Interim MT II

8/14/2019 Interim MT II

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Interim report

On

Management Thesis II

“ A Study on customer satisfaction towards retail Banking services of

IDBI bank in – Hubli city ”

Submitted by

Santosh K

Enrollment No - 8NBHU050

University ID No- 080251673

ICFAI NATIONAL COLLEGE

HUBLI

Under taken at

Hubli

Under the guidance of

Prof. Praveen Joshi

(Faculty Supervisor)

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A cknowledgement

“Experience is the best Teacher”. But experience is fulfilled only when there is

hard work and also good support and cooperation offered by various people that I have

been able to compile in this report. It is always wise to appreciate such people who have

helped me to complete this report successfully.

I express my deep sense of gratitude and indebtedness to My

Institute ICFAI National College which have provided me an opportunity to fulfill my

objectives.

I extend my sincere thanks to faculty guide Mr. Praveen Joshi for enabling me to facethe challenges ahead.

Thanking You

Santosh K

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Contents

Introduction

Industry Profile

Objectives

Limitations

Progress report

Literature Review

Methodology

Reference

Appendices

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Introduction of the Study

A bank is a financial institution licensed by a government. Its primary

activities include borrowing and lending money. Many other financial activities were allowed over

time. For example banks are important players in financial markets and offer financial services such

as investment funds.

Typical mass-market banking in which individual customers use local

branches of larger commercial banks. Services offered include savings and checking accounts,

mortgages, personal loans, debit/credit cards and certificates of deposit (CDs).

Retail banking aims to be the one-stop shop for as many financial services as

possible on behalf of retail clients. Some retail banks have even made a push into investment

services such as wealth management, brokerage accounts, private banking and retirement

planning. While some of these ancillary services are outsourced to third parties (often for regulatory

reasons), they often intertwine with core retail banking accounts like checking and savings to allow

for easier transfers and maintenance.

Banks in India can be categorized into non-scheduled banks and scheduled banks.

Scheduled banks constitute of commercial banks and co-operative banks. There are about 67,000

branches of Scheduled banks spread across India. During the first phase of financial reforms, there

was a nationalization of 14 major banks in 1969. This crucial step led to a shift from Class banking

to Mass banking. Since then the growth of the banking industry in India has been a continuous

process.

As far as the present scenario is concerned the banking industry is in a

transition phase. The Public Sector Banks (PSBs), which are the foundation of the Indian Banking

system account for more than 78 per cent of total banking industry assets. Unfortunately they are

burdened with excessive Non Performing assets (NPAs), massive manpower and lack of modern

technology.

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http://en.wikipedia.org/wiki/Government

http://en.wikipedia.org/wiki/Government



On the other hand the Private Sector Banks in India is witnessing immense progress. They are

leaders in Internet banking, mobile banking, phone banking, ATMs. On the other hand the Public

Sector Banks are still facing the problem of unhappy employees. There has been a decrease of 20

percent in the employee strength of the private sector in the wake of the Voluntary Retirement

Schemes (VRS). As far as foreign banks are concerned they are likely to succeed in India.

RETAILING: It has been a decade – and –a half since India embarked on an ambitious economic

liberalization programmed. Over the last five years, many of its benefits have manifested themselves

and one of the areas where growth is clearly reflected is retailing. The promotional strategies

adopted by retailer include different forms of communication to attract customers to the retail outlet.

This may be through Advertising, Sales promotion, Public relations, or Personal selling.

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Industry Profile

The Industrial Development Bank of India Limited commonly known by its

acronym IDBI is one of India's leading public sector banks and 4th largest Bank in overall ratings.

RBI categorised IDBI as an "other public sector bank". It was established in 1964 by an Act of

Parliament to provide credit and other facilities for the development of the fledgling Indian industry.

It is currently the tenth largest development bank in the world in terms of reach with 1162 ATMs,

702 branches and 468 centers.[1] Some of the institutions built by IDBI are the National Stock

Exchange of India (NSE), the National Securities Depository Services Ltd (NSDL), the Stock

Holding Corporation of India (SHCIL), and IDBI BANK, which today is owned by the Indian

Government, though for a brief period it was a private scheduled bank

Recent developments :

To meet emerging challenges and to keep up with reforms in financial sector, IDBI has taken steps

to reshape its role from a development finance institution to a commercial institution. With the

Industrial Development Bank (Transfer of Undertaking and Repeal) Act , 2003, IDBI attained the

status of a limited company viz. "Industrial Development Bank of India Limited" (IDBIL).

Subsequently, the Reserve Bank of India (RBI) issued the requisite notification on September 30,

2004 incorporating IDBI as a 'scheduled bank' under the RBI Act , 1934. Consequently, IDBI,

formally entered the portals of banking business as IDBIL from October 1, 2004.

The commercial banking arm, IDBI BANK, was merged into IDBI. Although IDBI Bank is owned

by the Government of India, there is a popular misconception that IDBI bank is a private entity.

In March 2008, IDBI Bank entered into a joint venture with Federal Bank and Fortis Insurance

International to form IDBI Fortis Life Insurance, of which IDBI Bank owns 48 percent. The

company ended the year with over 300 Cr in premiums as on 31st March 2009.

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http://en.wikipedia.org/wiki/India



http://en.wikipedia.org/wiki/Act_of_Parliament



http://en.wikipedia.org/wiki/IDBI_Bank#cite_note-0

http://en.wikipedia.org/wiki/National_Stock_Exchange_of_India



http://en.wikipedia.org/w/index.php?title=National_Securities_Depository_Services_Ltd&action=edit&redlink=1


http://en.wikipedia.org/w/index.php?title=Stock_Holding_Corporation_of_India&action=edit&redlink=1


http://en.wikipedia.org/wiki/Reserve_Bank_of_India


http://en.wikipedia.org/wiki/IDBI_Fortis_Life_Insurance





http://en.wikipedia.org/wiki/IDBI_Bank#cite_note-0










Industrial Development Bank of India (IDBI)

The Industrial Development Bank of India (IDBI) was established on July 1,

1964 under an Act of Parliament as a wholly owned subsidiary of the Reserve Bank of India. In 16

February 1976, the ownership of IDBI was transferred to the Government of India and it was made

the principal financial institution for coordinating the activities of institutions engaged in financing,

promoting and developing industry in the country. Although Government shareholding in the Bank

came down below 100% following IDBI’s public issue in July 1995, the former continues to be the

major shareholder (current shareholding: 52.3%). During the four decades of its existence, IDBI has

been instrumental not only in establishing a well-developed, diversified and efficient industrial and

institutional structure but also adding a qualitative dimension to the process of industrial

development in the country. IDBI has played a pioneering role in fulfilling its mission of promoting

industrial growth through financing of medium and long-term projects, in consonance with national

plans and priorities. Over the years,

IDBI has enlarged its basket of products and services, covering almost the

entire spectrum of industrial activities, including manufacturing and services. IDBI provides

financial assistance, both in rupee and foreign currencies, for green-field projects as also for

expansion, modernisation and diversification purposes. In the wake of financial sector reforms

unveiled by the government since 1992, IDBI evolved an array of fund and fee-based services with a

view to providing an integrated solution to meet the entire demand of financial and corporate

advisory requirements of its clients. IDBI also provides indirect financial assistance by way of

refinancing of loans extended by State-level financial institutions and banks and by way of

rediscounting of bills of exchange arising out of sale of indigenous machinery on deferred payment

terms.

IDBI has played a pioneering role, particularly in the pre-reform era (1964-91),in catalyzing broad

based industrial development in the country in keeping with its Government-ordained ‘development

banking’ charter. In pursuance of this mandate, IDBI’s activities transcended the confines of pure

long-term lending to industry and encompassed, among others, balanced industrial growth through

development of backward areas, modernisation of specific industries, employment generation,

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entrepreneurship development along with support services for creating a deep and vibrant domestic

capital market, including development of apposite institutional framework.

Narasimam committee recommends that IDBI should give up its direct financing functions and

concentrate only in promotional and refinancing role. But this recommendation was rejected by the

government. Latter RBI constituted a committee under the chairmanship of S.H.Khan to examine

the concept of development financing in the changed global challenges. This committee is the first

to recommend the concept of universal banking. The committee wanted to the development financial

institution to diversify its activity. It recommended to harmonise the role of development financing

and banking activities by getting away from the conventional distinction between commercial

banking and developmental banking.

In September 2003, IDBI diversified its business domain further by acquiring the entire

shareholding of Tata Finance Limited in Tata Home finance Ltd., signaling IDBI’s foray into the

retail finance sector. The fully-owned housing finance subsidiary has since been renamed ‘IDBI

Home finance Limited’. In view of the signal changes in the operating environment, following

initiation of reforms since the early nineties,

Government of India has decided to transform IDBI into a commercial bank without eschewing its

secular development finance obligations. The migration to the new business model of commercial banking, with its gateway to low-cost current, savings bank deposits, would help overcome most of

the limitations of the current business model of development finance while simultaneously enabling

it to diversify its client/ asset base. Towards this end, the IDB (Transfer of Undertaking and Repeal)

Act 2003 was passed by Parliament in December 2003. The Act provides for repeal of IDBI Act,

corporatisation of IDBI (with majority Government holding; current share: 58.47%) and

transformation into a commercial bank.

The provisions of the Act have come into force from July 2, 2004 in terms of a Government

Notification to this effect. The Notification facilitated formation, incorporation and registration of

Industrial Development Bank of India Ltd. as a company under the Companies Act , 1956 and a

deemed Banking Company under the Banking Regulation Act 1949 and helped in obtaining requisite

regulatory and statutory clearances, including those from RBI. IDBI would commence banking

business in accordance with the provisions of the new Act in addition to the business being

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http://en.wikipedia.org/w/index.php?title=Narasimam_committee&action=edit&redlink=1



transacted under IDBI Act , 1964 from October 1, 2004, the ‘Appointed Date’ notified by the Central

Government. IDBI has firmed up the infrastructure, technology platform and reorientation of its

human capital to achieve a smooth transition.

IDBI Bank, with which the parent IDBI was merged, was a vibrant new generation Bank. The Pvt

Bank was the fastest growing banking company in India. The bank was pioneer in adapting to policy

of first mover in tier 2 cities. The Bank also had the least NPA and the highest productivity per

employee in the banking industry.

On July 29, 2004, the Board of Directors of IDBI and IDBI Bank accorded in principle approval to

the merger of IDBI Bank with the Industrial Development Bank of India Ltd. to be formed

incorporated under the Companies Act , 1956 pursuant to the IDB (Transfer of Undertaking and

Repeal) Act , 2003 (53 of 2003), subject to the approval of shareholders and other regulatory and

statutory approvals. A mutually gainful proposition with positive implications for all stakeholders

and clients, the merger process is expected to be completed during the current financial year ending

March 31, 2005.

The immediate fall out of the merger of IDBI and idbi bank was the exit of employees of idbi bank.

The cultures in the two organizations have taken its toll. The IDBI BANK now is in a growing fold.

With its retail banking arm expanding further after the merger of United western Bank.

IDBI would continue to provide the extant products and services as part of its development finance

role even after its conversion into a banking company. In addition, the new entity would also

provide an array of wholesale and retail banking products, designed to suit the specific needs cash

flow requirements of corporates and individuals. In particular, IDBI would leverage the strong

corporate relationships built up over the years to offer customised and total financial solutions for all

corporate business needs, single-window appraisal for term loans and working capital finance,

strategic advisory and “hand-holding” support at the implementation phase of projects, among

others.

IDBI’s transformation into a commercial bank would provide a gateway to low-cost deposits like

Current and Savings Bank Deposits. This would have a positive impact on the Bank’s overall cost of

funds and facilitate lending at more competitive rates to its clients. The new entity would offer

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various retail products, leveraging upon its existing relationship with retail investors under its

existing Suvidha Flexi-bond schemes. In the emerging scenario, the new IDBI hopes to realize its

mission of positioning itself as a one stop super-shop and most preferred brand for providing total

financial and banking solutions to corporates and individuals, capitalising on its intimate knowledge

of the Indian industry and client requirements and large retail base on the liability side.

IDBI upholds the highest standards of corporate governance in its operations. The responsibility for

maintaining these high standards of governance lies with its Board of Directors. Two Committees of

the Board viz. the Executive Committee and the Audit Committee are adequately empowered to

monitor implementation of good corporate governance practices and making necessary disclosures

within the framework of legal provisions and banking conventions.

Objectives of the studies

• To study on the Customer Satisfaction level on retail banking

• To know the technical advancement benefits for customers.

• To understand the operations and modalities of Retail banking

• To study on the Impact of the Banking Crisis and the Flight to Quality

• To study and analyze the concept of Customer Relationship Management of banks

in general.

• To predict the future position of Retail banking in India

RETAIL BANKING-NEED:

Poor industrial production due to lack of demand has resulted in poor credit off take. Banks cannot

rely on big corporate. As there is regular rise in deposits, banks are flushed with funds. Banks do not

want to take risk by financing second rung manufacturers in recession. With narrowing investment

opportunities and poor credit off take, banks turn towards retail banking, which presents attractive

opportunity with lesser risk and reasonable return. Growing consumerism in India also encourages

retail banking.

The domain of retail banking market has tremendous growth potential for banks and finance

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companies, as at present it is largely untapped. The penetration level is 2.5 to 3%. And this is in a

scenario when the requirements of the consumers are growing. In the past, people never believed in

buying consumer goods on credit. But today the attitude is changing. The demand for consumer

products has increased. Today, about 70% of consumer goods purchased are through finance

schemes/loans as against 40% about five to six years ago.

In retailing of deposits also banks have better scope now. The stock markets and real estate market

are not performing to the expectations of the investors. To tap this market, banks should come out

with a variety of new deposit products.

Due to recession and industrial slowdown, many of the corporate have either shelved or postponed

their development plans. A number of corporate borrowers are sidetracking banks and raising money

through commercial paper and the debt market. These are not only cheaper than bank credit but at

times they succeed in raising money at rates below bank rate. To overcome these problems banks

have formulated strategies to go for retail banking as a major thrust area.

NATURE OF THE STUDY

“Retail banking is typical mass-market banking where individual customers use local

branches of larger commercial banks. Services offered include: savings and checking accounts,

mortgages, personal loans, debit cards, credit cards, and so”

The Retail Banking environment today is changing fast .The changing customer

demographics demands to create a differentiated application based on scalable technology, improved

service and banking convenience. Higher penetration of technology and increase in global literacy

levels has set up the expectations of the customer higher than never before. Increasing use of modern

technology has further enhanced reach and accessibility.

The market today gives us a challenge to provide multiple and innovative contemporary

services to the customer through a consolidated window as so to ensure that the bank’s customer

gets “Uniformity and Consistency” of service delivery across time and at every touch point across

all channels. The pace of innovation is accelerating and security threat has become prime of all

electronic transactions. High cost structure rendering mass-market servicing is prohibitively

expensive.

Present day tech-savvy bankers are now more looking at reduction in their operating costs

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by adopting scalable and secure technology thereby reducing the response time to their customers so

as to improve their client base and economies of scale.

The solution lies to market demands and challenges lies in innovation of new offering with

minimum dependence on branches ' a multi-channel bank and to eliminate the disadvantage of an

inadequate branch network. Generation of leads to cross sell and creating additional revenues with

outmost customer satisfaction has become focal point worldwide for the success of a Bank.

RESEARCH OBJECTIVE

Top of mind awareness of consumers for banks offering various retail

products.

Factors influencing their purchase decision.

To study the comparative influence of various mediums of advertisements in

creating awareness amongst the consumers.

To find the immediate competitors in the minds of consumer for every retail

product.

Key Players Analyzed

This section covers the key facts about the major players (including Public, Private, and Foreign

sector) in the Indian Banking Industry, including

• Bank of Baroda,

• State Bank of India,

• Canara Bank,

• Punjab National Bank,

• HDFC Bank,

• ICICI Bank,

• Kotak Mahindra Bank,

• Citibank,

• Standard Chartered Bank,

• HSBC Bank,

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• ABN AMRO Bank, and

EXPECTED OUTCOMES FOR THE PROPOSED STUDY:This study would enrich my knowledge to look into the modalities of operations of

Key products analyzed in this report include:

Indian retail credit scenario

Housing finance

Auto finance

Consumer Durable loan

educational Loan

Other personal loans

Credit Cards &

Banc assurance.

THE STUDY WOULD FURTHER ENABLE ME TO LEARN:

On line service provided by banks

The level of awareness about various products of banks

The satisfactory levels of existing customers

The location advantages to customer

These are the some of the expected outcomes out of these over-all research programs i will

come to that.

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Problems faced in Retail Banking:

• Retail Banking has all it’s attendant risks. It is highly sensitive .Banks got to move cautiously. It is

easy to enter, but difficult to get out. A systematic and a calculated approach is the pre-requisite for

success in the long run.

• Retail Banking is being introduced with the concept of serving customer with better and innovative

products with the latest technology and easy availability. It becomes so popular and widely

acceptable that more and more customers had started to use it. Now it becomes a mass product.

Customer database have tremendously increased and it becomes difficult to manage them.

• To match the customer inflows and current customer requirements as well as service standards,

banks have to set up more branches, distribution channels and new trained staff as well as

improvement in back office operations also in very near future. This itself a time bounded problem

and banks have to do it as early as possible.

• Today’s competitive market customer has more than one options for his retail banking needs.

Every bank is providing more or less similar kind of products. So an unsatisfied customer can easily

switch over to another competitor’s bank. So banks need to be very careful in handling the

customers. They have to continually improve their service standards.

• Retail Banking is so wide accepted by the customer as well as very aggressively promoted by the

bankers that if the bankers do not take adequate care in distributing and recovering advances, there

are chances of increasing in NPAs in coming feature. And that would be an alarming situation.

PROGRESS REPORT:

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Indian retail banking sector which mainly depends upon transactions directly with

consumers savings and lending, registered a decline in share of 5.02 per cent during the first quarter

of FY ’10 as compared to the corresponding period last year as per analyses of thirty public or

private Indian banks by the Assocham Financial Pulse.

The Retail Banking in India covers segments like current account, saving account, housing

loan, auto loan, personal loan, education loan, consumer durable loan, credit card and debit card etc.

The share of retail banking in total income stood at 41.06 per cent during Q1 FY ’10 and was lower

than the share of 46.08 per cent in the corresponding period last year. The total income of banking

sector increased about 24.3 per cent during Q1 FY ’10, whereas the income from retail banking

registered a growth of 6.03 per cent during the period.

Due to the global meltdown, Indian government took major steps in monitory policy and cut

the banking interest rate for lending like housing and auto loans which impacted the revenue of

Indian retail banking segment. Other reason behind the decline in retail revenue may be due to

higher collateral charged by the banks for retail loans.The analyses of fifteen private and fifteen

public banks show that the private banks are performing better than the public banks in terms of

their revenue from retail segment. The private and public banks have registered about 54.27 per cent

and 35.47 per cent share in retail banking during Q1 FY ’10 respectively.

In the context of banking sector, the public sector banks registered a growth of 28.96 per

cent in total income and 9.92 per cent in retail banking during the first quarter of FY ’10. While theshare of retail banking in public banks declined 6.14 per cent during the period from 41.61 per cent

in Q1 FY ’09 to 35.47 per cent in Q1 FY ’10. However the private banks registered only 13.52 per

cent growth in total income during the period and show a minimal decline of 0.16 per cent in retail

banking. The share of retail banking in private banks declined by 7.44 percentage points during the

period from 61.71 per cent in Q1 FY ’09 to 54.27 per cent in Q1 FY ’10.

Public Bank :

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• The analyses of fifteen public banks shows that State Bank of Hyderabad recorded a major

share in retail banking segment from its total income about 81.84 per cent followed by

Andhra Bank with 42.14 per cent, State Bank of India with 39.81 per cent and Indian Bank

with 38.01 per cent.

• State Bank of Hyderabad registered a major share in retail banking from its total income

during Q1 FY ‘10. The total income of the bank stood at Rs. 1724.41 crore during the

period, out of which Rs. 1448.94 crore came from the retail banking. The bank has

involved about 81.84 per cent in retail banking segment during Q1 FY ’10 registered a

minimal decline in share of 2.03 per cent from the last year same period.

• Andhra Bank registered about 42.14 per cent share in retail banking from its total income

during the Q1 FY ’10. The total income of the bank during the period stood at Rs. 1742.70

crore and the revenue from retail banking was Rs. 734.44 crore, the bank registered 1.17 per

cent decline in share of retail banking as compared to the last year same period.

• The major wholesale and retail banking operator, State Bank of India (SBI) shows 39.81 per

cent share in the retail banking segment from its total income during Q1 FY ’10. The bank

registered a major decline in share of retail segment about 6.23 per cent as compared to the

same period last year. The total income of the bank during the period stood at Rs. 21041.51

crore and the revenue from retail banking was about Rs. 8377.09 crore.

• Indian Bank had a 38.01 per cent share in retail banking from its total income during Q1 FY

’10. The total income of the bank during the period stood at Rs. 2230.39 crore and revenue

from retail banking was Rs. 847.84 crore. The bank registered a minimal decline of 0.98 per

cent in share as compared to the last year same period.

• Other banks which present major share in retail banking segment from their total income

were UCO Bank (37.42 per cent), Central Bank of India (34.45 per cent), Canara Bank

(33.42 per cent) and Union bank of India (31.36 per cent).

•

The banks which registered decline in share of retail banking during Q1 FY ’10 as comparedto the same period last year were Oriental Bank of commerce (33.96 per cent), Allahabad

Bank (10.54 per cent), Corporation Bank (7.81 per cent), Bank of India (7.71 per cent),

Indian Overseas Bank (6.64 per cent) and Bank of Baroda (5.88 per cent).

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Private Bank :

• In the context of fifteen private banks, Ing Vysya Bank Limited shows a major share (80.20

per cent) of retail banking in its total income, followed by Kotak Mahindra Bank Limited

(75.36 per cent), HDFC Bank of India (74.82 per cent) and ICICI Bank Limited (53.52 per

cent).

• Ing Vysya Bank Limited recorded a major share in retail banking from its total income

during Q1 FY ‘10. The total income of the bank stood at Rs. 742.55 crore during the

period, out of which Rs. 595.73 crore came from the retail banking. The bank earned

about 80.2 per cent revenue from retail banking segment during Q1 FY ’10 however

registered a minimal decline in share of 2.22 per cent from the last year same period.

• Kotak Mahindra Bank Limited had a share of 75.36 per cent of retail banking in its total

income during the Q1 FY ’10. The total income of the bank during the period stood atRs.894.23 crore and the revenue from retail banking was Rs. 673.91 crore, the bank

Registered 3.52 per cent decline in share of retail banking as compared to the same

period last year.

• HDFC bank recorded about 74.82 per cent share in retail banking from its total income

during the Q1 FY ’10. The total income of the bank during the period stood at Rs.

5126.75 crore and the revenue from retail banking was Rs. 3843.34 crore, the bank

registered 2.83 per cent decline in share of retail banking as compared to the same period

last year.The major private bank which involved in wholesale and retail banking

operations, State

• ICICI Bank Limited shows 53.52 per cent share in the retail banking segment from its total

income during Q1 FY ’10. The bank registered a major decline in share of retail segment

about 10.936 per cent as compared to the last year same period. The total income of thebank

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during the period stood at Rs. 9223.32 crore and the revenue comes from retail banking was

about Rs. 4936.18 crore. Development Credit Bank Limited recorded 52.26 per cent share in

retail banking from its total income during Q1 FY ’10. The total income of the bank during

the period stood at Rs. 147.08 crore and revenue from retail banking was Rs. 76.85 crore,

registering a 7.52 per cent growth in share as compared to the same period last year.

• Other banks which recorded major share in retail banking segment from their total income

were Axis Bank (47.16 per cent), South Indian Bank (46.92 per cent), J&K Bank (45.90 per

cent), IDBI Bank (43.45 per cent) and The Bank of Rajasthan Limited (22.91 per cent). The

banks which registered decline in share of retail banking during Q1 FY ’10 as compared to

the same period last year were The Federal Bank Limited (20.07 per cent), IndusInd Bank

(16.22 per cent), Dhanalakshmi Bank (15.89 per cent) and Karnataka Bank ( 13.29 per cent),

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LITERATURE REVIEW

Background:

Our perception is an approximation of reality. Our brain attempts to make sense out of the

stimuli to which we are exposed. This works well when we are about to perceive familiar facts.

However, our perception is sometimes “off” when we are not clear about concepts. Perception is a

process by which an individual select, organize & Interpret stimuli in a meaningful picture of the

world Also, we can describe as “how we see the world around us” Perception is the process of selecting, organizing, & Interpreting or attaching meaning to events happening in environment

The Concept of Perception

Perception is one of the objects studied by the science of consumer behaviour. Analyzing the

works of scientists studying consumer behaviour, it is possible to make a conclusion that perception

is presented as one of personal factors, determining consumer behaviour. Personal factors mean the

closest environment of a human, including everything what is inside the person, his head and soul,

characterizing him as a personality. Using his sensory receptors and being influenced by externalfactors, the person receives information, accepts and adapts it, forms his personal attitude, opinion,

and motive, which can be defined as factors that will influence his further activity and behaviour.

Perception within this context is considered as one of the principal personal factors, conditioning the

nature and direction of remaining variables.

Customer Perception

Customer perception is an important component of our relationship with our customers.

Customer satisfaction is a mental state which results from the customer’s comparison of expectations prior to a purchase with performance perceptions after a purchase. A customer may

make such comparisons for each part of an offer called ‘‘domain-specific satisfaction’’ or for the

offer in total called ‘‘global satisfaction’’.

Moreover, this mental state, which we view as a cognitive judgment, is conceived of as

falling somewhere on a bipolar continuum bounded at the lower end by a low level of satisfaction

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where expectations exceed performance perceptions and at the higher end by a high level of

satisfaction where performance perceptions exceed expectations.

Customer Perception on Service:

These characteristics of service also make service unique and different from goods as

Described below

1. Intangibility. Unlike manufactured goods that are tangible, a service is intangible. The

Products from service are purely a performance. The consumer cannot see, taste, smell, hear, feel or

touch the product before it purchased

2. Heterogeneity. A service is difficult to produce consistently and exactly over time. Service

performance varies from producer to producer, from customer to customer, and from time to time.

This characteristic of service makes it difficult to standardize the quality of the service

Inseparability. In service industries, usually the producer performs the service at the time the

consumption of the service takes place. Therefore, it is difficult for the producer to hide mistakes or

quality shortfalls of the service. In comparison the goods producers, have a buffer between

production and customers’ consumption

4. Perishability. Unlike manufactured goods, services cannot be stored for later consumption. This

makes it impossible to have a quality check before the producers send it to the customers. The

service providers then only have one path, to provide service right the first time and every time.

5. Non-returnable. A service is not returnable, unlike products. On the other hand, in many

services, customers maybe fully refunded if the service is not satisfactory.

6. Needs-match uncertainty. Service attributes are more uncertain than the product. This

Yield to higher variance of making a match between perceived needs and service is greater than

perceived need and product match.

7. Interpersonal. Service tends to be more interpersonal than products. For example, compare

buying a vacuum cleaner to contracting for the cleaning of a carpet. While customers will judge the

quality of the vacuum cleaner by how clean the carpet is, customers will tend to judge the quality of the carpet cleaning service on both the appearance of the carpet and the attitude of the technician.

8. Personal. Customers often view services to be more personal than products. For example, a

customer may perceive the service of her car (balancing the tires) as more personal than purchasing

new tires. If the same customer has problems later with the tires, the defect in the tires would be less

personal than if the tires were never balanced.

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9. Psychic. Even though the food at a restaurant might not be as delicious as other famous

restaurants., the customers will recognize the restaurant and tend to be satisfactions if the service of

the restaurant is excellent. Another example is when a flight is delayed, and people tend to be upset

with this poor service . However, if the gate agent is very helpful and friendly, people tend to still be

pleased with the service (Groth, & Dye,1999). Like other industries, banking and financial services

companies have reached the conclusion that the relationship with the customer should not

(metaphorically and literally) end at the bank door. Customer access after the transaction adds value

to the transaction.

Features of Banking:

1. Dealing in Money:

The banks accept deposits from the public and advancing them as loans to the needy people. The

deposits may be of different types- Current, Fixed, Savings, etc. accounts. The deposits are accepted

on various terms and conditions.

2. Deposits must be withdrawable:

The deposits (other than fixed deposits) made by the public can be withdrawable by cheques, draft

or otherwise, i.e., the bank issue and pay cheque. The deposits are usually withdrawable on demand.

3. Dealing with Credit:

The banks are the institutions that can create Credit i.e., creation of additional money for lending.

Thus, ‘Creation of Credit’ is the unique feature of banking.

4. Commercial in Nature:

Since all the banking functions are carried on with the aim of making profit, it is regarded as a

commercial institution.

5. Nature of Agent:

Besides the basic functions of accepting deposit and lending money as loans, banks possess the

character of an agent because of its various agency services.

21



Methodology

RESEARCH METHODOLOGY

An exploratory research was conducted in order the study the consumer perception about

various banks offering retail products and the banks they opt for.

Sample Size

A random sample of 100 were administered with the questionnaire and responses collected.

Research Area

The research was carried out at Hyderabad.

Respondents’ profile

Data was collected from respondents across all age and income groups. Data relating to age was

collected. This segmentation helped us to gain insights into the perception and preferences across

all age groups. Based on the nature of retail banking products age groups were identified and

classified as follows:

Majority of the respondents

belonged to the age group of 25 – 40years.

The reason associated with it is

that this group is the highest user of

retail offerings.

22

Age Profile

15%

45%

23%

17%18-25 yrs

25-40 yrs

40-55 yrs

55 yrs & above



Respondents earning Rs. 8000-

15000 constitute the major chunk of

the respondents using retail product.

This income group qualifies

almost all eligibility criteria of retail

offerings.

Retail products being also

designed for students and retired

people, they were considered for the

survey.

Salaried and businessmen being

the major users of retail users of retail

products.

Data Collection Tools

23

Proffessional Profil

7

29

15

9

Students

Salaried

Businessmen

Retired

Income Profile

15%

15%

27%

30%

13%Non- earning

<5000

5000-8000

8000-15000

>15000



Data was collected using Questionnaires. The Questionnaire consisted of suitable

combination of Rating Scale, Ranking Scale and open ended Questions in the level of

importance.

An in depth interview was also conducted while administering the questionnaire.

Sources of Data

Questionnaires were administered to people with experience of any retail offering,

currently using or used in the past.

Secondary Sources: Data was collected from the various websites from the internet as

well as Journals of Marketing.

Market research:-

Market research covers the field of problem, technique and other aspects of marketing

and related decision making and implementation.

Market Analysis:-

Market Analysis is very useful in plotting questionnaire to test comprehension

positioning charts the memory factors etc. It is useful for finding out real market position in order to

change the existing strategies whenever necessary. The information gathered from different source is

processed and analyzed with of computers to draw conclusion to be used by managers .

Area of Study:-

The study is conducted within the limit of Hubli city.

Type of research design:-

The research design adopted in this study is exploratory research design, exploratory

research design includes survey and facts finding enquiries of different kinds research design is used

to describe the state of affairs as it exists at present.

Research Instrument used:-

24



A structured design Questionnaire is used for surveying the consumers both open

ended and closed ended questions, Binary questions and checklist questions are included.

Open and close ended questionnaires:-

A questionnaire is set of questions to be asked from respondent in an interview,

with appropriate instructions indicating which questions are to be asked and in what order

questionnaire are used in various fields of research and experimental design. A questionnaire serves

many functions-enables data collection from respondent, lend a structure to interview, provide a

standard means for writing down answer and help in processing collected data.

In questionnaire I used response format, it is required by questions depends on the

nature of the research. The format deals with issue relating to the degree of freedom that should be

given to respondent while answering a question. There are two types in this format

1) Open ended questions

2) Closed ended questions

Open ended questions:- It is a type of questions that requires participants to respond in his/her

pre-defined response choice.

Closed ended questions: - It refers to those questions which restricts the interviewee’s answer

to pre-defined response options. In closed ended question I used binary and checklist questions.

Binary questions: - This also knows dichotomous question as they permit only two possible

answers. The respondent has to choose one of the two permissible answers.

Sampling Size - Sampling size is 100.

Sampling Unit - Hubli

25



Reference

Marketing Books.

Bank Brochures.

Information Websites.

www.reportlinker.com

www.idbi.com

http://www.icmrindia.org

www.researchandmarkets.com

www.google.com

www.marketresarch.com

Appendices

MBA - Master of Business Administration

MCA – Master of Computer Application

26



M Sc. – Master of Science

Documents

Interim MT II