Retail bank services : rating & performance of private sector banks in India

Autor:Dr. A. K. Tiwari/Mrs. Meenakshi Sharma

The private banks with their focused business and service portfolio have a reputation of being niche player in the industry. A strategy that has allowed these banks to concentrate on few reliable high net worth companies and individuals rather than cater to the mass market. These integrated strategies have allowed most of these banks to deliver superlative levels of personalized services. With... (ver resumen completo)


The private sector banks have made tremendous strides during the last two decades. It was in mid 1990’s when Indian banking scenario witnessed the entry of some new private sector banks and during the period of 2002-2007 these banks have grown by leaps and bounds accompanied by a rapid branch expansion. The network of private sector banks grew at almost three times of all scheduled commercial banks and more than four times that of public sector banks. The star performers among these banks were the centurion bank of Punjab (CboP), HDFC Bank, ICICI Bank, and the Axis Bank (formerly UTI Bank). These big four expanded their branch network at a rapid rate of 14-16 percent per annum in terms of compound growth rates.

Another trend in the banking sector during this period was the significant increase in staff strength by private sector banks while the public sector banks witnessed a decline in the number of employees. The private sector banks recorded a compounded growth of 24 percentages in their staff strength. The decline in public sector bank staff can be attributed to restricting and adaption of IT infrastructure.

Private sector recorded growth ranging from 30 percentages to 68 percentages in terms of capital, reserves and surplus. The deposits increased in the range of 32 percentages to 51 percentages while the advances showed a growth trend between 39 percentages to 71 percentages. The net profit by private sector recorded a compound annual growth of 27 percentages to 36 percentages

The objective of the study is to

1) To investigate the role of retail banking services in upliftment of banking services in India

2) To find out the expansion and analyse the rating of various private sector banks in India.

3) To examine the performance of these banks in context of retail banking services particularly in the light of new era of competition in banking business.


The parameters which have been categorically looked into include inter-alia the advances, profit per employee, the rate of expansion of branches all of which have been tested comprehensively besides having a new comparative account of the application of these variables.

The relationship between profit per employee and business per employee is tested using Karl Pearson,s coefficient of correlation

Analysis & Findings

A significant surge has taken place in the advances disbursed by all Private Sector Banks during the period 2003-04 to 2007-08. The Table 4.1 x-rays the advance disbursement by all private sector banks during the period 2003-04 to 2007-08.

Table 4.1

Advances of Private Sector Banks during the year (2003-04 to 2007- 08)

(In Rs. Crore)

[ Table does not include ]

Source : Annual publication, “Statistical table relating to banks in India.”

A significant surge can be observed in the advances disbursed by all private sector banks during the period 2003-04 to 2007-08. It is evident from the table 4.1 that a sum of Rs. 115506 crore was disbursed in the year 2003-04 which increased up to Rs. 518104 crore in the year 2007-08 registering the growth of 349 percent. An analysis of advances made by private sector banks individually in the year 2003-04 reveals that Rs. 62648 crore, the highest amount was advanced by ICICI Bank followed by HDFC Bank (Rs. 17745 crore), Axis Bank (Rs. 9363 crore), Federal Bank (Rs. 7701 crore), ING Vysya Bank (Rs. 6937 crore), Development Credit Bank (Rs. 2440 crore), Bank of Rajasthan (Rs. 2333 crore), Kotak Mahindra Bank (Rs. 2097 crore), Centurion Bank of Punjab (Rs.1556 crore), City Union Bank (Rs.1547 crore) and Dhanalakshmi Bank (Rs. 1139 crore). Further it is established that during 2004-05 sum of Rs. 210964 were disbursed by all private Sector Banks, out of which the highest...

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