratio 0.622 0.478 0.698 0.163 0.095

Graph.4

Liquid ratio SBI Bank

Quick ratio

0.698
0.622
0.478

0.163
0.095

2012 2013 2014 2015 2016

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HDFC Bank

CURRENT RATIO:
Formula: Current ratio/ current liability

Table no.1 Shows the current assets, current liability and current ratio 2012-2016 of HDFC
bank.

YEARS 2012 2013 2014 2015 2016

Current asset 23863.45 35897.54 44269.92 42659.36 46294.58

Current lib. 168218.04 201236.07 251973.33 307984.83 364117.75

Current ratio 0.141 0.178 0.175 0.138 0.127

Graph .1

Current ratio HDFC Bank

0.178 0.175
0.141 0.138
0.127

2012 2013 2014 2015 2016

PROFITABILITY RATIO:

The Analysis of financial data of HDFC has been taken from 2012-2016

Gross profit ratio: gross profit ×100/sale

Table no.2 Shows the Gross profit, sales and GP ratio 2012-2016 of HDFC bank

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Years 2012 2013 2014 2015 2016

Gross profit 2703.08 2347.19 2170.65 4707.97 3956.63

Sales 19770.72 19958.76 19928.21 27286.35 35064.87

Ratio 0.136 0.117 0.108 0.172 0.112

Graph .2

Gross Profit Ratio HDFC Bank

0.172
0.136
0.117 0.108 0.112

2012 2013 2014 2015 2016

LEVERAGE RATIO:
The Analysis of financial data of HDFC has been taken from 2012-2016

Formula: Short term debt +long term debt/shareholder fund

Table no.3 shows that total debt , shareholder funds and leverage ratio

Years 2012 2013 2014 2015 2016

Long &short 145497.42 180320.13 222980.47 270552.96 329253.58

Equity fund 14652.81 21522.49 25367.36 29924.42 36214.14

Ratio 9.92 8.37 8.79 9.04 0.091

Graph .3

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Leverage Ratio of HDFC Bank

9.92
8.37 8.79 9.04

0.091
2012 2013 2014 2015 2016

LIQUID RATIO:

The Analysis of financial data of HDFC has been taken from 2012-2016

Formula: Quick assets/ current liability

Table no.4 Shows the Quick assets, Quick liability and Quick ratio 2012-2016 of HDFC bank.

Years 2012 2013 2014 2015 2016

Quick asset 16659.42 28387.41 35708.31 33175.12 351856.9

Current lib. 168218.04 201236.07 251973.33 307984.83 364117.75

Quick ratio 0.099 0.141 0.141 0.107 0.966

Graph:4

Liquid ratio HDFC Bank

0.966

0.099 0.141 0.141 0.107

2012 2013 2014 2015 2016

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Findings

1. The current ratio of SBI has shown non fluctuating trend as 0.839, 0.839, 0.975 , 0.907
and 0.834 during 2012 ,2013, 2014, 2015 and 2016. And The current ratio of HDFC has
also shown non fluctuating trend as 0.141 , 0.178,0.175,0.138 and 0.127 during 2012 ,
2013,2014,2015 and 2016.
2. The gross profit ratio of SBI is in fluctuation manner. It decreased in the current year
compared with the previous year from 13.89% to 4.81%. The gross profit ratio of HDFC
is also in fluctuation manner. It decreased in the current year compared with the
previous year from 0.172% to 0.108%.
3. The leverage ratio is maximum in the year 2014 and minimum in the year 2012. In 2014
the levarage ratio is very high is not a good indicater of sbi. The leverag ratio is
maximum in the year 2012 and minimum in the year 2016. In 2012 the levrage ratio is
very high is not a good indicater of hdfc.

Comparative study of two banks

1. The comparative study of table no .1 in 2016 the current assets of SBI are better than
the current assets of H.D.F.C. and in 2016 the current liabilities of H.D.F.C is better than
the SBI.IN 2015 the current assets of SBI has a better than the current assets of H.D.F.C
and current liabilities of H.D.F.C is better than the SBI. In overall the current position of
SBI is good.
2. The comparative study of table no .2 in 2016 the liquid assets and current liabilities of
H.D.F.C is better than the liquid assets and current liabilities of SBI. In 2015 the liquid
assets and current liabilities of H.D.F.C has a better than the SBI. In overall the current
position of HDFC is good.
3. The comparative study of table no .3 in 2016 the gross profit and sales of SBI is better
than the H.D.F.C. and also In 2015 gross profit and sales of SBI has a better than the
HDFC. In overall the current position of SBI is good.

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Bibliography
 https://www.edupristine.com/blog/ratio-analysis-introduction
 Ratio analysis by P. Murlidhar.
 Financial ratio analysis by Chander Shekhar
 Financial statement analysis by Martin. S. Fridson.

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