To Study The Financial Performance of HDFC and Sbop: A Comparative Study

EXCEL International Journal of Multidisciplinary Management Studies
Vol.2 Issue 3, March 2012, ISSN 2249 8834 Online available at http://zenithresearch.org.in/
TO STUDY THE FINANCIAL PERFORMANCE OF HDFC AND SBOP: A COMPARATIVE STUDY

BIKRAMJIT SINGH*
*Associate Professor, HOD P.G Department of Commerce, Mata Gujri College, Fatehgarh Sahib.
ABSRACT The banking system of India should not only be hassle free but it should be able to meet new challenges posed by the technology and any other external and internal factors. The government's regular policy for Indian bank since 1969 has paid rich dividends with the nationalization of 14 major private banks of India. For the purpose of study two banks have been taken one from public sector bank and one from private sector bank that is HDFC and SBOP. The purpose of study is to examine the profitability aspects of both the banks and also compare the profitability of both the banks. For the purpose of the study secondary date has been taken from the period 2004-05 to 2009-10. The study found that the profitability of HDFC bank is higher as compared to SBOP bank. ______________________________________________________________________________ INTRODUCTION Without a sound and effective banking system in India it cannot have a healthy economy. The banking system of India should not only be hassle free but it should be able to meet new challenges posed by the technology and any other external and internal factors. For the past three decades India's banking system has several outstanding achievements to its credit. The most striking is its extensive reach. It is no longer confined to only metropolitans or cosmopolitans in India. In fact, Indian banking system has reached even to the remote corners of the country. This is one of the main reasons of India's growth process. The government's regular policy for Indian bank since 1969 has paid rich dividends with the nationalization of 14 major private banks of India. Not long ago, an account holder had to wait for hours at the bank counters for getting a draft or for withdrawing his own money. Today, he has a choice. Gone are days when the most efficient bank transferred money from one branch to other in two days. Now it is simple as instant messaging or dials a pizza. Money has become the order of the day. BANKS IN INDIA In India the banks are being segregated in different groups. Each group has their own benefits and limitations in operating in India. Each has their own dedicated target market. Few of them only work in rural sector while others in both rural as well as urban. Many even are only catering in cities. Some are of Indian origin and some are foreign players. All these details and many more are discussed over here. The banks and its relation with the customers, their mode of operation, the names of banks under different groups and other such useful informations are talked about.
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HDFC BANK INTRODUCTION The Housing Development Finance Corporation Limited (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 in 1994. The bank was incorporated in August 1994 in the name of 'HDFC Bank Limited', with its registered office in Mumbai, India. HDFC Bank commenced operations as a Scheduled Commercial Bank in January 1995. HDFC Bank currently has an nationwide network of 1,986 Branches and 5,471 ATM's in 996 Indian towns and cities. The Bank also has 5,471 networked ATMs across these cities. Moreover, HDFC Bank's ATM network can be accessed by all domestic and international Visa/MasterCard, Visa Electron/Maestro, Plus/Cirrus and American Express Credit/Charge cardholders. HDFC Bank was the first bank in India to launch an International Debit Card in association with VISA (VISA Electron) and issues the Master card Maestro debit card as well. The Bank launched its credit card business in late 2001. By March 2010, the bank had a total card base (debit and credit cards) of over 14 million. The Bank is also one of the leading players in the merchant acquiring business with over 90,000 Point-of-sale (POS) terminals for debit / credit cards acceptance at merchant establishments. The Bank is well positioned as a leader in various net based B2C opportunities including a wide range of internet banking services for Fixed Deposits, Loans, Bill Payments, etc. STATE BANK OF PATIALA The rich heritage of State Bank of Patiala dates back to the year 1917, when it was founded by Late His Highness Bhupinder Singh, Maharaja of erstwhile Patiala state, with one branch by the name of 'Chowk Fort, Patiala' to begin with. The Bank, then known as the 'Patiala State Bank' was state owned and setup for the explicit purpose of fostering growth of agriculture, trade and industry. The constitution, scope and operations of the Bank underwent a sea change with the formation of the Patiala and east Punjab States Union (PEPSU) in 1948.The Bank was then reorganized and brought under the control of Reserve Bank of India. RESEARCH METHODOLOGY In this paper an attempt has been made to study and compare the profitability of SBOP and HDFC. The profitability of the selected banks has been studied on the basis of various indicators. The profitability of both the Banks are examine on the basis of various indicators like interest expense to total income, interest income to total assets, interest income to total income, return on equity, return on advances, return on assets, profit margin, asset utilization and priority sector advances to total advances. The secondary data has also been collected from the web sites of the selected banks. I also visited various offices of SBOP and HDFC and consulted many employees and members of the Banks. My personal observations and their views were also used in reaching some conclusions. The data collected has been tabulated and analyzed by using ratio analysis. The period of study is 2004-05 to 2009-10. www.zenithresearch.org.in
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NEED OF THE STUDY Since the era of economic reforms, banking sector has been witnessing numerous changes. The new private sector banks and foreign banks have also introduced number of new innovative products. These banks are also offerings their services through new age distribution channels like ATM, internet banking, phone banking, etc. All these factors have affected the performance of both the public sector banks and private sector banks. A large no of studies have already been conducted in banking sector but these studies have covered period prior to 2006. So the present study is an attempt to analyses and compares the profitability of HDFC and SBOP Bank during the period 2004-05 to 2009-10. OBJECTIVES OF THE STUDY The following are main objectives of the study: To examine the profitability of HDFC and SBOP To compare the profitability of HDFC and SBOP. LIMITATION OF THE STUDY Due to constraints of time and resources, the study is likely to suffer from certain limitations. Some of these are mentioned here under so that the findings of the study may be understood in a proper perspective. The limitations of the study are: The study is based on the secondary data and the limitation of using secondary data may affect the results. The secondary data was taken from the annual reports of the banks. It may be possible that the data shown in the annual reports may be window dressed which does not show the actual position of the banks. www.zenithresearch.org.in SCOPE OF THE STUDY The present study has been undertaken to measure and evaluate the profitability of two banks. The study covers the period of 6 years that is from year 2004-2005 to year 2009-2010. The sample of study takes into account two banks one from private sector and one from public sector. Profitability is the management concept with the objective of assessment banks results from efficiency point of view both for entirely activity and for differently management compounds. From the conceptual point of view, profitability represents the modality to achieve two major goals of banks activity, respectively the maximization of profits in minimization risk conditions. The profitability analysis is achieved on a set of indicator to measure the banks performance. The indicator results arise from the accounting dates which illustrates the reference period in the most
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synthetic expression of balance sheet and profit and loss account. The main performance indicators computed for the banks are: INTEREST EXPENSE TO TOTAL INCOME This ratio measures the proportion of interest expenses to total income earned. The bank pays interest on deposits. Total income comprises of interest income and other income. Table 1.1 shows year wise interest paid on deposits as proportion to total income. TABLE 1.1RATIO OF INTEREST EXPENSES TO TOTAL INCOME (IN PERCENTAGE) YEAR 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010 HDFC 35.13 34.45 38.94 39.41 45.41 38.96 SBOP 46.48 52.15 58.72 69.70 72.66 66.78
(Source: Compiled from annual reports of both the banks for the period 2004-2005 to 20092010) FIGURE 1.1 RATIO OF INTEREST EXPENSE TO TOTAL INCOME
HDFC SBOP 20042005 20052006 20062007 Years 20072008 20082009 20092010
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80 70 60 50 40 30 20 10 0
Percentage

Table 1.1 depicts that the major portion of total income on expanded on the interest expenses. In case of HDFC bank there is an increase in interest expenditure as percentage to total income from 35.13% in year 2005 to 45.41% in year 2009. In year 2010 there is a decrease in ratio. Further in case of SBOP near about 65% to 75% is the interest expenditure out of total income. In year 2005 it was 46.48% but in year 2010 it was 66.78%. So interest expenditure is more in case of SBOP as compared to HDFC. The reason may be due to interest rate fluctuations on deposits of both the banks. INTEREST INCOME EARNED TO TOTAL ASSETS Interest is earned by the banks on the amounts advanced to the customers and the investments made in securities. The interest income to total income of the HDFC Bank and SBOP Bank has been given in table 1.2 TABLE 1.2 RATIO OF INTEREST INCOME TO TOTAL ASSETS (IN PERCENT) YEAR 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010 HDFC 6.015 6.08 7.28 7.59 8.91 7.27 SBOP 6.77 5.94 6.45 7.29 8.33 7.85
(Source: Compiled from annual reports of both the banks for the period 2004-2005 to 20092010) www.zenithresearch.org.in
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FIGURE 1.2 RATIO OF INTEREST INCOME EARNED TO TOTAL ASSETS
10 9 8 7 percentagee 6 5 4 3 2 1 0 20042005 20052006 20062007 Years 20072008 20082009 20092010 HDFC SBOP
Table 1.2 indicates that interest income to total assets of HDFC bank increased from 6.015 % in year 2005 to 8.91% in year 2009. In year there is decrease in ratio that is 7.27% in year 2010. Same is the case with SBOP in 2009 it was 8.33% but in year 2010 it was 7.85% but it is higher than the HDFC bank ratio. So both the banks show a fluctuating trend in interest income to total assets ratio. NET INTEREST INCOME TO TOTAL ASSET(NET INTEREST MARGIN RATIO) It is ratio of excess of interest earned over interest paid to total assets. The interest earned minus interest paid is the net interest margin. From this it comes to know about the net amount left as an net interest income which may be used for investment or other purposes. The ratio for both the banks is shown in table 1.3.
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TABLE 1.3 RATIO OF NET INTEREST INCOME TO TOTAL INCOME (IN PERCENT) YEAR 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010 HDFC 3.457 3.46 3.80 3.92 4.05 3.76 SBOP 3.09 2.41 2.11 1.50 1.60 2.02
(Source: Compiled from annual reports of both the banks for the period 2004-2005 to 20092010) FIGURE 1.3 RATIO OF NET INTEREST INCOME TO TOTAL ASSET
4.5 4 3.5 3 percentage 2.5 2 1.5 1 0.5 0 20042005 20052006 20062007 years 20072008 20082009 20092010 HDFC SBOP
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From the table 1.3 it is clear that the HDFC bank ratio increases from3.45% in year 2005 to 4.05% in year 2009. But in year 2010 there is a slightly decrease out this it is cleared that near about 3% to 4% is contributed to total assets. Further in SBOP the ratio shows a declining trend up to 2009 but in year 2010 it show uprising trend. But still there is not as much percentage as compared to year 2005. That is in year 2005 it is 3.09%, decline up to 1.61% in year 2009 but in year 2010 there is increase that is 2.02% PROFIT MARGIN: In the banking all computed the profit on which the dimensions depend first by the ratio between bank income and expenses and second by the structure of incomes and the costs of banking activity. To reveal the financial result of business activity and to reflect the management efficiency in operations. This ratio is calculated by dividing the net profit after tax by total income. Higher the ratio better is performance. The ratio of the selected banks is shown below in table 1.4 TABLE 1.4 PROFIT MARGIN RATE YEAR 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010 HDFC 17.77 15.55 13.98 12.82 11.44 14.75 (IN PERCENT) SBOP 11.53 10.78 10.43 8.43 8.26 8.29
(Source: Compiled from annual reports of both the banks for the period 2004-2005 to 20092010) FIGURE 1.4 PROFIT MARGIN RATIO www.zenithresearch.org.in
20 percentage 15 10 5 0 20042005 20052006 20062007 years 20072008 20082009 20092010 HDFC SBOP
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From the table 1.4 it is cleared that the profit margin ratio in both the banks is fluctuating. In case of HDFC bank the profit margin ranges from 11.44% to 17.77%. In case of SBOP it ranges from 8.26% to 11.53%. in case of SBOP firstly there is a decline trend and from 2008 there are minor fluctuations in ratio. In year 2005 there is more ratio the reason behind it is that the net profit and the total income both decrease as compared to previous year. From this analysis it is cleared the performance of HDFC is better than SBOP. ASSET UTILIZATION The dimension of this indicator depends by the active interest measured on market and the banking assets structure. The indicator is defined as a ratio between the total income and the total asset thus treating the total income obtained from asset utilization. TABLE 1.5 ASSET UTILIZATION RATIO YEAR 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010 HDFC 7.28 7.617 8.95 9.30 10.70 8.98 (IN PERCENT) SBOP 7.90 6.782 7.38 8.30 9.24 8.71
(Source: Compiled from annual reports of both the banks for the period 2004-2005 to 20092010) FIGURE 1.5 ASSET UTILIZATION
10 percentage 8 6 4 2 0 20042005 20052006 20062007 years 20072008 20082009 20092010 HDFC SBOP
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12

Table 1.5 depicts that the ratio of asset utilization in case HDFC decrease ins year 2010 i.e. 8.98% as compared to previous year which was 10.70%. In case of SBOP it was 9.24% in year 2009 but in 2010 it decrease to 8.71%. But the decrease in ratio is more in HDFC bank but still HDFC has higher asset utilization as compared to SBOP. RETURN ON ASSETS This indicator is an expression of return ability for the entirely business activity of a banking society. This indicator known as profit to assets. The assets return ability measures the effect of management capacity to use the financial and real resources of bank society in order to generate profit. It is appreciable that return of asset indicator is the most exact measure of banking activity due to the fact that expressed directly the results, accordingly to the specific management of banking intermediate of active operations optimization related to the volume of resources considered. Table 1.6 depicts the ratios of both the banks. TABLE 1.6 RETURN ON ASSET RATIO YEAR 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010 HDFC 1.47 1.38 1.33 1.32 1.28 1.53 (IN PERCENT) SBOP 1.01 0.73 0.77 0.88 0.83 0.79
(Source: Compiled from annual reports of both the banks for the period 2004-2005 to 20092010)
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FIGURE 1.6 RETURN ON ASSETS
1.8 1.6 1.4 1.2 1 0.8 0.6 0.4 0.2 0 20042005 20052006 20062007 years 20072008 20082009 20092010
percentage
HDFC SBOP
From the table 1.6 it shows that the return on asset of HDFC bank goes on fluctuating from year 2005 to year 2010 that is from 1.47% to 1.53%. In case of the SBOP there is decreasing trend from year 2005 to year 2007 that is from 1.01% to 0.77%. In 2008 and 2009 the ratio is stable at 0.83% and again there is decrease in year 2010 to 0.79%. So from analysis it is cleared that the performance of HDFC is far better than the SBOP. RETURN ON EQUITY It is the most significant indicator for the profit which measures the banking management in all its dimensions, it offers on image over the way to use the capital brought by the shareholders, the effect of their return in banks activity. The indicator is determined by dividing the net profit after tax to the equity capital that includes equity and reserve and surplus. TABLE 1.7 RETURN ON EQUITY RATIO YEAR 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010 HDFC 14.72 16.43 17.74 13.83 15.32 13.70 (IN PERCENT) SBOP 14.04 13.56 14.73 15.92 18.20 15.68 www.zenithresearch.org.in
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(Source: Compiled from annual reports of both the banks for the period 2004-2005 to 20092010) FIGURE 1.7 RETURN ON EQUITY
20 18 16 14 PERCENTAGE 12 10 8 6 4 2 0 20042005 20052006 20062007 YEARS 20072008 20082009 20092010 HDFC SBOP
The table 5.7 depicts that the return on equity ratio of HDFC Bank has been increased from 14.72% in 2005 to 17.74% in year 2007 but in year 2010 the ratio is 13.70%. In case of SBOP in year 2005 it was 14.04% and in year 2010 it increase to 15.68% but between these years there are fluctuations in ratio. The return on equity ratio is higher in SBOP as compared HDFC bank. RETURN ON ADVANCES Return on advances reveals that how much interest has been earned on advances by banks. Return on advances is the indicator to know the performance of the banks. Return on advances ratio has been calculated by using the formula that is interest earned on advance and bill divided by total assets. Higher ratio indicates better performance bank. Hence banks having the higher ratio indicate more earnings from advances. Return on advances ratio of HDFC and SBOP bank has been shown in table 1.8. www.zenithresearch.org.in
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TABLE 1.8 RETURN ON ASSETS YEAR 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010 HDFC 6.51 7.70 9.23 10.98 12.25 9.65
(IN PERCENT) SBOP 7.31 6.79 7.77 9.12 10.32 9.94
(Source: Compiled from annual reports of both the banks for the period 2004-2005 to 20092010) FIGURE 1.8 RETURN ON ADVANCES
14 12 10 PERCENTAGE 8 6 4 2 0 20042005 20052006 20062007 YEAR 20072008 20082009 20092010 HDFC SBOP
Table 1.8 indicates that return on advances ratio of the HDFC bank is 6.51% in year 2005 and up to year 2009 there is an increasing trend that it rises up to 12.25%. But in year 2010 it decreases to 9.65%. In case of SBOP in year 2005 it was 7.31% and increase up to 10.32% in year 2009 but in year 2010 again it declines to 9.94%. Now the return on advances is higher in SBOP as compared to HDFC bank.
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RATIO OF PRIORITY SECTOR ADVANCES TO TOTAL ADVANCES Agriculture ,small scale industries, small road and water transport operations, small business, retail trade, professional and self employed persons, organization of scheduled caste and tribe, education, housing, consumption loans, software industry, and investment by banks in venture capital constitutes priority sector advances. This ratio predicts how much preference has been given to the priority sector advances as compared to the total advances. Ratio of priority sector advances to total advance of both the selected banks is given below TABLE 1.9 RATIO OF PRIORITY SECTOR ADVANCES TO TOTAL ADVANCES (IN PERCENT) YEAR 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010 HDFC 21.96 30.98 37.66 27.47 30.11 35.09 SBOP 44.04 37.86 34.60 31.60 32.14 38.47
(Source: Compiled from annual reports of both the banks for the period 2004-2005 to 20092010) FIGURE 1.9 PRIORITY SECTOR ADVANCES TO TOTAL ADVANCES
HDFC SBOP 20042005 20052006 20062007 year 20072008 20082009 20092010
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50 45 40 35 30 25 20 15 10 5 0
percentages

Table 1.9 indicates that the ratio of priority sector advances to total advances of HDFC bank is increased from 21.96% in year 2005 to 35.09% in year 2010. In the similar way the ratio of SBOP decreased from 44.04% to 38.47% in year 2010. The figure 1.9 shows the uprising trend in priority sector to total advances ratio. It is mandatory for the public banks to contribute 40% of total advances to priority sector. Due to this reason the ratio is more in case of SBOP as compared to the HDFC bank. FINDINGS OF THE STUDY 1. The major portion of total income on expanded on the interest expenses. In case of HDFC bank there is a increase in interest expenditure as percentage to total income from 35.13% in year 2005 to 45.41% in year 2009. In year 2010 there is a decrease in ratio. Further in case of SBOP near about 65% to 75% is the interest expenditure out of total income. In year 2005 it was 46.48% but in year 2010 it was 66.78%. So interest expenditure is more in case of SBOP as compared to HDFC. The reason may be due to interest rate fluctuations on deposits of both the banks. 2. The interest income to total assets of HDFC bank increased from 6.015 % in year 2005 to 8.91% in year 2009. In year there is decrease in ratio that is 7.27% in year 2010. Same is the case with SBOP in 2009 it was 8.33% but in year 2010 it was 7.85% but it is higher than the HDFC bank ratio. So both the banks show a fluctuating trend in interest income to total assets ratio. 3. The HDFC bank ratio increases from3.45% in year 2005 to 4.05% in year 2009. But in year 2010 there is a slightly decrease out this it is cleared that near about 3% to 4% is contributed to total assets. Further in SBOP the ratio shows a declining trend up to 2009 but in year 2010 it show uprising trend. But still there is not as much percentage as compared to year 2005. That is in year 2005 it is 3.09%, decline up to 1.61% in year 2009 but in year 2010 there is increase that is 2.02% 4. The profit margin ratio in both the banks is fluctuating. In case of HDFC bank the profit margin ranges from 11.44% to 17.77%. In case of SBOP it ranges from 8.26% to 11.53%. in case of SBOP firstly there is a decline trend and from 2008 there are minor fluctuations in ratio. In year 2005 there is more ratio the reason behind it is that the net profit and the total income both decrease as compared to previous year. From this analysis it is cleared the performance of HDFC is better than SBOP. 5. The ratio of asset utilization in case HDFC decreases in year 2010 i.e. 8.98% as compared to previous year which was 10.70%. In case of SBOP it was 9.24% in year 2009 but in 2010 it decrease to 8.71%. But the decrease in ratio is more in HDFC bank but still HDFC has higher asset utilization as compared to SBOP. 6. The return on asset of HDFC bank goes on fluctuating from year 2005 to year 2010 that is from 1.47% to 1.53%. In case of the SBOP there is decreasing trend from year 2005 to year 2007 that is from 1.01% to 0.77% in 2008 and 2009 the ratio is stable at 0.83% and again there is decrease in year 2010 to 0.79%. So from analysis it is cleared that the performance of HDFC is far better than the SBOP.
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7. The return on equity ratio of HDFC Bank has been increased from 14.72% in 2005 to 17.74% in year 2007 but in year 2010 the ratio is 13.70%. In case of SBOP in year 2005 it was 14.04% and in year 2010 it increase to 15.68% but between these years there are fluctuations in ratio. 8. The ratio of priority sector advances to total advances of HDFC bank is increased from 21.96% in year 2005 to 35.09% in year 2010. In the similar way the ratio of SBOP decreased from 44.04% to 38.47% in year 2010.It is mandatory for the public banks to contribute 40% of total advances to priority sector. Due to this reason the ratio is more in case of SBOP as compared to the HDFC bank. CONCLUSION 1. The interest expense is more as compared to operating expense in SBOP. Out of total income the major share of income is expanded on interest paid. In comparison to HDFC Bank the interest expense is more in SBOP. The reason behind it is that as SBOP is a public sector bank pays more interest on deposits. 2. As public banks have been entrusted with the task of providing finance to weaker sections of society, development of priority sectors and providing credit under DRI scheme. So priority sector advances out of total advances is more in case of SBOP as compared to HDFC bank. 3. In case of profitability front the performance of HDFC Bank is better as compared to the SBOP. 4. Return on asset ratio is more in HDFC bank. For big banks the basic norm in ratio is greater than 1%. So bank perform far better than the norm. So these above reasons depict the performance of both the banks that is HDFC bank and SBOP bank. SUGGESTIONS Thus it is evident that both HDFC bank AND State Bank of Patiala have tried to improve the upon their performance in terms of growth, profitability and productivity. However the performance of HDFC Bank on an average has been much impressive as compared to SBOP. This may be due to aggressive lending drives carried by bank, autonomy available to the bank managers and selection of suitable sites for opening new branches. Further private sector banks are more innovative in adopting latest technological changes in the field of banking. In view of conclusion following suggestions are forwarded to improve upon the performance of banks. 1. Banking is a service industry and marketing of such services depends upon selection of suitable marketing mix. Among the various elements of mix people (employees) is an essential element. Since the banking product is meant for human beings (customers), a proper dealing with them by the staff is a key to success. For this purpose there is need for having proper personnel policies which ensures placement of fully trained and motivated staff having specialized skill in dealing with people. It has been seen that private sector bank laid special stress on training of employees in such respects. However the behavior of public sector employees is generally less
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cordial and they are less trained in performing their jobs. Hence it is suggested that banks should follow proper personnel policies which lay stress on training of employees. 2. Banking industry is changing very fast keeping in pace with changing requirement of the people. Banks are trying to formulate and provide customized products to their customers. This in turn requires a lot of autonomy available to the bank managers. It has been observed that HDFC bank to some extent have been able to provide autonomy to their managers. However SBOP proved unsuitable to meet their requirements. Thus to retain and grow existing strength of customers it becomes necessary that managers working in SBOP are also given sufficient powers to bring flexibility in the banking operations. This will help the bank in meeting competition from private sector bank more effectively. 3. Traditional banking and modern banking are two different extremes. Hence the banking processes planned for providing traditional services are ineffective in many cases for providing modern services to the customers. Traditional processes are sometimes unnecessary and time consuming thus harassing the customer and leading to unnecessary delay in operations. This requires a proper study of organizational methods to make the office processes, customer friendly and effective. Thus it is suggested that both the banks should to take the benefit of mechanization and adopt the customer friendly simplified process to bring efficiency and customer satisfaction. 5. Mobilizing deposits and providing advances are the most important activities of any bank. The profitability of the bank depends to a great extent on the effectiveness of its deposits mobilization accompanied by aggressive credit deployment. It has been observed that HDFC bank have been more aggressive in their credit deployment efforts. Sometimes they approach the customers at their residence, contact them on telephones to present a product which meet their specific requirements. All this has lead to higher productivity and profitability of such banks. So it is suggested that SBOP should also adopt this marketing strategy successfully to improve upon their profitability and productivity. 6. Customer satisfaction is the base for the success of any business activity. However customers requirements and expectations are varied and differ from time to time. So the banks should continuously strive to provide a wide variety of alternative products and make amendments or improvements in them from time to time. Further formation of grievance handling committee and regular contact with customers can help the banks in improving customer satisfaction and in turn improving profitability and productivity of banks. 7. Bank deal in money which has to be properly invested to earn profits. These need a well trained team work which is supported by regular supply of information with regard to market, economic policies and legal aspects etc. The investment committee of the bank should ensure good returns to the bank at desirable level of risk.
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BIBLIOGRAPHY Mathus, O.P, Public Sector Banks, Sterling Publishers Private limited, New Delhi,1978. Tajinder Pal Singh, Marketing of Banking Services a comparative study of public and private sector banks. PhD Thesis, department of commerce, Punjabi university Patiala,2006 Neeraj Sharma , performance of Punjab National Bank in competitive environment a case of Harayana, Punjab School of Management Studies, Punjabi university Patiala, 2006 Sathya Swaroop Debasish and Bishnupriya Mishra, Indian Banking System Development Performance and Service, Mahamaya Publishing House , New Delhi 2005. Harish Kumari, Productivity of Banks A Comparison of Public and Private Sector Banks in India, Ph.D Thesis,Department of Commerce , Punjabi University Patiala,2003. Reserve Bank of India, Report On Trend and Progress of banking in India , 2004 to 2010. Reserve Bank of India, Statistical Tables Relating to banking In India, 2004 to 2010. Annual reports of HDFC Bank and State Bank of Patiala from year 2004 to 2010. WEBSITES www.indianbanksassociation.org www.wikipedia.org www.rbi.org.in www.hdfcbank.com www.sbp.co.in www.onlinesbp.com www.economictimes.indiatimes.com www.zenithresearch.org.in
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To Study The Financial Performance of HDFC and Sbop: A Comparative Study

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EXCEL International Journal of Multidisciplinary Management Studies