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Qtbd project Qtbd project Document Transcript

  • PGDM 2011-13By-Sonam Khare (2011197)Vibhor Arora(2011224)Urvashi Soni(2011212)Sagar Welekar (2011236)QTBD Project: Group No 7(Sec E)<br />Contents TOC o "1-3" h z u Banking industry overview PAGEREF _Toc303880107 h 2Overview of State Bank of India PAGEREF _Toc303880108 h 3Objectives of the study PAGEREF _Toc303880109 h 4Methodology PAGEREF _Toc303880110 h 4Analysis and findings with implications PAGEREF _Toc303880111 h 4Conclusion and scope for further study PAGEREF _Toc303880112 h 8Bibliography PAGEREF _Toc303880113 h 8<br />Banking industry overview<br />Banking Regulation Act of India, 1949 defines Banking as "accepting, for the purpose of lending or investment of deposits of money from the public, repayable on demand or otherwise and withdrawable by cheques, draft, and order or otherwise." To put it in layman's terms, a bank is a financial institution primarily engaged in the business of borrowing and lending. The Reserve Bank of India (RBI) is the apex body or ombudsman of banking in India. Among various functions, RBI's role is also to prescribe broad parameters of banking operations, within which the country's banking system functions. The ombudsman is also responsible for protecting depositor's interest by framing relevant policies and by maintaining accounts of the bank. RBI also has to make sure that the banking services remain cost-effective. <br />RBI data shows that in all there are 239 banks operating in India with nearly 75,000 branches and 35,000 ATMs across the country. As on March 2008, the deposits at commercial banks stood at Rs. 30, 75,224 crores, and as projected by RBI, this will touch Rs. 57, 50,000 crores by 2010. <br />Details of Banking Industry <br />India's first commercial bank, Bank of Hindustan was incorporated in 1870. India's touch with modern commercial banking came only after RBI was set-up in 1921. The year 1949 was significant one as this was the year in which Banking Regulation Act 1949 was passed by Government of India imparting RBI powers to supervise and control banks in India. <br />Today banking industry in India is divided into two categories viz. Commercial Banks and Co-operative Banks. The commercial banking sector is further sub-divided into Scheduled Commercial Banks (SCB, banks which meet certain criterion are laid by RBI) and Unscheduled Commercial Banks. Public Sector Banks, Private Banks and Foreign Banks all come under SCBs. <br />Primary Urban Co-op Banks, Primary Agricultural Credit Societies, District Central Co-op Banks, State Co-operative Banks and Land Development Banks all fall under the umbrella of Co-operative banks. Each of these banks differs in type of business they do, target customers and level of operations. <br />Overview of State Bank of India<br />State Bank of India (SBI) is the largest Indian banking and financial services company (by turnover and total assets) with its headquarters in Mumbai, India. It is state-owned. The bank traces its ancestry to British India, through the Imperial Bank of India, to the founding in 1806 of the Bank of Calcutta, making it the oldest commercial bank in the Indian Subcontinent. Bank of Madras merged into the other two presidency banks, Bank of Calcutta and Bank of Bombay to form Imperial Bank of India, which in turn became State Bank of India. The government of India nationalized the Imperial Bank of India in 1955, with the Reserve Bank of India taking a 60% stake, and renamed it the State Bank of India. In 2008, the government took over the stake held by the Reserve Bank of India.<br />SBI provides a range of banking products through its vast network of branches in India and overseas, including products aimed at non-resident Indians (NRIs). The State Bank Group, with over 16,000 branches, has the largest banking branch network in India. SBI has 14 Local Head Offices and 57 Zonal Offices that are located at important cities throughout the country. It also has around 130 branches overseas.<br />With an asset base of $352 billion and $285 billion in deposits, SBI is a regional banking behemoth and is one of the largest financial institutions in the world. It has a market share among Indian commercial banks of about 20% in deposits and loans. The State Bank of India is the 29th most reputed company in the world according to Forbes. Also SBI is the only bank featured in the coveted "top 10 brands of India" list in an annual survey conducted by Brand Finance and The Economic Times in 2010.<br />The State Bank of India is the largest of the Big Four banks of India, along with ICICI Bank, Punjab National Bank and HDFC Bank—its main competitors.<br />Objectives of the study<br />The objective of our study is to -<br />
    • Compare the consistency of the dividend yield of the five banks (SBI, ICICI, PNB, HDFC, and AXIS) for the last 9 years, on the basis of Coefficient of Variation.
    • Study the claim whether the growth rate of share of SBI (Over the period of last 9 years) is different from that of BANKEX growth rate.
    • Study whether on an average, the Dividend Yield (over the period of last 7 years) of five Banks considered for study is equal or not by using ANOVA.
    Methodology <br />In our study, we have used the following concepts of statistics <br />Descriptive Statistics<br />
    • Mean
    • Media
    • Mode
    • Standard deviation
    • Coefficient of Variation
    Inferential Statistics<br />For Hypothesis Testing following methods were used-<br />
    • t-test
    • ANOVA test
    Analysis and FINDINGS WITH implications<br />Descriptive Statistics<br />Axis BankMeanMedianStd DeviationVarianceCoeff. Of Variation1.246251.0150.5450020.29702743.73133%     HDFC BankMeanMedianStd DeviationVarianceCoeff. Of Variation3.87753.6250.7172520.5144518.49779%ICICI BankMeanMedianStd DeviationVarianceCoeff. Of Variation1.821.4350.7733050.59842.48929%Punjab National BankMeanMedianStd DeviationVarianceCoeff. Of Variation2.272.0151.1288171.27422949.72764%<br />From the above results, it is clear that the dividend yield for PNB over a period of last 9 years is least consistent and that of HDFC Bank is most consistent amongst all the five banks taken for study. <br />Inferential Statistics<br />t - test <br />To see whether on an average in the last 9 years the growth rate of share price of SBI isdifferent from that of BANKEX growth rate (i.e. industry growth rate)         Average growth rate of BANKEX(banking sector index) = 36.25%NULL HYPOTHESIS H0: µ= 36.25%ALTERNATIVE HYPOTHESIS H1: µ≠ 36.25%LET LEVEL OF SIGNIFICANCE : α=5%SAMPLE SIZE = 9STANDARD ERROR ẋ=16.34 TEST STATISTIC t = 33.361 - 36.25 / 16.33 = -0.177TABULATED VALUE te= 2.306INFERENCE : Since absolute value of test statistic is less than the tabulated value. So  with 5% level of significance we cannot reject the null hypothesis and conclude that on an average the growth rate of share price of SBI is not significantly different from that of BANKEX growth rate (industry growth rate).     <br />ANOVA Test<br />YEARHDFC Bank LtdAXIS BANK LtdICICI Bank LtdSBIPNB2011033.5211.261.081.82010033.11.031.261.442.172009035.172.413.312.724.872008033.220.771.431.342.562007033.690.921.171.492.122006033.560.981.441.531.912005034.131.162.162.021.5326.398.2712.0311.6216.96NULL HYPOTHESISH0:µ1=µ2=µ3=µ4ALTERNATIVE HYPOTHESISH1:µ1≠µ2≠µ3≠µ4LET SIGNIFICANCE LEVEL α = 5%GRAND TOTAL75.27CORRECTION FACTOR161.87RAW SUM OF SQUARES208.11RSSTOTAL SUM OF SQUARES46.24TREATMENT SUM OF SQUARES28.45ERROR SUM OF SQUARES ESS17.79<br />ANOVA TableSOURCES OF VARIATIONDegree Of FreedomSum of SquaresMean Sum of SquaresF RatioDifferent company policies428.457.1112.05Error3017.790.59          TEST STATISTIC =12.05TABULATED VALUE =2.69     Since test statistic is greater than the tabulated value so with 5% level of significance, we can reject the null hypothesis and conclude that the mean Dividend Yield for these five banks during the given period is not equal.<br />CONCLUSION AND scope for further study<br />
    • From the given study we saw that the growth rate of share of SBI (Over the period of last 9 years) is not very significantly different from that of BANKEX growth rate. Thus we can say that SBI is doing well according to the industry standards
    • Also we saw that the dividend yield for HDFC over a period of last 9 years is least consistent and that of PNB is most consistent amongst all the five banks taken for study
    • At the same time on an average, the Dividend Yield (over the period of last 7 years) of five Banks considered for study is not equal.
    Bibliography<br />Given below are the web sources from where we have collected secondary data for our study purpose...<br />
    • http://capitaline.com
    • http://www.bseindia.com
    • http://www.moneycontrol.com
    • Statistics for business and Economics: By Anderson, Sweeney, Williams