CHAPTER- I

INTRODUCTION
 CHAPTER I

Introduction

The term Bank is very important concept in the Indian economy. The finance is the
lifeblood of each and every sector of the economy such as trade, commerce and industry. For
the modern business concerns the banking sector performs as the backbone in recent times.
Growth and development of any nation totally depends upon the banking sector. The term
bank is taken from French word ‘banque’ and also the Italian word ‘banca’ both of which
mean a “Bench” or “Money Exchange Table” In earlier times, European money lenders or
money charges utilized to present coins of various countries in large quantity on benches or
tables for the reason of exchanging. A bank is nothing but a financial institution which
performs with deposits and loans and other connected services. The bank collects money
from those who need to save in the form of deposits and it gives money to those who required
it.

According to the oxford dictionary defines the term Bank as “an establishment for
custody of money, which it fills out an order of customer. There is various numbers of
definitions which are defined by the different authors. Therefore, by taking into account the
various definitions we may define bank as “A Bank is a true financial institution which
collects the money from one group of people and gives to other group of people. So, bank
acts as the duty of financial middleman among the people and generate the credit money”.
The banking system is nothing but the structural panel of institutions that deal financial
Services within a nation. The members of the banking system and the operations they
specifically perform consists of

1. Commercial banks that collects deposits and loans.

2. Investment banks which specialist in capital market concepts and trading.
3. National central banks that concerns currency and confirms monetary policy.

Features / characteristics of Bank

 Dealing with Money

 From the general public the bank accept deposits and giving money in advance as loans
to the essential people. Bank deals with different number of various deposits namely; saving
deposits, current deposits and etc. accounts. But on the various terms and conditions only the
deposits are accepted.

 Accepted deposits must be able to withdrawn

Other than the fixed deposits, remaining all types of deposits can be able to
withdrawn able cheques, draft or otherwise, i.e., by pay cheques and bank issue. But, usually
the deposits are withdrawn able on demand only.

 Dealing in Credit
The banks are nothing but the institutions that can generate credit i.e., generating the
additional money for the purpose of lending. So, generating the credit is the special
characteristics of banking.

 Generally it is commercial
Basically with the object of generating Profit all the banking operations are carried on.
So, it is termed as commercial institutions.

 Act as agent
Along with the basic functions of banking such as accepting deposits and lending
money as loans and advances, the bank also perform the character of an agent due to its
number of agency services.

 Company / Firm / Individual

A bank may be act as a company or firm or an individual. A banking company refers
as a company which is in banking business concern.

 Number of Branches

For the facility of the customers a bank can offer various numbers of branches. Because
each and every customer is not able to go directly to the main branch of the bank, the
banks further increase their branches to reach each and every customer.
  Identity
As we know, all people deal with banks having their various names, but the word
‘bank’ is common for all of them.

After knowing the main features of bank, we are now focusing towards the major
functions of banks. The functions of banks are mainly categorised into two heads. (i)
Primary functions (ii) Secondary functions consisting functions regarding agency.

 Primary functions of Bank

 Deposits accepting
The person who is having excess earnings and fined savings it convenient to deposits
the amount into the bank. The deposited amount of money also grows along with earned
interest. Generally people are motivated to deposit much more funds when bank provides
higher rate of interest. And also, it is safe to deposits funds into the bank for people.

 Providing loans and advances

The second major function of bank is to give loans and advances to needy people.
Such loans and advances are provided to the customers and to business related community at
a high rate of interest after allowed by bank on numerous accounts of deposits. And the
charged interest rate on loans and advances are varies according to the purpose, period and
repayment mode. In procedure of discounting of bill, overdraft and cash credit, the banks
provide short-term financial support.

 Secondary Functions of Bank:

Along with the Primary functions such as accepting deposits and lending loans and
advances, the bank also play various other functions these are known as secondary functions.
These are

a) Granting credit letter, Cheques of travellers and circular notes etc.

b) Undertaking valuables safe custody, documents which are much important, securities
by granting safe deposit lockers.
c) Giving facilities to customers of foreign exchange.
d) Credit worthiness reports are also giving to customers.
e) Demand drafts and pay orders are also providing.
f) Gathering business information and transferring.
 g) The bank also doing payments like premium of insurance, various subscriptions, rent,
and etc. Up to the order is revoked; the bank will start to do such payments
consistently by debiting the account of customers.
h) On behalf of the customer, the banks also doing the function of purchasing and selling
various securities such as shares, bonds and debentures etc.,
i) The bank itself prepares tax returns and gives suggestions on tax related matters for
their customers.

Evolution in Banking Sector

The banking evolution in India is having very interesting history. In the ancient period
human life and wealth both was not safety. Due to fear of theft the people hide their wealth
under land but this way was not that much safety. So, the people went to in search of the
custodians of wealth. Therefore, the evolution in banking sector started and it has passed the
following phases.

 First phase of Evolution

After a strong struggle the people finally succeeded in detecting the reliable persons
to deposit their own funds and very worthy goods for security. Such types of people are
known as goldsmiths. Only due to their financial condition, people considered the most
confidential persons. One more important thing that they had a very strong iron safes for
putting the valuable items like gold, money and etc., But for this purpose the goldsmiths
charges some sort of money and they also returned back the deposited their funds whenever
they required. It was the first phase of evolution in banking and in early time goldsmith were
the first bankers.

 Second Phase of Evolution

During the second phase of banking evolution, those document proofs which were
provided by the goldsmiths against the worthy goods, were being used as a tool of exchange
by the merchants. Against these documentary receipts, the public purchased the number of
items from traders. And the concerned traders also started taking the receipts for the
payments. Therefore, the documentary receipts were just utilised as similar to bank cheque of
the modern age.

 Third phase of Evolution

 In the third phase of banking evolution, the goldsmiths come to know that the people
used their given receipt as a medium of exchange, and therefore very few customers demand
their deposits so, they come to conclusion that they also lend some part of their whole
deposits to some other customer and then they earn some sort of profit. From this it comes to
know that the goldsmiths commenced slowly the lending business. They also commenced
filling interest to attract the net cash depositors. So that this business came to very profitable,
due to this reason traders and money lenders also reached in this field.

 Forth phase of Evolution

The fourth phase started at the period when people were much excited to deposit much
more cash of the traders, goldsmiths and the money lenders only to accrue maximum Profit.
Besides this, the number of borrowers and lenders are increased, so, the regular institutions
came into existence. In recent times the bank is modernized structure of those institutions.
But to earn much more income every bank commenced issuing overdraft without controlling
adequate cash reserve to balance the demand of the depositors. Now to control and maintain
the goodwill of every bank the government has started the central bank. All the commercial
banks act their duties by keeping in mind the instructions of the central bank.

By discussion the main four phases of evolution of banking sector we concludes that it
is result of the various functions of goldsmiths, merchants and money lenders, they are the
true founder of modern banking system. All basic general functions of modern bank like
accepting deposits, Providing loans and creation of money are similar with the founders.
Presently with the fining requirements of business the secondary functions of banks have
started along with the duration of time.

Role of Banks in Indian Economic Development

For Indian economic development, banks plays very important role. Banks have
strong hold over a main section of the supply of money in Circulation. If the banking system
of any of country is efficient, effective and proper controlled then it results in a rapid
development in the various sections of the economy. In developing countries banks are now
giving credit for growth of agriculture and small scale industries especially in rural places and
also give short as well as medium term loans to entrepreneurs to invest in new businesses and
conduct the new method of Production. In recent days, the development of our economy also
depends upon proper Organization of internal trade and foreign trade expansion, particularly
exports. So, policies of the banking industry affect development of economy of our nation.
The basic Sources of economic which are available for business purpose are land, labour,
capital and entrepreneurs. But, to proper use of such resources, a business needs finance for
the purchase of land, hire labour capital goods payments and also pay to in individuals with
qualified special skills. The brief role of banks for economic development of India is
explained below.

 Development of Trade
The banks give technical assistance, capital and other required facilities to the
businessman with a view to meet their needs, which leads to trade development.

 Development of agricultural Sector

The banks provide finance to the most essential sector of the developing economies
i.e., agriculture. The banks provide proper timely short term, medium term and so also long
term financial help for purchase of seeds and fertilizer, tube wells installation, warehouse
construction and purchase of tractor etc.

 Development of Industrial Sector

The countries that are much concentrated on industrial sector, those countries made
full economic development. Only with the proper help of commercial banks, the South
Korea, Taiwan, Indonesia, Malaysia and Hong Kong have currently developed their industrial
sector.

 Formation of Capital
Capital formation is nothing but enhancing the number of units of production,
technology and then machinery and plant. They provide financial help to those projects which
responsible for enhancing the rate of formation of capital.

 Foreign Trade Development

The bank supports the traders of two different countries to conduct business. The
credit letter is approved by the importers bank to exporters, to fix the payment because the
banks also manage the foreign exchange.

 Money Transfer
The banks approve the facility of transferring funds from one location to another
which leads to the trade growth.

 Increase Production
 A good banking sector guarantees more production in all segments of the economy. It
enhances the production ability of the economy by updating structure of capital and division
of labour.

 Transportation Development
Recently, all commercial banks financed the transport department. The main reason
behind this is, it reduces the unemployment in the country and also enhance the transport
facilities. Especially the remote areas are connected to main markets by developed transport
system.

 Provide safe custody

The individuals and business firms can make themselves free totally from tension
through depositing their excess money in banks. The banks also give safe custody as lockers
to keep their valuable articles and required documents.

 Enhancing Savings of Customers

The banks motivate the public in general for more savings various saving plans and
policies with attractive rate of interest are introduced for this reason. Various numbers of
bank branches are stated in rural as well as in urban areas.

 Housing finance
The commercial banks give credit approvals to their customers for the reason of
purchase or construction of houses.

 Government Assistance
The banks provide financial assistance to government for various programs
development; the banks contribute the government for stability in economy.

 Decrease Unemployment
A nation’s economic growth depends on the development of commerce, trade,
agriculture, industry and proper effective communication, etc. and all these sections are
appropriate financed by the commercial banks and unemployment threats are decreasing.

 Metallic Reserve Savings

 It is important to note that cheques and drafts are acts like money. In this concept the
requirement of precious metals to do coins decreases and metallic reserves of the nation can
be used to other important subjects.

 Creation of Credit
Generally the banks are referred as the credit factories. They grant advances more
than what they collect from public in the form of deposits. By this process of creation of
credit, the banks give financial support to all areas of the economy, so making them much
developed than earlier.

 Proper Utilisation of Money

All people in the Society deposits their surplus savings into the bank. So, the collected
deposited money becomes a large amount in the way, this can be utilised for various projects
in a proper way.

 Success in Monetary Policy

For the success of monetary policy all scheduled commercial banks do efforts only
under the effective supervision and control of central bank.

 Proper Utilisation of Modern technology

The Proper and effective utilisation of modern technology in less developed countries
is just possible in the appearance of developed commercial banking as it can be the major
source of their finance.

 Advices regarding finance

The banks along with the credit facilities also provide useful advice regarding
financial matter to promote the business of their customers.

 Promotion of export
In order to promote the country’s export, the banks have started export promotion
cells for the proper guidance to the concerned exporters.

 Economic Prosperity
The economic Prosperity of a nation largely depends upon various important factors
consists the development of commercial banking. An effective banking system supports the
economic criteria of the people by approving them short term medium term and long term
loans.

Now, it is much essential to review the banking structure in the Indian context and also
with a target to enable the banking sector to spread to the requirements of a developing and
globalizing economy as well as highlighting financial inclusion. Therefore, it is much
essential to study and point out in detail the structure of Indian Banking Industry. As per the
detailed study the Indian financial system includes an impressive network of banks and so
also institutions relating to financial nature and a large range of financial mechanisms. There
has been a remarkable not ending and deeding of financial structure of Indian economy. And
the main objective of RBI is to control a monetary equilibrium balance in the economy by
structuring number of policies from time to time and fully controlling the financial
mechanism of the economy.

The Structure of Indian Banking Industry:

The Structure of Indian banking industry can be organized as given below.

Reserve Bank of India [Monetary Authority]

 Commercial Banks : 1)Public Sector Banks: a) State Banks Groups

b) Other Nationalized Bank

2) Private Sector Banks: a) Indian Banks

b) Foreign Banks

 Co-Operative Banks: 1) State Co-operative Banks

2) Central Co-operative Banks

3) Primary Credit Societies

 Regional Rural Banks

 Development Banks

Now we can discuss the above structure of banking industry in India in brief.
Reserve Bank of India

RBI controls the apex place in the Structure of Indian banking. The RBI plays various
numbers of developmental and effective promotional important functions. It undertakes wide
control and powers to manage, control and supervise the structure of banking. It acquires the
valuable place in the monetary and structure of banking of the nation. In different countries
the central bank having different names, for example, in USA it is called as Federal Reserve
Bank, in UK is known as Bank of England, etc. The RBI is having powers and authorities to
frame and implement policies like monetary and credit. And also, the RBI is undertaking
monopoly authority of issuing notes.

Commercial Banks

The commercial bank are those banks, which accept deposit from customers, makes
trade loans and then also offer concerned services to various types. Such as accepting
customer deposits, lending loans to needy people and provide advances to general customers
and business concerns. Such banks functioning have to make Profit.

They spread to the financial need of industrial and other different sectors like agriculture,
development of rural, etc. it is a Profit Oriented institutions owned and managed by
government or Private or both.

Public Sector Banks

The Public Sector banks in India having a vital place in the Indian Banking structure.
It consists of SBI, 7 SBI associate banks and also 19 nationalised banks. Totally there are 27
public sector banks in Indian banking system. And it is much important to note that 90% of
total banking business in India includes only Public sector banks. The State Bank of India
occupies largest place in Indian commercial bank in concept of volume of all commercial
banks.

Private Sector Banks:

Private sector banks are nothing but those banks whose total equity is handed in
private shareholders. For example: HDFC Bank, ICICI Bank and etc. The Private Sector bank
performs a main part in the development of banking industry of India.

Foreign Banks
 The Banks whose head offices situated in abroad, such types of banks are called as
foreign banks. Such as HSBC, CITI Bank, standard chartered etc. are few names of foreign
banks in India.

Co-Operative Banks

In 1904, by approving a Co-operative Act the Co-operative bank was formulated. On

the basis of Co-Operation and mutual understanding the Co-operative banks are organized,
managed and controlled. The primary objective of Co-operative bank is to give credit to rural
people. In the year 1912, the Co-operative credit societies act was amended with a target to
broad basing it to possible to Organization of non-credit bases societies. The Co-operative
banking includes three tier structures namely:

a) At the apex level the state co-operative bank.

b) At district place central co-operative banks
c) The base level or local level the Primary Co-Operative banks.

Regional Rural Banks

The regional rural banks Provide credit towards development of agriculture and rural
sector. The primary objective of RRB is to upgrade economy of rural India. Their borrowers
consists farmers of small and marginal, labourers of agriculture, artists and etc. The
NABARD holds the supreme authority in the rural and agricultural development.

Development Banks and various financial institutions

A development bank is nothing but a financial institution, which gives a long term
financial help to the industries for development reason. This structure consist of banks like
ICICI, IDBI, IFCI and etc., The institutions of state level are such as SFC’s, SIDC’s etc., And
this type of institutions also includes investment institutions such as LIC, GIC and UTI etc.

After discussing the whole structure of Indian banking industry, the researcher now
focuses towards the role of Private sector banks for the development of Indian economy.
Because no doubt the Public sector banks occupy the huge place in Indian banking sector and
play very important role. They motivate the banks of public sector by indirectly through
offering a strong competition to them. The following few points explains the importance of
private sector banks.
  Providing high level of Professional management

The Private sector banks support in introducing high level of professional

management and concept related to marketing towards banking. It helps the banks of public
sectors as also to develop simultaneous technology and skill.

 Generates strong competition

The private sector banks give a strong competition on common efficiency degree in
the system of banking sector.

 Supports to enhance foreign Capital markets

This type of service is much easier in these days only because of the appearance of
foreign banks head offices other connected branches in an important foreign centre. In such
way they support a huge proportion in the promotion of trade and industry in the nation.

 Supports to develop innovation and reach expertise

The Private sector banks are always in try to find out new schemes, services, etc and
make the industries to reach specialist in their related fields by providing qualitative service
and the guidance. In the banking industry they innovates new technology. Thus, they connect
the other banks in number of various new areas. For example computerised operations
introduction, business of credit cards, service of ATM and etc.,

Among all top most Private sector bank is ICICI is also one. The ICICI bank is one of the
most popular private banks in India. So, the researcher undertook a study of ICICI bank for
their research work.

In the year 1955 the ICICI was formulated at the beginning of the World Bank, the
government of India and so also representatives of Indian industry. The Primary or major
object to form a developmental financial institution i.e. ICICI Bank was just mainly to
provide timely medium term and long-term financing to projects. The ICICI bank offers a
large number of various banking products and services.

The ICICI bank globally spread throughout 19 countries, consisting India. And also
include network of 2535 branches and 6810 ATMs in India. The ICICI bank limited become
nation’s second largest private sector bank, in the year December 2011, with total
consolidated asset of over USD 110 billion.
 In the year 1995 the parent company was formed as a joint venture of the World Bank,
India’s public sector insurance company and so also public sector bank to assist and gives a
project financing to Indian industry. During the year 1988, the ICICI bank commenced
operations related to internet banking, among all four large banks of India, the ICICI bank is
one along with state Bank of India, Punjab National Bank and Canara Bank.

The ICICI Bank launched ‘iWish’ flexible recurring deposit product for their customers of
saving accounts. ‘iWish’ is a flexible and much interesting scheme. Which motivate and
support savings among youth by fulfilling their dreams? The ‘iWish’ recurring deposit
product permits customers to deposit their saving money at any time period of their choice
and position. One more remarkable point that no penalties will be fined if a customer misses
any time their monthly contribution to the recurring deposit with just Rs. 500, customers can
easily open such type of account. In this way the ICICI bank gives number of various
customers beneficiary schemes are offering to the public in general. Therefore, the popularity
of ICICI bank was increased and became one of the top largest banks among all the private
sector banks in India. The following are the ICICI bank’s 7 points of marketing. The
marketing of services offered by ICICI bank is

Product Mix

The Product mix of ICICI bank consists of deposits, investments, anywhere banking and
loans. All these products are offered by ICICI bank in huge varieties as suit to the customer’s
requirements.

Pricing Mix

When deciding the Price mix the customer services rank occupies top position.

Place Mix

Such type of content of marketing mix is connected to the offering of services. The services
are offered by the way of different branches. The two main decision making places are:

 Make it possible to reach the promised services to the end users.

 Proper selection of appropriate designation for branches of bank.
Promotion Mix

The ICICI bank uses such type of component of the promotion mix with the prime object
of persuading, sensing and informing the customer about their various new and existing
products. And also publicity through the road shows, visits to campus, etc.

Process Mix

Only by the guidelines of RBI the all main activities of ICICI bank follows. There
have been some precautions to certain regulations, principles and rules in the operations of
banking. The activities have been grouped into number of departments namely
standardisation, simplicity, customer involvement and customization.

Physical Education

Any of services the physical education is a material part. The fact is that there are no
physical connections to a service. Therefore, a customer relates to depends on material status.
The following are few examples of physical evidence.

 Paperwork of banks
 Related broachers
 Furnishings of office /branch building
 Cards of business
 Internet connectivity
People

All people who are directly or indirectly connected with utilization of banking
services. Skilful workers, bank employees, Management of all levels and various other
customers are frequently add important worth to the offering final product and services. In
the organization of bank the employees are required the contact person with customers. So,
an employee of bank acts a very significant part in the operations and functioning of an
organisation service. In the internal marketing path a numerous operations are utilized
internally as an active, service of marketing. The primary objective of internal marketing is to
motivation development and the employees’ customer seriousness. It is one of the remarkable
facts that the any of Service Company can be much successful only when related people are
in good condition. Therefore, the ICICI bank realises the requirements of customers and so, it
is leveraging technology to service customers fast and effectively.
 The following table explains the journey of ICICI bank from 1955 to 2013

Table No. 2

Year Journey

1955 ICICI was established / formed at the beginning of the World Bank, the Government
of India and representatives of Indian industry for providing medium and long term
project financing to Indian business was the main objective to create a development
financial institution.

 ICICI limited selected Mr. A Ram swami Mudaliar as the first chairman.

1956 3.5% first dividend announced by ICICI.

1958 ICICI appointed Mr. G.L. Mehta as the second Chairman.

1961 From Kredianstalt, ICICI Bank obtained the 1st West German loan of DM 5 Million.

1967 ICICI declared 1st debentures for Rs. 6 cores, which was subscribed.

1969 ICICI Bank’s first two regional offices set up in Calcutta and Madras.

1972 The 3rd Chairman of ICICI appointed as Mr. H. T. Parekha

1977 The formation of Housing Development Finance corporation sponsored by ICICI

1978 The fourth chairman of ICICI appointed Mr. James Raj.

1979 The fifth Chairman of ICICI appointed as Mr. Siddharth Mehta.

1982 In 1982, to raise European currency units ICICI became the 1st ever Indian borrower

1984 The 6th Chairman of ICICI appointed as Mr. S. Nadkarni

1985 The 7th Chairman and Managing Director appointed as Mr. W. Vaghul

1986 The Receive ADB Loans ICICI became the 1st Indian institution.

Shipping credit and Investment company of India limited promoted by ICICI.

1987 For sterling Pound 10 million with commonwealth Development corporation (CDC).
 ICICI signed a loan agreement, the first loan by CDC for financing Projects in India.

1988 TDICI – India’s first venture capital Company promoted by ICICI.

1993 With J.P. Morgan set up the ICICI securities and Finance company limited are joint
ventured.

1994 ICICI Bank was set up in the year 1994.

1997 The Industrial Credit and Investment corporation of India Ltd., name changed as –
ICICI ltd.,

 In the year 1997 the ICICI ltd., declared the takeover of ITC classic finance.
1998 To identify a common corporate for the ICICI group the new symbolical logo is to be
introduced.

 The takeover of Anagram Finance announced by ICICI.

1999 ICICI offered retail finance as – Car Loans, house loans and loans for consumer
durables.

2000 The first commercial bank from India to list its stock on NYSE is nothing but ICIC.

 In 2000, the ICICI Bank was announced merger with Bank of Madura.
2001 In the year 2001, the merger of ICICI with ICICI Bank approved by the board of
ICICI ltd., and ICICI Bank.

2003 In Pune the first Integrated currently Management centre was launched.

 In Singapore the ICICI Bank was declared the setting up of its first ever offshore.
 In Dubai ICICI Bank’s representative office inaugurated.
 In retail credit in India ICICI Bank became the market leader.
2005 In Uttar Pradesh at Delpandarwa, Hardoi the fist rural branch and ATM were
launched.

 In terms of its market capitalization, ICICI Bank becomes the biggest bank in
India.
 To mate a simultaneous equity offering of $K 8 billion in India, the United States
and Japan the ICICI became first Indian company.
2007 The year 2007 the Sangli Bank was collaborated / amalgamated with ICICI Bank.

2008 ICICI Bank launches their first branch in Frank fart after entering Germany

 ICICI Bank opens its first branch in New York after entering US
2009 For bill payments ICICI bank join with BSNL cell one.

2010  The ICICI bank won award as the most ‘Tech-Friendly Bank’ from Business
World
 The Managing Director and CEO of ICICI Bank awarded as the outstanding
Business Woman leader for the year 2010 from CNBC TV18.
 By trade and forfeiting Review, UK the ICICI Bank got award as ‘Best Local
Bank’
2011  By the Finance Asia, the ICICI Bank got award as “Best Foreign Exchange Bank”
 The Managing Director and CEO, of ICICI Bank won at the 10th Asia Business
Leader Award as “Corporate Social Responsibility Award” from CNBC
2012  The ICICI bank got ranked 15th in “top service 50 Brands”
 From the Asset Triple A, the ICICI Bank awarded as “Best SME for Treasurer
and Working Capital”
2013  In the Large Enterprise category the ICICI Bank awarded winner at the Express IT
Innovation Award.
 For the Purpose of ‘Outstanding Institution Builder’ Mr. Kamat, ICICI Bank
Chairman got the award as “AIMA Managing India”.

The ICICI Bank (Industrial Credit and Investment Corporation of India] in the year
1955 registered as a Private limited company of India. It was formulated as to support and
provide assistance for Private sector development bank also to enhance and upgrade private
industrial concerns in the nation. The following are some of main objectives to formulate
ICICI Bank.

i) To provide assistance for creation, modernisation and so also expansion of concerns of

private sectors.
ii) To support the involvement in internal and external capital in the private sector.
iii) To support and assist ownership of private of industrial investment.
  The major importance functions of ICICI Bank are as below

i) The new issues are to be underwritten and also sponsored.

ii) One more important function of ICICI bank is to give medium term and long term loans
support to industrial sector.
iii) To guarantee loans are to be undertaken by other various private sources.
iv) To provide advice related to the administrative, technical and managerial to the
industrial sector.
v) The one important function of ICICI bank is to most available funds for the purpose of
reinvestment.
vi) To provide advance loans in form of foreign currency to the imported cost of capital
equipments.
vii) It also facilitates extension of guarantee of differed payments.
viii) To provide financial assistance of buy the shares and debentures of companies of newly
formed.

 The Characteristics of ICICI Bank.

The important characteristics of the functioning of ICICI Bank are as follows.

i) The assistance related to finance as given by the ICICI bank consists rupee loans, loans
of foreign currency, shares and debentures underwriting and so also shares and
debentures direct subscription.
ii) Initially, the ICICI was started to give assistance of financial related to the industrial
concerns in private sectors. But recently, the scope of this bank has been expanded by
consisting industrial concerns in the public sector, private sector and co-operative
sectors.
iii) This bank has been giving particular attention towards financing riskier and industries
of the non-traditional such as heavy engineering, petrochemicals, products of metal, and
chemicals. Thus such type of industries have mentioned for more than half of the whole
assistance.
iv) The ICICI bank after some period gradually also assisting financial help to the small
scale industries and the backward areas projects.
v) With the all other financial institutions, the ICICI bank has also strongly participated in
adopting surveys to evaluate potential of industries of various states.
vi) The ICICI Bank also incorporated the Housing Development Finance Corporation Ltd.,
during the year 1977, to provide term loans for building and buying of residential
houses.
vii) The ICICI has been giving assistance regarding leasing for modernization, schemes
replacement; conservation of energy; orientation of exports; expansion of pollution
controller and etc., Since from 1983.
viii) With concept from April 1, 1996, the shipping credit company of India Ltd was totally
merged with ICICI bank.

After focusing in detail the history of banking industry and about the ICICI Bank’s
incorporation, growth, development, functions, objectives and features of ICICI bank, now
research come towards most important concept of research study i.e. Profitability.

The measurement of Profitability is one of the most significant measures of the

evaluation of success of the business concern. Any of business entity without earning
profitable cannot survive in the economy. As a result, a business firm that is largely profitable
has the capacity to refund its owners with a huge return of their final investment. Enhancing
the Profitability is one of the most remarkable targets of the enterprise managers. The good
quality manager always in touch to change the business conditions only to improve
profitability. So, these effective Profitable changes have been measured with the help of Pro-
forma income statement or a budget of Partial. And whereas a partial budget allows the
business managers to gather the influence on profitability of a small changes in the trade
before it is finally implemented.

A variety of and a large number of profitability ratios can be utilised to gather

business’s financial conditions. And such ratios are to be created from the statement of
income, must be match up with bench marks of industry. And also, with decision tool can be
locked over a time of years to recognize emerging problems. Profitability is the primary aim
or object of any of business concerns. Without the profitability, any business cannot run in
long way. Therefore, the evaluation of past profitability, current profitability and predicting
the future profitability is very essential thing.
 The Profitability is to be evaluated with income and expenses. The income is
generally money created from the operations of the business entity. Take for example, if the
crops and livestock are grown up and taken into market for sell, then income is collected
from this activity. Therefore, money is coming into the firm. Such type of transaction is
simply take place between business and lender to generate money for the buying assets.
Expenses are the resources costs utilised or consumed through the operations of the business.
For example, corn seed is a cost of expenses of a business firm because it is utilised in a
process of production. The profitability is examined with the help of ‘income statements’.
This is required a listing of income and expenses for a time duration of whole business.
Therefore, a Pro-forma income statement examines the targeted profitability of the firm for
the new coming period of accounting.

Definition of Profitability

According to the Financial Dictionary, “Profitability is nothing but the measure of the
gap between the buying price and the actual casts of taking into market i.e., the revenue of a
business derived from its activities, less all explicit expenses. For example, it a company’s
revenue is $ 2 million and their total cost of overhead is $ 1,750,000, and then its profit is $
1,250000 as point of view of accounting.

In other words, Profitability refers as making much money than all utilised, or put in
another path, revenue less expense. But it much difficult task to choice which revenue and
expenses and when these revenue and expenses include them is not at all final, when are
choice a deep action at any business firm and its customer behaviour.

To indicate overall financial performance of any business firm the ‘Profitability’ is the
most effective tool. Through the bank’s profit the efficiency and soundness of financial
conditions is to be showed profitability is nothing but earning power of related investment.
The Profitability is the accurate tool to evaluate actual performance and efficiency of banking
concerns. If the profit earning capacity is high degree then it influences prosperity of a
concern. The Profitability of the bank is to be evaluated and measured by using the ratio
analysis technique over the financial figures.

With the help of two words namely ‘Profit’ and ‘ability’ the word ‘Profitability’ is
formed or composed. The term ‘Profit’ is refers as the absolute figures alone does not
properly give the exact ideas of the adequacy or otherwise of fluctuations in performance as
highlighted in the financial statement of banking concerns. And the term ‘ability’ explains the
capacity of a bank to earn profits. The ability of a bank also highlights its earning capacity or
performance of the operating. So, the term ‘Profitability’ defined as – the ability or capacity
of a given mechanism too much more earns a return from its utilization. Profit being totally
true figures which fail to denotes the adequacy of income or fluctuations in efficiency,
resulting from financial and operational performance of an entity. But number of related
problems and confusion comes whenever interpreting the true figures of profit in case of
historical or comparison of inter-firm, this thing may be takes place due to changes in the size
of investment or volume of sales etc. In such cases the difficult problems are handled by
relating data of profit either with the degree of the investment or the volume of sales.
Therefore, to evaluate the profitability of banks the ratio analysis technique or methods are
used, such important ratios are called as “Profitability ratios”.

No, doubt the net income shows us an idea of how good a bank is performing, but it
going through one main drawback. The net profit of bank does not manage for the bank’s
size, therefore, making it much difficult to compare how good one bank is performing
concerned to another. A common measure or tool of bank Profitability that solve for the
volume of the bank is the return on asset. Secondly, due to the owners of a bank must
understand that whether their bank is relatively managed and controlled good, return on asset
pursues as a best method to recognize it.

Formula of ROA

Net Income
ROA = X 100
Assets

Note: ROA = Return on Asset

So, the return on asset ration gives detail information regarding how the effectively
and efficiently a bank is relatively run because it signals that how much profit are created by
each and every rupee and dollar of an assets.
 It is one of the fact that the bank’s equity shareholders i.e. owners of bank are
thinking about how much the bank earn profit on their final investment in equity shares.
Formula of ROE

Net Income
ROE =
Capital

Note: ROE = Return on Equity

There must be a close relationship between the measures how efficiently and
effectively the bank is performing i.e. return on assets and the measures how good the equity
shareholders are performing or acting on their equity investment i.e. returns on equity. Such
type of direct relationship is measured by the equity multiplier (EM), the amount of assets
each dollar of an equity investment.

Therefore,

Formula of EM

EM = Assets / Equity Capital

Note: EM – Equity Multiplier.

So,

The return on equity can also be calculated by using another formula.

Formula of ROE

ROE = ROA * EM

The above new formula of return on equity shows that when a bank undertakes a
smaller amount of equity capital for a provided amount of assets, then what happens on ROE.
For example, Z bank has $ 200 million of assets and $ 20 million of equity, which provide it
an EM of 10 (= $200 million / $ 20 million) Then, the P bank in opposite, has just $ 8 million
of equity and $ 200 million of assets, which provides that and EM of $ 25(= $ 200 million / $
8 million)

Assume that these both banks have been equally perform well, So, that they have
equal return on assets, i.e., 1% The ROE for the Z bank is total same to 1% * 10 = 10%,
whereas the ROE for the P bank equals finally 1% * 25 = 25%. Therefore, the owners of P
bank are clearly much profitable than the owners of Z bank. The reason is that the P bank
owners are earning more than double as high a return. So, now we can clearly understand that
why the equity shareholders of bank may not wish it to undertake a large amount of equity
capital.

Another most popularly utilised measure of bank profitability is known as the net
interest margins i.e., NIM. The net interest margin is the gap in between the income of
interest and expenses of interest as a percentage of total assts.

Therefore,

Formula of NIM

Interest Income – Interest Expenses

NIM = X 100
Assets

Note: NIM =Net Interest Margin.

One of the Bank’s basic intermediation operations is to issue the liabilities and utilize
the proceeds to buy income earnings assets. This type of spread is totally measures what net
interest margin explores. If the bank is capable to ask funds with liabilities that have very
little cost of interest and it capable to gather assets with huge income of interest, then the
NIM will be high and the bank is similarly to be much more profitable. If a cost of interest of
their liabilities rises comparatively to the earned interest on its assets, the NIM will drop, and
then the profitability of bank will suffer.

So, for the measurement of bank profitability, the three main ratios are used. In this
present study also the researcher used return on asset (ROA) ratio; return on equity (ROE)
ratio and net interest margin (NIM) ratios are used and measures the Profitability of ICICI
bank for 7 years of duration. This Profitability calculation of ICICI bank is undertaken for
measurement with the help of annual report of ICICI Bank.

Along with the term ‘Profitability’ the concept of ‘Operational efficiency’ is also
important concept to evaluate the actual comparison / Performance of Banks in India. While
maintaining a strong balance between productivity and the cost, the operational efficiency is
the capability for a firm to perform its tactical plans. Originally, the operational efficiency is
influenced and impacted by the productivity of the organization that is calculated and
analyses by examining the amount of output (that may be product or services) for a given
amount of input (assets, employee, work hours and investment etc.) In order to upgrade and
enhance the operational efficiency, it required to increase the outcome without performing a
fluctuation in input of similar order of magnitude. And this is done in one of the following
two ways.

i) To eradicate or eliminate unnecessary steps and change the undertaken steps of processes.
ii) To enhance or increase outcome without increasing the inflow and add capabilities to the
undertaken processes.

But, it is fact that, when we thinking about this processes it is nearly not possible to
enhance the output without affecting the input requirements, therefore, one must analyse that
they are simply trying to get a increased ratio of output: input than the increased numbers.
The operational efficiency is also the ability of a bank to provide products and services to
their customers in the most effective cost manner, when ensuring the highest quality of its
support, products and services.

Operational efficiency is commonly reached by streamlining a bank’s core

processes in order to reply more efficiently and effectively to constantly changing focus of
market in a cost effective manner. In order to reach operational efficiency a bank needs to
minimise redundancy and the waste while leveraging the resources that involves most of its
success and use the best of its success and use the best of its human resources, technology
and processes of business firm. With the outcome from operational efficiency bank is capable
to reach most high level of profit margins or be much more successful in markets of high
competition.

The operational efficiency of bank is to be measured with the help of three ratios.
These are:

i) Interest earned to total income ratio

ii) Interest paid to total income ratio
iii) Deposit to owned fund ratio.

I. Interest earned to total income ratio

This ratio is to be calculated with the help of following formula.
Formula:

Interest Earned
= X 100
Total income

II. Interest paid to total income ratio

The operational efficiency measurement, the interest paid to total income ratio is to be
used. And for such ratio formula is:

Formula:

Interest Paid
= X 100
Total income

III. Deposit to owned fund ratio

This is very important ratio to calculate the operational efficiency of the bank. The
deposit to owned fund ratio is to be measured with the help of following formula:

Formula:

Deposits
= X 100
Owned fund

Note:

Owned fund includes

 Share capital
 Reserve fund
 General Reserve

With the help of above three operational efficiency ratios, it is possible to measure
bank’s efficiency, so, in this present research study, the ICICI bank’s Operational efficiency
is to be measured with the help of above mentioned ratios for 7 years of time period. And for
calculation of such operational efficiency ratio the ICICI Bank’s annual report is to be
utilised.

But evaluating / calculating the operational efficiency of bank is much difficult task,
because there is not any of satisfactory bank output definition. Even not the clearly stated the
exact number of accounts of customers, and not also stated clearly total number of loans, total
assets, total customer deposits give a well index of output. However, the values added of
banks are provided through their cost of labour and profits to calculate both the output and
cost of banking concern. But the usefulness of these figures is determined by consisting
structural and accounting gaps across different nations, among individual banks and over
time. Extra precautions are to be taken for evaluation of bank’s operational efficiency. And
extreme skill and knowledge is to be required of local banking situations to interpret of ratios
of bank. In this current study the researcher follows extreme precautions and then with full
concentration measured the operational efficiency of ICICI Bank for 7 years of time duration.

Thus, after discussing in detail the concept of banking industry in India, detail
information about ICICI Bank i.e., functions of ICICI Bank, objectives to from ICICI Bank,
features of ICICI bank, various schemes / Services offered by ICICI Bank to their customers,
No. of branches list of ICICI bank through state wise, Number of and name of branches of
ICICI bank district wise in Maharashtra state and etc.

When it discussing the detail information about ICICI Bank it come to know that, in
Maharashtra state the popularity of ICICI Bank is on top most position. It is having 580
branches of ICICI Bank throughout the Maharashtra state in India. And in the Maharashtra
states all district list of ICICI bank shows the Sangli district occupies the second highest
position in number of ICICI branches among all districts in state of Maharashtra.

By observing all this things the researcher undertook a study of profitability and
operational efficiency of ICICI Bank in Sangli and satara district of Maharashtra. The
current research study explains that the researcher going to measure the profitability and
operational efficiency of ICICI Bank and the role of both Satara and Sangli district ICICI
bank branches to enhance the profitability and operational efficiency of ICICI bank as a
whole.

Problem on Hand
 The Present research work is undertaken to measure profitability and operational
efficiency of ICICI bank and also highlight the role of satara and Sangli district ICICI
branches to enhance the profitability and operational efficiency of ICICI Bank as a whole.

To indicate the overall performance of any of bank the concept of ‘Profitability’ is

much important tool. The Profit is nothing but an absolute figure which fails to indicate the
adequacy of earning or fluctuation in efficiency out coming from operational and financial
performance. Therefore, to know the financial soundness of ICICI bank the research
undertaken to study the profitability, measurement. For calculating the Profitability of bank
the ratio analysis technique is to be used. There are namely three ratios are used to measure
Profitability of ICICI Bank for 7 years.

These ratios are namely as

i. Return on Assets ratio

ii. Return on equity ratio
iii. Net interest Margin ratio
With the calculation of these three ratio calculation we come to a conclusion that the
financial condition of ICICI Bank is good one or not and what steps should the ICICI Bank is
to undertakes to enhance the Profitability of bank.

Along with the concept ‘Profitability’ the term ‘Operational efficiency’ is also an
important one to measure the actual performance of bank. While controlling a strong balance
in between Productivity and cost, the operational efficiency is the capability for a bank to
perform its tactical plans. For the analysis of operational efficiency of ICICI bank, the ratio
analysis technique is to be used. The ratios which are used for evaluation operational
efficiency of ICICI Bank are:

i. Interest earned to total income ratio.

ii. Interest paid to total income ratio
iii. Deposit to owned fund ratio.
After calculation these ratios, come to a conclusion that what is the exact efficiency
level of ICICI Bank and what is the Primary role of satara and Sangli district of Maharashtra
to upgrade the operational efficiency level of ICICI Bank as a whole.

For calculation of both Profitability and operational efficiency, of ICICI bank, the
research using the Annual Report of ICICI Bank for 7 years i.e., from year 2007 to 2013. In
the annual report of ICICI Bank, the research uses mainly the Balance sheet of ICICI Bank,
Profit and loss account of ICICI Bank and in some cases the cash flow statement, It, means
the financial statements of ICICI Bank is to be used for evaluating Profitability and
operational efficiency.

The Present research study is undertaken to know the Profitability position of ICICI
Bank and the role of satara and Sangli district branches ICICI Bank to increase the
Profitability of bank. And to focuses what are the necessary steps to be required to
undertaken for increase the Profitability by the satara and Sangli district of Maharashtra. And
also undertook to know the operational efficiency of ICICI Bank. And the role of Satara and
Sangli district branches of ICICI Bank, to enhance the operational efficiency of ICICI Bank.
And after evaluation of these ratios, few remedial measures are to be suggesting to the Satara
and Sangli district ICICI Branches to take some remedial measures to increase the
operational efficiency of the ICICI Bank. The current study is also undertaken to know the
flow of share capital, Reserve and surplus, deposits and borrowings etc. such flow is to be
evaluated with the help of comparison of share capital, reserve, deposits and borrowings for
the number of years. In this research study for such type of comparison 7 years annual report
of ICICI Bank is to be undertaken. With this comparison it come to know that what is the
trend of share capital i.e. whether positive or negative and on this outcome the some
suggestions are to be given to positive flow towards share capital, deposits, reserve etc.
Finally after measuring profitability and Operational efficiency and the role of satara and
Sangli district ICICI bank branches towards increasing Profitability and operational
efficiency of bank. Some suggestions are providing for improving Performance about
Profitability and operational efficiency of ICICI bank in satara and Sangli district of
Maharashtra.

The main object to select this title of researcher for current study there are so many
reasons. The popularity of ICICI Bank is day- by- day increasing. And it offers frequently
various new schemes for rural and agricultural development in India. The Performance of
ICICI Bank in Maharashtra state is much remarkable one. Because when analysing the
number of branches of ICICI Bank state wise list, it come to know that in Maharashtra state
580 branches of ICICI Bank. And it occupies top most rank among all states in India in
number of branches of ICICI Bank. So, the researcher wants to focus on the performance of
ICICI Bank.
 In Maharashtra state, while analysing the district wise list of number of ICICI Bank
branches, it shows that in whole Maharashtra the greater Bombay district occupies the top
rank in having number of ICICI branches, after that the Sangli district places the second rank.
And beside Sangli district there is a satara district situated. So, to highlight the role of Satara
and Sangli district ICICI branches to enhance the Profitability and operational efficiency of
ICICI Bank. The Profitability is nothing but a such tool, which shows the financial condition
of the ICICI Bank and with this calculation research want to give some suggestion to enhance
the performance by highlight few measures for increasing their profitability.

The operational efficiency calculation presents the actual utilisation of resources. It is

to be calculated with the help of ratio analysis. And give some suggestions to improve the
efficiency level of the bank performance.

The ICICI Bank is most popular bank in India. It performance is much effectively and
efficiently its schemes towards satisfying their customers.

Organization

The Present research study is composed of number of chapters. The researcher

organized the research study in most effective manner, covering all important concepts in
separate sections. The chapter 1 includes introduction, Problem of Hand and organization of
study, chapter 2 states: review of literature, chapter 3 explains: Banking Industry in India,
chapter 4 consists: History of ICICI Bank, chapter 5 denotes: objectives and Hypothesis of
research problem, chapter 6 consists: Data collection and analysis, chapter 7 includes: results
and discussion, chapter 8 states: conclusion and recommendations, summary gains and finally
chapter 9 states: References.

In this proper way the researcher designed there study and organized there research
work. For the present study the research have been undertaken both primary and secondary
methods of data collection. The Primary method of data collection is nothing but a type of
information which is collected directly from the first – hand surveys i.e., by means of
observation, interview schedules and Questionnaires etc. So, in this study of research the
researcher selected sample of near about 100 respondents from the Satara and Sangli district
of Maharashtra in following groups by using simple random sampling techniques.
 Table No. 7

Sr. No. Categories of Respondents Numbers

1 Managers of Bank 15

2 Officers of Bank 25

3 Customers of Bank 60

Total 100

Thus, an interview and questionnaire method used as a main primary source of data
collection only to gather information for research purpose. The list of questions are to be
prepared by the researcher as related to their study and trying to get almost proper response
from managers, officers and customers of bank and on the basis of theme response the
researcher trying to give some opinion and suggestions to the bank financial performance
enhancement. For gathering information through respondents the research visited some of
places. These places are –

i) ICICI bank branches in satara and Sangli district.

ii) Visit satara region and Sangli region customers of ICICI Bank.
iii) Other necessary various places.
For this current research work the secondary data is very much important part. The
secondary data is such type of data that has already collected and is readily available for
utilisation. The secondary sources of data collection for current research study are

i) Annual Report of ICICI Bank

ii) Journals
iii) Articles and publications
iv) Research paper
v) News Papers
vi) Websites, etc
In above all sources of secondary data, the annual report of ICICI bank is very essential
one. With the help of this report only the research able to calculate the profitability ratios and
operational efficiency ratios. For such ratio calculation the researches uses 7 years of annual
report of ICICI Bank. In this way the researcher put their full efforts and managed to collect
the relevant data, so, that it much convenient to organized and precedes their research work
successfully.

Review of Literature

Lustsik Olga (2004), described that was the chart that started dozens of stand-alone
Internet banks. This condition needs a profound analysis to be able to understand the real cost
of e-banking and e-banking transaction in especially. It is so hard to evaluate the unit price
for e-channel transactions? The true feedback of these questions is “Yes”, very difficult.”
According to Forrester Research, only 13 out of 25 European banks were able to examine the
whole allocated costs per various other distribution channels. But the research of 13 banks
presented that on an average online transactions cost 14 times less than those made by branch
tellers. Most of such banks had applied activity based costing (ABC) to map the examination
of channel cost more time. The empirically and main part of the article are depended on Hans
bank's examination and statistical updates as well as on Hans bank's internal documents that
stipulate rules for cost allotment and unit cost evaluation.

Electronic banking i.e., e-banking is the recent innovation of banking services. The
definition of e-banking differs from researches especially because electronic banking means
to various types of services through which a bank’s customers can request information and
carry out most special banking services via computer, television or mobile phone. An
introduction to meet Activity-Based costing in the Hans bank Group has been made since
1997. From 1997 the Hans bank has a complicated and continuously changing organization;
the project has frequently experienced setbacks. At recent time the ABC methodology is
successfully applied in the Hans bank Group. As bank services are a much more complicated
than the products of a manufacturing company, a various approach was required for defining
the cost objects. The cost of a bank’s product, for example, amount is fluctuates mainly
according to the structure where it is effected. We can guess that main differences to exist in
the branch and online bank channel cost structure for a single payment similarly, it is
important what kind of a customer uses the product.

Teresa curristine and Lonti zsuzsanna (2007) described that the government of OECD
countries is under control to improve public sector performance and at the same time, it
includes expenditure growth. While factors similarly ageing populations and increasing
health care and pension costs sums to budgetary pressures, citizens are requiring that
governments be made much accountable for what they target with taxpayers money. This
research paper briefly reviews key institutional drivers that they many contribute to enhance
public sector efficiency and focuses on one of them in more detail performance information
and its contribution and use in the budget process. There is no blueprint for increasing public
sector efficiency. OECD countries have thus conducted diverse approaches to reforming key
institutional settings, which include: increasing devolution and decentralization;
strengthening competitive pressures; workforce structure transforming, size and arrangements
of HRM; budge practices changes and procedures and introducing results- oriented
approaches to budgeting and management. Although the large number of OECD countries
have engaged in some institutional changes, the empirical proof of their influence on
efficiency is so far restricted due to: the lack of data to conduct evaluations; the lack of Pre-
reform tools of performance; the difficulties in measuring efficiency in the public sector; and
the problem of isolating the refractions of particular institutional reforms on efficiency from
other external influences.

To improve Public sector performance level, the empirical evidence nevertheless suggests
that the following few institutional factors.

 Decentralization of power of politicians and spending responsibility towards sub national

governments.
 Proper and accurate practices of human resource management.
 In the health and education sectors, there is proof that enhancing the scale of functions
may improve efficiency.
For increasing the utilization of performance information in budget processes is a
significant initiative that is widespread towards the OECD countries. It is a part of
undergoing processes that keeps moving the focus of decision making in budgeting away
from input data towards the measurable results. However, stable to face a number of new
challenges with the use of PI in the budget process, consisting how much to improve the
measurement of activities, the quality of information, and getting politicians to utilize it in
decision making process.

Kumaran C (2010), the current study explains the influence of technology over product
invention in banks is tremendous one. This study aims toward analyzing the satisfaction level
of the customer of ICICI Bank holding ATM cards in Tiruvarur district with connection to
some aspects such as the service quality of ATM personnel enough number of ATMs in the
district, continuity in working of ATMs, their reflect on overall performance and their
opinions on number of other related concepts. The respondent customers were not satisfied
with the availability of location concept, complaint box and various numbers of ATMs in the
city. The population restricted for this study was defined to the ATM users of ICICI bank in
the Tiruvarur district So, in this research sorely random sampling technique has been used
and 120 customers were elected on the random sampling basis. Both the primary and
secondary method of data collection was used for the purpose of the study. The detailed
research explains that the average level of satisfactions of ATM customers is more than that
of neutral level which is denoted by 3 with respect to all the concepts except enough number
of ATMs in the district, location concept etc, further on the weighted sum, ranking is done
opposite to various concepts of ATM in order to know which concept contributes the most
towards maximizing the satisfaction and which one provides a negative effect, for the
analysis of the study conclusions can be drawn as, the customers are highly satisfied from the
cash availability in ATMs and the quality of currency note the ATMs being ranted 1 st and 2nd
respect. The customers of ATM are equally satisfaction promptness of delivery of ATM card
and correctness of cash drawn by there from ATM.

The characteristics like security safety, privacy and behavior of ATM was personally,
moderately satisfied. The response was not fully satisfied with the available of complaint
book, concept of location and much number of ATMs in the city. Some the customers are
forcefully commented the non-availability of power back up in issue of break down. The
management ICICI Bank should seriously mentions the recommendations made by their
regular customers and take all necessary steps to follow the same.

Bordelean Etienne and graham Christopher (2010) described that since, the liquid
assets like as cash and government securities basically have a comparatively low return,
holding them imposes an opportunity cost on a bank. In the absence of rules and regulations,
it is reasonable to expect banks will control liquid assets to the extent they help to maximize
the profitability of firm. Apart from this, policymakers have the choice to require huge
holdings of liquid assets, for instance, if it is seen as an advantage to the stability of the
overall financial sectors. That said, the object of this research is not to commence the Ideal
level to liquid asset holdings, but rather to help differentiate empirically, whether the banks
holdings of liquid assets have a important influence on their profitability. Such findings are to
be conceptually in line with relevant literature and are consistence with the opinion that the
opportunity cost of holding low-return assets eventually out weights the advantage of any
increase in the banks liquidity resiliency as perceived by funding markets.

In the situation of this relationship, examined results suggest some evidence of further
positive advantage to holding additional liquid assets for institutions that follow up less
traditional, more market based banking model. Similarly, there is a similar evaluated benefit
to holding more liquid assets when economic situations deteriorate. The remainder of this
research paper sets forth this proof, beginning with some stylized facts and regulatory
context. This is followed by a short explanation of the relevant literature and the empirical
framework as applied in this research.

Sungeeta Mohanty (2011) described that the banking system has witnessed a
tremendous change during the last few years. The government owned commercial banks in
these days have a market contribution of near about 75% public sector banks, the private
sector banks about 20% and the foreign banks near to 5%. The banking industry of India is
undergoing a huge shift in scope, context, functions, operations, structure and governance.
The informational technology revolution is remarkable changing the operational environment
of the banks. For the banks, technology has started as a strategic tool for achieving higher
efficiency, control of the operation, productivity and the profitability. The country’s financial
markets are recently featured by financial liberalization and technological advancement.

Banking system in India has been leaded by the number of branches of the public sector
banks. Due to the liberalization of financial sector in the year 1990’s, the private sector banks
and the foreign banks have also settled their branches all over the country. The ICICI Bank is
India’s largest private sector bank and the second largest popular bank in the whole banking
sector. ICICI Bank has commenced their operations in the year 1955 as Industrial credit and
Investment Corporation in India. Frequently at the concessional rates, the ICICI Bank
announced funds from various agencies like World Bank. The current study is undertaken
with the aimed at evaluating and so also approaching customer’s priorities in regard to access
the ICICI Bank. This paper has undertaken to find out the most preferable type of the ICICI
bank account as a whole, to find out the duration of association of the public or the customer
with the bank, to find out the factors influencing the starting of a bank account between the
respondents. For achieving the stated objectives the researcher undertook a sample of 125
investors was taken randomly from Sahid nagar, Acharya vihar, Vanivihar, the Ram Mandir
in the city Bhubaneshwar, Balasore. A pre-tested questionnaire was administrated to the
customers of the ICICI Bank in their specified area.

The purpose of evaluating customer’s acceptability of ICICI Bank is to observe whether

the ICICI Bank stands in this regard in the eyes of its customers. Thereby possibility of
service and product improvements leading to higher satisfaction levels current study found
that, there exist remarkable difference between the various account services like as current
account, saving account, term deposits and demand deposits and 44% of the customers have
the current account services followed by the saving account i.e. 26%. It is come to know that
the people of the large income group visit the bank most frequently.

Kamalpreet Kaur and Balraj Sing (2011) described that the Banking Industry in India
consists of commercial and Co-operative banks, in that bank more than 90 percent of banking
system’s assets. As far as the financial operations are concerned, the public sector banks have
shown very good performance as compared to the private sector banks. If we focused on the
number of non-performing assets we may realize that in the year 1995 the NPAS were Rs.
38385 crore and reached to Rs. 44042 crore in 2009 in public sector banks and as compared
in the year 2001 the NPAs were Rs. 6410 crore and reached to Rs. 16887 crore in 2009 in
private sector banks. The main quality of Indian banks assets is likely to determine over the
next two years. If any advances of credit facility offered by the bank to a borrower becomes
non-performing.

Banks are required to grouped non-performing assets further into their categories. The
NPAs have always been a much worry for the banks in India. The money locked-up in NPAs
is not possible for productive use and contrast effect on banks profitability is there. In the
public sector banks the extent of NPA is comparatively more in public sector banks. To
improve and upgrade the efficiency and profitability, the NPAs have to be scheduled various
number of steps have been undertaken by government to reduce the NPAs.

Singh Mahipal (2011) described that banks directly or indirectly affects for economic
development growth and established all over the world to channelize the savings and invest
into economy either directly or indirectly for the purpose of production and generation of
income and employment. The significance and necessity of banking sector has been realized
in post-independence period and these were restructured into nationalized or public sector
banks to achieve broader economic objectives and registered impressive achievements in
terms of branch expansion, deposits and investments.
 A number of various studies found that banking sector does not operate as general
commodity production because its have much facts as an industry itself, as an impact and the
service providing system also. In fact merging of banks did not provide viable results at
international level. The concept of non-performing assets (NPAs) came into force in 1992
and its absolute amount is increasing very frequently from Rs. 39253 crore in the year 1993
to Rs. 4,406 crore in 2006 in the credit portfolio of the public banks, therefore, resulted
adverse effect on profitability of banks. The discussion and debate about non-performing
assets (NPAs) of public sector banks needs to evaluate and analyses its impact on the
profitability and productivity of public sector banks over a time period of ten years to achieve
a final conclusion about strengthening or winding up state public banks.

The main objectives of the present study is to analyses the impact of the non-performing
assets on profitability of public sector banks at most aggregate and sectional level, to evaluate
the influence of non-performing assets on profitability with other variables and also to
evaluate the influence of non-performing assets on efficiency and productivity. The current
research depends a secondary date provided by various publications of Reserve Bank of
India. For study the data is collected for the time period of 1994-1995 to 2005-2006 for the
indices of profit, non-performing asset, Spread burden, credit deposit ratio, fixed deposit
ratio, operating expenses and other various indices of all twenty seven public sector banks. A
conceptual model highlighting the hypothesis is subsequently validated in Singapore,
Malaysia and Brunei reported here. In addition, this study concluded that governmental
recognition of online degrees is very remarkable for the propagation of online tertiary
education in these three countries.

Puja Walia Mann and Manish Jha (2011) described that the term online became
popular in the late 80’s and concerned to the use of a terminal, keyboard and monitor to
access the banking system using a telephone line. Home Banking can also state to the
utilization of a numeric keypad to send tones down a telephone line with instructions to the
bank. Payments detail to be made were input into the NBS system by the accountholder via
pestle. A cheque was then sent by NBS to the payee and an advice providing details of
payment was post to the account holder. BACS was later used to transfer the payment amount
with the direct way. In these days, many banks are only internet banks. The banking system
in India is facing unprecedented competition from non-traditional banking institutions with
are new approve banking and financial services over the Internet. The deregulation of the
banking industry, commenced with the emergence of new advanced technologies, is enabling
new competitors to enter the financial services market efficiently and effectively online
banking sector in India and the characteristics available with different other banks across
India has facilitate this even much more.

Some of the little basis information on the transmission of confidential data is concerned
in security and Encryption on the web.

HDFC bank has built various cheeks in its internet banking software to secure its HDFC
Net Banking transactions. The login page of HDFC net banking questions about unique
customer ID and IPIN i.e., password to confirm the user’s identity. And the secret password
is not accessible to anyone, not even the employees of the bank. HDFC net banking India is
the new advanced generation online internet banking service which gives you the information
concerned to your savings / current accounts and lets you handle them online from anywhere,
anytime through the Internet connectivity concept. For the savings account, up to 3 cash
deposits per quarter (3 months) at the non-base branch can be made at not a single rupee cost.
For the additional cash deposits, the bank started to charge the recipient Rs. 100 plus the
service tax per deposit, irrespective of the amount deposited. It the time when the bank
implemented this change, the ICICI Bank customers were not intimated about the revision in
the charges.

Rehman Ramiz and Qusim Saleem (2011) explains that liquidity management is very
essential weapon for every firm that means to pay current obligations on business, the
payment conditions include operating and financial expenses that are short term but
experiencing long term debt Liquidity ratios are used for liquidity management in each and
every firm in the kind of current ratio, quick ratio and acid test ratio that largely effect on
profitability of firm. Therefore, business has so much liquid assets to face the payment
structure by comparing the cash and near-cash with payment conditions. Liquidity ratios
operate with cash and near cash assets of a trade on one side, the immediate payment
conditions on the other side. The near cash assets importantly consists receivables from
customers and stock of finished goods and raw materials. The payment conditions consists
dues to suppliers, financial and operating expenses that must be paid shortly and maturing
installments under long-term debt.

Liquidity ratios evaluate a business capacity to meet the payment conditions by comparing
the cash and near-cash with the payment conditions. If the coverage of the latter by the
general is not sufficient, it signals that the business might face various problems in meeting
its immediate financial conditions. This can in turn, effect gather company’s business
functions and profitability, the liquidity versus profitability principle. There is a trade off
among liquidity and profitability; profiting much of one commonly means providing some of
the other.

Liquidity lines and funding sanctions may also have a play within an institutions liquidity
program by helping an institution project itself opposite to temporary problems that might
happen when honoring cash outflow commitments. The effective management of the broader
measure of liquidity, working capital and its narrower weapon, cash are both significant for a
company’s good profitability and well being. The current research study undertaken between
the years 2004 and 2009 and after gathering data for the financial positions as a result of
annual activities and the related ratios of 26 firms per year operated on the Pakistan, as
Karachi stock exchange (KSE). Generally, this paper marks a first chance to empirically
address the relationship between liquid ratios and profitability. In interpreting the evaluation
results, it should be kept in mind that this work utilizes a decreased from model. In any
program, the present paper serves as an initial step, highlighting the significant, if elementary,
relationship related to the rules of companies.

Arora Jaskiran and Abraham Shilka (2011) explained that many of countries have
deregulated the financial companies to enhance cross border economic functions and
encourage the entry of foreign banks into the domestic market place. This has focused to the
privatization of publicly owned banks, cross boarder and domestic merger and acquisitions of
banks and the international growth of institutions of financial structures. In terms to
understand the impact that the mergers and acquisitions have on the banking sector it is much
essential to understand the way or manner operandi with which they transpire. Theoretically a
merger takes place when an independent bank loses its features and becomes a part of an
existing bank with one headquarter and a similar branch network. In India this consolidation
policies has been started by Narasimhan committee II. Internationally the banking system has
display a main uproar in lost few years with relate to mergers and acquisitions Deregulation
has been a key factor that has impact on banking institutions to adopt this consolidation
policy. The apparent return in this kind of economies of scale, diversification and decreased
costs and the new Basel II have also led banks to consider M & AS.

Earlier of 1990s Indian industries were under hard control which stiffed growth. The
economic slump in the year 1990 put to reforms initiated by the Government of India. The
post liberalization period came into starts from 1991 and since then the Indian Banking sector
has been main structural and strategic changes maintained by privatization and globalization.
This has hastened the opening of foreign banks into the country upgrading competitiveness
and enhancing Indian industries to refocus their business with relate to their general
competencies and market share by restructuring exercises such as mergers and acquisitions.
The concept of Mergers and Acquisitions will now and stable to be a clean area of interest for
a various number of researchers. The banking sector in specific is one of the some industries
that evoke a large interest as a outcome of the deregulation and liberalization in the industry
which concentrate to a wave of merger and acquisitions through the company locally and
globally. This research commenced by taking a watch into the support behind the mergers
and acquisitions in the banking industry.

Dr. Deepak Gupta and Dr. Vikrant Singh Tomar (2011) states that in recent times the
customer focus on banking sector has significantly increased. A remarkable aspect of the
private sector banks is their ability to command a proportionally higher share of net profit
(9.8%), even though they have a lower contribution in terms of customer deposits. The study
is an attempt to calculate and compare the customer perception about retail banking services
offered by SBI, the largest public sector bank in India and ICICI bank that represents private
sector banks, being the largest private sector bank in India. In this study there is an attempt to
evaluate and compare the customer perception about retail banking services offered by SBI
that represents public sector banks, being the largest public sector banks in India and ICICI
bank that reflects private sector banks, being the largest private sector bank in India.

The summary reflects that, in their respective sectors both SBI and ICICI for deserve to be
the leading banks. The services offered by both the banks are very technically advanced,
competitive and cell centric. The study reveals that of 18 scale parameters in customer help,
courtesy and warmth, managing customer complaints, infrastructure facilities like parking,
ATM etc., communication and pro prompt information ICICI served better than that of SBI,
but in case of Method of Imposing serving charges and fines, Return on deposits,
Momentum, speed and precision in transactions safety of investment, provision of financial
records and transactions Goodwill of the bank, core banking as Banks Networks SBI
overtakes the ICICI. Therefore out of 18 point scale the ICICI Bank was preferred on 11
scale parameters whereas SBI was preference on 7 scale parameters.
 The study also states the remarkable finding that come out was that out of 11 points
parameters scale where as the ICICI Bank has been prefer over the SBI, only on 4 points
parameter scale a important difference was found between the customer preference for the
ICICI bank and SBI Bank.

T. Velnampy and J. Aloy Niresh (2012) states that the capital structure decision is the
important one since the profitability of an enterprise is directly connected by such decision
factors. The current study concentrates on the association between capital structure and
profitability of listed banks in the banks finance and insurance area. The capital structure is
the concept which is generally explained as the combination of debt and equity that make the
total capital of firms. Capital is the important part in the financial statement. Due to the
unplanned capital structure, banks, firms and so also companies may fail to economize the
use of their funds generally, banks busy in financial intermediation to guarantees efficient
mobilization and disbursement of funds to the real system of the economy. The relationship
between capital structure and profitability is to find out an optimum capital structure that
would be mentioned with the best performance progress, to guide the banks in a path to
enhance the profitability through adopting a better strategic framework of capital structure.

The present study used secondary method of data collection for the purpose of analysis.
The financial statements and balance sheet of the concern banks were the main sources of
data for this study? To describe and summarize the trend of the Variables in a study the
descriptive statistics are used. The current research evaluates the relationship between capital
structure and profitability in concern listed Sri Lankan banks. The banking sector generally
plays a crucial part in the economic development of every country. The top management
level of every banking firm should make prudent financing and competitive Banks in
Srilanka must not be just interested in operating deposits but must also be concerned with
using these deposits efficiently and effectively. To achieve such goal, banks must and should
set competitive leading rates that would not deter customers of banks from accessing loans.

The present study is restricted and limited only to the listed banks in Banks, Finance and
insurance sector in Srilanka. The research considered a large database of listed banks
accounting data that determine what can be done even with the limitations of currently
available data.

J. Aloy Niresh (2012) describes that the current study concentrates much on capital
structure and Profitability of listed banks in the Banks, specifically in finance and insurance
sectors. Capital structure decision is the important one since the profitability of the firm is
directly affected by such decisions. Therefore, proper, effective care and attention need to be
provided while determining capital structure decision. The concept “Capital structure” of an
enterprise of firm is generally a combination of equity shares, preference shares and long-
term debts. Simultaneously, it is being increasing realized that a company should plan its
capital structure to maximize the utilization of funds and to be able to adapt much smoothly
and easily to the changing conditions.

The relationship between capital structure and profitability is one that remarkable attention
in the concept of finance literature. Therefore, such type of research major findings will be
advantaged in selecting the capital structure to achieve the optimum level of bank’s
profitability. Although there are remarkable inter–firm differences in the capital structure of
firms due to the unique characteristic of each and every industry’s business, the intra-firm
difference are attributed to the business and financial risk of individual industry and firm.

The objectives of the current study are to find out the flow of capital structure on
Profitability. To find out an optimal capital structure that would be communicated with the
important performance, to give suggestions for the banks in the path to enhance profitability
through adapting a better strategic format of capital structure. The current study utilizes
secondary method of data for their analysis. The financial statements which are set up of
income statements and balance sheet of the sample banks were the main elements of data for
this study.

This research evaluated the impact of capital structure on profitability of Sri Lankan banks.
Total debt was found to be important in determining net profit and return on capital used in
the banking system in Sri Lanka. The R2 values were found to be important for the impact of
debt to total funds on net profit. Debt on net interest margin and debt to total funds on net
interest margin were also remarkable findings of the study. But, there is no important impact
was found on the remaining available dependant variables. Therefore, banks should take into
account few changes in order to increase their profitability.

Majid Karimzadch (2012) states that investigating the efficiency of the financial system
and in specific banks, has benefited a lot of popularity in recent times for several reasons.
First of all the efficiency of banks is directly connected to the productivity of the Indian
economy. The banks give payments of liquidity and safekeeping for depositors and mobilize
these funds into investment and working capital requirements. Banks also perform an
important role in insuring a smoothly functioning system of payment, which allows financial
and real resources to flow freely to their highest returns uses. A basic advantage of enhanced
efficiency is a decrease in spreads between lending and deposit rates. The Indian financial
service industry is leaded and dominated by the banking system and the banking structure in
India is widely classified into public sector banks, private sector banks and foreign banks.
The public sector banks operating to dominate the banking industry, in concept of lending
and borrowings and it has broadly spread out branches which help strongly in pooling up of
resources as well as in revenue generation for credit creation. The present research study uses
non-parametric approach Data Envelopment Analysis to evaluate technical and economic
efficiency of Indian commercial banks.

By using non-parametric approach Data Envelopment Analysis methodology helps us to

evaluate economic, technical and locative efficiency. The cost efficiency evaluated and
examined for the banks under study averaged 93% when the estimates are considered under
constant return to scale while the evaluations averaged around 99% under variable return to
scale over 2000-2010. The efficiencies scores differs across banks based on their connective
size, the highest banks are innovated to be relatively the most cost effective.

Namita Rajput, Monika Gupta and Mr. Ajaykumar Chavan (2012) explain that the
post reform phase has changed the whole structure of banking system of India. The upcoming
hard competition has resulted in new challenges for the Indian banks. Therefore the
parameters for evaluating (measuring) the performances of banks have also changed. This
paper gives on empirical approach to the study of profitability indicators with a focus point
on non-performing assets (NPAs) of commercial banks in the Indian contest. Now-a-days
with fast development of technology and customer services, innovation of number of new
products, implementation of Basel II, betters risk management systems and us sub-prime
crises, implementation of new accounting standards, has made it essential to maintain the
NPA with law level and effective examining before they become bad debts. This research
paper is largely divided into size groups. Section 1 is the present section provides a backdrop
of NPA menace, magnitude and its reflect on the profitability of Indian banking sector,
section 2 shows the reviews the existing literature on the subject section 3 indicates the
research’s main objectives, Section 4 highlights the details of data and the methodology used,
section 5 analyses the results of this paper and finally the research paper concludes with
section 6 focusing the conclusions and recommendations, providing insight to the policy
makers.
 The objective of this research 8 is to analyses the nature, extent and magnitude of NPAs of
SCBs, as a roe the current research also analyses reflect of NPAs on the profitability of PSBs
which are operating in India. The research analysis finally concluded that there diminishing
trend in the ratios of non-performing assets as GNPAs and NNPAs, which already stated that
the measure adopted the proper, are valuable rudiments to affect the amount of NPAs. There
is a huge degree of negative coloration between NPAs Ratios with Return of asset ratios.
Multiple Regression model has also repetitive correct in between NPA results that there can
an encouragement in profitability of the banks of the NPAs has continuously decreasing
trend. It can be accomplished that as present environment is taillight with various number of
risks and various kinds of dimensions, a tested and sound credit risk model has to be put in
Plan to have efficient and effective perception the risk in a proposal and decide on
acceptability.

Gupta Bratati (2012) states that the Indian banking sector has undergone huge changed
from post liberalization. The Reserve Bank of India has nationalized a good amount of
commercial banks for giving socio economic service to the people of the country. The public
sector banks have also shown very remarkable important performance as far as the financial
operation is to be concerned. However, none performing assets had been the only one reason
of irritation of the banking sector in India. Particularly, the public sector banks because
increasing NPAs have a direct influence on banks profitability as legally banks are not
allowed to book income on this accounts and the sometime focused to make provisions an
such assts as per the Reserve Bank of India rules, regulations and as well as guidelines. But
also with the increasing deposits made by the public in the banking sector, the banking
industry cannot afford defaults by borrowers since NPAs influence on repayment capacity of
banks.

Like any other industry risk is hidden in banking. The all commercial banks faced credit
risk as a principal risk. The NPA generates three major queries before any of banks as the
bank has to make provisions opposite to NPA, so their profit is reduced. The Reserve Bank of
India has commenced internal cheeks and control scheme; to decrease the level of NPA they
also appointed relationship managers who have full information about the borrowers, credit
rating system and early warning sector and so on. It also tried to upgrade the securitization
act and SRFAESI act and other plays related to the Structure of the borrowings such as CDR
mechanism. One time settlement plans, performed of SRFAESI Act etc.
 The main objective of the current research study is to analyze the NPAs situation in public
sector Banks. Main and major guidelines approved by RBI from time to time were analyzed
in depth, Articles in various business journals, magazines, newspapers periodicals were
examined and available on internet and other data sources has also been utilized.

Rawlin Rajveer and Sharan Shwetha (2012) explain that industries and business are
major devices of the Indian economy. Bank finance is an influencing tool for strengthening
industrial activity in the country, especially when it consist industrial sectors that cover the
small and medium scale enterprises not listed on the countries major stock exchanges.
However, when industries experience difficulties connected to a low economic environment
of business slowdown and viability of the business is called into question industries may fail
to meet their agreement towards interest and principal amount of the loans availed by them.
The management of NPAs so, is a very important part of credit management of banks and
institutions related to finance in the country. By seeing at NPAs, one can monitor the asset
quality of the bank as a whole one.

The main object of any business concern is to make profits so; asset credited in the course
of conduct of the business concern should create income for the business. This applies
equally to the business of every banks of India. Banks, particularly offset deposits by
benefiting higher margins through amounts advanced as loans.

As NPA’s are a direct reflection of asset quality, examining them can justify useful in
overall credit management. Provided large time lags consisted in evaluating problem loans as
NPAs, the current work has been undertaken to help managers at banks arrive at a quick
evaluation of NPA as soon as advances are made without waiting for calculated NAPs from
the RBI which can justify laborious and time consuming. To collect a reasonable estimate of
NPA both in terms of gross and net from the advances made by a mid-sized Indian public
bank. The current research work used historical data to study the impact of the independent
variable advances, towards the dependent variables with were the gross and net NPA % of a
midsized Indian Bank. The study was undertaken with secondary data more than the past ten
year period i.e., from the financial year 2000-01 to 2009-10.

The NPAs are a direct influence on asset quality, evaluating them can prove useful in
overall credit management. We gathered statistically important linear and non-linear models
compensate the other. A cubic model given the best fit for NPA percentage and an S curve
model given the best fit for the gross NPA percentages as a function of advances, thereby
help us born at NPA evaluations.

Goyal Vishal & Pandey U.S. (2012) states that three billion people are expected to have
mobile phones in the world by 2012. There are recently near about 22.5 million mobile
phones in India and 100 million people are added each and every year. In some years more
than 500 million people are having mobile phones in India. Mobile commerce is an ordinary
successor to the world of electronic commerce. The ability to pay electronically doubled with
a website is the mechanism behind electronic commerce. Electronic commerce has been
approved by ATMs and shared banking networks, debit and credit card systems, electronic
money and applications of stored value, and presentment of electronic bill and systems for
payment. The realization of mobile payments will surely possible new and unforeseen path of
convenience and commerce. The various mobile payment industries and initiatives in EU
have failed and many have been discontinued. Therefore, mobile payment services in Asia
have been totally successful especially in South Korea, Japan and other Asian popular
countries. The major difference between successful implementation and adoption of mobile
payment services in the Asia pacific region and failed in Europe and North America is mainly
attributed to the ‘Payment culture’ of the consumers that are country specific.

In this contest the owner is always intimated when there card is utilized and how much
amount of money was taken for each transaction. But similarly the bank could forces he
customers of outstanding loan repayment dates, dates for the payment of monthly
installments or simply tell them that a bill has been sanctioned and is up for payment.

Singh Anurag and Tandor Priyanka (2012) explain that the concept capital structure is
used to represent the balancing relationship between debt and equity. The equity consist paid-
up capital, hare premium, reserve and surplus. The financial structure of an enterprise is
displayed by the left-hand side of the balance sheet. When we see that traditionally, short-
term borrowings are excluded from the list of group of financing the firm’s capital expenses
and so, the long-term claims are explained to form the capital structure of the enterprise. The
term capital structure focuses the long term investment in a trade. It consists of funds asked
through ordinary and preference shares, bonds, debentures, term loans from financial
institutions etc. The capital structure is made up of debt and equity securities which causes
and finance of firm’s of its assets. The capital structure of bank is still comparatively under-
explored sector in the literature of banking. There is no full understanding on low banks
select their capital structure and what factor determine their behavior of corporate financing.
The truth that, huge banks tend to lower their capital and upgrade their lending after merger.

The capital structure matter to most free markets but there are various differences.
Because, companies in non-financing industries required capital major reason to support
funding such as to purchase property and to constitutes or gather production facilities and
mechanism to pursue new sectors of business. But this is also feet for banks, their important
facts is somewhat different By its very basic, banking in an try to manage multiple and
seemingly contrasting weeds banks facility liquidity on demand to depositor by the current
account and extend credit as well as liquidity to their borrowers by lies of credit seeing to
these fundamental role, banks have always been related with liquidity and solvency. The
major objective of study is to comparatively examine the capital structure condition of state
Bank of India and ICICI Bank. The objectives of the current study has been approached by
examining the various rations of the bank which consist debt equity ratio, funded debt to ratio
of capitalization, ratio of solvency, ratio of interest coverage capital gearing ratio, proprietary
ratio. The remaining objectives are to analyze the policy of bank relating to capital structure
and the effect of capital structure on the profitability of firms in relation to various ratios.

Malviya Mayank (2012) explains that this research study clears the key signals from the
financial statements of the major banks functioning in India during the financial year ending
March 2011 and development concepts of these firms. The major calculations are followed
by an analysis focusing the difference between the public and private sector banks. The
preliminary data content to the summary of the Balance sheet and Income statements for six
major banks like as state bank of India, Bank of Baroda and Punjab National Bank from the
category of public sector Banks; ICICI Bank, HDFC Bank and Axis Bank from the category
of private sector banks. The current analyses focuses on the core systems of public and
private sector banks and where the data were not much to evaluate the signals connecting to
public and private sector banks.

The Profitability includes the most important part in the financial analysis of the public
and private sector Banks. The selection of data is depended on sample public and private
sector banks provided operating in India and on their of that the detailed income statement is
being drafted for the year ending 31st March, 2011. The risk consists an internal part of an
accurate financial analysis, since the profitability of an institution should be examined in the
concept of its risk. Higher profits might be the outcome of the higher risk levels and vice
versa. Banks are explored to various risk categories, consisting financial risks, environmental
risks, risk of management and risk of delivery which are occurred in the delivering a product
or service. This section concentrates on the main types of financial risks of banks; leverage
risks, credit risks, risk of liquidity, and interest rate related risk.

Throughout the year ending March, 2011, public sector banks analyzed a higher level of
profitability and cost control, whilst private sector banks operated more revenue for each
rupee invested in assets. In concept of private sector banks, supporting the equity base with
additional capital might consists an important concept of a development strategy.

Misal D.M. (2013) states that now we are in the era of globalization Multinational
organizations worldwide having conducted globalization as their own first tactical choice.
Globalization has been facilitating by the progress in technology. During the last two decades
the information technology has become a dynamic force of economics. In the economic trade
the IT has played on important role.

Web banking is nothing but the utilization of web as a distance transmission channel for
banking trade. In recent days, web banking becomes the future face of banking trade. By
operating web account the number of visits to bank can be minimized efficiently and
effectively users of Web banking are increasing considerably. In the year 2006, about 12% of
the 38.5 million web users in India but in 2013-14 the figures for web banking increased to
16 million. The web banking help us in overcoming the demerits of manual system of
banking Because, the computers are capable of huge storing, analyzing, consolidating,
searching and presenting the data as per the customers, necessities with lot of paw and
correctness. The number of advantages accrues to the numerous parties with the development
of electronic banking i.e. web banking.

To the Banks the advantages points are

 Web banking helps banks to increasing profits.

 It gives competitive benefit with boundary less network to the banks.
 Due to the web banking the banks carry on trade less with paper money and more
with plastic money; have web transfer of the funds, thus decreasing on the cost of
storage of lot of stocks of currency notes & coins.
To the customers’ advantages points are:
  The web banking gives 24 hours service to the customers for money withdrawal from
any branch.
 For information collecting, it is quick and steady.
To the merchants, traders’ etc advantages points are:

 Web banking guarantees assured quick payment and settlement to the various
transactions made by the traders.
 Cost and risk problem factors involved in maintaining money, which are very high in
trade transactions, are avoided.
Thus, the electronic banking tremendously changing the banking trade and is having the
serious effects on banking relationships. There is necessity to scan and analyze the market
and replay to the needs of customers and to generate awareness regarding the various
important advantages of web banking.

Deepak Sahni and Soniya Mehandiratta (2013) state that basically, the Bank is an
institution which is dealing in money. In now a day, the Indian Banking system has been
undertaking major changes that have affected both its structure and the nature of strategic
interaction among the banking institutions. It has also been concluded that Indian Banking
system is going from traditional savings and lending functions to other services as well such
as financial services, trading of securities, Insurance and etc., recently, the banks have also
spread their activities in wide areas. But, to cover the wide areas of activities banks give
number of facilities and various financial services to their consumers at one place.

ICICI Bank is the second largest top most popular Bank in India with total assets of Rs.
3,634.00billion at March 31, 2010 and the profit after tax Rs. 40.25 billion for the year ended
March 31, 2010. But the Bank has a large number of network of 2,528 branches and near
about 6000 ATMs in India and available in 19 countries, consisting India.

The main promoters of Bank of Rajasthan have decided to merge the bank with the India’s
second largest private sector bank ICICI Bank. BOR informed the stock exchange that it
received a proper communication from Sanjay Kumar Tayal, director and one of the most
important promoters to convene a board meeting on May 18 as they have entered into a fixed
agreement with ICICI Bank for proposing an amalgamation. The current research is
undertaken to study the influence of mergers and Acquisitions on the financial performance
of the selected Bank and also to proper summarize the finding and make an accurate
conclusion. In this research work there are importantly two types of data that is collected.
One of them is primary, which is collected first time by the researcher and characterized by
original in nature. The other one is secondary data is financial statements of BOR and ICICI
Bank. The Merger has enhanced the liquidity and profitability level of ICICI bank. But the
post merger results are satisfactory one. And main thing is that the merger has increased no.
of ATMs of ICICI Bank. Hence, the merger is much advantage for both the banks.

Muni Sekhar Amba and Fayza Almukharreq (2013): In the early phases of the
financial were going through from the import of the crisis, Islamic banks concerned to remain
stable and enjoy profit for this reason everyone’s attention to Islamic banking as the ideal
banking model since from it avoids interest and it functions on the basis of risk bearing and
profitability sharing as the financial crisis became worldwide. Islamic bank commenced to
get affected by the crisis in negative path. And then suddenly, come of the largest Islamic
banks in the Islamic region ended up with net losses. The Islamic banking was started as an
alternative to conventional banking by Dr. Ahmed Alnajar who conceived the concept from a
savings bank in Germany commenced the Islamic banking movement that was interest free in
the year 1963 in Mit Ghamar a small town in Egypt. By which followed the success of Dr.
Alnajar’s endeavor other Islamic banks came into operations.

The data of current study includes all Islamic and conventional banks in the QCC from
2006 to 2009, whereas year 2006 and 2007 covers the period before the financial crisis.
While in the year 2008 and 2009 indicates the period during the financial crisis situation. The
financial data for all Islamic and conventional banks in the QCC from during the year 2006 to
2009 were gathered from financial statements from Bank scope database complied by
International Bank credit Analysis limited (IBCA).

This present research has examined the claim Islamic banks are robust and understood the
financial crisis unlike the conventional banks. One every important conclusion is that the
financial crisis had a negative influence on profitability of both the Islamic and conventional
banks and that the Islamic banks were much more profitable during the financial crisis, than
conventional banks. The profitability factors behaved differently for Islamic banks and
tangible equity ratio dragged for Islamic banks during the financial crisis while enhanced for
conventional banks. The liabilities of both Islamic and conventional banks enhanced during
the crisis but the conventional banks had larger deposits ratio and the Islamic banks had
larger rate of overhead ratio during the financial crisis.
 Ali Mahmoud Abdullah Alrabei (2013) explains that of every business concerns prime
object is to earn more profit. Therefore, without the profit a business cannot breathe well. It
may be stated as a mirror of the operating Performance of every company. Profit is nothing
but a bolometer of the success of the company or every business concerns. A business
requires profit not only for its existence but also for the expansion and diversification
purpose. In accounting term, the profit is referred as “excess of revenue over related cost
applicable to transaction a group of transactions or the transactions of an operating and
functioning period. The company’s financial information is consisted in Balance sheet and
Profit and loss Account statements. The all figures included in these statements are absolute
and in some cases unconnected with one another. Therefore, it is only in the focus of other
information that the importance of a data is realized. Take for example, Mr. A weights 50
Kgs. Is he fat? We cannot judge the exact answer unless we correctly know his age and
height like this only a company’s Profitability cannot be known unless connected with the
amount of Profit, the Capital employed is also seen.

The word Profitability may be defined as the capability of a given whole investment to
earn a return from its use. Just like temperature and humidity of a day, the state of
Profitability is a variable thing. Profitability has been stated, to a great extent, as one of the
important criteria to judge the extent to which Management has been totally successful in
maximizing its Profits or minimizing it loses, if any. The Present research work seeks to
evaluate the effect of Profitability on Performance of commercial banks, to find and examine
the Profitability on the gross Profit ratio between the SBI and CAB, to evaluate the term
Profitability on the net profit ratio between SBI and CAB, to examine the Profitability on the
operating ratio between the SBI and CAB.

The test of significance has been carried out by adopting t – test formula. Then the
calculated value of t (2.75) is more than the table value (2.306), therefore there is no evidence
of accepting the hypothesis. Since, the calculated value of t is greater than the table value,
therefore, in this case the null hypothesis is rejected and alternative hypothesis is accepted
and finally concluded that the difference in the operating Profit ratio of SBI and CAB is very
important.

Almumani, Mohammad (2013) explains that the Profitability became one of the
Challenges faced by the commercial banks to maintain their financial positions strong in
order to meet the risks associated with these openness and globalization. A profitable banking
system is better able to with stood negative stocks and contributes to constant of the financial
sector. The factors of Profitability are well observed and explained, as it is upgrade important
to strengthen the foundations of domestic financial system as a path to buildup fluctuation for
capital flow volatility. By the managerial and environment i.e., internal as well as external
factors the Profitability of commercial banks is affected. Internal factors are affected by
management decisions and targets to be achieved by the management of the bank; similarly
as capital ratio, Credit risk, productivity growth and size of the performance of bank. The
external factors are affected by environmental forces such as financial market structure,
independence of trade, growth of economy, inflation, interest rates in market and structure of
the ownership. In this concept, the importance of this study is to determine the managerial
factors that affect commercial banks profitability in general and Jordanian banks in particular.

This research paper contributes towards literature in a unique path. The dataset, made up of
thirteen Jordanian commercial banks contents of 81.3% of banks presented in Amman stock
exchange (ASE). This enhances the generalization of our opinion to all banks operating in
Jordan. Commercial banks play a main role in Jordan by pushing forward the rates of
economic growth, through the mobilization of national savings and by utilizing them to
finance Productive economic sections.

This Paper has attempted to explore the managerial factors that influence commercial
banks profitability in Jordan. The major conclusion of this study is that the profitability of the
Jordanian commercial banks is affected by operational efficiency. The cost income ratio is
the main endogenous factor under the control of management that influences the Profitability
of the commercial banks in Jordan. Most of the regulatory reforms and structural fluctuations,
specifically those undertook during the study time, had an important influence on the Jordan's
a banking behavior. The requirement for the CBJ to undertake various comprehensive and
tremendous steps for restructuring the banks is specifically those with low and unstable levels
of performance efficiency.

Kanwal Sara and Nadeem Muhammad (2013) explain that the banking sector of
Pakistan has been continuously under structural fluctuations and development phase since
independence. Up to 1970, the commercial banks present remarkable growth. From 1974
onwards 14 commercial banks were nationalized and then they merged into five main banks.
Almost all 90% of the total assets of banking sector were owned by financial unproductive
public banks in 1980s and 1990s. The profit decreasing and Simultaneously, banking sector
reforms were started to address issues like Privatization, lending rates and etc., The
Profitability as defined by Rose (1997) is the net after tax income of banks generally
evaluated by return on assets and return on equity ratios. Various external factors that affect
these ratios include; inflation rate, real interest rate, gross domestic product of real, country’s
imports and exports etc., In economic growth and development commercial banks have been
playing a significant role in Pakistan and also affected by the conditions of macroeconomic.

As Pakistan is leaded by commercial banks, it is of important concern to associate their

Profitability with country’s Progress and hence, a study to determine the cumulative impact
of macroeconomic variables on the Profitability of commercial banks would addition to the
strategies devised in interest of the institutions Progress. The main objective of this study is
the relationship between macroeconomic variables and Profitability of listed commercial
banks in the Pakistan. The remaining whole research paper is divided as follows: Section 2
gives the related review of literature. Sections 3 provided the data, methodology and improve
the hypotheses. Section 4 defines the findings and interpretation. And lastly, Section 5
presents results of empirical and provided suggestions for future work.

There are various internal and external factors which impact the Profitability of public
limited commercial banks in Pakistan, but this research employs only three external factors
namely inflation rate, GDP and interest rate and examine their impact on earnings of financial
institutions. For future research, current study can be explored to cover large time periods.
Unbalanced panel date can be used to incorporate the banks which are presently commenced.
Quarterly data can be examined to explore more valuable results. But, he other eco metric
methods can be applied to confirm the relationship.

Zakaria Mohammed (2013): Rural Community Banks (RCBs) are group of banks which
are owned and controlled by residents in a country. In Ghana the rural banks are admitted
under the company’s code and are licensed by the Bank of Ghana to busy in the business of
banking. There are nearly 130 rural banks including over 500 agencies in the ten regions of
Ghana. The RCBs are the biggest Providers of formal financial services in rural areas and
also represent nearly half of the total banking outlets in Ghana. RCBs are so, the primary
vehicle for financial intermediation, formation of capital and retention of rural dwellers in the
rural sectors.

Now – a – day, information and communication technologies have approved as a powerful

mechanism and low income fields. ICT innovations such as a personal computer related to
the internet, a mobile phone, on ATM or a Point – of – sale machine situated at a retail or
postal outlet, may be much low expensive to start than branches situated in rural areas and
more possible for customers. Unlike transactions as manual, TCT based transactions can take
place with less time or with no time need from a teller.

Technological developments especially in the area of information and communication

technology are revolutionizing the way business is done in Ghana. Banks are now essential to
invest in ICT for the facilities of a transaction and payment sectors that is compatible with the
needs of the electronically inter-linked global market place. The conduct of various forms of
innovation has largely influenced the content and quality of banking functions. Also,
technological innovations have impacted the RCBs Performance in Ghana. With connected to
core banking functions the implementation of the Software supported in the transformation of
the manual functions of the RCBs into efficient and standardized automated processes. This
supports real time transactions related to Inter-branch and Inter-bank. The conduct of the
software slowly reduces income leakage such as calculation of interest on overdrafts and cost
on turnover.

Jassal Rajpreet and Sehgal Ravinder (2013), states that online banking is referred as the
use of Internet as a remote delivery channel of banking system services through the World
Wide web Banks worldwide are enhancing offering banking services: customers are
transferring money from one account to another account, verifying their account status or
investigating in stock from online traced steps try to interpret financial transactions and turn
them to their advantage. Banks and consumers worldwide have lost millions of dollars by
online traced. The bank information is compiled by skilled criminal hackers by interpreting a
financial institutions online information system, enhancing malicious bank Trojan viruses,
corrupt data and implements the quality of an information system’s performance. Therefore,
in these days, customers can do banking online which is much easy and time saving and at
the same time they are essential to threats. Therefore, one of the main concerns of people
with concept of internet banking is the security related to data of bank account, transactional
information and also the access path of their accounts.

Therefore, RBI observed that at present few banks do not have appropriate security
polices and kinds of monitor the service level agreements with third parties and have
inadequate credit trail, so it has approved warning to banks to comply the rules of RBI by
Oct, 2012. Further online banking becomes less safety if users are not careful or computer
illiterate. As enhancing popular criminal practices is to gain access to a user’s finances is
phishing and other dangers consist farming, Malware, Viruses, user identity theft and
password by the other means etc.,

The ICICI Bank was a very first mover in the area of internet banking space, not just first
bank to start this service in India way bank in October 1997, but one of the pioneers in Asia
pacific as well. The ICICI Bank is India’s second largest Bank with a linkage of nearly 2750
(540) branches and as well as offices, more than 9000 ATMs. In the year 1996 the ICICI
Bank was first internet banks of India. Therefore, ICICI Bank’s internet banking provides a
security tool to conveniently and safely manage the finances of clients from your home or
office. The ICICI bank has presented its Privacy policy on websites for customers and bank
site shows that on July, 2012 it was amended last time.

Goel Shobhit and Bajpai Avinash (2013) explain that the bank performs the backbone in
growth of the any economy. The Indian Banking Industry undertook a huge increase in post
globalization and liberalization. In the Indian banking sector, since the financial reforms of
1999, there has been a tremendous change. The deregulation of deposit interest rates and rates
of lending, lower CRR and SLR, increased competition etc have encourage the Indian
banking sector this has enabled banks to control the deposits cost, to give loans at a
competitive pricing, much more funds available for lending purpose, to lower down their
generation rate of NPA, etc., RBI granted new banks to e commence din the private sector as
per the recommendation of Narashiman Committee. The enhancement in the information and
communication technology (ICI) has also made banks to start their branches outside India.

All these changes in the Indian banking sector brought globalization in the Indian banking
system. The globalization of the Indian banks has increased their customer base and facilities
more business to them these focusing the future of the Indian banking industry at the core.
The optional point of origin of the US financial crises is the highly indebted us economy and
high appetite for risk by investors and the collapse of real estate market is the end point of
origin of crisis. The recession in the US is the outcome of low interest rate atmosphere which
encourage large number of home buyers to take home loans.

Housing slump in the US and more use of credit cards has led the people of US to
bankrupted, resulting towards slowing down of the consumer spending which in turn has
lowered the capacity of US to import goods from various countries and therefore lowered the
industrial production. This condition also affected the ability of US banks to transact with
banks in various countries. Due to the US recession purpose the foreign banks in US also get
influenced. The banking sector around the world gets influenced by this recession of global
directly of the five huge Us investment banks, Lehman Brothers went bankrupt; Bear steams
and Merrill lynch were gathered By other banks. Out of these huge five banks, only Goldman
such as and Morgan Stanley have lived just because of both of these have changed their
business models since the commencement of the crisis. But the Indian banks due to their
conservative approach have not been much influenced.

Subramanyam T (2013) states that due to globalization various foreign banks commence
to function on Indian soil. The changes that are occupying place worldwide continued to give
shocks to the banking system which resulted in an expansion of banking services both in
range, volume and on-performing assets. To the bank management and the policy maker the
measurement of commercial bank’s efficiency is very important concept. Before we
contemplate to evaluate efficiency ‘commercial bank’ has to be bended suitably to meet the
aims of the analysts. A commercial bank can be folded into following two approaches, an
intermediation and so also production approach. In the intermediation concept financial
institutions are viewed to intermediate funds in between depositors and borrowers. Under
approach of production a commercial bank’s resources produce services to the customers.
The common difference between the two approaches is that in production approach deposits
are treated as result, and where as they are viewed as an input in approach of intermediation.

The performance of banks and bank branches was examined by a number of analysts, but
unfortunately there is no common agreement of choice of technology in concept of inputs and
outputs. To assess efficiency of Indian commercial banks Data Envelopment Analysis (DEA)
models are utilized as lowest tools. Adding too much inputs and outputs to DEA list of
variables in the presence of too less number of Decision Making Units (DMUs) leads to loss
of discriminatory power of DEA.

The commercial banks are regulated by environment of risk by which differ from one
banks to another. This research study refers to credit risk and non-performing assets are
assumed to proxy risk of credit. We examine the performance of 63 commercial banks
functioning on Indian soil. These consists public, private and foreign sector banks. Unlike
traditional decomposition the full input technical efficiency is decomposed into endogenous,
exogenous, scale and pure technical efficiency, the decomposition being multiplicative.
Instead of bank wise, we report system wise average efficiencies.
 This research study decomposes various the overall technical efficiency into exogenous
risk, endogenous risk, scale and true technical efficiency. It is assumed that NPA focuses the
risk weapon involved in commercial bank trade.

Singh Sultan and Chaudhry Sahila (2013) described that the trend of banking in India is
changing rapidly. The increased role of the banking system in the Indian economy, the
enhancing levels of deregulation along with the upgrading levels of competition have
facilitate globalization of the Indian banking sector and offered numerous demands on banks.
Operating in this demanding environment has opened the banks to number of challenges and
risks. In the process of giving financial services, they guess various kinds of financial risks.
The quality, consistency and the transparency of the capital background are one of the main
objectives of any institution of banking sector.

Introduced by the forgoing revelations, an attempt is made to examine the capital

adequacy of selected private sector banks in India, which is grouped under four sections.
Namely, the first section consist a small review of some of the earlier research studies;
Second section explores the scope, objectives of study, hypothesis and research methodology
of the study. The third section, covers an attempt is made to study the capital adequacy of
private sector Indian banks. The fourth section discloses the conclusion and limitations of
study.

It is much significance for a bank to control depositors’ confidence and eradicating the
bank from going bankrupt. Capital is seen as a precaution to protect the depositors and
motivate the stability and efficiency of financial sector. The capital adequacy ratios perform
as indicators of bank leverage. To reach the objectives of the study, the use is made of
secondary data for a time period of eleven years i.e., from 2000-01 to 2010-11, gathered
importantly from Report on trends and Progress of Banking in India.

It is conclude that, there is no important difference in the capital adequacy ratio and the
ratio of securities of government to total investments in the selected bank; so, as a result the
null hypothesis is accepted on the other side, an important difference is got in the ratio of
advances of total assets, government securities to total investments and debt equity ratio in
the selected banks; that’s why, null hypothesis is rejected finally.

Kumar Suresh (2013) described that from the early 1990s, the scope of the banking sector
has importantly changed due to the deregulation and liberalization, concerned by divestment
of public sector banks, entry of foreign banks and mainly the merger of many banks in India
in the whole world. In the post reform time nearly 25 bank mergers took place in India. These
mergers have an important conduct on the functioning and profitability in the banking
sectors. So, from the point of view of both managerial and policy interests, it is totally
significant behaviors so as to understand how the banking industry has been performing to
these upcoming challenges and which banks are functioning better than the others in this time
of transition.

The current research is undertaken to examine whether the size of banks better and to what
extent and also to analyses the likely influence of mergers on the efficiency and profitability
measurement of banks. In this research an attempt has been made to focus various concept
involved in bank mergers in India. For the reason of the research study the collection of data
has been based on secondary data.

After the collection of sources from various ways they have been totally managed and
tabulated to do analyses and interpretation. Simple percentages, diagrams of bar and so also
tables have been utilized. Much of the impact towards merger bring from the concept that
there is a liner relationship between size and efficiency, coming partly and wholly from
economic of scale. Therefore, the bigger you get the much you become competitive. Indian
banks are huge smaller than international banks. If they need to become competitive, they
definitely get larger. The highlight the relationship between size and profitability, a sample of
about 24 large banks is undertaken. Their assets and operating profits are undertaken and
Karl Pearson’s correlation Co-efficient in them is undertaken.

Leveling the acting field in domestic and foreign banks is specifically essential for
competitive settings. The popular concept that large banking business are much more
efficient and low risky than smaller firms of the notion that the world banking industry is
consolidating in order to eradicate more capacity, may be few of the forces but one can not
refuse the truth that today public policies are supporting the banks to merge.

Sontakke Ravindra and Tiwari Chandan (2013) described that the introduction of
financial sector reforms from 1991 have enormously fluctuated the face of Banking in India.
The banking sector has moved slowly from a restricted environment to a deregulated market
based economy. With the advent of liberalization and globalization, resulting in market
growth there has been drastic charge in the intermediation play of banks in India. The pace of
transformation has been more important in recent times with technology acting as a catalyst.
Consequently, we are pointing the cut throat competition in the banking sector these days. Of
course, the problem of swelling non-performing asset is observing attention and accumulation
of huge NPA has guessed great significant in terms of management of risk. Bankers thus have
realized to have influence NPA management on their Priority list.

Non-Performing Asset refer an asset of borrower (customer), which has been grouped by a
bank or institution of financial as sub-standard, doubtful or asset loss, in accordance with the
guidelines relating to asset classification approved by RBI. The current research is
undertaken to analyze the conceptual framework of Non Performing Assets in banking, to
point out the trend of Gross NPA and net NPA in scheduled commercial Banks in India for
the duration of five years, to execute the remedies for the management of NPA in banking
sector. For our research study, we have mentioned Non-Performing Assets in Scheduled
commercial banks which consists public sector banks, private sector banks and so also
foreign banks which are mentioned in the second schedule of the RBI Act 1934.

The current research is depends on the secondary data. The current study discusses the
conceptual framework of NPA and it also point out the trend of NPA in numerous banks
during the schedule of 5 years i.e., from 2008 to 2012. Various reputed research journal
consisting research paper and article have been utilized by the researchers. Further more, RBI
Report on Trend and progress of Banking in India for several years, websites and a book on
banking has been using during the study time. Bankers do opinion that NPA is unavoidable in
banking sector because of the general nature of the business of banking. Therefore, proper
remedial actions as discussed is followed shall restrain the accounts turning NPA directing
the Soundness of banking.

Priya K and Dr.Nimalathasan B, (2013) described that the liquidity management and
Profitability are two very important concepts in the survival and development of business and
the ability to manage the tradeoff between two sources of concern for financial managers.
The liquidity of an asset refers how fast it can be transformed into cash and the profitability
of a concern can explained by as its potential to meet its current liabilities and it is usually
measured by various different types of ratios such as Return on asset (ROA), Return on
Equity (ROE) and etc. The current research is just undertaken to explain how the liquidity
plays a significant role in the successful and effective operations of a business firm.
Liquidity management and profitability are most effective tools in the survival, growth,
development, suitability and performance. The research in this study also explains the factors
which are effectively contribute to the liquidity and profitability. In today’s cut throat huge
competition the management of liquidity and profitability has become critical issue. If any of
the concern decreases its liquidity the Profitability would be high so, the results highlights
that there is a relationship between profitability and liquidity concepts. Therefore it is much
essential for the every business concerned to maintain equilibrium between profitability and
liquidity.

Vivek Kumar and Dr. Major Singh (2013) described that the Profitability and the reason
theme of with connected to the two major public and private sector banks of India. The
current research takes into account the number of profitability ratios of two banks as the main
measure of Profitability. The common factor used for developing the number of various
Profitability ratios is business volume (deposits + advances). The study deeply analysis
published five- year data from 2007-08 onwards for the two major banks, i.e. SBI the largest
public sector bank and HDFC is the largest private sector bank. From this comparative
analytical study of profitability of two banks clearly states that there is a huge difference
between the profitability of the two banks. The profitability of HDFC’s bank is more than
that of the SBI bank.

The Profitability is very important tool for Performance appraisal of any business
organization Banks plays major role in the functioning of most of the countries in the world.
It is commonly agreed that a healthy and strong banking sector is a prerequisite for
sustainable economic development.

The Social responsibility that was forward upon the public sector Banks deviate the from
the profit motive on the other hand foreign and private sector banks did not make such moves
of responsibilities. The measure selected to evaluation of performance of both the SBI and
HDFC is profitability. The performance of the Indian Banking sector has to be continuously
compared with their counterparts in its own and others countries to help bankers make better
decisions regarding the directions of the banking sector. The current research is undertaken to
analyze and study the behaviors of profitability of both SBI HDFC and to make a comparison
of Profitability between state Bank of India and HDFC bank. The ratios used for evaluating
profitability of both banks interest rate ratio, interest paid ration and etc. The comparative
study of both banks clearly states that there is a huge difference between the profitability two
banks. The state Bank of India as public sector Bank plays a very important in the
development of the banking base India. The lower profitability of SBI may be due to the
reason because profit earning is not the sole target the SBI. But currently higher profitability
much essential for the success of any can.

Shephali Mathur (2013) described that, the in priority Indian Banking sector priority
banking is the new term / concept. The main basic purpose of this form of banking is to do
the experience of banking hassle free and less time consuming. This paper is focused on the
study of the priority banking with reference to ICICI Bank V/s HDFC Bank. With the advent
of foreign banks the Priority banking concept is to be emerged. The foreign Banks usually
have the habit of serving their more number of customers with priority service. By seeing this
private sector banks commence the similar service options for their valued customers. Slowly
the government banks also started this service as well and currently almost all banks in India
gives priority banking services to their customers. The main objective of the study is to
analyze the term Priority banking i.e. what is deals with and generally to study the term
priority banking with reference to ICICI Bank. The services provided by ICICI Bank to its
priority customers Vs HDFC Bank. The objective of study is also to get the customers views
on priority banking and what are the services they are getting from ICICI Bank as their
priority banking customer.

The ICICI Bank gives priority recognition as a privilege banking customer the branches
with speed access to privilege Bankers and Priority access to phone bank services will make
your banking effortless smoothly. The paper analysis on priority of banking with connection
to ICICI Bank Vs HDFC Bank, in current scenario priority banking, is an important aspect
for bank. The importance could be understood with concept that priority banking not only
excretes satisfaction of the customers who served but also push other customer to enhance to
the priority banking. The scope priority banking is large with almost double digit
development in the economy. Huge group of people have salaries, profits an Bonus
enhancing over time. It is much convenient to ask for investment with the already satisfied
existing customer in place hurting for new customers in hard completion market like India.
Priority Banking is a new term in the banking field and the priority customers are provided
special privileges by the bank. But in spite of their comparison both the banks are providing
worthy services to the customers and the customers. Should take all advantages out it and the
customers who are still not aware about the priority banking services should be made aware
by the banks.
 Shrimal Perera, Michal Skally & Zahida Chaudhry (2013): This study analysis the
bank specific and other factors which are determinants of commercial bank Profitability in
selected south Asian countries (India, Sri Lanka, Bangladesh and Pakistan). The single-
equation, dynamic Panel data procedure employed accommodates evaluates of production
efficiency, production function effectiveness, competition among industry, persistence of
Profit and Country specific difference in governance, The result of current study also shows
that slack legal systems in these countries (leading to inferior contract enforcement)
positively affects profits as banks probably require high risk performance on their long
contracts.

The current study uses unconsolidated bank-specific annual data of 119 domestic
commercial banks operating in four Asian countries. Unconsolidated data is referred over the
consolidated data as the later having revenue and costs from non-bank subsidiaries of bank
holding companies. The main and most important primary source of bank specific annual
data is the Bank scope database. Data for corruption control and law and order are gained
from the governance factors published in a World Bank’s policy research paper by Karfmann,
Kraay and Matruzzi (2007). With regard to sampling method, comprehensive list of 198
licensed commercial banks was primarily obtained from the central bank annual report of
India, Bangladesh, Sri Lanka and Pakistan. This study represents the domestic banking
market of the four countries with 94% coverage. Out of 119 bank final sample, there are 29
Bangladeshi, 58 Indian, 21 Pakistani 11 Sri Lankans banks. Therefore, the more proportion
of Indian banks reflects the large number of domestic banks India. Finally, this study utilizes
the annual cross section and time series poor data as this helps to delete bases caused by
aggregating heterogeneous individual banks. This approach also gives more reliable
regression evaluation due the larger sample size and helps to control for any unobserved same
various problems. In a strictly time series or the cross area approach, these may be eradicate
into the usual fault term or can cause problems in estimation. The study also experimented
with there other three macroeconomic variables such as long time rate of interest, rate of
inflation and real output growth.

P.D. Saini and Arun Kumar Singh (2014):“Impact of Global Recession in Banking
Industry (A comparative study of SBI and ICICI Bank)” explains that a recession is a
business abele contraction, a basic slowdown in economic activity. During the recession
period, many of macroeconomic indicators fluctuate in a similar way. Production was as
measured by the Gross Domestic Product (GDP), employment, investment spending,
utilization of capacity, income from households, Profits from business and fall in inflation,
while bankruptcies and unemployment rate rise. For the purpose of analysis SBI the most
popular public sector bank and ICICI Bank the leading top most private sector bank have
been taken into consideration. And the secondary data have been gathered through annual
report of selected banks and websites. In this current study the comparison of impact of
recession on financial performance of public and private sector bank on the basis of financial
performance have been evaluated. The sample has been drawn by utilizing convenient
random sampling and statistical tools ratios; pained t-test has been used. The present study is
an attempt to examine the impact of global recession in banking industry of elected banks
over a selected period of time.

The current research study is undertaken to determine the impact of recession on financial
Performance of both the selected banks, and also to analyze the comparison of impact of
recession on financial performance of selected public and private sector bank. According to
the analysis and study of SBI and ICICI Indian Banks the result highlights that except R1,
R3, R5 and R6 there is no impact of recession on SBI Bank. But the ICICI Bank results states
that except R1, R5 and R6 there is no impact of recession on ICICI Bank. So, the researcher
can say that in Indian banking sector public and Private Banks are equally influenced by
recession. The Profitability of both the Indian Banks is influenced by recession because
majority of selected parameters showing important changes in the pre and post recession
period.

If recession states Indian Banking system than government should replay to recession by
just adopting expansionary macroeconomic policies, such as increasing money supply,
spending of government increasing and taxation is decreasing.

Almazari Ahmad Aref (2014): “Impact of Internal factors on Bank Profitability:

Comparative study Between Saudi Arabia and Jordan” explains that a strong banking system
is capable to confront negative reactions and contribute to the consistence of the financial
sector. The financial institutions are influenced by several of indicators, among these factors
are internal and external factors which has direct influence on it is performance. The internal
factors such as the decisions of management on size of the bank, capital, risk management
and management of expenses influence the profitability of the bank directly. Because most of
the factors remain confidential closely connected 5to management of bank, specially the
management of risk. The requirement for risk management is the banking system is inherent
in the nature of the business of banking low asset quality and weak liquidity are the two main
reasons of bank fails and represented as the key risk factors in terms of credit and risk of
liquidity and attracted too much attention from researchers to evaluate their impact on bank
profitability.

The external factors influencing the profitability of banks are presented in economic
situations and institutional base. The macroeconomic environment like as inflation, rate of
interest and output of cyclical and variables that reflects market features such as market
concentration, size of industry and states of ownership.

The major objectives of this research study are to evaluate the factors of internal that
influence the profitability of the Saudi and Jordian Banks and make a comparison in the two
sectors. Earlier studies used few internal factors variables to measure profitability, while this
present research used more than one weapon to find out the impact of internal factors on the
Profitability both the sectors. During the time of study both banking systems witnessed many
challenges and problems internally and as well as externally. The main reason of this
research was to find out the most important internal factors that influencing the profitability
of the Saudi and Jordian banks. The required data was gathered from secondary sources. The
outcome indicates that the Profitability of Saudi Banks in surpassed the profitability of the
banks of Jordanian. This includes that Saudi banks are more Profitable than the Jordanian
ones as well as it is used resources in none effective way. The profitability of Saudi hanks has
a positive and important correlation with total investment to total asset ratio, total equity to
asset ratio, risk of liquidity.