Comparative Study of Customer Satisfaction in Indian Public Sector and Private Sector Banks

There are various categories of banking; these include retail banking, directly dealing with small businesses and persons. Commercial and Corporate banking which offers services to medium and large businesses (Koch & MacDonald 2010). Private banking, deals with individuals, offering them one on one service. The last category is investment banking. These help clients to raise capital and often invest in financial markets. Most global banking institutions provide all these services combined. With all these institutions in existence within the same localities and offering similar services, there is a need to regulate the industry so as to protect the consumer and provide fair working environment for all banks (Du & Girma, 2011).

Introduction: Banking sector The Indian Banking industry governed by the Banking Regulation Act of India, 1949, falling into two broad classifications, non-scheduled banks and scheduled banks. Within the commercial banks there are nationalized banks, the State Bank of India and its group banks, regional rural banks and private sector banks (the old/ new domestic and foreign). With the economic growth picking up pace and the investment cycle on the way to recovery, the banking sector has witnessed a transformation in its vital role of intermediating between the demand and supply of funds. The revived credit off take (both from the food and non food segments) and structural reforms have paved the way for a change in the

Banks that can offer a multitude of consumer products and acquire customers through branches will continue to own customer acquisition and product distribution advantage over the coming years

Banking industry is currently operating in the maturity stage. There are many players as a result of which the competition is quite high. Competition is broadly based on the levels of fees charged, reputation, the range of services and products provided. As the industry consolidates and the range of services broadens, the size and geographic spread of industry players in increasing. Providing a high set of barriers is the capital and regulatory requirements within the banking sector. Entities that want to start up as a commercial bank and/or investment bank or securities dealer face significant establishment costs in order to gain acceptance and meet market reputation. Furthermore, start-ups require up-front expenses in order to establish proper distribution channels. Globalization is high and the trend is increasing. Cross-border sales and acquisitions of banking operations are also occurring, as assets are shuffled in the race to raise capital.

In partial fulfilment Of the course requirement In Management Science 1st Term, S.Y. 2012-2013 Submitted to: Dr. Dennis Berino

A bank is an institution that facilitates financial transactions between the parties. Amongst its standard operations are accepting deposits from the customers, lending money as loan (cite). The major source of income for banks is interest income which is earned on loans given to the customers, business firms and corporations. This very nature of it makes banking institutions so crucial for economic development of any country. Strong banking operations and fundamentals paves the way for higher customer and investor confidence in the company.

Previously these banks had core strategies of targeting specific markets. They focussed on their main product offerings such as Checking Accounts, and on branch network service provision.

o Technology: In a technology driven world, it is important that banks in the industry ‘move with the time’. With respect to the big four, these banks have now introduced internet and cell phone banking as well as banking from the ATM; making the industry highly competitive. This technology aims to make banking for the client simple and accessible from anywhere. This new technology is aimed, once again, at the medium to high-income earning clients, who have access to these technologies.

Faculty of Human Resources and Finance, Department of Management Studies, National Institute of Technology, Tiruchirappalli, India

Product innovation – Since all banks are offering similar products therefore differentiation is important for future survival.

(Khatri and Ahuja, 2010) stated in their study that it has become imperative for the Public sector as well as Private sector Banks, to perform to the best of their abilities to retain their customers by catering to their needs. If the banks fail to satisfy their customers, it can suffer huge losses. The authors used SERVQUAL model to study various variables of service quality and also compared the public sector and private sector in terms of customer satisfaction. The SERVQUAL model takes into considerations the perceptions of customers of the relative importance of the service attributes. They carried out this in only Delhi, NCR and used a likert scale as follows:

This case was written by P. Indu, under the direction of Vivek Gupta, IBS Center for Management Research. It was compiled

Aniruddh Kr Singh Faculty of Management Studies University of Delhi, India. Debadyuti Das Associate Professor, Faculty of Management Studies University of Delhi, India.

The RBI has granted operating approval to a few privately owned domestic banks; of these many commenced banking business. Foreign banks operate more than 150 branches in India. The entry of foreign banks is based on reciprocity, economic and political bilateral relations. An inter-departmental committee approves applications for entry and expansion.

Corporate Banking business envelops a broad range of businesses and industries. Customers can leverage on its know-how in the following sectors mainly: