PUBLIC SECTOR v/s

PRIVATE SECTOR BANKS

INTRODUCTION:Banking Sector plays an important role in economic development of a country.Banks mobilize the savings of community into productive channels.The banking system of India is featured by a large network of bank branches, serving many kinds of financial services of the people. The State Bank of India is one of the leading bank of public sector in India. ICICI Bank is second largest and leading bank of private sector in India.

RBI : The Reserve Bank of India is India's Central Banking Institution, under which every transaction is monitored. It’s foremost role is to regulate the issue of Bank Notes and, keeping of reserves with a view to securing the monetary stability in India. It is the Bank to banks. All commercial banks i.e. Public sector and Private sector banks operate under RBI.

PUBLIC SECTOR BANKS: The major part of stake or equity is held by the government. The government controls the bank. The main motive is the benefit of the people and providing

services. The decisions are generally in the interest of the public. They provide services to all sections of the society.

PRIVATE SECTOR BANKS: The greater part of stake or equity lies in the hands of

private shareholders. The interest rates of private banks are generally slight costly

as compared to public sector banks. They are known for better customer services and investment

opportunities. A private bank mainly focuses on short term interest.

Public v/s PrivatePARAMETER PRIVATE SECTOR

BANKSPUBLIC SECTOR BANKS

Processing FeePaper work, efficiency and turnaround timeInterest rates fluctuationPrepayment charges/period/amount

Comparison of products & services in both the sectors(1)

• SBIWomen: SuperShakti Account Stree Shakti Tractor Loan (launched

on 12th June, 2014) Stree Shakti Scheme-Loans to Women

Entrepreneur

Children:Pehla Kadam(2015) Pehli Udaan(2015)

• ICICIWomen: Advantage Women

Savings Account Women's Debit Card

Children: Young Star (Minor Under Guardianship Account) Smart Star (Minor Self Operated Account)Bank@Campus

Child Education Plan

Comparison of products & services in both the sectors(2)

• SBISenior Citizens: SBI Reverse

mortgage loan

NRI: NRE Savings Bank Account. NRI-Car Loan Schemes. NRI home Loans

• ICICISenior Citizens: Life Plus

Senior Citizens AccountSenior Citizens Savings

Scheme, 2004Senior Citizen Savings AccountNRI: NRE (Non–Resident

External) Fixed Deposit Account

Comparison of products & services in both the sectors(3)

• SBIAgriculture:Agriculture banking.Multipurpose agri-gold loan.Special campaigns with

attractive concessions.

• ICICIFarmer FinanceMicro BankingTractor loan

Domain wise Analysis(1)

• Women: SBI focused more on rural women and women who wanted to

start new ventures. It also gives 2 free accounts for the kids.ICICI provides services that would fascinate the women in higher class by providing them discounts on various goods and services and attracting them by providing them good features for the ease of shopping.Not more focused on rural women development.

Domain wise Analysis(2)

• Children:Both the kinds of banks have same kinds of products and services:Both have same two kind of accounts:

Joint with a guardianThat can be run independentlyAlso both the banks have facilities for student loans.

• When we went to SBI for survey we were also told that there are awards for students in various institutions and that also includes scholarship facilities according to the t&c.

Domain wise Analysis(3)

• SME:Here is where a private sector can prove to be better than public, There isn’t much difference between the products given by both of them . ICICI has better services that have been proven to be very helpful to the new entrepreneurs to start a new venture rather then SBI. THE SME DIALOUGE and SME TOOLKIT are two services that have made a difference by their success in guiding new entrepreneurs by various activities.

Domain wise Analysis(4)

• Senior CitizensWhile finding the products for both, they were similar up to a great extent but when we personally went to the banks we found that ICICI provided better services for gave more privileges to the senior citizen. Eg. There is a separate desk for them, they don’t have to wait in the queue, on the other hand there is a common token system for all.

Domain wise Analysis(5)

• AgricultureHere is where the private sector actually fails. Though both the banks provide as much as loans/ services for farmers, SBI works not just for profit making but for the upliftment of poor farmers. For eg. Both the banks provide loans on tractors but SBI provides that loans to farmer even if he has less then 2 acres of land where as icici doesn’t!

FINANCIAL ANALYSIS

Operating Profit (in crores) Advances (in crores) Reserves and Surplus (in crores) Total Deposits (in crores) No. of Employees

No. of domestic branches Interest Income to Total Income (%) Interest Expenses to Total Income (%) Net Interest Income Total Income (in crores)

Considering the following parameters, comparison between ICICI and SBI with the figures (data) for the different years:

The profit earned from a firm’s normal core business operations. This value does not include any profit earned from the firm’s investments (such as earnings from firms in which the company has partial interest) and the effects of interest and taxes.

Operating Profit

Figure 1 - Operating Profit (in crores)

Advances are the credit facility granted by the bank. In other words it is the amount borrowed by a person from the Bank. It is also known as Credit granted where the money is distributed and recovered.

Advances

Figure 2 – Advances (in crores)

Figure 3 – Reserves and Surplus (in crores)

Figure 4 – Total Deposits (in crores)

Figure 5 – No. of domestic branches

Figure 6 - No of Employees

Interest Income to Total Income shows the proportionate contribution of interest income in total income. Banks lend money in the form of loans and advances to the borrowers and receive interest on it. This receipt of interest is called interest income.

Interest Income to Total Income

Figure 7– Interest Income to Total Income

Interest Expenses to Total Expenses reveals the expenses incurred on interest in proportion to total expenses. Banks accepts deposits from savers and pay interest on these accounts. This payment of interest is known as interest expenses. Total expenses include the amount spent in the form of staff expenses, interest expenses, overhead expenses and other operating expenses etc.

Interest Expenses to Total Expenses

Figure 8– Interest Expenses to Total Expenses

Interest is both an expense and a revenue stream.It is the difference between interest earned and interest paid, and is commonly tracked by banks and other institutions that lend money.

Net Interest Income

Figure 9 - Net Interest Income (in crores)

The total income indicates the rupee value of the income earned during a period. The higher value of total income represents the efficiency and good performance. Total income includes interest income, non-interest income and operating income

Total Income

Figure 10 – Total Income

The share of interest expenses in total expenses higher in ICICI (63.36 %) as compare to SBI (59.99 %) and the proportion of interest income to total income was higher in case of SBI(84.49 % ) as compared to ICICI (78.84%), which shows that people prefer ICICI to invest their savings and SBI to take loans & advances.

Also, through higher profit we can conclude that ICICI has shown comparatively better operational efficiency than SBI.

Deposits in SBI were continuously increased. However deposits in ICICI were decreased (with a declining trend) till 2009-10 but these were increased in the subsequent years. In case of SBI Advances were continuously increased (with a decreasing trend) with the combined growth rate of (108.16 %),

ICICI has suffered with funds or have avoided providing advances through 2007-08 to 2009-10, but now we can see that the bank has recovered.

Findings and Conclusions

Hence, on the basis of the above study or analysis banking customer has more trust on the public sector banks as compared to private sector banks but through our primary research we have also found that ICICI is trying to compete with SBI. ICICI has won back to back awards for the best bank in new technological advancements.

Lastly, apart from the analysis interpreted from the figures (real data), we have known that RBI has a norm for all the banks. According to this norm for every 4 branches opened by a Bank, one branch has to be a Rural Branch. This indicates that RBI has guided even the private banks to take up the responsibility of overall development and welfare of the economy.

Findings and Conclusions

ACKNOWLEDGEMENT• SBI Bank Manager, Mr. Nilesh Kathad

(Branch – opposite Gujarat University)• ICICI Assistant Manager, Shrikanth Eswarappa

(Branch – JMC House)

REFERENCESData has been found through the help of the following sites and primary research: https://www.icicicareers.com/icici_career/home.aspx?X http://www.icicibank.com/aboutus/invest-relations.page? http://www.icicibank.com/aboutus/annual.page? http://www.icicibank.com/aboutus/qfr.page?#toptitle https://www.sbi.co.in/portal/documents/44589/6136037/Final+ANALYST+PPT

+Q3FY15.pdf/fec74707-0060-40f4-82c1-854a07591539 http://www.icicibank.com/interest-rates.page? https://www.sbi.co.in/portal/web/investor-relations/investor-relations https://www.sbi.co.in/portal/web/investor-relations/results

ALLOCATION OF WORKo Primary Research

SBI : Miloni, Mayank, Nihar ICICI : Manthan, Mohana,

Netrao Secondary Research

SBI : Nidhi ICICI : Miloni RBI and Public and Private:

Nihar, Manthan

o Analysis and Graphs: Mayank, Mohana, Netra

TEAM MEMBERS

• MANTHAN SHAH 131025 • MAYANK JOBANPUTRA 131026 • MILONI MEHTA 131027• MOHANA SARAF 131028• NETRA PATHAK 131029• NIDHI MEHTA 131030• NIHAR MEHTA 131031