A Study on the Impact of New Private Sector Banks on State Bank of India

Commercial banks, especially the dominant public sector banks, have been exposed to competition from the new banks set up in the private sector with the latest technology. This has created a need for the public sector banks to improve their business efficiency and volume, which is a good sign of competitive effectiveness. Induced stiff competition in the banking sector certainly raises some issues relating to the functioning of domestic banks. The study mainly focuses on the State Bank of India (SBI), the premier bank in the Indian banking sector, as to what extent it has been affected by the entry of new private sector banks. The study applies the t-test for finding the significant difference in the performance of SBI before and after the entry of private sector banks, with the help of financial ratios selected as the parameters for ascertaining the changes in the business of SBI. The results indicate that the presence of new private sector banks does not pose any threat to SBI at the moment, however, the same cannot be said in the future. The SBI has a strong network as compared to these new banks, and its presence has been for more than hundreds of years in the region. These facts certainly have a major impact on the results of the study.