A Comparative Study of Financial Decisions of Banks with Special Reference to Bank of India and HDFC Bank

Abstract

Commercial banks are very crucial to economic growth of the nation for the services they provide such as financial mediation between savers and investors, credit creation and encouragement of capital accumulation. The health of the economy is the soundness of banking system. Banking as an activity involves acceptance of deposits and leading or investment of money. The importance of financial decision in bank performance is crucial because many of the factors that may lead to failure. The strategies and financial decisions that may drive to growth and profitability. The present study has been conducted to know the financial performance of HDFC Bank and Bank of India, the relationship between capital structure and banking performance and to study the relationship between financial decisions and corporate governance. The study is based on both primary and secondary data. The Current Ratio, Quick ratio, Credit deposit ratio, Yield on advances ratio and GNPA percentage to Gross advances ratios are used for this study. The study revealed that the current ratio of HDFC bank is greater than Bank of India. As far as the liquidity position is concerned, the HDFC bank has more liquid assets. The study revealed that HDFC has more credit deposit ratio which indicates that HDFC Bank creates more loan assets from its deposits as compared to Bank of India. The profit made from advances is more for HDFC bank when compared to Bank of India. The management of Non-Performing assets (NPA) is good for HDFC Bank because the Gross Non-Performing Assets to gross advances is less for HDFC Bank.

Keywords

Current Ratio, Quick ratio, Credit deposit ratio, Yield on advances ratio, Gross Non-Performing Assets, Percentage to Gross advances, Corporate Governance.

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