sign in sign up
<<
Home , Bank of Calcutta, Commercial Bank of India, Imperial Bank of India

International Journal of Innovations & Research Analysis (IJIRA) 15 ISSN : XXXX-XXXX, Volume 01, No. 01, October - December, 2020, pp 15-22

FINANCIAL PERFORMANCE AND CUSTOMERS SERVICES OF STATE OF INDIA AFTER MERGING, AJMER DISTRICT: A STUDY

Dr. Sunil Kumar Goyal

ABSTRACT

Banking sector is playing a vital role in Indian economy and economic growth. It is also known as the indicator of the economy. provide credit to the different sectors like: agriculture, small scale business, trade and industries etc. As we know State is a biggest bank of India and first commercial bank. SBI with its associate banks contributed towards Indian Economy. Merger is important technique to take the benefits of largest bank, it reduces operation cost also. The merging process of SBI was started in 2008 but in 2017, SBI was merged with its 5 associate banks. The paper focuses on the performance of before and after merging. This paper also presents the satisfaction level of customer regarding services provided by SBI. The purpose of this paper is to study about the merger effects on SBI ______

Keywords: State Bank of India, Banking Sectors, Economic Growth, Performance of SBI, SBI Services. ______Introduction Banking sector is playing an important role in Indian economy and economic growth. It is also known as the indicator of the economy. Banks provide financial facilities to agriculture sectors, industrial sectors, trade and business etc. Banking sector in India stated from 18th century with the establishment of Bank of Hindustan in 1770. There were number of public sector banks established by British East India Company for the trade relationship between Indian and other countries. For the regulation of banking system, was established on April, 1935. After independence, many changes have taken place in Indian Banking sectors. At the time of independence the banking system was not developed. In 1949 two steps were taken for banking sectors reforms. The first steps was Banking regulation Act, which provided rights to RBI to control over the commercial banks and the second steps was the nationalization of RBI. Reserve Bank of India is a regulatory bank of Indian banking system. It regulates and controls all the banks in India. The banking system includes commercial banks, regional rural banks, co-operative banks and small finance banks etc. Commercial banks mobilize savings into industrial and commercial sectors and fulfill capital requirements. Commercial banks cover 92 percent of the entire banking business in India. After independence the commercial banks were provided their services in urban area but for the development of economy there were need a bank who provide serviced in rural areas also. So All India Credit survey Committee recommended the creation of a state-partnered bank by taking over the . Then the state bank of India was established in July 1955. Every country’s growth is depend on the sound financial system and the last three decades witnessed the strength in India’s financial markets. In Indian banking system reforms were started after 1991 by the recommendation of Narasimhan committee. This committee suggested restructuring banks through mergers. The merger is most important tool to achieve the growth. This Committee also recommended reviewing the progress of reforms in the banking sector. These reforms enhanced the efficiency and profitability of banks. Banking Ombudsman scheme was introduced in Jan, 2006. Through these schemes, the consumer can submit complaints online. Indian banks had given new responsibilities for social and economic development by various function.

 Assistant Professor, SPC Government College, Ajmer, Rajasthan, India. 16 International Journal of Innovations & Research Analysis (IJIRA) - October - December, 2020 About SBI State bank of India is playing an important role in commercial banking system. SBI is the largest bank of India with 23% market share in assets. It was established in 1806 as then and were merged together and Imperial bank was formed. In 1955 the Imperial bank was converted into State Bank of India. It is the first . It is a multinational, public sector banking and organization which is constitute under Indian constitute. It has a aim to provide easy financial solution and fulfil the financial requirement of consumers. It is a government-owned corporation and it has its headquarters in , Maharashtra. SBI is providing some services like digital banking, online shopping, travel planning, taxi booking, online education and e-commerce companies facilities. SBI also provides different loan to their customers like home loan, education loan, auto loan, personal loan, agri financing and financial solution to SME and MSMEs. Small and medium enterprises are an important segment for SBI because these sectors are contributing in Indian economy by manufacturing output, exports and employment. This bank provide not only financial services but also services of life insurance, general insurance, merchant banking and mutual fund. From few years SBI was facing some problems like misutilisation and poor recovery of loans, identification of beneficiaries, ignorance of customers, lack of sufficient security by the borrowers, lack of proper monitoring, lack or training, promote new technology, systematic improvement for better human resources. Due to these problems the bank had started the merging process. The merger process is providing the benefit of large banks. The aim of this merger is to make the State bank group a stronger and more resilient organization. The merging process of SBI with its subsidiary banks has been started in 2008. In Sept 2008, merged in SBI. In 2009 was merged and Bhartiya Mahila Bank was formed. After that Union Cabinet approved merger of SBI with its associate banks on 15th June, 2016. All the associate banks as , State bank of Punjab, , State bank of Bikaner and Jaipur, , and merged with SBI with effect from April 1st 2017. The SBI has provided various services through various channels like digital, mobile, internet, social media. Bank has set up over 2,200 e-corners across the country where customers can avail different services through ATMs, SWAYAMs, Check deposit Kiosk and online banking Kiosk. SBI has conducted a mass communication program for the all employees to improve the customer centric services in the bank. Today’s banking system is innovative banking system and based on information technology. Information technology has given opportunity to get better customers services. In recent days banking facilities become very easier with the smart phones. People are very friendly with digital services. Objectives of the Study  To discuss the financial performance of State bank of India after merging.  To discuss the financial performance of State bank of India before merging.  To discuss the customer satisfaction regarding services provided by State Bank of India.  To know about the merger effect on SBI. Review of Literature Farman Ali and Anshulsharma (2019) paper title “Pre-Merger and Post Merger Operating Performance of SBI”, presented financial performance affected after merger also evaluated all financial parameters before and after merger. V Mahesh Yadav (2019) in his paper title “A Study on financial position of SBI after merger”, Presented financial performance of SBI before and after merger also examined the reasons of merger and challenges faced by SBI during merger. Ritesh Patel (2018) in his paper title, “Pre and Post Merger Financial Performance- An Indian Perspective” explained the before and after merger position of Indian banks, also focused on long term profitability. In this study he also presented negative impact of merger on return on equity, return on assets, net profit ratio and yield on investment but positive impact on Earning Per Share, Profit per Employees and Business per Employees. Hari Mohan (2018) in his paper title, “Impact of Merger on SBI” presented the introduction of banking industry, introduction of SBI and its associate banks, reasons behind the merger of SBI and its associate banks. He also focused the pros and cons of mega merging of SBI. Dr. Sunil Kumar Goyal: Financial Performance and Customers Services of State Bank of India..... 17 D.Sreemathi and Dr. A. Tharmalingam (2018) in their paper title, “A Study on Financial Position of SBI After Merger of Associate Bank” explained the pre and post merger position of the bank also analyzed Cash Deposit Ratio, Credit Deposit Ratio, Credit Investment Deposit Ratio, Interest income to Assets Ratio, Return on Equity Ratio.CMA Jai Bansal and Dr. Gurudatt Kakkar (2018) in their paper title, ”A Research on the Analysis of Merger of SBI with its Associate Banks and Bhartiya Mahila Bank” presented introduction of merger and acquisition, reasons of merger and performance in term of profitability. Neha Chadha (2017) in her paper title, “ An Analytical Study of Reforms and their Impact on Indian Banking Sector” focused on evaluation of , changing structure of Indian banking sector since Independence, banking reforms in India and their impact on Indian banking system. Sanjay Sharma and SahilSidana (2017) in their paper title, ”Impact of SBI Merger on Financial Condition of SBI” analyzed the impact of SBI merger on its financial position, introduction of SBI and its associate banks, reasons for merger, various benefits of merger, disadvantages of merger and financial analysis with different parameters. Singh and Bansal (2017)in their paper title, “An Analysis of Revenue Maximizing Efficiency of Public Sector Banks in the Post Reforms Period” analyzed that the key financial ratios are essential to evaluate the productivity and efficiency of the bank. They also focused that in financial world the decision of investment and financing can be made on the basis of these parameters. Monika (2014) Analysed in her paper titled, “Merger and Acquisitions in Indian Banking Sector- A Comparative Study on Pre-Post Merger” that the merger and acquisitions expressed value mixed motives to attract the investor by way of corporate level strategy and use behavioral theories to understand the concept behind the decision to adopt form of consolidation. Koala Jayashree (2016) in her paper titled, “The economic impact of merger and acquisition on profitability of SBI” focused on various reasons of merger in Indian banking industry. She also focused on pre and post merger financial performance of merged banks with different parameters as Gross Profit and Net Profit margin, Return on Capital Employed, Return on Equity and Debt Equity Ratio. She also used some statistical significance test. She found that banks have been positively affected after merger. Jayashree K.N., Sridhar A.N., in their paper title “Reforms in Banking Sector- SBI merger with its subsidiaries made easier with digital technology”, presented purpose, consequences and the financial effects arrived from the process of merging SBI and its associates also presented the management of NPA and pros and cons of merging process. Debaprosanna Nandy (2010) in his paper titled “ Banking sector reforms in India and performance evaluation of Commercial Banks” presented banking structure in India, Banking Sector reforms, Narsimhan Committee recommendation and Banking sector development in India. Research Methodology  Purpose of the Study: The main purpose of this study is to know about the performance of the SBI after merging and evaluate the customer satisfaction regarding the services provided by bank. For this 5 years data are taken 3 years pre-merger and 2 years post-merger.  Scope of the Study: The study was both empirical and analytical. In this present study, we examine the performance of State bank of India and to focus customer perception regarding bank services in Ajmer district of Rajasthan. This study is based on primary data which is collected through pre-structured questionnaires from 100 consumers of Ajmer district. Respondents were considered and classified in different age group, different income group, occupation and educational qualification. The finding will be helpful for the bank to improve their financial performance in the future as well as proving the better services to the customers. The secondary data are collected through SBI Annual Report, RBI publications, published data of banks, newspaper, economic and political weekly. The data analysis is based on information provided by the respondents. Data were analyzed with the help of charts and tables. Hypothesis

H0: Mergers of SBI with its associate banks don’t have significant difference in the financial performance of SBI and It does not play a vital role for providing better services to their customers. H1: Mergers of SBI with its associate banks have significant difference in the financial performance of SBI and it plays a vital role for providing better services to their customers. 18 International Journal of Innovations & Research Analysis (IJIRA) - October - December, 2020 Results and Discussions Table 1 Pre Merger Post Merger S. No. Financial Position 2014-15 2015-16 2016-17 2017-18 2018-19 1 Net Profit (in crore) 13,102 9,951 10,484 -6,547 862 2 Return on Assets (%) 0.68 0.46 0.41 -0.19 0.02 3 Return on Equity (%) 11.17 7.74 7.25 -3.78 0.48 Profit Per employee 4 602 470 511 -243 33 (in 000) 5 Earning Per share (Rs.) 17.55 12.98 13.43 -7.67 0.97 6 Net NPA to Net Advance (%) 2.12 3.81 3.71 5.73 3.01 7 No of Domestic Branches 16,333 16,784 17,170 22,414 22,010 Source: SBI Annual Report Interpretation It was found that there was a significant decrease in the net profit after merger and it was decreased from Rs. 10,484 crore to Rs. -6,547 crore. Also Profit per employees was decreased from Rs. 5,11,000 to Rs. -2,43,000. It was also found that return on assets was decreased from .41% to -.19% and return on equity decreased from 7.25% to -3.78%. Earning per share was also declined from Rs. 13.43 to Rs. -7.76. It was found that Net NPA to net advance was increased from 3.71% to 5.73%. Domestic branches was also increased from 17,170 to 22,414. Table 2 SBI provides better Services % Yes 71 No 6 May be 22 Total 100 Figure 1

SBI Provies Better Services

Yes 22% No 6% 72% May be

Interpretation For know about the services provided by SBI, It was found that 72 percent of the respondent replied that SBI is proving better services, 6 percent of the respondent replied that bank is not providing better services and 22 percent of respondent were not sure about this. Table 3 Customer Satisfaction Level % Very Good 33 Good 47 Satisfactory 20 Not Good Nil Total 100 Dr. Sunil Kumar Goyal: Financial Performance and Customers Services of State Bank of India..... 19 Figure 2

Customer Satisfaction Level

20% Very Good 33%

Good

Satisfactory

47%

Interpretation For know about the customer satisfaction level, It was found that 33 percent of the respondent that they are very satisfied, 47 percent of the respondent replied that bank is providing good customer satisfaction and 20 percent of respondent were replied that they are satisfied.. Table 4 Employees Attention towards Customers Needs % Yes 69 No 3 Sometimes 28 Total 100 Figure 3

Employees attention towards customers needs

Sometimes 28%

No 3% Yes 69%

Interpretation For know about the Employees attention towards customers needs, It was found that 69 percent of the respondent replied that employees are giving proper attention towards customers, 3 percent of the respondent replied that not proper attention and 28 percent of respondent replied that sometimes employees paid attention towards customers needs. 20 International Journal of Innovations & Research Analysis (IJIRA) - October - December, 2020 Table 5 Level of Employees Behavior while Attending the customers % Very Good 14 Good 58 Satisfactory 22 Not Good 6 Total 100 Interpretation For know about the level of employees behavior while attending the customers, It was found that 14 percent of the respondent replied that employees behavior are very good, 58 percent of the respondent replied that employees behavior are good, 22 percent of respondent are replied that the employees behavior is satisfactory and 6 percent of respondent replied that the behavior of employees are not good. Figure 4

Level of employee behaviour while attanding the customers

70 60 50 58 40 30 20 22 10 14 6 0 Very Good Good Satisfactory Not Good

Table 6 Employees take initiative to solve the problem of the customers % Yes 64 No 3 Sometimes 28 Rarely 5 Total 100 Figure 5

Employees Take initiative to solve the problem of the customers 5%

Yes 28% No

64% Sometimes 3% Rarely Dr. Sunil Kumar Goyal: Financial Performance and Customers Services of State Bank of India..... 21 Interpretation For know about that employees take initiative to solve the problem of the customer, It was found that 64 percent of the respondent replied employees take initiative, 3 percent of the respondent replied no, 28 percent of respondent replied that sometimes employees take initiative and 5 percent of the respondent replied that rarely employees take initiative to solve the problem of the employees. Findings and Suggestions No doubt the SBI is a biggest commercial bank of India and its play an important role for the development of the economy. In this study it was found thatSBI should focus on most useful services to the customers for their better growth. No doubt the bank had started complaint management system where they can do complaint or they can give their feedback and suggestion but still bank has to focus on better consumer relationship, also focus on corporate debt, more digitalization and developing of human resources. There is a need of institutional changes for the better performance of bank like better utilization of loans, proper recovery of loans, reduce the trends of NPA. There is necessity for the economic development to provide proper credit to the rural sector also banks allocate capital by limiting risk and cost. For enhancing the productivity of credit there is a need to give credit to the right person. For removing poverty and sustainable development it is essential that bank should give priority wise credit and fulfill social goals. It will enhance the employability and economic growth. Bank should take timely feedback and suggestion for provide better services to their customers. Mostly merging is required due to bad performance of banking sector, market situation, uncertainty in future. So the better profitability of SBI, this merger was an essential requirement. SBI had lots of bad loan and NPA. Through merger, the financial problems of its associate banks can be solved. Conclusion In this paper we analyse the performance of SBI after and before merger also services provided by the bank to their customers. Hypothesis tested for the research is H0= Mergers of SBI with its associate banks don’t have significant difference in the financial performance of SBI and It does not play a vital role for providing better services to their customers.H1= Mergers of SBI with its associate banks have significant difference in the financial performance of SBI and it plays a vital role for providing better services to their customers. In this study we can say the hypothesis H0 was rejected and H1 is accepted. After merging SBI became 44th largest bank in the world by assets. Now this bank can easily diversify its assets portfolio. Now SBI is able to finance more projects that will increase the growth of economy. After merging SBI now have 24000 branches with ATM serving near about 50 crore customers. It will also help in financial inclusion and open more branches in rural areas. It will also reduce the bad loans. The merging task is not easy. It takes too much time to completion. After merging many employees took VRS and it reduces the working speed. Also bank face the problems of reconciliation of accounts, updating of records, written off accounts. After merger, the share prices of associated banks also fall down and net profit has been declined. But for better corporate restructure and better services this merger was required. Because of single management, efficient and effective services can be provided. Single circular will be issued for all banks. It will also provide better internal control system. The merger of SBI has a greater positive impact on the economy because it reduces the operation cost and optimum utilization of financial resources. It also involve digital revolution and this is a positive sign of development of bank. References  D. Sreemathi and Dr. A. Tharmalingam, “A Study on Financial Position of SBI After Merger of Associate Bank” International journal of multidisciplinary, Research and Modern education vol.4, issue 2, pp 1-5.  Farman Ali, Anshulsharma, “Pre-Merger and Post Merger Operating Performance of SBI”, International Journal of Recent Technology and Engineering, Vol. 8, Issue 3S2, pp. 25-31.  Hari Mohan (2018), “Impact of Merger on SBI” The Catalyst- Journal of Management, Vol.3, Issue 2, pp.123-129.  Jai Bansal and Dr. Gurudatt Kakkar (2018),”A Research on the Analysis of Merger of SBI with its Associate Banks and BhartiyaMahila Bank” International Journal of Science Technology and Management, Vol.7, Issue 12, pp 1-8.  Jayashree K.N., Sridhar A.N., Reforms in Banking Sector- SBI merger with its subsidiaries made easier with digital technology, Research in Digital Revolution and New Delhi, pp 216-222. 22 International Journal of Innovations & Research Analysis (IJIRA) - October - December, 2020  Monika (2014), “Merger and Acquisitions in Indian Banking Sector- A Comparative Study on Pre-Post Merger” International Journal of Economics and Management Strategy, Vol IV, No. I, pp- 1-14.  Neha Chadha, “An Analytical Study of Reforms and their Impact on Indian Banking Sector” International Journal of Business Administration and Management, Vol. 7, pp 112-129.  Sanjay Sharma and SahilSidana (2017),”Impact of SBI Merger on Financial Condition of SBI” International Conference on Recent Trends in Technology and its Impact on Economy of India, pp- 390-396.  Singh, O., & Bansal, S. (2017). An Analysis of Revenue Maximising Efficiency of Public Sector Banks in the Post-Reforms Period. Journal of Central Banking Theory and Practice, 6(1), 111-125.  V Mahesh Yadav, “ A Study on financial position of SBI after merger”, International Journal for Research in Applied Science and Engineering Technology, Vol. 7, issue IX, pp 806-815.  Wikipedia, State Bank of India, https://en.wikipedia.org/wiki/State_Bank_of_India,  State Bank of India (SBI), http://www.iloveindia.com/finance/bank/nationalised-banks/statebank- of-india.html,  IANS, SBI merger impact: 47% of associate banks' offices to shut down, http://www.businessstandard.com/article/finance/sbi-merger-impact-47-of-ssociate-banks- offices-to-shut-down-117032100246_1.html  http://economictimes.indiatimes.com/articleshow 53756055. cms?utm_ source= contentofinterest&utm_ medium= text&utm_ campaign= cppst  http://www.jagranjosh.com/articles/merger-of-5-associates-and-bharatiya-mahila-bank-with-sbi- impact-andconsequences1465996068-1  https://www.quora.com/What-is-all-about-the-merging-of-SBI-and-its-associate-banks-Why-is-it- in-talks-Why-is-ithappening-What-are-the-pros-and-cons  sebi annual report. 