Analysing The Financial Performance Of Indian Banks: A Comparative Study Of Public And Private Banks”

Authors: Assistant Professor Ms.Rupali Khurana, Anushka Verma

Abstract: The Indian banking sector is the backbone of the nation’s economic infrastructure, playing a crucial role in mobilizing savings, providing credit, and facilitating financial inclusion. Among the diverse players in this sector, public and private sector banks display significant differences in terms of structure, governance, customer service, and financial performance. This research paper aims to provide a comparative analysis of the financial performance of two prominent Indian banks—State Bank of India (SBI), representing the public sector, and HDFC Bank, representing the private sector—over a five-year period from FY 2019–20 to FY 2023–24.The study applies both ratio analysis and the CAMEL framework—which evaluates Capital Adequacy, Asset Quality, Management Efficiency, Earnings, and Liquidity—to comprehensively assess and compare the financial health and operational performance of the two banks. Key financial indicators such as Return on Assets (ROA), Return on Equity (ROE), Net Interest Margin (NIM), Gross and Net Non-Performing Assets (GNPA & NNPA), Cost-to-Income ratio, and Capital to Risk-weighted Assets Ratio (CRAR) were analysed. The findings reveal that HDFC Bank consistently outperformed SBI across most financial parameters, especially in profitability, asset quality, and operational efficiency. HDFC Bank demonstrated robust risk management practices, lower NPA levels, higher returns on assets and equity, and more efficient use of its resources. In contrast, SBI, despite being a market leader in terms of size and branch network, struggled with relatively higher NPA ratios and lower returns. However, it maintained strong capital adequacy and played a vital role in financial inclusion through its outreach and priority sector lending.This study also considers the impact of external events such as the COVID-19 pandemic, the RBI’s policy interventions, and the 2023 merger of HDFC Ltd. with HDFC Bank, analysing how these factors influenced the banks' financial performance. The research concludes that while private sector banks like HDFC Bank are more agile and profitable, public sector banks such as SBI are indispensable for their role in social banking and economic development. The study offers valuable insights for investors, policymakers, regulators, and academicians interested in understanding the evolving dynamics of Indian banking. It also emphasizes the need for public sector banks to adopt modern technology, improve governance, and reduce bad debts to remain competitive in the changing financial landscape.