A Comparative Study of the Borrower Perception of Retail Lending in Private and Public Sector Banks in India

Indian banking sector is growing rapidly and is expected to enjoy even better growth opportunities in the evolving future. Retail banking has always been prevalent in various forms ever since the evolution of banking. Retail lending in India is becoming an important segment of bank credit. It holds the key to the inclusive, comprehensive and pervasive growth of India. India's retail-banking assets size is expected to grow at the rate of 18% a year over the next four years (2006-2010). Customer service is perhaps the most important dimension of retail banking. While most public sector banks offer the same range of service with similar technology/expertise, the level of customer service matters the most in bringing in more business. Perhaps more than the efficiency of service, the approach and attitude towards customers will make the difference. Customer relationship is the base on which the structure of retail banking will evolve. The study brings out the perception of the retail borrowers about the two types of banks in India i.e. the private sector banks and public sector banks. It has revealed that all the TWELVE components of the borrower perception on retail lending can be grouped under TWO broad factors namely; Services and Marketing of loan products and Economic value and convenience. Private Banks are found to be comparatively better in Services and Marketing of loan products and Public Banks in Economic value and convenience among the perception of the borrowers of retail lending. Further, the study elucidates that though there is a positive perception about the retail lending of both the types of banks, these banks need to perk up their services greatly and make conscious effort to meet the customer needs and requirements in the wake of competition and growing expectations of customers