A comparative study on financial performance of selected Public and private sector banks
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A comparative study on financial performance of selected Public and private sector banks

Project period

12/11/2018 - 01/09/2019

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A comparative study on financial performance of selected Public and private sector banks
A comparative study on financial performance of selected Public and private sector banks

In this project, we analyze the performance of commercial banks in India during the period 2014 to 2018. Specifically, the project examines the behavior of profitability, cost of intermediation, efficiency, and soundness of the banking system for public and private sector Indian commercial banks. The empirical results show that competition in the Indian banking industry has intensified. While the net interest margin has improved, the cost of intermediation is rising and banks are responding to the increased costs with higher efficiency levels.

Banks form a fundamental component of the financial system and are also active players in financial markets. An efficient banking system capable of mobilizing the savings and channeling them to productive purposes is essential for the development of any economy. The objective of the study is to analyze and compare the overall financial performance analysis of selected public and private sector banks in India. The study is based on secondary data that has been collected from annual reports of the respective banks and Reserve Bank of India website. This research study covers five years i.e. from the financial year 2011-2012 to 2015-2016. A quota sample method is used to select ten banks i.e. five from the public sector and five from the private sector has been selected and the criteria are based on highest market capitalization generated by banks during 2015-2016. T-test, mean and graphs are used to analyze the data. Although there was an increase in profitability for both sector banks the rate of growth is higher for private sector banks. Public sector banks are lagging in many financial parameters and they are facing many challenges also. It is concluded that Public sector banks must redefine their strategies by considering their strengths and weakness and the type of market they are operating.

Why: Problem statement

Banks are the backbone of every economy. Banks must remain healthy financially. Otherwise, a financial crisis can hit a country leading to recession like the US in 2008. This is especially true for developing countries like India. The banks are the lifelines of the economy and play a catalytic role in activating and sustaining economic growth, especially, in developing countries.

Banks in India face different kinds of problems, which have affected their profitability and financial stability.

How: Solution description

Commercial banks have to overcome their problems in terms of profitability and financial stability. Nowadays, there are so many banks in India and they want to capture customers to show their strength. But they want to keep eye on their profitability and financial stability for running their business as well as to develop the Indian economy. 

Solution the above problems are,

  • Know your customer
  • Keep eye on changing interest rate to generate the profit
  • Know the source for repaying the loan
  • Reduce their cost and maximize their profit in financial inclusion
  • Reduce their NPA 

How is it different from competition

We have taken both public and private sector banks by simple random sampling instead of not going for the top-performing banking companies. We have taken the necessary financial ratios for the development of banks in the future. We have taken the period of last 5 years and it also includes effects such as demonetization and GST by the Central Government.

Who are your customers

  • Investing people who want to invest their money in the stock market by stock market analyst. (particularly in the banking sector)
  • Bank's customer who deposit their money in banks.
  • Both public and private sector banks.
  • Small Finance institutions.

Project Phases and Schedule

Phase 1 - Collecting the data

Phase 2 - Finding the financial ratios

Phase 3 - Data analysis

Phase 4 - Graphs to compare the financial ratios over the time period

Phase 5 - Suggestions to improve their performance( Comercial Banks)

Resources Required

  • CNBC’s moneycontrol.com website for collecting the data
  • Financial ratios
  • Microsoft Excel

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