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

Topics: Bank, Customer service, Retail banking Pages: 13 (3749 words) Published: October 16, 2012
1Puja Khatri & 2yukti Ahuja
1 School of Management Studies, Guru Gobind Singh Indraprastha University, Kashmere gate, Delhi, India 2*Jagan Institute of Management Studies, 3, Institutional area, sector – 5, Rohini, Delhi – 85, India ABSTRACT

With the advent of liberalization policy and RBI’s easy norms several private and foreign banks have entered in Indian banking sector which has given birth to cut throat competition amongst banks for acquiring large customer base and market share. Banks have to deal with many customers and render various types of services to its customers and if the customers are not satisfied with the services provided by the banks then they will defect which will impact economy as a whole since banking system plays an important role in the economy of a country, also it is very costly and difficult to recover a dissatisfied customer. Since the competition has grown manifold in the recent times it has become a herculean task for organizations to build loyalty, the reason being that the customer of today is spoilt for choice. It has become imperative for both public and private sector banks to perform to the best of their abilities to retain their customers by catering to their explicit as well as implicit needs. Many a times it happens that the banks fail to satisfy their customer which can cause huge losses for banks and there the need of this study arises. The purpose of this study is to compare the public sector banks and private sector banks in terms of customer satisfaction and to study the various variables of service quality using servqual model. The work has been carried out with the objective of understanding the reasons of customer dissatisfaction and what are the opportunity areas wherein these banks need to focus and strengthen their Customer Relationship Management practices. The research work uses both the sources of information, i.e. Primary and Secondary sources, and thereafter SERVQUAL model has been used to identify the discrepancy in the service delivery system. Finally the study concludes by giving some recommendations to improve in the area where these banks do not meet the expectation of their customers.

KEYWORDS: customer relationship management, private banks, public banks, servqual INDIAN RETAIL BANKING ENVIRONMENT
The commercial Banks in India comprise both public
sector as well as private sector banks. In an initiative
towards bringing about reforms in the financial sector,
overall development in the economy along with reforms in
industry, trade, taxation, external sector, banking and
financial markets have been carried out since mid 1991. It
took almost 10 years for the Indian economy to strengthen
its footing and bring about a sea change in the way
financial institutions in the country work today. It is
because of the sustained and gradual pace of reforms that
has helped us in avoiding any crisis and has actually
fuelled growth. As pointed out in the RBI Annual Report
2001-02, GDP growth in the 10 years after reforms i.e.
1992-93 to 2001-02 averaged 6.0% against 5.8% recorded
during 1980-81 to 1989-90 in the pre-reform period. After
almost 7% growth in 2008/09 fiscal year, in the first three
months of 2010 India's economy expanded 8.6% boosted
by industrial production and services.
According to a compilation of facts done by India Brand
Equity Foundation, the RBI has the tenth largest gold
reserves in the world after spending US$ 6.7 billion
towards the purchase of 200 metric tonnes of gold from
the International Monetary Fund (IMF) in November
2009. The purchase has increased the country's share of
gold holdings in its foreign exchange reserves from
approximately 4 per cent to about 6 per cent. In the annual
international ranking conducted by UK-based Brand
Finance Plc, 20 Indian banks have been included in the
Brand Finance® Global Banking 500. In...
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