4.1 PARAMETERS OF MAS

Transcription

1 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) 97

2 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 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 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 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. 98

3 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 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 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 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. 99

4 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 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. 100

5 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. 101

6 4.2 Assigning Scores to selected parameters of MAS Table no.4.2 shows Assigning Scores Parameters (MAS) Internal Control Credit Audit& Review Cash Management Services Risk Management Information Technology Management Information System Non-performing Asset Management Citizens' charter Right to Information Act Customer care Center Basis for assigning scores For assigning the scores to internal control the researcher has taken into consideration the percentage of total bank s business during the selected years. 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 percent of credit portfolio to be received every year. Scores have been assigned by the researcher on the basis availability of CBS system at the no.of locations. The scoring has been given taking into consideration the policy and procedure adopted by the bank to reduce the risk. Scoring has been done by taking percentage of multichannel distribution networks adopted by banks. Scoring has been done on the basis of functioning of Management Information System. For assigning scores net NPA ratio has been taken into consideration. Low net NPA ratio got highest score, and so on. For the purpose of scoring no. of languages in which pamphlets were printed taken into consideration. For the purpose of scoring percentage of total number of information provided by the bank to the applicants were taken into consideration. For the purpose of scoring percentage of resolved complaints (opening + received/redressed) taken into consideration. Source: Annual Report (PNB & HDFC Bank) 102

7 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 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. 103

8 MAS-SCORE CHART-PNB and HDFC BANK Table no. 4.3 shows Score Chart CHAPTER-4 Comparative Analysis of MAS of both the selected Banks MAS Score Chart- PNB & HDFC Bank S.no. Years PNB HDFC Parameters (MAS) PNB HDFC PNB HDFC PNB HDFC PNB HDFC PNB HDFC x 1 x 2 1. Internal control Credit audit& Review Cash management Services Risk management Information technology Management information 6. system Non-performing asset 7. management Citizen s charter Right to information act Customer care Center Total MAS(X)= Source: Annual Reports (PNB & HDFC Bank ), x-variable of MAS,x=mean 104

9 4.3.MAS IN SELECTED BANKS Graph no. 4.1 MAS (PNB and HDFC Bank) PNB HDFC Source: Annual Report (PNB & HDFC Bank ) The above graph clearly shows the score of MAS in PNB and HDFC Bank from to The score of MAS in PNB is slightly decreasing in 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. 105

10 CHAPTER-4 Comparative Analysis of MAS of both the selected Banks 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 Years PNB HDFC PNB HDFC S.No. t- Parameters P H P H P H P H P H x 1 x 2 S.D1 S.D2 value Ho 1. Internal control R R Credit audit& Review R Cash management R Risk management 5. Information R technology 6. Management R information system 7. Non-performing asset A management 8. Citizens' charter R 9. Right to information A act 10. Customer care A Total MAS(X)= R Source: Annual Reports (PNB & HDFC Bank ), x-variable of MAS,x =mean 106

11 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- 1.96at 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 (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 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. 107

12 In order to test the hypothesis number five, it shows the mean scores of the two selected banks in case of information technology havesignificant difference. The computed value of 5.91 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 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 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. 108

13 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 difference. The computed value of 1.31 is more than the table value of t- 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 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. 109

14 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 R 1 x 2 R 2 1. Internal control Credit audit& Review Cash management Risk management Information technology Management information system Non-performing asset management Citizens' chater Right to information act Customer care 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. 110

15 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 X 2 Years Y dx XY X N= N= 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 bX For HDFC Bank: Y = 11.72a bX 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. 111

16 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 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. 112

17 REFERENCES 1. Annual reports PNB , , , , Annual reports HDFC Bank , , , , K.K.Sharma, Arun Kumar, AlkaChaudhary-Statistics in Management Studies: Krishna Prakashan Media (P) Ltd. 9 th Edition Page no PratiyogitaDarpan, Commerce-page no. 175, R.P.Varshney, Business Statistics: Jawahar Publication-Agra 5 th Edition page, S.P.Guta, M.K.Gupta. Business Statistics: Sultan Chand & Sons Publishers New Delhi 4 th Edition. Page no.199, 204,