TOPIC:- A COMPARATIVE STUDY OF PUBLIC

SECTOR BANK AND PRIVATE SECTOR BANK A

CASE STUDY OF SBI AND HDFC BANK

Name- Salon Singh

Roll-80
Exam roll no- 22ECo00782
 Introduction

The banking sector plays a crucial role in the economic development of a

country by providing financial services to individuals, businesses, and the
government. Banks are the financial institutions whose primary activity is
to act as a payment agent for customers and to borrow and lend money. It
acts as an institution for receiving, keeping and lending money.
There are two main types of banks: public sector banks and private sector
banks. Public sector banks are controlled by the government and private
sector banks are controlled by individuals and companies. When a private
sector bank is bought by the government, it becomes a nationalized bank.
Similarly, when the government sells a public sector bank to a person or
Company, it becomes a privatized bank.
After gaining independence, India’s government started planning the
country’s economic growth. In 1951, the first five-year plan was launched.
At that time, there were more than 400 private commercial banks. These
banks mainly focused on their own interests and didn’t help the
government meet its goals. In July 1955, the State Bank of India (SBI)
became the first bank to be nationalized under the SBI Act of 1955. On July
19, 1960, seven subsidiary banks of SBI were also nationalized. The first
bank ever nationalized in India was the Imperial Bank of India, which has
been run by the government since 1955. A big wave of nationalization
happened in 1969 when the government took control of 14 private banks. A
second round of nationalization occurred In 1980.
Today, India has 12 public sector banks like Punjab National Bank, Bank of
Baroda, and Canara Bank. There are also more than 20 private banks,
including ICICI Bank, Axis Bank, and HDFC Bank.
Product and Services offers by Bank
1. Deposits: A bank accepts deposits from the public. People can
deposit their cash balances in either of the following accounts to their
conveniences.
• Saving account :- These types of deposits are meant for those
who wish to park small savings in the bank and may need to
withdraw them occasionally. Bank offer certain interest rate
upon maximum balance maintained by depositors throughout
the month.
• Current account :- These account are usually maintained by
business people who are required to withdraw amount now and
then. Bank usually don’t pay interest on such account.
• Fixed account :- Account in which money remains for a fixed
period. Fixed deposit (FD) is a tenured deposit account provided
by banks which provides investors a higher rate of interest than
a regular savings account, until the given maturity date. A fixed
deposit means that the money cannot be withdrawn before
maturity unlike a recurring deposit or a demand deposit. The
tenure of an FD can vary from 7, 15 or 45 days to 1.5 years and
can be as high as 10 years.
2. Loans Facility: People can borrow money from a bank, pay interest,
and repay the loan over a specific repayment tenure. Banks typically
offer home loans, personal loans, auto loans, etc. People can also
borrow money if they do not have sufficient funds in their account to
pay for certain transactions. This service is known as an overdraft.
3. Credit cards: All banks (except the Swiss bank) provide VISA and
MasterCard cards that enable individuals to make payments over the
Internet or in shops.
4. Insurance :- Banks may offer insurance products such as life
insurance, health insurance, and car insurance.
5. Internet Banking: Online banking (or Internet banking) allows
customers to conduct financial transactions on a secure website
operated by their retail or virtual bank, credit Union or building society.
PUBLIC SECTOR BANKS
Public sector banks are owned and controlled by the Government of India.
The Government holds 50% or more shares in these banks. Reserve Bank
of India issue guidelines, regulations, instructions, and rules. Bank Board
Bureau (BBB) is the official body for the selection of management
personals. The customers with public banks is very high as there is a trust
of Government.

State Bank of India

State Bank of India (SBI), state-owned commercial bank and financial
services company, nationalized by the Indian government in 1955. SBI
maintains thousands of branches throughout India and offices in dozens of
countries throughout the world. The Bank’s headquarters are in Mumbai.
The government nationalized the bank with the Reserve Bank of India taking
a 60% ownership stake. In recent years the bank has focused on three
priorities, 1), reducing its huge staff through Golden handshake schemes
known as the Voluntary Retirement Scheme, which saw many of its best
and brightest defect to the private sector, 2), computerizing its operations
and 3), changing the attitude of its employees (through an ambitious
programme aptly named ‘Parivartan’ which means (change) as a large
number of employees are very rude to customers.

PRIVATE SECTOR BANK

Private Banks are owned and controlled by the private personals. In private
banks majority of shareholdings are with private personals and
corporation. These banks are formed by registered under the Indian
Companies Act. Reserve Bank of India issue guidelines, regulations,
instructions, and rules. Maximum 74 %, Investment are permitted. Single
corporation or individuals are not permitted to invest more than 10 %.These
banks have their own selection process by keeping the RBI rules and
regulations in mind. These banks provide the good customer services to
their customers These banks have less customers as it is managed by the
private individuals and there is trust issues.
Housing Development Finance Corporation (HDFC )
HDFC Bank was incorporated in Aug. 1994 and promoted by Housing
Development Finance Corporation Limited (HDFC) India’s premier housing
finance company which also enjoys an impeccable track record in India as
well as in international markets. HDFC was amongst the first to receive an
‘in principle’ approval from the Reserve Bank of India (RBI) to set up a bank
in the private sector, as part of the RBI’s liberalization of the Indian Banking
Industry. HDFC bank has become the first private sector bank to be
authorized by the Central Board Of Direct Taxes (CBDT) as well as the RBI to
accept direct taxes, HDFC Bank concentrates in four areas -corporate
banking, treasury management, custodial services and retail banking. It
has entered the banking a consortium of over 50 corporate for providing
working capital finance, trade services, corporate finance and merchant
banking.

SIGNIFICANCE OF THE STUDY :-

In recent years, banking services have evolved significantly with
advancements in technology, changing customer expectations, and
regulatory reforms. Customers today demand seamless banking
experiences, efficient digital services, and personalized financial solutions.
While public sector banks like SBI have been improving their digital and
customer service capabilities, private banks like HDFC have been at the
forefront of innovation and customer satisfaction. The mere objective of the
study is to interpret the customer services provided by HDFC and SBI bank
and to compare with each other. It will help in understanding the preferred
customer changing attitude towards the customer services provided to
them by HDFCI and SBI bank.
 OBJECTIVES AND HYPOTHESIS

OBJECTIVES:-
The objectives of the study are :-

1. To compare the services provided by HDFC Bank and SBI Bank.

2. To understand about the customer perception towards SBI and
HDFC.

HYPOTHESIS:-
Based on the above objectives, the following hypotheses are formulated :
1. There is difference in quality of services provided by HDFC and SBI.
2. HDFC Bank provides better customer services and digital banking
experience than SBI.
 REVIEW OF LITERATURE
Gupta, R., & Sharma, A. (2019) in their research “Financial Performance of
Public and Private Sector Banks in India: A Comparative Study” compares
financial performance indicators such as profitability, return on assets
(ROA), and non-performing assets (NPAs) between SBI and HDFC Bank.
The study concludes that HDFC Bank exhibits higher profitability and lower
NPAs, attributing this to efficient management practices and a focus on
retail banking.
Habiba Abbasi (2017) in her research “A Comparative Study of Public and
Private Sector Banks in India” delves into the evolution of private sector
banking and public sector banking in India. The study analyzes the
structure, functions, and share issuance of private banks, offering a
detailed comparison between the two sectors on standard parameters. The
findings suggest that private banks have adopted more aggressive
strategies in terms of service delivery and technological adoption
compared to their public counterparts.
Malhotra, P. (2020) in his research “Customer Satisfaction in Public vs.
Private Sector Banks: A Case Study of SBI and HDFC Bank” assesses
customer satisfaction levels, revealing that HDFC Bank scores higher in
service quality and digital banking services. Conversely, SBI is preferred for
its extensive branch network and trustworthiness, especially among rural
customers. The research highlights the need for PSBs to enhance their
service delivery to match private sector standards.
A study by SBI (2024) found that public sector banks, including SBI, are
more efficient than private sector banks like HDFC in terms of resource
utilization and optimal scale operations. The study measures efficiency by
assessing how well banks utilize resources to generate output at an optimal
scale. SBI leads among public sector banks with a score of nearly 98%,
while HDFC Bank tops the private sector with a similar score.
Patel, R., & Verma, S. (2019) in their research “Service Quality Assessment
in Public and Private Sector Bank” apply the SERVQUAL model, the study
finds that HDFC Bank outperforms SBI in responsiveness and reliability.
However, SBI has greater accessibility, especially in rural areas, owing to its
extensive branch network. The research suggests that while private banks
excel in service quality, public banks play a crucial role in financial
inclusion.
Sharma, K., & Mehta, R. (2021) in their research “Customer Preferences in
the Digital Era: A Comparative Study of SBI and HDFC Bank” highlights that
tech-savvy urban customers prefer HDFC Bank for its digital services, while
SBI retains loyalty in semi-urban and rural regions due to its trust factor and
extensive branch.
 RESEARCH METHODOLOGY
1. Area of study :-
The study basically tries to identify the customers are satisfied with
their services among HDFC bank and SBI bank and know about the
Customer preferences among HDFC and SBI bank. The study was
done to individual customer restricted to the Boring Road,Patna.

2. Sample size :-
For the purpose of this study, the sample size comprise of 100
respondents :- HDFC bank – 50 respondents
SBI bank – 50 respondents

3. Sampling method:-
For the study on customer service provided by public sector banks
and private sector banks with reference to SBI and HDFC bank,
random sampling method has been adopted.

4. Method of collection of data :-

Primary Data:-Primary data will be collected through questionnaire
and personal Interviews.
Secondary Data:-Secondary data will be collected through various
sources such as Magazine, Internet and business journals.

5. Analysis method:-
Analysis is done on the basis of responses taken from the
respondents by making use of
• Tables,
• charts,
• graphs
• Chi-Square test
The Chi-Square test will help assess whether there’s a significant
association between bank type (HDFC/SBI) and various aspects of
customer experience, such as service quality and digital banking
experience.

CHAPTERIZATION

Chapter 1 – Introduction

Chapter 2 – Review of Literature

Chapter 3 – Research Methodology

Chapter 4 – Result and Discussion

Chapter 5 – Summary and Conclusion

References