PROJECT REPORT

FINANCIAL-PERFORMANCE-OF-PRIVATE AND
NATIONALIZED BANKS
AT
-HDFC BANK LIMITED, HYDERABAD
MASTER OF BUSINESS ADMINISTRATION

Submitted by

(Student Name)

HT NO: 21WJ1E****

Under the Guidance of

Mr. K. SANDEEP REDDY

ASSISTANT PROFESSOR

School of Management studies

GURUNANAK INSTITUTIONS TECHNICAL CAMPUS

(Autonomous)
 PAGE
CHAPTER CONTENTS
NO.
INTRODUCTION
 Objectives of the study

CHAPTER - I  Need for the study

 Scope of the study

 Research Methodology

CHAPTER - II REVIEW OF LITERATURE

CHAPTER -
COMPANY PROFILE
III
CHAPTER -
THEORETICAL FRAMEWORK
IV
DATA ANALYSIS &
CHAPTER - V
INTERPRETATION
 Findings
CHAPTER -
 Suggestion
VI
 Conclusion
Annexure / Questionnaire
INDEX
Abstract

In any organization, the two important financial statements are the Balance Sheet and Profit &
Loss Account of the business. Balance Sheet is a statement of financial position of an enterprise
at a particular point of time. Profit & Loss account shows the net profit or net loss of a company
for a specified period of time. When these statements of the last few year of any organization are
studied and analyzed, significant conclusions may be arrived regarding the changes in the
financial position, the important policies followed and trends in profit and loss etc. Analysis and
interpretation of financial statement has now become an important technique of credit appraisal.
The investors, financial experts, management executives and the bankers all analyze these
statements. Though the basic technique of appraisal remains the same in all the cases but the
approach and the emphasis in the analysis vary. A banker interprets the financial statement so as
to evaluate the financial soundness and stability, the liquidity position and the profitability or the
earning capacity of borrowing concern. Analysis of financial statements is necessary because it
helps in depicting the financial position on the basis of past and current records. Analysis of
financial statements helps in making the future decisions and strategies. Therefore it is very
necessary for every organization whether it is a financial or manufacturing, to make financial
statement and to analyze it.
CHAPTER – I
INTRODUCTION
FINANCIAL ANALYSIS
Financial analysis is the process of identifying the financial strengths and weaknesses of the firm
and establishing relationship between the items of the balance sheet and profit & loss account.
Financial ratio analysis is the calculation and comparison of ratios, which are derived from the
information in a company’s financial statements. The level and historical trends of these ratios
can be used to make inferences about a company’s financial condition, its operations and
attractiveness as an investment. The information in the statements is used by

 Trade creditors, to identify the firm’s ability to meet their claims i.e. liquidity position of
the company.
 Investors, to know about the present and future profitability of the company and its
financial structure.
 Management, in every aspect of the financial analysis. It is the responsibility of the
management to maintain sound financial condition in the company.

RATIO ANALYSIS
The term “Ratio” refers to the numerical and quantitative relationship between two items or
variables. This relationship can be exposed as.

Percentages
Fractions
Proportion of numbers

Ratio analysis is defined as the systematic use of the ratio to interpret the financial statements. So
that the strengths and weaknesses of a firm, as well as its historical performance and current
financial condition can be determined. Ratio reflects a quantitative relationship helps to form a
quantitative judgment.
STEPS IN RATIO ANALYSIS

The first task of the financial analysis is to select the information relevant to the decision
under consideration from the statements and calculates appropriate ratios.
To compare the calculated ratios with the ratios of the same firm relating to the pas6t or with
the industry ratios. It facilitates in assessing success or failure of the firm.
Third step is to interpretation, drawing of inferences and report writing conclusions are
drawn after comparison in the shape of report or recommended courses of action.

BASIS OR STANDARDS OF COMPARISON

Ratios are relative figures reflecting the relation between variables. They enable analyst to draw
conclusions regarding financial operations. They use of ratios as a tool of financial analysis
involves the comparison with related facts.

NATURE OF RATIO ANALYSIS

Ratio analysis is a technique of analysis and interpretation of financial statements. It is the
process of establishing and interpreting various ratios for helping in making certain decisions. It
is only a means of understanding of financial strengths and weaknesses of a firm. There are a
number of ratios which can be calculated from the information given in the financial statements,
but the analyst has to select the appropriate data and calculate only a few appropriate ratios. The
following are the four steps involved in the ratio analysis.

Selection of relevant data from the financial statements depending upon the objective of the
analysis.
Calculation of appropriate ratios from the above data.
Comparison of the calculated ratios with the ratios of the same firm in the past, or the ratios
developed from projected financial statements or the ratios of some other firms or the
comparison with ratios of the industry to which the firm belongs.
INTERPRETATION OF THE RATIOS
The interpretation of ratios is an important factor. The inherent limitations of ratio analysis
should be kept in mind while interpreting them.
The impact of factors such as price level changes, change in accounting policies, window
dressing etc., should also be kept in mind when attempting to interpret ratios.

IMPORTANCE OF RATIO ANALYSIS

Aid to measure general efficiency
Aid to measure financial solvency
Aid in forecasting and planning
Facilitate decision making
Aid in corrective action
Aid in intra-firm comparison
Act as a good communication
Evaluation of efficiency
Effective tool

LIMITATIONS OF RATIO ANALYSIS

Differences in definitions
Limitations of accounting records
Lack of proper standards
No allowances for price level changes
Changes in accounting procedures
Quantitative factors are ignored
Limited use of single ratio
Background is over looked
Limited use
Personal bias
IN THE VIEW OF FUNCTIONAL CLASSIFICATION THE RATIOS ARE
1. Liquidity ratio
2. Leverage ratio
3. Activity ratio
4. Profitability ratio
OBJECTIVE OF THE STUDY:

1. To know the strength and weakness of State Bank of India and HDFC Bank through
Ratio analysis.
2. To evaluate the performance of the Public and Private Banking Sector companies.
3. To understand the liquidity, profitability and efficiency positions of the companies.
4. To make comparison between the ratios during different periods.
Scope of Study;
 The scope of the study is to find the profitability of SBI and HDFC on the duration of 2018 to
2023.
 The profit is Associate in Nursing the absolute word, whereas, the gain may is a relative
thought, though' they're closely connected and reciprocally mutually beneficial, having
distinct roles in business. Gain refers to the operative efficiency of the enterprise.
 It's the power of the priority to create profit on sales, and conjointly to urge sufficient return
on the capital utilized It take under consideration numerous gain ratios like adjusted money
Margin, Net Profit Margin, come back on internet price, and Adjusted come back on internet
price.
 Banking company of Republic of India (SBI) and Industrial Credit and Investment
Corporation of India (HDFC) area unit hand-picked as sample banks for the study as they are
high banks within the domain of public and personal sectors.
 The banking company of Republic of India, popularly referred to as SBI is one amongst the
leading public sector bank in Republic of India.
 This study may be a case methodology of analysis and comparative analysis in nature.
 The study is used solely secondary knowledge that was collected from analysis articles,
books connected and thesis works already done on the subject and significantly from annual
reports of SBI and HDFC Bank.
Need of the study:

1. With this analysis we come to know about the strength and weakness of State Bank of
India and HDFC Bank through Ratio analysis.
2. To evaluate the performance of the companies.
3. To understand the liquidity, profitability and efficiency positions of the companies.
4. To make comparison between the ratios during different periods.
 RESEARCH METHODOLOGY

Research methodology is a way to systematically solve the research problems. It is

necessary to know not only the research methods/ techniques but also the methodology. Research
methodology is a scientific study of various steps that are adopted in research problem.

Research:
Research can be defined as the search for knowledge, or as any systematic
investigation, with an open mind, to establish novel facts, usually using a scientific method. The
primary purpose for applied research is discovering, interpreting, and the development of
methods and systems for the advancement of human knowledge on a wide variety of scientific
matters of our world and the universe.

Research Design:
A design is used to structure the research, to show how all of the major parts of the
research project. Research design can be thought of as the structure of research- it is the “glue”
that holds all of the elements in a research project together. We often describe a design using a
concise notation that enables us to summarize a complex design structure efficiently.

Research Type:
Descriptive Research
Descriptive research is used to obtain information concerning the current status of the
phenomena to describe “what exists” with respect to variables or conditions in a situation.
Descriptive research, also known as statistical research, describes data and characteristics about
the population or phenomena being studied. Descriptive research answers the questions who,
what, where, when and how. In short descriptive research deals with everything that can be
counted and studied. The methodology involved in this design is mostly qualitative in nature
producing descriptive data.

Types of Data:
 While deciding about the method of data collection to be used for the study, the
researcher kept in mind for two types of data. They are:
a) Primary Data
b) Secondary Data
a) Primary data
In this study primary data is not required.
b) Secondary data
The secondary data are those financial Analyses which are collected from the company.

Research Instrument:
In this study the research, the researcher has used secondary data i.e., Annual
Report if SBI & HDFC Bank as research instrument.

Research Presentation:
After analysis of data, using various statistical techniques the findings and suggestions
are presented in the form of a report. To assist the understanding on findings and suggestion of
the study, various other details ranging from objective, need and research methodology to the
detailed presentation analysis is included in the report.

TOOLS USED:
Comparative analysis
Ratio analysis
Trend analysis
Beta valuation
Sustainable earnings
Basel-II CRAR % capital requirement
Cash Flow Statement Analysis

STATISTICAL TOOL:
CAPITALINE
SPSS
Limitation of study;

 Comparison is restricted to SBI and HDFC Bank.

 The study is based on secondary data as published in various publications of RBI other
reports.
 The data are based on historical accounting concept.
 Time constraints – The time available to study such a research problem and to measure
change over time is constrained by the deadline.
 CHAPTER – II
REVIEW OF LITERATURE
 REVIEW OF LITERATURE

Anita Makkar (2013) in his on „Analysis of the Financial Performance of Indian

Commercial Banks: A Comparative Study‟ stated that the financial performance of a bank
indicates the strength and weakness of that particular bank by properly establishing the
association between the items of the balance sheet and profit & loss account. The present study is
a comparative analysis of the financial performance of Indian commercial banks. The study
considered a sample of 37 banks (22 public sector banks and 15 private sector banks) for the
period from 2006-07 to 2022-2023. CAMELS rating methodology was used in the study to
measure the performance of the considered banks. The study found that the IDBI Bank was the
best performing bank followed by Kotak Mahindra Bank and ICICI Bank. Dhanalaxmi Bank had
the worst performance followed by J & K Bank and Karnataka Bank Ltd. The results of the 't' -
test disclosed that there is a significant difference in the Capital Adequacy, Asset Quality and
Earning Capacity of public and private sector banks in India, while there is no significant
difference in the Management, Liquidity Position and Sensitivity to market risk of the two
different banks groups. The study concluded that on an average, there is no statistically
significant difference in the financial performance of the public and private sector banks in India,
but still, there is a need for overall improvement in the public sector banks to make their position
strong in the competitive market.

Paneer Selvam (2012), the present study was aimed to analyze the financial assistance of
nationalized bank in India. The financial assistance was measured during 1997-98 to 2021-2022
in State Bank of India and Associate Bank (19 banks). The present paper focused on the
performance of the nationalized banks in the context of the Indian economy. The performance is
being carried out with the help of certain crucial operational variables of the banks including
total business, expenditure, deposits, advances, profits etc. To identify the relative performance
of the operational variables the linear and compound growth rates have been calculated. The
growth rates worked out indicated that on the average in the case of a majority of the operational
variables, the performance of the nationalized banks followed by private sector banks is found to
be higher when compared to SBI and its associates and foreign banks.
 M.SakthiVadivela(2012) the banks in India have over 67,000 branches located across
the country. All these are classified into two major categories, nonscheduled banks and
scheduled banks. Scheduled banks include commercial banks and the co-operative banks. The
public sector banks are accountable for more than 78 percent of total banking industry in India.
Even though private sector banks came later into the market, due to their customer servicing and
easy banking features they are also competing equally with already existing public sector banks.
so it is very essential to analyze how their financial performance is influenced by number of
factors which will further suggest them where they need to concentrate more. in this article we
have analyzed the correlation between return on total assets and other financial variables of
selected private and public banks in India.

M.K.Sharma, (2005), the study of Indian Banking sector occupies an important place in
development of economy in India, and is related to close and critical study of various measures
observed in the operation of business and management organization. Present study described
four types of analytical aspects of performance of India banking sector i.e. Productivity,
Profitability, various Financial Efficiency (Ratio) and comparative study with Common Size
Statements. Although as a conceptual point of view performance appraisal is purely
developmental tool for a study unit. Banking sector reforms in India, strive to increase
profitability, productivity and efficiency of the banking institutions. The existing banking
institutions have to face the global competition. As a consequence, there has not only been rapid
expansion in the number of banking institutions in the country, but the banking horizon of the
country has also changed significantly with the entry of new private sector and foreign banks.
Nowadays, the country has (i) Public Sector Banks (ii) Old Private Sector Banks (iii) New
Private Sector Banks and (iv) Foreign Banks operating side – by – side and giving cut – throat
competitions to each other. This study emphases on the critical evolution of Indian banking
sector specially with reference to public sector banks and new private sector banks.

Chhikara Dr. Sudesh (2019) conducted study on “Causes and Impact of Non
Performing Assets in Public Sector Banks: A state level Analysis” This paper examines the
reasons of NPA‟s in selected public sector banks in the state of Haryana. It also examines the
impact of NPAs on profitability and other financial parameters. Lending is always accompanied
by the credit risk arising out of the borrowers default in repaying the money. A banker should
therefore manage his loan in a safe manner. This may include development comprehensive credit
appraisal and monitoring system, introduction of credit audit system and also establishment of
the system to tackle potential problem of recovering loans well in time. It is concluded that
impact of NPAs on the performance of the banks is manifold. “Profitability” is the worst affected
by NPAs followed by “Credit deployment and investment policy”, “Achievement of capital
adequacy ratio level” and reduction in “Productivity”. Among the preventive measures to control
NPAs “Efficient credit appraisal”, “Effective credit monitors monitoring”, “Monitoring of
standard assets and imparting specialized training to bank officers reconsidered most critical.
Securitization of assets and suit filling are rated as the important curative measure to control
NPAs. Mahor handicaps in the recovery of the advances are cumbersome “legal system”,
inadequacy and lack of proper training of staff. Total elimination of NPAs is not possible in
banking business owing to externalities but their incidence can be minimized. It is always wise to
follow proper policy appraisal, supervision and follow up of advances to avoid NPAs.

V. SRI HARI (2012), in recent years the Banking Industry has been undergoing rapid
changes, reflecting a number of underlying developments. The most significant has been
advances in communications and information technology, which have accelerated and broadened
the dissemination of financial information while lowering the costs of many financial activates.
Public Sector Banks and Private Sector Banks play an important role in economic development
of the country. These are banking financial institutions and they are also social organizations
rendering savings, investments in the form of deposits and security and providing their needful
helps to the society members to borrow loans at affordable interest rates. Public Sector Banks
and Private Sector Banks have had the distinction of being recognized as banking institutions,
which provides satisfying services to its customers or account holders. As a result of this the
customers expects the best of services from the banking institution.

This article focuses on how far Public Sector Bank Vs Private Sector Bank is doing their
business in a banking industry after liberalization and banking reforms. And what is the impact
of functioning of their banking operations due to the competition in banking industry. How far
Public Sector Banks or Private Sector Banks are successful in facing these challenges? What are
the trends observed in the performance of Public Sector and Private Sector Banks? This article is
a modest effort to compare public and private sector banks on the basis of major parameters.
With Reference to State Bank of India, Canara Bank (Vs) CITY Bank, ICICI Bank.

Abdul Naser V (2014) The Research paper speaks about the relationship between employee
efficiency and the performance of the working of banks. The time period covered is 2019 to
2013. It is all about all public and private sector banks working in India. The study also
considered foreign sector banks.The drastic change in the performance can be seen before
reforms and after reforms. Because of latest technology, increased competition the new banks
adopted this in their day-to-day working because of which there is an improvement in the
performance of the banks.

Shveta Singh (2014) The study includes SBI and the associates and Nationalised banks under
public sector banks. New and old foreign banks under private sector and all the foreign banks in
India are included under foreign banks. The analysis is made on the basis of few ratios like
credit deposit ratio, Return on Asset, NPA to net advance etc.

Deepak M. (2005) The VRS scheme was introduced for employees but the backup plan was
ready with the help of technology implementation and business reengineering. The ratio of
business per employee and profit per employee becomes important. The conclusion says that
performance of foreign banks is much better than Indian banks. Though performance of private
sector bank is better than public sector banks, public sector banks have got stable performance.
NPA of public sector banks is much more than private and foreign sector banks. The banking
sector as a whole has to find out its own path for the flourished business and much more to work
out.

B. G SATYA PRASAD (2012) it can be sum up that foreign banks worked much better,
private sector banks on second number and public sector are yet to go for advancement. But
while comparing public and private sector banks public sector banks are very much stable in
the performance as compared to private sector banks. Foreign banks are much ahead in both
variables like employee‟s efficiency as well as financial performance.
Dr.Anurag B. Singh (2012) The paper speaks about the comparative performance of SBI and
ICICI Bank . State Bank of India popularly known as SBI is one of the leading public sector
bank having 14 local Head Offices and 57 zonal offices in the country.ICICI is the second
largest bank in India having 2533 branches and 6800 ATMs throughout the country. One public
and another private sector bank can be analysed properly on the basis of financial performance
as both are leading banks in their own sectors.

Abdallah Alrabei (2013) The period of study is 2019-2020 to 2023-12. The main tool of
analysis adopted is ratio analysis.The author has selected the main and important ratios for
analysis which has the proper impact on the analysis. The profile of both the banks is studied
properly including its branches and subsidiaries. The limitations clearly mentioned that the
study is only on the basis of secondary data and which can only be windowdressed.

After studying all these parameters for both banks the autor concluded that deposits in SBI are
always increasing than ICICI. Hence on the basis of the study customers have more trust on
public sector bank and especially SBI as compared to private sector banks. SBI is performing
better than ICICI and even financially sound. But as far as deposits and expenditures are
concerned ICICI have better efficiency and managing skills.

Dr. Ali Mohmoud(2014) The study is about banks and other financial institutes are important
part of the economy not only in any particular country but for all over the world and the main
criteria for evaluation is profitability.The author has selected SBI as Indian Bank and Cairo
Amman Bank (CAB) as Jordian bank for comparison.Both the sources of data collection as
primary data and secondary data from reports magazines and internet is collected. The period of
study is 2006-07 to 2022-2023. The accounting year for SBI is April to March and for CAB its
from January to December.

Cheenu Goel (2013) The paper is about three major private sector banks i.e. ICICI Bank,
HDFC Bank and Axis Bank. For comparison the public sector banks are SBI, Punjab National
Bank and Bank of Baroda. The time period covered is 2021-2023.Due to customer requirement
or demand, competition of the market and changes in the banking sector efficiency and
profitability are of utmost importance. The quantification of output in such a manner is really
difficult as it is intangible. The main part considered is size of bank assets. The main tool used
for the analysis are different ratios like Return on Assets, Return on Equity, Net Interest
Margin.Interpretation is mainly on the basis of Demand Deposit Ratio i.e. relationship of
Demand Deposit to Total Deposits.The ratio used is Saving Deposit Ratio i.e. relation of Saving
deposit to Total deposits. Next is Net Interest Margin i.e. (Interest received and Interest paid)
difference total assets.

Next is Credit Deposit Ratio i.e. proportion of loans generated by banks from deposits received.
The ratio used is Debt Equity Ratio which indicates finance of the organisation by way of debt
and equity.

Ms. Priyanka Tondon (November 2023) Return on asset shows efficiency of business using its
own assets to generate the income. Return on equity shows how much the return on shareholders
fund is. Capital Adequacy Ratio is to decide bank‟s capacity to pay time as well as other
liabilities. Operating Margin Ratio is about the total income to operating income

T.K. Velayudham(1997)Net Profit Margin Ratio is about the percentage of total revenue to net
profit after tax and preference dividend. After studying so many ratios of all banks the authors
concluded that the efficiency part of new banks is much better than old ones. All other sector
banks are more profitable and efficient than public sector banks. Both the variables: efficiency
and profitability gives lead to private and other sector banks and not public sector banks. It can
be proved from this that both the variables go on same lines to measure the performance.

Chitwan Bhutani Rekhi (July 2013) Changing technology and markets are the primary forces
driving organisations to change internally. Author has made four parts of nationalised banks:
corporate office, zonal office, divisional office and branches.Here in SWOT analysis
opportunities and Threats are External interface and Strengths and weakness are Internal
interface.The PSB‟s are clubbed into certain categories like Strong and successful banks, bank
and reviving banks. In this study author strongly believe that multiple sub-systems are equally
important. With that a strong leader with mission and vision is a conditional variable. Many
ingredients are given for systematic redesign.

P.S.R.Prasad (2015) Author puts up six principles to cope up with changing external
environment.In action plan they suggest that the time is appropriate to formulate several task
forces with people drawn from cross functional and hierarchic, thereby ensuring collective
commitment. It will also give chance to make future of middle and junior offices in
nationalised banks.

Success in the market place will not be made available on a platter. It will have to be earned.
Leadership will be the key issue and this is exactly in abundant supply.

S.K.Datta (2005), The Banking Company is run under the Banking Regulation Act, 1949.
The separate Act other than companies Act, 1956. Is passed to protect the interest of the
Indian Depositors.If a manufacturing company accepts deposits from public it is not a banking
company . The banking company is not allowed to buy, sell, or deal with goods except
realization of securities and negotiating bills of exchange.

S.D.Bhargir (2005) As per guidelines issued and by RBI banks have to prepare and publish
form A (balance sheet) and form B (profit and loss account). As per government notification
banks have to close books of accounts on 31 st March every year and 30th September for internal
reports. The accounts must be audited by a qualified auditor and his appointment should be
audited by RBI. Three copies of audited accounts with auditor‟s reports should be submitted to
RBI within 3 months. These reports are to be published in the newspaper within 6 months from
the end of the period.
General Bank maintains the books like clearing register, securities register, dishonored cheques
register etc.

T.K. Velayudham(1997) In format A of balance sheet it is discussed how to prepare a balance

sheet of a bank. There are total 11 schedules containing all liabilities and assets 12 th schedules
maintain contingent liabilities.Form B shows detail format of preparation of Profit and Loss A/c
which contains schedule no. 13, 14, 15 and 16. It shows Income and Expenditures of business.

P.S.R.Prasad, (2005)The summary of chapter says the banking company takes deposits and
provide many faculties to depositors for payment of cheques. The formats for preparation are
given by RBI. Before declining dividend to public a bank his to aside 20% of its profit as
statutory reserve which is shown in its Balance sheet. The slip system is followed by banks
while posting in ledger.
Raghu palat (1996) Ratios are very important to know the analysis of profits and balance sheet
of banks as other as financial institutions. For all the people it becomes easy to understand
actual business position with the help of ratios. Ratios summarised the large figures and for
interruption it can be used in a simplified form. It expresses the relationship of two different
figures.For the ratios analysis the comparison is made. The comparison has to be of the same
and equal components. Time period should be same. The type of institutions should be same.
Otherwise to analysis can be misleading.

A.D.Bhorkar (2015), The ratios to be used in the manner i.e. logical with intelligent
interpretation. It may not give you answers but it can raise the questions. Margins are one of the
important components of analysis. Only increase is margin in large figures is not sufficient. Why
it is so is very important. Low margins are not every time bad. Margins help us to find out cast
structure, profitability and company‟s ability to impose the cast on the consumers.

Profitability ratios are comparing the company with the other industry or it can be composed
with its own previous year‟s performance. Trend analysis in ratios can be the very interesting
part of the ratio analysis. Ratios are very useful to know about the liquidity of the company.
Every person will first evaluate the company with this, whether the company is able to pay its
current obligations and have sufficient funds to run a business successfully. .The ratio analysis
for banks is mainly for depositors, shareholders and creditors. If the return is low, then the risk is
high. The affecting factors are operating results, quality of assets, stability of liability etc. So
only ratios of profitability, liquidity, assets quality and capital and adequacy are important.
CHAPTER – III
 INDUSTRY PROFILE
Banks are the main providers of credit within India's around half of India's financial assets
(Graph 1). Since the 1970s, government-controlled banks have been central to India's development
strategy by extending credit to sectors prioritized by governments, such as agriculture and
infrastructure (RBI 2005). While Indian authorities have sought to develop a domestic corporate
bond market, this remains relatively small and is mostly used by larger firms and financial
institutions (Ganguly 2020). Non-bank financial corporations (NBFCs) have grown in recent years
as alternative intermediaries of finance; however, a substantial share of funding for NBFCs is
ultimately provided by banks. Beyond financing private and state-owned firms, banks are also a
significant funding source for governments, through direct loans and buying bonds issued by the
central and state governments. More generally, India's capital account has remained relatively
closed, and so India remains more reliant on domestic financing sources than comparable
emerging market economies.

India's banking system is dominated by government-owned ‘public sector banks’ (PSBs), which
account for around 60 per cent of commercial banking system assets. Since the mid-2022s, these
banks have been beset by problems with non-performing loans (NPLs) and low capital levels
(Graph 2) (RBA 2020). Over the past two decades, private sector banks have become more
prominent and generally have healthier balance sheets with lower NPL ratios, although some
private banks have failed in recent years. Foreign banks are in the strongest financial position but
comprise only 7 per cent of commercial banking system assets. Outside the commercial banking
system, there are a number of smaller banks that serve the needs of narrower groups of borrowers,
including rural cooperative banks, small finance banks, local area banks and payment banks.

Credit to the non-financial sector in India is equivalent to around 165 per cent of GDP, which is
high relative to many other emerging market economies. India's high level of debt and reliance on
bank credit magnify the effect of stress in the banking system on economic growth. While direct
financial links between Australia and India are limited, potential vulnerabilities in the Indian
financial system are important for Australia through the trade channel. India accounts for only
0.6 per cent of Australian investment abroad, and 0.05 per cent of foreign investment in Australia.
A few Australian banks have subsidiaries in India; however, their operations are very small. In
 contrast, India was the destination for around 4 per cent of Australia's exports in 2021. This trade
channel was apparent in 2019/19, when weaknesses in India's banking system contributed to a
slowdown in Indian economic activity, and weighed on India's demand for Australia's exports
(Fair weather and Sutton 2021).
This article examines four factors that are affecting the ability of India's banking system to allocate
credit efficiently and support long-term growth: banks' high NPL ratios and low capital levels;
high levels of government borrowing from banks; Indian authorities' influence on credit
allocation; and the interaction of banks and NBFCs (the shadow banking system).

Indian Major Banks

8 Best Banks to Work for in India
 State Bank of India.
 Bank of Baroda.
 Punjab National Bank.
 Indian Overseas Bank.
 Union Bank of India.
 IDBI Bank.
 Bank of Maharashtra.
 Allahabad Bank.
Financial system, and account for
COMPANY PROFILE
The Housing Development Finance Corporation Limited or HDFC was among the first financial
institutions in India to receive an “in principle” approval from the Reserve Bank of India (RBI) to
set up a bank in the private sector. This was done as part of RBI’s policy for liberalisation of the
Indian banking industry in 1994.

HDFC Bank was incorporated in August 1994 with its registered office in Mumbai, India. The
bank commenced operations as a Scheduled Commercial Bank in January 1995. As of June 30,
2021, the Bank had a nationwide distribution network 5,326 branches and 14,996 ATM's in 2,825
cities/towns.

HDFC Bank's MOGO - our Musical Logo - is a vibrant expression of the values that
have driven the Bank to become India's premier digital bank. It helps form a powerful emotional
connect with customers and builds recall among stakeholders across platforms - ATMs, Phone
Banking, Apps and other touch-points
Our MOGO reflects the two dimensions of what we stand for:

Trust
Created through being caring and reliable over the last two decades

Progressive change
To address the ever changing needs of our customers

This piece is inspired on the one hand, by Raag Bilawal which expresses innovation and
dynamism, and on the other by Raag Shudh Kalyan which reflects the caring, humane nature of
HDFC Bank. You will find contemporary western instruments such as the Piano and Guitar
accompanying our very own Sitar, thus creating a wholesome blend of global aspiration and
Indian earthiness.

MOGO is a registered trademark of Brand Musiq.

Section I.01 CSR

At HDFC Bank, corporate social responsibility or CSR is all about developing a business model
that not only creates economic value but also contributes to a healthy ecosystem and strong
communities. Our endeavour is to evolve and develop appropriate business processes and
strategies to achieve a common goal that contributes to the greater good.

Our CSR programmers encompass sustainable livelihood, sanitation, education, skilling,

community initiatives and environmental sustainability.

Section I.02 VISION, MISSION AND VALUES

HDFC Bank’s mission is to be a world class Indian bank. We have a two-fold objective: first, to
be the preferred provider of banking services for target retail and wholesale customer segments.
The second objective is to achieve healthy growth in profitability, consistent with the bank’s risk
appetite.

The bank is committed to maintaining the highest level of ethical standards, professional integrity,
corporate governance and regulatory compliance. HDFC Bank’s business philosophy is based on
five core values: Operational Excellence, Customer Focus, Product Leadership, People and
Sustainability.

Section I.03

Section I.04 Promoter

HDFC is India's premier housing finance company and enjoys an impeccable track record in India
as well as in international markets. Since its inception in 1977, the Corporation has maintained a
consistent and healthy growth in its operations to remain the market leader in mortgages.
Itsoutstandits, strong market reputation, large shareholder base and unique consumer franchise,
HDFC was ideally positioned to promote a bank in the Indian environment.
Section I.05 Business Focus

ding loan portfolio covers well over a million dwelling units. HDFC has developed significant
expertise in retail mortgage loans to different market segments and also has a large corporate
client base for its housing related credit facilities. With its experience in the financial mark
As on September 30, 2018 the authorised share capital of the Bank is Rs. 650 crores. The paid-up
share capital of the Bank is Rs. 509,12,67,434 (2545633717 equity shares of Rs. 2 each). The
HDFC Group holds 21.34 % of the bank’s equity and about 18.58 % of the equity is held by the
ADS / GDR Depositories (in respect of the bank’s American Depository Shares (ADS) and Global
Depository Receipts (GDR) Issues). Also, 32.04 % of the equity is held by Foreign Institutional
Investors (FIIs) and the bank has 4,74,443 shareholders.
Section I.06 Awards
HDFC Bank began operations in 1995 with a simple mission: to be a "World-class Indian Bank".
We realised that only a single-minded focus on product quality and service excellence would help
us get there. Today, we are proud to say that we are well on our way towards that goal.
It is extremely gratifying that our efforts towards providing customer convenience have been
appreciated both nationally and internationally.

Section I.07 2021

Asiamoney Asia's Outstanding

Most Outstanding Company - Financial Sector
Companies Poll 2020?

2021 Brand™ Top 75 Most Valuable HDFC Bank ranked India’s Most Valuable Brand for
Indian Brands the 7th consecutive year

Euromoney (Global) Awards For

Lifetime Achievement Award - Aditya Puri
Excellence 2021

Finance Asia Country Awards 2021 Best Bank in India

Euromoney Awards for Excellence 2021 India’s Best Bank

 HDFC Bank certified as a ‘Great Place to Work’ for
Great Place To Work
2021

Asiamoney Best Bank Awards 2021 HDFC Bank adjudged Best Domestic Bank in India

Business Today 18th Best Companies to HDFC Bank Among Top 10 Best Companies to
work for in India Survey work for in India

Best Managed Company- Ranked 1st

HDFC Bank voted ‘Best Managed’, ‘Best Best Corporate Governance- Ranked 1st
Governed’ Indian Company Best CEO- Aditya Puri, MD ranked 1st
Best Environmental Stewardship- Ranked 2nd

India’s Leading Private Bank – BFSI

Best Use of Banking Technology - Data
Dun & Bradstreet BankTech Awards
Analytics/BI/Big Data (Joint Winner with SBI)
2021
Best Use of Banking Technology - API Open
Banking

Bank of the Year - HDFC Bank jointly with SBI

Business Today – Money Today
Best Large Bank - HDFC Bank
Financial Awards 2020
Best Fintech Engagement - HDFC Bank

CNBC-TV18 India Business Leader HDFC Bank - Outstanding Company of the year
Awards (IBLA) 2020-20 award

Section I.08 ORGANIZATION STRUCTURE:

HDFC Bank's Board of Directors is comprised of distinguished individuals with a wealth of
experience in public policy, administration, industry and commercial banking. Senior executives
representing HDFC Ltd. are also on the Board.

Various businesses and functions in the bank are headed by senior executives with work
experience in India and abroad. They report to the Managing Director. The Bank is focused on
recruiting and retaining the best talent in the industry as it believes that its people are a
competitive strength.
Section I.09 Senior Management Team
HDFC Bank’s leadership team brings together a diversity of talent and a wealth of experience.
Guided by an experienced board and visionary managing director, the team steers the bank to new
heights. As the world becomes increasingly digital, the management team is leading the bank to
leadership in this emerging domain with innovative products and services.
Section I.10 PRODUCTS AND SERVICES OF THE COMPANY

It's a good work environment ..work load is high because of process but . their pay are very
good ..work life balance is hampered because of sales pressure but incentive structure is very
good.
Past and Current Position
HDFC CEO Keki Mistry said share prices of Housing Development Finance Corporation (HDFC)
and HDFC Bank fell after the announcement of their merger because the management was
unable to articulate the advantages of the merger.

HDFC Bank hikes lending rates by 0.35%; 2nd hike in two months . The hike,
which comes a day ahead of the RBI's scheduled policy review, is the second such move from the
lender in as many months, taking the cumulative hike to up to 0.60 percent.

“I have been recommending a buy in HDFC Bank. I believe there has been significant correction
from the levels it was at. At the current level, it does look attractive even for HDFC Limited. It is
a good buy at current levels.
HDFC Bank sales and Profits
For the first nine months ended December 31, 2022, the private bank's total income was at Rs 1,
16,177.2 crore, up from Rs 1, 08,045.6 crore the same period a year ago. Net revenues for the
nine-month period were at Rs 75,009.7 crore, sharply up from Rs 65,370.4 crore for the nine
months ended December 31, 2021.

The lender's net profit for the full fiscal year 2022-22 rose 18.8 per cent to ₹36,961.3
crore against ₹31,116.53 crore in 2021-21. For the January to March 2022 quarter, the bank's net
interest income grew 10.2 per cent to ₹18,872.7 crore compared to ₹17,120.2 crore a year ago.

HDFC Bank earned a net profit of ₹10,055.2 crore on a standalone basis for
the quarter ending March 2022 (Q4FY22) period, rising by a whopping 22.8%
yoy. The bank had posted a net profit of ₹8,186.51 crore in the March quarter of last year, while
the bottom line stood at ₹10,342.20 crore in the third quarter of FY22.
 CHAPTER-IV
THEORETICAL FRAME WORK
Theoretical Framework
There are several volumes of theoretical work trying to understand the managerial education-
performance link. The common and widely applied theory which forms the basis of this study is
the Human capital theory by Becker which suggests that a bank can profit from the cognitive and
productivity ability of an individual derived from the individual’s stock of experience, education
and skills. According to this theory the level of education determined the marginal productivity
of labor which tend to influence the bank’s earnings as the theory proposes a positive managerial
education-performance .

Studies of the effect of managerial skills have grown since the germination of human capital and
business literature. These empirical studies define managerial skills as the organizational
resources, which can deal with upcoming challenges, development of organizational planning,
and lead the firm’s operations by utilizing the organizational recourses. The main important
dimensions for managerial skills are management education, experience, gender composition and
administrative skills Smith. These dimensions are considered important for planning the
strategies, directing the organizational strategies, supervising the team in upcoming challenges,
building the networking, distribution channels, and decision-making.

Theoretical Perspectives
The role and importance of managerial skills has been studied by scholars of different disciples
such as law, economics, finance, sociology, strategic management and organisation theory Kiel
& Nicholson. The extant literature has primarily focussed on the characteristics of the managers
in affecting organisational performance Fama & Jensen. Meanwhile, some scholars have also
paid attention to other issues such as ownership. CEO turnover and compensation Lausten in
affecting firm performance. This section reviews four major theoretical perspectives of boards
and governance mechanisms that are considered relevant for this study that is., the human capital
theory, agency theory, stewardship theory, resource dependence theory and stakeholder theory.

The Human Capital Theory

Production in the banking industry involves the use of intermediate inputs, which take part in the
production of final or semi-final outputs. Bank performance depends upon the way it produces
outputs from inputs. According to Rossi & Ruzzier productivity means the firm’s ability to
produce an output at a minimum cost and to achieve that minimum cost the firm must produce
the maximum output given its inputs (technical efficiency) and choose the appropriate input mix
given the relative price of its inputs (allocative efficiency)

The human capital theory has been viewed as a source of value in effective organisation Thomas
& Diez and with the emergence of knowledge- based economies, knowledge, skills and abilities
are viewed as an invisible asset for sustainable organisation Wright. Thus continued education is
critical for organisations to maintain competitiveness, hence as such organisations have
emphasise more on knowledge acquisition Debrulle & Maes. The organisation relies on
employees’ skills and knowledge for increased organisational performance. McConnell stated
that a more educated, better-trained person is capable of supplying a larger amount of useful
productive effort. As such, organisation relies on employee’s skills and knowledge for value
creation in organisation. According to the human capita theory, different level of education and
training contribute to different level of wages and salaries. The theory viewed employees as an
invaluable asset and to invest in education and training led to significant gains in business
competitive advantage and sustainability (Belliveau et al., 1996; Wagenvoort & Schure, 2005).

Empirical li Gottesman & Morey (2022) test the CEO education background and performance
link on a sample of 390 US firms. Educational background is defined by the type of degree and
the school selection of the CEO. Performance is measured by Tobin’s Q. The study finds a
significant link between both the type of degree and school selectivity with Tobin’s Q. Results
are explained by citing the length of time that lapses between the attainment of formal education
and becoming CEO. This time gap renders formal education irrelevant.

Jalbert examine the level of education and school ranking of CEOs of large US firms during the
period, 1997-2006. Performance is assessed by return on assets, return on equity and return on
investment. The study shows that, while being undergraduate is essential to become CEO, a
graduate degree is not. Accomplishment of undergraduate degree does not explain differences in
return on assets and return on investment, but is significantly and positively related to return on
investment. School rank is found to be associated with return on equity. Graduate school ranking
is marginally significantly cause variations in return on assets. While undergraduate school
ranking affects return on investment positively, graduate school ranking affects the variable
negatively .

King show that both level of education and school quality influence firm performance. A sample
of 149 large US firms are studied during 1992 to 2023. Results show CEOs with an MBA have
the ability to deliver better performance than their counterparts. MBA from a better-ranked
school is found to results in CEOs assuming more risk and adopt innovative models of business
to achieve better performance. The study concludes that management degree enhances CEOs’
ability to manage bigger and more complex banks and attain improved performance. Cheng
evaluate if the managerial ability and bank strategy fit can influence the bank performance with a
sample of 34285 bank-year observations from US listed banks during the period, 1992-2014.
Along with other variables, they check if CEO with a management degree can impact
performance. The results show a positive association with performance and a negative
relationship with risk .

In Europe, Morresi examines CEO education-performance relation with a sample of 612 banks
of market capitalization of over one billion euros listed on stock exchanges of UK, France, Italy,
Spain, Germany and Netherlands during 2006 to 2015. The level of education, quality of school,
and study specialization of CEO are evaluated against the accounting and market related
performance. The study finds that CEOs with a higher degree and from a better-ranked school do
not boost performance. But, CEOs from top ranked schools are found to enhance long-term
market performance (Gottesman & Morey, 2006). The study infers the CEO education helps to
reduce information asymmetry problem. Lu & Zhang examine the CEO education-performance
link with the data of Chinese publicly-listed banks from 2003 to 2012. After addressing the
endogeneity in the CEO education variable with the instrumental variables of the college entry
exam rate in China's different provinces in different years, the impacts of cultural revolution on
CEO education, and the growth environment of the CEO, the authors find that excellent CEO
education can significantly enhance bank value, but cannot significantly affect banks' accounting
profitability and growth rate (Golec, 1996). These findings suggest that a CEO with high
education background can enhance the expectation on the value of the bank from investors;
however, CEO education may not help enhance performance in the short run (Frey & Detterman,
2004; Graham & Harvey, 2001; Palia, 2000).

Saidu investigates CEO education-performance association with a sample of 222 bank year
observations relating to financial banks listed in Nigerian stock exchange over the period, 2023-
2016. Results show CEO education is positively linked to all the three measures of performance
employed by the study (Gonchve, 2005). While the association with return on assets is
statistically significant, the association with the other two variables, stock price and return on
equity are not statistically significant. Research that tests the CEO education-performance comes
up with mixed results. Broadly, the empirical works employ four broad measures of CEO
education, level, ranking, domestic or foreign and field of study. This study employs three of
these measures namely, level, domestic or foreign and field of study. The study proposes the
following hypotheses .
 CHAPTER-V
DATA ANALYSIS AND INTERPRETATION
 BALANCE SHEET OF STATE BANK OF INDIA
FOR THE YEAR ENDING ON MARCH 2019-2023
IN RS CR.
2019- 2020- 2021-2022 2022-
2020 2021 2023
Absolute % Absolute % Absolute % Absolute %
change change change change change change change chang
e
Capital &
Liabilities
Capital 105.17 19.98 3.41 0.0054 0.00 0.00 0.12 0.018
Reserve& 17628.83 57.28 8910.91 18.41 8001.5 13.96 (963.28) (1.47)
surplus
deposits 101882.8 23.39 204669.1 38.08 62043.1 8.36 129816.5 16.14
5 9 8
borrowings 12024.07 30.28 1986.27 3.83 49297.92 91.77 16557.36 16.07
Other 23320.04 38.83 27335.27 32.79 (30360.30 (27.42 24911.69 31.009
liabilities and ) )
provisions
TOTAL 154961.0 27.35 242905.7 33.66 88981.65 9.226 170322.4 16.16
CAPITAL 6 7 7
AND
LIABILITIE
S
2019- 2020- 2021-2022 2022-
2020 2021 2023
Absolute % Absolute % Absolute % Absolute %
change change change change change change change chang
e
Assets:
Investments 40352.39 27.055 86452.69 45.62 9836.11 3.56 9810.5 3.43
Advances 79431.71 23.54 125735 30.16 89410.95 16.48 124805.3 19.75
Fixed assets (314.22) (0.070 (543.32) (0.13) 543.32 0.15 314.22 0.076
)
Capital Work (37.05) (0.11) (31.74) (0.107 31.74 0.1204 37.05 0.1255
In Progress )
Current assets (8665.09) (0.19) 2620.51 0.074 (2620.51) (0.069 8665.09 0.24
)
TOTAL 154961.0 27.35 242905.7 33.66 88981.65
9.226 170322.4 16.16
ASSETS: 6 7 7
Interpretation :
The capital of bank increased by 19.98%in 07-08, 0.0054% in 08-09, 0.018% in 10-11.
There is no change in capital of the bank in the year 09-10
There is a huge fluctuation in the rate of increasing in reserves& surplus .
The bank is utilizing its reserves &surplus in an effective manner.
In 07-08 deposits increase by 23.39%, 08-09 it increase by 38.08%, 8.36% in 09-10,16.14% in
10-11.
There is a huge fluctuating rate of increase . in 08-09 it had fluctuate to 3.83%.
The investment in 10-11 has increased with a low rate as compared to the preceding
years .27.55% in 07-08,45.62% in 08-09,3.56% in 09-10,3.43% in 10-11.
The advances rose by 23.54% in 07-08,30.16% in 08-09,16.48% in 09-10, 19.75% in 10-11.
There has been a consistent decline in fixed assets in 07-08 and 08-09 0.070% ,0.13%
respectively. Increased by 0.15% in 09-10, 0.076% in 10-11.
There is a fall of current assets 0.19% in 07-08 mainly due to the repayment of deposits.0.074%
in 08-09, subsequent fall of current assets 0.069% in 09-10, and increase of 0.24% in 10-11.
PROFIT AND LOSS OF STATE BANK OF INDIA FOR THE YEAR ENDING ON
MARCH 2019-2023IN RS CR.
Particulars 2019-2020 2020-2021 2021-2022 2022-2023
absolute % absolute % absolute %
change change change change change % change absolute change change

INCOME:
operating income 11410.95 0.24 18131.04 0.31 9482.29 0.12 10367.38 0.12
EXPENDITURE:
interest expended 8492.26 0.36 10986.21 0.18 4407.19 0.10 1545.48 0.032
operating 3514.11
expenses 1357.77 0.10 0.24 6817.35 0.37 6489.87 0.26
9223.14
total expenses 0.21 15738.93 0.30 9437.47 0.14 12163.1 0.15
provision and
contingencies -626.89 -0.10 1238.61 0.24 -1787.07 0.14 12163.1 0.15
net profit of the
year 2187.81 0.48 2392.11 0.35 44.82 0.004914 -1795.68 -0.19
extraordinary
items 0 0 0 0 0 0 0 0
profit brought
forward 0 0 0 0 0 0 0 0
total profit/(loss): 2187.81 0.48 2392.11 0.35 44.82 0.004914 -1795.68 -0.19

INTERPRETATION:
Net Profit Of The Year: it shows a fluctuating trend i.e., increased by 48% in2019-2020,35% in
2020-2021,0.49% in 2021-2022 and decline by 19% in 2022-2023due to increased tax liability.
Interest Expended: it increases from 36% in 2019-2020,18% in 2020-2021, 10% in 2021-
2022 and 3.20% in 2022-2023.
 BALANCE SHEET OF BANK OF BARODA FOR THE YEAR ENDING ON MARCH
2019-2023 IN RS CR.

2019- 2020- 2021- 2022-

2020 2021 2022 2023
absolute % absolute % absolute % absolute %
change change change change change change change change
capital &
liabilities:
0.07463
Capital 0 0 0 0 0 0 27.28 1
reserves& 0.28897 0.16777 0.18210 0.39749
surplus 2393.99 5 1791.61 9 2270.85 5 5859.44 6
27118.1 0.21709 40362.8 0.26548 48647.3 0.25284 64395.2 0.26715
Deposits 5 1 2 5 1 9 2 1
2.43706 0.43519 1.36867 0.67098
Borrowings 2784.49 2 1709.04 7 7714 9 8957.76 9
0.49263 0.31313 - - 0.09536
other liabilities 4156.71 5 3943.74 4 7722.18 0.46693 840.76 8
TOTAL
LIABILITIE 36453.3 0.25465 47807.2 0.26618 50909.9 0.22387 80080.4 0.28773
S: 4 8 1 8 8 2 6 1
2019- 2020- 2021- 2022-
2020 2021 2022 2023
absolute % absolute % absolute % absolute %
change change change change change change change change
ASSETS
0.25545 0.19548 0.16658 10078.2 0.16472
Investments 8926.44 3 8575.81 2 8736.5 1 5 5
23080.4 0.27601 37284.5 0.34942 31049.3 0.21564 53641.0 0.30645
Advances 5 3 8 9 9 2 7 9
fixed assets 1338 1.2 (117) (0.05) (25) (0.01) 15 0.01
capital work in
progress 0 0 0 0 0 0 0 0
36453.3 0.25465 47807.2 0.26618 50909.9 0.22387 80080.4 0.28773
Total assets 2 8 3 8 8 2 7 1
INTERPRETATION:
The capital of the bank shows no change till 2021-2022 but it increases by 7.40% in 2022-2023.
There is a huge fluctuation in the increase of reserves and surplus. It increases by 28% in 2019-
2020,16%in 2020-2021,18% in 2021-2022 and 39% in 2022-2023.
The investments has increased with a low rate . 2019-2020- 25%,2020-2021 – 19%, 2021-2022 –
16.6%, 2022-2023-16.47%
There is a fluctuating in increase in advances 27% in 2019-2020,34.9% in 2020-2021, 21.5%in
2021-2022, 30.64% in 2022-2023.
There is decline of fixed assets in 2020-2021 and 2021-2022 with 5% and 1% respectively. The
reason may be the increase in the rate of depreciation in the subsequent years.
There has been an increase in borrowings. 243% in 2019-2020, 43.5% in 2020-2021, 136% in
2021-2022,67% in 2022-2023.

PROFIT AND LOSS OF BANK OF BARODA FOR THE YEAR ENDING ON MARCH
2019-2023

absolute absolute absolute

change % absolute change % change % change %
2019-2020 2020-2021 2021-2022 2022-2023
particulars
income:
26.61
total income 3,270.1 30.87% 3,984.7 28.74% 1,655.5 9.27% 5,190.4 %
expenditure:
21.61
interest expended 2,475.11 45.61% 2,066.50 26.15% 791 7.93% 2,324.8 %
20.35
operating expenses 598.82 21.61% 474.39 14.08% 866.57 22.54% 958.65 %
other provisions and - 74.12
contingencies -212.90 -15.54% 652.15 56.36% -832.92 46.04% 723.60 %
24.36
total expenses 2,861.0 29.90% 3,193.0 25.69% 824.3 5.28% 4,007.1 %
38.69
net profit of the year 409.06 39.85% 791.68 55.15% 831.13 37.32% 1,183.35 %
extra ordinary items 0 0.00% 0 0.00% 0 0.00% 0 0.00%
profit brought forward 0 0.00% 0 0.00% 0 0.00% 0 0.00%
38.69
total 409.06 39.85% 791.68 55.15% 831.13 37.32% 1,183.35 %

INTERPRETATION:

The net profit of the year shows a fluctuating trend i.e., 39.85% in 2019-2020,55.15% in2020-
2021,37.32% in 2021-2022and 38.69% in 2022-2023.

The interest expended shows a fluctuating trend in 2019-2020 to 2022-2023

2019-2020-45.61%,2020-2021-26.51% ,

BETA VALUATION :
state bank of
India bank of Baroda

beta 0.8 0.9

 beta
0.92
0.9
0.9
0.88
0.86
beta
0.84
0.82
0.8
0.8
0.78
0.76
0.74
state bank of India bank of Baroda

The graph shows the compare beta of SBI and BOB which is 0.8 and 0.9 which means that
both are comparatively good. There betas are<1 which means it is goodfor the investors to
invest in the bank as it is less risky in nature.

SUSTAINABLE EARNINGS:

SBI BOB
SUSTAINABLE
EARNINGS 8857 3136
 SUSTAINABLE EARNINGS
10000
8857
9000
8000
7000
6000 SUSTAINABLE EARN-
INGS
5000
4000 3136
3000
2000
1000
0
SBI BOB

CRAR% ANALYSIS :

SBI BOB
BASEL-II
CRAR% 11.98 14.52

BASEL-II CRAR%
16 14.52
14
11.98
12
10 BASEL-II CRAR%
8
6
4
2
0
SBI BOB

CASH FLOW STATEMENT ANALYSIS OF BANK OFBARODA:

2019 2020 2021 2022 2023

NET PROFIT BEFORE TAX 1654.26 2207.1 3342.94 4238.06 5650.3
 6 2
NET CASH FROM OPERATING 2241.8 11252.4 11778.
ACTIVITIES 5153.94 2 1125.47 5 81
NET CASH USED IN FROM INVESTING
ACTIVITIES -307.65 -235.13 -238.93 -335.01 -489.76
NET CASH USED IN FROM FINANCING 2012.2 3177.9
ACTIVITIES -20.56 3 901.29 462.51 6
NET (DECREASE)/INCREASE IN CASH 4018.9 11379.9 14467.
AND CASH EQUIVALENT 4825.73 2 1787.83 4 01
18280. 22299.2 24087.1 35467.
OPENING CASH 13454.64 37 9 2 06
22299. 24087.1 35467.0 49934.
CLOSING CASH 18280.37 29 2 6 07

CASH FLOW STATEMENT ANALYSIS OF STATE BANK OF INDIA:

2019 2020 2021 2022 2023

PARTICULARS
14180.6 14954.2
Net Profit Before Tax 7625.08 10438.9 4 13926.1 3
29479.7 34282.5
Net Cash From Operating Activities -1776.07 -856.87 3 -1804.99 2
Net Cash (used in)/from Investing activities -284.56 -2798.01 -1651.93 -1761.52 -1245.53
19371.1
Net Cash (used in)/from Financing Activities 9494.11 2 5097.38 -3359.67 2057.11
15716.2 32925.1
Net (decrease)/increase In Cash and Cash Equivalents 7433.49 4 8 -6926.18 35094.1
51968.6 71478.6 87780.0
Opening Cash & Cash Equivalents 44535.2 9 2 103110 5
51968.6 67466.3 104403. 96183.8 122874.
Closing Cash & Cash Equivalents 9 4 8 4 2
FINDINGS, SUGGESTIONS AND CONCLUSIONS

State bank of India Bank of Baroda

Particulars
1. Beta valuation 0.8 0.9
2. sustainable earnings ( standard 504 1044
deviation)
Average sustainable earnings 8857 3136

3. Cash flow statement analysis: 14467.01 35094.1

4. Basel-II CRAR% 11.98 14.52

5. Profit & Loss statement analysis (19%) 38.69%
6. Balance sheet statement analysis 16 28%
7. Ratio analysis:
a. P/E ratio 21.92 9.15
b. P/BV 2.7 1.8
c. EV/EBIDTA 17.07 16.64

YEAR 2023
SBI BOB
P/E 21.92 9.15
P/BV 2.7 1.8
EV/
EBIDTA 17.07 16.64
 25
21.92

20
17.07 16.64

15
SBI
10 9.15 BOB

5
2.7
1.8

0
P/E P/BV EV/EBIDTA

INTERPRETATION:
P/E RATIO OF State bank of India is 21.92 which is more than the P/E ratio of its peerset bank
of Baroda 9.15 which means that it is overvalued and strongly sound in nature.
P/BV
The ratio of state bank of india is 2.7 and that of its peerset is 1.8 which means the bank is highly
overvalued in nature
EV/EBIDTA
The ratio of state bank of india is 17.07 and that of its peerset is 16.64 which means that the bank
is closely related to its peerset.
Both are fundamentally sound in nature.

SBI BOB
credit deposit ratio 79.9 73.87
CASH DEPOSIT 8.96 6.11
 90
79.9
80 73.87
70

60

50
credit deposit ratio
40 CASH DEPOSIT
30

20
8.96
10 6.11

0
SBI BOB

CREDIT-DEPOSIT RATIO:
This ratio assess the credit performance of the bank.
The graph shows that state bank of india and bank of baroda both are performing well as both
banks has overall good efficiency in nature.
SBI-79.9
BOB – 73.87
State bank of India has overall good efficiency and performance of banking institutions.
CASH DEPOSIT RATIO:
This ratio assesses the cash performance of the bank.
The graph shows that state bank of India and bank of Baroda is performing well in nature.

SUSTAINAB
LE
EARNINGS
SBI BOB
STANDARD DEVIATION 504 1044
AVERAGE 8857 3136
 10000
8857
9000
8000
7000
6000
5000 STANDARD DEVI-
ATION
4000
3136 AVERAGE
3000
2000
1044
1000 504
0
SBI BOB
SUSTAINABLE EARNINGS

OUTCOME:
Since the average sustainable earnings is high and standard deviation of state bank of India is
low which means that the bank is fundamentally sound and it is performing good as compared to
bank of Baroda.

INDUSTR
Y SBI BOB
P/E
RATIO 6.43 21.92 9.15
 P/E RATIO
25
21.92
20

15 P/E RATIO

10 9.15
6.43
5

0
INDUSTRY SBI BOB

INTERPRETATION:
Since the industry P/E ratio is 6.43 ,SBI 21.92,BOB 9.15.
It means that State bank of India P/E ratio is more than the industry/peerset company which
means it is overvalued and it is fundamentally sound in nature as compared to its industry/
peerset bank of Baroda.

SBI BOB
dividend payout ratio 26.03 17.76
 30
dividend payout ratio
26.03
25

20 17.76
dividend payout ratio
15

10

0
SBI BOB
INTERPRETATION:
SBI 26.03
BOB 17.76
There is increase in ratio in the year 2023 in both the banks .

SBI BOB

Earnings Per Share 116.07 108.33

1,023.4
Book Value 0 536.16

Dividend Per Share 30 16.5

Price Earning (P/E) 21.92 9.15
Price to Book Value
( P/BV) 2.7 1.8

It is indicated that EPS AND DPS ARE INCREASING OF STATE BANK OF INDIA AS
COMPARED TO BANK OF BARODA .
THE REASON MAY BE THAT THERE IS MORE USE OF DEBTTHAN DUE TO
IMPROVED OPERATIONS.
P/E RATIO AND P/BV RATIO BOTH ARE INCREASING . .
THE OVERALL EFFICIENCY OF THE COMPANY IS GOOD AND IT IS PERFORMANCE
IS BETTER IN THE BANKING INSTITUTION.
 CHAPTER-VI
FINDINGS, SUGGESTIONS AND CONCLUTION

CONCLUSIONS:
1. State Bank Of India has overall better efficiency and has performed better in the banking
institution as compared to Bank Of Baroda.
2. EPS And DPS Of State Bank Of India is increasing due to increase in the use of debt
rather than the use of improved operations.
3. The P/E Ratio Of State Bank Of India is high as compared to its industry and Bank Of
Baroda which means that SBI is using its funds in a better manner and it is fundamentally
sound in nature.
4. Beta Of State Bank Of India And Bank Of Baroda is less than the market beta which
means that both banks are giving less returns but they are less risky and investors can
invest in these shares.
5. The Average Sustainable Earnings Of State Bank Of India is high and the standard
deviation is low so the bank has its earnings is sustain and more robust in nature as
compared to Bank of Baroda.
6. The Credit Deposit Of State Bank Of India And Bank Of Baroda is close but the ratio is
high which means that State Bank Of India has overall good efficiency and better
performance, i.e., the bank has high credit deposit ratio.

REFERENCES:

http://en.wikipedia.org/wiki/State_Bank_of_India
http://en.wikipedia.org/wiki/Bank_of_Baroda
http://www.moneycontrol.com/financials/state bank of India/balance-sheet/SBI
http://www.moneycontrol.com/financials/bankofbaroda/balance-sheet/BOB
http://www.moneycontrol.com/financials/bankofbaroda/profit&loss/BOB
http://www.moneycontrol.com/financials/bankofbaroda/profit&loss/SBI
www.google.com
www.capitaline.com
www.sbi.com
www.investopedia.com