PERFORMANCE ANALYSIS OF NEW GENERATION

INDIAN BANKS FOR THE FIRST TWO DECADES OF

MILLENNIAL ERA

Abstract of the
Thesis Submitted to the
ARKA JAIN University
For the award of the degree

Of

DOCTOR OF PHILOSOPHY
in COMMERCE & MANAGEMENT

by
Priya Raman

Under the Guidance of

Prof. (Dr.) Angad Tiwary

DEPARTMENT OF COMMERCE & MANAGEMENT

ARKA JAIN UNIVERSITY,
JHARKHAND

2022
 Table of Contents

[Link] CONTENTS PAGE No.

1. Introduction 1-11
2. Review of Literature 12-16
3. Research Methodology 17-22
4. Data Analysis & Interpretation 23-62
5. Conclusion 63-70
 CHAPTER I

INTRODUCTION-

Finance is the lifeblood of a business similarly Financial Institutions are considered as

the heart of an economy and its people. These Institutions help the economy to
evolve, innovate and revive various sectors .Their primary existence ensures that
individual and economic needs expectations and dreams are translated .With the help
of these Institutions its easier for the individuals and corporate bodies to give their
dreams a platform to transform them into reality. To facilitate this process these
institutions have ensured rigid control yet be approachable for the general public.

A Bank is demarcated as a financial intermediary that takes in deposits from the

general public and maneuvers these deposits into constructive lending activities, either
directly to the general public or through the capital market1 .A Bank acts as a bridge
to supplement capital deficit with surplus where required . Financial Institutions
encourage the convention of savings and also as a link between the lenders and
depositors . Banks are a regulatory body which allows the customers free acceptance
of deposit and withdrawal of funds when required. These Institutions accepts deposits
from Individuals and corporate bodies who are in need of them.

Financial sector is the most influential sector that effects the performance of the other
sectors in the economy. A repellent Financial sector becomes to be disastrous for the
economy and it dislocates the activities of other sectors as well. Consequently an
economy requires an effectual and proficient financial intermediary that will ensure
consistent and
constructive allotment of resources in all sectors of the economy. Hence it can be
concluded that the effectivity and productivity of an economy are positively correlated
with the outcome of the financial sector. It becomes mandatory for the Financial
Institutions to be regulated in an efficient manner to ensure the universal progression
of the economy. To counter the imbalances of the financial sector and its volatile
nature it has become utmost important that these financial institutions are highly
monitored by the relevant regulatory bodies across the globe. Numerous guidelines
and instructions are laid down to ensure the interest of the stakeholders ,ensure
financial steadiness and advancement of the economy is safeguarded.
Being an integral part of the functioning of an economy Banking sector plays a crucial
role in the progression of the country. The progression of the economy and its people
are directly correlated with the development of the banking sector. This specific sector
acts as a fuel to the agricultural ,industrial ,trade and service industries. The system
inspires the need to inculcate the habit of saving and to ensure sufficient funds are
available for the people in need.

ROLE & CONTRIBUTIONS OF INDIAN BANKING SYSTEM:

The structure of Indian Banking system comprises of 12 Public sector ,22 private
sector, 44 foreign and 56 regional banks in our country5.
Banks are primarily classified into scheduled and non-scheduled banks. The
scheduled banks are then further branched into state co-operative and commercial
banks, whereas the non-scheduled banks are divided into primary credit banks, central
co-operatives, and commercial banks.

INCREASING FINANCIAL GROWTH

The Indian banking system is at a crossroads. Real estate buyers were protected by
improving the visibility of real estate transactions. Introduction of a unique
identification number system that made it easier for government transfers. This has
greatly benefited the poor. Development of Bankruptcy & Insolvency code also
played a very important role. These are acceptable developments. However, the
financial sector faces many challenges. Despite the signs that commercial banks are
making progress in eliminating non-performing loans, there is still much work to be
done. State banks confiscate about 70 percent of assets in the national banking sector.
This difficult involvement of state-owned enterprises disrupts markets, making it
difficult for India to address the financial gap in key development sectors such as
infrastructure, small and medium enterprises and housing. Non-bank financial
companies, sometimes called shadow banks, have emerged as an important new
source of debt for businesses and consumers. However their growth has also led to
interactions with the mainstream banking sector which poses new risks. The financial
sector is tackling these issues at a time when it is a challenge for the global economy.
Global growth is slower between slower investments and weaker trade. Like many
countries, the Indian economy is facing challenges, with weakening consumption and
declining investment. Globally, bond yields have plummeted in a low or negative
position for a few high-yield bond producers, benefiting a relatively small group but
leaving the productive investment required for broad-based broad- based growth,
including in India. This creates a difficult background for change. At the same time, it
emphasizes the need for decisive action to allow for rapid growth. The chance is too
great. Faced with the current challenges, India has the potential to build the world's
largest domestic banking industry. The rapid growth of private sector debt will
directly add to GDP, jobs and average income. The 2017 Economic Survey was
presented to parliament today by the Minister of Finance and Trade and Industry
Affairs, Nirmala Sitharaman. The survey highlights that India has a $ 5 billion
economy, the big banks in the public sector must function properly. The economy
wants PSU banks to do their best and support economic growth instead of
backtracking on borrowing which has a negative impact on growth and prosperity.
India should have at least 6 of the top 100 banks in the world than the current largest
PSU Bank which is the State Bank of India which is the 55th largest bank in the
world. The survey reveals whether Indian banks were equally large in size in relation
to the size of the Indian economy. Studies have shown that more than Rs. 4,30,000
crore of taxpayers' money is invested as government equity in state-owned
enterprises. In 2017, every rupees of taxpayers invested in PSU banks on average lost
23 payments requiring urgent attention.

The key to a successful banking system are;

• Implementing favorable demographics
• Modernization of digital infrastructure including JAM & PMJDY
• Uniform Indirect GST
The survey believes that India's growth path depends on how quickly these growth
bases are implemented using a well-developed financial system. In developing
countries, state-owned enterprises typically include fewer than a large portion of the
market share: close to 20 percent compared to 70 percent. The financial sector here
produces a lower level of debt compared to other countries. India's credit-to-GDP
ratio is 51 percent. That’s compared to 136 percent in Malaysia and 70 percent in
Brazil. This trend is compounded by the fact that India's total savings rate, which
accounts for about 30 percent of GDP, is in line with other countries. Saving is
enough, but the system is not using it properly. To achieve the goal of building a $ 5
billion economy, debt must grow at a faster rate while maintaining good credit quality
and avoiding taking risks.

INCLUDING THE PRIVATE & FOREGIN SECTOR

The extra debt will help meet India's needs in areas such as housing, SMEs and
infrastructure. India’s annual infrastructure finance gap is expected to be between 0.7
percent of GDP by 2035, more than double the global average of 0.3 percent.
Successful debt growth can benefit the poor. Hundreds of millions of Indians, as well
as millions of businesses and entrepreneurs, work in the informal economy, with
limited access to financial services. Many of them can successfully use credit to build
a business or buy motorcycles to get to work. Knowledge of other emerging markets
and developing countries provides valuable lessons. In the 1980s and 1990s, a wave
of developing countries moved to free up their financial sectors. Central and eastern
European countries traded large portions of their financial systems in the early 1990's
as they traveled to restructure their previously planned economies. In Latin America,
countries including Mexico released their banking systems following a debt crisis in
the 1980's. Most, but not all, financial freedoms have been successful. One lesson we
can learn: it is important to have strong, independent authorities to control change.
International experience also suggests that it is important to make changes in times of
power, when the conditions of a major economy are equal and the nation is at a strong
economic and financial level. In this context, we see India's recent efforts to
strengthen its financial system. The Reserve Bank of India has worked hard to
monitor the quality of its assets. The government's corporate banking system is an
opportunity to strengthen governance, oversight, efficiency and risk management. We
hope that these measures will form the basis of a comprehensive strategy to reduce the
role of the public sector in the financial system. The combination of injecting private
investors into private banks and full private practice will enhance the sector's ability to
support credit, facilitate effective financial interventions, and will reduce ethical risks
and financial exposure. Gradually reversing the legal requirement of state-owned
banks to provide for operating expenses, as well as important industry lending policy,
may also be helpful. These policies end up doing more to distort markets than to
expand. India is in a good position to take advantage of the latest developments in
financial technology. India has already established a good foundation for promoting
Fintech, which includes the “control sandbox” set up by the RBI, with the help of the
World Bank Group. Fintech's top three deals in Asia last year were based in India, and
80 percent of Indians have bank accounts. India is in a good position to share the
lessons learned with other countries. India can also continue to enter into its trading
spirit and allow the private sector to continue to innovate in the region, for example in
the rental housing market.
DEVELOPING CAPITAL MARKETS
India's major markets can play a key role in helping the country achieve its economic
goals. Equity market capitalization is over $ 2.2 trillion, up six percent in 2017-9.
However, the credit market remains at an early stage of development. The credit
market remains largely dependent on government securities, while the business bond
market is dominated by high-profile financiers and the public sector. The issuance of
business bonds amounts to about 3.94 percent of GDP, much lower than other
emerging markets. Corporate bond revenues increased from about $ 52 billion in
fiscal 2012-3 to $ 101 billion in fiscal 2016-7. Since then, business bond issuance has
remained relatively low. Deepening the Indian financial markets can go hand in hand
with bank financing to encourage growth, help create new market areas and attract
interest to local and foreign institutional investors. Deep financial markets can be an
important way to increase long-term financial flows, especially considering the
inconsistencies in the financial liability sector in the banking sector. Globally, long-
term financing is increasingly focused on institutional investors such as pension funds,
insurance companies, joint funds and private equity funds. We urge India to review its
guidelines for local institutional investors, so that additional resources can flow into
long-term investments. Another useful step would be to adjust the funding models for
your financial development institutions to increase market-based support. As financial
markets deepen, new infrastructure financial tools can attract more institutional
investors. Globally, pension funds and other institutional investors have an estimated
net worth of $ 136 trillion. Many of these funds would be able to invest more in India
if they had a deep money market and the right combination of market tools.

EMPOWERING THE NON BANKING FINANCING COMPANIES:

The growth of non-bank financing companies (NBFCs) has played a key role in
transferring debt to markets that are less supportive of new products. IFC, an
independent arm of the World Bank Group, has been supporting the NBFC sector and
assisting underperforming market credit channels. NBFCs have been a useful
complement to commercial banks, helping to meet national financial needs for
infrastructure, and between entrepreneurs and consumers. The sector has recently
experienced inflation, which has led to financial problems among some NBFCs. Most
of these non-bank banks are dealing with conflicts of interest, short-term borrowing
and long-term borrowing. Mainly dependent on commercial banks and financing
market financing. Therefore, some banks have vulnerabilities within NBFCs.
Resolving this “fallen balance sheet” issue of weakness in NBFCs and related banks
will be an important step in strengthening India’s financial system and reviving
economic growth. The recent slowdown in the NBFC sector is an opportunity for
government and regulators to reconsider the role of these institutions in India’s
financial system. We can welcome the RBI's efforts to strengthen its regulatory and
oversight framework for the acquisition of all licensed financial institutions, including
all systematic NBFCs. Properly managed, NBFCs will play a key role in promoting
innovation in Fintech. That is why it is even more important for policy makers to
ensure that NBFCs are properly regulated and implemented as their role in the
financial system continues to emerge. The RBI has done a commendable job of
overseeing the growth of NBFCs. Going forward, we would recommend that the
authorities view the sector as a constructive, diversified combination of different types
of institutions with different business models and risk profiles. One should consider
using the same risk-based approach to directing NBFCs as you use banks, enforce
stricter rules and further institutional scrutiny, depending on the risks they present to
the financial system.

WORKING TOWARDS BUILING A STRONGER INDIA:

It is to emphasize the importance of a strong financial system in order to achieve
India's goal of becoming a $ 5 billion economy. Allowing more private sector
participation in the financial system, making it easier for funds to enter larger markets,
and effectively managing key NBFCs are all ways to develop the financial sector in a
way that could put India at a faster, more comprehensive growth. . An improved
financial plan is essential to delivery. In recent decades, India has made remarkable
progress in building a financial sector that meets its unique needs. However in a world
where payments can be sent at the click of a button from a basic cell phone, it is
important for countries to have financial institutions that ensure stability while
providing deep, well-managed markets and fast enough to respond to the industry's
rapid innovation. At the World Bank Group, we are proud of our long-standing
cooperation with India. Our first project in India, which funded agricultural
machinery, took place in 1948, a year after the nation gained independence. Over the
years, our support has shifted from focusing on infrastructure and agriculture to
economic liberation and poverty reduction. In recent years, we have supported the
emergence of real estate finance and microfinance markets. Our financial experts are
available to liaise with government as it moves forward with changes in banking and
financial systems. As said earlier, it is important to design a system that meets the
unique profile of the Indian economy. Conclusion The Indian banking system consists
of 20 public sector banks, 22 private banks, 44 foreign banks, 44 local regional banks,
1,542 urban cooperative banks and 94,384 co-operative banks in addition to
institutions. of corporate loans. As of January 31, 2017, the total number of ATMs in
India has increased to 210,263 and is expected to increase to 407,000 by 20216. The
British at the time of the revolution, the subjugation of the state to form private banks
and now an increase in the number of foreign banks in India. So, Banking in India has
come a long way. The banking industry in India has also reached new heights and
changing times. The Indian banking system consists of 18 public sector banks, 22
private banks, 46 foreign banks, 53 rural banks, 1,542 urban cooperative banks and
94,384 co-operative banks as of September. 2017. During FY07-19, deposits grew to
CAGR 11.11% and reached $ 1.86 trillion by FY19. Deposit from Feb 2017, stood at
Rs 132.35 lakh crore (US $ 1,893.77 billion). The use of technology has brought
about a change in the way banks operate. However, the basic features of banking,
namely the trust and trust of the people in the institution, remain the same. Most banks
are still successful in maintaining the confidence of shareholders and other
stakeholders. However, with the fluctuations of the banking business it brings a new
kind of exposure to risk. In this paper attempts to identify common feelings,
 challenges and opportunities in the Indian banking industry. This article is divided
into three sections. The first part covers the introduction and general situation of the
Indian banking industry. The second section discusses the challenges and
opportunities facing the Indian banking industry. The third phase concludes that there
is an urgent need for greater emphasis on Indian banking product and marketing
strategies in order to achieve sustainable competition over intense competition from
national and international banks.

Challenges and Challenges Facing the Indian Banking

Industry
Among the signs of progress, the Indian banking industry has faced many challenges in
recent times. Few of them –

A. Bad Loans
At about Rs10 lakh crore, India's gross debt is larger than the total production of domestic
products in at least 137 countries. But so far, RBI's efforts to reduce Nutrition (NPAs) in the
banking sector have had little effect. The total share of NPAs in India could grow to 10.2% in
March 2018, up from 9.6% in March 2017, according to the FSR. In September 2016, the
total number of NPAs was 9.2% .Currently, they have hit the central banks, which are in
control of the Indian banking system. As of March 2017, the PSB's bad credit rating stands at
75% of its total value. These bad loans are squeezing banks' profits and financial positions,
threatening the lives of some of India's largest banks. In the report, the RBI warned that the
situation could worsen with any unexpected economic downturn.
B. Cyber threats
About 95% of India's transactions are paid in cash but with the advent of computers and
smartphones, with increasing internet access, Indians are taking digital channels for their
banking needs. Cybercrime crime will be a major threat as a result. FSR has called
cybercrime as the most dangerous area for the Indian banking sector. The RBI classifies bank
fraud as a transaction involving any fraud, negligence, misappropriation of funds, or
fraudulent documents.
C. Adequate Capital Sufficiency
One way a bank tries to ensure that it is safe from bad credit is to set aside money as a
'provision'. This money cannot be used for any other purpose including borrowing. As a
result, banks have a limited amount of money available for their various activities. Capital
Adequacy Ratio measures the value of a bank. If this is the case, the bank may have to
 borrow money or use lenders' money to lend. This money, however, is more risky and more
expensive than the bank itself.

D. Unusual Forex Disclosure

"Wild gyrations in the forex market have the potential to put a lot of pressure on the books of
Indian companies that have borrowed heavily abroad," Mundra said in a statement. This
stress can be affected their ability to pay off debt to Indian banks. As a result, the RBI wants
banks to ensure that lending companies do not expose themselves to unnecessary debt in
dollars.
E. Unused Assets
NPAs have been a major problem in the banking sector over the past few years and have had
a significant impact on bank lending. According to a study, total NPAs account for 12 percent
of total loan disbursements in the banking system. However, if restructured assets are
considered, the accounted assets account will be 10.9 percent of the total loan amount in the
system. According to the International Monetary Fund (IMF), about 37 percent of India's total
debt is at risk. India's largest bank, the State Bank of India (SBI), has reported a 67 percent
reduction in the combined interest rate of Rupees. 1259.49 crore. the third quarter of the
2015-16 financial year and a loan of Rs 20692 crore has not changed.
F. Reduced Profit
The banking sector recorded a decline in balance sheet growth for the fourth consecutive year
in 2015-16. Profits remained depressed as the return on goods (RoA) continued to be less
than 1 percent. In addition, although PSBs make up 72 percent of the bank's total assets, it has
a profit margin of only 42 percent of the total profit.
G. The Transfer Case
As a reduced benefit, this is also the bud of the growing NPAs in the system. By lowering
inflation and adjusting to inflation expectations, the RBI lowered the repo by 100 points
between January and September 2015. However, significant policy changes were not
reflected in lending rates as banks were unwilling to transfer profits. of low interest policy
state due to low availability of funds compared to the background of high NPAs.
H. Corruption
The previous scams of the Global Trust Bank (GBT) and Baroda Bank show how few
officials misused the freedom they had given and hid in secret to their advantage. These
scams have seriously damaged the reputation of these banks and as a result have been
profitable
 OBJECTIVE OF THE STUDY

• To analyze the impact of Financial parameters on the performance of New

Generation Banks
• To analyze the impact of Non Financial Parameters on the performance of New
Generation Banks
• To understand the correlation between the Financial and Non Financial Factors
effecting the performance of New Generation Banks
• To find out the most prominent Financial and Non Financial factors effecting the
performance of New generation banks
• To study and understand the customer’s perception about new generation banks.

HYPOTHESIS :

The study aims to conduct a research probe into the following:

H01- There is no Significant impact of Financial Parameters on the Performance of

New Generation Banks
Ho2- There is no Significant impact of Non Financial Parameters on the
Performance of New Generation Banks.
Ho3- There is no significant correlation of Financial & Non Financial Parameter
together on the Performance of New Generation Banks.

SCOPE OF THE STUDY

The study has considered 4 major New Generation Banks-HDFC Bank Ltd ,Axis
Bank Ltd ,Kotak Mahindra Bank Ltd & Yes Bank Ltd. The study has remained
engrossed in determining the essential factors that determine the Performance of a
New Generation Bank that necessarily does not have to be a financial one.
 BENEFIT OF THE STUDY

The study aims to emphasize the following points :

• Understanding the Position New Generation Banks hold in the current banking
industry
• Customer’s preference towards New Generation Banks
• Factors that effect the performance of a bank
• Importance of Non Financial Parameters while determining the Performance of a
new generation bank.

RESEARCH METHODOLOGY

The study has been executed with the usage of primary and secondary data accumulated
through field study , the annual report of the New Generation Banks and through varios
reports of RBI etc. A Multi Stage Random Sample Survey method was used for collecting
primary information (of the customers of the sample new generation banks) to understand the
impact of the New Generation Banks . Questionnaires for the customers of New Generation
Banks, have been used to collect primary data.

Data processing and analysis have been done mainly using the following methods/techniques:
descriptive statistics and analytical techniques like chi square test ,Friedman Test and
ANOVA.
 CHAPTER II

REVIEW OF LITERATURE

Educational research on the performance of National Banks and New Generation

Bank sectors in India is very important and relevant to the context of the existence of
the structure, before taking up such work attempts at this stage to present a review of
available resources. courses in the appropriate area of the banks. Formal or formal
research in banks and related areas comes from India. Research conducted in the
Indian and domestic banking sector is closely related to the institutional activities,
operations and development of banks.

Research Conducted by various authors studying the Financial Parameters

effecting the Overall Performance:

Kaveri (2002) as per the report on trend and progress of banking in India 2000- 2001.
The gross NPAs of scheduled commercial banks increased to Rs.63883 crore to march
2001 from Rs.60408 crore a year ago. Net NPAs on the same date amounted to Rs.32468
core compared with Rs.30073 crore as at end march 2000. Recovery measures could be
classified into two categories: Legal measures debt recovery, national company law,
corporate debt, company manager etc. Non-legal measures remind systems visits to
borrowers, recovery camp, loan compromise and appointment of professional agencies
for recovery. Finally the NPAs analysis in during 1999-2000, shows that recovery from
NPAs in some PSBs was RS.3000 crore but the amount involved in fresh NPAs was
more than Rs.6000 crore. Consequently each bank has set up credit monitoring
department cell at the corporate office and zonal office suitable reporting formats have
been devised for branches to provide information on NPA borrowers.

C. Kandasamya and C. Indirani, “A Study on Financial Performance of New Generation

Private Sector Commercial Banks in India”, International Journal of Science and
Research, Vol. 4, No. 2, pp. 1758-1763, 2015. In their study stated that the new
12
generation banks are in a position to increase their possessions and income. They also
did raise a concern on the performance of Public sector banks which is hereby giving a
rise for competition of New Generation Banks.

Vinisha, “Financial Performance of New Generation Banks in India: An Interbank

Analysis”, Business Sciences International Research Journal, Vol. 4, No. 1, pp. 69-71,
2016 studies about the coming into existence of New Generation banks, the need and the
role of the same in the current scenario. The study also compares the financial
performance of the New generation banks with the established Public sector banks and
the impact of the same in the banking industry.

Habiba Abbasi, “A Comparative Study of Public and Private Sector Banks in India”,
International Journal on Recent and Innovative Trends in Computing and
Communication, Vol. 5, No. 5, pp. 361-370, 2017-New private banking banks are the
fastest growing sector in India. The efficiency and effectiveness of these banks have
repeatedly improved. Exploring this field is not an easy task. Following the national
banking system adopted in 1969, the number of private banking companies increased.
And thanks to the presence of
new private sector banks and foreign banks have made the market more efficient and
improved the quality of services over the past decade in India. These banks have
established themselves in the new and latest system with the highest level of service and
excellent performance.

Priyanka Jha, “Analyzing Financial Performance (2011- 2018) of Public Sector Banks
(PNB) and Private Sector Banks (ICICI) in India”, ICTACT Journal on Management
Studies, Vol. 4, No. 3, 793-799, 201879. Bank customers have great faith in the public
banks compared to private bank banks. People are very fond of PNB bank for its need
for loans and development compared ICICI Bank. However, PNB bank has low
efficiency compared to ICICI bank. If there is a dividend payment rate, Debt Equity and
Interest Rate Used for Interest, ICICI. The bank did very well compared to PNB bank

13
M Selvakumar et al. (2019) : Performance Analysis Of New Generation Private Sector
Banks In India studied the financial parameters of several new generation banks the
study is based on a model developed by the author who further tests the same through
Friedsman test. The study aims to find the best performing New Generation Bank.

Dr. C. Paramasivam (2020) A Study On Performance Of Private Sector Banks In India

stated in his study that The banking sector is one of the most important parts of the
economic development of a country that provides systematic cash flow from one hand
to the other. She is well organized and the regulated banking system facilitates the
effective and significant growth of the social economy conditions in the world. Banking
is another driver economy definition country. It provides the funding needed for
families and businesses to invest in the future. As a result the existing papers mainly
discuss the operation of commercial banks in India about public, private companies and
foreign banks

Research Conducted by various authors studying the Non Financial Parameters

effecting the Overall Performance:

Karim khalilli (2012) says that the goal of present research is to survey the
relationship between electronic services quality and users' electronic satisfaction of
central branch of Indian Bank. This study is survey, analytical and applied research.
For this purpose, electronic service quality has been defined in 6 dimensions:
Efficiency Dimension, reliance capability, Command Supply, Personal Secret
Protection, Compensation, and Communication. In this way 9 hypotheses have been
set. The Statistical survey of this research is customers of central branch of Indian
bank. The size of statistical sample has been estimated 380 people by Cochrane
formula, and has been selected by using time random sampling method. Information
gathering instrument in this research is researcher made questionnaire. It has been
distributed among statistical sample after assessing validity and reliability of
questionnaire, Gathered data, summarized and categorized using descriptive
statistical method. Pearson test and Freedman test have been used to test research
hypothesis. The result of research indicates that there is relationship between
electronic services quality and its seven dimensions and users' electronic satisfaction
of central branch of Indian Bank. And also ranking of the relationship between
dimensions of electronic service's quality and electronic satisfaction of bank users has
14
been presented.

Mahtab Alam (2012) attempts to find out the customer satisfaction of the internet
banking users which leads to make more loyal customers and hence loyalty leads to
attracting more customers, expansion of business and increase in net profit. The
finding of the study shows that there is a significant variation in the level of
satisfaction among the internet banking users. The satisfaction of the Internet banking
users depends upon Reliability, Responsiveness, Security and Ease of use and
Tangibles.

Senthil Balasubramanian (2013) says that channel of distribution like Automatic

Teller machines (ATM), internet banking, and mobile banking. This enables the
customer to avail the banking services at anytime and anywhere. These technological
interfaces are known as self service technologies (SSTs). Customers availing banking
services through these SSTs get more benefits in terms of time, cost and energy.
Despite these benefits the customer trial, adoption and repeat usage of SSTs vary
among banking customers. Although the kinds of service one can avail from these
SST are similar, the patronage among the SSTs differs. The SST channel choice
could be attributed to various factors viz., Nature of service to be availed or purpose,
Perceived risk, Requirements and Benefits.
When it comes to predicting customer priority among alternatives, Analytical
hierarchy process (AHP) has been proved as an effective technique. This paper
explores the factors influencing customer choice of SSTs by employing AHP
technique.

Nishit [Link], in her study “A Review Article on New Private Sector Banks in
India: Challenges and Opportunities”, Indian Journal of Research, Vol. 3, No. 12, pp.
93-94, [Link] that usually customers have a higher trust factor in private sector
banks in comparison with public sector banks in context of performance and other
parameters.

15
RESEARCH GAP:
“Performance Analysis is the process of studying or evaluating the performance of a
particular scenario in comparison of the objective which was to be achieved.
Performance analysis can be done in finance on the basis of ROI, profits etc.”4
Performance Analysis is considered to be a parameter in judging the effectivity of an
organization. But even while judging the performance usually researchers concentrate
on the financial parameters only. While there have been few researches where the
performances have been analyzed from the aspect of customer satisfaction level.
Performance Analysis of New Generation Banks have been conducted by various
researchers -in the financial area with the help of CAMEL analysis and various other
statistical tools and when non financial parameters are considered researchers have
analyzed the performance of the banks through the service they provide and the
satisfaction level .But when one wants to figure out the performance of a bank it
cannot be identified through one single parameter. When one considers analyzing the
performance of a banking institution one needs to strike a perfect balance between the
financial and non financial parameters.

The current study aims to find a perfect correlation through which a ground may be
set to analyze the performance of a banking institution on a wider perspective where
both financial and non financial parameters play a dominant role

16
 CHAPTER III

RESEARCH METHODOLOGY

This chapter provides a brief discussion of data collection process, from the field and
other sources, for our analysis. It then describes different research methodologies to
analyze the performance of New Generation Banks and the implication of the Financial
& Non Financial Parameters . This chapter also discusses the research methodology for
measuring the correlation between the Financial & Non Financial parameters and how
they together impact the performance of the New Generation Banks..

With these objectives in particular, the discussion here has been structured in three broad
sections.

In the first section (3.1) of this chapter, an attempt has been made to discuss the methods
of data collection from the field and other sources.

In the second section (3.2) of this chapter, an attempt has been made to discuss the
research methodology to measure the Financial & Non Financial performance of New
Generation Banks

In the third section (3.3) of this chapter, an attempt has been made to discuss research
methodology to measure Correlation of Financial & Non Financial Parameters impacting
the overall performance of New Generation Banks.

3.1 DATA COLLECTION PROCESS:-

3.1.1 RESEARCH DESIGN:-

The study is both exploratory as well as descriptive in nature. Exploratory research has provided
valuable insight into the complex scenario of understanding the factors effecting the performance
of the New Generation Banks and breaking the biases towards concluding that it is only the
Financial parameter effecting the performance of New Generation Bank

17
3.1.2 FIELD STUDY:-

Field survey was conducted for the customers of New Generation Banks. The field study
collected information from the respondents by using a predefined questionnaire.

3.1.3 DATA COLLECTION:-

[Link] PRIMARY DATA:-

A detailed field survey was done. The respondents were interviewed using structured and
unstructured questionnaire.

[Link] SECONDARY DATA:-

Secondary data were obtained from the published reports, internet, libraries, journals/magazines,
and reports of certain government agencies, banks’ annual reports and various reports of RBI,
NSSO, NABARD, NAFSCOB,CEIC etc. Major part of the objectives are covered through the
analysis of secondary data.

[Link] DATA COLLECTION PERIOD:-

Stakeholders’ data were collected during the period 2010-2021 using structured questionnaire.
And the responses were taken from different members/ non-members of different New
Generation Banks for the above mentioned period. The first decade has been not fully
incorporated in the study as two of the sample banks (Kotak Mahindra Bank & Yes Bank) were
formed in the year 2003,hence to ensure a stable performance comparison, the period of study
considered is from 2010-2021.

[Link] RESEARCH METHODOLOGY:-

A random sample survey method was used for collecting primary information (from members
and non-members of New Generation Banks) to understand the impact of New Generation Banks
on different performance parameters . Please refer annexure , for the set of questionnaire used for
data collection.

18
[Link] SAMPLING TECHNIQUE:-

Multi stage sampling technique was followed for the study. In the first stage the numbers of
sample New Generation were determined from the total population of customers of these New
Generation Banks.

[Link] Sample size determination:-

In order to determine the sample size for our research analysis we applied the following formula.
For the sample size n:

N´X
n =
(N + X -1)
5229 ´ 384 (5229 + 384 -1)
=
= 358
Where we determined the x value as,

Z 2´p´(1-p) a/2
X=
MOE 2 1.962 ´0.50´(1-0.5)
=
0.052 = 384

Where Zα/2 is the critical value of the Normal distribution at α/2 (e.g. for a confidence level of
95%, α is 0.05 and the critical value is 1.96), MOE (0.05) is the margin of error, p (0.50) is the
sample proportion, and N is the population size. Here finite population Correction has been
applied to the sample size.

3.2 DATA COLLECTION

The data collection for the present study was entirely primary in nature. A total of 385
respondents were contacted from the field by applying random sampling process. A variety of
statistical tools and techniques, including Chi-square test, CFA and Structured Equation Model
was used for data analysis.

19
3.3 NON-RESPONSE CHECKS
As with any questionnaire based survey, non-response always exist. The most often cited reasons
for non-response were respondents' reluctance to participate in the survey and enumerators'
inability to gather replies in a reasonable amount of time. Therefore, both a field and data were
used to check for non-response entries.

3.4 PILOT SURVEY AND SCALE REFINEMENT

Researchers have advised doing a pilot survey prior to conducting a full assessment (Sekaran,
2003; Malhotra, 2008). The major objective of the pilot survey is to fine-tune and verify the
normality of the measuring scales (Sekaran, 2003; Malhotra, 2008). To do this, it was decided to
begin by generating data from a small sample. Thus, determining the sample size for the pilot
survey was critical. In this regard, prior studies have advised that the sample size for a pilot
research is to be between 25 to 100 respondents (Cooper & Schindler, 1998; Hair et al, 2010).
Furthermore, it has been recommended that the subject to variable ratio for EFA use be at least
10:1 (Hair et al, 2010).
Therefore, 50 respondents were contacted for survey so that through their response pattern, any
type of anomaly in the questionnaire can be adjudged. As the Cronbach’s Alpha was found to be
more than 0.80, it is acceptable and considered good for social science research.

3.5 RESEARCH MODEL:

Since there had been no predefined study in the lines of the said objective of this study, it was
essential to develop a acceptable model to satisfy the hypothesis and objectives of the study.

20
 3.5.1 OBJECTIVE OF THE STUDY:
• To analyze the impact of Financial parameters on the performance of New
Generation Banks
• To analyze the impact of Non Financial Parameters on the performance of New
Generation Banks
• To understand the correlation between the Financial and Non Financial Factors
effecting the performance of New Generation Banks
• To find out the most prominent Financial and Non Financial factors effecting the
performance of New generation banks
• To study and understand the customer’s perception about new generation banks.

To Validate the above mentioned objectives, the following hypothesis are formulated.

3.5.2 HYPOTHESIS FORMULATED:

The study aims to conduct a research probe into the following:

H01- There is no Significant impact of Financial Parameters on the Performance of

New Generation Banks
Ho2- There is no Significant impact of Non Financial Parameters on the Performance
of New Generation Banks.
Ho3- There is no significant correlation of Financial & Non Financial Parameter
together on the Performance of New Generation Banks.

21
3.6 RESEARCH VARIABLES:
Although the extensive literature review revealed various factors, only a few were found to be
pertinent to the topic and were included for the current study. Many such demographic and
psychographic variables have been examined, but the results are inconsistent. Various studies
were analyzed to determine the factors effecting the overall performance of New Generation
Banks but only studies relating to Financial Performance and Customer satisfaction were
undertaken hereby putting a compulsion on the researcher to determine her own model for
analysis. The design created to evaluate the current study takes into consideration both the
financial and non financial parameters to derive at the conclusive result. To check the relativity
of the Financial parameters a set of 15 ratios were considered ,on the categories of Profitability,
Capital Adequacy & Liquidity. These 15 ratio’s were further analyzed using Friedman test to
evaluate the relatability of the parameters and overall objective of the study

22
23
 CHAPTER IV

DATA ANALYSIS & INTERPRETATION

In the previous chapter , the research pathway and methodology used for the present study
had been discussed .The ultimate priority of the current chapter is to contour the analysis
methods and to carve out the findings from the study. A brief demographic profile of the
respondents is presented at the beginning of the chapter to cast a light on the background
of the respondents involved in the study and the implication of the same. Together,
Descriptive & Inferential statistics had been applied to the available dataset. Analysis tools
like frequency ,percent ,mean & standard deviation were used from the descriptive
statistics tools whereas Chi square test was used as inferential statistics tool to investigate
the demographic data. Usage of pictorial depictions have been used where ever possible.
Conclusions for the said chapters were drawn using Balance Score Card Technique
,Friedsman Non Parametric Test & SPSS -21 .

4.1 Demographic Analysis of the Respondents

Demographic information refers to data about features or characteristics that define a

person or population. Obtaining demographic information is important and beneficial in
helping researchers better understand the number of people interested in their research. The
demographic profile of the respondents scrutinized in this study were gender, age,
educational qualification, and income. The general demographic profile of the respondents
is shown below:-

23
4.1.1 Gender:

Enav Friedmann¹, Oded Lowengart² in their study –“The Effect of Gender Differences on
the Choice of Banking Services” stated that banks usually have preferential treatment
towards a specific gender in their customer base. This study also suggested further that
banks should be impartial towards providing services towards their customers irrespective
of the gender.

GENDER DISTRIBUTION TABLE

Gender HDFC Bank AXIS Bank Kotak Mahindra Bank Yes Bank
Male 75% 85% 54% 100
Female 25% 15% 46% 0
Total 100 100 100 100
Table 4.1.1

Fig 4.1.1

TOTAL GENDER
DISTRIBUTION

Female
32%

Male
68%

Source: Author’s Calculation

24
In the above tabular & pictorial representation ,a glimpse of the respondents based on their
gender. Out of total respondents the study has 68% male respondents & 32% female
respondents. Some studies have claimed that some banks have an inclination towards
serving a specific gender ,which will be further tested through a fitness of good test-Chi Sq
Test to prove any positive correlation between gender and banks customer database.

Fig:4.1.2

GENDER GENDER
DISTRIBUTION IN DISTRIBUTION IN
HDFC BANK AXIS BANK
Female
Female 15%
25%

Male
75% Male
85%

GENDER
GENDER
DISTRIBUTION IN
DISTRIBUTION IN YES
KOTAK MAHINDRA
BANK
BANK
Female
0%

Female
46% Male
54%
Male
100%

Source :Author’s Calculation

In the figure 4.1.2 we have a glimpse of the respondents in the four sample banks .In HDFC
we have 75% male respondents & 25% female respondents. In Axis Bank we find that

25
 there are 85% male respondents & 15% female respondents. Kotak Mahindra Bank has
54% male respondents & 46% female respondents .All the respondents of Yes Bank were
male. Through this depiction it may be said that all the sample New Generation Bank are
male dominated. To substantiate it further Chi Square -Fitness of Good test is conducted.

Reliability Test

The reliability analysis allows to study the features of the measurement scales and the items
that comprise the scales. The Integrity Analysis Process calculates the number of
commonly used measurement reliability scales and provides information about the
interactions between each item on the scale. Intraclass communication coefficients can be
used to calculate intermediate levels of intermediate levels.

In order for the test to be acceptable, the results of the chi-square test must comply with
the following parameters:
• The chi-square result must be higher than 5;
• Confidence level must be 95% at least;
• The variable should be represented in, at least, 5 units of the sample

26
 Table 4.1.2

Reliability Test:

BANK MALE FEMALE X2 P-value

HDFC BANK 75% 25% 0.00000000374527 1

AXIS BANK 85% 15% 0.00000238008 1

KOTAK 54% 46% 0.683091398 0.999884949

MAHINDRA

BANK

YES BANK 100% 0% 0.000000963357 1

Source :Author’s Calculation

From the table 4.1.2 it can be concluded that gender does not play a pivotal role while
choosing a New generation bank .

4.1.2 AGE:

ADVANCING THE DIGITAL FINANCIAL INCLUSION OF YOUTH-A report

prepared for the G20 Global Partnership for financial inclusion by OECD cited that world

16% population belongs the age group 15-24 years. The study emphasized an urgent need

to get the youth of any country financially upgraded and upskilled .Table 4.1.3 depicts the

age wise distribution of the respondents of the current study.

27
 TABLE 4.1.3

AGE WISE DISTRIBUTION OF THE CUSTOMERS

Kotak
Mahindra
Age HDFC Bank AXIS Bank Bank Yes Bank

Less than 25 37 % 27 % 43 % 14 %
25-35 18 % 13 % 30 % 10 %
35-45 24 % 27 % 17 % 34 %
45 and above 22 % 33 % 9% 41 %

Fig:4.1.3

AGE WISE DISTRIBUTION OF

THE RESPONDENTS

45 and above Less than 25

23% 24%

35-45
25-35
21%
32%

Source: Author’s Calculation

In fig 4.1.3 it is depicted that 24% respondents are less than 25 years,32% respondents are
between 25-35 years,21%respondents are between 35-45 and finally 23% are above 45
years of age. It is observed that 56% of the total respondents are below 35 years of age

28
hence it can be said that the sample New generation Banks are working towards
empowering the youth towards digitalization.
Fig:4.1.4

AGE WISE DISTRIBUTION OF AGE WISE DISTRIBUTION OF

HDFC BANK CUSTOMERS AXIS BANK CUSTOMERS

45 and
above
22%
45 and above Less than 25
Less than 25 33% 27%
37%

35-45 25-35
35- 13%
23%
45
27%
25-35
18%

AGE WISE DISTRIBUTION OF AGE WISE DISTRIBUTION OF

KOTAK MAHINDRA BANK YES BANK CUSTOMERS
CUSTOMERS

Less than 25
14%
45 and
above 25-35
9% 45 and above 10%
35-45 41%
17%
Less than 25
44%

25-35 35-45
30% 35%

Source: Author’s Calculation

Fig 4.1.4 demonstrates the age wise spread of customers across the sample New Generation
Banks. HDFC has a customer base of 37% who are less than 25 ,18% who are between 25-
35,23% between 35-45 &22% who are 45 and above. Axis Bank has 27% respondents who

29
 are below 25 ,13% who are between 25-35,27% of the responses were received from the
age bracket of 35-45 years of age, whereas the last criteria of 45 years and above has only
22% responses. Yes bank demonstrates the following responses ,14 % belong to less than
25 years age,10% between 25-35,35% between 35-45 & 41% are those who belong to 45
years and above criteria.
Kotak Mahindra Bank has only 9% responses from the age bracket of 45 and above
remaining 91% are further distributed as follows,44% belong to less than 25 years
criteria,30% between 25-35 & 17% between 35-45.
Observation of the above facts leads to the point that major New Generation Banks have
young customers. But weather they have a priority of having youth as their customer base
and focus on delivering services to them can only be tested via a Fitness of Good Fit test.

In order for the test to be acceptable, the results of the chi-square test must comply with
the following parameters:
• The chi-square result must be higher than 5;

• Confidence level must be 95% at least;

• The variable should be represented in, at least, 5 units of the sample

30
 Table 4.1.4

Reliability Test:

BANK Less than 25-35 35-45 45 X2 P -Value

25 &Above

HDFC BANK 33% 27% 23% 22% 0.01141201 1

AXIS BANK 27% 13% 27% 33% 0.28388613 1

KOTAK 44% 30% 17% 9% 1

MAHINDRA

BANK 0.09404918

YES BANK 10% 35% 41% 14% 0.04392143 1

Source: Author’s Calculation

Table 4.1.4 depicts that the P value of all the bank is 1 which is more than the significance
level of .05 therefore there is no relation between banks and a specific preference of a
particular age.

4.1.3 OCCUPATION:

The concept of work has long despised the satisfactory definition of a career therapist or

occupational scientist. Recently, both Kielhofer and Nelson tried to define the term Work

in a way that will reduce the ambiguity associated with the use of the word. This article

compares and contrasts their work ideas, explaining how the word work and related

concepts are defined and used. The identified differences and similarities provide the basis

for recommendations for continuous improvement and confirmation of job description.

31
 Table 4.1.5

OCCUPATION WISE DISTRIBUTION OF THE CUSTOMERS

HDFC Kotak
OCCUPATION Bank AXIS Bank Mahindra Bank Yes Bank

SERVICE 64 % 44 % 68 % 43 %
AGRICULTURE 4% 20 % 0 4%
BUSINESS 24 % 27 % 18 % 39 %
OTHERS 8% 9% 14 % 14 %
Source :Author’s Calculation

Fig:4.1.5

OCCUPATION WISE
DISTRIBUTION OF THE
CUSTOMERS

OTHERS
20%

SERVICE
50%
BUSINESS
25%
AGRICULTURE
5%

Source :Author’s Calculation

32
Table 4.1.5 & Fig 4.1.5 depicts the occupation variability of the respondents.50 % of the
respondents belong to the service sector,5 % to the agriculture sector 25% to the business
sector & 20% to the other sector. Table 4.1.5 also showcases that all the sample New
Generation banks get majority of their customers from service and the business sector. It
may therefore be concluded that customers belonging to this category have a higher level
of reliability on these New Generation Banks.
Fig 4.1.6 shows a bank wise distribution of the respondents according to their occupation.
Fig:4.1.6

OCCUPATION WISE
OCCUPATION WISE
DISTRIBUTION OF THE
DISTRIBUTION OF THE
CUSTOMERS OF AXIS
CUSTOMERS OF HDFC
BANK
BANK

OTHERS OTHERS
8% 9%

BUSINESS
BUSINESS SERVICE
24%
27% 44%
AGRICULTU SERVICE
RE 64% AGRICULTU
4% RE
20%

OCCUPATION WISE OCCUPATION WISE

DISTRIBUTION OF DISTRIBUTION OF
THE CUSTOMERS THE CUSTOMERS
OF KOTAK … OF YES BANK
OTHERS OTHERS
14% 14%
BUSINESS SERVICE
18% 43%
SERVICE BUSINESS
AGRICULTU 68% 39% AGRICULTU
RE RE
0% 4%

Source :Author’s Calculation

33
4.1.4 EDUCATION:-

Table 4.1.6

EDUCATION WISE DISTRIBUTION OF THE CUSTOMERS

Kotak
HDFC AXIS Mahindra Yes
EDUCATION Bank Bank Bank Bank

HIGHER SECONDARY 31 18 26 17
GRADUATE 13 46 57 48
POST GRADUATE 71 36 13 35
OTHERS 4 0 4 0
Source: Author’s Calculation

Fig:4.1.7

EDUCATION WISE DISTRIBUTION

OF THE CUSTOMERS
OTHERS
4% HIGHER SECONDARY
11%

POST GRADUATE
40%

GRADUATE
45%

Source: Author’s Calculation

Table 4.1.6 represents education wise categorization of the respondents of the sample New
Generation Banks. The chart depicts that maximum respondents are educated 85% of the
respondents are either graduate or post graduates. The importance of being educated here

34
is that the respondents understands the services provided by the banks and the needs of the
customers that has to be addressed by the bank.
Fig:4.1.8

EDUCATION WISE EDUCATION WISE

DISTRIBUTION OF THE DISTRIBUTION OF THE
HDFC BANK CUSTOMERS AXIS BANK CUSTOMERS

OTHERS OTHERS
HIGHER 0% HIGHER
3%
SECONDARY
SECONDARY
13%
POST 18%
GRADUATE
36%
POST GRADUATE
GRADUATE 31%
53%

GRADUATE
46%

EDUCATION WISE EDUCATION WISE

DISTRIBUTION OF THE DISTRIBUTION OF THE
KOTAK MAHINDRA BANK YES BANK CUSTOMERS
CUSTOMERS
OTHERS
0% HIGHER
HIGHER SECONDARY
OTHERS
SECONDARY 17%
13% POST
4%
GRADUATE
GRADUATE 35%
26%

POST GRADUATE
GRADUATE 48%
57%

Source: Author’s Calculation

Fig 4.1.8 shows a bank wise categorization of the respondents according to their education
level.31% respondents of HDFC Bank are graduates ,53% are Post graduates. Axis bank
has 46% respondents as graduates & 36% are post graduates.57% respondents of Kotak

35
Mahindra Bank are post graduates .Yes bank has 48% respondents who are graduates &
35% Post Graduates.
Table 4.1.7

RELIABILITY TEST

HIGHER POST
EDUCATION GRADUATE OTHERS X2 P Value
SECONDARY GRADUATE

0.0000000000 1
31 18 26 17 000000732417
HDFC Bank
0.0000847014 1
13 46 57 48
Axis Bank
Kotak Mahindra 0.002418132 1
71 36 13 35
Bank
0.00159546 1
4 0 4 0
Yes Bank
Source: Author’s Calculation

Table 4.1.7 showcases a P value of 1 across all the sample new generation banks ,this
therefore proves that education level does not have any significant impact on the decision
making process of which bank to open an account into.

4.1.5 :ANNUAL INCOME

The study focused on the respondents who were earning less than 2,50,000 Rs to the one’s
earning more than 7,50,000 Rs. Banks are usually a place where customers come to deposit
their savings .Table 4.1.8 illustrates distribution of annual income through the New
Generation Banks.
Shockingly 43% of the respondents have an annual income below 2,50,000 Rs 32% were
those who earn between 2,50,000 Rs to 5,00,000 Rs 11% were those who earned between
Rs 5,00,000 to Rs 7,50,000 & Lastly 14% who earn above 7,50,000 Rs.

36
 Table :4.1.8

Kotak
HDFC AXIS Mahindra Yes
ANNUAL INCOME Bank Bank Bank Bank

LESS THAN 2,50,000 25% 30% 48% 35%

2,50,001-5,00,000 35% 45% 39% 62%
5,00,001-7,50,000 17% 16% 4% 3%
7,50,001 AND ABOVE 23% 9% 9% 0
Source: Author’s Calculation

Fig:4.1.9

ANNUAL INCOME WISE DISTRIBUTION OF

THE CUSTOMERS

7,50,001 AND ABOVE

14%

5,00,001-7,50,000 LESS THAN 2,50,000

11% 43%

2,50,001-5,00,000
32%

Source: Author’s Calculation

37
 4.2- ANALYSIS OF THE IMPACT OF FINANCIAL PARAMETERS ON THE

OVERALL PERFORMANCE OF THE NEW GENERATION BANKS:

Post the establishment of New Generation Banks, the banking sector underwent key
changes. With the advancement in the technologies, professional management has gained
a realistic point .
The first and foremost objective of the study was to study the impact of Financial
Performance on the Performance of New Generation Banks. The Performance of the
Sample New Generation Banks is measured through the Ratio Analysis. A Set of 15 Ratios
were taken to analyze the performance of these banks .The ratios were namely as follows:

• Credit Deposit Ratio • Net Profit Ratio

• Deposit to Total Asset Ratio • Deposit to Fixed Asset Ratio

• Fixed Assets to total Assets Ratio• Investments to Advance Ratio

• Return on Equity Ratio • Interest Expense Ratio

• Return on Assets Ratio • Profit Margin Ratio

• Equity Multiplier Ratio • Asset Utilization Ratio

• Non Interest Expense Ratio • Non Interest Income Ratio

• Interest Expense Ratio •

38
4.2.1-Credit Deposit Ratio (Sample) -

The ratio is usually used for measuring the bank’s liquidity by dividing banks total loans
and deposits.
The following formula was used to calculate the same:

CREDIT DEPOSIT RATIO = TOTAL LOAN/TOTAL DEPOSITS

The credit deposit ratio of the sample duration banks during the period of study is depicted
in the table 4.2.1

Table 4.2.1

CREDIT DEPOSIT RATIO

Year AXIS BANK HDFC BANK KOTAK MAHINDRA BANK YES BANK

2010-2011 0.75 0.77 1.51 0.7

2011-2012 0.77 0.79 1.46 0.57
2012-2013 0.78 0.81 0.95 0.63
2013-2014 0.82 0.82 0.9 0.61
2014-2015 0.87 0.81 1.22 0.83
2015-2016 0.28 0.10 0.15 0.28
2016-2017 0.25 0.12 0.13 0.27
2017-2018 0.33 0.16 0.13 0.37
2018-2019 0.28 0.13 0.14 0.48
2019-2020 0.23 0.13 0.14 1.08
2020-2021 0.20 1.02 0.08 0.39
Average 0.50533083 0.512656673 0.620220869 0.565042407
Minimum 0.20199602 0.097027217 0.084434131 0.270212006
Maximum 0.87 1.018239892 1.51 1.079980638
Source: Author’s Calculation and respective Bank’s Website.
In the table 4.2.1 it can be reviewed that the highest average credit deposit ratio is with
Kotak Mahindra Bank at [Link] minimum ratio registered was 0.10 by HDFC Bank in
the year 2015-16 and the Maximum was registered by Kotak Mahindra Bank in the year
2010-2011.

39
 Profitability Management Ratios indicate the banks ability ,capability and capacity to earn
a substantial amount of profit. The ratios are the indicator of the banks health and stability.
The ratios that depict the profitability status of the bank are as follows:

• Return of Equity • Asset Utilization

• Return on Assets • Non Interest Expense

• Profit Margin • Interest Income

• Net Profit • Non Interest Income

• Investments to Advance • Interest Expense

Table 4.2.16 states the profitability status of New Generation Banks that they have earned
during the study period. Each ratio that has been considered above has contributed in some
or the other way to the profitability parameter. Once the ratio’s are summated in the table
they are further by ranked .According to the individual ranks given under each ratio an
overall rank is further determined through which the profitability of the banks are ranked.
Table 4.2.16 clearly showcases that based on the on the ranks assigned HDFC Bank stands
out as the best performer and Yes Bank as the worst performer. Ranking of the banks as
per profitability is shown in Table 4.2.17.

40
 Table 4.2.17

RANKING OF PROFITABILITY OF BANKS

BANK SCORE RANK

AXIS BANK 25 3
HDFC BANK
29 1
KOTAK MAHINDRA BANK 26 2

YES BANK
20 4
Source: Author’s Calculation

4.2.18:LIQUIDITY POSITION OF THE NEW GENERATION BANKS:

Table 5.2.18
LIQUIDITY POSITION OF NEW GENERATION BANKS
AXIS KOTAK RANK
HDFC BANK YES BANK
RATIO’s BANK MAHINDRA BANK TOTAL
0.51 0.51 0.62 0.57
CREDIT DEPOSIT RATIO
1 2 4 3 10
DEPOSIT TO TOTAL 0.71 0.69 0.63 0.64
ASSET RATIO 4 3 1 2 10
DEPOSIT TO FIXED ASSET 119.07 150.45 95.01 236.53
RATIO 2 3 1 4 10
FIXED ASSET TO TOTAL 0.01 0.00 0.01 0.00
ASSET RATIO 2 3 4 1 10
9 11 10 10 40
Source: Author’s Calculation

Liquidity is the ability of an organization to generate cash to meet its obligation in case of
contingencies. Investors are usually trigged with the liquidity position of the banks ,as it
speaks about the ability to meet the short term obligation of the bank. As per the list of 15
ratios taken for the study following 4 ratio’s can be classified as the list of liquidity ratios-

41
• Credit Deposit Ratio
• Deposit to Total Asset Ratio
• Deposit to Fixed Asset Ratio
• Fixed Asset to Total Asset Ratio.
According to Table 4.2.18 it can be clearly seen that HDFC Bank ranks as one of the best
performer followed by Kotak Mahindra Bank & Yes bank. The Worst performing bank in
this sector is Axis Bank.
A cumulative ranking is summated in table 4.2.19.

Table 4.2.19

RANKING OF LIQUIDITY OF BANKS

BANK SCORE RANK
AXIS BANK
9 4
HDFC BANK 11 1

KOTAK MAHINDRA BANK

10 2
YES BANK
10 2
Source: Author’s Calculation.

4.2.18 CAPITAL ADEQUACY POSITION OF NEW GENERATION BANKS:

Capital adequacy analysis states the quality of the assets and the ability of provisions
available to meet any shortfalls arising. It explains the relation a percentage of total risk
weighted assets and shows the margins available to protect the interests of debtors and
creditors against and unforeseen losses that may be showcased.

42
Table 4.2.20

CAPITAL ADEQUACY POSITION OF NEW GENERATION BANKS

KOTAK
AXIS BANK HDFC BANK MAHINDRA YES BANK TOTAL
RATIO’s BANK
1121.18 1612.92 297.85 346.13
EQUITY MULTIPLIER
RATIO
3 4 1 2 10
Source: Author’s Calculation

Table 4.2.20 shows the performance of the sample new generation banks. It can be seen
that the best performer in this segment is Kotak Mahindra bank followed by Yes bank &
Axis Bank. Shockingly HDFC Bank is the worst performer in this segment.
Table 4.2.21 showcases the overall ranking in this segment.

Table 4.2.21

RANKING OF CAPITAL ADEQUACY OF BANKS

BANK SCORE RANK

AXIS BANK
3 3
HDFC BANK 4 4
KOTAK MAHINDRA BANK
1 1
YES BANK 2 2
Source: Author’s Calculation

43
4.2.21 RANKING OF BANKS ON THE BASIS OF OVERALL PERFORMANCE

To analyze the overall performance of the New Generation Banks all the 15 selected ratios
will be scrutinized and the banks will be ranked according to the same.
Table 4.2.22 highlights the ranking of the New Generation bank. A total score of 150 was
given to the New generation Banks .Out of 150 HDFC scored 44 for the second place there
was a tie between Axis bank & Kotak Mahindra Bank at a score of [Link] third place was
therefore skipped. Yes bank stood at the fourth place at a score of 32.
Hence it was proved that HDFC Bank is the market Leader as far as the sample New
Generation Banks are concerned.

Table 4.2.22

RANKING OF OVERALL PERFORMANCE OF BANKS

BANK SCORE RANK
AXIS BANK 37 2

HDFC BANK
44 1

KOTAK MAHINDRA BANK

37 2
YES BANK 32 4
Source: Author’s Calculation

44
 Table 4.2.23

OVERALL PERFORMANCE OF NEW GENERATION BANKS

KOTAK MAHINDRA
AXIS BANK HDFC BANK YES BANK TOTAL
BANK

0.50533 0.51265667 0.62022087 0.565042407

CREDIT DEPOSIT RATIO
1 2 4 3 10

1.66293 2.67160836 1.50259824 0.841803097

NET PROFIT RATIO
3 4 2 1 10

DEPOSIT TO TOTAL ASSET 0.71278 0.68681824 0.62685452 0.642258935

RATIO
4 3 1 2 10

DEPOSIT TO FIXED ASSET 119.075 150.449281 95.011564 236.5273747

RATIO
2 3 1 4 10

FIXED ASSET TO TOTAL ASSET 0.00597 0.00493158 0.01102058 0.002963097

RATIO
2 3 4 1 10
INVESTMENT TO ADVANCE 0.50462 0.41072807 0.46869672 0.51345559
RATIO 3 1 2 4 10
19.6085 27.368528 8.85384214 8.54508814
RETURN ON EQUITY
3 4 2 1 10

1.26921 0.85882456 1.0390733 2.024946964

INTEREST EXPENSE RATIO
2 4 3 1 10
0.01769 0.0165935 0.0304576 0.005590099
RETURN ON ASSET
3 2 4 1 10

PROFIT MARGIN RATIO 0.46385 0.33708312 0.63307868 -0.43610168

2 1 3 4 10
1121.18 1612.92144 297.847267 346.1299355
EQUITY MULTIPLIER RATIO
3 4 1 2 10
0.03971 0.1000618 0.04834708 0.039660723
ASSET UTILISATION RATIO
2 4 3 1 10

1.06397 0.77189018 1.42026638 1.528324088

NON INTEREST EXPENSE RATIO
3 4 2 1 10

NON INTEREST INCOME RATIO 0.222 0.07416563 0.15335005 0.382547582

2 4 1 3 10

INTEREST INCOME RATIO 0.07239 0.07930278 0.08351544 0.081025092

2 1 4 3 10

37 44 37 32 150
Source: Author’s Calculation.

45
4.2.22 FRIEDMAN’S TEST:

Friedman’s test is a non parametric test which requires restrictive assumptions concerned
with the level of Data measurement. The test is used whenever the sample is more than or
equal to 3 and each of the sample size is equally parallel to two way analysis of variance.
Under the null hypothesis ,the Friedman’s test statistics is as follows:

The study has a null hypothesis of:

H01- There is no Significant impact of Financial Parameters on the Performance of New
Generation Banks
For a null hypothesis to be Rejected p value has to be less than 0.05 at a significance level
of 5%
The decision is taken on the basis of the SPSS 21 result based on which the null hypothesis
will be accepted or rejected.
Table 4.2.24

BANK MEAN RANK CHI SQUARE P-VALUE

AXIS Bank 1.68

HDFC Bank 3.00

Kotak Mahindra Bank 1.30 7.654 0.022

Yes Bank 1.38

Source : Author’s Calculation through SPSS 21

46
 Since P Value in the said study is less than 0.05 ,therefore the null hypothesis is rejected at
5% level of significance. Hence it can be concluded that there is a significant impact of
Financial Parameters on the Overall Performance of the New Generation Banks.

4.3 ANALYSIS OF THE IMPACT OF NON FINANCIAL PARAMETERS ON THE

OVERALL PERFORMANCE OF THE NEW GENERATION BANKS:

Banking Industry transformation was introduced by the Indian Government based on the
sanctions given by the Narasimhan Committee during the year 1991 & [Link] sanctions
given by the committee have duly changed the face of the banking industry.1991 is also
known as the year of “Banking Sector Reforms” which had heightened the platform for the
private and foreign sector banks .Further these evolved private sector banks were known
as the New Generation Banks.

Balance Score Card is a technique that has been developed by Kaplan & Norton in the year
1992. This is a strategic management technique that measures the performance parameters
on a holistic approach rather than individualistic approach. The technique emphasizes to
take all the factors into consideration that drives the future performance. The balanced
score card framework evaluates a business enterprise on four varied perspectives
• Financial Perspective

• Customers Satisfaction Perspective

• Internal Business Process Perspective

• Learning & Growth Perspective

Through these four perspective parameters the current study aims to understand:
A. The impact of Non-Financial Parameters on the overall performance of new generation
banks.
B. How cumulatively both financial & non-financial parameters influence the overall
performance of new generation banks.

47
 The relative performance of the new generation bank is being observed and studied by
using mean values and standard deviation. The variance in the performance level is
analyzed through ANOVA Analysis. Anova analysis is a decision-making tool that tests
the hypothesis when three or more populations are equal. The one way analysis of variance
is used to determine whether there are any statistically significant differences between the
means of three or more independent groups.

1. Financial Perspectives- This perspective underlines the need for and importance of
finance in an origination and the impact of the same on the overall performance. To develop
a mechanism for the measurement of the financial parameters the following ratios are taken
into consideration.
Ratio P Value
Credit Deposit Ratio 0.022882854
Net Interest Margin Ratio 0.002030261
Capital Adequacy Ratio 0.00005
Net Non Performing Assets Ratio 0.991596921

Sample Calculation:
A) Credit Deposit Ratio- This ratio measures the relation between how much a bank lends
out in comparison to the deposits receive. It helps the banks to access the liquidity and talks
about their financial help. If the ratio is high, it means that the banks don’t have surplus
liquidity to meet any contingent situation. Therefore, it is presumed that a lower credit
deposit ratio is acceptable. Credit deposit ratio can be calculated as follows:

CREDIT DEPOSIT RATIO= TOTAL ADVANCES/TOTAL DEPOSITS*100

48
 Table 4.3.1

CREDIT DEPOSIT RATIO

YEAR HDFC BANK AXIS BANK YES BANK KOTAK MAHINDRA BANK
2010-2011 279.48 141.31 74.80 100.23
2011-2012 325.76 6.63 77.29 101.41
2012-2013 308.20 5.36 70.20 94.98
2013-2014 278.19 4.79 74.99 89.77
2014-2015 268.44 3.15 82.86 88.38
2015-2016 85.02 94.64 87.91 85.59
2016-2017 86.16 90.03 92.57 86.44
2017-2018 83.46 96.92 101.39 88.10
2018-2019 88.76 90.21 106.10 91.06
2019-2020 86.60 89.27 162.72 83.61
2020-2021 84.85 88.18 102.42 79.86
MEAN 179.54 64.59 93.93 89.95
STD DEV 108.759081 49.5197416 25.9481175 6.65460496
ANOVA F- VALUE 12.91586132
P 0.022882854
Source: Author’s Calculation

Table 4.3.1 showcases the mean result of the 4 sample New Generation Banks. The mean
values of the sample banks are as follows HDFC Bank has a mean value of 179.54,Axis
Bank has a value of 64.59,93.93 value has been denoted to Yes Bank and Kotak Mahindra
Bank has a mean value of 89.95.A high mean value means a higher dependability of these
banks on deposits to lend loans and vice versa. It is further observed in the study that HDFC
Bank has highest value both in Mean Value and standard deviation. Whereas Kotak
Mahindra Bank has the third largest mean value and the least standard deviation.
P Value while considering the Credit Deposit Ratio is 0.022 which is less than the
significance level of 0.05.

Since out 4 ratios under the Financial Perspective ,3 of them show a P Value of less
than 5% significant level, It can be therefore be concluded that Financial Parameters
have a significant impact on the overall performance of the New Generation Banks.

49
2)Customer Satisfaction Perspective: Under this specific perspective, the banks focuses
on the requirement of the customers and how exactly they satisfy their requirements.

The ratios considered under this perspective are as follows:

Ratios P Value
Market Share in Deposits 0.658.
Ratio of Marketing expenses to Volume of 0.025
Business
Ratio of Priority Sector Advances to Total 0.000717824
Advances.

Therefore it has been found that out of 3 ratios in two of them P value is less than 0.05
therefore it can be concluded that customer satisfaction level does have a significant
impact on the Overall Performance of the New Generation Banks.

3)Internal Business Process Perspective: This perspective basically aims at figuring out
the processes which the organization should maintain to excel. In the current study the
following ratio’s are duly taken into consideration.

Ratios P Value
Cost to Income Ratio 0.000140671
Business Per Employee Ratio 0.027444018
Profit per Employee ratio. 0.982164599

In the current section ,it is found that out of the 3 ratios 2 have a significance value of
less than 5%,hence it may be concluded that Internal Business Process Perspective
has a significant effect on the overall performance of New Generation Bank.

50
 [Link] & Growth Perspective-This perspective focuses on the learning and
development of the employees and the opportunities available for the employees to grow
and evolve.
The ratios to consider under the same are as follows:
Ratios P Value
Number of Automated Teller Machines 0.378445804
Number of Skilled Employees 0.023
Ratio of Wage Bills to Total Income 0.009584279

In the current perspective two out of three ratios have a P value of less than 0.05,it
may there fore may be concluded that Learning and Growth Perspective have a
significant impact on the overall performance of New Generation Banks.
Table 4.3.14

BALANCED SCORE CARD STRUCTURE:

BANK Financial Customer Internal Learning &

Perspective Satisfaction Business Growth

Perspective Perspective Perspective

HDFC BANK

AXIS BANK

KOTAK MAHINDRA

BANK

YES BANK

Significant contributor in Overall Performance of New Generation Bank

Non Significant contributor in Overall Performance of New Generation Bank

Source: Author’s Calculation

51
Table 4.3.13 shows that apart from the Financial Perspective ,Customer Satisfaction
Perspective ,Internal business Perspective & Learning and Growth Perspective equally
have a significant impact on the Overall Performance of the New Generation Bank: Hence-
the second Null Hypothesis –

Ho2- There is no Significant impact of Non Financial Parameters on the Performance

of New Generation Banks.
Is Rejected

4.4 FACTORS PROMINENTLY EFFECTING THE PERFORMANCE OF NEW

GENERATION BANKS:-

From the above framework used ,if we determine a stage wise analysis we would find that
in every parameter there are certain prominent factors and certain non prominent factors
that determine the performance of New Generation Banks.
Table 4.4.1

Financial Factors Effecting the Performance of New Generation Bank

FINANCIAL HDFC AXIS KOTAK MAHINDRA YES

PERSPECTIVE BANK BANK BANK BANK
Credit Deposit Ratio

Net Interest Margin

Capital Adequacy Ratio

Net Non Performing

Asset Ratio

Significant contributor in Overall Performance of New Generation Bank

Non Significant contributor in Overall Performance of New Generation Bank

Source: Author’s Calculation

52
From Table 4.4.1 it can be concluded that the following factors play a prominent role in
determining the overall performance of New Generation Bank-The total amount of Deposit
and Advances issued and taken by the NGB’s, Interest Earned, Interest Expended, Capital
Adequacy status .
Table 4.4.2

Customer Satisfaction Factors Effecting the Performance of New Generation Bank

CUSTOMER HDFC AXIS BANK KOTAK YES BANK

SATISFACTION BANK MAHINDRA

PERSPECTIVE BANK

Market Share in

Deposits

Ratio of Marketing

Expenses Volume of

Business

Ratio of Priority

Sector Advances to

Total Advances

Significant contributor in Overall Performance of New Generation Bank

Non Significant contributor in Overall Performance of New Generation Bank

Source: Author’s Calculation

Table 4.4.2 speaks about the factors effecting the Overall Performance from the customers
satisfaction Perspectives. It was deduced that Ratio of Marketing Expense to Volume of

53
Business and Ratio of Priority sector Lending to total advances are the contributing factors
from the customer satisfaction perspective.

Table 4.4.3

Internal Business Process Factors Effecting the Performance of New Generation

Bank

INTERNAL HDFC AXIS BANK KOTAK YES BANK

BUSINESS BANK MAHINDRA

PROCESS BANK

PERSPECTIVE

Cost to Income Ratio

Business per

Employee

Profit per Employee

Significant contributor in Overall Performance of New Generation Bank

Non Significant contributor in Overall Performance of New Generation Bank

Source: Author’s Calculation

54
From Table 4.4.3 it was concluded that the Ratio between Cost to Income and Business per
employee were the contributing factors towards the overall performance from the Internal
Business Process Perspective.

Table 4.4.4

Learning & Growth Factors Effecting the Performance of New Generation Bank

LEARNING & HDFC AXIS BANK KOTAK YES BANK

GROWTH BANK MAHINDRA

PERSPECTIVE BANK

Number of ATM’s

Number of Skilled

Employees

Ratio of Wage Bills to

Total Income

Significant contributor in Overall Performance of New Generation Bank

Non Significant contributor in Overall Performance of New Generation Bank

Source: Author’s Calculation

From table 4.4.4 it has been found that Number of Skilled Employees and Ratio of Wage
Bills are the most contributing factor under Learning & Growth Perspectives.
Therefore through the above analysis :
Ho3- There is no significant correlation of Financial & Non Financial Parameter
together on the Performance of New Generation Banks.
Is Rejected

55
4.5 CUSTOMER PERCEPTION ANALYSIS OF NEW GENERATION BANKS.

Customer perception is a general customer perspective, thought, awareness and feelings

about the company and its product and service offerings. Customer feedback is also called
customer feedback. Customer perspective refers to the process by which a customer selects,
organizes, and interprets informative / dynamic inputs to create a meaningful product or
product image in a variety of categories.

4 Categories of Customer Vision

Customer Visualization is a three-stage process that translates crude motives into

meaningful information.

Each person interprets the meaning of encouragement in a way that is consistent with their
different biases, needs and expectations. Three stages of visual acuity, attention,
interpretation and memory

1. Exposure
Exposure includes elements such as colors, logo, sound, ambience that a customer acquires
when interacting with a product or product. When we see a certain color and taste a unique
taste it can get our attention that makes the second stage.

2. Attention
Attention arises from the image when the exposure phase ends and the customer recognizes
the message and product being marketed. If attention is given to a positive experience, it
may enter the translation phase.

56
 3. Translation

Interpretation is the way a customer shares the meaning or value of an input and
information in the first 2 stages of customer perception. It can lead to comparisons with
other similar products or similar experiences in the past. All in all the customer gives some
meaning to what is being done with the product.

4. Maintenance

Now the final stage is where the customer remembers the interaction of future indicators
by keeping it in memory. This means that the customer’s opinion is already formed. It may
be positive or negative as well.
4.5.2 ANALYZING THE PERCEPTION OF THE CUSTOMERS OF SAMPLE

NEW GENERATION BANK-

Customer Perception about the sample new generation banks were categorized on different
criteria and the responses of the respondents were recorded.
Perception of the respondents were categorized on the following pointers:

A. Perception on the Financial Services Provided by the bank

B. Perception on the Staff Support provided by the bank

C. Perception on the Environment of the Bank

D. Perception on the Internal Process of the Bank

E. Perception on the Overall Performance of the Bank

A. Perception on the Financial Services Provided by the bank-

57
Jignesh Valand in his study “A Study on Perception of Bank Customers towards Financial
Services Quality in Selected Cities of Gujarat” stated that it was necessary for the banks to
evolve themselves in order to ensure that the customers are provided top notch financial
services.

Fig 4.5.1

PERCEPTION REGARDING THE FINANCIAL

SERVICES PROVIDED BY THE BANK
Disagree Strongly Disagree
3% 0%

Neutral
16% Strongly Agree
19%

Agree
62%

Source: Author’s Calculation

Fig 4.5.1 explains the responses on the perception of the respondents regarding the
financial services provided by the new generation bank. The responses were analyzed on
the basis of variety of questions -Are they satisfied with the financial knowledge provided
by the banks, Are they satisfied with the financial facility provided by the bank etc.
Through the above figure it is found that 19% respondents strongly agree that they are
highly satisfied with the services provided by the new generation bank.62% respondents
agree on their satisfaction level with the services provided by the New Generation

58
 Bank.16% respondents were neutral ,3% respondents disagree with the services that were
provided. Through the above responses it can be concluded that the respondents are
satisfied with the Financial services provided by the New Generation Banks.

B. Perception on the Staff Support provided by the bank:-

Adefulu, A., & van Scheers, L. (2016). Consumer perceptions of banking services: Factors
for bank’s preference in their study stated that how the perception of the customers effect
the choice of banks the customers adopt.

Fig 4.5.2

PERCEPTION ON THE STAFF SUPPORT PROVIDED

BY THE NEW GENERATION BANK
Disagree Strongly Disagree
2% 1%

Neutral
15% Strongly Agree
19%

Agree
63%

Source: Author’s Calculation

19% of the respondents strongly agree that they are satisfied with the staff support ,63% of
the respondents agree that they are satisfied with the staff support services provided,15%
respondents were neutral to the services provided. Whereas 2% disagree were not happy

59
 with the staff services provided and 1% strongly disagree with staff support provided by
the .It can hence be concluded that the customers of sample New Generation Banks are
satisfied with the staff support provided by the bank.

C. Perception on the Environment of the Bank :-

Shalu Katyal & Dr Shefali Nagpal in their paper Role of Green Banking in sustainable
development in India stated in their paper that the essence of sustainability of new
generation banks depends upon the green banking practices they follow.
Fig 4.5.3

PERCEPTION REGARDING THE ENVIRONMENT

OF THE NEW GENERATION BANK
Strongly
Disagree
Disagree
0%
2%

Neutral
11%
Strongly Agree
22%

Agree
65%

Source: Author’s Calculation

22% of the respondents strongly agree that their New Generation Banks follow green
banking practices.65% respondents agree to the same where as 11% of the respondents are
neutral. Only 2% of the respondents did not agree that their banks did follow green banking
practices.

60
D. Perception on the Internal Process of the Bank-

INTERNAL ENVIRONMENT AND PROFITABILITY OF BANKS: THE TERMINAL

BENEFITS NEXUS A study by Anthony Nzeribe Chizue Nwaubani PhD, FCA, ACIB
studied the correlation between the essence of Internal Environment impacting the
profitability of the banks in Sub Saharan.

Fig 4.5.4

PERCEPTION REGARDING THE PROCESS

FOLLOWED BY NEW GENERATION BANKS

Disagree Strongly Disagree

3% 1%

Strongly
Agree
Neutral 13%
17%

Agree
66%

Source: Author’s Calculation

Fig 4.5.4 states that 13% of the respondents strongly agree that their New Generation Banks
have a systematic Internal Process with which they are satisfied.66% of the respondents
agree to the same whereas 17% have a neutral stand.3% of the respondents disagree with
the satisfaction level of the Internal Process services provided by the New Generation Bank
& 1% strongly disagree with the fact.
Hence it can be safely concluded that the customers of the sample new generation banks
are satisfied with the Internal Process of the sample new generation banks.

61
E. Perception on the Overall Performance of the Bank

To access the overall perception of the New Generation Banks a cumulation of all the
responses were taken into account to analyze the impact of the perception of the customers
on the overall performance of the New Generation Banks.
Fig 4.5.5

PERCEPTION REGARDING THE OVERALL

PERFORMANCE OF THE BANK

Strongly Disagree Disagree

1% 2%

Neutral
14% Strongly Agree
20%

Agree
63%

Source :Author’s Calculation

From the above figure ,it is clear that 20 % of the respondents strongly agree & 63%
respondents agree that they are satisfied with the overall performance of the Sample New
Generation Banks .Whereas 14% of the respondents held a neutral position regarding their
preference ,where 2% respondents disagree with the overall performance of the New
Generation Bank & 1 % strongly disagree with the overall performance of the New
Generation Bank.

62
 CHAPTER V

CONCLUSION

The Indian banking sector has undergone major changes following the reform of the
banking sector. Major changes have taken place in the structure of the bank, operations,
part of the business, a workplace that includes the use of a banking system and Other
deliveries channels. The advent of the new generation of banks created competition and
efficiency for operation of banks in India. Banks are established nationally where
ownership is held by The Indian government has lost part of the market share due to tense
marketing pressure by new private banks. The recent economic downturn has affected the
quality of goods and profits of Indian banks. Emergence of digital banking and other
innovations bank channels are the latest trends in the banking sector. Profitability is a major
problem for Indian banks. Changes in the banking sector,competitiveness, prudent asset
management, Basel systems, banking system and high level of concentrated assets has
contributed to the profitability of banks. Despite the evil above conditions for private
banks, especially new private banks, to operate rather good. Private sector banks have
recorded high levels of business growth, profits service delivery channels and digital
banking over the past 20 years and research focused are helping Indian banks to improve
their profits. Private Banks have an important role in the Indian Banking Sector. Private
corporate banks show structure efficiency for their private ownership benefit.

63
5.1 Findings

The current study aims to define a balanced relationship between the Financial and Non
Financial Parameters and their effect on the overall performance of the New Generation
Bank. The following are the findings of the study:-

Effect of the Demographic Profile on the Banking Performance:-

• The study has 68% male respondents and 32% female respondents which has a
further bank wise classification as well. Enav Friedmann, Oded Lowengart in their
study –“The Effect of Gender Differences on the Choice of Banking Services”
stated that banks usually have preferential treatment with the kind of gender
involved in their banks ,but through further investigation it was discovered that in
the current study ,Gender does not have any pivotal role.

• The study records responses of respondents who have varied age frame.16% of the
world’s population belongs to the youth and if the banks fails to cater them, they
shall be failing miserably. But analysis of the current study prove that age does not
have any effect on the overall performance of the New Generation Bank.

• The study has respondents who are Higher Secondary, Graduate ,Post Graduate &
Professionally qualified. It can be said that when the respondents were filling their
responses they knew what they were filling in, hence their responses can be
considered as valid. But the study does not provide for any significant relation
between Education and the performance of New Generation Bank.

• The study has recorded responses of customers earning between Rs 2,50,000 to

more than Rs 7,50,000 but does not significantly impacts the performance of the
New Generation Banks.

64
Hence it can be concluded that none of the Demographic parameters effect the Performance
of the New Generation Banks.

Effect of Financial Parameters on the Overall Performance :-

To study the impact of Financial Parameters on the Overall Performance of New

Generation Banks we conducted a study using 15 ratio’s. Each Ratio impacting the
organization in someway or the other. The 15 ratio’s were further categorized further into
3 categories of Profitability, Liquidity & Capital Adequacy post which we categorize and
rank them on the basis of overall performance.

• On the basis of profitability, we find that HDFC Bank is the best performer
,followed by Kotak Mahindra Bank, then by AXIS Bank & Yes Bank.

• On the basis of liquidity ,HDFC Bank still is the ruler, but there is a tie for the
second place between Kotak Mahindra Bank & Yes Bank and the last place is taken
by Axis Bank.

• On the basis of Capital Adequacy, there is a reverse ranking top rank is bagged by
Kotak Mahindra Bank followed by Yes Bank & Axis Bank. Shockingly the last
place is held by HDFC bank

• On the basis of overall performance HDFC Bank hold the first position followed
by Axis Bank & Yes Bank who had tied in for the second place and the last place
was held by Yes Bank.

• Post the analysis of the ranks ,all the scores were taken into the analysis under the
Friedman Analysis where we arrived at a P Value of 0.022 which is less than 5%
significance level, which helps us prove that Financial Parameter does have a
significant impact on the Overall Performance of the New Generation Bank.

65
Effect of Non Financial Parameters on the Overall Performance :-

To study the Non Financial Parameters impacting the Overall Performance ,Balance Score
Card was implemented where 4 kinds of perspectives were examined:-Financial, Customer
Satisfaction, Learning & Growth & Internal business Processes.
Based on the same following conclusions were drawn:-

• Financial Perspectives examines the performance measurement using the

following factors -Credit Deposit Ratio, Net Interest Margin Ratio, Capital
Adequacy Ratio & Net Non Performing Assets. It was found that out of the 4 factors
that 3 of them significantly effected the overall performance.

• Customer Satisfaction Perspective examines the performance measurement using

the following factors-Market Share in Deposits, Ratio of Marketing Expenses to
Volume of business & Ratio of Priority sector Lending. It was found that out of 3
factors 2 of them significantly effects the overall performance of New Generation
Banks.

• Internal Business Process Perspectives examines the performance measurement

using the following factors-Cost to Income Ratio, Business per employee & Profit
per Employee. It was found that out of 3 factors 2 of them significantly effects the
overall performance of New Generation Banks.

• Learning & Growth Perspectives examines the performance measurement using the
following factors- Number of Automated Teller Machines, Number of Skilled
Employees, Ratio of Wage Bills to Total Income. It was found that out of 3 factors
2 of them significantly effects the overall performance of New Generation Banks
It can thus be concluded that Non Financial Parameter does effect the Performance of New
Generation Banks.

66
Factors Prominently effecting the Performance of New Generation
Banks:-

The following factors were identified as the most prominent factors effecting the
Performance if New Generation banks:-
• Credit Deposit Ratio
• Net Interest Margin
• Capital Adequacy Ratio
• Ratio of Marketing Expenses Volume of Business
• Ratio of Priority Sector Advances to Total Advances
• Cost to Income Ratio
• Business per Employee
• Number of Skilled Employees
• Ratio of Wage Bills to Total Income

The above mentioned factors were identified scientifically based on the p value these
factors have generated .It was found that all these factors had a p value of less than 5%
significance level and hence a valid factor impacting the overall performance of New
Generation Banks.

67
 Effect of Consumer Perception on the Overall Perception of New
Generation Banks:-

Perception is the most decisive factor on deciding in which bank will the consumer will
open his account and what do they perceive about these banks.
Perception Analysis of these New Generation Banks are further categorized into the
following points:-

A. Perception on the Financial Services Provided by the bank

B. Perception on the Staff Support provided by the bank
C. Perception on the Environment of the Bank
D. Perception on the Internal Process of the Bank
E. Perception on the Overall Performance of the Bank

Through the analysis of these factors it was concluded that the customers were satisfied
with the level of services ,support and the environment these sample New Generation
Banks have. These can also be taken as one of the reasons because of which the consumers
have maintained their Brand Loyalty with their New Generation Bank.

5.3 Limitations:
In our study we have considered only 4 New Generation Banks for a period study from
2010-2021,where we could have considered other Banks as well. Also the study records
the responses for its analysis Pan India and it does not restrict to any specific area.

5.4 Research Contribution:

We have applied a new model to study the integrated approach of Financial & Non
Financial Parameters effecting the Overall Performance .Previously studies have been
conducted to study either of the factors but none of them have used a cumulative approach
to arrive at the factors that effect the Overall Performance of the Sample New Generation
Bank.
68
5.5 Suggestions:

The findings of the research have rejected all the hypothesis :

H01- There is no Significant impact of Financial Parameters on the Performance of New
Generation Banks
Ho2- There is no Significant impact of Non Financial Parameters on the Performance
of New Generation Banks.
Ho3- There is no significant impact of Financial & Non Financial Parameter together on
the Performance of New Generation Banks.

And it can be concluded that there is a significant impact of Financial & Non Financial
Parameters on the Performance of the New Generation Bank.
Therefore the following suggestions, after a proper consultation with the stakeholders of
the respected New Generation Banks can be recommended to the New Generation Banks:

• To keep the fundamentals intact

• To keep a check on the required BASEL Ratios to ensure the stability of the banks
• New Generation banks are gaining popularity majorly because of the customer
service that they provide ,therefore to ensure the quality of the same is maintained.
• To take into consideration a holistic approach while framing the policy of the banks
and not only the financial parameters to ensure maximum adaptability.
• To use the new edge technology to provide better services yet retain the banker
customer relation to increase brand loyalty.

69
5.6 Way Forward:

New Generation Banks have carved a pathway of customer friendly banking for its
customers but by ensuring that their fundamentals are intact. Strict RBI compliance norms
ensure that these New Generation Banks don’t go haywire. Digitalization and Artificial
Intelligence also play a main role in the development of these New Generation Banks.
Although the banking sector has been around for a long time depending on technology and
comprehensive data, The new data-enabled AI technology has four the ability to move
forward with innovation as well faster than before. AI can help the better the efficiency,
the more growth agenda, improve differentiation, manage risk and regulatory
requirements, and of course influence customer feeling. Structure sophisticated AI
programs once expensive, limiting key shipping use of conditions (e.g., high frequency
trading).Deloitte’s latest AI survey of IT and business executives of companies adopt AI
technology and found that, from a technical point of view, cost and some adoption
obstacles fall, too it becomes easier to do it again integrate AI technology. Organizations
do what they set out to do investment in cloud-like, large areas data platforms, and data
applications that use updated structures (e.g., microservices and event hubs), finishing key
investment required especially development, supply, and rating AI solutions. However,
many operational and organizational challenges stay, especially skills gaps as well AI
integration is broad organization, to cite two examples

70