Public Sector Amp Private Sector Bank

8/13/2019 Public Sector Amp Private Sector Bank

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Shri Vile Parle Kelvani MandalsMithibai College of Arts,, Chauhan Institute of Science &Amrutben Jivanlal college of Commerce and conomics

Vile Parle !"est# Mumbai $%%% '

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COMPARATIVE ANALYSIS OF PRIVATE AND PUBLIC

SECTOR BANKS

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EVALUATION CERTIFICATE

This is to certify that the undersigned have assessed and evaluated the

project onComparative Analysis of Private and Public Sector Banks;

submitted byDaroge Rashid Nisar Ahmed, student of M.Com. Part -

II (Semester III) for the academic year 2013-14. This project is original to

the best of our knowledge and has been accepted for Internal Assessment.

Name & Signature of Internal Examiner

Name & Signature of External Examiner

P(I+CIPA0College Seal /(4 /4.41A/KA(I

2

Shri Vile Parle Kelvani MandalsMithibai College of Arts,, Chauhan Institute of Science &Amrutben Jivanlal college of Commerce and conomics



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Shri Vile Parle Kelvani Mandals

Mithibai College of Arts,, Chauhan Institute of Science &Amrutben Jivanlal college of Commerce and conomics


DECLARATION BY THE STUDENT

I, DAROGE RASHID NISAR AHMED, student of M.Com. (Part II)

Roll No.: 07 hereby declare that the project titledCOMPARATIVE

ANALYSIS OF PRIVATE SECTOR AND PUBLIC SECTOR

BANKS for the subjectRESEARCH METHODOLOGY submitted by

me for Semester III of the academic year 2013-14, is based on actual work

carried out by me under the guidance and supervision ofPROF BHARAT

PITHADIA I further state that this work is original and not submitted

anywhere else for any examination.

Place: Mumbai

Date:

Name & Signature of Student: DAROGE RASHID NISAR AHMED ___________________________

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ACK+)"0 /1 M +*

First and foremost I seek the blessings of my beloved TEACHERSwho keep lot of expe tations on me and showering their infinite lovefor ever!

I wo"ld like to thank #niversity of $"mbai for giving me thisopport"nity of taking s" h a hallenging pro%e t& whi h has enhan edmy knowledge abo"t the ' Comparative Analysis of Private andPublic Sector Banks

I show my gratit"de to the (rin ipal& )i e (rin ipal and Co*ordinatorof $ithibai College who gave me a lot of moral s"pport and "ndertheir g"idan e I was s" essf"lly able to omplete my pro%e t!

And with deep sense of gratit"de I wo"ld like to thank (rof! Bharat

Pithdia for his+her immense help and o*operation!

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C)+* +*

Sr4 +o4 PA(*IC-0A(S Page +o4

94 Inroduction

84 Anal


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94 I+*()/-CI*)+

The world of banking has assumed a new dimension at dawn of the 21 st century with the

advent of tech banking, thereby lending the industry a stamp of universality. n general,

banking may be classified as retail and corporate banking. !etail banking, which is

designed to meet the re"uirement of individual customers and encourage their savings,

includes payment of utility bills, consumer loans, credit cards, checking account and the

like. #orporate banking, on the other hand, caters to the need of corporate customers like

bills discounting, opening letters of credit, managing cash, etc.$etamorphic changes took place in the ndian financial system during the eighties and

nineties conse"uent upon deregulation and liberali%ation of economic policies of the

government. ndia began shaping up its economy and earmarked ambitious plan for

economic growth. #onse"uently, a sea change in money and capital markets took place.

&pplication of marketing concept in the banking sector was introduced to enhance the

customer satisfaction the policy of privati%ation of banking services aims at encouraging

the competition in banking sector and introduction of financial services. #onse"uently,

services such as 'emat, nternet banking, (ortfolio $anagement, )enture capital, etc,

came into e*istence to cater to the needs of public. &n important agenda for every banker

today is greater operational efficiency and customer satisfaction. The mew watchword for

the bank is pretty ambitious+ customer delight.

The introduction to the marketing concept to banking sectors can be traced back to

&merican anking &ssociation #onference of 1-5 . anks marketing can be defined as

the part of management activity, which seems to direct the flow of banking services

profitability to the customers. The marketing concept basically re"uires that there should be thorough understanding of customer need and to learn about market it operates in.

/urther the market is segmented so as to understand the re"uirement of the customer at a

profit to the banks.

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/ 6I+I*I)+ )6 .A+K

*he )=ford dictionar< defines the .an> as,

An establishment for the custody of money, which it pays out, on a customers

order

According to "hitehead,

A Bank is defined as an institution which collects surplus funds from the public,

safeguards them, and makes them available to the true owner when required and also

lends sums be their true owners to those who are in need of funds and can provide

security.

anking #ompany in ndia has been defined in the anking #ompanies act 1-4-,

ne which transacts the business of banking which means the accepting, for the

purpose of lending or investment of the deposits of money from the public, repayable on

demand, or otherwise and withdraw able be che"ue, draft, order or otherwise.

The banking system is an integral subsystem of the financial system. t represents an

important channel of collecting small savings form the households and lending it to the

corporate sector.

The ndian banking system has !eserve ank of ndia ! as the ape* body for all

matters relating to the banking system. t is the central ank of ndia. t is also known as

the anker To &ll ther anks.

V)0-*I)+ )6 I+/IA+ .A+KI+1

&ncient banking system of ndia constituted of indigenous bankers. They have been

carrying on their age6old banking operations in different parts of the country under

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different names. The modern age of banking constitutes the fundamental basis of

economic growth. The term ank is being used since long time but there is no clear

conception regarding its beginning. &ccording to the viewpoint, in good old days. talian

money leaders were known as Banchi because they kept a special type of table to

transact their business.

IMP)(*A+C )6 .A+KS

Today banks have become a part and parcel of 8otak ank9s life. There was a time when

dwellers of the city alone could en:oy their services. ;ow banks offer access to even a

common man and their activities e*tend to areas hitherto untouched. anks cater to the

needs of agriculturalists, industrialists, traders and to all the other sections of the society.

n modern age, the banking constitutes the fundamental basis of economic growth. Thus,

they accelerate the economic growth of a country and steer the wheels of the economytowards its goals of self reliance in all fields . t naturally arouses 8otak ank9s interest

in knowing more about the < ank= and the various men and the activities connected with

it.

I+/IA+ .A+KI+1 S2S* M

anking in ndia has its origin as early as the )edic period. t was believed that transition

from money lending to banking must have occurred even before $anu, The great >indu

?urist, who has devoted a section of his work to deposit advance and laid down rules

relating to rates of interest. 'uring the $ogul period, the indigeneous ankers played a

very important role in lending money financing foreign trade and commerce. 'uring the

days of @ast ndia #ompany, it was turn over the agency houses to carry on the business.

The Aeneral ank of ndia was the first to :oin sector in the year 17 0.The others that

followed were the ank of >industan and the engal bank. The bank of >industan is

reported to have continued till 1-B0 while the other two failed in the meantime.

n the first half of the 1- th century the @ast ndia #ompany established three banks+

1. ank of engal 1 B- .

2. ank of ombay 1 4B .

3. ank of $adras 1 43 .


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These three banks are also known as (residency anks were independent units and

functioned well. These three banks were amalgamated in 1-2B and mperial ank of

ndia was established on 27 th :anuary1-21, which started as private shareholders banks,

mostly @uropeans shareholders, with the passing of time mperial bank was taken over by

the newly constituted Ctate bank of ndia act in1-55. n 1 05 &llahabad ank was

established and first time e*clusively by ndians, (un:ab ;ational ank Dtd. was set up in

1 -4 with head"uarters at Dahore. etween 1-B0 and 1-13, ank of ndia, #entral ank

of ndia, ank of aroda, #anara ank, ndian ank, and ank of $ysore were set up.

!eserve ank of ndia came in 1-35. n ?uly, 1-0-, 14 ma:or banks of ndia were

nationali%ed and on 15 th &pril, 1- B si* more commercial private banks were also taken

over by the government.

(eserve .an> of India

The anking system is an integral sub6system of the financial system. t represents an

important channel of collecting small savings from the households and lending it to the

corporate sector. The ndian banking system has The !eserve ank of ndia ! as the

ape* body from all matters relating to the banking system. t is the #entral ank of

ndia and act as the banker to all other banks.

6unctions of (.I3

#urrency issuing authority

anker to the government.

anker to other ank.

/raming of monetary policy. @*change control.

#ustodian to foreign e*change and gold reserves.

'evelopment activities.

!esearch and development in the banking sector.

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C0ASSI6ICA*I)+ )6 .A+KS

On the basis o O!ne"shi#

P-.0IC S C*)( .A+KS

(ublic sector banks are those banks that are owned by the government. The governmentowns these banks. n ndia 2B banks were nationali%ed in 1-0- and 1- B respectively.

Cocial welfare is there main ob:ective.

P(IVA* S C*)( .A+KS

These banks are those banks that are owned and run by private sector. &n individual has

control over these banks in proportion to the shares of the banks held by him.

C)7)P (A*IV .A+KSThese are those banks that are :ointly run by a group of individuals. @ach individual has

an e"ual share in these banks. ts shareholders manage the affairs of the bank.

A$$o"%in& to the La!

SC /-0 / .A+K

Cchedule banks are the banks, which are included in the second schedule of the banking

regulation act 1-05. &ccording to this schedule bank+

1. $ust have paid6up capital and reserve of not less than !s5BB, BBB.

2. $ust also satisfy the ! that its affairs are not conducted in a manner

'eterminate to the interest of its depositors.

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Cchedule banks are sub6divided as+6

a Ctate co6operative banks

b #ommercial banks

+)+7SC /-0 / .A+KS

;on 6schedule banks are the banks, which are not included in the second schedule of the

banking regulation act 1-05. t means they do not satisfy the conditions lay down by that

schedule. These are the banks having paid up capital, less than !s.5Dakhs. They are

further classified as follows+6

&. #entral #o6operative banks and (rimary #redit Cocieties.

. #ommercial banks

A$$o"%in& to F'n$tion

C)MM (CIA0 .A+KS

These are the banks that do banking business to earn profit. These banks make loans for

short to business and in the process create money. #redit creation is the main function of

these banks.

6)( I1+ .A+KSThese are those banks that are incorporated by foreign company. They have set up their

branches in ndia. These banks have their head offices in foreign countries. Their

principle function is to make credit arrangement or the e*port and the import of the

country and these banks deals in foreign e*change.

I+/-S*(IA0 .A+KS

ndustrial banks are those banks that offer long term and medium term loan to the

industries and also work for their development. These banks help industries in sale of

their shares, debentures and bonds. They give loan to the industries for the purchase of

land and machinery.

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A1(IC-0*-(A0 .A+KS

&gricultural banks are those banks that give credit to agricultural sector of the economy.

SAVI+1 .A+KS

The principle function of these banks is to collect small savings across the country and

put them to the productive use. n ndia department of post office functions a savings

banks.

C +*(A0 .A+K

#entral ank is the ape* bank of the banking system of the country. t issues currency

notes and acts a banker9s bank. @conomic stability is the principle function of this bank.

n short, it regulates and controls the banking system of the country. ! is the #entral

ank of ndia.

P(IVA*I?A*I)+ )6 I+/IA+ .A+KI+1

/or the public sector banks, the era of bumper profit is over. /or much of the last decade

the process of collaborated financial liberali%ation had cleared up the ank=s balance

sheet enabling them to with stand increased competition, global financing, turmoil and

even unprotected industrial slow down. ut the cycle of liberali%ation has run its full

course. ;ow it is the time for the big structural leap, rationali%ation, mergers, and

privati%ation. Enless the banks undertake these fundamental changes, their profit will

stay under pressure.

There are twp areas of competitions which banking industry is facing internationally and

nationally. n the pre6liberali%ation era, ndian banks could grow in a closed economy but

the banking sector opened up for private competition. t is possible that private banks

could become dominant players even within ndia. t has been recorded a rapid rise of thenew private sector banks and it has tracked the transformation of the public sector banks

as they grapple with the changes of financial deregulation.

Ese of &T$ cards, nternet anking, (hone anking, $obile anking are the new

innovative channels of banking which are being widely used as they result in saving both

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time and money which are two essential things that every one is short of and is running to

catch hold of them. $oreover private sector banks are aligning its infrastructures,

marketing "uality and technology to build deep commitment in building consumer and

retail banking. The main focus of these banks is on innovative range of services or

products.

S*(-C*-( )6 .A+KI+1 S2S* M

'ifferent countries of the world have different types of banking systems. >owever,

commercial banking had grown under all these banking systems. To understand the

structure of banking system, let us take up various types of banking systems one by one.

These types are+

!9# -+I* .A+KI+1

Enit anking originated in the Enited Ctate of &merica. t grew in the Enited Ctates of

&merica. &s a counter part of independent or industrial units.

An independent unit bank is a corporation that operates one office and that is not

related to other banks through either ownership or control.

Thus under unit banking, a single bank is a complete organi%ation in itself having its own

management. The scale of operation is small and the area is restricted to a locality only.

Enit banking is locali%ed banking and is much more responsive to the needs of the

locality. t has better understanding of the local problems and conditions, which helps it

to cater to the needs of the area in a better way. The staff of the unit bank is generally

local and is in a better position to determine the standing or desirability of the customers.

The failure of the unit bank will not endanger the banking system and economy. t is free

from the difficulties and diseconomies of large scale operations. t will not drain out the

financial resources of villages and small towns to big industrial centers and will ensure a

balanced growth.

!8# .(A+C .A+KI+13

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@conomic and $anagerial problems faced by the unit banks let to the emergence of

banking system. ;ow, This the most popular and important banking system. n branch

banking, a bank has a large network of branches scattered all over the country. ranch

banking developed in @ngland. Cubse"uently most of the countries of the world adopted

the system. n terms of branches, the Ctate ank of ndia has emerged as one of the

largest banks in the world.

&s under the system the resources of a number of branches get pooled under the same

management, any individual branch is in a better position to face e*cessive withdrawals

by the customers. t facilitates diversification of activities because the area covered by the

branches is generally widespread. Ender the system branches can operate without

keeping large idle cash reserves. t becomes possible for the bank to hire the services of

competent and professionally "ualified managers, capable of understanding the handlingtechnical problems and comple* situations. The cost of remitting or transferring funds

from one place to another works out to be less. The staff stays at a branch only for a

limited period, so the chances of ob:ective decision making in the branch banking are

high.

ranch anking tends to bring homogeneity in the prevailing nterest !ates as it

increases the mobility of resources from one place to another. t is easier for the #entral

ank to e*ercise #ontrol. t will communicate only with a few !egistered F>ead ffices

of the anks and not with each individual branch. n this system there more safety and

li"uidity of funds. The choice of securities and investments is larger. ranch banking

makes complete banking services available to the smallest communities. The branches in

small localities can be initially operated at loss in e*pectation of future gains.

The comparative study of unit banking and branch banking is a case of small scale

banking versus large scale banking. t is evident that the scale is clearly titled towards

branch banking. Gith the growth of large scale business it is no wonder that the trend is

almost every country towards the branch banking i.e. big banks with a network of

branches all over the country. @ven in the E.C.&. The birthplace of unit banking. The

ank of &merica has now more than 5BB branches in the state of #alifornia itself.

!:# C AI+ .A+KI+13

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Chaper, Colomon and Ghite have defined #hain anking as

An arrangement by which two or more banks each of which retains its identity, capital

and personnel are brought under common control by any device other than a !olding

"ompany.

Ender the system there is pooling of resources. #hain banking overcomes certain

limitations of unit banking. ut the system suffers from certain limitations of its own.

There may be a lack of co6ordination, proper control etc. The system is infle*ible.

!$# 1()-P .A+KI+1 3

t is similar to #hain anking, the difference being that under Aroup anking two or

more banks are brought under the control of the same management through a >olding

#ompany. oth the systems aim at gaining the advantages of large scale operations. The banks are able to pool their resources in case of emergency or when large amount of cash

is re"uired to meet the loan re"uirements of the customer. The advantages and

disadvantages of both the systems are similar. oth the systems developed in the Enited

Ctate of &merica as a result of attempts to overcome the difficulties or limitations of unit

banking.

! # C)(( SP)+/ +* .A+KI+13

Ender #orrespondent banking, small banks serving local communities hold deposits with

:oint banks serving in big cities. This kind of banking is prevalent in E.C.&. The

correspondent banks perform two important services of outstation che"ue clearing and

loan participation for the respondent banks while they benefit for the deposit funds of

respondent banks.

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6-+C*I)+S )6 .A+KS

P(IMA(2 6-+C*I)+S3

1 &ccepting of 'eposits+ & bank accepts deposits from the public. (eople can

deposit their cash balances in either of the following accounts to their

convenience+6

a. #i$ed or %ime &eposit Account' #ash is deposited in this account for a

fi*ed period. The depositor gets receipts for the amount deposited. t is

called /i*ed 'eposit !eceipt. The receipt indicates the name of the

depositor, amount of deposit, rate of interest and the period of deposit. This

receipt is not transferable. f the depositor stands in need of the amount

before the e*piry of fi*ed period, he can withdraw the same after paying

the discount to the bank. b. (avings Account' This type of deposit suits to those who :ust want to keep

their small savings in a bank and might need to withdraw them

occasionally. anks provide a certain rate of interest on the minimum

balance kept by the depositor during the month.

c. "urrent Account' This type of account is kept by the businessman who are

re"uired to withdraw money every new and then. anks do not pay any

interest on this account. &ny sum or any number of withdrawals can be

presented by such an account holder.

2 &dvancing of Doans+ The bank advances money in any one of the following ways.

a. )verdraft #acilities' #ustomers of good trading are allowed to overdraw from

their current account. ut they have to pay interest on e*tra amount they have

withdrawn. verdrafts are allowed to provide temporary accommodation

since the e*tra amount withdrawn is payable within a short period.

b. *oney at "all' t is the money lent for a very short period varying from 1 to

14 days. Cuch advances are usually made to other banks and financial

institutions only. $oney at call ensures li"uidity. n the nterbank market it

enables bank to make ad:ustment according to their li"uidity re"uirements.

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c. +oans' Doans are granted by the banks on securities which can be easily

disposed off in the market. Ghen the bank has satisfied itself regarding the

soundness of the party, a loan is advanced.

d. "ash "redit' The 'ebtor is allowed to withdraw a certain amount on a given

security. The debtor withdraws the amount within this limit, interest is

charged by the bank on the amount actually withdrawn.

e. &iscounting Bills of $change' t is another method of making advances by

the banks. Ender this method, bank gives advance to their clients on the basis

of their bills of e*change before the maturity of such bills.

f. -nvestment in overnment (ecurities' (urchasing of government securities by

the banks tantamount to advancing loans by them to the Aovernment. anks

prefer to buy government securities as these are considered to be the safestinvestment. /or e*ample + ndira )ikas (atra + t enables the banks to meet

re"uirement of statutory li"uidity ratio CD!

3 #redit #reation ' ne of the main functions of banks these days is to create credit.

anks create credit by giving more loans than their cash reserves. anks are able

to create credit because the demand deposits i.e. a claim against the bank is

accepted by the public in settlement of their debts. n this process the bank creates

money. /or this reason (rof. Cayers has called bank the manufactures of money.

4 #he"ue system of (ayment of /unds+ & che"ue, a negotiable instrument, which in

fact is a bill of e*change, drawn upon a banker, is the most popular credit

instrument used by the client to make payments. #he"ue system is the main credit

instrument in the banking world. &lthough a che"ue is not a legal tender money,

the serves as a medium of e*change in a limited way as it is a negotiable

instrument. ecause of clearing houses and clearing operations of the banks,

che"ues can be and are used for transferring funds from one centre to another. n

the modern days they can also be used for transferring funds from one country to

another.

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S C)+/A(2 6-+C*I)+S

esides the above primary functions, banks also perform may secondary functions such as

agency functions, general utility and social functions.

& &gency /unctions

anks act as agents to their customers in different ways+6

i/ "ollection and 0ayment of "redit and )ther -nstruments' The #ommercial banks

collect and pay che"ues, bills of e*change, promissory notes, hundies, rent, interest etc.

n behalf of their customers and also make payments of income ta*, fees, insurance

premium etc. on behalf of the customers. #ustomers can leave standing instructions with

the banker for various periodic payments ensuring the regular payments and avoiding the

trouble of performing it themselves.

ii/ 0urchase and (ale of (ecurities' The modern commercial banks also undertake the purchase and sale of various securities like shares, stocks, bonds units and debentures etc.

n behalf of the customers, banks do not give any advice regarding the suitability or

otherwise of a security but simply perform the functions of a broker.

iii/ %rustee and $ecutor' anks also acts as trustees and e*ecutors of the property of their

customers on their advice. Cometimes banks also undertake income ta* services on behalf

of the customers.

iv/ 1emittance of #unds' The #ommercial banks remit funds on behalf of clients from

one place to another through che"ues, drafts, mail transfers etc.

v/ 1epresentation and "orrespondence' Cometimes commercial banks acts as

representatives or correspondents of the clients especially in handling various applications.

/or instance, passports and travel tickets, booking of vehicles, plots etc.

vi/ Billion %rading' n many countries, the commercial banks trade is billions like gold

and silver. n ct 1--7, banks including C , , #anara ank and &llahabad ank

have been allowed import of gold which has been put under open general licensed

category.

vii/ 0urchase and (ale of #oreign $change ' anks buy and sell foreign e*change,

promoting international trade. This function is mainly discharged by foreign @*change

anks.

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viii/ +etter of 1eferences' anks also give information about economic position of their

customers to domestic and foreign traders and vice versa.

A@;@!&D ET D TH C@!) #@C

n addition to agency services, banks render many more utility services to the public.

These services are+6

i Docker /acilities+ anks provide locker facilities to their customers. (eople can

keep their valuables or important documents in these lockers. Their annual rent

is very nominal.

ii &cting as a referee + t desired by the customers, the bank can be a referee i.e.

who could be referred by the third parties for seeking information regarding the

financial position of the customers. The bank will acts as referee only and onlyif it is desired by the customer, otherwise the secrecy of a customers is account

is maintained very carefully.

iii ssuing letters of credit+ ankers in a way by issuing letters of credit certify the

credit worthiness of the customers. Detters of credit are very popular in foreign

trade.

iv &cting as Enderwriters+ anks also underwrite the securities issued by the

Aovernment and #orporate bodies for a commission. The name of bank as an

underwriter encouraged investors to have faith in the security.

v &cting as information banks+ #ommercial banks also acts as information

bureau as they collect the financial, economic and statistical data relating to

industry, trade and commerce. >'/# ank is providing information relating to

;! Cchemes and commentaries of e*perts on development in the areas of

finance through nternet.

vi ssuing Traveler=s che"ues and credit cards + anks have been rendering great

service by issuing traveler=s che"ues, which enable a person to travel without

fear of theft or loss of money. ;ow, some banks have started credit card

system under which a credit card holder is allowed to avail credit from the

listed outlets without any additional cost or effort. Thus, credit card holder

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need not carry or handle cash all the time. ;ow, international credit cards are

:oining hands with ndian anks.

vii ssuing of gift che"ues+ #ertain banks issue gift che"ues of various

denominations, e.g. Come ndian banks issue gift che"ues f the denominations

of !s. 21, 31, 51 and 1B1 etc. They are generally issued free of charge.

viii 'ealing in /oreign @*change+ $a:or branches of commercial banks also

transact business of foreign e*change. #ommercial banks are the main

authori%ed dealers of foreign e*change in ndia.

i* $erchant banking Cervices+ #ommercial banks also render merchant banking

services to the customers. They help in availing loans from non6banking

financial institutions.

* >elp in Transportation of Aoods+ ig businessmen or industrialists afterconsigning goods to their retailers send the !ailway !eceipt #onsignment

;ote to the bank.

Dist of (ublic Cector anks

o Ctate ank of ikaner I ?aipur

o Ctate ank of >yderabad

o

Ctate ank of ndoreo Ctate ank of $ysore

o Ctate ank of Caurastra

o Ctate ank of Travancore

ther ;ationalised banks are+

&llahabad ank

&ndhra ank

ank of aroda

ank of ndia

ank of $aharastra

#anara ank

#entral ank of ndia

21
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#orporation ank

'ena ank

ndian ank

ndian verseas ank

riental ank of #ommerce

(un:ab I Cind ank

(un:ab ;ational ank

Cyndicate ank

E# ank

Enion ank of ndia

Enited ank of ndia

)i:aya ank

Dist of (rivate Cector ank

ank of (un:ab

ank of !a:asthan

#atholic Cyrian ank

#enturion ank

#ity Enion ank 'hanalakshmi ank

'evelopment #redit ank

/ederal ank

>'/# ank

# # ank

' ank

ndus nd ank

;A )ysya ank

?ammu I 8ashmir ank

8arnataka ank

8arur )ysya ank

Da*mi )ilas ank

22
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Couth ndian ank

Enited Gestern ank

ET ank

0ist of 6oreign .an>s in India & ;6&$! ank

&bu 'habi #ommercial ank

ank of #eylon

;( (aribas ank

#iti ank

#hina Trust #ommercial ank

'eutsche ank >C #

?($organ #hase ank

Ctandard #hartered ank

Ccotia ank

Taib ank

-@coming 6oreign .an>s In India

y 2BB- few more names is going to be added in the list of foreign banks in ndia. This is

as an aftermath of the sudden interest shown by !eserve ank of ndia paving roadmap

for foreign banks in ndia greater freedom in ndia. &mong them

is the world9s best private bank by @uro $oney maga%ine,

Cwit%erland9s E C.

*he follo ing are the list of foreign ban>s going to set u@ business in India !oyal ank of Ccotland

Cwit%erland9s E C

EC6based A@ #apital

#redit Cuisse Aroup

23
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ndustrial and #ommercial ank of #hina

$errill Dynch is having a :oint venture in ndian investment banking space 66 'C(

$errill Dynch. Aoldman Cachs holds stakes in 8otak $ahindra arms.

A@ #apital is also having a wide presence in consumer finance through A@ #apital ndia.

ndia9s A'( is seen growing at a robust pace of around 7J over the ne*t few years,

throwing up opportunities for the banking sector to profit from.

The credit of banks has risen by over 25J in 2BB46B5 and the growth momentum is

e*pected to continue over the ne*t four to five years.

(articipation in the growth curve of the ndian economy in the ne*t four years will

provide foreign banks a launch pad for greater business e*pansion when they get morefreedom after &pril 2BB-.

24


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)bBectives of the Studed about hich ban>ing sectors services do their avail4

Table1+ banking sector=s services which the respondents avail.

Araph 1+ anking Cector=s services which the respondents avails

I+* (*( *A*I)+37 t was found that most of the respondents were availing services

of private sectors banks while those of the public sector banks were less as compare

to public sector.

30

Banking sector Number of respondents

Public !

Private "

Both #

0

5

10

15

20

25

30

35

40

No o respondents

!u"li#

!riv$te

Both


37/52

84$he respondents ere asked about the type of account they have in the

public sector as ell as Private sector banks

Table 2.1 ;umber of type of account held in (ublic sectors banks

0

10

20

30

40

50

60

S$vin &urrent 'em$t (i)eddeposits

S$l$ry

Total no of respondents

*ot$l no o respondents

Araph 2.1 +6 ;umber of type of accounts held in (ublic sector banks

Analno the most @referred ban>4

37

$ype ofAccounts

Savings Current &emat 'i(eddeposits

Salary

$otal no ofrespondents

)# *) + *) *,


38/52

Table 3. ;umber of respondents preferring different banks

+ames of .an>s +umber of res@ondents# # ank 8G

>'/# ank 8'Ctate ank Aroup 88ank of $aharashtra 9'(un:ab &nd Cind ank 9%

Anal this Fuestion as to >no he reasons for their @reference indifferent ban>s37

Table 4+6 !eason for account in different banks

3

0

5

10

15

20

25

30

Num"er o respondents

+&+&+ "$n,

-'(& B$n,

St$te B$n, Group

B$n, o .$h$r$shtr$

!un/$" $nd sind B$n,


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(easons +o of res@ondents

6riendl< .ehavior of the Staff 9'

(eliabilit and fast services

0ocation 9

Araph 4+6!easons for account in different banks

In@retation + y analy%ing this graph, we can conclude that most of the

people is influenced by the "uick and speedy services provided by the bankand location is given less preference than others.

4 *he res@ondents ere as>ed about the facilities the< ere availing in @ublic as ellas @rivate sector ban>s +6

Table 5.1 ;umber of people availing different facilities at public sector banks+

3-

0

10

20

30

40

50

60

No o respondents

Chart Title (riendly "eh$viour o the st$eli$"ility *rust

ui#, $nd $st servi#es

o#$tion


40/52

6acilities Availed +o of res@ondents&T$F'ebit card 0B'emat 5nternetF$obileF(hone anking 15nsurance 2B

0

10

20

30

40

50

60

No o espondents

*. 'e"it #$rd

'em$t

+nternet .o"ile !hone"$n,in

+nsur$n#e

Araph 5.1+ ;umber of people availing different facilities at public sector banks

Inter@retation3 /rom the above graph, it was found that was availed by mostof the people at public sector banks was that of &T$F'ebit cards which hold-BJ of respondents. t is clearly observed by the graph that nsurance areneck to neck holding 2BJ of respondent each.

'4 *he @ur@ose of this Fuestion is to >no the satisfaction level the< ere having iththeir ban>s overall @erformance37

Public sector ban>s

4B


41/52


42/52

0

10

20

30

40

50

60

0

80

7es No

Araph 7+6 ;umber of customers ready to shift from their present bank or not.

Inter@retation3/rom this above Araph, we can conclude that the number of respondents ready to shiftfrom their present bank is 2 J while 7BJ customers seems to be satisfied from their bankand hence willing to shift from their present bank to other.

G4 *he aim to as> this Fuestion as to >no hether the res@ondents faces an 37

Table (roblem faced by customers.

42


43/52

*


44/52

$a:ority of the respondents whether in public sectors or in private sector banks

have savings account with banks.

;umber of problem faced by the people is more in public sector banks.

(eople want a change in the behavior of the staff of the public sector banks.

(eople are more satisfied form the private sector banks due to their better services

provided by them in terms of speedy transactions, fully computeri%ed facilities,

more working hours in case of # # bank, the number of working hour are 12 ,

good investment &dvisory services, efficient and co6operative staff, better

approach to #ustomer !elationship $anagement.

n private sector banks proper promotional activities should be taken up so as to

make the population aware of the services provided by the banks even in ruralareas.

The facility that was availed by most of the people at public sector banks was that

of &T$F'ebit cards. The least availed facility was that of 'emat account and

foreign transfer of funds.

The facility that was availed by most of the people at private sector banks was

that of nternetF(hone banking by &T$F'ebit card.

$a:ority of respondents do not want to shift from their present bank.

/rom the above study it is clear that private banks are providing better services

than nationali%ed banks. -5J respondents favored that private banks are

providing better services than nationali4ed banks while 5J respondents are not

agree with it.

/rom the above study it is clear that ma:ority of the respondents said that the

average balance re"uirement for operating their saving account is between 5BBB6

1BBBB. 2BJ said it is between 1BBBB62BBBB and remaining 5J said it is between

2BBBB65BBBB in private sector banks which as compared to (ublic sector bank is

very high.

4BJ respondents said that the bank employees never pay any attention to them

and 1BJ respondents said that their problems are not solved by bank e*ecutives.

44


45/52

The remaining 5BJ respondents give a positive reaction in the favour of bank.

3BJ respondents favored that their problems are solved by bank e*ecutives and

2BJ respondents said they are received with smile by bank e*ecutives. Co there is

a mi* response.

$a:ority of the respondents said that the average time taken for transactions is

between 25 to 5B minutes in their bank. 3BJ respondents said the average time

taken for transaction is between 2B625 minutes, 2BJ said it is between 1B to 25

min. and remaining 1BJ said that the average time taken for transaction by their

bank is 5 to 1B minutes.

/rom the above study is clear that the banks do not organi%e any customer

meets. &ll the 1BBJ respondents said that their bank does not organi%e any

customer9s meets to resolve their problems. #ustomer satisfaction is the demand

of time, so the banks should organi%e customer meets to resolve the problems of

their customers.

/rom the above study it is clear that ma:ority of the respondents are ready to pay

nominal charges for better services provided by private banks while 4BJ

respondents are not ready to pay any nominal charges.

The above study depicts that 0BJ respondent said that their bank updates them

time to time about the latest facilities and remaining 4BJ said that their bank

doesn9t update them.

45


46/52

IV4 S-11 S*I)+S, ( C)MM +/A*I)+S A+/ C)+C0-SI)+

Suggestions

ased on the study conducted, There are some of the suggestions given by the customers

of how the modern banking should be. These are the comment given by them about theimprovement of the banking sector in ndia.

anks should obey the ! norms and provide facilitiesas per the norms, which are

not being followed by the banks. Ghile the customer must be given prompt services

and the bank officer should not have any fear on mind to provide the facilities as per

! norms to the units going sick.

anks should provide loan at the lower interest rate and education loans should begiven with ease without much documentation. &ll the banks must provide loans

against shares.

/air dealing with the customers. $ore contribution from the employee of the bank.

The staff Chould be co6operative, friendly and must be capable of understanding the

problems of customers

nternet banking facility must be made available in all the banks.

(rompt dealing with permanent customers and speedy transaction without harassing

the customers

@ach section of every bank should be computeri%ed even in rural areas also.

!eal time gross settlement can play a very important role.

$ore &T$ coverage should be provided for the convenience of the customers.

;o limit on cash withdrawls on &T$ cards.

The bank should bring out new schemes at time6to6time so that more people can be

attracted. @ven some gifts and pri%es may be offered to the customers for their

retention.

24 hours banking should be induced so as to facilitate the customers who may not

have a free time in the daytime. t will help in facing the competition more

effectively.

The charges for saving account opening are high, so they should also be reduced.

40


47/52

#ustomers generally complain that full knowledge is not granted to them. Thus the

bank should properly disclose the features of the product and services to the

customers. $oreover door to door services can also be introduced by bank.

The need of the customer should properly be understood so that customer feels

satisfied. The relationship value should be maintained.

The branch should promote cooperation and coordination among employees which

help them in efficient working.

$aintenance of proper hierarchy should be done. & good hierarchy set up can ensure

better results with in the bank.

anking sector is improving by leaps but still it needs to be improved. (roper and

efficient relationship staffs having knowledge for one stop banking, customer friendly

atmosphere, and better rate of interest are need of the hour.the concept of

privati%ation has overall improved the services in all the banks. >ome banking will be

order of the day.

(ecommendations

6or Public Sector .an>s3

ank staff should be customer friendly and highly motivated to servethe normal customer.

&s far as possible, banks should reduce its documentation process

while providing loans.

#omputeri%ation should be done in banks at all level and the operators

should de properly trained.

Token system should be induced so as to minimi%e the waiting lines in

the banks. (roper ambience in the banks can develop a healthy working culture.

Kuick services should be provided.

47


48/52

6or Private sector .an>s

24 hours banking should be induced so as to facilitate the customers

who may not have free time in the day time. t will help in facing the

competition more effectively.

$ore &T$ coverage should be provided for the convenience of the

customers.

#ustomer care services should be provided by banks .

Conclusion

The customers now days are not only e*posed of what type of service is being provided

by banks in ndia but in the world as a whole. They e*pect much more than what is

actually being provided. Co the new coming banking sector has to provide and cater to all

the needs of the customers otherwise it is difficult to survive in the competition coming

up.

They not only e*pect the safety of money but also best ways to invest that money which

need needs to be fulfilled. anks need to have a better outlook towards to actually what

customers are re"uiring. @ntries of the private sector banks have made the competition

tougher. f a bank is not functioning properly it is being closed. Co it is difficult to facethese types of conditions. >ere a simple philosophy can work that customers are Aod and

we need to follow this to survive and serve better.

The banking sector is poised for e*plosive growth. n this, scenario, it is imperative that

banks adopt technology at an aggressive (ace, if they wish to remain competitive. $ani

$amallan makes a case for banks to outsource their technology infrastructure

re"uirement, thus enabling early adoption and increased efficiencies.

n the prevailing scenario, a number of banks have adopt a new deployment strategy of

infrastructure outsourcing, to lower the cost of service channels. &s a result, other banks

too will need to align their reinvented business models. The re"uired changes at both the

business and technology levels are enormous. n a highly competitive banking markets,

early adopters are profiting from increased efficiencies.

4


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.I.0I)1(AP 2

.))KS3

8othari #.!. 1--B # (esearch Methodologing *heor< 0a and Practice .

Indian financial Sing by 8han $asood &hmed

H.an>ing in India; b< (.;.)arshney

" .SI* S3

www.centurionbop.co.in

www.pnbindia.com

www.statebankofindia.com

www.icicibank.com

www.rbi.org.in

www.iba.org.in

www.knowledgestom.com

www.igniter.com

.()AC (S & PAMP 0 *S

roachers and pamphlets of Caving &Fc

4-


50/52

(UESTIONNAIRE

HCom@arative Stud< on @ublic and @rivate sector ban>s;

K1. Ghich Cector bank do you have your accountN

(ublic (rivate oth

K2. n which bank do you have your &ccountN

1.

2.

3.

4.

K3. Ghich type of account do you have in the bankN

Caving #urrent

'emat /.'

Calary

K4. n #ase you have yours &ccount in more than one a ank which one is your most preferred bank Aive only one bank

K5. !ank the selection criteria for opening account with bankN

rand mage Cervices

Docation #harges

K0. 8indly rank the reasons for yours preference in this particular bankN

Kuick and fast services Docation

5B


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/riendly ehavior !eliability

K7. Ghich facilities are you availing at your bankN

&tmF'ebit card #redit card

nsurance $obile anking

K .>ow often do you use debit card to shopN

ccasionally ;ever

K-. >ow much Catisfied are you with your bank=s overall performanceN

@*cellent )ery Aood

Aood

K1B. &ny Cpecific services you e*pect from your bankN

K11. f an option is given to you, would you like to shift from the present ankN

Hes ;o

K12. 'o you face any problem regarding the services provided by your preferred bankN

f Hes,

K13. Gould you like to give any suggestions for the better functioning of banks in these

sectorsN

(ublic Cector

(rivate sector

51


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Documents

Public Sector Amp Private Sector Bank