TEMPLET FOR PROJECT

PROPOSAL

NAME: GAMIT PRIYANKA

VIPULBHAI ROLL NUMBER: 108
SPEACIALIZATION: FINANCE
E MAIL: priyankagamit813@gmail.com

TITLE OF THE PROJECT:

"A COMPARATIVE ANALYSIS OF PROFITABILITY OF SELECTED PUBLIC AND PRIVATE BANKS IN

INDIA"

1. INTRODUCTION:
Indian banking industry has developed in to one of the nation’s most potent engines of economic
development. The Indian banking system has achieved great achievements in recent years
notwithstanding the global financial crisis. India’s worldwide expansion and financial market
liberalization over the past decades have resulted in a revolution of the Indian banking industry,
currently on the verge of a historically unimagined upheaval. The industry has seems significant
expansion and investment. The banks are the blood to economies. The economy will freeze without a
sound banking system. The banking system helps the country to walk in path of growth and
development. Hence a sound banking system has immense importance to strengthen an economy.
For a sound banking system banks must be financially sound. The present study is an attempt to
compare the financial soundness of two big banks in Indian Banking sector i.e. State Bank of India and
ICICI Bank. State Bank of India (SBI) is the largest bank among the public sector bank and ICICI bank
is the largest private sector bank in India.

2. RESEARCH METHODOLOGY :
2.1 RESEARCH PROBLEM :
This study aims to investigate the profitability of selected public and private banks in India to
determine the underlying factors contributing to their financial performance
differences. Specifically, it seeks to answer how these banks compare in terms of
profitability ratios and what operational and external factors influence their profitability.
2.2. WHY IS THIS PROBLEM SIGNIFICANT/NEED FOR THE STUDY:

Economic Impact: Banks play a crucial role in the Indian economy by facilitating capital flow,
supporting businesses, and promoting savings. Understanding their profitability helps assess their
contribution to economic growth. Policy Implications: Insights from the comparative analysis can
inform policymakers on the effectiveness of regulations, especially regarding public versus private
sector performance. This can lead to better governance and improved financial stability.
Investment Decisions: Investors and stakeholders can make more informed decisions by
understanding profitability trends and risk profiles of public versus private banks.

2.3. 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 2019 to year 2023. Ratio
Analysis was applied to analyze and compare the trends in banking business and financial
performance. Mean have also been deployed to analyze the trends in banking business
profitability.

3.LITERATURE REVIEW:
 Agarwal (2019) examined both public and private Indian banks with regard to their
profitability; with the help of ROA, ROE, NIM, and operating profits for the period 2005-
2017. The result of the study shows that due to the heavy burden of NPAs the public banks
face deterioration in their profit. The results suggest that the financial standing of publicly
owned banks is not as favorable as that of privately owned banks.

 Rai (2020)examined and compared three banks from the public sector and three banks
from the private sector from year 2016 to 2020. According to the research, public sector
banks have all the necessary resources and have a vast customer base but their bad
loans createbarriers in the way of their efficient utilization of their resources. It is also
observed that the non-performing assets of private banks havegone down in recent years.
The author concluded that private banks’ efficiency is more than public banks.

 Mohanty (2021) examined ICICI Bank's and Indian Overseas Bank's financial results from
2017 to 2021.Given the results of the study, it can be concluded that ICICI Bank has good
liquidity, profitability, and asset quality management. Therefore, ICICI Bank has
outperformed the IOB in terms of financial performance.

 Mathur (2022) evaluated the operating performance and financial returns of India's public
and private banks. The research was conducted from 2016 to 2020. According to the
results 24 of this study, private banks are doing better financially than their public sector 2
counterparts. Although private banks catered more to individual consumers, public banks
primarily served corporations. Another finding is that public sector banks yield higher
profits compared to private sector banks, which allows them to be more efficient

 Patra etal (2023) evaluated the effectiveness of India's public and private banking systems.
Research shows that government-run banks outperform their private sector counterparts in
terms of efficiency. The author found that banks, whether public or private, are vulnerable to
instability. Public bank efficiency is determined by the return on assets (ROA), capital,
nonperforming assets (NPA), market share, and bank size, meanwhile, private bank
efficiency is majorly affected by capital and returns on assets. The merger in public sector
banks helps PSBs in attaining efficiency. The author suggests that Indian banks should
 keep adequate levels of capital to meet stressful situations.

4.TOOLS/TECHNIQUES TO BE USED FOR DATA ANALYSIS:

1. Descriptive Statistics: This involves summarizing the data through measures such as
mean, median, standard deviation, and range. Descriptive statistics will help in
understanding the basic characteristics of profitability indicators like ROA, ROE, and NIM
for both public and private banks.

2. Ratio Analysis: This technique will be crucial in comparing financial ratios that reflect
profitability. Key ratios to analyze include ROA (net income/total assets), ROE (net
income/shareholder'sequity), and NIM (net interest income/total earning assets). This will allow
for a direct comparison of financial performance between the two bank types.

5. EXPECTED RESULTS OF THE STUDY:

1.Identification of Profitability Trends: The study is likely to reveal distinct trends in profitability metrics such as
Return on Assets (ROA), Return on Equity (ROE), and Net Interest Margin (NIM) for both public and private
banks. It may show that private banks generally exhibit higher profitability ratios compared to public banks,
reflecting their efficiency and operational strategies.
2.Factors Influencing Profitability: The analysis is expected to uncover key factors that contribute to the differences
in profitability between the two types of banks. For example, it may highlight how management practices,
asset quality, and customer service impact the financial performance of public and private banks differently.

6. BOOKS, SITES, JOURNALS, MAGAZINES

REFERRED:
1. Books: - "Bank Management" by Timothy W. Koch and S. Scott MacDonald - "Financial Institutions
Management: A Risk Management Approach" by Anthony Saunders and Marcia Millon Cornett - "Indian
Banking: A Comprehensive Textbook" by R. K. Gupta
2. Journals: - The Journal of Banking C Finance - The International Journal of Bank Marketing - Journal
of Financial Services Research
3. Research Papers: - Look for research papers published in databases like JSTOR, SSRN, or Google
Scholar that focus on profitability analysis in Indian banking.
4. Magazines: - Business Today - The Economic Times - Forbes India
5. Websites: - Reserve Bank of India (RBI) – for regulatory frameworks and financial data - National Stock
Exchange of India (NSE)
– for financial performance indicators of listed banks - Financial Express – for news and articles related to the
banking sector
 Patra etal (2023) evaluated the effectiveness of India's public and private banking systems.
Research shows that government-run banks outperform their private sector counterparts in
terms of efficiency. The author found that banks, whether public or private, are vulnerable to
instability. Public bank efficiency is determined by the return on assets (ROA), capital,
nonperforming assets (NPA), market share, and bank size, meanwhile, private bank
efficiency is majorly affected by capital and returns on assets. The merger in public sector
banks helps PSBs in attaining efficiency. The author suggests that Indian banks should
keep adequate levels of capital to meet stressful situations.

7.TOOLS/TECHNIQUES TO BE USED FOR DATA ANALYSIS:

3. Descriptive Statistics: This involves summarizing the data through measures such as
mean, median, standard deviation, and range. Descriptive statistics will help in
understanding the basic characteristics of profitability indicators like ROA, ROE, and NIM
for both public and private banks.

4. Ratio Analysis: This technique will be crucial in comparing financial ratios that reflect
profitability. Key ratios to analyze include ROA (net income/total assets), ROE (net
income/shareholder'sequity), and NIM (net interest income/total earning assets). This will allow
for a direct comparison of financial performance between the two bank types.

8. EXPECTED RESULTS OF THE STUDY:

3.Identification of Profitability Trends: The study is likely to reveal distinct trends in profitability metrics such as
Return on Assets (ROA), Return on Equity (ROE), and Net Interest Margin (NIM) for both public and private
banks. It may show that private banks generally exhibit higher profitability ratios compared to public banks,
reflecting their efficiency and operational strategies.
4.Factors Influencing Profitability: The analysis is expected to uncover key factors that contribute to the differences
in profitability between the two types of banks. For example, it may highlight how management practices,
asset quality, and customer service impact the financial performance of public and private banks differently.

9. BOOKS, SITES, JOURNALS, MAGAZINES

REFERRED:
6. Books: - "Bank Management" by Timothy W. Koch and S. Scott MacDonald - "Financial Institutions
Management: A Risk Management Approach" by Anthony Saunders and Marcia Millon Cornett - "Indian
Banking: A Comprehensive Textbook" by R. K. Gupta
7. Journals: - The Journal of Banking C Finance - The International Journal of Bank Marketing - Journal
of Financial Services Research
8. Research Papers: - Look for research papers published in databases like JSTOR, SSRN, or Google
Scholar that focus on profitability analysis in Indian banking.
9. Magazines: - Business Today - The Economic Times - Forbes India
10. Websites: - Reserve Bank of India (RBI) – for regulatory frameworks and financial data - National Stock
Exchange of India (NSE)
– for financial performance indicators of listed banks - Financial Express – for news and articles related to the
banking sector