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Analysis of Deposits and Advances of Selected Private Sector Commercial

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International Journal of Management and Social Sciences Research (IJMSSR)
Volume 3, No. 3, March 2014
Analysis of Deposits and Advances of Selected Private Sector
Commercial Banks
M. Anbalagan, Head, Dept. of Commerce, Sri Kaliswari College, Sivakasi
Dr. M. Selvakumar, Assistant Professor in PG Commerce, Ayya Nadar Janaki Ammal College, Sivakasi
ABSTRACT
The resilience of the banking sector was marked by
improvement in the capital base, asset quality and
profitability. Even though the Public Sector Commercial
Banks (PSCBs) have the maximum share of banking
industry, the role of Private Sector Commercial Banks
(Pvt.SCBs) is very important in the economic development
of India, particularly Tamil Nadu. This study covers a
period of 11 years from 2001-02 to 2011-12. In order to
know the significant difference in the growth rates of
deposits and advances of various TNBPvt.SCBs, Kruskal-
Wallis Test is used.
INTRODUCTION
The Indian banking has come a long way from being a
sleepy business institution to a highly proactive and
dynamic entity. This transformation has been largely
brought about by a large dose of liberalization and
economic reforms that allowed the banks to explore new
business avenues rather than generating revenues from
conventional streams (i.e., borrowing and lending). There
has been a particularly discernible improvement in banks’
operating efficiency in recent years owing to technology
up-gradation and staff restructuring. However, to sustain
the high and inclusive growth, there is a need to raise the
level of domestic savings and channel those savings into
investment. The resilience of the banking sector was
marked by improvement in the capital base, asset quality
and profitability. Even though the Public Sector
Commercial Banks (PSCBs) have the maximum share of
banking industry, the role of Private Sector Commercial
Banks (Pvt.SCBs) is very important in the economic
development of India, particularly Tamil Nadu.
STATEMENT OF THE PROBLEM
The PSCBs have reported a negative growth in its
profitability. It is mainly because of rising NPAs coupled
with pace of loan restructuring, which leads to higher
provisioning (2.75 per cent). Whereas, Pvt.SCBs have
reported a robust growth in their bottom line numbers and
supported the entire Banking Industry's profitability.
Stable asset quality and loan restructuring were the
primary reasons for the Private Banks’ superior
performance. Still the Pvt.SCBs have to face the
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ISSN: 2319-4421 10
competition with PSCBs and also among themselves. The
contribution of Pvt.SCBs to the economic development of
India is admirable, particularly in the areas of financial
literacy, technical up-gradation of operating,
entrepreneurial development, project financing and
reaching the low income people in urban areas too. As
Pvt.SCBs plays a predominant role in the overall growth
of a nation, a need is felt especially to analyze the
performance of deposits and advances of Pvt.SCBs.
REVIEW OF LITERATURE
Subbiah A. and Selvakumar M. (2005) in their article,
“Regional Rural Banks and Agricultural Credit”,
examined the various agricultural credits given by RRBs
in India. They observed that the RRBs were specially
designed financial institutions for financing agriculture.
The article concluded that the RRBs were suited to
monitor regional development by providing financial
assistance to the weaker sectors of the people.
Selvakumar M. (2006) in his Ph.D. Thesis on “Regional
Rural Banks- A Performance Review” analyzed deposit
mobilization and lending performance of RRBs in Tamil
Nadu. He also compares income, expenditure, profit,
deposit and advances of RRBs operating in Tamil Nadu
among themselves and with RRBs at National level.
A Ph.D. Thesis on “Financial Performance of Scheduled
Commercial Banks in India -CAMEL Analysis” submitted
by Ashok Kumar. M. (2009) examined how the financial
performance of SBI group, Nationalized banks group,
private banks group and foreign banks group have been
affected by the financial deregulation of the economy.
Selvakumar M. (2010) in his article, “Regional Rural
Banks (RRBs): Performance Analysis”, examined three
regional rural banks namely Pandian Grama Bank,
Adhiyaman Grama Bank and Vallalar Grama Bank. He
concluded that there was no significance difference in the
growth rates of deposits, advances, income expenditure
and profit of RRBs operating in Tamil Nadu. Also there
was no significance difference in the growth rates of
deposits, advances, income expenditure and profit of
RRBs in India and RRBs operating in Tamil Nadu.
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International Journal of Management and Social Sciences Research (IJMSSR)
Volume 3, No. 3, March 2014
Manicka Mahesh (2011) in his Ph.D. Thesis “Performance
Evaluation of Co-operative Urban Banks in Virudhunagar
District” examined Income, Expenditure and Profits of
Co-operative Urban Banks in Virudhunagar District and
also the factors that influence the net profit through
multiple regression analysis.
SCOPE OF THE STUDY
The Private Sector Commercial Banks (Pvt.SCBs)
includes 13 Old Pvt.SCBs (excluding Bharat Overseas
Bank Ltd. which was taken over by the Indian Overseas
Bank on April 1, 2007) and 07 New Pvt.SCBs as on 2012.
Out of the 13 Old Pvt.SCBs in India, four banks have their
registered office in Tamil Nadu having a population of
more than six crores and are playing an important role in
all spheres of economic activities. Though they have
branches at throughout the India, their origin is from
Tamil Nadu. They are City Union Bank Ltd., having its
registered office at Kumbakonam, Karur Vysya Bank Ltd.,
at Karur, Tamilnad Mercantile Bank Ltd., at Thoothukudi,
and Lakshmi Vilas Bank Ltd. at Karur. So the scope of
this study is limited to these four banks which are
collectively called as Tamil Nadu Based Private Sector
Commercial Banks (TNBPvt.SCBs) in India.
OBJECTIVE OF THE STUDY
• To make a comparative analysis of the deposits and
advances of TNBPvt.SCBs with one another.
HYPOTHESES OF THE STUDY
For the purpose of comparing the growth of deposits and
advances of various TNBPvt.SCBs, the following null
hypothesis was framed:
• There is no significant difference among the
demand deposits, savings bank deposits, term
deposits, total deposits, priority sector advances,
non- priority sector advances and total advances of
various TNBPvt.SCBs during the study period.
PERIOD OF STUDY
This study covers a period of 11 years from 2001-02 to
2011-12.
METHODOLOGY
This study is based upon the secondary data which have
been collected from the annual reports of the individual
bank, reports on trends and progress of banking in India,
websites and profile of banks 2011-12.
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PLAN OF ANALYSIS
In order to know the significant difference in the growth
rates of deposits and advances of various TNBPvt.SCBs,
Kruskal-Wallis Test is used.
KRUSKAL –WALLIS TEST
The Kruskal –Wallis Test is a non-parametric test. Non-
parametric test are distribution free, since these tests do
not depend on the shape of distribution. Non-parametric
tests are applicable to all types of data: qualitative
(nominal scale) data in rank form (ordinal scale) as well as
data that have been measured more precisely (interval or
ratio scale). Many non-parametric methods make it
possible to work with very small samples. Non-parametric
tests require less restrictive assumptions concerning the
level of data measurement.
Kruskal –Wallis Test can be used with ordinal data as well
as interval or ratio data. This test does not require the
assumptions of normality and equal variances. The
Kruskal –Wallis Test statistic, which is based on the sum
of ranks for each of the samples, can be computed as
follows:
Where k = Number of population groups
ni = Number of items in sample I
nT = Total number of items in all samples
Rj = Sum of the ranks for sample I
The Kruskal –Wallis Test is used when k• 3.
In order to compute the ‘W’ value for this study, ranks are
assigned to combined data from low to high. The lowest
value receives the rank of 1, whereas the highest value
receives the rank of 40. Tied growth rates are assigned
average rank values.
Kruskal and Wallis were able to show that under the null
hypothesis the populations are identical, the sampling
distribution of ‘w’ can be approximated by a χ 2 (chi-
square) distribution with k-1 degrees of freedom. This
approximation is generally acceptable if each of the
sample sizes is greater or equal to 5.
The calculated value of ‘W’ is compared with the table
value of chi-square (χ 2), at 5 per cent level of significance.
If the calculated value of ‘W’ is less than or equal to table
value of chi-square (χ 2), at 5 per cent level of significance
there is no significant difference in the deposits and
advances of TNBPvt.SCBs.
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International Journal of Management and Social Sciences Research (IJMSSR) ISSN: 2319-4421 12
Volume 3, No. 3, March 2014

COMPARISON OF DEMAND DEPOSITS OF VARIOUS TNBPvt.SCBs

For testing the null hypothesis, whether there is any statistically significant difference in the growth rate of demand
deposits among the TNBPvt.SCBs, the ‘W’ value was calculated.

TABLE 1
Ranking of Growth Rates of Demand Deposits of TNBPvt.SCBs

CUB KVB TMB LVB

Year Growth Growth Growth Growth
Rank Rank Rank Rank
Rate Rate Rate Rate
2002-03 10.69 17 13.17 25 01.32 07 22.08 32
2003-04 18.59 28 14.64 26 05.21 11 08.54 14
2004-05 11.69 21 20.19 29 17.92 27 04.15 09
2005-06 12.91 24 21.11 30 11.04 19 06.11 12
2006-07 75.07 40 29.14 35 10.76 18 11.72 22
2007-08 08.20 13 25.33 33 11.39 20 10.47 15
2008-09 11.97 23 (- 2.76) 04 03.49 08 (- 12.00) 02
2009-10 57.82 39 37.00 37 43.45 38 27.73 34
2010-11 (- 0.86) 06 22.03 31 04.98 10 32.91 36
2011-12 10.62 16 (- 0.96) 05 (- 06.06) 03 (-13.56) 01
227 255 161 177
Source: Calculated values from annual reports of individual bank

W = 12/1640 x (5152.9 + 6502.5+ 2592.1 + 3132.9) – 123

W = 4.17

COMPARISON OF SAVINGS BANK DEPOSITS OF VARIOUS TNBPvt.SCBs

For testing the null hypothesis, whether there is any statistically significant difference in the growth rate of savings bank
deposits among the TNBPvt.SCBs, the ‘W’ value was calculated.

TABLE 2
Ranking of Growth Rates of Savings Bank Deposits of TNBPvt.SCBs

CUB KVB TMB LVB

Year Growth Growth Growth Growth
Rank Rank Rank Rank
Rate Rate Rate Rate
2002-03 17.61 16 28.00 33 11.41 07 11.61 08
2003-04 24.24 28 31.86 36 20.53 20 25.65 31
2004-05 19.22 18 20.99 21 10.93 06 07.04 01
2005-06 23.37 26 28.70 34 21.83 22 16.92 15
2006-07 19.33 19 25.01 29 16.63 14 09.45 03
2007-08 27.25 32 23.01 24 15.98 12 09.82 05
2008-09 18.34 17 08.13 02 16.45 13 12.86 09
2009-10 34.48 38 37.36 39 33.48 37 37.92 40
2010-11 25.15 30 30.93 35 23.92 27 23.12 25
2011-12 22.75 23 12.92 10 14.49 11 09.55 04
247 263 169 141
Source: Calculated values from annual reports of individual bank

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International Journal of Management and Social Sciences Research (IJMSSR) ISSN: 2319-4421 13
Volume 3, No. 3, March 2014

W = 12/1640 x (6100.9 +6916.9 + 2856.1 + 1988.1) – 123

W = 7.70

COMPARISON OF TERM DEPOSITS OF VARIOUS TNBPvt.SCBs

For testing the null hypothesis, whether there is any statistically significant difference in the growth rate of term deposits
among the TNBPvt.SCBs, the ‘W’ value was calculated.
TABLE 3
Ranking of Growth Rates of Term Deposits of TNBPvt.SCBs

CUB KVB TMB LVB

Year Growth Growth Growth Growth
Rank Rank Rank Rank
Rate Rate Rate Rate
2002-03 18.24 16 23.28 24 10.82 09 10.19 07
2003-04 23.15 23 13.36 12 06.45 03 19.75 18
2004-05 06.89 04 10.57 08 07.93 05 06.22 02
2005-06 12.06 10 09.84 06 04.81 01 28.67 27
2006-07 31.23 34 21.93 21 16.52 13 17.32 15
2007-08 42.84 40 38.29 38 32.71 36 12.46 11
2008-09 30.99 33 26.32 26 29.54 31 39.19 39
2009-10 20.75 19 24.93 25 17.06 14 21.16 20
2010-11 29.24 30 28.70 28 19.68 17 21.97 22
2011-12 28.72 29 36.87 37 29.93 32 32.67 35
238 225 161 196
Source: Calculated values from annual reports of individual bank

W = 12/1640 x (5664.4 + 5062.5+ 2592.1 + 3841.6) – 123

W = 2.57

COMPARISON OF TOTAL DEPOSITS OF VARIOUS TNBPvt.SCBs

For testing the null hypothesis, whether there is any statistically significant difference in the growth rate of total deposits
among the TNBPvt.SCBs, the ‘W’ value was calculated.
TABLE 4
Ranking of Growth Rates of Total Deposits of TNBPvt.SCBs
CUB KVB TMB LVB
Year Growth Growth Growth Growth
Rank Rank Rank Rank
Rate Rate Rate Rate
2002-03 17.41 15 22.53 20 09.51 05 11.85 07
2003-04 22.84 21 15.42 12 07.83 03 18.96 17
2004-05 08.73 04 12.87 09 09.60 06 06.07 01
2005-06 13.65 11 13.56 10 07.79 02 24.04 25
2006-07 33.59 38 23.27 23 15.70 13 15.76 14
2007-08 36.72 40 34.36 39 27.42 32 11.93 08
2008-09 27.73 34 20.33 18 24.72 27 31.01 37
2009-10 25.32 28 27.62 33 21.67 19 23.29 24
2010-11 25.57 29 28.28 35 18.51 16 22.85 22
2011-12 26.53 30 29.89 36 24.05 26 26.59 31
250 235 149 186
Source: Calculated values from annual reports of individual bank

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International Journal of Management and Social Sciences Research (IJMSSR) ISSN: 2319-4421 14
Volume 3, No. 3, March 2014

W = 12/1640 x (6250 + 5522.5+ 2220.1 + 3459.6) – 123

W =4.70

COMPARISON OF PRIORITY SECTOR ADVANCES OF VARIOUS TNBPvt.SCBs

For testing the null hypothesis, whether there is any statistically significant difference in the growth rate of priority sector
advances among the TNBPvt.SCBs, the ‘W’ value was calculated.
TABLE 5
Ranking of Growth Rates of Priority Sector Advances of TNBPvt.SCBs

CUB KVB TMB LVB

Year Growth Growth Growth Growth
Rank Rank Rank Rank
Rate Rate Rate Rate
2002-03 38.76 40 24.57 19 13.72 06 10.41 03
2003-04 25.97 23 35.66 37 19.29 14 25.30 20
2004-05 34.75 35 24.16 17 30.41 30 24.17 18
2005-06 22.90 16 13.28 04 15.72 07 13.49 5
2006-07 28.41 28 25.88 22 31.41 32 27.49 25
2007-08 15.82 08 18.89 12 25.43 21 10.24 02
2008-09 17.90 11 19.05 13 16.22 9 07.53 01
2009-10 37.91 39 17.71 10 30.66 31 31.44 33
2010-11 35.92 38 26.39 24 27.74 26 34.91 36
2011-12 28.56 29 33.13 34 27.89 27 21.02 15
267 192 203 158
Source: Calculated values from annual reports of individual bank

W = 12/1640 x (7128.9 + 3686.4+ 4120.9 + 2496.4) – 123

W = 4.56
COMPARISON OF NON-PRIORITY SECTOR ADVANCES OF VARIOUS
TNBPvt.SCBs
For testing the null hypothesis, whether there is any statistically significant difference in the growth rate of non-priority
sector advances among the TNBPvt.SCBs, the ‘W’ value was calculated.
TABLE 6
Ranking of Growth Rates of Non-Priority Sector Advances of TNBPvt.SCBs

CUB KVB TMB LVB

Year Growth Growth Growth Growth
Rank Rank Rank Rank
Rate Rate Rate Rate
2002-03 10.28 07 42.43 37 5.69 03 14.25 11
2003-04 28.70 26 12.64 09 2.63 01 10.45 08
2004-05 27.23 20 9.23 06 19.15 13 7.39 05
2005-06 24.63 17 25.01 18 22.04 15 37.08 35
2006-07 32.08 29 27.25 21 27.76 22 19.39 14
2007-08 50.00 39 42.95 38 37.29 36 4.70 02
2008-09 27.81 23 6.14 04 28.92 27 53.92 40
2009-10 12.99 10 36.47 34 22.82 16 14.66 12
2010-11 35.17 33 34.73 31 31.41 28 25.85 19
2011-12 32.65 30 35.04 32 28.21 24 28.57 25
234 230 185 171
Source: Calculated values from annual reports of individual bank

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International Journal of Management and Social Sciences Research (IJMSSR) ISSN: 2319-4421 15
Volume 3, No. 3, March 2014

W = 12/1640 x (5475.6 + 5290+ 3422.5 + 2924.1) – 123

W = 2.21

COMPARISON OF TOTAL ADVANCES OF VARIOUS TNBPvt.SCBs

For testing the null hypothesis, whether there is any statistically significant difference in the growth rate of total advances
among the TNBPvt.SCBs, the ‘W’ value was calculated.

TABLE 7
Ranking of Growth Rates of Total Advances of TNBPvt.SCBs

CUB KVB TMB LVB

Year Growth Growth Growth Growth
Rank Rank Rank Rank
Rate Rate Rate Rate
2002-03 19.88 11 35.95 39 08.87 02 12.89 05
2003-04 27.63 24 20.30 13 09.53 03 15.59 08
2004-05 30.12 30 14.83 07 24.23 17 13.69 06
2005-06 26.66 21 20.25 12 19.04 09 27.40 23
2006-07 30.58 31 26.73 22 29.44 27 22.35 15
2007-08 36.28 40 33.82 35 31.74 33 06.81 01
2008-09 24.43 18 10.49 04 23.27 16 35.70 38
2009-10 21.05 14 29.66 28 26.11 20 19.89 10
2010-11 35.44 37 31.98 34 29.82 29 28.94 26
2011-12 31.14 32 34.44 36 28.07 25 25.87 19
258 230 181 151
Source: Calculated values from annual reports of individual bank

W = 12/1640 x (6656.4 + 5290+ 3276.1 + 2280.1) – 123

W = 5.07

FINDINGS
The results of Kruskal-Wallis Test are furnished as below.

Table value at
5% (9.48) and at 1% (9.21)
Variables Calculated value Result
Demand Deposits 4.17 Accepted
Savings Bank Deposits 7.70 Accepted
Term Deposits 2.57 Accepted
Total Deposits 4.70 Accepted
Priority Sector Advances 4.56 Accepted
Non-Priority Sector Advances 2.21 Accepted
Total Advances 5.07 Accepted

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 International Journal of Management and Social Sciences Research (IJMSSR)
Volume 3, No. 3, March 2014
CONCLUSION
There is no significant difference among the demand
deposits, savings bank deposits, term deposits, total
deposits, priority sector advances, non-priority sector
advances and total advances of various TNBPvt.SCBs
both at 1 per cent and 5 per cent significance levels.
REFERENCE
[1] Subbiah A. and Selvakumar M., “Regional Rural
Banks and Agricultural Credit”, Krukshetra, New
Delhi, pp.45-47, December 2005.
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ISSN: 2319-4421 16
[2] Selvakumar M., “Regional Rural Banks- A
Performance Review” Ph.D. Thesis submitted to
Madurai Kamaraj University, 2006.
[3] Ashok Kumar M., “Financial Performance of
Scheduled Commercial Banks in India -CAMEL
Analysis” Ph.D Thesis, Bharathiar University,
Coimbatore, 2009.
[4] Selvakumar M., “Regional Rural Banks (RRBs):
Performance Analysis”, Indian Journal of Finance,
pp.3-19, August, 2010.
[5] • Manicka Mahesh N., “Performance Evaluation of
Co-operative Urban Banks in Virudhunagar
District” Ph.D. Thesis submitted to Madurai
Kamaraj University, July 2011.
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