E-ISSN:2583-0074

Research Article

Private Sector Banks in India

Social Science Journal for Advanced Research

2024 Volume 4 Number 6 November
Publisherwww.singhpublication.com

An Analytical Study on Trend and Forecasting of Selected Private Sector Banks in India

Kasthuri1*, Saratha S2
DOI:10.5281/zenodo.14437015

1* Kasthuri, Research Scholar, Department of Commerce, Erode Arts and Science College Autonomous, Erode, India.

2 S Saratha, Assistant Professor, Department of Commerce, Erode Arts and Science College Autonomous, Erode, India.

This study examines the trends and forecasting of reserves and deposits in selected private sector banks in India. Reserves, which represent the portion of profits retained by the banks, are crucial for enhancing financial stability and meeting regulatory requirements. Analyzing the growth in reserves provides insights into the bank''s ability to cushion against future uncertainties and risks. Deposits, on the other hand, serve as a vital indicator of customer confidence and liquidity. The growth and trend in deposit levels are key to assessing the bank''s ability to fund loans and manage its liquidity position effectively. By focusing on the trends in reserves and deposits, this study aims to provide a clear understanding of how these factors contribute to the overall financial stability, growth potential, and resilience of private sector banks in a competitive financial landscape.

Keywords: banks, reserves,deposits, private banks

Corresponding Author How to Cite this Article To Browse
Kasthuri, Research Scholar, Department of Commerce, Erode Arts and Science College Autonomous, Erode, , India.
Email: 		Kasthuri, Saratha S, An Analytical Study on Trend and Forecasting of Selected Private Sector Banks in India. soc. sci. j. adv. res.. 2024;4(6):67-71.
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https://ssjar.singhpublication.com/index.php/ojs/article/view/210

Manuscript Received Review Round 1 Review Round 2 Review Round 3 Accepted
2024-10-10 2024-10-29 2024-11-29
Conflict of Interest Funding Ethical Approval Plagiarism X-checker Note
None Nil Yes 10.21

© 2024by Kasthuri, Saratha Sand Published by Singh Publication. This is an Open Access article licensed under a Creative Commons Attribution 4.0 International License https://creativecommons.org/licenses/by/4.0/ unported [CC BY 4.0].

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Kasthuri D et al. An Analytical Study on Trend and Forecasting

Introduction

"The financial performance of banks is a critical indicator of their stability and overall economic impact. For banks like Federal Bank and Bandhan Bank, understanding the key factors influencing their reserves and deposits is essential for making strategic decisions that foster sustainable growth and strengthen shareholder value. This study explores the trends in reserves and deposits, which play a significant role in the financial health of these banks.

Deposits, as the primary source of funding, are crucial to a bank’s liquidity and lending potential. Understanding the trends in deposit growth provides insight into customer confidence, market trust, and liquidity management. Federal Bank, with its strong presence in urban areas, has focused on maintaining a steady inflow of deposits to meet its lending obligations. In contrast, Bandhan Bank, with its unique focus on rural and underbanked populations, tailors its deposit-gathering strategies to meet the needs of its customer base while ensuring liquidity.

The efficient management of reserves and deposits is critical to both banks' financial strategies, ensuring their capacity to meet obligations while maintaining healthy liquidity levels. Federal Bank and Bandhan Bank monitor these metrics closely, as they directly affect their ability to fund loans, manage risks, and plan for future growth. Trends in deposit growth also help assess the competitive positioning of these banks in the financial sector.

Review Of Literature

Gupta, A., &Mehra, V. (2017). This study analyzes the role of deposit growth in enhancing the financial performance of Indian banks. By examining data from 20 private sector banks over a 15-year period, the authors find that higher deposits are closely linked to increased profitability and improved liquidity.

The study also highlights the need for banks to balance deposit growth with efficient fund utilization to maximize returns.

Rao, P., & Thomas, M. (2019). This paper explores impact of reserves on financial stability of Indian private sector banks. The authors show that banks with larger reserves tend to have higher capital adequacy and are better positioned to manage economic downturns. findings suggest that maintaining adequate reserves is key to ensuring resilience in a competitive financial market.

Singh, K., &Verma, S. (2020). This research focuses on how effective liquidity management strategies influence overall performance of Indian banks. Analyzing data from a sample of private and public sector banks, study finds that banks with robust liquidity frameworks are better equipped to handle short-term obligations and sustain profitability during periods of financial stress.

Das, S., & Roy, T. (2018). This study examines the relationship between deposit mobilization and profitability in private sector banks in India. Using data from major private banks over a 10-year period, the authors conclude that consistent deposit growth contributes significantly to bank profitability, allowing for more extensive lending operations and improved market valuation.

Kumar, R., & Sharma, P. (2021). This paper investigates the relationship between reserves management and profitability in Indian private sector banks. The authors find that banks with higher reserves not only exhibit greater financial stability but also achieve higher profitability due to their enhanced capacity to absorb losses. The study recommends a balanced approach to reserves management for sustainable long-term growth.

Objective

To assess the trend and forecasting of selected private sector banks in India.


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Table 1: Actual and Trend Value for Total Deposits of Selected Private Sector Banks (Rs. in Crores)

YearHDFCICICIAXISKOTAK
Actual
value		Trend valueActual
value		Trend valueActual
value		Trend valueActual
value		Trend value
2014-15450795.64261387361562.73269884.6322441.9253759.259072.3357967.51
2015-16546424.19462361.7421425.71384324.7357967.6336959.474860.3191001.97
2016-17643639.66663336.4490039.06498764.8414378.8420159.6138643124036.4
2017-18788770.64864311.1560975.21613204.9453622.7503359.8157425.9157070.9
2018-19923140.931065286652919.67727645548471.3586560192643.3190105.4
2019-201147502.291266261770968.99842085.1640104.9669760.2225880.4223139.8
2020-211335060.221467235932522.16956525.2707306.1752960.4262820.5256174.3
2021-221559217.4416682101064571.611070965821720.9836160.6280100.1289208.7
2022-231883394.6518691851180840.71185405946945.2919360.8311684.1322243.2
2023-242379786.2820701591412824.95129984610686411002561363096.1355277.7
T.EYt = 60412 + 200975*tYt = 155444 + 114440*tYt = 170559 + 83200*tYt = 24933 + 33034*t

Source: CMIE ReportRegEqn= 0.0 + 1.00 *TT.E-Trend Equation

Table 2: Actual and Trend Value for Total Deposits of Selected Private Sector Banks (Rs. in Crores)

YearIDBIYESFEDERALIDFC FIRST
Actual
value		Trend valueActual
value		Trend valueActual
value		Trend valueActual
value		Trend value
2014-15259836252834.391175.85108170.970824.9959597.60-10189.1
2015-16265719.8251960.3111719.5122432.879171.7178957.328219.059225.144
2016-17268538.1251086.2142873.9136694.797664.5698317.0440208.2228639.36
2017-18247931.6250212.1200738.2150956.6111992.5117676.848198.248053.57
2018-19227371.7249338.1227610.2165218.4134954.3137036.570479.0167467.78
2019-20222424.1248464105363.9179480.3152290.1156396.265107.9786881.99
2020-21230898.4247589.9162946.6193742.2172644.5175755.988688.42106296.2
2021-22233134.4246715.9197191.7208004.1181700.6195115.6105634.4125710.4
2022-23255498.9245841.8217501.9222266213386214475.3144637.3145124.6
2023-24277657.2244967.7266372.2236527.9252534233835.1200576.3164538.8
T.EYt = 253708 - 874.064*tYt = 93909 + 14262*tYt = 40238 + 19360*tYt = -29603 + 19414*t

Source: CMIE ReportRegEqn= 0.0 + 1.00 *TT.E-Trend Equation

Table 3: Anova for Total Deposits of Selected Private Sector Banks

S.noName of the BanksR2F-valuep-valueS/NS
1HDFC83.339.820.000S
2ICICI55.19.800.019**S
3AXIS59.585.670.002S
4KOTAK76.844.530.000S
5INDUSIND77.126.930.005S
6IDBI44.60.150.15NS
7YES71.820.350.002S
8FEDERAL76.525.980.001S

*p<0.01 **p<0.05 S-Significant NS-Not Significant 

The actual value and the computed trend values ofdeposits of the selected public and private sector banksin India, during the study period from 2014-15to 2023-24have been revealed in tables. Based on the actual value and the computed trend values ofdepositsof the selected study units the fitted trend and regression equation is also obtained. The Table denotes the ANOVA for depositsof selected public and private sector banksin India. There is significant difference in case ofHDFC, ICICI,AXIS,KOTAK, INDUSIND, YESB,FEDERAL,IDFC FIRST andBANDHAN,at five per cent level of significance. It is clear from table that significant difference between actual and trend values inof HDFC, ICICI, AXIS, KOTAK, INDUSIND, YESB, FEDERAL, IDFCFIRST and at five per cent level of significance. So, null hypothesis is rejected while alternative hypothesis is accepted for these banks.

Table 4: Projections for Total Deposits of Public and Private Sector Banks (Rs in Crores)

YEARHDFCICICIAXISKOTAKIDBIYESFEDERALIDFC FIRST
2024-25227113414142861085761388312.1244093.7250789.8253194.8183953
2026-26247210915287261168961421346.6243219.6265051.7272554.5203367.3
2026-27267308416431661252162454381.1242345.6279313.6291914.2222781.5
2027-28287405817576061335362487415.5241471.5293575.5311273.9242195.7
2028-29307503318720461418562520450240597.4307837.3330633.6261609.9

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Source: Computed

The projection resulted for deposits of the selected private sector banks in India by linear growth models during the year 2024-25 to 2028-29 is listed in tableshows thatHDFC and ICICI bank have more depositswhen compared with all the other selected private sector.

Further, the table reveals that during the year 2028-29 all the banks are having increasing trend in deposits.

So, we can conclude from the analysis that theHDFC and ICICI bank have more deposits when compared with all the other selected private sector banks during the projection period from the year 2024-25 to 2028-29.

Conclusion

In conclusion, the study highlights significant trends in the deposits of selected private sector banks in India, demonstrating notable differences between actual and computed trend values for key banks such as HDFC, ICICI, AXIS, and others.

The analysis shows that HDFC and ICICI are expected to maintain higher deposit levels compared to their peers during the projected period from 2024-25 to 2028-29.

All banks in the study are projected to experience a positive growth trend in deposits, reflecting increasing customer confidence and effective liquidity management.

The findings suggest that private sector banks are well-positioned for sustainable growth, with deposit trends serving as a key indicator of financial stability and competitive strength in the Indian banking sector.

References

1. Gupta, A., & Mehra, V. (2017). Deposits and financial performance in Indian banks: A panel data analysis. Indian Journal of Finance, 12(1), 45-60.

2. Rao, P., & Thomas, M. (2019). The effect of reserves on bank stability: Evidence from Indian private sector banks. Journal of Banking Studies, 23(4), 330-345.
3. Singh, K., &Verma, S. (2020). Liquidity management and its influence on the performance of Indian banks. International Journal of Banking and Financial Markets, 35(2), 189-205.
4. Das, S., & Roy, T. (2018). Trends in deposit mobilization and its impact on bank profitability: A case study of Indian private sector banks. Journal of Finance and Banking, 31(1), 78-93.
5. Kumar, R., & Sharma, P. (2021). Reserves management and profitability: An empirical analysis of private sector banks in India. South Asian Journal of Banking & Finance, 28(3), 112-127.
6. Mishra, N., & Sinha, S. (2018). The role of capital reserves in financial performance: Evidence from Indian private banks. Asian Journal of Finance & Accounting, 10(2), 214-229.
7. Prasad, A., & Chatterjee, D. (2019). A study of deposit growth and its impact on Indian private sector banks' financial performance. International Journal of Financial Management, 7(3), 95-110.
8. Bansal, R., & Jain, S. (2020). The interplay between reserves and liquidity in Indian private sector banks: A case study approach. Journal of Applied Banking Research, 15(4), 290-305.
9. Chakraborty, P., &Sengupta, R. (2017). Deposit growth trends in Indian banking: Implications for profitability and stability. Journal of Emerging Financial Markets, 22(2), 123-141.
10. Raj, M., & Nair, K. (2021). Financial stability through reserves: An empirical study on selected Indian private banks. Indian Journal of Banking & Economics, 39(3), 175-192.


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