CHAPTER-4 Comparative Analysis of MAS of both...

CHAPTER-4 Comparative Analysis of MAS of both the selected Banks

97

In this chapter, the entire analysis has been done on the basis of secondary data,

collected through information given in annual reports of both the banks. This

section comprises of MAS of both the banks. In order to have the precise

comparison between the two banks, hypotheses have also been tested in this

chapter. Some important statistical tools such as, score chart, mean, Spearsman’s

rank correlation coefficient, Karl Pearson’s coefficient of correlation, regression

and student‘t-test’ have also been applied to make this analysis more scientific.

4.1 PARAMETERS OF MAS

In this section ofthe study, the researcher has taken 10 parameters of MAS from

both the banks which are considered to be important for judging the

management audit in the selected banks. The selected parameters have been

scored out of ten. Further calculation has been done to test the hypotheses. The

selected parameters are as follows:-

Table no.4.1 shows parameters of MAS

S.No.

Parameters of MAS

1. Internal Control

2. Credit Audit& Review

3. Cash Management Services

4. Risk Management

5. Information Technology

6. Management Information System

7. Non-performing Asset Management

8. Citizen’s charter

9. Right to Information Act

10. Customer care Center

Source: Annual Report (PNB & HDFC Bank)


98

4.1.1 INTERNAL CONTROL:

The term internal control means identification, measuring, monitoring and

mitigation of risk in day to operations effects were taken to ensure strict

compliance of directions/guidelines issued by regulatory bodies.

4.1.2 CREDIT AUDIT & REVIEW:

The Credit Audit & Review Division (CARD) is conducting on-site credit audit by

Credit Auditors as well as by Concurrent Auditors. The Division is conducting

credit audit of loan accounts in standard category with explore of Rs. 8 crore&

above and identified high risk accounts with outstanding balance of Rs. 1 crore

and above.

4.1.3 CASH MANAGEMENT SERVICES:

The Cash management services are being provided through CBS system. The

objective of CBS is to provide a well-integrated collection and payment solution

to the corporate clients. The existing CMS software will handle large transactions

of all cash management functions including payment, collection liquidity

management, charging & billing, account reconciliation, bulk payment, postdated

cheque, remittances etc.

4.1.4 RISK MANAGEMENT:

Risk management includes vision/mission, risk appetite, polices, strategy shared

beliefs & behaviors, committees, roles & responsibilities, skills/ resources, risk

identification, limit setting, risk monitoring, issues escalation, methodologies,

system, tools, management information these tools help bank to strike a balance

between the risk and the return on assets and striving towards improving market

share to maximize shareholder value.


99

4.1.5 INFORMATION TECHONOLOGY:

Information technology includes ATM facilities, Internet Banking System, Real

Time Gross Settlement System (RTGS) and National Electronic Funds Transfer

(NEFT), Bilingual Banking Solution, Share trading, Active Directory Services

(ADS), Voice over Internet Protocol (VoIP),SMS Alert Services, Mobile Banking

Services.

4.1.6 MANAGEMENT INFORMATION SYSTEM:

Management Information System Division (MISD) was set up with the objective

of centralization of MIS.LADDER (Loan and Advances Data Desk for Evaluation

& Reports) System is being implemented through the Division, which is being

used for: generation of credit related MIS, monitoring of NPAs and arresting

slippages, calculation of provisioning on NPAs & standard assets, credit

administration, credit related data input source for Enterprise wide Data

Warehouse (EDW) being established in the bank.

4.1.7 NON-PERFORMING ASSETS MANAGEMENT:

A loan or lease that is not meeting its stated principal and interest payments.

Banks usually classify as NPA any commercial loans which are more than 90 days

overdue and any consumer loans which are more than 180 days overdue. More

generally, an asset which is not producing income.

4.1.8 CITIZENS’ CHARTER:

Citizens’ charter includes pamphlets containing the Bank’s deposit and credit

schemes are freely available to the customers in the branches. These pamphlets

also contain brief details of the formalities and documents required for availing

different credit facilities.


100

4.1.9 RIGHT TO INFORMATION ACT:

The Right to Information Act, which came into force on October 12, 2005, has

been implemented by the bank. The relevant information as per the act has been

put on the bank’s website.

4.1.10 CUSTOMERCARE CENTER:

Customer Care Centre endeavors to provide customer service of a high order to

minimize the inflow of complaints and to effectively implement the measures

taken by the Bank. Customer Care Centre reviews various aspects of Customer

Service on an on-going basis to ensure impact at the grass root level. Besides

redressal (of complaints received from Public/Customers, MOF, DPG, RBI,

VIPs), the complaints are analyzed and effective measures undertaken to avoid

recurrence of the same. Further, implementation/compliance of Code of Bank’s

Commitment to Customers is ensured across the Bank.


101

On the basis of these parameters the researcher has compared MAS in both the

banks. Researcher has prepared Score Chart of MAS with the help of

Annual Reports of the selected banks. This analysis is also helpful in

testing the most important hypotheses of the study i.e,

HO1: In reference to MAS both the banks are independent of each other.

In order to have an in-depth study, the researcher has further

framed the following hypotheses for each parameter.

HO1.1: In reference to Internal Control both the banks are independent to each

other.

HO1.2: In reference to Credit audit & Review both the banks are independent to

each other.

HO1.3: In reference to Cash Management Services both the banks are independent

to each other.

HO1.4: In reference to Risk Management both the banks are independent to each

other.

HO1.5: In reference to Information Technology both the banks are independent to

each other.

HO1.6: In reference to Management Information System both the banks are

independent to each other.

HO1.7: In reference to Non-performing Assets both the banks are independent to

each other.

HO1.8: In reference to Citizen’s Charter both the banks are independent to each

other.

HO1.9: In reference to Right to Information Act both the banks are independent to

each other.

HO1.10: In reference to Customer care Center both the banks are independent to

each other.


102

4.2 Assigning Scores to selected parameters of MAS

Table no.4.2 shows Assigning Scores

Parameters (MAS) Basis for assigning scores

Internal Control For assigning the scores to internal control the researcher has

taken into consideration the percentage of total bank’s business

during the selected years.

Credit Audit& Review

For assigning score, the researcher has taken the credit audit

completed in accounts covering percentage of credit portfolio,

as against RBI requirement of at least 30-40 percent of credit

portfolio to be received every year.

Cash Management Services

Scores have been assigned by the researcher on the basis

availability of CBS system at the no.of locations.

Risk Management The scoring has been given taking into consideration the policy

and procedure adopted by the bank to reduce the risk.

Information Technology

Scoring has been done by taking percentage of multichannel

distribution networks adopted by banks.

Management Information System

Scoring has been done on the basis of functioning of

Management Information System.

Non-performing Asset Management

For assigning scores net NPA ratio has been taken into

consideration. Low net NPA ratio got highest score, and so on.

Citizens' charter For the purpose of scoring no. of languages in which pamphlets

were printed taken into consideration.

Right to Information Act

For the purpose of scoring percentage of total number of

information provided by the bank to the applicants were taken

into consideration.

Customer care Center

For the purpose of scoring percentage of resolved complaints

(opening + received/redressed) taken into consideration.

Source: Annual Report (PNB & HDFC Bank)


103

The above table shows the 10 selected parameters of MAS. The information has

been gathered related to the MAS parameters for the 5 years starting from 2005-

06 and scored by the researcher to the each parameter on the basis of secondary

data and information collected from Annual Reports and experts of the related

field of selected banks. The researcher has also calculated mean, standard

deviation and t-test for each parameter. Spearsman’s rank correlation coefficient,

Karl Pearson’s coefficient of correlation has also been calculated with reference to

each parameter of MAS. To show the trend of both the banks in reference to

MAS, regression analysis has also been done for judging the performance of

banks.


104

MAS-SCORE CHART-PNB and HDFC BANK

Table no. 4.3 shows Score Chart

MAS Score Chart- PNB & HDFC Bank

S.no. Years 2005-06 2006-07 2007-08 2008-09 2009-10 PNB HDFC

Parameters (MAS) PNB HDFC PNB HDFC PNB HDFC PNB HDFC PNB HDFC 𝒙 𝟏 𝒙 𝟐

1. Internal control 6.5 5.6 6.5 4.9 6.4 5.4 6.3 4.5 6.6 4.6 6.46 5

2. Credit audit& Review 6 4.2 6.3 5.3 5.1 5.5 5.2 5.5 7.4 4.5 6 5

3. Cash management Services 7 6 8 6 9 6 10 6 10 6 8.8 6

4. Risk management 10 7 10 7 10 7 10 7 10 8 10 7.2

5. Information technology 8.5 7.7 8.6 7.8 8.6 8.3 8.6 8 8.6 8 8.58 7.96

6.

Management information

system 6 5 6 5 6 5 6 5 6 6 6 5.2

7.

Non-performing asset

management 8 6 7 6 3 6 4 6 9 4 6.2 5.6

8. Citizen’s charter 9 2 10 2 10 2 10 2 10 2 9.8 2

9. Right to information act 5.8 5.2 4.6 4.8 4.7 4.1 6.5 5 7.3 5.9 5.78 5

10. Customer care Center 9.8 9.9 9.9 9.9 10 10 9.9 10 10 9.9 9.92 9.94

Total MAS(X)= 76.6 58.6 76.9 58.7 72.8 59.3 76.5 59 84.9 58.9 387.7 294.5

Source: Annual Reports (PNB & HDFC Bank 2005-2010), x-variable of MAS,𝒙 =mean


105

4.3.MAS IN SELECTED BANKS

Graph no. 4.1

Source: Annual Report (PNB & HDFC Bank 2005-2010) The above graph clearly shows the score of MAS in PNB and HDFC Bank from

2005-06 to 2009-10. The score of MAS in PNB is slightly decreasing in 2007-08

and afterward, it is increasing. Whereas, the score of MAS in HDFC Bank is

almost constant every year.

The table no. 4.4 shows the mean standard deviation and t- test (which has been

compared at 0.05 level of significance). It shows the results of test of hypothesis

of different parameters. Here, ‘A’ indicates that Ho is accepted and ‘R’ indicates

that Ho is rejected. The descriptions of t-test of significance are presented in the

following table.

76.6 76.9 72.8 76.584.9

58.6 58.7 59.3 59 58.9

2005-06 2006-07 2007-08 2008-09 2009-10

MAS (PNB and HDFC Bank)

PNB HDFC


106

4.4 Comparison between PNB and HDFC Bank with Reference to selected Parameters of MAS

Table no. 4.4 shows Comparison Chart

Comparison Chart - PNB and HDFC Bank

S.No.

Years 2005-06 2006-7 2007-08 2008-09 2009-10 PNB HDFC PNB HDFC

Parameters P H P H P H P H P H 𝒙 𝟏 𝒙 𝟐 S.D1 S.D2

t-

value Ho

1. Internal control 6.5 5.6 6.5 4.9 6.4 5.4 6.3 4.5 6.6 4.6 6.46 5 0.11 0.48 6.56 R

2.

Credit audit& Review

6 4.2 6.3 5.3 5.1 5.5 5.2 5.5 7.4 4.5 6 5 0.94 0.61 2 R

3.

Cash management

7 6 8 6 9 6 10 6 10 6 8.8 6 1.3 0 4.8 R

4.

Risk management

10 7 10 7 10 7 10 7 10 8 10 7.2 0 0.45 14 R

5. Information technology

8.5 7.7 8.6 7.8 8.6 8.3 8.6 8 8.6 8 8.58 7.96 0.04 0.23 5.91 R

6. Management information system

6 5 6 5 6 5 6 5 6 6 6 5.2 0 0.45 4 R

7. Non-performing asset management

8 6 7 6 3 6 4 6 9 4 6.2 5.6 2.59 0.89 0.49 A

8. Citizens' charter 9 2 10 2 10 2 10 2 10 2 9.8 2 0.45 0 39 R

9. Right to information act

5.8 5.2 4.6 4.8 4.7 4.1 6.5 5 7.3 5.9 5.78 5 1.16 0.65 1.31 A

10. Customer care 9.8 9.9 9.9 9.9 10 10 9.9 10 10 9.9 9.92 9.94 0.08 0.05 -0.45 A

Total MAS(X)=

76.6 58.6 76.9 58.7 72.8 59.3 76.5 59 84.9 58.9 77.54 58.9 4.44 0.27 9.36 R

Source: Annual Reports (PNB & HDFC Bank 2005-2010), x-variable of MAS,𝒙 =mean


107

In order to test the hypothesis number one, it shows that the mean scores of

the two selected banks in case of Internal Control havesignificant difference.

The computed value of 6.56 is more than the table value of t-1.96at 0.05

level of significance.Therefore, it can be safely said that there is a significant

difference in the mean scores of internal control of the two banks. The mean

score of PNB (6.45) is more than HDFC (5). It can be concluded that in this

parameter the PNB is in a better position in comparison to HDFC Bank.

In order to test the hypothesis number two, it shows that the mean scores of

the two selected banks in case of Credit audit & review havesignificant

difference. The computed value of 2.00 is more than the table value of t-

1.96at 0.05 level of significance. Therefore, it can be safely said that there is a

significant difference in the mean scores of credit audit & review of the two

banks. The mean score of PNB (6) is more than HDFC (5). It can be

concluded that in this parameter the PNB is in a better position in comparison

to HDFC Bank.

In order to test the hypothesis number three, it shows that the mean scores of

the two selected banks in case of cash management services havesignificant

difference. The computed value of 4.80 is greater than the table value of t-


significant difference in the mean scores of cash management of the two

banks. The mean score of PNB (8.8) is greater than HDFC (6). It can be

concluded in this parameter the PNB is at better position in comparison to

HDFC.

In order to test the hypothesis number four, it shows the mean scores of the

two selected banks in case of risk management have significant difference.

The computed value of 14.00 is greater than the table value of t-1.96 at 0.05

level of significance. Therefore, it can be safely said that there is a significant

difference in the mean scores of cash management of the two banks. The

mean score of PNB (10) is greater than HDFC (7.2). It can be concluded that

in this parameter the PNB is at better position in comparison to HDFC.


108

In order to test the hypothesis number five, it shows the mean scores of the

two selected banks in case of information technology havesignificant



significant difference in the mean scores of information technology of the two

banks. The mean score of PNB (8.58) is more than HDFC (7.96). It can be

concluded in this parameter the PNB is in a better position in comparison to

HDFC.

In order to test the hypothesis number six, it shows the mean scores of the

two selected banks in case of management information technology have

significant difference. The computed value of 4.00 is more than the table

value of t-1.96at 0.05 level of significance. Therefore, it can be safely said that

there is a significant difference in the mean scores of management

information technology of the two banks. The mean score of PNB (6) is more

than HDFC (5.2). It can be concluded in this parameter the PNB is in a better

position in comparison to HDFC.

In order to test the hypothesis number seven, it shows the mean scores of the

two selected banks in case of non-performing assets management have no

significant difference. The computed value of 0.49 is less than the table value

of t-1.96at 0.05 level of significance. Therefore, it can be safely said that

thereis no significant difference in the mean scores of non-performing assets

of the two banks. In this regard both the banks are equal to each other.

In order to test the hypothesis number eight, it shows the mean scores of the

two selected banks in case of citizen’s charter havesignificant difference. The

computed value of 39.00 is greater than the table value of t-1.96at 0.05 level

of significance. Therefore, it can be safely said that there is a significant

difference in the mean scores of citizen’s charter of the two banks. The mean

score of PNB (9.8) is higher than HDFC (2). It can be concluded that in this

parameter the PNB is in a better position in comparison to HDFC.


109

In order to test the hypothesis number nine, it shows the mean scores of the

two selected banks in case of right to information act have no significant


1.96at 0.05 level of significance. Therefore, it can be safely said that there is

no significant difference in the mean scores of right to information act of the

two banks. In this regard both the banks are equal to each other.

In order to test the hypothesis number ten, it shows the mean scores of the

two selected banks in case of Customercare center have no significant

difference. The computed value of -0.49 is less than the table value of t-1.96

at 0.05 level of significance. Therefore, it can be safely said that there is no

significant difference in the mean scores of Customercare center of the two

banks. In this parameter both the banks are equal to each other.


110

4.5Spearman’s Rank Correlation Coefficient between PNB & HDFC

Bank with Reference to selected Parameters of MAS

Table no. 4.5 shows Computation of Rank Correlation

Computation of Rank Correlation Coefficient Between PNB &

HDFC Bank with reference to selected parameters of MAS

S. no.

Parameters 𝒙 𝟏 R1 𝒙 𝟐 R2

1. Internal control 6.46 6 5 8

2. Credit audit& Review 6.00 8.5 5 8

3. Cash management 8.80 4 6 4

4. Risk management 10.0 1 7.2 3

5. Information technology 8.58 5 7.96 2

6.

Management information

system 6.00 8.5 5.2 6

7.

Non-performing asset

management 6.20 7 5.6 5

8. Citizens' chater 9.80 3 2 10

9. Right to information act 5.78 10 5 8

10. Customer care 9.92 2 9.94 1

Result (R)

0.49

Source: Annual Reports, 𝒙 -mean, R- coefficient of rank co-rrelation.

In the above table, on the basis of mean scores of selected parameters, the

researcher has used Spearman's Rank Correlation to rank both the banks

The outcome of Spearman’s coefficient of rank correlation is R= 0.49, which

shows positively moderate degree of agreement between PNB and HDFC Bank in

reference to selected parameters of MAS.


111

4.6Regression Analysis of PNB & HDFC Bank with reference to MAS

Table no. 4.4 showsRegression Analysis

Regression-PNB Regression-HDFC Bank

Years Y dx XY X2 Years Y dx XY X2

2005-06 76.6 -2 -153.2 1 2005-06 58.6 -2 -117.2 1

2006-07 76.9 -1 -76.9 4 2006-07 58.7 -1 -58.6 4

2007-08 72.8 0 0 9 2007-08 59.3 0 0 9

2008-09 76.5 1 76.5 16 2008-09 59 1 59 16

2009-10 84.9 2 169.8 25 2009-10 58.9 2 117.8 25

N=5 387.7

16.2 55 N=5 294.5

1 55

Result= 15.32a 0.29 b

Result= 11.72a 0.02b

Source: Annual Reports

Above table shows the regression analysis of both the banks in which the

researcher has taken the MAS. Total scores ofY show the trend of MAS during

selected 5 years.

The equation of the straight line is:𝑌 = 𝑎 + 𝑏𝑋

For PNB: 𝑌 = 15.32𝑎 + 0.29𝑏𝑋

For HDFC Bank: 𝑌 = 11.72𝑎 + 0.02𝑏𝑋

The outcomes of regression analysis were PNB (0.29) and HDFC Bank (0.02).

From the results, it can be inferred that the trend of PNB of selected 5 years is

better than that of HDFC Bank with reference to selected MAS parameters of

both the banks.


112

4.7 Overall Comparison of MAS in PNB and HDFC Bank

In the below mentioned table, researcher has calculated weighted mean of total

MAS score of PNB and HDFC Bank and t-test has been applied.

Table no. 4.7 shows the overall Comparison Chart

Comparison of MAS in PNB and HDFC Bank

PNB HDFC Bank

Mean S.D Mean S.D t-value Ho

77.54 4.44 58.88 0.27 9.36 R

Source: Annual Reports, S.D-Standard Deviation.

In order to test the hypothesis which shows mean scores of two selected banks in

case of MAS have significant difference. The computed value 9.36is more than

the table value of t-1.96at 0.05 level of significance. Therefore, it can be safely

said that there is a significant difference in the mean scores of MAS of the two

banks. The mean score of PNB (77.54) is higher than HDFC (58.88). Therefore,

it can be concluded that PNB is better than HDFC Bank in overall performance of

MAS because out of 10 selected parameters, 7 parameters have scored higher

than that of HDFC Bank.


113

REFERENCES

1. Annual reports PNB- 2005-06, 2006-07, 2007-08, 2008-09, 2009-2010.

2. Annual reports HDFC Bank- 2005-06, 2006-07, 2007-08, 2008-09, 2009-

2010.

3. K.K.Sharma, Arun Kumar, AlkaChaudhary-Statistics in Management Studies:

Krishna Prakashan Media (P) Ltd. 9th Edition 2008. Page no.8.212.

4. PratiyogitaDarpan, Commerce-page no. 175,271.

5. R.P.Varshney, Business Statistics: Jawahar Publication-Agra 5th Edition 2009-

10.page, 72.

6. S.P.Guta, M.K.Gupta. Business Statistics: Sultan Chand & Sons Publishers

New Delhi 4th Edition. Page no.199, 204, 525-526.

CHAPTER-4 Comparative Analysis of MAS of both...

Documents

Transcript of CHAPTER-4 Comparative Analysis of MAS of both...