Research Question

Currently banking industry especially in India is going via bad phase due to rapid change in economic surroundings. So it’s high time for banks in India especially the top banks to double check the performance parameters like Interest income profit , Deposit, , NPA, whole income Investment and Advance. This project highlights the gauge to found a statistical connection between the Bank’s main Income source which is Deposit and the secondary source of income which is Interest and its steadiness on the generally bank’s Profit.

Data Description

Creating a connection between all the above three discussed parameters which is between the Bank’s Interest along with Deposit and the profit is the Main criteria of this study. For this reason it necessitates a confirm data, for this particular project we have collected vast data. Like the information has been gathered from the Reserve Bank of India (RBI), and many websites like top websites of 30 banks in India based on diverse parameters. RBI which is known as the most important financial government body and it acts as a controller for the monetary and banking Firm. The information is gathered from RBI to make sure it’s error free.

Data Size: Information from 30 Banks which includes both public along with the Private is gathered from RBI (Reserve Bank of India), Creating a connection between all the above three discussed parameters which is between the Bank’s Interest along with Deposit and the profit is the Main criteria, please find the below Variables :

1. Deposit: It’s the Main source of liquidity to any bank .It has two components they are Demand Deposit along with the Saving Bank deposits and for this case study it is a variable which is Dependent.

2. Interest Income: It’s also the Main income source to any banks, for this case study it is a variable which is Dependent.

3. Profit: for this case study it is a variable which is Dependent.

This Case study will be done assuming about the bank abundance and vetted via their capability to manufacture the Deposits along with the Interest rates.

Methodology

The information which has been Collected from RBI is showed with the help of Bar Diagram, Charts along with the Scatter illustration with the aid of Excel and also to make available statistically the suggestion created and investigated by an excel Add-in. Deterioration and association analysis to creating a connection between all the above three discussed parameters which is between the Bank’s Interest along with Deposit and the profit is the

Main criteria of this study. At the same time as by means of the simple deterioration statistical means, compute the on the whole intercept β0 along with the slope β1. Major purpose is to, settle on the assurance level along with the investigation and the theory whether these two are linked or not

For this case study let’s do the below Hypothesis:

H1: Profit in the Banks relay on the largely by deposit paying attention by the individual Indian banks.

H2: Deposit along with Interest is extremely correlated along with the profit of Banks.

H0: Β1 >= 0 Ha: Β1 ≠ 0

Equation:

In deterioration case he sketchy the deterioration line: y (Profit) = β1 (coefficient) + β2 (Slope) x2 (Deposit) + β3 x3 (Interest rate)

H1: Banks Profit relay on the on the whole deposit involved by the individual Indian banks.

H2: income from Interest is the main source of profit in the Bank’s. H3: Deposit along with Interest is exceedingly simultaneous with the profits in the

Bank’s.

Data Interpretation

The basic and vital hypothesis of this particular study is to investigate the collision of Deposit especially on the Indian banks Profit’s, the primary graph shows the relationship between the deposit and profit with whole 30 banks in India, However it wasn’t a function which is linear. To get a clear picture regarding the same, we have taken the top 10 Banks in Indian considering their profit along with deposit to recognize if that affiliation is considered or not .

REGRASSION ANALYSIS

Deposit Interest Income ProfitMean 375554.360 17362.00 2349.00Median 154984.210 13530.000 1219.920Mode 30624.480 2736.100 307.770Maximum 2256021.000 106521.450 11707.290Range 2225396.520 103785.350 11399.520Sample Standard Deviation 608731.140 18724.570 2817.020Quartile 1 30624.47990 2736.09790 307.76970Quartile 3 403567.760 403567.760 403567.80Skewness 2.4589778070 3.9791723720 2.1061410Kurtosis 4.9037818430 18.59539050 4.170820

Summary of statistics for Bank’s Deposit, interest income and profit

Regression Statistics

Multiple R0.806339713

0

R Square0.650183732

0

Adjusted R Square0.637227574

0

Standard Error1725.838765

0Observations 30.0

Estimated regression line for profit and deposit are: y = 934.0630 + 0.00370 X2.0

Square of R is equal to 0.650, which is considered as to some extent related to the Bank profit .80% of the disparity in Bank profit earned by the Indian banks is detailed by the variables which are independent Deposit. The consequence value related to the two variables is not considered very positive regarding the banks deposit along with the Bank profit. value for P is Exactly 0.02 which is less than 0.05 It shows how the data is relevant and the variables which are independent are worn as a Bank Deposit.

Creating a connection between all the above three discussed parameters which is between the Bank’s Interest along with Deposit is shown in the data outcome.

Regression Statistics

Multiple R0.970372074

0

R Square0.941621961

0Adjusted R Square

0.9372976620

Standard Error705.3945926

0Observations 30.0

Value of R square for such hypothesis is 0.94 that means the bank profit are correlated to the rate of interest and bank deposits thus the line of regression for this are

CoefficientsStandard

Error t Stat P-value

Intercept

-269.587312

60184.683225

50

-1.45972820

200.002590302

20

Deposit0.00309920

800.00022195

9013.9629943

30 0.00193080Interest Income

0.0837906890

0.0072158220

11.612078890 0.00243930

y = - 269.5870 + 0.0030 X1 + 0.0870 X2.0

Thus the hypothesis are true and it is valid H0 : Β1 >= 0

Ha: Β1 ≠ 0

The value of P is less than .005 which shows that information is consistent and validate for the both Bank Interest and Deposit income. The below shown Graph 2 and 3 tells the relationship amid Bank’s Interest income and Profit. The Study Output which is holding its relative true with performance 94% of the connection amid the two variables; so it shows Bank’s profit is proportional to interest. Graph 4 is depiction of 30 deposits pertaining to banks and their proceeds which is incredibly balanced and presenting elevated correlation.

Consequently we can articulate income or profit banks are dependent relative on the Interest income finished by banks. Consider as the main source for banks proceeds which possess apparatus primary will be the Interest gained and second one is Interest from the banks.

Allahabad Bank Andhra Bank Bank of Baroda Bank of India Bank of Maharashtra

69.7282.91

67.6677.08 80.33

65.949.1

39.9 34.2 30

Relationship Between profit and income on Bank's Interest

Deposit Interest Income

Graph 3: Complete Relationship Between profit and income on Bank's Interest and their profit.

Allahabad Bank Andhra Bank Bank of Baroda Bank of India Bank of Maharashtra

69.72 82.91 67.66 77.08 80.3365.9 49.1 39.9 34.2 30

1142 1031

5179

796 308

Banks Deposit , Profitabilityand Interest Income

Deposit Interest Income Profit

Graph 4: rate of deposit and income of interest are highly correlated with profitability of banks

Data Interpretation

H1: Profit of banks mainly depends on overall deposit that are attracted by respective banks.

Allahabad Bank Andhra Bank Bank of Baroda Bank of India Bank of Maharashtra69.72 82.91 67.66 77.08 80.33

1866.791344.67

5006.96

2677.52

430.83

Banks Proft and Deposit Rate Deposit Profit

Graph 1: Relationship between Profit and Deposit of 5 Banks from India

Allahab

ad Ban

k

Andhra Ban

k

Bank o

f Baro

da

Bank o

f India

Bank o

f Mah

arash

tra

Canara

Bank

Centra

l Ban

k of In

dia0

20406080

Profit and Deposit

Graph 2: Relationship between Profit and Deposit for top 6 public banks who make profits .

10

100

1000

10000

Profit

Deposit

ProfitDeposit

Graph 3: Relationship between Profit and Deposit for top 06 banks along high higher deposit rate.

First hypothesis of the study to analyse the impact of Deposit on the Profits of Indian banks, the first graph represents the deposit and profit relationship with entire 30 Indian banks, and which is clearly describe that the relationship between these two are partially true, however it is not the linear function . To have the clarity on the same, top 10 Indian banks indentified on the basis of their profit and deposit to understand if that relationship holds valid or not, as scatter diagram 2 and 3 showed above the relationship between two are not justified, in graph 2the for initial three profit making banks have strong relationship with the Deposits however later part from 4 to 7 even the deposit are almost constant however the profits of the banks are deepen, and has extensive rise for the bank at number 8 position. Hence the outcome of the hypothesis is partially true that deposit of the banks is correlated to the Profits.

H2: Primary source of profit are based on Interest income in Bank

Allahabad Bank Andhra Bank Bank of Baroda Bank of India Bank of Maharashtra Canara Bank 65.9 49.1 39.9 34.2 30 28.5

1142 1031

5179

796 308581

Relationship between Profit and Interest Income of banks

Interest Income Profit

Graph 4: Relationship between Profit and Interest Income of banks

The above shown graph 4 and 5 depicts relationship amid the Interest and the profit of Banks. SPSS productivity of the case study also investment its relation accurate with 98% of the connection mid variables. For this reason interest is directly proportional to profit. Graph 4 is depiction of the 30 different banks deposits and profits related to them are which is incredibly symmetrical and performance elevated correlations. The below shown Graph 5 is depiction interest income in Banks, NPA along with total income which is symmetrical. As a result we came to conclusion that income or profit of the banks is relayed on Interest income prepared by banks.

H3: Interest and deposit rate are highly correlated with Bank Profit .

Allahabad Bank Andhra Bank Bank of Baroda Bank of India Bank of Maharashtra Canara Bank 0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

69.72 82.91 67.66 77.0880.33

70.6365.9 49.1

39.934.2

3028.5

1141.5635 1031.13355179

796.45307.7697

580.99

Deposit Interest Income Profit

Graph 5: Interest income and Deposit rate are mainly a highly correlated of bank’s Profitability

Graph 6: Top 10 Banks along with highest Deposit Rate.

Allahab

ad Ban

k

Andhra Ban

k

Bank o

f Baro

da

Bank o

f India

Bank o

f Mah

arashtra

Canara

Bank

Centra

l Ban

k of In

dia

65.949.1 39.9 34.2 30 28.5 27.2

Interest IncomeInterest Income

Graph 7: Top 10 Indian Banks along with their Highest Interest Income

Allahab

ad Ban

k

Andhra Ban

k

Bank o

f Baro

da

Bank o

f India

Bank o

f Mah

arashtra

Canara

Bank

1142 1031

5179

796308 581

ProfitProfit

Graph 8: Top 10 Banks of high Profitability.

After seeing graph no 6, 7, 8 and 9 it tells about the relationship between of bank’s profitability as well as their interest and deposit income. Mainly Based on correlation test and graph that has been done through SPSS hence it tells that that profitability of banks are based and dependent on Interest rates as well as deposit rate.

Conclusion

Therefore we can come to conclusion from the Study that forms a relationship amid 30 banks in India about their profitability pertaining to deposit rate along with interest income. For this particular project we have collected vast data. Like the information has been gathered from the Reserve Bank of India (RBI ).To formed a relationship, with the help of best available tools like Microsoft excel and SPSS for graphs plotting and undertaking coefficient of correlations investigation. The study states that banks deposit rate and the bank’s profitability weren’t very significant .and the Banks interest income and banks profitability are extremely correlated. This Study also showed why the Banks are more focused on the Interest rate.

BIBLIOGRAPHY

Reserve Banks of India (rbidocs.rbi.org.in/rdocs/Publications/PDFs/00STB071112FLS.pdf)

Appendix

Interest Income

State Bank of Indore* 2736State Bank of Mysore 5078State Bank of Bikaner & Jaipur 6291Punjab & Sind Bank 6475Dena Bank 6794State Bank of Travancore 6829Bank of Maharashtra 7214United Bank of India 7961Vijaya Bank 7988State Bank of Patiala 8121State Bank of Hyderabad 10647Andhra Bank 11339Indian Bank 12231Corporation Bank 13018Axis Bank Limited 13375HDFC Bank Limited 13685ICICI Bank Limited 14419UCO Bank 14632IDBI Ltd. 15261Syndicate Bank 15268

DepositInterest Income Profit

Bank of Baroda 3849 29674 5,007Punjab National Bank 3796 36428 4,884

Canara Bank 3271 30851 3,283Bank of India 3182 28481 2,678ICICI Bank Limited 2256 14419 96,03Union Bank of India 2229 21144 1,787IDBI Ltd. 2105 15261 1031HDFC Bank Limited 2086 13685 6,869Central Bank of India 1962 19149 533Axis Bank Limited 1892 13375 5,179Indian Overseas Bank 1784 17897 1,050Allahabad Bank 1596 15523 1,867

DepositInterest Income Profit

State Bank of India (SBI) 1044 106521 11,707Punjab National Bank 3796 36428 4,884Canara Bank 3271 30851 3,283Bank of Baroda 3849 29674 5,007Bank of India 3182 28481 2,678Union Bank of India 2229 21144 1,787Central Bank of India 1962 19149 533Indian Overseas Bank 1784 17897 1,050Oriental Bank of Commerce 1560 15815 1,142Allahabad Bank 1596 15523 1,867Syndicate Bank 1579 15268 1,313IDBI Ltd. 2105 15261 1031UCO Bank 1540 14632 1,109ICICI Bank Limited 2256 14419 96,03

DepositInterest Income Profit

ICICI Bank Limited 2256 14419 96,03State Bank of India (SBI) 1044 106521 11,707HDFC Bank Limited 2086 13685 6,869Axis Bank Limited 1892 13375 5,179Bank of Baroda 3849 29674 5,007Punjab National Bank 3796 36428 4,884Canara Bank 3271 30851 3,283Bank of India 3182 28481 2,678Allahabad Bank 1596 15523 1,867Union Bank of India 2229 21144 1,787Indian Bank 1208 12231 1,747Corporation Bank 1361 13018 1,506Andhra Bank 1059 11339 1,345

Syndicate Bank 1579 15268 1,313

Deposit ProfitICICI Bank Limited 2256 96,03State Bank of India (SBI) 1044 11,707HDFC Bank Limited 2086 6,869Axis Bank Limited 1892 5,179Bank of Baroda 3849 5,007Punjab National Bank 3796 4,884Canara Bank 3271 3,283Bank of India 3182 2,678Allahabad Bank 1596 1,867Union Bank of India 2229 1,787

Deposit ProfitBank of Baroda 3849 5,007Punjab National Bank 3796 4,884Canara Bank 3271 3,283Bank of India 3182 2,678ICICI Bank Limited 2256 96,03Union Bank of India 2229 1,787IDBI Ltd. 2105 1031HDFC Bank Limited 2086 6,869Central Bank of India 1962 533Axis Bank Limited 1892 5,179

Deposit Interest Income ProfitICICI Bank Limited 2256 14419 96,03State Bank of India (SBI) 1044 106521 11,707HDFC Bank Limited 2086 13685 6,869Axis Bank Limited 1892 13375 5,179Bank of Baroda 3849 29674 5,007Punjab National Bank 3796 36428 4,884Canara Bank 3271 30851 3,283Bank of India 3182 28481 2,678Allahabad Bank 1596 15523 1,867

Union Bank of India 2229 21144 1,787Indian Bank 1208 12231 1,747Corporation Bank 1361 13018 1,506Andhra Bank 1059 11339 1,345Syndicate Bank 1579 15268 1,313State Bank of Hyderabad 987 10647 1,298Oriental Bank of Commerce 1560 15815 1,142UCO Bank 1540 14632 1,109Indian Overseas Bank 1784 17897 1,050IDBI Ltd. 2105 15261 1031Dena Bank 772 6794 803State Bank of Patiala 791 8121 796State Bank of Bikaner & Jaipur 616 6291 652United Bank of India 891 7961 633Vijaya Bank 831 7988 581Central Bank of India 1962 19149 533State Bank of Travancore 715 6829 510Punjab & Sind Bank 631 6475 451Bank of Maharashtra 765 7214 431State Bank of Mysore 502 5078 369State Bank of Indore* 306 2736 308

All the figures are in 000 crore.

Deposit Interest IncomeAllahabad Bank 159593Andhra Bank 105851Bank of Baroda 384871Bank of India 318216Bank of Maharashtra 76529Canara Bank 327054Central Bank of India 196173Corporation Bank 136142Dena Bank 77167Indian Bank 120804Indian Overseas Bank 178434Oriental Bank of Commerce 155965Punjab & Sind Bank 63124Punjab National Bank 379588Syndicate Bank 157941UCO Bank 154003Union Bank of India 222869United Bank of India 89116

Vijaya Bank 83056State Bank of India (SBI) 1043647State Bank of Bikaner & Jaipur 61572State Bank of Hyderabad 98732State Bank of Indore* 30624State Bank of Mysore 50186State Bank of Patiala 79147State Bank of Travancore 71470IDBI Ltd. 210493ICICI Bank Limited 2256021HDFC Bank Limited 2085864Axis Bank Limited 1892378