A STUDY ON COMPARATIVE ANALYSIS OF

ICICI BANK AND SBI

Bachelor of Commerce
Banking & Insurance
Semester V
(2014 - 2015)

Submitted by

TUSHAR BAJIRAO PATIL

Roll No. 16

Mumbai Pradesh Arya Vidya Sabha’s

GURUKUL COLLEGE OF COMMERCE

Tilak Road, Ghatkopar (E) Mumbai-77.

A STUDY ON COMPARATIVE ANALYSIS OF

ICICI BANK AND SBI
Bachelor of Commerce
Banking & Insurance
 Semester V
(2014 - 2015)
Submitted
In Partial Fulfillment of the requirements
For the Award of Degree of Bachelor of
Commerce- Banking & Insurance
By

TUSHAR BAJIRAO PATIL

Roll No. 16

Mumbai Pradesh Arya Vidya Sabha’s

GURUKUL COLLEGE OF COMMERCE

Tilak Road, Ghatkopar (E) Mumbai-77.

DECLARATION

I TUSHAR BAJIRAO PATIL Student of B.com. Banking & Insurance Semester v

(2014-2015) hereby declare that I have completed the Project on COMPARATIVE
ANALYSIS OF ICICI BANK AND SBI The information submitted is true and original
to the best of my knowledge.
 Signature of Student
TUSHAR BAJIRAO PATIL
Roll No :-
16
 GURUKUL COLLEGE OF
COMMERCE
(Tilak road, Ghatkopar (E), Mumbai - 77.)

CERTIFICATE
This is to certify that Mr. TUSHAR BAJIRAO PATIL Roll No. 16 of
B.Com. Banking & Insurance Semester v (2014-2015) has successfully
completed the project on COMPARATIVE ANALYSIS OF ICICI BANK AND
SBI under the guidance of Prof. MAMTA RANE.

Course Co-ordinator PrincipaL

(Prof. Nitin Agarwal) (Dr. Kshitij Prabha)

Project Guide External Examiner

(Prof. Mamta Rane)
 ACKNOWLEDGEMENT

I wish to express my sincere and heartfelt thanks to my guide

Prof. Mamta Rane, his supervision throughout the project work.

I take this opportunity to express my deep sense of gratitude to Dr. Kshitij

Prabha, Principal, Gurukul College of Commerce, Ghatkoper (E) for having taken
the initiative to start the project work.

I thank Prof. Nitin Agarwal, BBI Co-ordinator and Head, Department of

Commerce for encouragement and help to complete this project work.

Finally, I wish to express my heartfelt gratitude to my beloved parents and all

my friends for their encouragement and support in completing this project work.
Above all I thank Lord Almighty for abundant mercies and infinite grace which
showed upon me to complete this project work.
V/S

INDEX
 CHAPTER NAME PAGE
NO
1. CHAP : 1 INTRODUCTION 1-20
1
1.1 An Overview Of The Banking Sector Section 2
1.2 Need of the Banks 3
1.3 History of Indian Banking System 4
1.4 Nationalisation 5
1.5 Liberalisation 7
1.6 Government Policy On Banking Industry
8
1.7 Law of banking
11
1.8 Classification of Banking Industry in India
1.9 Services Provided By Banking Organizations 16

2. CHAP : 2 REVIEW OF LITERATURE 21-23

3. CHAP : 3 COMPARISON BETWEEN ICICI BANK AND 24-53

SBI

3.1 Overview of ICICI Bank 24

3.2 History of ICICI Bank 25
3.3 Overview of SBI 28
3.4 Roots OF SBI 30
3.5 Comparison Between ICICI Bank And SBI 31
3.6 Analysis Of Performances Of ICICI And SBI 33

4. CHAP : 4 OBJECTIVE OF THE STUDY 54-55

4.1 Objective Of The Study 54

4.1 Research Methodology 54
4.2 Limitation Of The Study 55

5. CHAP : 5 FINDINGS AND CONCLUSIONS 56-57

6. CHAP : 6 REFERENCES 58

7. QUESTIONNAIRE 59-61
 CHAPTER : 1 INTRODUCTION

 An Overview Of The Banking Sector Section

 Need of the Banks

 History of Indian Banking System

 Nationalisation

 Liberalisation

 Government policy on banking industry

 Law of banking

 Classification of Banking Industry in India

 Services provided by banking organizations

 Key Words
 An Overview Of The Banking Sector Section

A bank is a financial institution that provides banking and other financial

services to their customers. A bank is generally understood as an institution which
provides fundamental banking services such as accepting deposits and providing
loans. There are also non-banking institutions that provide certain banking services
without meeting the legal definition of a bank. Banks are a subset of the financial
services industry.

A banking system also referred as a system provided by the bank which offers
cash management services for customers, reporting the transactions of their
accounts and portfolios, throughout the day. The banking system in India, should
not only be hassle free but it should be able to meet the new challenges posed by
the technology and any other external and internal factors. For the past three
decades, India’s banking system has several outstanding achievements to its credit.
The Banks are the main participants of the financial system in India. The Banking
sector offers several facilities and opportunities to their customers. All the banks
safeguards the money and valuables and provide loans, credit, and payment
services, such as checking accounts, money orders, and cashier’s cheques. The
banks also offer investment and insurance products. As a variety of models for
cooperation and integration among finance industries have emerged, some of the
traditional distinctions between banks, insurance companies, and securities firms
have diminished. In spite of these changes, banks continue to maintain and
perform their primary role—accepting deposits and lending funds from these
deposits.

1
 Need Of The Banks

Before the establishment of banks, the financial activities were handled by money
lenders and individuals. At that time the interest rates were very high. Again there were
no security of public savings and no uniformity regarding loans. So as to overcome such
problems the organized banking sector was established, which was fully regulated by the
government. The organized banking sector works within the financial system to provide
loans, accept deposits and provide other services to their customers. The following
functions of the bank explain the need of the bank and its importance:

• To provide the security to the savings of customers.

• To control the supply of money and credit

• To encourage public confidence in the working of the financial system, increase

savings speedily and efficiently.

• To avoid focus of financial powers in the hands of a few individuals and

institutions.

• To set equal norms and conditions (i.e. rate of interest, period of lending etc) to
all types of customers

2
 History of Indian Banking System

The first bank in India, called The General Bank of India was established in the year
1786. The East India Company established The Bank of Bengal/Calcutta (1809), Bank of
Bombay (1840) and Bank of Madras (1843). The next bank was Bank of Hindustan
which was established in 1870. These three individual units (Bank of Calcutta, Bank of
Bombay, and Bank of Madras) were called as Presidency Banks. Allahabad Bank which
was established in 1865, was for the first time completely run by Indians. Punjab
National Bank Ltd. was set up in 1894 with head quarters at Lahore. Between 1906 and
1913, Bank of India, Central Bank of India, Bank of Baroda, Canara Bank, Indian Bank,
and Bank of Mysore were set up. In 1921, all presidency banks were amalgamated to

form the Imperial Bank of India which was run by European Shareholders. After that
the Reserve Bank of India was established in April 1935.

At the time of first phase the growth of banking sector was very slow. Between 1913
and 1948 there were approximately 1100 small banks in India. To streamline the
functioning and activities of commercial banks, the Government of India came up with
the Banking Companies Act, 1949 which was later changed to Banking Regulation Act
1949 as per amending Act of 1965 (Act No.23 of 1965). Reserve Bank of India was
vested with extensive powers for the supervision of banking in India as a Central Banking
Authority. After independence, Government has taken most important steps in regard of
Indian Banking Sector reforms. In 1955, the Imperial Bank of India was nationalized and
was given the name "State Bank of India", to act as the principal agent of RBI and to
handle banking transactions all over the country. It was established under State Bank of
India Act, 1955. Seven banks forming subsidiary of State Bank of India was nationalized
in 1960. On 19th July, 1969, major process of nationalization was carried out. At the same
time 14 major Indian commercial banks of the country were nationalized. In 1980,
another six banks were nationalized, and thus raising the number of nationalized banks to
20. Seven more banks were nationalized with deposits over 200 Crores. Till the year 1980
approximately 80% of the banking segment in India was under government’s ownership.
On the suggestions of Narsimhan Committee, the Banking Regulation Act was amended
in 1993 and thus the gates for the new private sector banks were opened. The following
are the major steps taken by the Government of India to Regulate Banking institutions in
the country.

3
 Nationalisation
By the 1960s, the Indian banking industry has become an important tool to facilitate
the development of the Indian economy. At the same time, it has emerged as a large
employer, and a debate has ensured about the possibility to nationalise the banking
industry. Indira Gandhi, the-then Prime Minister of India expressed the intention of the
Government of India (GOI) in the annual conference of the All India Congress Meeting
in a paper entitled "Stray thoughts on Bank Nationalisation". The paper was received with
positive enthusiasm. Thereafter, her move was swift and sudden, and the GOI issued an
ordinance and nationalised the 14 largest commercial banks with effect from the midnight
of July 19, 1969. Jayaprakash Narayan, a national leader of India, described the step as a
"Masterstroke of political sagacity" Within two weeks of the issue of the ordinance,
the Parliament passed the Banking Companies (Acquisition and Transfer of Undertaking)
Bill, and it received the presidential approval on 9 August, 1969. A second step of
nationalisation of 6 more commercial banks followed in 1980. The stated reason for the
nationalisation was to give the government more control of credit delivery. With the
second step of nationalisation, the GOI controlled around 91% of the banking business in
India. Later on, in the year 1993, the government merged New Bank of India with Punjab
National Bank. It was the only merger between nationalised banks and resulted in the
reduction of the number of nationalised banks from 20 to 19. After this, until the 1990s,
the nationalised banks grew at a pace of around 4%, closer to the average growth rate of
the Indian economy. The nationalised banks were credited by some; including Home
minister P. Chidambaram, to have helped the Indian economy withstand the global
financial crisis of 2007-2009.

4
 Liberalisation
In the early 1990s, the then Narsimha Rao government embarked on a policy of
liberalisation, licensing a small number of private banks. These came to be known as
New Generation tech-savvy banks, and included Global Trust Bank (the first of such new
generation banks to be set up), which later amalgamated with Oriental Bank of

Commerce, Axis Bank(earlier as UTI Bank), ICICI Bank and HDFC Bank. This move
along with the rapid growth in the economy of India revolutionized the banking sector in
India which has seen rapid growth with strong contribution from all the three sectors of
banks, namely, government banks, private banks and foreign banks. The next stage for
the Indian banking has been setup with the proposed relaxation in the norms for Foreign
Direct Investment, where all Foreign Investors in banks may be given voting rights which
could exceed the present cap of 10%, at present it has gone up to 49% with some
restrictions.

The new policy shook the banking sector in India completely. Bankers, till this time,
were used to the 4-6-4 method (Borrow at 4%; Lend at 6%; Go home at 4) of functioning.
The new wave ushered in a modern outlook and tech-savvy methods of working for the
traditional banks. All this led to the retail boom in India. People not just demanded more
from their banks but also received more. Currently (2007), banking in India is generally
fairly mature in terms of supply, product range and reach-even though reach in rural India
still remains a challenge for the private sector and foreign banks. In terms of quality of
assets and capital adequacy, Indian banks are considered to have clean, strong and
transparent balance sheets as compared to other banks in comparable economies in its
region. The Reserve Bank of India is an autonomous body, with minimal pressure from
the government. The stated policy of the Bank on the Indian Rupee is to manage volatility
but without any fixed exchange rate-and this has mostly been true. With the growth in the
Indian economy expected to be strong for quite some time-especially in its services
sector-the demand for banking services, especially retail banking, mortgages and
investment services are expected to be strong.

5
 In March 2006, the Reserve Bank of India allowed Warburg Pincus to increase its
stake in Kotak Mahindra Bank (a private sector bank) to 10%. This is the first time an
investor has been allowed to hold more than 5% in a private sector bank since the RBI
announced norms in 2005 that any stake exceeding 5% in the private sector banks would
need to be voted by them. In recent years critics have charged that the non-government
owned banks are too aggressive in their loan recovery efforts in connection with housing,
vehicle and personal loans. There are press reports that the banks' loan recovery efforts
have driven defaulting borrowers to suicide.

6
 Government Policy On Banking Industry

Banks operating in most of the countries must contend with heavy regulations, rules
enforced by Federal and State agencies to govern their operations, service offerings, and
the manner in which they grow and expand their facilities to better serve the public. A
banker works within the financial system to provide loans, accept deposits, and provide
other services to their customers. They must do so within a climate of extensive
regulation, designed primarily to protect the public interests.

The main reasons why the banks are heavily regulated are as follows:

• To protect the safety of the public’s savings.

• To control the supply of money and credit in order to achieve a nation’s broad
economic goal.

• To ensure equal opportunity and fairness in the public’s access to credit and
other vital financial services.

• To promote public confidence in the financial system, so that savings are made
speedily and efficiently.

• To avoid concentrations of financial power in the hands of a few individuals

and institutions.

• Provide the Government with credit, tax revenues and other services.

• To help sectors of the economy that they have special credit needs for eg.
Housing, small business and agricultural loans etc.

7
 Law Of Banking
Banking law is based on a contractual analysis of the relationship between the bank
and customer—defined as any entity for which the bank agrees to conduct an account.
The law implies rights and obligations into this relationship as follows:

• The bank account balance is the financial position between the bank and the
customer: when the account is in credit, the bank owes the balance to the customer; when
the account is overdrawn, the customer owes the balance to the bank.

• The bank agrees to pay the customer's cheques up to the amount standing to the
credit of the customer's account, plus any agreed overdraft limit.

• The bank may not pay from the customer's account without a mandate from the
customer, e.g. cheques drawn by the customer.

• The bank agrees to promptly collect the cheques deposited to the customer's
account as the customer's agent, and to credit the proceeds to the customer's account.

• The bank has a right to combine the customer's accounts, since each account is
just an aspect of the same credit relationship.

• The bank has a lien on cheques deposited to the customer's account, to the
extent that the customer is indebted to the bank.

• The bank must not disclose details of transactions through the customer's
account—unless the customer consents, there is a public duty to disclose, the bank's
interests require it, or the law demands it.

• The bank must not close a customer's account without reasonable notice, since
cheques are outstanding in the ordinary course of business for several days.

These implied contractual terms may be modified by express agreement between the
customer and the bank. The statutes and regulations in force within a particular
jurisdiction may also modify the above terms and/or create new rights, obligations or
limitations relevant to the bank-customer relationship.

8
 Acts Regarding Banking Industry

1949 : Enactment of Banking Regulation Act.

1955 : Nationalisation of State Bank of India.

1959 : Nationalization of SBI subsidiaries.

1961 : Insurance cover extended to deposits.

1969 : Nationalisation of 14 major Banks.

1971 : Creation of credit guarantee corporation.

1975 : Creation of regional rural banks.

1980 : Nationalisation of seven banks with deposits over 200 Crores.

9
 Regulations for Indian banks

Currently in most jurisdictions commercial banks are regulated by government entities

and require a special bank license to operate. Usually the definition of the business of
banking for the purposes of regulation is extended to include acceptance of deposits, even
if they are not repayable to the customer's order—although money lending, by itself, is
generally not included in the definition.

Unlike most other regulated industries, the regulator is typically also a participant in
the market, i.e. a government-owned (central) bank. Central banks also typically have a
monopoly on the business of issuing banknotes. However, in some countries this is not
the case. In UK, for example, the Financial Services Authority licenses banks, and some
commercial banks (such as the Bank of Scotland) issue their own banknotes in addition to
those issued by the Bank of England, the UK government's central bank. Some types of
financial institutions, such as building societies and credit unions, may be partly or
wholly exempted from bank license requirements, and therefore regulated under separate
rules. The requirements for the issue of a bank license vary between jurisdictions but
typically include:

• Minimum capital

• Minimum capital ratio

• 'Fit and Proper' requirements for the bank's controllers, owners, directors, and/or
senior officers

Approval of the bank's business plan as being sufficiently prudent and plausible

10
 Classification Of Banking Industry In India

Indian banking industry has been divided into two parts, organized and unorganized
sectors. The organized sector consists of Reserve Bank of India, Commercial Banks and
Co-operative Banks, and Specialized Financial Institutions (IDBI, ICICI, IFC etc). The
unorganized sector, which is not homogeneous, is largely made up of money lenders and
indigenous bankers.

An outline of the Indian Banking structure may be presented as follows:

1. Reserve banks of India.

2. Indian Scheduled Commercial Banks: a) State Bank of India and its associate banks.
b) Twenty nationalized banks. c) Regional rural banks. d) Other scheduled commercial
banks.

3. Foreign Banks

4. Non-scheduled banks.

5. Co-operative banks.

Reserve Bank Of India:

The reserve bank of India is a central bank and was established in April 1, 1935 in
accordance with the provisions of reserve bank of India act 1934. The central office of
RBI is located at Mumbai since inception. Though originally the reserve bank of India
was privately owned, since nationalization in 1949, RBI is fully owned by the
Government of India. It was inaugurated with share capital of Rs. 5 Crores divided into
shares of Rs. 100 each fully paid up.
RBI is governed by a central board (headed by a governor) appointed by the central
government of India. RBI has 22 regional offices across India. The reserve bank of India
was nationalized in the year 1949. The general superintendence and direction of the bank
is entrusted to central board of directors of 20 members, the Governor and four deputy
Governors, one Governmental official from the ministry of Finance, ten nominated
directors by the government to give representation to important elements in the economic
life of the country, and the four nominated director by the Central Government to
represent the four local boards with the headquarters at Mumbai, Kolkata, Chennai and
New Delhi.

11
 Local Board consists of five members each central government appointed for a term
of four years to represent territorial and economic interests and the interests of co-
operative and indigenous banks.
The RBI Act 1934 was commenced on April 1, 1935. The Act, 1934 provides the
statutory basis of the functioning of the bank. The bank was constituted for the need of
following: -To regulate the issues of banknotes. -To maintain reserves with a view to
securing monetary stability -To operate the credit and currency system of the country to
its advantage.

Functions of RBI as a central bank of India are explained briefly as follows:

1. Bank of Issue: The RBI formulates, implements, and monitors the monitory
policy. Its main objective is maintaining price stability and ensuring adequate
flow of credit to productive sector.

2. Regulator-Supervisor of the financial system: RBI prescribes broad

parameters of banking operations within which the country’s banking and
financial system functions. Their main objective is to maintain public
confidence in the system, protect depositor’s interest and provide cost effective
banking services to the public.

3. Manager of exchange control: The manager of exchange control department

manages the foreign exchange, according to the foreign exchange management
act, 1999. The manager’s main objective is to facilitate external trade and
payment and promote orderly development and maintenance of foreign
exchange market in India.

4. Issuer of currency: A person who works as an issuer, issues and exchanges or

destroys the currency and coins that are not fit for circulation. His main
objective is to give the public adequate quantity of supplies of currency notes
and coins and in good quality.

5. Developmental role: The RBI performs the wide range of promotional

functions to support national objectives such as contests, coupons maintaining
good public relations and many more.

6. Related functions: There are also some of the related functions to the above
mentioned main functions. They are such as, banker to the government, banker
to banks etc.

12
 Banker to government performs merchant banking function for the central and
the state governments; also acts as their banker.
Banker to banks maintains banking accounts to all scheduled banks.

7. Controller of Credit: RBI performs the following tasks:

 It holds the cash reserves of all the scheduled banks.
 It controls the credit operations of banks through quantitative and qualitative
controls.
 It controls the banking system through the system of licensing, inspection and
calling for information.
 It acts as the lender of the last resort by providing rediscount facilities to
scheduled banks.

8. Supervisory Functions: In addition to its traditional central banking functions,

the Reserve Bank performs certain non-monetary functions of the nature of
supervision of banks and promotion of sound banking in India. The Reserve
Bank Act 1934 and the banking regulation act 1949 have given the RBI wide
powers of supervision and control over commercial and co-operative banks,
relating to licensing and establishments, branch expansion, liquidity of their
assets, management and methods of working, amalgamation, reconstruction and
liquidation. The RBI is authorized to carry out periodical inspections of the
banks and to call for returns and necessary information from them. The
nationalisation of 14 major Indian scheduled banks in July 1969 has imposed
new responsibilities on the RBI for directing the growth of banking and credit
policies towards more rapid development of the economy and realisation of
certain desired social objectives. The supervisory functions of the RBI have
helped a great deal in improving the standard of banking in India to develop on
sound lines and to improve the methods of their operation.

9. Promotional Functions: With economic growth assuming a new urgency since

independence, the range of the Reserve Bank’s functions has steadily widened.
The bank now performs a variety of developmental and promotional functions,
which, at one time, were regarded as outside the normal scope of central
banking. The Reserve bank was asked to promote banking habit, extend
banking facilities to rural and semi-urban areas, and establish and promote new
specialized financing agencies.

13
 Indian Scheduled Commercial Banks:

The commercial banking structure in India consists of:

I. Scheduled commercial banks and
II. Unscheduled banks.

Scheduled Banks:

Scheduled Banks in India constitute those banks which have been included in the
second schedule of RBI act 1934. RBI in turn includes only those banks in this schedule
which satisfy the criteria laid down vide section 42(6a) of the Act. “Scheduled banks in
India” means the State Bank of India constituted under the State Bank of India Act, 1955
(23 of 1955), a subsidiary bank as defined in the s State Bank of India (subsidiary banks)
Act, 1959 (38 of 1959), a corresponding new bank constituted under section 3 of the
Banking companies (Acquisition and Transfer of Undertakings) Act, 1980 (40 of 1980),
or any other bank being a bank included in the Second Schedule to the Reserve bank of
India Act, 1934 (2 of 1934), but does not include a co-operative bank”. For the purpose of
assessment of performance of banks, the Reserve Bank of India categories those banks as
public sector banks, old private sector banks, new private sector banks and foreign banks,
i.e. private sector, public sector, and foreign banks come under the umbrella of scheduled
commercial banks.

Regional Rural Bank:

The government of India set up Regional Rural Banks (RRBs) on October 2, 1975 [10].
The banks provide credit to the weaker sections of the rural areas, particularly the small
and marginal farmers, agricultural labourers, and small enterpreneurs. Initially, five RRBs
were set up on October 2, 1975 which was sponsored by Syndicate Bank, State Bank of
India, Punjab National Bank, United Commercial Bank and United Bank of India. The
total authorized capital was fixed at Rs. 1 Crore which has since been raised to Rs. 5
Crores. There are several concessions enjoyed by the RRBs by Reserve Bank of India
such as lower interest rates and refinancing facilities from NABARD like lower cash
ratio, lower statutory liquidity ratio, lower rate of interest on loans taken from sponsoring
banks, managerial and staff assistance from the sponsoring bank and reimbursement of
the expenses on staff training. The RRBs are under the control of NABARD. NABARD
has the responsibility of laying down the policies for the RRBs, to oversee their
operations, provide refinance facilities, to monitor their performance and to attend their
problems.

14
 Unscheduled Banks:

“Unscheduled Bank in India” means a banking company as defined in clause (c) of

section 5 of the Banking Regulation Act, 1949 (10 of 1949), which is not a scheduled
bank”.

NABARD:

NABARD is an apex development bank with an authorization for facilitating credit

flow for promotion and development of agriculture, small-scale industries, cottage and
village industries, handicrafts and other rural crafts. It also has the mandate to support all
other allied economic activities in rural areas, promote integrated and sustainable rural
development and secure prosperity of rural areas. In discharging its role as a facilitator for
rural prosperity, NABARD is entrusted with:

1. Providing refinance to lending institutions in rural areas

2. Bringing about or promoting institutions development and

3. Evaluating, monitoring and inspecting the client banks

Besides this fundamental role, NABARD also:

• Act as a coordinator in the operations of rural credit institutions
• To help sectors of the economy that they have special credit needs for eg.
Housing, small business and agricultural loans etc.

15
 Services Provided By Banking Organizations

Banking Regulation Act in India, 1949 defines banking as “Accepting” for the purpose
of lending or investment of deposits of money from the public, repayable on demand and
withdrawable by cheques, drafts, orders etc. as per the above definition a bank essentially
performs the following functions:-

• Accepting Deposits or savings functions from customers or public by providing

bank account, current account, fixed deposit account, recurring accounts etc.
• The payment transactions like lending money to the public. Bank provides an
effective credit delivery system for loanable transactions.
• Provide the facility of transferring of money from one place to another place.
For performing this operation, bank issues demand drafts, banker’s cheques, money
orders etc. for transferring the money. Bank also provides the facility of Telegraphic
transfer or tele- cash orders for quick transfer of money.
• A bank performs a trustworthy business for various purposes.
• A bank also provides the safe custody facility to the money and valuables of the
general public. Bank offers various types of deposit schemes for security of money. For
keeping valuables bank provides locker facility. The lockers are small compartments with
dual locking system built into strong cupboards. These are stored in the bank’s strong
room and are fully secured.
• Banks act on behalf of the Govt. to accept its tax and non-tax receipt. Most of
the government disbursements like pension payments and tax refunds also take place
through banks.

There are several types of banks, which differ in the number of services they provide
and the clientele (Customers) they serve. Although some of the differences between these
types of banks have lessened as they have begun to expand the range of products and
services they offer, there are still key distinguishing traits. These banks are as follows:

Commercial banks, which dominate this industry, offer a full range of services for
individuals, businesses, and governments. These banks come in a wide range of sizes,
from large global banks to regional and community banks.

Global banks are involved in international lending and foreign currency trading, in
addition to the more typical banking services.

16
 Regional banks have numerous branches and automated teller machine (ATM)
locations throughout a multi-state area that provide banking services to individuals.
Banks have become more oriented toward marketing and sales. As a result, employees
need to know about all types of products and services offered by banks.

Community banks are based locally and offer more personal attention, which many
individuals and small businesses prefer. In recent years, online banks—which provide all
services entirely over the Internet—have entered the market, with some success.
However, many traditional banks have also expanded to offer online banking, and some
formerly Internet-only banks are opting to open branches.

Savings banks and savings and loan associations, sometimes called thrift
institutions, are the second largest group of depository institutions. They were first
established as community-based institutions to finance mortgages for people to buy
homes and still cater mostly to the savings and lending needs of individuals.

Credit unions are another kind of depository institution. Most credit unions are
formed by people with a common bond, such as those who work for the same company or
belong to the same labour union or church. Members pool their savings and, when they
need money, they may borrow from the credit union, often at a lower interest rate than
that demanded by other financial institutions.

Federal Reserve banks are Government agencies that perform many financial
services for the Government. Their chief responsibilities are to regulate the banking
industry and to help implement our Nation’s monetary policy so our economy can run
more efficiently by controlling the Nation’s money supply—the total quantity of money
in the country, including cash and bank deposits. For example, during slower periods of
economic activity, the Federal Reserve may purchase government securities from
commercial banks, giving them more money to lend, thus expanding the economy.
Federal Reserve banks also perform a variety of services for other banks. For example,
they may make emergency loans to banks that are short of cash, and clear checks that are
drawn and paid out by different banks.

The money banks lend, comes primarily from deposits in checking and savings
accounts, certificates of deposit, money market accounts, and other deposit accounts that
consumers and businesses set up with the bank. These deposits often earn interest for
their owners, and accounts that offer checking, provide owners with an easy method for
making payments safely without using cash. Deposits in many banks are insured by the
Federal Deposit Insurance Corporation, which guarantees that depositors will get their
money back, up to a stated limit, if a bank should fail.

17
 Key Words

Bank:

A bank is a financial institution whose primary activity is to act as a payment

agent for customers and to borrow and lend money. It is an institution for receiving,
keeping, and lending money.

Mobile Banking:

Mobile banking (also known as M-Banking, mbanking, SMS Banking etc.) is a

term used for performing balance checks, account transactions, payments etc. via a
mobile device such as a mobile phone. Mobile banking today (2007) is most often
performed via SMS or the Mobile Internet but can also use special programs called
clients downloaded to the mobile device.

18
Internet Banking:

Online banking (or Internet banking) allows customers to conduct financial

transactions on a secure website operated by their retail or virtual bank, credit union or
building society.

Core Banking System:

Core Banking is a general term used to describe the services provided by a

group of networked bank branches. Bank Customers may access their funds and other
simple transactions from any of the menber branch offices.

19
 ATM:

An automated teller machine (ATM) is a computerized telecommunications

device that provides the customers of a financial institution with access to financial
transactions in a public space without the need for a human clerk or bank teller. On
most modern ATMs, the customer is identified by inserting a plastic ATM card with a
magnetic stripe or a plastic smartcard with a chip, that contains a unique card number
and some security information, such as an expiration date or CVC (CVV). Security is
provided by the customer entering a personal identification number (PIN).

Using an ATM, customers can access their bank accounts in order to make cash
withdrawals (or credit card cash advances) and check their account balances as well as
purchasing mobile cell phone prepaid credit. ATMs are known by various other names
including automated banking machine, money machine, bank machine, cash machine,
hole-in-the-wall, cashpoint, Bancomat (in various countries in Europe and Russia),
Multibanco (after a registered trade mark, in Portugal), and Any Time Money (in India).

20
 CHAPTER : 2
REVIEW OF LITERATURE

1. Leary (2002) in his study examined how Internet or electronic banking is

slowly but surely reviving itself after numerous attempts by various financial
institutions and financial intermediaries in the 1970 and 1980s. The
standardization in technologies and the public's familiarity with the use of
personal computers and the Internet have made the Internet bank or Internet
banking site easier, cheaper and more cost effective than ever before. This
paper discusses the coming of age of Internet banking, the opportunity for
Internet banking and some of the obstacles and procedures that must be
followed in order to develop a sound Internet banking presence.
2. Corrocher (2002) in his study examined the drivers of the adoption of the
Internet banking, in order to understand its role with respect to the traditional
banking activity and to offer a comprehensive picture of the diffusion of such a
technology within the sector. In doing so, it analyses the role of firm-specific
and non firm-specific (technology, market, environment) characteristics in
influencing the decision to adopt the new technological platforms to perform
on-line banking transactions within the retail segment of the financial sector.
The main purpose of this paper is to investigate the relationship between the
Internet banking and the traditional banking activity, in order to understand if
these two systems of financial services delivery are perceived as substitutes or
complements by the banks.

21
3. Singh & Malhotra (2004) in their study found that the tremendous advances in
technology and the aggressive infusion of information technology had brought in a
paradigm shift in banking operations. The purpose of this paper is to help fill
significant gaps in knowledge about the Internet banking landscape in India. The
paper presents data, drawn from a survey of commercial banks websites, on the
number of commercial banks that offer Internet banking and on the products and
services they offer. It investigates the profile of commercial banks that offer
Internet banking, using univariate statistical analysis, relative to other commercial
banks with respect to profitability, cost efficiency, and other characteristics. By the
end of first quarter, 2004, differences between Internet and non-Internet banks had
begun to emerge in funding, in sources of income and expenditures and in
measures of performance. It was also found that the profitability and offering of
Internet banking does not have any significant correlation.

4. Mishra & Kiranmai (2009) in their study found that information technology is
considered as the key driver for the changes taking place around the world.
According to Heikki, the transformation from the traditional banking to e-banking
has been a 'leap' change. The evolution of e-banking started from the use of
Automatic Teller Machines (ATMs) and telephone banking (tele-banking), direct
bill payment, electronic fund transfer and the revolutionary online banking. The
future of electronic banking would be more interactive i.e., TV banking. Finland is
the first country in the world to have taken a lead in e-banking. In India, ICICI
Bank initiated e-banking services during 1997 under the brand name 'Infinity'. It
has been forecasted that among all categories, online banking is the future of
electronic financial transactions.

22
The rise in e-commerce and internet in enhancing online security transformation
and sensitive information has been the core reason for the penetration of online
banking in everyday life. The shift towards the involvement of the customers in
the financial service with the help of technology, especially internet, has helped in
reducing costs of financial institutions as well as clients/customers who use the
service at anytime and from virtually anywhere with access to an internet
connection

23
 CHAPTER : 3
COMPARISON BETWEEN ICICI BANK AND SBI

 Company Profile Of ICICI Bank

 History of ICICI Bank

 Company Profile of SBI

 Roots OF SBI

 Comparison Between ICICI Bank And SBI

 Analysis Of Performances Of ICICI And SBI

 Company Profile Of ICICI Bank

ICICI Bank is India's second-largest bank with total assets of Rs. 3,849.70
billion (US$ 82 billion) at September 30, 2008 and profit after tax Rs. 17.42 billion for
the half year ended September 30, 2008. The Bank has a network of about 1,400 branches
and 4,530 ATMs in India and presence in 18 countries. ICICI Bank offers a wide range of
banking products and financial services to corporate and retail customers through a
variety of delivery channels and through its specialized subsidiaries and affiliates in the
areas of investment banking, life and non-life insurance, venture capital and asset
management. The Bank currently has subsidiaries in the United Kingdom, Russia and
Canada, branches in United States, Singapore, Bahrain, Hong Kong, Sri Lanka, Qatar and
Dubai International Finance Centre and representative offices in United Arab Emirates,
China, South Africa, Bangladesh, Thailand, Malaysia and Indonesia. Our UK subsidiary
has established branches in Belgium and Germany.

ICICI Bank's equity shares are listed in India on Bombay Stock Exchange and the
National Stock Exchange of India Limited and its American Depositary Receipts (ADRs)
are listed on the New York Stock Exchange (NYSE).

24
 History of ICICI Bank

ICICI Bank was originally promoted in 1994 by ICICI Limited, an Indian financial
institution, and was its wholly-owned subsidiary. ICICI's shareholding in ICICI Bank was
reduced to 46% through a public offering of shares in India in fiscal 1998, an equity
offering in the form of ADRs listed on the NYSE in fiscal 2000, ICICI Bank's acquisition
of Bank of Madura Limited in an all-stock amalgamation in fiscal 2001, and secondary
market sales by ICICI to institutional investors in fiscal 2001 and fiscal 2002. ICICI was
formed in 1955 at the initiative of the World Bank, the Government of India and
representatives of Indian industry. The principal objective was to create a development
financial institution for providing medium-term and long-term project financing to Indian
businesses. In the 1990s, ICICI transformed its business from a development financial
institution offering only project finance to a diversified financial services group offering a
wide variety of products and services, both directly and through a number of subsidiaries
and affiliates like ICICI Bank. In 1999, ICICI become the first Indian company and the
first bank or financial institution from non-Japan Asia to be listed on the NYSE.

After consideration of various corporate structuring alternatives in the context of the

emerging competitive scenario in the Indian banking industry, and the move towards
universal banking, the managements of ICICI and ICICI Bank formed the view that the
merger of ICICI with ICICI Bank would be the optimal strategic alternative for both
entities, and would create the optimal legal structure for the ICICI group's universal
banking strategy. The merger would enhance value for ICICI shareholders through the
merged entity's access to low-cost deposits, greater opportunities for earning fee-based
income and the ability to participate in the payments system and provide transaction-
banking services.

25
The merger would enhance value for ICICI Bank shareholders through a large capital
base and scale of operations, seamless access to ICICI's strong corporate relationships
built up over five decades, entry into new business segments, higher market share in
various business segments, particularly fee-based services, and access to the vast talent
pool of ICICI and its subsidiaries. In October 2001, the Boards of Directors of ICICI and
ICICI Bank approved the merger of ICICI and two of its wholly-owned retail finance
subsidiaries, ICICI Personal Financial Services Limited and ICICI Capital Services
Limited, with ICICI Bank. The merger was approved by shareholders of ICICI and ICICI
Bank in January 2002, by the High Court of Gujarat at Ahmadabad in March 2002, and
by the High Court of Judicature at Mumbai and the Reserve Bank of India in April 2002.
Consequent to the merger, the ICICI group's financing and banking operations, both
wholesale and retail, have been integrated in a single entity.

ICICI Bank has formulated a Code of Business Conduct and Ethics for its directors
and employees.

ICICI Bank (formerly Industrial Credit and Investment Corporation of India) is India's
largest private sector bank in market capitalization and second largest overall in terms of
assets. Bank has total assets of about USD 100 billion (at the end of March 2008), a
network of over 1,399 branches, 22 regional offices and 49 regional processing centres,
about 4,485 ATMs (at the end of September 2008), and 24 million customers (at the end
of July 2007). ICICI Bank offers a wide range of banking products and financial services
to corporate and retail customers through a variety of delivery channels and specialised
subsidiaries and affiliates in the areas of investment banking, life and non-life insurance,
venture capital and asset management. (These data are dynamic.) ICICI Bank is also the
largest issuer of credit cards in India. . ICICI Bank has got its equity shares listed on the
stock exchanges at Kolkata and Vadodara, Mumbai and the National Stock Exchange of
India Limited, and its ADRs on the New York Stock Exchange (NYSE).

26
 The Bank is expanding in overseas markets and has the largest international balance
sheet among Indian banks. ICICI Bank now has wholly-owned subsidiaries, branches and
representatives offices in 18 countries, including an offshore unit in Mumbai. This
includes wholly owned subsidiaries in Canada, Russia and the UK, offshore banking units
in Bahrain and Singapore, an advisory branch in Dubai, branches in Belgium, Hong Kong
and Sri Lanka, and representative offices in Bangladesh, China, Malaysia, Indonesia,
South Africa, Thailand, the United Arab Emirates and USA. Overseas, the Bank is
targeting the NRI (Non-Resident Indian) population in particular.

ICICI reported a 1.15% rise in net profit to Rs. 1,014.21 crore on a 1.29% increase in
total income to Rs. 9,712.31 crore in Q2 September 2008 over Q2 September 2007. 1955:
The Industrial Credit and Investment Corporation of India Limited (ICICI) was
incorporated at the initiative of World Bank, the Government of India and representatives
of Indian industry, with the objective of creating a development financial institution for
providing medium-term and long-term project financing to Indian businesses.
Mr.A.Ramaswami Mudaliar is elected as the first Chairman of ICICI Limited.

27
 Company Profile Of SBI Bank

State Bank of India (SBI) is India's largest commercial bank. SBI has a vast
domestic network of over 9000 branches (approximately 14% of all bank branches) and
commands one-fifth of deposits and loans of all scheduled commercial banks in India.

The State Bank Group includes a network of eight banking subsidiaries and several
non-banking subsidiaries offering merchant banking services, fund management,
factoring services, primary dealership in government securities, credit cards and
insurance.

The Eight Banking Subsidiaries Are:

1. State Bank of Bikaner and Jaipur (SBBJ)

2. State Bank of Hyderabad (SBH)
3. State Bank of India (SBI)
4. State Bank of Indore (SBIR)
5. State Bank of Mysore (SBM)
6. State Bank of Patiala (SBP)
7. State Bank of Saurashtra (SBS)
8. State Bank of Travancore (SBT)

28
 The origins of State Bank of India date back to 1806 when the Bank of Calcutta (later
called the Bank of Bengal) was established. In 1921, the Bank of Bengal and two other
Presidency banks (Bank of Madras and Bank of Bombay) were amalgamated to form the
Imperial Bank of India. In 1955, the controlling interest in the Imperial Bank of India
was acquired by the Reserve Bank of India and the State Bank of India (SBI) came into
existence by an act of Parliament as successor to the Imperial Bank Of India
Today, State Bank of India (SBI) has spread its arms around the world and has a
network of branches spanning all time zones. SBI's International Banking Group delivers
the full range of cross-border finance solutions through its four wings - the Domestic
division, the Foreign Offices division, the Foreign Department and the International
Services division.
State Bank of India (SBI) is the largest bank in India. If one measures by the
number of branch offices and employees, SBI is the largest bank in the world.
Established in 1806 as Bank of Calcutta, it is the oldest commercial bank in the Indian
subcontinent. SBI provides various domestic, international and NRI products and
services, through its vast network in India and overseas. With an asset base of $126
billion and its reach, it is a regional banking behemoth. The government nationalized the
bank in 1955, with the Reserve Bank of India taking a 60% ownership stake. In recent

years the bank has focused on three priorities, 1), reducing its huge staff
through Golden handshake schemes known as the Voluntary Retirement Scheme, which
saw many of its best and brightest defect to the private sector, 2), computerizing its
operations and 3), changing the attitude of its employees (through an ambitious
programme aptly named 'Parivartan' which means change) as a large number of
employees are very rude to customers.
 29

Roots OF SBI

The State Bank of India traces its roots to the first decade of 19th
century, when the Bank of Calcutta, later renamed the Bank of Bengal, was established

on 2 June 1806. The government amalgamated Bank of Bengal and two

other Presidency banks, namely, the Bank of Bombay (incorporated on 15 April 1840)
and the Bank of Madras on 27 January 1921, and named the reorganized banking entity
the Imperial Bank of India. All these Presidency banks had been incorporated as joint
stock companies, and were the result of the royal charters. The Imperial Bank of India
continued as a joint stock company. Until the establishment of a central bank in India the
Imperial Bank and its early predecessors served as India's central bank, at least in terms
of issuing the currency. The State Bank of India Act 1955, enacted by the Parliament of
India, authorized the Reserve Bank of India, which is the central banking organization of
India, to acquire a controlling interest in the Imperial Bank of India, which was renamed

the State Bank of India on 30 April 1955.

 30

Comparison Between ICICI Bank And SBI

SBI v/s ICICI

SBI stands for State Bank of India. It is a public sector institution (government
owned), with a huge customer base all over India. It has seven associate banks
operating under its SBI name. It has over thirteen thousand branches across India and
in some selected international countries and a 56,000 ATM network across India. The
Standard Bank of India inherited‟ the Bank of Calcutta, which was founded in 1806,
and has been in existence for over two hundred years.

On the other hand, the ICICI is a private sector bank (privately owned), with a
relatively smaller clientele base. It is one of the major banks in India (precisely the
second largest), but much smaller than the SBI. It has 950 branches, with 3,500
branches across India. The bank has deposits of Rs 1.65 lakh crore compared to SBI‟s
Rs 3.8 lakh crore (accumulated in a period of twelve years), racking up a net worth of
Rs 22,000 against Rs 27,000 for the State Bank of India. This represents Rs 9 crore
business generated by each ICICI employee per year, compared to Rs 3 crore worth of
business per employee of the ICICI. While the State Bank pays 4.7 percent on
deposits, and earns less on advances, the ICICI pays 0.7 less (4 percent), while earning
more on advances, and thus earns 0.4 percent more on assets than the SBI. This is no
surprise, as there‟s seemingly limitless access to funds from the government for the
state owned SBI.
 On money transfers from overseas accounts, with the SBI, once a transfer
transaction is completed, you will be able to know the exchange rate used, and there
are no restrictions on the amounts you can transfer a day.

31

However, the ICICI transfer is somewhat different. After completion of a money

transfer transaction, the exchange rate can only be known after five days, and there is a
daily limit of $5000 that can be transferred a day.

Although the SBI has generally performed well in the past, in recent years, the
ICICI has seen very good performance, almost edging out the SBI in every aspect,
especially financially. The financial years between 2001-2002 and 2005, and 2006,
saw very strong gains for the ICICI bank. Its deposits grew by 200 percent, five times
more than the SBI‟s, and while SBI‟s revenue grew by 30 percent and the ICICI
bank‟s revenue grew by seven times that percentage. This trend means that ICICI‟s
growth will eventually overtake SBI‟s in the future, in terms of deposits.

 The SBI is a government owned bank (public sector), while ICICI is a

privately owned bank (private sector).
 The SBI is much older (more than 200 years old) and more established than the
ICICI, which is less than 25 years old.
 The SBI does not limit daily international transfer amounts, while the ICICI
limits daily transfers to $5000 a day.
 The SBI bank pays a higher percentage on deposits than the ICICI bank.
 32

Analysis Of Performances Of ICICI And SBI

For This Purpose The Following Parameters Have Been Studied:

1. Credit Deposit Ratio

2. Interest Expenses to Total Expenses
3. Interest Income to Total Income
4. Other Income to Total Income
5. Net Profit Margin
6. Net worth Ratio
7. Percentage Change in Total Income
8. Percentage Change in Total Expenditure
9. Percentage Change in Advances
10.Percentage Change in Deposits
 33

Credit Deposit Ratio:

Credit-Deposit Ratio is the proportion of loan-assets created by a bank from the

deposits received. Credits are the loans and advances granted by the bank. In other
words it is the amount lent by the bank to a person or an organization which is
recovered later on. Interest is charged from the borrower. Deposit is the amount
accepted by bank from the savers and interest is paid to them

TABLE 1.1 - CREDIT DEPOSIT RATIO

(IN PERCENT)
YEAR SBI ICICI

2007-08 77.57 84.99

2008-09 74.97 91.44

2009-10 73.56 90.04

2010-11 76.32 87.81

2011-12 78.50 92.23

MEAN 76.184 89.302

 CGR 1.19 8.51

34

FIG. NO. 1.1:- CREDIT DEPOSIT RATIO

Table 1.1 depicts that over the course of five financial periods of study the mean
of Credit Deposit Ratio in ICICI was higher (89.302%) than in SBI (76.184%). But the
Compound Growth Rate in SBI lowers 1.19% than in ICICI (8.51%). In case of SBI
the credit deposit ratio was highest in 2011-12 and lowest in 2009-10. But in case of
ICICI credit deposit ratio was highest in 2011-12 and lowest in 2007-08. This shows
that ICICI Bank has created more loan assets from its deposits as compared to SBI.

35

Interest Expenses to Total Expenses :

Interest Expenses to Total Expenses reveals the expenses incurred on interest in

proportion to total expenses. Banks accepts deposits from savers and pay interest on
these accounts. This payment of interest is known as interest expenses. Total expenses
include the amount spent in the form of staff expenses, interest expenses, overhead
expenses and other operating expenses etc.

TABLE 1.2:- INTEREST EXPENSES TO TOTAL EXPENSES

(IN PERCENT)

YEAR SBI ICICI

2007-08 61.85 66.135

2008-09 63.27 64.10

2009-10 61.62 60.71

2010-11 54.93 60.70

 2011-12 57.90 65.19

MEAN 59.9 63.36

CGR -6.38 -1.46

36

FIG.NO.1.2:- INTEREST EXPENSES TO TOTAL EXPENSES

 The table 1.2 shows that the ratio of interest expenses to total expenses in SBI
was highly volatile it increased from 61.85 per cent to 63.27 per cent during the period
2007-08 to 2008-09. Afterwards it was decreased till 2010-11 and then again increased
to 57.90 per cent. The ratio of interest expenses to total expenses in ICICI was also
decreased from 66.135 per- cent to 64.10 per cent during the period 2007-08 to 2008-
09. It remain stable from 2009-10 to 2010-2011 but Further it was increased to 65.19
per cent in 2011-12 . It has been found that the share of interest expenses in total
expenses was higher in case of SBI as compared to ICICI, which shows that people
preferred to invest their savings in SBI than ICICI.

37

Interest Income to Total Income :

Interest Income to Total Income shows the proportionate contribution of interest

income in total income. Banks lend money in the form of loans and advances to the
borrowers and receive interest on it. This receipt of interest is called interest income.
Total income includes interest income, non-interest income and operating income.

TABLE 1.3:-INTEREST INCOME TO TOTAL INCOME IN SBI

AND ICICI
(IN PERCENT)

YEAR SBI ICICI

2007-08 83.89 77.61

2008-09 83.40 79.29

 2009-10 82.5 77.90

2010-11 84.49 78.51

2011-12 88.12 80.92

MEAN 84.49 78.84

CGR 5.04 4.26

38

FIG.NO.1.3 INTEREST INCOME TO TOTAL INCOME IN SBI AND

ICICI
 The table 1.3 represents that the ratio of interest income to total income in SBI and
ICICI both is quite stable and volatile over the years. The growth rate of SBI is 5.04
while that of ICICI is 4.26. Thus, the proportion of interest income to total income in
SBI was higher than that of ICICI, which shows that people preferred SBI to take
loans and advances.

39

Other Income To Total Income :

 Other income to total income reveals the proportionate share of other income in
total income. Other income includes non-interest income and operating income. Total
income includes interest income, non-interest income and operating income.

TABLE 1.4:-OTHER INCOME TO TOTAL INCOME IN SBI AND

ICICI

(IN PERCENT)

YEAR SBI ICICI

2007-08 16.10 22.38

2008-09 16 20.70

2009-10 17 22.09

2010-11 16 21.48

2011-12 11 19.07

MEAN 15.22 21.44

CGR -31.6 -14.7

40
FIG.NO.1.4 OTHER INCOME TO TOTAL INCOME IN SBI AND
ICICI

The table 1.4 shows that the ratio of other income to total income was decreased
from 16.10 per cent in 2007-08 to 11.00 per cent in 2011-12 in case of SBI. However,
the share of other income in total income of ICICI was also decreased from 22.38 per
cent in 2007-08 to 19.07 per cent 2011-12. The table shows that the ratio of other
income to total income was relatively higher in ICICI (21.44%) as compared to SBI
(15.22%) during the period of study.

41
Net Profit Margin :

Net Profit Margin reveals the financial results of the business activity and efficiency of
management in operations. The table 5.8 shows the net profit margin in SBI and ICICI
during the Period 2005-06 to 2009-10.

TABLE-1.5:-NET PROFIT MARGIN IN SBI AND ICICI

(IN PERCENT)

YEAR SBI ICICI

2007-08 12.64 11.81

2008-09 13.11 11.45

2009-10 10.54 13.64

2010-11 8.55 17.52

2011-12 9.73 17.45

MEAN 10.91 14.37

CGR 23.02 47.7

42
 FIG. NO.1.5 NET PROFIT MARGIN IN SBI AND ICICI

The table 1.5 reveals that the ratio of net profits to total income of ICICI was
varied from 11.81 per cent to 17.45 percent whereas in case of SBI it is not stable. It
increased to 13.11 percent from 12.64 percent in 2008-09 then further decreased to
10.54 percent in 2009-10 and 8.55 percent in 2010-11 and finally increased to 9.73
percent in 2011-12 during the period of 5 years of study. However, the net profit
margin was higher in ICICI (14.37%) as compared to SBI (10.91%) during the period
of study. But it was continuously decreased from 2007-08 to 2011-12 in ICICI. Thus,
the ICICI has shown comparatively lower operational efficiency than SBI.

43
Net Worth Ratio:

Net Worth Ratio is used for measuring the overall efficiency of a firm. This ratio

establishes the relationship between net profit and the proprietor‟s funds.

TABLE 1.6 NET WORTH RATIO (IN PERCENT)

YEAR SBI ICICI

2007-08 13.70 8.94

2008-09 15.74 7.58

2009-10 13.91 7.79

2010-11 12.84 9.35

2011-12 14.36 10.70

MEAN 14.11 8.87

CGR 4.87 19.68

44
 FIG.NO.1.6 NET WORTH RATIO

It is clear from the table 1.6 that the net worth ratio of SBI was increased from
13.70 per cent to 14.36 per cent during 2007-08 to 2011-12, and decreased in 2009-10
and 2010-2011. Whereas the ratio was increased from 8.94 per cent to 10.70 per cent
in ICICI. The table showed that the net worth ratio was higher in SBI (14.11%) as
compared to ICICI (8.87%) during the period of study, which revealed that SBI has
utilized its resources more efficiently as compared to ICICI.

45
Total Income:

The total income indicates the rupee value of the income earned during a period. The
higher value of total income represents the efficiency and good performance.

TABLE 1.7 GROWTH IN TOTAL INCOME OF SBI AND ICICI (IN CRORES)

YEAR SBI ICICI

INCOME %CHANGE INCOME %CHANGE

2007-08 58,348.74 ….. 39,667.19 …..

2008-09 76,479.78 31% 39,210.31 -1.15%

2009-10 85,962.07 12.3% 32,999.36 -15.8%

2010-11 96,329.45 12.065 33,082.96 0.25%

2011-12 120,872.90 25.4% 41,450.75 25.2%

MEAN 87,598.58 37282.114

CGR 107.15 4.49

46
 FIG.NO.1.7 GROWTH IN TOTAL INCOME OF SBI AND ICICI

The table 1.7 highlights that the mean value of total income was higher in SBI
(Rs. 87,598.58 crores) as compared to that in ICICI (Rs. 37282.114 crores) during the
period of study. However the rate of growth regarding total income was higher in SBI
(107.15 %) than in ICICI (4.49 %) during the period of study.

47
Total Expenditure:

The total expenditure reveals the proportionate share of total expenditure spent on the
development of staff, interest expended and other overheads. The higher value of total

TABLE 1.8:- TOTAL EXPENDITURE OF SBI AND ICICI

YEAR SBI ICICI

EXPENDITURE %CHANGE EXPENDITURE %CHANGE

2007-08 51,619.622 ….. 35,509.47 …..

2008-09 67,358.55 30.4% 35,452.17 0.16%

2009-10 76,796.02 14.01% 28,974.37 -18.2%

2010-11 88,959.12 15.83% 27,931.58 -3.59%

2011-12 109,186.99 22.73% 34,985.50 25.25%

MEAN 78,,784.06 32,570.61

CGR 111.52 -1.47

48
 FIG.NO.1.8 TOTAL EXPENDITURE OF SBI AND ICICI

The table 1.8 discloses that the mean value of total expenditure was higher in
SBI (Rs. 78,784.06 crores) as compared to that in ICICI (Rs. 32570.61 crore) during
the period of study. But the rate of growth regarding expenditure in ICICI was (-1.47
%) than that in SBI (111.52%) during the same period. It is clear that ICICI is
successful in decreasing their total expenditure as compared to SBI. The table also
highlights that the annual growth rate of expenditure in SBI was highest (30.04) in the
year 2008-09 and was lowest (14.01) in the year 2009-10. In ICICI, the annual growth
rate of expenditure was negative in the year 2009-10 and 2010-11 i.e. (-18.20) and (-
3.59) respectively. Hence it is clear that ICICI is more efficient as compared to SBI in
terms of managing expenditure.

49
Advances:

Advances are the credit facility granted by the bank. In other words it is the amount

borrowed by a person from the Bank. It is also known as „Credit‟ granted where the

money is disbursed and recovery of which is made later on.

TABLE 1.9- TOTAL ADVANCES OF SBI AND ICICI (IN CRORES)

YEAR SBI ICICI

ADVANCES %CHANGE ADVANCES %CHANGE

2007-08 416,768.20 …… 225,616.08 …..

2008-09 542,503.20 30.16% 218,310.85 -3.25 %

2009-10 631,917.15 16.48% 181,205.60 -16%

2010-11 756,719.45 19.75% 216,365.90 19.40%

2011-12 867,578.89 14.6% 253,727.66 17.26%

MEAN 646,578.89 224,645

CGR 108.16 12.45

 50

FIG.NO.1.9- TOTAL ADVANCES OF SBI AND ICICI

Table 1.9 presents that the mean of Advances of SBI was higher (646,578.89) as
compared to mean of Advances of ICICI (224,645). Rate of growth was also higher in
SBI (108.16 %) than in ICICI (12.45%). Table also shows the per cent Change in
Advances over the period of 5 years. In case of SBI Advances were continuously
increased (with a decreasing trend) over the period of study. However Advances in
ICICI were decreased till 2009-10 but these were increased in the subsequent years.
 51

Deposits:

Deposit is the amount accepted by bank from the savers in the form of current
deposits, savings deposits and fixed deposits and interest is paid to them.

TABLE 1.10-TOTAL DEPOSITS OF SBI AND ICICI (IN CRORES)

YEAR SBI ICICI

DEPOSITS %CHANGE DEPOSITS %CHANGE

2007-08 537,403.94 2,44,431.05 …..

2008-09 742,073.13 38.08% 2.18.347.05 -10.6 %

2009-10 804,116.23 8.36% 2,02,016.60 -7.40%

2010-11 9,33,932.81 16.14% 2,25,602.11 11.6%

2011-12 1,04,647.36 11.7% 2,55,499.96 13.2%

MEAN 8,12,234 2,29,179

CGR 94.20 4.52

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FIG. NO.1.10:- TOTAL DEPOSITS OF SBI AND ICICI

Table 1.10 presents that the mean of Deposits of SBI was higher (812,234) as
compared to mean of deposits of ICICI (229,179%). However the rate of growth was
higher in SBI (94.20%) than that in ICICI (4.52%) during the period of study. Table
also shows the per cent Change in Deposits over the period of 5 years. In case of SBI
Deposits were continuously fluctuating over the period of study. However deposits in
ICICI were decreased in 2008-09 and 2009-10 but these were increased in the year
2010-11 and 2011-12 with 11.6% and 13.2% respectively.
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CHAPTER : 4
OBJECTIVE OF THE STUDY

 Objective Of The Study

 Research Methodology

 Limitation Of The Study

 Objective Of The Study

 To study the financial performance of SBI and ICICI Bank.

 To compare the financial performance of SBI and ICICI Bank.

Research Methodology

In the present study, an attempt has been made to measure, evaluate and compare
the financial performance of SBI and ICICI Bank which one related to the public
sector and private sector respectively. The study is based on secondary data that has
been collected from annual reports of the respective banks, magazines, journals,
documents and other published information. The study covers the period of 5 years i.e.
from year 2007-08 to year 2011-12. Ratio Analysis was applied to analyze and
compare the trends in banking business and financial performance. Mean and
Compound Growth Rate (CGR) have also been deployed to analyze the trends in
banking business profitability.
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Limitation Of The Study

Due to constraints of time and resources, the study is likely to suffer from certain
limitations. Some of these are mentioned here under so that the findings of the study
may be understood in a proper perspective. The limitations of the study are:

 The study is based on the secondary data and the limitation of using secondary
data may affect the results.

 The secondary data was taken from the annual reports of the SBI and ICICI
Bank. It may be possible that the data shown in the annual reports may be
window dressed which does not show the actual position of the banks.

Financial analysis is mainly done to compare the growth, profitability and

financial soundness of the respective banks by diagnosing the information contained in
the financial statements. Financial analysis is done to identify the financial strengths
and weaknesses of the two banks by properly establishing relationship between the
items of Balance Sheet and Profit & Loss Account. It helps in better understanding of
banks financial position, growth and performance by analyzing the financial
statements with various tools and evaluating the relationship between various elements
of financial statements.
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CHAPTER: 5

FINDINGS AND CONCLUSIONS

 The study found that the mean of Credit Deposit Ratio in ICICI was higher
(89.302%) than in SBI (76.184%). This shows that ICICI Bank has created
more loan assets from its deposits as compared to SBI.

 The share of interest expenses in total expenses higher in ICICI (63.36%) as

compare to SBI (59.99%) and the proportion of interest income to total income
was higher in case of SBI(84.49 %) as compared to ICICI (78.84%), which
shows that people prefer ICICI to invest their savings and SBI to take loans &
advances.

 The ratio of other income to total income was relatively higher in ICICI
(21.44%) as compared to SBI (15.22%). The Net Profit Margin of ICICI is
higher (14.37%) whereas in SBI it was (10.99 %), which shows that ICICI has
shown comparatively better operational efficiency than SBI.

 The growth rate of net profit is (73.97%) in SBI which is higher than ICICI
which is (55.49%). This shows that SBI performed well as compared to ICICI.
The mean value of total income was higher in SBI (87,598.58) as compared to
that in ICICI (37,282.114). Net worth ratio was also higher in SBI (14.11%)
than ICICI (8.87%), which revealed that SBI has utilized its resources more
efficiently as compared to ICICI.

 The mean value of total expenditure was higher in SBI (Rs. 78,784.06 cr) as
compared to that in ICICI (Rs.32,570.61) and the combined growth rate of
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expenditure was negative (-1.47%) in the case of ICICI whereas in SBI it is

111.52%. Deposits in SBI were continuously increased. However deposits in
ICICI were decreased (with a declining trend) till 2009-10 but these were
increased in the subsequent years.

 In case of SBI Advances were continuously increased (with a decreasing trend)

with the combined growth rate of (108.16%), However Advances in ICICI were
decreased (with a declining trend) till 2009-10 but these were increased
thereafter with combined growth rate of (12.45 %).

 It shows that ICICI has suffered with funds or avoid providing advances
through 2007-08 to 2009-10. Hence, on the basis of the above study or analysis
banking customer has more trust on the public sector banks as compared to
private sector banks.
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CHAPTER : 6

REFERENCES

 Financial year report of SBI 2007-08 to 2011-12.

 SBI bulletin publication 2012.

 Financial year report of ICICI Bank 2007-08 to 2011-12.

 ICICI Bank bulletin publication 2012

 RBI statistical table relating to banks 2011-12.

Information Memorandum

 SBI and ICICI Bank annual report 2007-12.

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Questionnaire

Personal details

1. Name: ______________________________________

2. Age: 25yrs- 35 yrs

36 yrs - 45yrs

46 – 55 yrs

Above 55 yrs

3. Gender: Male

Female

4. Educational Qualification: Illiterate

School

UG
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PG

Professional Course

Others

5. Occupation: House wife

Students

Salaried person

Business man

Professionals

Supervisor

Managerial

Pensioner

6. Income level: Rs.5,000 – Rs.15,000

Rs.15,001-Rs.25,000

Rs.25,001- Rs.35,000

Rs.35,001-Rs.45,000

Above Rs. 45,000

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7. In which bank do you have an account?

ICICI bank

SBI bank

Other Specify___________________

8. What is the reason to choose the services of the bank?

Efficient customer service

Efficient complaints handling

Time saving

Transaction costs

Technology

Others _________ please specify

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