Perception of Service Quality in Public Sector Banks

Topics: Bank, Customer service, Banks Pages: 17 (3621 words) Published: May 16, 2010
Consumer Perception of
Public & Private Sector Banks:
A Service Quality Approach


|S. NO. |PARTICULARS |PAGE NO. | | |Executive Summary |3 | |1 |Introduction |4 | |2 |Objectives |5 | |3 |Hypothesis |6 | |4 |Methodology |6 | |5 |Data analysis |7 | |6 |Findings |21 |


Quality of service is becoming important differentiator for companies competing in the services sector and this is more pronounced in the domain of retail banking. Almost all the banks provide similar service and with high level of monetary regulation by the central bank, Reserve Bank of India, the freedom to give differentiated products is very limited. Under such circumstances the quality of service provided by the banks becomes a key differentiator.

The difference in quality of service provided by the banks in Public sector has been improving over the years after losing ground initially to foreign banks and private sector banks. This study sets out to determine how effective the initiatives of the public sector banks have been, since the private sector banks have also been upgrading themselves all this while. The objective of the study hence is to collect data about the quality of service provided in public and private banks and to compare the perception of general public about the service provided.


Perception is a process by which an individual select, organize and interprets stimuli in a meaningful picture of the world. Also, we can perception as “how we see the world around us”. Perception is the process of selecting, organizing, and interpreting or attaching meaning to events happening in environment. Customer perception is an important component of any organisation’s relationship with its customers. Customer satisfaction is a mental state which results from the customer’s comparison of expectations prior to a purchase with performance perceptions after a purchase.

Banking in India originated in the last decades of the 18th century. The oldest bank in existence in India is the State Bank of India, a government-owned bank that traces its origins back to June 1806 and that is the largest commercial bank in the country. Currently, India has 88 scheduled commercial banks - 27 public sector banks (that is with the Government of India holding a stake), 31 private banks (these do not have government stake; they may be publicly listed and traded on stock exchanges) and 38 foreign banks.

The private sector banks have made tremendous strides in the last few years. It was in mid 1990's when Indian banking scenario witnessed the entry of some new private sector banks and in the period between 2002 -2007 these banks have grown by leaps and bounds. They have increased their incomes, asset sizes and outperformed their public sector counterparts in many areas. The scenario post banking reforms of the 1990s thus has made the competition between the banks severe. The public sector banks particularly are trying hard to update themselves and introduce new practices to attract and retain customers. On the other side, foreign...
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