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Analysis and Findings of SBI an Evaluation of Performance Compare To Other Indian Banks

Critical Appraisal of Literature

       The service quality as well as its dimensions perceptions are concerned by the major analysis and questioning areas such as assurance, reliability, empathy, tangibility and responsiveness. On the seven point scale of strongly agree to strongly disagree, the perceptions are measured. For ICICI and SBI banks, among the banks and its respective customer’s service quality perceptions, mean differences are calculated individually. In below tables, the results are represented which are acquired from this computation.  

Analysis of Data

          Generally along with their respective customer’s, service quality presents an extensive perceptual difference between Indian (public sector) banks but in private banks an assumed perceptual difference is constricted this whole analysis is shown in the below table.

Table: Comparative perceptions of banks and their Respective Customers about Overall service Quality in Banks.

SERVQUAL Dimension State Bank ofIndia ICICI Bank
Group Mean Group Mean
Overall Service BO 133.52 BO 142.62
Quality BC 113.86 BC 137.36

Through the quality of service which seems by their respective customers, SBI distribute the most important differences in quality of service this is explained by SBI’s (20.68) high mean difference.

         Banks distribute the service quality, for example, particular customer expectations are not coordinated by SBI.  For customers to distribute the quality of service ICICI bank is also below its assessment, however comparing ICICI with SBI the perceptual difference of ICICI is narrow (4.91).

 Findings from Analysis:

   Tangibility: In the table below, in the perceptions of ICICI and SBI Banks a large difference was brought to light by the data on tangibles through their relevant customers. While SBI by means of a large mean difference of 5.28 falls much below the customer’s perceptions on the dimension of quality of service, the date informs that banks like ICICI are exceeding their relevant customer’s perceptions. Between the banks such as SBI as perceived by their relevant customers a serious loss of perceptions were shown by the study of tangibility’s element wise on physical facilities and up to data equipments available in the bank. 

Table: Comparative Perceptions of Banks and their Respective Customers about Tangibility

S. No.         SERVQUAL                                 Dimension            State Bank ofIndia     ICICI Bank
     Group        Mean Group Mean
 

1

  

Up to date equipment

 BO 5.63 BO 6.24
BC 4.10 BC 6.53
 

2

  

Physical facilities

 BO 5.35 BO 6.28
BO 3.47 BC 6.58
 

3

  

Neatness of employees

 BO 6.16 BO 6.97
BC 5.18 BC 6.95
 

4

  

Communication material

 BO 5.99 BO 6.31
BC 5.11 BC 6.89
  Tangibility (1  2   3  4) BO 23.13 BO 25.79
BC 17.84 BC 26.93

Note: BO and BC denotes Bank officials and Bank customers respectively.

Bank   SBI ICICI
Numbers BC 75 75
BO 30 30

 Reliability: In the SBI perceptions, an important difference was shown by the study of quality of service of reliability dimension through their relevant customers. In distributing the services of a quality, SBI illustrates that they fall below the customer’s expectations, while ICICI bank in this dimension is going beyond their customer’s perceptions. It is being shown by the element wise study of reliability that as far as being sincere and keeping promise in solving the problems are concerned, SBI is found to be far below their relevant customer’s perceptions.   

Responsiveness: Upon the service quality responsiveness dimension, there are important perceptual differences with their customers where the data is brought into consideration in the below table. The perceptions of bank customers are far below on supposed dimension which is shown through high mean difference of SBI (3.65). Among its customers and ICICI bank, the perceptual difference is narrow (0.66) on supposed dimension. Below the perceptions of their customers, SBI is falling on employees by offering prompt services in case of element wise analysis of this dimension .

 Table: Comparative Perceptions of Banks and their Respective Customers about Responsiveness

S. No.        SERVQUAL Dimension State Bank ofIndia ICICI Bank
Group Mean Group Mean
1 Telling customers exactly when the services will be performed BO 6.11 BO 6.21
BC 5.39 BC 6.33
2 Employees providing prompt service to customers BO 5.86 BO 6.21
BC 4.65 BC 6.11
3 Employees who are always willing to help

 

 BO 6.10 BO 6.79
BC 5.18 BC 6.33
4 Employees who are never too busy to respond to customers requests BO 5.31 BO 6.28
BC 4.52 BC 6.04
5 Responsiveness (10 11 12 13) BO 23.38 BO 25.48
BC 19.73 BC 24.81

 Note: BO and BC denotes Bank officials and Bank customers respectively

Bank   SBI ICICI
Numbers BC 75 75
BO 30 30

  Assurance: Apparently from the mean difference, among its customers and ICICI the perceptual difference is high. Regarding the assurance dimension to the bank, the persons of SBI specified a low rating. The perceptions of SBI customers are exceeded by ICICI in case of feeling safe and trust worthiness in transacting with the concern bank.

Empathy:  Regarding the quality services delivery, the SBI banks move away from their customers which are revealed in the table of data analysis. Apparently from the high mean difference (5.50), a large gap is existed among the perceptions of banks like SBI and their customers. Below the perceptions of their customers (4.09), the ICICI is declining on this dimension. 

 Table 5: Comparative perceptions of Banks and their Respective Customers about Empathy

S. No. SERVQUAL Dimension State Bank ofIndia ICICI Bank
Group Mean Group Mean
1 Bank  that gives individual attention BO 6.02 BO 6.28
BC 5.28 BC 6.29
2 Convenient operating hours BO 6.23 BO 7.00
BC 4.85 BC 6.88
3 Employees who give personal attention BO 6.16 BO 6.21
BC 5.17 BC 6.06
4 Bank which has your best interests at least BO 6.24 BO 6.62
BC 4.99 BC 5.15
5 Employees who understand specific needs of the customer BO 5.98 BO 6.62
BC 4.84 BC 5.15
6 Empathy (18  19  20  21 22) BO 30.63 BO 33.10
BC 25.13 BC 29.02

 Note: BO and BC denotes Bank officials and Bank customers

Bank   SBI ICICI
Numbers BC 75 75
BO 30 30

 Interpretation: 

  1. What is your occupation? 
House wife 9
Student 0
Business man 15
Government Employee 22
Other 0

 Interpretation: – The pupils here are Housewives, students, Businessman, Government employees and other. The total number of people is 46. In that housewives are of 9, Students are 0, Businessman is of 15 and Government employees are of 22. And to the category of others, no one of the people is belonged. Finally four of the persons do not answer. 

  1. Since how many years you are related with SBI bank?
1-5 years 24
More than 5 12
Less than 1 year 10

 Interpretation:  In total 46 persons, less than one year 10 persons are connected with bank, from more than five years 12 persons are connected with bank and since one to five years 24 persons are connected with bank.

  1. How do you come to know about the home loan schemes of SBI bank?
Internet 10
Television 14
Newspaper 18
Other resources 4

 Interpretation:  Out of 46 persons, from internet, television, newspaper and other resources nearly 10, 14, 18 and 4 persons respectively came to know about the bank. 

4. Are you aware of these types of home loans? 

Home equity loan 4
Land purchase loan 9
Home construction loan 6
Home purchase loan 9
Home improvement loan 18

 Interpretation:  Regarding the Land purchase loan only 9 persons knew, Home equity loan only 4 persons knew, Home purchase loan only 9 persons knew, Home improvement loans 6 persons knew and finally about Home construction loan nearly 18 persons knew out of 46 persons.

 5. Are you aware all terms and conditions of home loans?

No 6
Yes 40

 Interpretation:  Except 6 persons nearly 40 persons knew about all home loan terms as well as conditions out of 46 persons.

 6. Are you satisfy with the interest rate charges by your bank? 

Agree 30
Disagree 4
Strongly agree 12
Strongly disagree 0

 Interpretation:  The total number of persons is 46. Out of these persons, the bank interest rate is agreed by 30 consumers, disagreed by 4 consumers, strongly agreed by 12 consumers and none of the consumers did not disagreed with it strongly. 

7. Which type of services is offered by your bank?

Net banking 15
Forex banking 7
Mobile banking 24

 Interpretation:   From 46 persons, 15 persons say that the bank presents net banking services, 24 person’s state that it presents mobile banking services but only 7 persons assumed that it presents forex banking services.

8. Your bank loan processing is fast, do you agree that? 

Agree 26
Disagree 9
Strongly agree 8
Strongly disagree 3

 Interpretation: Out of 46 persons, the bank processing is fast is agreed by 26 persons, disagreed by 9 persons, strongly agreed by 8 persons and strongly disagreed by 3 persons.

9. When compared to other banks, do you satisfy with the after home loan services offered by your bank are best?

Agree 30
Disagree 4
Strongly agree 12
Strongly disagree 0

 Interpretation:  The total number of persons is 46. In those persons, after sale the bank services are agreed by 30 consumers, disagreed by 4 consumers, strongly agreed by 12 consumers and strongly disagreed by none of the consumers. 

10. According to your demand does the home loan cost is appropriate? 

No 13
Yes 33

 Interpretation:  Out of 46 persons, according to their demand that the home is loan appropriate is agreed by 33 persons and remaining 13 persons not agreed it. 

11. The bank employee behavior is satisfactory or not? 

Agree 23
Disagree 4
Strongly agree 19
Strongly disagree 0

 Interpretation: In total 46 persons, the bank employee behavior is satisfied by 23 persons, not satisfied by 4 persons. And very satisfied by 19 persons and finally no one disagreed with the bank employee behavior.

12. Upon loan services did bank gave any discount? 

No 6
Yes 40

 Interpretation:  The total number of persons is 46. In those persons, nearly 40 persons said that discount is given upon loan services by the bank and remaining 6 persons said that the bank did not offer any discount.

13. Are you satisfied by the time consumed in loan sanctioning? 

No 12
Yes 34

 Interpretation:  Out of 46 persons, the time taken while sanctioning a loan is satisfied by the 34 persons and not satisfied by 12 persons.

14. While taking the loan did you face any difficulty? 

No 7
Yes 39

 Interpretation:  The total number of persons is 46. In those persons, except 7 persons remaining 39 persons faced difficulty while taking the loan. 

15. Which grade you want to give off to the bank home loan schemes?

Average 4
Good 18
Excellent 24
Below average 0

 Interpretation:  The total number of persons is 46. In those, only 4 persons gave average grade to bank, 18 persons gave good grade to bank, 24 persons gave excellent grade to bank and none of them gave below average grade to bank.

16. Do you have all the documents which are required to open an account?

TABLE

Sr. No. Category No. of people Percentage
1 Yes 120 60%
2 No 80 40%
  Total 200 100%

                                                                                                         Base 200 people                       

Interpretation

From the table and graph above it can be seen that

  • In order to open an account in the SBI bank, 60% of people have all the documents which are essential.
  • In order to open an account in the SBI bank, 25% of people don’t have all the documents which are necessary.    

17. What is your annual household income?

TABLE

Sr. No. Category No. of People Percentage
1 Less than 2 lacs 98 49%
2 Between 2 to 5 lacs 62 31%
3 Between 5 to 8 lacs 30 15%
4 More than 8 lacs 10 5%
  Total 200 100%

                    Base 200 People

Interpretation

  • An annual household income of 49% people is less than 2 lacs.
  • Annual household income of 31% people is between 2 to 5 lacs.
  • Annual household income is between 5 to 8 lacs of 15% people.
  • An annual household income of 5% people is more than 8 lacs. 

18. Regarding various services or products provided by SBI bank, what is your opinion?

TABLE

Sr. No. Category No. of People Percentage
1 Lucrative 50 25%
2 Not Lucrative 120 60%
3 No idea 30 15%
  Total 200 100%

Base 200 People

Interpretation

From the above table and graph it can be seen that

  • Regarding different products 25% of people’s opinion is lucrative.
  • In relation to products, 60% of people’s opinion is not lucrative.
  • 15% people have no idea. 

19. To continue an account at SBI Bank, are you aware of various conditions and terms which are very much necessary? 

TABLE

Sr. No. Category No. of People Percentage
1 Yes                   25 12%
2 No 175 88%
  Total 200 100%

                                                                                                          Base 200 respondents

Interpretation

It can be seen from the above graph and table that

  • In order to continue an account with the bank, only 12% people were familiar through the conditions and terms that are very much necessary.
  • While, 88% people have no idea regarding it.

20. In relation to sales executives, do you know regarding SBI Bank’s recruitment policies?

TABLE

Sr. No. Category No. of People Percentage
1 Yes 82 41%
2 No 118 59%
  Total 200 100%

                                                                                                          Base 200 respondents

Interpretation

It can be seen from the above graph and table that

  • In relation with sales executives, only 41% people are well-known regarding recruitment policies of SBI Bank.
  • Whereas, in relation to sales executives 59% of the people are not well-known regarding the recruitment policies of SBI Bank.
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Empirical Specification of banking sector in india

EMPIRICAL SPECIFICATION: 

From Specification,   reduction of the following standard is approximately calculated by an empirical strategy.

 IR= a+b ln (PF)+c ln (PL)+d ln(PK)+e ln (SIZE)+f ln (CRAR)+g ln (LNASST)+h ln (BR)+ i (D5) ………3

Where

IR is interest revenue (net of income on CRR) scaled by total assets

PL is personnel expense to the total number of employees (proxy for unit price of labor)

SIZE is natural logarithm of the total assets,

LINASST is the ratio of loans to total assets,

D5 is dummy variable for total assets (one for the five largest banks, zero elsewhere),

­ denotes the natural logarithmic operator,

PF is average funding rate calculated as the ratio of aggregate interest expenses to total deposits plus borrowings (proxy for unit price of labor).

PK is other operating costs to fixed assets (proxy for unit price of capital),

CRAR is the ratio of capital to risk-weighted assets, and

BR is the number of branches to the total number of branches.

              By following an equation (3) H statistics is equals to b, c and d i.e.; H=b + c + d. When there is rise in costs mutually with an equal amount, total revenues and marginal costs are increasing while there is an increase in the input price, under perfect competition. Reducing of total revenues, marginal costs and reducing of equilibrium output are augmented by input prices, when under monopoly there is an increase in input prices. 

                                 Table: Interpretation of the Panzar-Rosse H Statistic 

H-value Interpretation
H ≤0 Monopoly or perfectly collusive oligopoly
H<1 Monopolistic competition
H=1 Perfect competition, natural monopoly in a perfectly contestable market, or sales-maximizing firm subject to a break-even constraint

 Particularly it is very interest to understand that is in cost figures how total revenues react towards variations this is the main opinion of H statistic in environment.  Banks central business is financial intermediation, first of all as a dependent variable, interest revenue is considered. The relation is a total income in the share of non-interest income is increasing, through total revenue (TR), interest revenue (IR) is restored then the revenue function’s alternative specification is evaluated where it is defined as aggregate of interest revenues and non-interest revenues. 

                To consider the bank-specific features, control variables are initiated. For aggregate demand and bank size, proxy is measured by the natural algorithm of total asset (SIZE). For the purpose of risk-return profile, the size is also controlled in comparison with the cost differences; therefore the coefficients sign that is ex ante is not definite.

                 To consider the firm-level risk, there is an integration of loan-to-total-asset (LNASST) ratios and capital to risk-weighted assets ratios (CRAR). The coefficient which is based on former differs as positive or negative which depends on high range of risk that may lead to low revenue or high revenue of bank. When the revenue of the bank becomes high due to the reason of increased loans based on the assets, the coefficient which is on later becomes positive.

              On revenues, to calculate an outcome of bank size one more proxy which is useful is signified towards total number of branches (BR) by the ratio of many bank branches and therefore possible scale economies and discovered. The above mentioned ratio becomes negative or positive based on the branch networks and the differences between those particular banks which in turn affect the bank revenue.  In banks, particularly state-owned banks are having a large branch network that is the reason in Indian context variable is very useful.

                  To decide five largest banks, an additional dummy variable D5 is used: D5 must be significant, at present oligopoly power is having link with large size 

EMPIRICAL RESULTS

              In the long-run equilibrium phases, banks are operated in which income should be correlated statistically with input prices. In order to test the H=0 hypothesis, ratio of net income to total assets are specified in eq (3). PR (Panzar Rosse) test and long-run equilibrium are meaningfully interpreted and the results are not discarded at the 5 percent level of the market equilibrium condition. Descriptive summary of variables as specified by the eq (3) are presented in the below table (Descriptive summary of variables (1996-2004).

Descriptive summary of variables (1996-2004):

Variable Mean Standard Deviation Minimum Maximum
Ln (SIZE) 8.870 1.415 4.054 12.919
Ln (PF) 1.920 0.272 -0.199 2.693
Ln (PL) 0.832 0.625 -0.627 3.841
Ln (PK) 5.152 0.803 2.313 7.026
Ln (CRAR) 2.379 0.658 -6.908 5.088
Ln (BR) -0.940 2.065 -5.599 2.917
Ln (Wages/ total asset) 0.192 0.655 -2.135 1.359
Ln( interest revenue) 6.465 1.361 1.764 10.341
Ln ( total revenue) 6.648 1.365 1.880 10.545

 

                          Descriptive summary of Variables four features are Mean, Standard Deviation, Minimum and maximum are most important. High variability is exhibited initially through both bank networks and bank size, and by the RBI rationalization policy of banks is affected.  Second, by means of interest revenues, total revenues are determined, as is obvious from the close correspondence among standard deviation and mean of two variables. Third, capital prices remain high, on average, over the period.     

                In the public sector banks operating expenses of banks are high, which results with the low variability labor costs are cheap, which is the strength of the banking system.  Total revenues and share of interest revenues are depicted in the below figures as a result of total assets in the form of percentages across bank groups. In 2002, the new private bank groups record the shares of interest revenues which are significant. 

    SoB: State-owned Banks; NPVT –New Private Banks. 

    OPVT- Old Private Banks; Foreign- Foreign Banks. 

    SoB: State-owned Banks; NPVT –New Private Banks. 

    OPVT- Old Private Banks; Foreign- Foreign Banks.

         The achievement of the financial sector reforms in India is broadly divided into two phases. First generation reforms is generally labeled as 1992-99 and it is known as first phase. Potential reforms, diversification and prudential reforms are guided by the first phase. Second generation reforms are perceived during 1999 and this phase is called as second phase and by means of structural reforms implementation of financial sectors are consolidated.  Below figure shows the economic results of Indian Commercial Banks over the period of 1996-2004.  

                        Estimated value of H is always considerable as non-negative. According to the PR classification Indian banking sector is distinguished by monopolistic competition and the suggested results are observed at specific period. At the one percent level, the unit cost of funds (PF) has a positive symbol which has statistically important. And also at the conventional levels PL turned to be significant. In the explanation of interest revenues (and therefore to the H statistic), the price of funds offers highest involvement during the period of 1996-2004.    

                    The entire Control variables have positive signs and which are significant. Therefore revenues are positively related to bank size. Interest revenues are increased which allows significant capital ratios. In the below table interest revenues are showed between the periods of 1996-2004. During the second sub period H statistics are increased marginally compared to the first, while in the both sub periods H statistics are differ from both 0 and 1.      

                 During the second sub period PK coefficient is important whereas the coefficient of PF also uniformly significant across both the sub periods at the rising importance of the price of capital. Due to the two factors like manpower rationalization and increasing technological sophistication, PL turns to be insignificant particularly at the state-owned banks across the second sub period.

Estimation results for the Indian Commercial Banks: Interest Revenue, 1996-2004. 

Dependent Variable = Ln (Interest Revenue/Total Assets)
  1996-2004 Sub-period 1, 1996-99 Sub-period 2, 2000-04
  Model 1 Model 2a Model 2b
Constant -3.181 (0.140)* -3.227 (0.173)* -3.424 (0.189)*
Ln PF 0.438 (0.024)* 0.382 (0.030)* 0.449 (0.029)*
Ln PL 0.052 (0.018)* 0.086 (0.029)* -0.004 (0.024)*
Ln (SIZE) 0.979 (0.012)* 0.959 (0.014)* 0.985 (0.016)*
Ln PK 0.021

(0.012)***

 0.0007 (0.013) 0.042 (0.016)*
Ln(LNASST) 0.007 (0.006) 0.872 (0.077)* 0.002 (0.0005)
Ln (CRAR) 0.014

(0.008)***

 0.030 (0.014)** 0.021 (0.009)*
Ln (BR) -0.015(0.009) 0.026 (0.012)** 0.005 (0.012)*
D5 0.059

(0.039)***

 0.032(0.047) 0.018 (0.043)
H statistic 0.407 0.469 0.487
F-value on Wald test for H=0 149.32a 125.52a 147.96a
F-value on Wald test for H=1 316.11b 160.47b 163.09b
Diagnostics      
Adjusted R-square 0.989 0.994 0.989
Number of banks 64 64 64
Total panel observations 570 252 318

 *, ** and *** indicate statistical significance at 1, 5, and 10%, respectively 

Significantly a  is different from 0 to 5% level. 

Significantly b  is different from 0 to 5% level. 

            In current years, the bank’s non-interest revenues have raised drastically which can be distinguished. The banks like old private and state owned banks, in terms of augmenting their fee incomes leaned to insulate after their new foreign and private counterparts historically and considerable progress is made in this regard. In 1992 from a level of 8-10 percentages, the non-interest revenues share like a percentage of total revenues is doubled for the banks of public sector to 18-20 percentages at end of the year 2004.

The alternate revenue function specification can be estimated in order to get the report of non-interest revenues increasing share in total revenues. The TR (total revenue) is defined as the “aggregate of non-interest revenues plus interest revenues net of CRR income” when a dependent variable like interest revenue is replaced. In the above given table the results are displayed. For the relevant related financial services, between the regressors the interest to non-interest income ratio to account is incorporated additionally for dissimilar elasticity of demand.

Table: For the Indian Commercial Banks the estimated results: Total revenue from    1996 to 2004

Dependant Variable = In (Total Revenue/Total Assets)
       1996-2004 Sub-period 1,1996-99 Sub-period 2, 2000-2004
  Model 3 Model 4a Model 4b
Constant -2.820(0.143)* -2.896(0.184)* -3.003(0.189)*
In PF 0.367(0.024)* 0.375(0.031)* 0.367(0.030)*
In PL -0.024(0.019) 0.082(0.029)* 0.024(0.023)
In PK 0.025(0.012)** -0.0009(0.012) 0.053(0.017)*
In(SIZE) 0.982(0.011)* 0.965(0.015)* 0.981(0.016)*
In(LNASST) 0.006(0.005) 0.866(0.079)* 0.0009(0.005)
In (CRAR) 0.013(0.0007)*** 0.031(0.015)** 0.018(0.008)*
In (BR) -0.023(0.009)* 0.018(0.012) -0.004(0.012)
In (interest income/ non-interest income) -0.065(0.017)* -0.111(0.022)* -0.075(0.020)*
D5 0.055(0.036) 0.033(0.049) 0.026(0.042)
H statistic 0.0368 0.456 0.444
F-value on Wald test for H=0 128.04a 113.55a 132.91a
F-value on Wald test for H=1 377.16b 161.19b 207.93b
Diagnostics
Adjusted R-square 0.990 0.994 0.989
Total Panel observations 570 252 318
Number of banks 64 64 64

 At 1, 5 and 10%, the *, ** and *** indicates the statistical significance respectively

Significantly a different from 0 at 5% level

Significantly b different from 0 at 5% level 

              The earlier findings are explained in the above given table. The H statistic value is lower when compared to the earlier but it is positive for the entire period and confirms the monopolistic free entry equilibrium presence. Similar to that of earlier model, during the second sub period the second most contribution is made to the H statistic by the capital price. Throughout the first sub period the contribution of labor price is significant but when moved to the second sub period it is insignificant.  But the second sub period can turn into significant with the help of bank size, capital adequacy and control variables for the whole period that is, similar to that of the earlier, the magnitudes are of same order approximately.

A negative sign is shown on a particular interest in case of interest to non-interest income ratio.  When the fee incomes of a bank are increasing, the bank’s interest income falls in an era of benevolent interest rates economically and this finally makes on government securities higher treasury incomes. For this reason, the interest to non-interest income ratio became lesser probably. By means of higher total revenues, the declining of ratio is linked. In the second sub period, the marginal decline in H statistic is signified by the sub period analysis. Like in earlier specification many variables of control maintain their significance as well as sign. During the second sub period, the raising importance of capital cost is revealed by the analysis that relies on sub periods, in affecting the H statistic. 

Table: For the Indian Commercial Banks the estimated results: Interest revenue by Type of Bank in the period 1996 to 2004. 

  Public Sector Banks New Private & Foreign Banks
Constant -1.298(0.253)* -3.664(0.325)*
In PF 0.161(0.023)* 0.507(0.042)*
In PL 0.059(0.025)** -0.013(0.039)
In PK 0.004(0.015) -0.006(0.029)
In (SIZE) 0.821(0.023)* 0.981(0.030)*
In (LNASST) 0.001(0.003) 0.967(0.124)*
In (CRAR) 0.062(0.016)* 0.012(0.014)
In (BR) 0.168(0.026)* -0.010(0.031)
H statistic 0.224 0.488
F-value on Wald test for H=0 40.60a 61.54a
F-value on Wald test for H=1 487.25b 67.80b
Diagnostics
Adjusted R-square 0.991 0.969
Number of banks 27 20
Total panel observations 243 174

 At 1, 5 and 10%, the statistical significance is indicated as *, ** and *** respectively

Significantly a different from 0 at 5% level

Significantly b different from 0 at 5% level

                 The weighted least squares (WLS) approach can be utilized for re-estimating the baseline specification (3). Here, in a particular year the banks weigh the observations with respective asset shares. The procedure of WLS is well suitable instinctively for capturing the representative banks behavior through offering high weight in case of bigger banks. Many variables contain counter instinctive signs and no extra significant insight is given by the results. Mainly for a cross country framework, the methodology of WLS is most suitable.

For various Latin American countries, the Levy Yeyati and Micco in the year 2003 in their study of bank competition reported, based on that across the countries the number of reporting banks vary. In support of dissimilar types of banks the results will be estimated.  The foreign as well as new private banks related business orientation is specially given and these two banks are grouped as one for the whole sample period in order to estimate the baseline model. The contribution of funds price is highest for the H statistic followed by the labor price in case of public sector banks which is clearly illustrated in the above table.

To H statistic, the funds price forms the most significant contribution in case of other group of banks.  In influencing the H statistic, the resultant high wage bill as well as in public sector banks the huge manpower is considered as most important because this is intuitive.  For public sector banks, the CRAR is concerned as the main which signify that for foreign banks the capital adequacy is not a key concern. When compared the foreign and private bank groups with the public sector group, the H statistic in terms of magnitudes is higher for foreign as well as private banks. The values of H statistic are dissimilar significantly from 0 and 1.

        The approximation in the table below also informs that a statistical importance for the group of public sector bank is shown by the price of both capital and labor. Since previous, for the public sector bank the capital adequacy and branch network amongst the control variables were considered significant. On the income ratio of interest to non-interest variable, the negative sign present may involve the rising importance of other incomes as well as non-interest treasury as a part of banks total income. Same as earlier(seen in table above), even though these magnitudes are reasonably lower, the H statistics magnitude practices the same order that is larger for private and foreign banks as compared to the public sector banks.

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Overview and History of the Banking Industry in India

Overview of the Industry:

HISTORY:

In India, banking contains a detailed and extended history of about 200 years. After the first bank of the country i.e. Bank of Bengal was launched, the industry’s foundation can be traced back to 1786. However in 1969, by following the nationalization of banks the industry has changed significantly and quickly. Therefore, a vast growth and several positive changes were experienced by the public sector banks. In order to explore the opportunities of new business, the economic reforms and liberalization permitted the banks to do this and from mere lending and borrowing it has not just remain forced to produce revenues. Hence, to get improved with time continuously, the scenario of Indian banking was offered with a significant facelift. But, in the country till today, the nationalized banks are persisted to be the largest lenders, in spite of the foreign banks voyage. This is mainly because of the diffusion of networks and the banks size. The system of Indian banking can be categorized as specialized banking institutions, private banks and nationalized banks.

With banking units of about 30, the industry is divided extremely contributing to approximately 60% of advances and 50% of deposits. In the financial sector of India, one of the leading monitoring bodies is the Reverse Bank of India. It acts as a centralized body in the system, so as to examine the limitations and inconsistencies. Through the estimation of industry it has been specified that, beyond 274 commercial banks that are working in the country, 51 are in the private sector and 223 are in the public sector. 24 foreign banks have been incorporated by these private sector banks, where these foreign banks had started their processes here. From the division of nationalized banks group, the institutions of specialized banking include rural banks, cooperatives, etc.  

Opportunities:

In the present job market, one of the most beneficial options that are considered is the banking sector. An arrangement in Forex or Treasury is being regarded to be accurate on the top of the industry and hence this is pursued as a result of the careers in retail banking, investment banking and private banking. In the industry of banking, one can work in different areas which includes banking officer, loan officer, personal loan officer, home loan agent, mortgage loan underwriter, accountant, customer service executive, recurring deposit account, probationary officer, assessor, home loan officer, loan manager, loan processing officer, and sales executive and product marketing between others.       

Fewer significant jobs in the Financial Services basically comprise of a person called stockbroker who sells and buys securities for some commission on behalf of institutions and individuals. Some brokers work for institutions whereas the others desire to put into practice through individual clients. Those brokers who often work for the investors of an institution are named as security traders.

Most of them wish to work as securities analysts, advisors and dealers. Since the security analysts are estimated to include capital market’s sound knowledge, they provide advice to the companies regarding the shares floatation. For the Financial service sector, the investment analysts are regarded as the backbone. They evaluate different statistical information, compare financial results, profitability projections, examine the whole industry depending on the foundation of information available, study the company’s financial reports, and at last terminate to the result. Same like investment analysts, the equity analysts perform jobs and make calculations and also investigates the equity markets. 

Growth:

In private banks, the boundary for foreign direct investment has been improved to 74% from 49%. Moreover, in private banks for foreign institutional investment the limit is only up to 49%. Within the banking sector and other fragments of financial sector like non banking finance companies, capital markets, mutual funds, venture capitalists, post offices, and etc, a challenging environment has been produced by globalization and liberalization. To their offerings the markets and research has declared the accumulation of “Indian Retail Banking” in 2006. In the Country, the credit growth has been predefined continuously by Indian Retail Banking. To handle Rs. 3,538 billion, the credit growth has been enormously increasing to 44.4% in the year 2005-06.

In spite of, growth in risk weight by means of RBI, there was an additional increase for real estate and housing loans in August, 2005. During the year 2005-06, among the entire retail loans housing that represents more than 52% will develop a strong rate of about 44.35%. To plan future strategies and to recognize the competition and market the Indian banks are being helped, by coming out through an industry approach on Indian Retail Banking. In India the segments of retail banking market has been analyzed, and along with challenges and issues the key trends were also obtained. In the strategies of retail banking space and among itself, 21 major players were being reported. The growth of finance market is decreasing due to the out breakable measures of Reserve Bank of India (RBI).  

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State Bank of India Introduction

State Bank of India:

Introduction:

In India, one of the biggest commercial bank is ‘State Bank of India’ (SBI). It commands one-fifth of loans and deposits of each and every programmed commercial bank and also contains an enormous network of about 9000 branches i.e. around 14% of all branches of bank in India.  A network of about, numerous non-banking subsidiaries and eight banking subsidiaries are included by State Bank Group which offers fund management, credit cards, merchant banking services, primary dealership in government securities, insurance and factoring services.

The eight banking subsidiaries include: State Bank of Hyderabad (SBH), State Bank of Travancore (SBT), State Bank of Indore (SBIR), State Bank of Patiala (SBP), State Bank of Bikaner and Jaipur (SBBJ), State Bank of India (SBI), State Bank of Mysore (SBM), and State Bank of Saurashtra (SBS). At present, the State Bank of India across all the time zones included a network of branches and around the world it has widened its arms. By means of its four wings such as the Foreign Offices division, International Services division, the Domestic division and the Foreign Department, the International Banking Group of SBI distributes the cross-border finance solutions in complete range.

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Tata Motors Problems in Market MBA Literature Survey

Tata Motors is facing many problems in the market place and researcher is making different recommendations to Tata Motors and Indian Auto Industry.

Many automobile companies stated that globalization process has shown major impact on auto industry which allowed them to face many problems. In order to overcome globalization impact auto companies should try to improve their company standards in the global markets through which they can even manage competitive levels in the global markets.

Many participants stated that the buying behavior of the customers change continuously which is the major reason for the failures of automobile companies. In order to overcome this problem, companies should try to maintain customer relationship management process through which they can build a relation with the customers and can easily identify their wants and needs.

In the research survey process, many participants stated that Tata Nano has not changed the history of Indian Auto industry but it gave some competition in the first year to the auto companies with its huge expectations. Tata Motors should take this particular point into consideration that auto companies are not thinking Nano as core competence of Tata Motors. In order to prove its efficiency and improve its competitive levels Tata should make some new innovations to Nano Car which gives a huge competition to the companies and get competitive advantages to Tata Motors.

Tata Motors stated that its major competitors are Honda, Maruthi and Toyota but not only these three companies Tata should try to consider all other auto companies because every company has its own strategies core competencies and each and every company which exists in the market can be considered as the competitor for the existing companies. 

The participants from Tata Motors gave a neutral answer that Tata Nano changed the history and Tata Nano does not change the history of Indian auto industry. Tata it self is not so clear that Nano is their competitive advantage. In order to make their Nano more successful Tata should try to improve the features of Nano and turn this car into the core competence of Tata Motors. Participants from Tata even answered that Indica and Indigo along with Nano are their most successful products. But Tata is still not clear that Nano is their only successful product, Tata is trying to manage all their company products in a balanced way. But Tata should highlight Nano as their competitive advantage because no other company in the world is offering a car for only one lakh rupees which are equal to that of a two wheeler price. Tata should try to promote Nano with more advertisements in order to create awareness among the customers not only in India but even in the global markets.

Participants from Tata Motors answered that price is the major competitive advantage of Nano Car, but Tata should remember that price is not only the major constraint but many people even prefer price along with quality and features. Tata should improve the quality of their Nano car and should develop it with required features.

While introducing Nano car there are huge expectations in the market that Nano car will change the history of Indian Auto industry and it will even satisfy the low income customer at all ends. But after using Nano many customers were not satisfied with the features and quality offered in the Nano Car. The customer feedback on Nano was not so impressive especially there were many technical problems, no proper seating facility, less mileage and low quality products within the car are the major complaints on Nano. For this reason, Tata should totally consider customer feedbacks and should innovate Nano car with additional features. By increasing Nano features Tata can even increase the price on Nano upto 1.5 lakh or 2 lakhs because no other company in the world is offering cars at the range between 1.5 to 2laksh and for this reason Nano can take this as an advantage and can improve the quality and all. Even after increasing the prices Nano will be the cheapest car in the world because other car is available in the market with a price range of 1.5 to 2 lakhs.

Many existing customers of Nano answered that they prefer Nano Car because of its low price but still they are stating that quality is also important and they are suggesting that Tata should improve the features and services of Nano car in order to totally satisfy the customers.

Many customers using Nano even stated that they have faced many technical problems with Nano car and Tata should try to improve the services and should offer the new Nano cars which do not create technical problems and should even offer free services to the existing customers who are using Nano car and facing problems with it.

Many participants even answered that the advertisements given by Tata Company and the marketing staff who were appointed to market Nano cars have initiated them to buy Nano Car. For this reason, Tata should identify that advertisements and marketing staff are more helpful to Tata in selling their Nano cars and for this reason they should use new strategies in advertising and marketing process in order to attract the customers towards its company. 

 The new customers of Tata who are willing to buy Nano car answered that the major reason behind they interest towards Nano is the low price when compared with the other cars. The customers are stating that they were just in a dilemma whether to buy Nano or not because of the existing customer feedback and Nano reviews. In order to satisfy these customers Tata should innovate Nano car and should promote the car in such a way which directly attracts the customers towards Nano and improves the sales of Nano.

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Sample Questionnaires

Questionnaires are the type of research techniques used in the interview process which includes different types of research questions related to research problem and research objectives. Questionnaires play the key role in entire research process because the actual research questions of the research process can be obtained from questionnaires. The objectives of the research process are divided into sub questions and by using different data approaches researcher will gather the information to fulfill the research questions.

Pilot test for questionnaires

The questionnaires included in the research process have undergone the pilot test through which the reliability and validity of the research process can be identified. In the pilot test process the questions are evaluated first and prepared the questions in a simple manner, so that participants can easily understand those questions. Each and every participant will be treated equally and they have all rights to express their own opinions on research topic.

The entire research process is carried out in a reliable manner and researcher followed the ethical rules and even allowed the participants to follow those ethics.

Participants are not forced to express their opinions and the answers given by participants will be considered as important information. The communication process will be carried out through phones and emails and finally the questions in the research questionnaires will be fulfilled by the answers given by participants. Researcher has conducted many mock sections for research interviews in order to complete the research process in a successful manner. 

 

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Advantages of ICICI over SBI

Advantages of ICICI over SBI:

· With total asset of Rs.3, 744.10 billion, the ICICI bank is going up at very fast rate.

· The SBI and ICICI banks are taking different paths in human relations area.

· SBI comprises nearly one lakh employees. But it is careful in adding the headcount and by means of voluntary retirement scheme its tries to reduce the headcount.  

· Every year ICICI bank will set up regional hubs for the reason that the plans as well as the workforce will be concentrated for adding 20,000 to its headcount.

· In coming few years among employees range from 75, 000 and 1, 00, 000, the group plans will be added by ICICI.

· The ICICI bank tries to exceed the SBI bank .

Advantages of SBI over ICICI:

· Flexible loan repayment tenures are provided by the SBI.

· SBI is the second largest issuer of credit cards as well as placed to turn into a largest debit card issuer.

· In Small and Medium Enterprises (SME) financing field, the SBI restrains huge experience.

· TheIndia’s one of the oldest and largest bank is SBI and the Indian government holds the main stock of SBI. Therefore the customers trust this bank.

· The SBI bank group is planning to insert more 3, 000 branches though it comprises 10,000 branches nearly.

· Public trusts this bank a lot because this is the oldest bank. Across the country it contains 54LearningCentersand four national levelApexTrainingColleges. So this bank strives constantly in enhancing the skills of its employees. Bankers from the banks located in some other countries also attend the training programs. 

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Introduction of ICICI Bank MBA Project Report

INTRODUCTION OF ICICI BANK

          Financial services and wide range of banking products are offered by ICICI Group and retail customers through a variety of delivery channels and through its specialized group companies, subsidiaries and affiliates in the areas of personal banking, investment banking, life and general insurance, venture capital and asset management. In their respective sectors ICICI Group companies have enhanced and maintained their leadership position with the support of strong customer focus.    

                   Second largestIndia’s bank is ICICI with the total assets of Rs. 3,793.01 billion (US$ 75 billion) at March 31, 2009 and for the year ended March 31, 2009 profit after tax is Rs. 37.58 billion. InIndia, the ICICI bank has a network of 1,451 branches and total ATM’s are 4,721 and existed in 18 countries.         

HISTORY 

1955:

              The government ofIndiaand representatives of Indian industry, the Industrial Credit and Investment Corporation of India Limited (ICICI) is incorporated at the initiative of the World Bank. In order to provide the medium and long term project financing to Indian businesses development financial institutions are created. First chairman of ICICI limited is Mr.A.Ramaswami Mudaliar. 

           ICICI emerges as the major source of foreign currency loans to Indian industry. In the Indian companies, ICICI is the first company for increasing the funds from international markets besides funding from the World Bank and other multi-lateral agencies.  

1956:

           ICICI stated that its first share is 3.5%. 

Business:

                In 1994 through ICICI Ltd., Indian development financial institution, ICICI bank was advanced. Among all private banks ICICI bank has to develop into largest commercial bank so consequently two entities are combined. In the second half of nineties to beat the Indian banking industry, with new technologies ICICI bank which is a new generation bank is in progress. VSAT technology is used in network along with systems and state-of-the-art technology in ICICI bank branches, these branches are automated fully.

With SWIFT International network, bank is having relation and network of ICICI bank is extended in 2005 as 1,910 ATMs and 562 branches. Some of the electronic channels like call centers and ATMs, internet banking, mobile banking are increased and for these channels number of customer transactions are transferred then more than 70% of customer transactions are happening.

To increase deposit franchise overseas and corporate business a small Russian banking entity, Investitsionno-Kreditny Bank (IKB) is obtained by ICICI bank. Through DBS inSingapore, Lloyds TSB inUKand Wells Fargo inUSAbanks, ICICI bank is having a number of dealings.

  • To do mutual business, ICICI planned to deal with prudential plc. OfUK. Through Prudential ICICI Trust Limited and Prudential ICICI Asset Management Company duo is moderately insistent. Towards the Indian agricultural sector, to offer services ICICI bank is ready. By means of large agriculture markets, in place more than 70 agri-desks and 2000 Internet kiosks are started. 

Developments: 

  • ‘Mutual Fund Sweep Account’ is started by ICICI Bank- Since to receive higher income, parking their short-term excess into liquid mutual funds when existing account holders are permitted by automatic sweeping facility. During GIC Mutual Fund and Prudential ICICI Asset Management Companies liquid fund schemes to invest an excess account, present account customers of ICICI bank are having ability.
  • In ICICI, ICICI Capital Services Limited and ICICI Personal Financial Services Limited are two combined wholly-owned subsidiaries, these two subsidiaries are in progress with ICICI bank.
  • Towards Rs.500 crore CD (Certificates of deposit) programme of IBL (ICICI Bank Ltd), the short-term of safety is represented as A1+rating it is allocated by ICRA.
  • To start the credit cards of ICICI Bank Master Card, MasterCard International is occupying ICICI Bank. About 4, 50,000 debit cards of ICICI bank are situated where as 5, 50,000 credit cards are situated at present. In market main card issuer is ICICI bank. For every month by rate 1, 00,000, debit and credit cards are added by bank. The debit card business is the latest one where as credit card business is started 2 years back by bank. 

        At the end of December 31, 2009 profit is Rs. 30.19 billion (US$ 648.8 billion) for nine months after tax, for total resources of Rs. 3, 562, 28 billion (US$ 77 billion) at December 31, 2009 thereforeIndia’s second-largest bank is ICICI. 4,883 ATMs and 1,646 branches network in banks, inIndiaand at present in 18 countries. During specialized subsidiaries and variety of delivery channels, for retail customers and corporate customers an open series of financial services and banking products are presented by ICICI and in regions like asset management and venture capital, investment banking, life and non-life insurance it is joined.

Technology: 

In an extremely automated environment the HDFC bank functions in terms of communication systems and information technology. Towards its customers this bank is allowed to present transfer facilities of speedy funds, because every branch of this bank contains online connectivity. To deal with customers through the Automated Teller Machines (ATMs) and branch network, a multi-branch access is also offered.

In order to gain the best technology which is available internationally so as to create infrastructure for a world class bank, considerable investments and efforts were made by the bank.  Through robust and scalable systems, the business of the bank is sustained which makes sure that the clients are always provided with supreme services. 

In the internet and technology, the bank has prioritized its commitment as one of its major aims and also in web-enabling its core business an important progress has been already made. To produce a build market share and competitive advantage, the bank has been successful in influencing its market position, in all of its business. 

       In association with the VISA (VISA Electron) an International Debit Card is launched and as well as issues the Master card Maestro debit card by the first bank inIndiawhich is HDFC Bank.  In late 2001, HDFC launched its credit card business. A total card base (credit and debit cards) HDFC bank crosses over 13 million by the end of the March 2009. 

       The Bank is also one of the leading players in the “merchant acquiring” business with over 70,000 Point-of-sale (POS) terminals for debit / credit cards acceptance at merchant establishments. The Bank is well positioned as a leader in various net based B2C opportunities including a wide range of internet banking services for Fixed Deposits, Loans, Bill Payments, etc.

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About The SBI And Comparison Of Other Indian Banks and Calculating Ratios

Introduction to SBI:

The foundation of the state bank of India is beginning in the first decade of the nineteenth century with the formation of the Bank of Calcutta in Calcutta on 1806, on 2nd June. After three years Bank of Calcutta is re-designed as Bank of Bengal on 2nd January of 1809. By the government of Bengal, among the Bank of British India sponsors, this bank was the first joint-stock bank. Bank of Bengal has increased its branches in the states such as Bank of Bombay on 15th April of 1840 and Bank of Madras on 1st July of 1843. These three Banks stands in the top most position in the Indian modern banking system. These banks are in top position until they merged with the Imperial Bank of India on 27th January 1921.

Mainly in Anglo-Indian creations, the three presidency banks appeared to be survival therefore the local requirements of European commerce or  the compulsion of grand finance  were  not forced from outside in random manner to  modernize Indian economy.  However their evolution was modified with selected ideas from identical developments in the England and Europe as well as by the structural changes which are influenced.  These structural changes will be in both the environments of local trading as well as those in that of Indian economy relations to the Europe economy and the frame work of the global economic. 

In the country the oldest Bank is State Bank of India and a premier in the form of balance sheet size, profits, market capitalization and number of branches is going today by a significant phase of transformation and change- Behemoth it is public sector which is two hundred years old is now shifting out of its public sector legacy as well as progressing with an ability to give Foreign and private banks a run for their money.

With the strategic tie ups, banks are seeking to enter in to new business which are like General insurance, Pension funds, Private Equity, Custodial Services, point of sale, Mobile banking, Merchant Acquisition, Structured products,  Advisory services etc-  among these each and every program will have a enormous potential growth.

The bank is forging ahead to expand banks in the rural regions, with the cutting edge technology and modern new banking models. Banks are looking to cover around 100,000 villages in coming next two years. Banks are also concentrating at the top of the market, upon the capability of the whole sale banking to give array of products and services. Banks are entering into the derivative instruments and structured products and by the way it is consolidating operations of its global treasury. Now days, infrastructure is provided more by banks as well as external commercial borrowings are largely done by the banks in the country.

Front and back end process which is outdated is continuously changing by banks to the friendly process of the modern customer to develop the total customer experience.  Associated banks are networked already, now the largest banking network is offer by it to the Indian customer. Through ATMs banks are providing total or complete payments solution to its clients, bank provides nearly 8500 ATMs and additional electronic channels like debit cards, mobile banking and internet banking etc.

With 54 learning centers and four national level Apex Training Colleges, banks are continuously recruiting skilled persons has employees. These centers or colleges are spread all over the country. Bankers from the banks will attend some of the training programs in the other countries.

Banks are looking to get opportunities to its growth all over India and also internationally. Across the globe, in 32 countries 82 foreign offices are there at present. In India it contains six subsidiaries – SBICAP securities, SBI Life, SBI Capital Markets, SBI DFHI, SBI Cards and SBI Factors. These six subsidiaries form formidable group in the scenario of Indian banking. For raising its capital process is going on as well as combining its various holdings.

Banks are trying to change its old mindset, attitudes and together to take all employees on this transformation and exciting road. Internal communication program which is recently conducted which is named as “Parivartan” the bank has been covered 3300 two day work shop across the country and in a period of 100 days it covered over 130,000 employees with 400 trainers, to drive home the inclusiveness and message of change. The imagination of the employees has been fired by work shop with some other banks in India and also in other organization of public sector looking to follow the program.

In State Bank of India history the main turning point is the launch of Five Year Plan of independent India in 1951. Towards serving Indian economy, the plan aimed is in general and particular in the rural sector of the country.  By the Commercial Bank of the country including Imperial bank of India, plan is kept pending and the services are limited to the urban sector. In addition, banks were not at all equipped to respond to the growing requirements of the economic stimulation in the country which is taking shape in the rural regions. Consequently, as a whole to serve the economy and particular in rural sector, the All India Rural Credit Survey Committee suggested the formation of state-partnered and state-sponsored bank.

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The Indian Economy – Gross Domestic Product Literature Review

The Indian Economy has seen major Macro changes in:

  1. Gross Domestic Product:

In the industrial cycle, uptrend and the strong fundamentals are driving the Indian economy. In the year 2005-06, the third successive year Indian economy is controlled a strong growth momentum with the real GDP and the accelerating growth is 8.4% for the year 2005-06. The growth in the double digit is recorded by the service sector to donate almost three-fourths of the incremental GDP. A reliable increase in the investment rate of domestic from 23.0% of GDP in the tear 2001-2002 to 30.1% in the year 2004-2005 encouraged a high credit growth observed during the past few years.

In the financial year 2006-2007, services sector account for major 55% of India GDP followed by 25% in the industrial sector and 20% in the agriculture sector.

FY07 Vs Q2FY06, in the GDP components growth rates are as follows:

Agriculture: 1.7%

Service: 10.7

Industry: 10.5%

FDI Confidence Index:

In the every sector of Indian economy large capital has been utilized which has been expanded by the relaxation of foreign direct investment rules. The efforts are made by the Government in liberalization the norms and guidelines for the investment through FDI. In the FDI Confidence Index,Indiastands in the second place among all the countries in the world because of the efforts put by the Indian Government.

Inflation: 

In India, since the pass-on of increase in international crude price is continued to be incomplete, the inflation remained hugely helpful because of promoted nature of prices of oil and motivated nature of growth. Inflation of WPI is raised up to 5.45% for the week ended on 18th November 2006 as the same range is continued of 4.0-5.0% in the past. RBI has given warning continuously that the main target is to control the inflation. In the present economy money provided is increased by 18.7% approximately till 10th of November 2006. Towards RBI efforts made towards the inflation to get a best range of 5.0-5.5%   , this will cause an important threat. 

Gross Fiscal Deficit: 

In the year 2005-2006 the ratio of the Goss Fiscal Deficit (GFD) to GDF ration was at 4.1 % as opposite to the estimated budget which is of 4.3%. In the year 2006 from April to November, Fiscal and revenue deficit are broadened to 72.8% of BE and 99.7% of BE Vs 74.7% of BE and 91.5% of BE respectively in the year 2005 from April to November. Comparing to the last month present levels are very high fiscal deficit of 58.6% of BE and 79.4% of BE for the revenue deficit. The development in the GFD make possible by the expended capital which is declined and the accessibility of disinvestments proceeds. In 2005 to 2006 GDP even though the revenue deficit is less in absolute terms will be continued at 2.7 % of the budgeted level.