International Journal of Management (IJM)

Volume 11, Issue 10, October 2020, pp. 636-644, Article ID: IJM_11_10_060
Available online at http://www.iaeme.com/IJM/issues.asp?JType=IJM&VType=11&IType=10
ISSN Print: 0976-6502 and ISSN Online: 0976-6510
DOI: 10.34218/IJM.11.10.2020.060

© IAEME Publication Scopus Indexed

A COMPARATIVE STUDY OF THE SELECTED

TOP INDIAN PUBLIC AND PRIVATE BANKS
Nikhil Kumar Rai
Symbiosis Institute of Management Studies,
Symbiosis International (Deemed University), Pune, India

ABSTRACT
This paper is written for the purpose of comparing the difference between private
and public banks by taking top Indian Public and private banks and using certain
parameters which are very valuable for a bank. We know the banking sector is any
country is the backbone of the economy. But in the case of country like India it’s the
soul. Just because the nature of Indian population and the economic condition they
heavily depend on banks to boast the economic activities. In this study top 3 banks
from both public and private sectors where taken as they are leaders in the banking
industry in terms of reach and data was extracted from the annual report from 2016 to
2020. Statistical techniques where used to interpret the data. This study revealed even
with the vast difference in resources how private banks are performing way better
then public banks. The study has done proper literature gap review and explored the
area which was not done before. This will very helpful for managers and researchers
to take a look at the whole sector as one and see and find out what fundamentally can
be done further in this area.
Key words: HDFC Bank, ICICI Bank, AXIS bank, SBI bank, IDBI bank, PNB bank,
mean, standard deviation, public sector banks, private sector bank
Cite this Article: Nikhil Kumar Rai, A Comparative Study of the Selected Top Indian
Public and Private Banks, International Journal of Management, 11(10), 2020,
pp. 636-644.
http://www.iaeme.com/IJM/issues.asp?JType=IJM&VType=11&IType=10

1. INTRODUCTION
Any nation greatness can be seen from the strength of how their banks are, as they are the soul
of any country. From the ancient times banking procedures have been done in informal
methods but they were done. In India the banking system actually has 3 phases. The first
phase was obviously the Pre-Independence Phase that is before 1947 which was generally
known for the vast number of banks preset in that time (around 600). The first bank which led
to the foundation of formal banking in India was Bank of Hindustan in Calcutta founded in
1770. This phase was saw presence of small banks and the high rate of failure due to lack of
trust of people in the banks. The second phase was mainly known for the nationalization of

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 A Comparative Study of the Selected Top Indian Public and Private Banks

banks as it was seen that banks where only helpful to the large corporations and there was
need of these banks for poor masses who were continuously exploited by the moneylenders in
their villages. The nationalization of banks resulted in improvement of efficiency in the
banking system as public trust in the banks increased. Small businesses started getting funded
which led to the economic growth and there was a penetration of banks in the rural India. The
third phase was liberalization of economic policies and some 10 private entities were given
license to operate as banks as even after the nationalization of banks the reach was still very
less. These steps where not just taken for profit purposes but to boast our economy as these
banks give credit to small businesses which creates jobs which creates demand for a better
lifestyle which grows are economy so in a way they can never fail. Credit was not something
which came into existence only in the modern banking system. Today due to the vastness of
the operations of the banks it is not as simple as the ancient times but just like any business
the soundness of any bank can be found out by how much money they are making. HDFC
Bank, ICICI Bank and AXIS bank are not only one of the biggest private banks in terms of
market capitalization and assets but also the reach they have in terms of the number of
branches they have is very high. SBI bank, IDBI bank and PNB bank are also the biggest
public banks in terms of market capitalization and number of branches they have which
translates into their reach.
HDFC bank: HDFC bank has been at the forefront of banking in India. It has been very
vocal about technological advancement in banking system. It has been increasing its reach to
have a larger base so it can have more money to lend. Its work for the environment is also not
going unnoticed. The amount of money they are investing for the betterment of society is an
example for a lots of corporate companies. The bank has always maintained high level of
moral principles and that has made sure it works as efficiently as possible. It was incorporated
in 1994 and as per 2020 annual report it has 5416 banking outlets.
ICICI bank: ICICI Bank was founded in 1994 in Vadodara. It also was started from the
period of 1990’s when government was on a mode to liberalize our economy which meant
private lenders now can work as banks. It was started to be at the forefront of banking in our
country. It has one of the highest number of ATM’s in the private sector banks and the
collaboration they are doing with other private companies are also contributing a lot to the
bank and the economy of our country. The bank has seen many ups and down and has been in
the news for all the bad reasons because of the last Head of the bank. Today it has more than
4882 branches and has one of the highest market capitalization in private sector banks.
AXIS bank: Axis bank was also one those banks which started after 1991 and really
contributed a lot to Indian economy. It began operations in 1994 and it was promoted by UTI
which was the best financial institution of the country. The bank has more than 4800 branches
and it is one of the largest private lender of the country. The bank is totally committed to
attaining the best practices present in the business with the strength of both retail and
corporate banking.
SBI bank: The oldest and most famous bank of India. It was founded in 1806 as bank of
Calcutta and the names keep changing during the course of time. With more than 2200
branches it is the largest bank in terms of market share and highest market capitalization in
public sector banks. It also commands a very high level of trust from the general public as it is
backed by the Government. But not only that the net assets of these banks are also very high
which can be attributed to age of the bank. The biggest competitor to any new age technology
is the network this bank has created. Not only that it employees one of the highest number of
man power in any public and private bank.
PNB bank: Punjab National Bank is perhaps the most established bank in India having a
virtual nearness in each significant focus of the nation. The Bank takes into account a wide

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 Nikhil Kumar Rai

assortment of crowd through range of administrations including corporate and individual

banking, modern money, horticultural fund and universal finance. The center focal point of
the bank is on holding and further improving ease stores, loaning to agribusiness and little and
medium endeavors and repositioning of auxiliaries and joint endeavors. It has more than
11437 branches all over India and one of the highest market capitalization when compared to
other public banks. It was in the news for a very long time for bad reasons but now with the
support of GOI its doing its level best to again work with high level of efficiency.
IDBI bank: IDBI Bank Ltd is today one of India’s biggest business Banks. The
administrations offered by the bank incorporates Retail banking: The organization gives a
wide scope of items and administrations like stores, credits, NRI administrations, demat,
annuity account, versatile banking, web banking, venture plans, for example, common
reserve, protection items, securities, debentures etc. Corporate banking: gives corporates
venture money, film fund, unfamiliar cash advance, working capital account, depository
items, etc. Agri business and microfinance: It gives fund to agri organizations as dairy
advances, ranch automation advances, financing for fisheries, poultry, piggery, stockroom
receipt fund, etc. SME: IDBI Bank likewise offers items and administrations to SME
segment. It is owned majorly by LIC which is entirely owned by the government of India that
is why we are considering IDBI in public sector for these studies.

2. REVIEW OF LITERATURE
P. Rajendran (2019) attempted to study the performance of HDFC which is the market
leader in banking sector in so many ways. The study was done for the period of 2015 to 2019
and found out that during this period the financial performance of the bank was strong during
this period of time.
Santosh Shah and Dhruv Sharma (2019) attempted to compare the NPA of SBI and
HDFC bank using their annual reports and the aim was to find out the impact these NPA’s has
on them. It concluded by stating the reasons why these NPA’s where bad and how much both
of these banks has been impacted by NPA’s.
K. Dinesh Kumar and G. Venugopal (2018) attempted to analyze the Indian banks by
using financial ratios and concluded that ICICI bank was a good performer on different
financial ratios and HDFC came in second. It also concluded that SBI performance is very
good when we take profitability ratios into account.
Murad Mohammad Galif Al-Kaseasbah and Abdel KarimSalimIssaAlbkour (2018)
from their study on SBI and ICICI tried to find out the financial performance of the banks and
concluded that both banks have recorded fluctuating trends and ICICI is not able to maintain
the increasing trends.
PriyankaJha (2017) attempted to analyze the financial performance of Punjab National
bank and ICICI in India. They found out that ICICI bank was performing better then PNB in
case of operational efficiency. It also lacked in other financial ratios which resulted in the
conclusion that ICICI is a better performing bank.
Vinoth Kumar and BhawnaMalhothra (2017), attempted to evaluate the financial
performance of private sector banks using CAMEL approach from the period of 2007 to 2017.
During the study it was found out that Axis bank is ranked first in the CAMEL analysis. The
second position went to ICICI bank followed by Kotak Mahindra bank and fourth position
was occupied by HDFC bank.
SuruchiSatsangiPrem Das Saini (2017) studied the financial performance of Kotak
Mahindra bank merger with ING Vysya bank. The study found out a higher growth rate for
Kotak Mahindra bank after the mergers and acquisition.

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 A Comparative Study of the Selected Top Indian Public and Private Banks

Pawan and Gorav (2016) discussed the financial health of ICICI and Axis bank by
comparing them with the help of financial ratio and found out that Axis bank is a better
performer from ICICI bank
Sanjib Kumar Pakira (2016) examines the growth rate of SBI and HDFC bank as both
are giants in terms of reach. This study found out that HDFC has performed much better than
SBI bank.
D.Jayakkodi (2015) studied the NPA’s of selected private and public banks and
compared the Net NPA’s of those selected private and public banks.
Gupta (2014) studied the financial performance of ICICI bank and concluded that the
bank should focus on controlling the banks NPA’s.

3. RESEARCH DESIGN
3.1. Data and Sample Selection
The data used in this study is secondary data taken from yearly report of the banks The
sample for study is the top three private bank in India according to market capitalization
which will be representing the private sector banks and top three public banks according to
market capitalization which will be representing the public sector banks
Represent Private banks
 HDFC bank
 ICICI bank
 AXIS bank
Represent Public banks
 SBI bank
 PNB bank
 IDBI bank
Interest earned: Interest earned is the sum paid to an element for loaning its cash or letting
another element utilize its assets. For a bigger scope, premium pay is the sum earned by a
financial specialist's cash that he puts in a speculation or venture. An extremely basic and
essential method of processing it is by duplicating the chief sum by the loan fee applied,
considering the quantity of months or years the cash is loaned. But in case of banks it’s the
major source of income as they have a lots money deposited with them so they can also lend
in the same way and as the lending increases the interest earned on that lending also increases
even if we keep the rates constant.
An asset (asset and asset of the bank) becomes non-performing resource (NPA) when it
stops to create pay for the bank. In the event that premium as well as portion of chief measure
of advance remain overdue for a time of over 90 days, of term advance or the record stay 'out
of order’ if there should arise an occurrence of overdraft/Cash Credit account or the bills
bought/limited such records will be named NPA.
Gross NPA: Gross NPA is the aggregate sum of exceptional NPAs in the borrowers
account, barring the intrigue receivable. According to RBI guideline, when the record is
named NPA intrigue can't be charged to the NPA record and allocates it as profit.
Accordingly, banks will record the premium receivable from the NPA account in a different
book and recoup the equivalent once the record is regularized by the borrower.
Net NPA: The Reserve Bank of India characterizes Net NPA as Gross NPA less (1) to (4)
the accompanying (1) Balance in Interest Suspense account + (2) DICGC/ECGC claims got

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 Nikhil Kumar Rai

and held pending alteration + (3) Part installment got and kept in anticipation account + (4)
Total provisions held.
Banks are needed to put aside a segment of their working profits as provisions. More
elevated level of NPAs will expand the measure of provision subsequently affecting the profit
of the bank. This will thusly antagonistically influence the Net Interest Margin (NIM) and
furthermore capital ampleness proportion of the bank. NPA recuperation prompts various
increases to the bank. Each Rupee recuperated includes sans cost assets to the bank. The
recuperated cash can be reused for additional loaning which improves the current procuring of
the bank. The working and net benefit of the bank would improve. The capital structure of the
bank would be reinforced. Recuperation in NPA accounts improves the proficiency and
benefit proportions of the bank and in this way improves Bank's appraising.
Net profit: Net profit speaks to the cash you have left over after costs are paid. It's
additionally normally alluded to as total compensation. Net productivity is a significant
marker for web based business and retail organizations to quantify, since increments in
income don't generally mean expanded gainfulness. Net profit discloses to you your actual
primary concern – how much cash you're in reality left with toward the day's end

3.2. Methodology
This study is based on secondary data taken from the annual reports and online websites. The
parameters used for comparison are the core part of any banking business. The study is done
for the 5-year period for the selected banks.

Limitations
 The study is only restricted to the last five years that is from 2016 to 2020.
 The study is completely dependent on the secondary data and its correctness will
highly depend on the data obtained.

4. OBJECTIVES OF THE STUDY

 To examine and compare the consolidated Interest earned of the selected Public and
Private banks.
 To examine and compare the consolidated Net profit of the selected Public and Private
banks.
 To study and compare the consolidated Gross and Net NPA’s of the selected Public
and Private banks.

5. ANALYSIS AND DISCUSSION

5.1. Interest Earned and Net Profit
Below is the table no. 1 containing the individual interest earned by the three selected banks
in the private sector. As we know for any bank the interest earned is the major part of its top
line and we can see from the below table HDFC bank constant increase interest shows that it’s
the market leader when it comes to private sector banks with almost same number of branches
it is able to generate double

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 A Comparative Study of the Selected Top Indian Public and Private Banks

Table 1 Private banks

Interest Earned(RS cr.)
2015-16 59293 41409 63161
2016-17 60162 45175 73272
2017-18 62162 46614 85287
2018-19 71981 56043 105160
2019-20 84835 63715 122189
Below is the table no. 2 containing the individual interest earned by the three selected
banks in the public sector. As we know for any bank the interest earned is the major part of its
top line and we can see from the below table SBI bank interest earned is even higher than any
other public bank. This clearly shows that it is the market leader when it comes to public
sector banks as its reach is also double compared to any other banks

Table 2 Public banks

Interest Earned(RS cr.)
2015-16 221,854.00 28,058 50803
2016-17 230,447.00 27,805 48058
2017-18 228,970.00 23,046 48724
2018-19 253,322.00 22,102 52147
2019-20 269,851.00 20,854 54918
Now below we have table no. 3 shows the consolidated data of the public and private
banks and when we have a close look we can see the growth rate of private banks has been
higher than public bank and in the last few years only it has grown 2-4 times then the growth
rate of public sector banks. From the table we can clearly see just the sheer volume of interest
earned by the public sector bank(mean=316191.80) is way higher than the private sector
bank(mean=208091). We can also see that the C.V for public banks are 5.60% whereas C.V
for private banks are 18.70%. From this what can be understood is there is no change in
public sector banks. Its growth potential is not met by the management as the number of
branches they are operating is 2-3 times the private sector banks.
Table 3
INTEREST
EARNED(RS cr.)
YEAR PUBLIC %CHANGE PRIVATE %CHANGE
2015-16 300715 163863
2016-17 306310 1.86 178609 8.99
2017-18 300740 (1.81) 194063 8.65
2018-19 327571 8.92 233284 20.15
2019-20 345623 5.51 270739 16.10
MEAN 316191.80 208091.60
S.D 17729.19 38926.90
C.V 5.60% 18.70%
Below is the table no. 4 which contains the individual Net profit of the selected private
banks. Over all it can be observed at the private banks have been profitable throughout the last
five years and even in that HDFC has been the most profitable private bank. HDFC’s growth
rate also is the best among all the other banks.

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 Nikhil Kumar Rai

Table 4
Net Profit (RS cr.)
2015-16 10946 8357 12817
2016-17 11340 3967 15287
2017-18 9099 464 18560
2018-19 5689 5047 22445
2019-20 11226 1878 27296
Below is the table no. 5 which contains the individual Net profit of the selected public
banks. It can be clearly seen that only SBI bank is profitable accept for one year in between
even after having such a high earnings from interest. This here clearly shows the bottom line
of the selected public banks of India.
Table 5

Net Profit(RS cr.)

2015-16 12,747 -3,623 -3663
2016-17 387 -5,069 901
2017-18 -4,176 -8,157 -12584
2018-19 2,602 -15,012 -10026
2019-20 18,176 -12,847 363

Below is the table no. 6 which contains the consolidated Net profits of the selected private
and public sector banks. It can be clearly seen that private banks have been making money
every year from the last five years whereas public banks have been losing money. Specially
for the last two years’ private banks have shown a very high amount of growth in their net
profits. Public sector banks are all over the place when it comes to their Net profits. So much
instability is not good for banks which has so much reach to the rural parts of the country.
Table 6
NET PROFIT (RS cr.)
YEAR PUBLIC %CHANGE PRIVATE %CHANGE
2015-16 5461 32120
2016-17 -3781 (169.23) 30594 (4.75)
2017-18 -24917 (559.00) 28123 (8.07)
2018-19 -22436 9.95 33181 17.98
2019-20 5692 125.37 40400 21.75
MEAN -7996.20 20449.20
S.D 13274.43 2804.83
C.V 166.00% 13.71%

5.2. Gross NPA and Net NPA

Below is the table no. 7 which contains the consolidated gross NPA’s of public banks and
private banks and consolidated net NPA’s of public and private banks. We can clearly see the
huge non-performing assets not only on the balance sheet of public banks but also private
banks. From here we can understand why even after earning so much of interest as earnings
why public banks where making so much of loses. But from table no. 7 and table no. 6 we can
clearly see these NPA’s are way more than the profits these banks are making and through
this we can see how severe the problem is and more then private banks it’s a problem for
public banks because the mean for net NPA of public banks are more than twice that of

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 A Comparative Study of the Selected Top Indian Public and Private Banks

private sector banks. Only good thing which we can observe is Gross NPA’s in case of private
sector banks has been reducing which might be some sign of relief.

Table 7
GROSS NPA(Rs cr.) NET NPA(Rs cr.)
YEAR PUBLIC BANKS PRIVATE PUBLIC BANKS PRIVATE BANKS
BANKS
20215-16 178865.80 36700 105872.02 16805
20216-17 212464.99 69324 116184.38 35685
20217-18 365635.46 96094 188203.70 47016
20218-19 301252.60 86689 703821.40 35014
20219-20 269841.85 83711 84528.30 34267
MEAN 265612.14 74503.60 239721.96 33757.40
S.D 65791.10 20762.21 234650.73 9682.24
C.V 24.76% 27.86% 97.88% 28.68%

6. FINDINGS
 The following are the findings of the above study
 Public sector banks are very high penetration compared to private sectors banks
because of which they are able to earn that much interest income.
 Public sector banks are loss making where as private sector banks are profitable.
 Both public and private sector banks are suffering with a severe problem of NPA
 Private sector banks are in a much better position than public sector banks in case of
NPA

7. CONCLUSION
The present study concludes that public sector banks have the resources to be the biggest
banks in the whole country but due the so much bad loans it is not able to perform up to its
potential. Most of these banks have been around for a very long time and they have a market
penetration much higher than private sector banks. Private sector banks are not as old as
public sector banks, even their penetration is not up to the mark still the amount of profits
they are able to generate indicates how much quality work is going the operation of these
banks. Public sector banks are making more two times the interest earnings which are the
major part of any banks earning but still they are not able to maintain any kind of profits
according to the last five years data from annual report. Obviously public sector banks do lend
a lot to the rural India but also to the corporate world. It is very necessary for both the sector
banks to lend to people or institution who can pay bank. In the study one thing which we can
observe is private sector NPA’s are decreasing every year and if this continues they will be
way stronger then the public sector banks. From this study we can clearly say that private
sector banks are highly efficient when compared to public sector banks and their performance
is getting better year by year in the last five years.

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