In the present Indian banking scenario, service quality is an ndispensable competitive strategy to retain customer base. Banks are trying to win customer satisfaction and loyalty by providing better quality services. This study examines the relationship of service quality with customer loyalty, commitment and trust from the customer’s perspective in the Indian banking sector. Data was collected from 300 customers of public and private sector banks using structured interview schedules. The results show that dimensions of service quality such as assurance-empathy, reliability and tangibles significantly predict customer trust and commitment. The results also indicate that service quality is positively associated with customer loyalty. Private bank customers are more committed and loyal as they receive better quality of service. The study implies that public sector banks should also come forward and try their best to provide better quality service to win back their customers’ loyalty and commitment.

Service quality has become the most dominant theme in services marketing research (Grönroos, 1984; Jacoby and Olson, 1985; and Parasuraman et al., 1988). Grönroos (1984) has defined service quality as "the outcome of an evaluation process, where the customers compare their expectations with the service they have received". Parasuraman et al. (1985) define service quality as consumers' comparisons between service expectation and service performance. They suggest that service quality is determined by the differences between customers' expectations of the service and their perceptions of the service experience (Parasuraman et al., 1988). Cronin and Taylor (1992) have argued that the conceptualization of service quality as a gap between expectations and performance is inadequate. Teas (1993 and 1994) also criticized the conceptual foundation of the disconfirmation paradigm.

The growth of the service industries and the competition between the private and public sector banks have resulted in an increased need for service providers to identify the gaps in the market in order to improve service provisions to retain customers. The Indian banking sector has responded to these needs and are paying more attention to improve service quality. The field of banking was dominated by large public sector banks till the 1990s. The liberalization policy of the Government of India permitted entry to foreign and private banks in the banking industry, leading to increased competition. Public sector banks are facing increasingly more competition, whereas foreign and private sector banks are trying to win customer loyalty, commitment and trust by providing them better quality services. Service quality has become a competitive strategy in the Indian banking sector. Thus, it is important to explore service quality and its effect on customer loyalty, commitment and trust in public and private sector banks. Another related objective is to examine the differences between public and private banks with regard to these factors. A brief literature review is done to examine the existing literature and then the gap is identified to formulate objectives and research questions.

Marketing Management Journal, Customer Loyalty, Indian Banking Sector, Public Sector Banks, Liberalization Policies, Private Sector Banks, Customer Commitments, Multiple Regression Analysis, Structural Equation Modeling, Foreign Sector Banks, Banking Industry.