Int.J.Curr.Res.Aca.Rev.2017; 5(12): 25-33
International Journal of Current Research
and Academic Review
ISSN: 2347-3215 (Online) ҉ Volume 5 ҉ Number 12 (December-2017)
Journal homepage: http://www.ijcrar.com
doi: https://doi.org/10.20546/ijcrar.2017.512.004
Customer Preferences for Banking Products between Private and Public Sector Banks
in Chennai City
K. S. Nirmal Kumar*
Department of Bank Management, The New College, Chennai – 600 014, Tamil Nadu, India
*Corresponding author
Article Info
Abstract
The reform process initiated in the banking sector in the country has brought in the
New Age private banks, which are quite aggressive in their operation. They are now
playing a crucial role in attracting deposits from the customers, providing advances to
various sections of society and thereby giving a tough competition to the public sector
banks (PSBs) not only in terms of quantity, but also in terms of quality. The private
sector banks have brought in many new products like credit cards, debit cards. ATMs,
internet banking etc. The PSBs have been forced to extend these facilities, which they
are struggling to do, since decision making takes time. Private sector banks have also
extending facilities like share trading, commodity trading, saving and current accounts
and term deposits with new features. This has led to the situation, where the customers
now opine that the private sector banks are aggressive and more tech savvy in their
operations in attracting customers and in providing more and newer products to them,
while the PSBs are less efficient and not quite forthcoming in extending new facilities
to their customers. However, there is also a general opinion that the public sector banks
are more secured compared to the private sector banks, since the former are backed
directly by the Government, which provides a lot of satisfaction to their customers. The
PSBs score over the private sector banks on one count, while the later score over the
former on another count. This calls for a close scrutiny from the view point of
customers regarding their preferences for the saving and investment products provided
by the banks that belong to the two sectors with the help of primary data, which is the
basic thrust of the present study.
Accepted: 28 November 2017
Available Online: 20 December 2017
Keywords
Banks,
Customers,
Products and Services,
PSB‟s and Private sector banks,
Prefernces, etc.
investment with the help of banks. When banks offer
handsome interest on savings, people can be induced to
direct their savings from wasteful activities to banks,
moreover the Government of India has now undertaken
many measures including better financial inclusion for
the economic reconstruction of the country. Banks can
generate an adequate volume of credit and supply it
along useful productive channels.
Introduction
Capital formation is the foremost requisite for
development in any country and especially so in a
developing country.
People need to channelize their surplus income into
saving products, which can be then converted into
25
Int.J.Curr.Res.Aca.Rev.2017; 5(12): 25-33
providing more and newer products to them, while the
PSBs are less efficient and not quite forthcoming in
extending new facilities to their customers. However,
there is also a general opinion that the public sector
banks are more secured compared to the private sector
banks, since the former are backed directly by the
Government, which provides a lot of satisfaction to their
customers. The PSBs score over the private sector banks
on one count, while the later score over the former on
another count. This calls for a close scrutiny from the
view point of customers regarding their preferences for
the saving and investment products provided by the
banks that belong to the two sectors with the help of
primary data, which is the basic thrust of the present
study.
Banking System in India
The banking system plays an important role in the
economic development of any country. It comprises of
the banking institutions functioning in the country and it
includes from the central bank to all banking institutions
which are functioning and providing financial facilities
to any developmental sector like agriculture, industries,
trade, etc. Under the Indian banking structure, central
bank in the name of the Reserve Bank of India (RBI)
regulates, directs and controls the banking institutions.
Separate institutions are functioning to meet the financial
requirement of different sectors of the economy.
Competition in the Banking Sector
After the reform process has been initiated in the banking
sector, many new private banks have been entered,
which are being called as New Age – Tech Savvy Banks
along with the foreign banks. This has clearly increased
the level of competition in the commercial banking
segment of the banking sector in the country. Though
private banks have been in operation even before 1991,
the arrival of new age banks have considerably altered
the picture. The public sector commercial banks which
did not face any serious competition in the pre – 1991
period, now compelled to pull up their socks to compete
with the new private banks. These New Age Tech Savvy
banks are quite aggressive in introducing the new
banking products, better service delivery and also
customer sastisfaction.
Objectives of the Study
To analyse the expansion of the sample banks from the
two sectors in India.
To analyse the products and services used by the
respondents from the selected banks in the study area.
To examine the preferences for the banking products by
the sample respondents.
Methodology of the Study
The main aim of this study is to examine the customer‟s
preferences for the various banking products being
offered by public and private sector banks in Chennai
city. For this purpose, three major public sector banks,
viz., State Bank of India (SBI), Punjab National Bank
(PNB) and Bank of Baroda (BoB) have been selected,
and from the private sector, ICICI Bank, HDFC Bank,
and Axis Bank, have been selected as the sample private
banks. The extent of expansion of the public and the
private sector banks in general and that of the six sample
banks at the All-India level have been examined with the
help of secondary data during the period 2000 – 01 to
2014 - 15. The choice of the customers for the banking
products provided by the public and private sector banks
have been gathered through a field survey.
Significance of the Problem
The reform process initiated in the banking sector in the
country has brought in the New Age private banks,
which are quite aggressive in their operation. They are
now playing a crucial role in attracting deposits from the
customers, providing advances to various sections of
society and thereby giving a tough competition to the
public sector banks (PSBs) not only in terms of quantity,
but also in terms of quality. The private sector banks
have brought in many new products like credit cards,
debit cards. ATMs, internet banking etc. The PSBs have
been forced to extend these facilities, which they are
struggling to do, since decision making takes time.
Private sector banks have also extending facilities like
share trading, commodity trading, saving and current
accounts and term deposits with new features. This has
led to the situation, where the customers now opine that
the private sector banks are aggressive and more tech
savvy in their operations in attracting customers and in
Sampling Design
The sampling technique used in this study is multi –
stage purposive sampling method. To begin with,
Chennai city has been purposively selected since all
major public and private sector banks operate in this city
and they provide all products and services. In the next
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Int.J.Curr.Res.Aca.Rev.2017; 5(12): 25-33
funds, mutual funds, Government investment bonds and
also share market.
stage, Adayar has been selected as the study area, since it
is one of the highly developed areas, both residential and
business term wise. The selected bank branches each
have more than 30,000 customers, though some of them
operate their account vary rarely. Hence, it was difficult
to determine the exact number of active accounts in each
and so, a proportionate sampling technique could not be
attempted. Thus a total of 300 customers each from the
Public and private sector banks have been selected as the
sample respondents and hence, a total of 600 respondents
form the sample size of the present study.
The table indicates that the number of commercial banks
in India has gone up quite considerably from 89 in 1969,
at the time of nationalization of banks to 222 in 2006, a
rise of around 150% cumulatively during the four
decades period. However, since then the number of
commercial banks has declined continuously to 151 in
2014, a decline by 32% in just eight years. The growth in
the number of scheduled commercial banks too has
witnessed a similar pattern, as its number has gone up
from 73 to 218 between 1969 and 2006, but has come
down to 146 in 2014. The number of regional rural banks
has decreased quite markedly from 133 to 57 in the last
eight years, witnessing a decline of 57%, which
underscores the fact that growing urbanization has been
reducing the necessity of rural banks in the country.
Analytical Tools Used In the Study
The following statistical tools have been used in this
study in order to analyse the secondary and primary data:
ratio analysis, charts and diagrams, summary statistics.
According to Athukorala and Jayasuriya (1994) (1),
individual‟s willingness to take financial risk is an
important factor in investment. Some are more security
motivated than others. Their security motivation is seen
in all phases of life, but is particularly apparent regarding
financial risk. Some are more risk oriented than others.
Their risk tolerance is seen in all phases of life, but it is
particularly apparent regarding financial risk.
The number of bank branches has grown quite
tremendously from 8262 in 1969 to 69471, a growth of
more than 740% for a period of four decades, signifying
the importance and success of nationalization of banks,
which had a main objective of increasing the rural spread
of the banking activities. The number of branches has
gone further up to 1,17,280 in 2014, a growth of more
than 68% in eight years. Hence though the number of
commercial banks has come down in the last eight years,
the number of bank branches has gone up in the same
period.
King and Levine (1994) (2), noted that savings become
investment particularly among those who earn
sufficiently higher. They expect some return from their
savings and thus, invest in such assets like bank or post
office deposits, and others. However, investment in land,
which involves huge amount, cannot take place among
all the households.
Deposit mobilized by the commercial banks has grown
from Rs.46 billion in 1969 to Rs.21090 billion in 2006,
which has produced a seven percent growth per annum
over the period, while it has gone up to Rs.79,134 billion
in 2014, which indicates a growth of 3.4% per annum
over the period.
Jha et al., (2009) (3), Opined that after financial
liberalization,
with
more
efficient
financial
intermediation, greater opportunities for diversification
across financial assets and market related returns,
financial savings has gained increasing importance.
Within financial assets, there has been a change in the
preference of saving instrument in recent years.
Thus, the deposit mobilized per bank branch has moved
up from Rs.5.6 million in 1969 to Rs.674.70 million in
2014. The credit extended by the commercial banks has
increased from Rs.36 billion in 1969 to Rs.61,390 billion
in 2014, which is 46% growth per annual over the
period. The contribution of the commercial banks can
further be understood when it is noted that the deposits
gathered by them as percentage of national income has
gone up from 15.5% in 1969 to 86.3% in 2014, while the
share of priority sector lending by the commercial banks
has also moved up from 15% to 35.7% in the same
period. This brings out the fact that the commercial
banks have grown over the period quite remarkably and
their contribution to the economy in terms of deposit
Jain (2011) (4), examined the preferences made by
investors among various saving and investment products
in Gujarat and found that there is a significant
relationship between the level of education and the
nature of products opted by investors, since those with
less education opted for the traditional products like chit
funds, private finance, gold and silver, while those with
higher education opted for modern products like pension
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Int.J.Curr.Res.Aca.Rev.2017; 5(12): 25-33
transactions through their mobile phone and it also offers
a hassle free service. A total of 239 respondents make
use of net banking which include 84 (35.1 per cent)
belonging to the public sector banks and 155 respondents
(64.9 per cent) from the private sector banks, which
again reiterates the fact that the use of technology based
mode of banking is higher among the respondents who
are associated with the private sector banks than in the
case of public sector banks.
mobilization, lending in general and also to the priority
sector has also been quite significant.
It is observed from the table that the Market share of the
selected banks in terms of their deposits indicates that the
highest share is held by SBI with 17.6% which is
followed by 7.2% in case of BoB and 5.7% in the case of
Punjab National Bank. However, in the case of private
sector banks, none of them could reach more than 5%
market share, as 4.6% for HDFC Bank, 4.2% for Axis
Bank and 3.5% for ICICI Bank. This suggests that the
three PSB‟s jointly account for 30.5% of the total market
share in terms of their deposits. The net interest margin
(NIM) earned by the banks is an important indicator in
understanding their capacity, since banks are now
allowed to fix their own rate of interest for both deposits
and lending. The table shows that the Tier I capital
adequacy ratio is quite higher in the case of the private
sector banks compared to that of the public sector banks.
All the public sector bans have a ratio of less than 10%,
while it is 14.1% in the case of ICICI Bank, 13.5% for
HDFC Bank and 10.2% for Axis Bank. This is not
surprising given the fact that public sector banks depend
on the Government to strengthen their capital adequacy,
while it is not so in the case of the private sector banks.
This makes the latter to be much safer in terms of their
capital adequacy as mandated by the RBI.
This underscores the technological advancement of the
private sector banks over that of the public sector banks,
since the customers opine that the former provides a
better and faster and also a safer service without any
glitches compared to that of the public sector banks.
Locker facility is another service being offered by the
banks, which is used by 325 respondents, which consist
of 194 (59.7 per cent) who are linked with the public
sector banks and 131 respondents (40.3 per cent) who are
associated with the private sector banks. Hence, the use
of locker facility is more in the case of those who hold
their accounts with the public sector banks than in the
case of the private sector banks, as the respondents view
that the charges need to be paid for locker facility is less
in the case of the former than in the case of the latter and
it is also opined that the former is much safer.
Money transfer is another facility which has been
introduced by the banks of late, through which customers
can transfer money to recipients without any paper work
from their bank branches, apart from the mobile and net
banking facilities. This is done with the help of debit
cards issued by the banks, which eases the way in which
the transaction is carried out. Among the respondents,
338 indicate that they make use of this facility, in which
129 (38.2 per cent) are from the public sector banks,
while the remaining 209 respondents (61.8 per cent) are
from the private sector banks. Moreover, cash deposit
machines are also now used, like cash withdrawal
machines by the banks in order to reduce the waiting
time of their customers. This again underscore the
dominance of the private sector banks, which first
introduced the use of debit cards and has reduced the use
of cheque books and thus quite eco-friendly in nature.
Preferences For The Products & Services Used By
The Respondents
The sample respondents make use of various products
and services that are provided by the selected banks in
the study area. All banks provide almost all products and
services, though not all of them are used by all
customers. Moreover, the extent of preferences for the
products and services also stem from the level of
satisfaction and safety enjoyed by the customers from the
same. Thus, it is quite important to understand the nature
of products and services being used by the respondents,
which is done in this section. Table 3 presents the sector
wise preferences of the respondents for the products and
services used by them.
It is inferred from the table that a total of 133
respondents prefer using mobile banking, which consists
of 41 (30.8 per cent) from the public sector banks and 92
(69.2 per cent) from the private sector banks. Thus, the
use of mobile banking is more among the respondents
who hold their accounts in the private sector banks than
in the case of the public sector banks, since the former
feel more secure and safe in carrying out their banking
The savings account facility too has now become more
futuristic with many facilities and the current account
facility also provides important add-on benefits like
over-draft. While saving account facility is more used by
those who are associated with the public sector banks,
the current account facility is more used by those who
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Int.J.Curr.Res.Aca.Rev.2017; 5(12): 25-33
latter. The service minded nature of the public sector
banks is more evident in these facilities compared to the
private sector banks, which are driven more by profit
earning.
are linked with private sector banks. Similarly, the use of
term deposits like the RD and FD are used more by the
customers who belong to the public sector banks than
that of the private sector banks, since they opine that the
former provide a better rate of interest than that of the
Table.1 Commercial Banks in India at a Glance, 1969 to 2014
Important Indicators
1969 2006 2007 2008 2009 2010 2011 2012 2013 2014
No. of Commercial Banks
89 222 183 175 170 169 169 173 155
151
(a) Scheduled Commercial Banks
73 218 179 171 166 165 165 169 151
146
Of which: Regional Rural Banks
133 96
91
86
82
82
82
64
57
(b) Non-Scheduled Comm. Banks
16 4
4
4
4
4
4
4
4
5
Number of Offices of Scheduled
8262 69471 71839 76050 80547 85393 90263 98330 105437 117280
Commercial Banks in India
(a) Rural (in %)
22.2 44.0 42.5 40.9 39.3 38.2 37.3 37.0 37.2 38.5
(b) Semi-Urban (in %)
40.5 22.4 22.8 23.2 23.6 24.3 25.3 26.2 26.7 26.8
(c) Urban (in %)
19.2 17.3 18.1 18.9 19.5 19.9 19.4 19.1 18.9 18.3
(d) Metropolitan (in %)
18.2 16.3 16.6 17.0 17.6 17.6 18.0 17.7 17.2 16.4
Population per office (in thousands)
64 16
15
15
14.5 13.8 13.4 12.3 11.9 10.8
Deposits of Scheduled Commercial Banks in India
46 21090 26119 31969 38341 44928 52080 59091 69343 79134
(Rs. Billion)
of which: (a) Demand
21 3646 4297 5243 5231 6456 6417 6253 7672 8272
(b) Time
25 17444 21822 26726 33110 38472 45663 52838 61671 70862
Credit of Scheduled Commercial Banks in India
36 15071 19312 23619 27755 32448 39421 46119 53932 61390
(Rs. Billion)
Deposits of Scheduled Commercial Banks per
5.6 303.6 363.1 420.4 476 526.1 577 600.9 657.7 674.7
office (Rs. Million)
Credit of Scheduled Commercial Banks per office
4.4 216.9 268.5 310.6 344.6 380 436.7 469 511.5 523.5
(Rs. Million)
Per Capita Deposits of Scheduled Commercial
88 19276 23468 28327 33471 38062 43034 48732 55445 62252
Banks (Rs.)
Per Capita Credit of Scheduled Commercial Banks
68 13774 17355 20928 24230 27489 32574 38033 43123 48294
(Rs.)
Deposits of Scheduled Commercial Banks as
15.5 73.8 79.1 84.4 88.1 86.6 82.3 81.1 84.0 86.3
percentage of National Income
Scheduled Commercial Banks' Advances to
5
5468 7038 8248 9674 11384 13373 14909 18180 21549
Priority Sector (Rs. Bill.)
Share of Priority Sector Advances in
Total Credit of Scheduled
14 37.2 36.5 34.9 34.8 35.1 33.9 32.3 33.7 35.1
Commercial Banks (per cent)
Share of Priority Sector Advances in
Total Non-Food Credit of Scheduled
15 38.2 37.4 35.6 35.4 35.6 34.5 32.9 34.3 35.7
Commercial Banks (per cent)
Credit Deposit Ratio
77.5 71.5 73.9 73.9 72.4 72.2 75.7 78
77.8 77.6
Investment Deposit Ratio
29.3 35.5 30.3 30.4 30.4 30.8 28.8 29.4 28.8 28.3
Cash Deposit Ratio
8.2 6.6 7.5 8.6 6.7 6.8 6.7 6.1 5.6
5.4
Source: Indian Banking Sector at a Glance, Reserve Bank of India, Mumbai, 2014-15.
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Table.2 Important Indicators of the Selected Banks, 2014-15
Bank
State Bank of India
Punjab National Bank
Bank of Baroda
ICICI Bank
HDFC Bank
Axis Bank
Market Share (%)
17.6
5.7
7.2
3.5
4.6
4.2
NIM (%)
3.2
3.1
3.0
2.7
3.6
4.1
Tier I Capital (%)
9.6
9.2
9.9
14.1
13.5
10.2
RONW (%)
11.3
24.2
24.6
11.5
17.3
16.9
Gross NPA (%)
4.2
2.1
1.6
4.1
1.3
1.3
Source: Balance Sheet of the respective banks, 2014-15.
Table.3 Sector-wise Products and Services used by the Respondents from the Selected Banks
Products and
Services
Mobile banking
Net banking
Locker facility
Money transfer
Savings account
Current account
Term deposits
Demat account
OD facility
Sector
Public Sector
No.
41
84
194
129
262
49
248
24
86
Total
Private Sector
No.
%
92
69.2
155
64.9
131
40.3
209
61.8
234
47.2
79
61.7
173
41.1
53
68.8
124
59.0
%
30.8
35.1
59.7
38.2
52.8
38.3
58.9
31.2
41.0
No.
133
239
325
338
496
128
421
77
210
%
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
Source: Computed from primary data.
Table.4 Sector-wise Ranking of Reasons for Banks‟ Preference by the Respondents
Rank
1
2
3
4
5
6
7
8
9
10
11
12
13
1
2
3
4
5
6
7
8
9
10
11
12
13
Reasons
Public Sector Banks
Reliability
Rate of Interest
Banking charges
Access to banks
Overdraft facility
ATM network
Anytime Banking
Working efficiency
Use of technology
Quick completion of work
Security of sites
Approach of bank staff
Working hours
Private Sector Banks
Use of technology
Working efficiency
Working hours
Approach of bank staff
Security of sites
Anytime Banking
Quick completion of work
ATM network
Overdraft facility
Access to banks
Reliability
Rate of Interest
Banking charges
Mean
SD
Min
Max
3.286
3.756
4.365
4.965
5.625
6.146
6.829
7.334
7.904
8.650
9.457
9.886
10.324
4.325
4.962
5.462
5.887
6.134
6.867
8.104
8.668
9.128
9.799
10.658
11.865
13.462
1
1
2
3
4
4
5
4
6
5
7
7
8
3
4
4
5
6
7
8
9
10
12
12
13
13
3.270
3.892
4.780
5.440
6.211
6.811
7.782
8.357
9.014
9.296
10.016
10.409
10.732
4.234
4.823
5.334
5.732
6.035
6.732
7.865
8.425
9.117
9.886
10.896
12.235
13.762
1
2
3
4
6
5
7
9
8
8
9
10
11
2
4
5
7
8
9
10
11
12
13
12
13
13
Note: SD – Standard Deviation. Source: Computed from field survey data.
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Sampling Design
Public Sector
Bank of Baroda
Punjab National Bank
State Bank of India
Total
No. of Sample Respondents
80
90
130
300
Private Sector
ICICI Bank
HDFC Bank
Axis Bank
Total
No. of Sample Respondents
120
95
85
300
the first rank is „use of technology‟ and it is followed by
„working efficiency‟ and „working hours‟ for the third
rank. This clearly underlines the fact that the reasons that
attract the respondents for their preference for the banks
differ among them.
Demat account facility is of recent origin, which has
become a reality with the SEBI allowing the transaction
of shares in electronic form. This allows the customers to
buy, sell and hold their shares in both primary and
secondary markets through internet facility. The private
sector banks started to provide such facility, which is
now also being done by the public sector banks. The data
indicate that 77 respondents make use of such facility,
which includes 24 (31.2 per cent) from the public sector
banks and the remaining 53 respondents (68.8 per cent)
from the private sector banks. This suggests that the
facilities like locker facility, savings account and term
deposits used more by those who are associated with the
public sector banks, while in the case of other facilities
like mobile banking, net banking, money transfer,
current, demat and OD facility is used more by those
who are linked with the private sector banks than in the
case of the public sector banks.
It is noted that in the case of the public sector banks, the
first rank is attained by „Reliability‟ by the respondents
with a mean value of 3.286, since the respondents opine
that the public sector banks are more reliable, as they are
directly backed by the Government and they view that
their hard earned money is quite safe and secure with the
public sector banks. Even at the times of any eventuality,
respondents opine that the Government will vouch them
safe. The standard deviation value of 4.325 indicates that
the variation in the values of rank given by the
respondents do not deviate much. Moreover, the rank
ranges from a low of 1 to a high of 3. Thus, the
respondents have given the highest rank to the reliability
of the public sector banks as the foremost reason for
preferring them.
Ranking The Reasons For Bank’s Preferences by the
Respondents
This is followed by, „rate of interest‟ as the second
preferred reason for the selection of the public sector
banks with a mean value of 3.756 and a standard
deviation value of 4.962. It ranges from a low of 1 to a
high of 4. This underlines the fact that the public sector
banks which are regulated by the RBI and have the social
responsibility to serve the society, provide better rate of
interest for the savings and investment made by the
customers, while the interest charged by them for the
loans taken by the customers is also quite competitive.
This has made the respondents to assign the second rank
to this reason for their preference of the public sector
banks.
The respondents prefer the banks between the public
sector and private sector depending on various reasons
and obviously these reasons vary among them. For this
purpose, the respondents have been asked to rank the
reasons for the choice of their banks. In this section,
these ranks are analysed on the basis of the ranks given
by them. The mean, standard deviation, minimum and
maximum values have been calculated on the basis of the
ranks given by them. The reason which receives the least
rank is the most important reason for the choice of the
bank. Moreover, these mean ranks are calculated
separately for the two sectors and Table – 5.16 presents
the sector-wise summary statistics of the ranks given by
the respondents for the reasons for their preferences.
Charge levied by the public sector banks for various
services and products rendered by them, the respondents
opine is the third most important reason for the
preference given to the public sector. It has attained the
mean score of 4.365 with a minimum of 2 and a
maximum rank of 4 and hence, the standard deviation
value is 5.462. As noted above, the public sector banks
are driven more by their social commitment, which
A cursory glance at the table indicates that the ranks
given to each of the reason differs between the public
sector banks and private sector banks, depending on their
mean values. For instance, in the case of the public
sector banks, „reliability‟ attains the first rank, followed
by „rate of interest‟, and „banking charges‟, while in the
case of the private sector banks, the reason which attains
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makes them to charge reasonably, which is preferred
mostly by the respondents.
enabled the private sector banks to attain better working
efficiency, which attracts the customers to this sector.
The third rank is attained by „working hours‟ since it has
the mean score of 4.780 with a standard deviation value
of 5.334 and the rank ranges from 3 to 5. The private
sector banks work for longer hours compared to the
public sector banks, which do not work beyond 4.00 PM
in the evening. The longer working hours being offered
by the private sector banks enable their customers to
carry out their banking activities even in late hours and
they quite enjoy such facility.
„Access to banks‟ is given the fourth rank by the
respondents as the reason for preferring the public sector
banks with a mean score of 4.965 and a standard
deviation value of 5.887 and it ranges from a low of 3
and a high of 5, which underlines the fact that there is
less variations in the opinions given by the respondents.
This suggests that the opinions given by the public sector
bank customers rank access to the banks as the important
reason for preferring them. This is followed by other
reasons like, „overdraft facility‟ with a mean score of
5.625 with a minimum value of 4 and a maximum value
of 6; the „ATM network‟ of the public sector banks has
attained the sixth rank with a mean value of 6.146 and its
low rank is 4 and the high rank is 7; „anytime and
anywhere banking‟ has given the seventh rank with a
mean score of 6.829 and its standard deviation value is
8.104; the reasons that succeed are: „working efficiency‟
with the mean value of 7.334 for the eighth rank; „use of
technology‟ for the ninth rank with a mean score of
7.904; tenth rank is attained by „quick completion of
work‟ as it has taken the mean value of 8.650; „security
of the websites‟ of the public sector banks has attained
the 11th rank and its mean value is 9.457; „approach of
bank staff‟ with a mean score of 9.886 has taken the 12th
rank and finally, „working hours‟ has taken the 13th rank
with a mean value of 10.324 and its rank ranges from a
low of 8 to a high of 13. Thus, the last three ranks have
been give to the reasons like security of websites of the
public sector banks, approach of their staff members and
their working hours, since they are least preferred
reasons, as opined by the respondents.
The respondents opine that approach of the staff
members in the private sector banks is quite courteous
and responsive, which enable them to complete their
banking transactions quite quickly and efficiently. Thus,
this reason has attained the mean value of 5.440 for the
fourth rank and it ranges from a low of 4 to a high of 7
and this has resulted in the standard deviation value of
5.732.
„Security of the websites‟ has attained the fifth rank with
a mean value of 6.211 and it ranges from a minimum
rank of 6 and a maximum rank of 8; the sixth rank is
taken by „anytime and anywhere banking‟ since its mean
score stands at 6.811 and it is followed by reasons like
„quick completion of work‟ for the seventh rank with a
mean value of 7.782, „ATM network‟ for the eighth rank
as its mean score is 8.357; „overdraft facility‟ stands at
the ninth position with a mean value of 9.014; „access to
banks‟ is ranked tenth, since its mean score is 9.296;
„reliability‟ has taken only the 11th rank, since the
respondents opine that the private sector banks are not as
dependable as the public sector banks, as they do not
have the direct backing of the Government, even though
they are regulated by the norms of the RBI; „rate of
interest‟ has taken a mean value of 10.409 for the 12th
rank, while the final rank is attained by „banking
charges‟ with a mean score of 10.732. Hence, the rate of
interest and the charges levied by the private sector
banks, which are driven by their profit motive are more
for all transactions. Hence, the ranking of the reasons for
preferring the two sectors by the respondents indicates
that in the case of the public sector banks, the top three
reasons are: reliability, rate of interest and banking
charges, which are more preferred, while the least
preferred reasons are: security of websites, approach of
bank staff and working hours. On the other hand, in the
case of the private sector banks, the three foremost
reasons are: use of technology, working efficiency and
working hours, while the least preferred reasons are:
reliability, rate of interest and banking charges.
In the case of the private sector banks, the foremost
reason for preferring them is „use of technology‟ as it has
taken the lowest mean value of 3.270 with a standard
deviation value of 4.234, which underscores the
minimum variation in the opinions, since it ranges from a
low of one to a high of two. The respondents opine that
the use of technology in various spheres of the banking
activities of the private sector has enabled it to become
the most preferred sector from their view point. This
enables them to carry out their banking transactions in a
quicker and better manner.
„Working efficiency‟ of the private sector banks has
taken the second rank with a mean value of 3.892 and it
ranges from a minimum of 2 to a maximum of 4 and
thus, it standard deviation is 4.823. The use of
technology along with efficient staff members has
32
Int.J.Curr.Res.Aca.Rev.2017; 5(12): 25-33
This study analysed the growth of the banking sector in
India, products and services offered by the public sector
and private sector banks to their customers, the degree of
preferences for the same, the level of satisfaction derived
by them and the reasons that influence their level of
satisfaction.
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While it is true that the public sector banks play a far
more important role in mobilising deposits from the
public and lending to the most important sectors like
agriculture, small traders, businessmen, emerging areas
like green energy, etc., they also suffer from the political
intervention in the form of shortage of manpower and
growing NPAs. Hence, they are not able to compete with
the private sector with all their vigour and vitality; it
seems they are competing with one hand tied. However,
the public sector banks are still able to post sizeable
growth in terms of deposits, investments, advances,
interest income and also net profit, though the rate of
growth is quite less.
It is also noted from the analysis that the political burden
and lack of adequate middle level and top level officials
in the public sector banks hamper their way of
functioning and they are not able to have sufficient
capital in order to have the level of technology they
would like to have otherwise. Hence, this study shows
that respondents prefer the new products and services
offered by the private sector banks, which are mostly
technology oriented and also the kind of security they
provide for online transaction. While it is true that the
rate of interest and the bank charges by the private sector
banks are higher compared to that of the public sector
banks, the former also lack similar reliability that
enjoyed by the latter.
The private sector banks willingly enter new areas,
markets and also bring in more customers and play quite
aggressively, which has resulted in their higher growth
rate of deposits, interest income and also profit. Hence,
the private sector banks need to get the confidence of the
customers in terms of their dependability and reliability,
while the public sector banks have to put in advanced
technology regime, which requires sufficient political
support that will result in a level playing field between
the two sectors.
How to cite this article:
Nirmal Kumar K. S. 2017. Customer Preferences for Banking Products between Private and Public Sector Banks in
Chennai City. Int.J.Curr.Res.Aca.Rev. 5(12), 25-33. doi: https://doi.org/10.20546/ijcrar.2017.512.004
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