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1 “ A COMPARATIVE STUDY BETWEEN PRIVATE SECTOR BANKS AND PUBLIC SECTOR BANKS WITH RESPECT TO CACHAR DISTRICT ” A Thesis Submitted in Partial Fulfilment of the Requirements for the Degree of Master of Business Administration Deepanjan Das MBA-12-122 Under the supervision of Mr.Shubrangshu Baruah Department of Management Studies

A COMPARATIVE STUDY BETWEEN PRIVATE SECTOR BANKS AND PUBLIC SECTOR BANKS WITH RESPECT TO CACHAR DISTRICT

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“ A COMPARATIVE STUDY BETWEEN PRIVATE SECTOR BANKS AND

PUBLIC SECTOR BANKS WITH RESPECT TO CACHAR DISTRICT ”

A Thesis Submitted in

Partial Fulfilment of the Requirements for the Degree of

Master of Business Administration

Deepanjan Das

MBA-12-122

Under the supervision of

Mr.Shubrangshu Baruah

Department of Management Studies

NATIONAL INSTITUTE OF TECHNOLOGY SILCHAR

(2012-2014)

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DECLARATION

Thesis Title: A Comparative Study between Private Sector Banks and Public Sector

Banks with respect to Cachar District

Degree for which the Thesis is submitted: Master of Business Administration

I declare that the presented thesis represents largely my own ideas and work in my own

words. Where others ideas or words have been included, I have adequately cited and listed

in the reference materials. The thesis has been prepared without resorting to plagiarism. I

have adhered to all principles of academic honesty and integrity. No falsified or fabricated

data have been presented in the thesis. I understand that any violation of the above will

cause for disciplinary action by the Institute, including revoking the conferred degree, if

conferred, and can also evoke penal action from the sources which have not been properly

cited or from whom proper permission has not been taken.

----------------------------

(Signature)

Deepanjan Das

MBA-12-122

Date:

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CERTIFICATE

________________________________________________________________

This id to certify that the work contained in the thesis entitled “A Comparative Study between

Private Sector Banks and Public Sector Banks with respect to Cachar District” is a bona fide

work of Deepanjan Das (MBA-12-122) and Bishwadip Das (MBA-12-108) for the award of

Masters of Business Administration, which has been carried out in the Department of

Management Studies, National Institute of Technology, Silchar under my supervision and this

work has not been submitted elsewhere for a degree.

May 2014 Mr.Shubrangshu Baruah

Silchar Assistant Professor

Department of Management Studies

NIT Silchar, India

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Acknowledgements

I take this opportunity to render my deep sense of gratitude to my supervisor, Mr ShubhrangshuBaruah,Assistant Professor, Department of Management Studies for his constant and valuable guidance in the truest sense throughout the course of the work. It was his encouragement and support from the initial to the final level enabled me to develop an understanding of the topic. Every time I had a problem, I would rush to him for his advice, and he would never ever let me down. His timely suggestions helped me to circumvent all sorts of hurdles that I had to face throughout my work. I am deeply indebted for his motivation and guidance. I would also like to extend my sense of gratitude to Mr.Ashim Kumar Das, Head, Department of Management Studies for his constant motivation and inspiration. Thanks go out to all our friends as they have always been around to provide useful suggestions, companionship and created a peaceful research environment. I wish to acknowledge the continuous support and blessings of my parents which made this work possible. Although they were physically far away from me, their immense faith and wish is gratefully acknowledged. Finally I believe this research experience will greatly benefit my career in the future.

Deepanjan Das

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Dedicated to

Department of Management Studies

National Institute of Technology, Silchar

Executive Summary

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The objective of the study is to have a comparative study of the PSU Banks and Private Sector Banks in Cachar

District and also to find out the most preferred Banking Sector among them.

For the above study a questionnaire was designed and the same was provided to the respondents for their

valuable inputs. Some of the inputs were taken from Qualtrics Survey Software and others were provided in the

form of hard copies.

All the aspects of the study included introduction of the study, objective of the study, research methodology,

literature review, data interpretation and analysis, findings, suggestions and recommendations.

The study suggests that in this part of the country the Public Sector Banks are ahead of the Private Sector Banks.

The main reasons according to our study are the trust and reliability factor (DICGC assurance on deposits) and

the location of the branch (Financial Inclusion policy of Reserve Bank of India)

The data collection of the study was mainly taken from primary source i.e. Questionnaire. And secondary

sources of the data i.e. internet and KiranPrakashan Books and Arihant Books.

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Table of Contents

List of Table (i)

List of Figure (ii)

Chapter 1: Page no.

1.1 Introduction to Banking……………………………………………….11

1.2 Banking in India………………………………………………………12

1.3 History of banking in India……………………………………………13

1.4 Adoption of Banking Technology…………………………………….19

1.5 Expansion of Banking Infrastructure…………………………………20

1.6 Types of Bank……………………………………………………….…24

1.7 Function of Commercial banks…………………………………….....27

1.8 Public Sector Banks…………………………………………………...27

1.9 Private Sector Banks………………………………………………......30

1.10 Business of Banking………………………………………………..31

Chapter 2:

2.1 Objectives of the Study…………………………………………...33

2.2 Literature Review………………………………………………....35

2.3 Research methodology…………………………………………....36

2.4 Personal details of Respondents………………………………......38

Chapter 3:

3.1 Limitations of the Study………………………………………….44

Chapter 4:

4.1 Data Interpretation and Analysis……………………………........46

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Chapter 5:

Findings of the Study………………………………………………..55

Chapter 6:

Suggestions given by the respondents………………………………60

Chapter 7:

Recommendations …………………………………………………..63

Chapter 8:

Conclusions………………………………………………………….66

Chapter 9:

Annexure……………………………………………………………..68

References…………………………………………………………...72

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List of Tables

Table no. Title Page no.

Table 1 Branches and ATMs of Commercial Bank………….20

Table 2 Age of the respondents………………………………38

Table 3 Gender of the respondents…………………………...39

Table 4 Highest educational qualification …………………...40

Table 5 Occupation of the respondents………………………41

Table 6 Place of Domicile …………………………………....42

Table 7 Awareness regarding PSU and Private Banks……….43

Table 8 Banking Sector Preferred……………………………..47

Table 9 Types of Account……………………………………..48

Table 10 Preferred Banks………………………………………..49

Table 11 Reason for choosing a particular Banking Sector…….50

Table 12 Services Availed ……………………………………....51

Table 13 Satisfaction Level of Respondents…………………....52

Table 14 Reason for choosing PSU Bank………………………53

Table 15 Reason for choosing Private bank…………………….54

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List of Figures

Figure no. Title Page no.

Figure 1 Business of Banking…………………………...31

Figure 2 Functioning of a Bank…………………………32

Figure 3 Age of the respondents………………………...38

Figure 4 Gender of the respondents……………………..39

Figure 5 Highest educational qualification……………...40

Figure 6 Occupation of the respondents………………...41

Figure 7 Place of Domicile……………………………….42

Figure 8 Awareness regarding PSU and Private Banks….43

Figure 9 Banking Sector Preferred……………………….47

Figure 10 Types of Account……………………………….48

Figure 11 Preferred Banks…………………………………49

Figure 12 Reason for choosing a particular Banking Sector.50

Figure 13 Services Availed ………………………………..51

Figure 14 Satisfaction Level of Respondents………………52

Figure 15 Reason for choosing PSU Bank…………………53

Figure 16 Reason for choosing Private bank……………….54

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1.1 Introduction to Banking

Bank is defined in many ways by various authors in the book son economics and commerce.

It is very difficult to define a bank; because a bank performs multifarious functions may be

defined in many ways according to their functions. The evolution of different types of banks,

each specializing in a particular field, gives emphasis on each and every kind of bank. A

general and comprehensive definition to cover all types of banking institutions would be

unscientific and probably impossible. Each type of bank should have its own definition,

explaining its specialized functions. Legislators have understood this difficulty and that is

why the bill of exchange Act 1882 (England) defines

 “A bank includes a body of persons, whether incorporated or not, who carry on the business

of banking”

 From this definition it is clear to us that any institution, which performs the various banking

functions, may be termed as bank. But in practice it is found that many banking functions

wary from time to time and country to country. It is not possible on the part of a single bank

to perform all the banking functions at a time. So there originated numbers of specialized

banks with the objective of performing one or more functions. As for example, Central Bank,

Commercial bank, Industrial Bank, Agricultural Bank, Co-operative Bank etc., are seen in the

practical field.

 Dr. Herbert L. Hart has defined a banker as

 “A banker is one who in the ordinary course of business honours cheques drawn upon him

by persons for whom he receives money on current account”

 According to Sir John Paget

 “No one and nobody corporate and otherwise can be a banker who does not (i) take deposit

accounts (ii) take current accounts (iii) issue and pay cheques drawn upon him(iv) collect

cheques crossed and uncrossed for his customers”

 Hilton banking commission defines bank or banker in the following words:

 “Every person, firm or company using in the description or its title, bank or banker or

banking and accepting deposits of money subject to withdrawal by cheque, draft or order”

In view of the above definitions, a simple and short definition can be given as

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 “Bank is an institution, which deals in money and credit”

 According to this precise definition a bank accepts deposits from public and makes advances

and loans to them. In practice bank receives deposits of money in savings and current

accounts at lower rate of interest or profit and gives on credit to needy persons and

businessmen at a higher rate of interest or profit. It also transfers money for the clients from

one city or country to another and also performs various other agency services for earnings.

1.2 Banking in India

Banking in India in the modern sense originated in the last decades of the 18th century. The

first banks were Bank of Hindustan (1770-1829) and The General Bank of India, established

1786 and since defunct.

The largest bank, and the oldest still in existence, is the State Bank of India, which originated

in the Bank of Calcutta in June 1806, which almost immediately became the Bank of Bengal.

This was one of the three presidency banks, the other two being the Bank of Bombay and

the Bank of Madras, all three of which were established under charters from the British East

India Company. The three banks merged in 1921 to form the Imperial Bank of India, which,

upon India's independence, became the State in 1955. For many years the presidency banks

acted as quasi-central banks, as did their successors, until the Reserve Bank of India was

established in 1935.

In 1969 the Indian government nationalized all the major banks that it did not already own

and these have remained under government ownership. They are run under a structure know

as 'profit-making public sector undertaking' (PSU) and are allowed to compete and operate

as commercial banks. The Indian banking sector is made up of four types of banks, as well as

the PSUs and the state banks; they have been joined since the 1990s by new private

commercial banks and a number of foreign banks.

Banking in India was generally fairly mature in terms of supply, product range and reach-

even though reach in rural India and to the poor still remains a challenge. The government

has developed initiatives to address this through the State Bank of India expanding its branch

network and through the National Bank for Agriculture and Rural Development with things

like microfinance.

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Indian Banking Industry currently employees 1,175,149 employees and has a total of 109,811

branches in India and 171 branches abroad and manages an aggregate deposit of  67504.54

billion (US$1.1 trillion or €820 billion) and bank credit of  52604.59 billion (US$880 billion

or €640 billion). The net profit of the banks operating in India was  1027.51 billion

(US$17 billion or €12 billion) against a turnover of  9148.59 billion (US$150 billion or

€110 billion) for the fiscal year 2012-13.

1.3 Historyof banking in India

In ancient India there is evidence of loans from the Vedic period (beginning 1750 BC). Later

during the Maurya dynasty (321 to 185 BC), an instrument called adesha was in use, which

was an order on a banker desiring him to pay the money of the note to a third person, which

corresponds to the definition of a bill of exchange as we understand it today. During the

Buddhist period, there was considerable use of these instruments. Merchants in large towns

gave letters of credit to one another.

Colonial era

During the period of British rule merchants established the Union Bank of Calcutta in 1829,

first as a private joint stock association, then partnership. Its proprietors were the owners of

the earlier Commercial Bank and the Calcutta Bank, who by mutual consent created Union

Bank to replace these two banks. In 1840 it established an agency at Singapore, and closed

the one at Mirzapore that it had opened in the previous year. Also in 1840 the Bank revealed

that it had been the subject of a fraud by the bank's accountant. Union Bank was incorporated

in 1845 but failed in 1848, having been insolvent for some time and having used new money

from depositors to pay its dividends.

The Allahabad Bank, established in 1865 and still functioning today, is the oldest Joint Stock

bank in India, it was not the first though. That honour belongs to the Bank of Upper India,

which was established in 1863, and which survived until 1913, when it failed, with some of

its assets and liabilities being transferred to the Alliance Bank of Simla.

Foreign banks too started to appear, particularly in Calcutta, in the 1860s.

The Comptoird'Escompte de Paris opened a branch in Calcutta in 1860, and another

in Bombay in 1862; branches in Madras and Pondicherry, then a French possession,

followed. HSBC established itself in Bengal in 1869. Calcutta was the most active trading

port in India, mainly due to the trade of the British Empire, and so became a banking centre.

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The first entirely Indian joint stock bank was the Oudh Commercial Bank, established in

1881 in Faizabad. It failed in 1958. The next was the Punjab National Bank, established in

Lahore in 1895, which has survived to the present and is now one of the largest banks in

India.

Around the turn of the 20th Century, the Indian economy was passing through a relative

period of stability. Around five decades had elapsed since the Indian Mutiny, and the social,

industrial and other infrastructure had improved. Indians had established small banks, most of

which served particular ethnic and religious communities.

The presidency banks dominated banking in India but there were also some exchange banks

and a number of Indian joint stock banks. All these banks operated in different segments of

the economy. The exchange banks, mostly owned by Europeans, concentrated on financing

foreign trade. Indian joint stock banks were generally under capitalized and lacked the

experience and maturity to compete with the presidency and exchange banks. This

segmentation let Lord Curzon to observe, "In respect of banking it seems we are behind the

times. We are like some old fashioned sailing ship, divided by solid wooden bulkheads into

separate and cumbersome compartments."

The period between 1906 and 1911, saw the establishment of banks inspired by

the Swadeshi movement. The Swadeshi movement inspired local businessmen and political

figures to found banks of and for the Indian community. A number of banks established then

have survived to the present such as Bank of India, Corporation Bank, Indian Bank,Bank of

Baroda, Canara Bank and Central Bank of India.

The fervour of Swadeshi movement lead to establishing of many private banks in Dakshina

Kannada and Udupi district which were unified earlier and known by the name South

Canara ( South Kanara ) district. Four nationalised banks started in this district and also a

leading private sector bank. Hence undivided Dakshina Kannada district is known as "Cradle

of Indian Banking".

During the First World War (1914–1918) through the end of the Second World War (1939–

1945), and two years thereafter until the independence of India were challenging for Indian

banking. The years of the First World War were turbulent, and it took its toll with banks

simply collapsing despite the Indian economy gaining indirect boost due to war-related

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economic activities. At least 94 banks in India failed between 1913 and 1918 as indicated in

the following table:

YearsNumber of banks

that failed

Authorised Capital

(  Lakhs)

Paid-up Capital

(  Lakhs)

1913 12 274 35

1914 42 710 109

1915 11 56 5

1916 13 231 4

1917 9 76 25

1918 7 2091

Post-Independence

The partition of India in 1947 adversely impacted the economies of Punjab and West Bengal,

paralysing banking activities for months. India's independence marked the end of a regime of

the Laissez-faire for the Indian banking. The Government of India initiated measures to play

an active role in the economic life of the nation, and the Industrial Policy Resolution adopted

by the government in 1948 envisaged a mixed economy. This resulted into greater

involvement of the state in different segments of the economy including banking and finance.

The major steps to regulate banking included:

The Reserve Bank of India, India's central banking authority, was established in April 1935,

but was nationalised on 1 January 1949 under the terms of the Reserve Bank of India

(Transfer to Public Ownership) Act, 1948 (RBI, 2005b).

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In 1949, the Banking Regulation Act was enacted which empowered the Reserve Bank of

India (RBI) "to regulate, control, and inspect the banks in India".

The Banking Regulation Act also provided that no new bank or branch of an existing bank

could be opened without a license from the RBI, and no two banks could have common

directors.

Nationalization in the 1960s

Despite the provisions, control and regulations of the Reserve Bank of India, banks in India

except the State Bank of India (SBI), continued to be owned and operated by private persons.

By the 1960s, the Indian banking industry had become an important tool to facilitate the

development of the Indian economy. At the same time, it had emerged as a large employer,

and a debate had ensued about the nationalization of the banking industry. Indira Gandhi, the

then Prime Minister of India, expressed the intention of the Government of India in the

annual conference of the All India Congress Meeting in a paper entitled "Stray thoughts on

Bank Nationalization."[7] The meeting received the paper with enthusiasm.

Thereafter, her move was swift and sudden. The Government of India issued an ordinance

('Banking Companies (Acquisition and Transfer of Undertakings) Ordinance, 1969') and

nationalised the 14 largest commercial banks with effect from the midnight of 19 July 1969.

These banks contained 85 percent of bank deposits in the country.[7] Jayaprakash Narayan, a

national leader of India, described the step as a "masterstroke of political sagacity." Within

two weeks of the issue of the ordinance, the Parliament passed the Banking Companies

(Acquisition and Transfer of Undertaking) Bill, and it received the presidential approval on 9

August 1969.

A second dose of nationalisation of 6 more commercial banks followed in 1980. The stated

reason for the nationalisation was to give the government more control of credit delivery.

With the second dose of nationalisation, the Government of India controlled around 91% of

the banking business of India. Later on, in the year 1993, the government merged New Bank

of India with Punjab National Bank. It was the only merger between nationalised banks and

resulted in the reduction of the number of nationalised banks from 20 to 19. After this, until

the 1990s, the nationalised banks grew at a pace of around 4%, closer to the average growth

rate of the Indian economy.

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Liberalization in the 1990s

In the early 1990s, the then government embarked on a policy of liberalization, licensing a

small number of private banks. These came to be known as New Generation tech-savvy

banks, and included Global Trust Bank (the first of such new generation banks to be set up),

which later amalgamated with Oriental Bank of Commerce, UTI Bank (since renamed

Axis), ICICI Bank and HDFC Bank. This move, along with the rapid growth in the economy

of India, revitalised the banking sector in India, which has seen rapid growth with strong

contribution from all the three sectors of banks, namely, government banks, private banks and

foreign banks.

The next stage for the Indian banking has been set up with the proposed relaxation in the

norms for foreign direct investment, where all foreign investors in banks may be given voting

rights which could exceed the present cap of 10% at present. It has gone up to 74% with

some restrictions.

The new policy shook the Banking sector in India completely. Bankers, till this time, were

used to the 4–6–4 method (borrow at 4%; lend at 6%; go home at 4) of functioning. The new

wave ushered in a modern outlook and tech-savvy methods of working for traditional banks.

All this led to the retail boom in India. People demanded more from their banks and received

more.

Current period

All banks which are included in the Second Schedule to the Reserve Bank of India Act, 1934

are Scheduled Banks. These banks comprise Scheduled Commercial Banks and Scheduled

Co-operative Banks. Scheduled Commercial Banks in India are categorised into five different

groups according to their ownership and/or nature of operation. These bank groups are:

State Bank of India and its Associates

Nationalised Banks

Private Sector Banks

Foreign Banks

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Regional Rural Banks.

In the bank group-wise classification, IDBI Bank Ltd. is included in Nationalised Banks.

Scheduled Co-operative Banks consist of Scheduled State Co-operative Banks and Scheduled

Urban Cooperative Banks.

By 2010, banking in India was generally fairly mature in terms of supply, product range and

reach-even though reach in rural India still remains a challenge for the private sector and

foreign banks. In terms of quality of assets and capital adequacy, Indian banks are considered

to have clean, strong and transparent balance sheets relative to other banks in comparable

economies in its region. The Reserve Bank of India is an autonomous body, with minimal

pressure from the government.

With the growth in the Indian economy expected to be strong for quite some time-especially

in its services sector-the demand for banking services, especially retail banking, mortgages

and investment services are expected to be strong. One may also expect M&As, takeovers,

and asset sales.

In March 2006, the Reserve Bank of India allowed Warburg Pincus to increase its stake

in Kotak Mahindra Bank (a private sector bank) to 10%. This is the first time an investor has

been allowed to hold more than 5% in a private sector bank since the RBI announced norms

in 2005 that any stake exceeding 5% in the private sector banks would need to be vetted by

them.

In recent years critics have charged that the non-government owned banks are too aggressive

in their loan recovery efforts in connexion with housing, vehicle and personal loans. There

are press reports that the banks' loan recovery efforts have driven defaulting borrowers to

suicide.

1.4 Adoption of banking technology

The IT revolution has had a great impact on the Indian banking system. The use of computers

has led to the introduction of online banking in India. The use of computers in the banking

sector in India has increased many fold after the economic liberalisation of 1991 as the

country's banking sector has been exposed to the world's market. Indian banks were finding it

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difficult to compete with the international banks in terms of customer service, without the use

of information technology.

The RBI set up a number of committees to define and co-ordinate banking technology. These

have included:

In 1984 was formed the Committee on Mechanisation in the Banking Industry (1984) whose

chairman was Dr. C Rangarajan, Deputy Governor, Reserve Bank of India. The major

recommendations of this committee were introducing MICR technology in all the banks in

the metropolises in India. This provided for the use of standardized cheque forms and

encoders.

In 1988, the RBI set up the Committee on Computerisation in Banks (1988) headed by Dr. C

Rangarajan. It emphasized that settlement operation must be computerized in the clearing

houses of RBI in Bhubaneshwar, Guwahati, Jaipur, Patna and Thiruvananthapuram. It further

stated that there should be National Clearing of inter-city cheques at

Kolkata, Mumbai, Delhi, Chennai and MICR should be made operational. It also focused on

computerisation of branches and increasing connectivity among branches through computers.

It also suggested modalities for implementing on-line banking. The committee submitted its

reports in 1989 and computerisation began from 1993 with the settlement between IBA and

bank employees' associations.

In 1994, the Committee on Technology Issues relating to Payment systems, Cheque

Clearing and Securities Settlement in the Banking Industry (1994) was set up under

Chairman W S Saraf. It emphasized Electronic Funds Transfer (EFT) system, with the

BANKNET communications network as its carrier. It also said that MICR clearing should be

set up in all branches of all those banks with more than 100 branches.

In 1995, the Committee for proposing Legislation on Electronic Funds Transfer and other

Electronic Payments (1995) again emphasized EFT system.

Total numbers of ATMs installed in India by various banks as on end June 2012 is

99,218. The New Private Sector Banks in India are having the largest numbers of ATMs,

which is followed by off-site ATMs belonging to SBI and its subsidiaries and then by

Nationalised banks and Foreign banks. While on site is highest for the Nationalised banks of

India.

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Table no. 1

Branches and ATMs of Scheduled Commercial Banks as on end March 2005

Bank typeNumber of

branches

On-site

ATMs

Off-site

ATMs

Total

ATMs

Nationalised banks 33,627 3,205 1,567 4,772

State Bank of India 13,661 1,548 3,672 5,220

Old private sector

banks4,511 800 441 1,241

New private sector

banks1,685 1,883 3,729 5,612

Foreign banks 242 218 582 800

TOTAL 53,726 7,654 9,409 17,645

1.5 Expansion of Banking Infrastructure

As per Census 2011, 58.7% households are availing banking services in the country. There

are 102,343 branches of Scheduled Commercial Banks (SCBs) in the country, out of which

37,953 (37%) bank branches are in the rural areas and 27,219 (26%) in semi-urban areas,

constituting 63% of the total numbers of branches in semi-urban and rural areas of the

country. However, a significant proportion of the households, especially in rural areas, are

still outside the formal fold of the banking system. To extend the reach of banking to those

outside the formal banking system, Government and Reserve Bank of India (RBI) are taking

various initiatives from time to time some of which are enumerated below:

Opening of Bank Branches: Government had issued detailed strategy and guidelines on

Financial Inclusion in October 2011, advising banks to open branches in all habitations of

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5,000 or more population in under-banked districts and 10,000 or more population in other

districts. Out of 3,925 such identified villages/habitations, branches have been opened in

3,402 villages/habitations (including 2,121 Ultra Small Branches) by end of April, 2013.

Each household to have at least one bank account: Banks have been advised to ensure service

area bank in rural areas and banks assigned the responsibility in specific wards in urban area

to ensure that every household has at least one bank account.

Business Correspondent Model: With the objective of ensuring greater financial inclusion

and increasing the outreach of the banking sector, banks were permitted by RBI in 2006 to

use the services of intermediaries in providing financial and banking services through the use

of Business Facilitators (BFs) and Business Correspondents (BCs). Business correspondents

are retail agents engaged by banks for providing banking services at locations other than a

bank branch/ATM. BCs and the BC Agents (BCAs) represent the bank concerned and enable

a bank to expand its outreach and offer limited range of banking services at low cost,

particularly where setting up a brick and mortar branch is not viable. BCs as agents of the

banks, thus, are an integral part of the business strategy for achieving greater financial

inclusion. Banks had been permitted to engage individuals/entities as BC like retired bank

employees, retired teachers, retired government employees, ex-servicemen, individual owners

of kirana/medical/fair price shops, individual Public Call Office (PCO) operators, agents of

Small Savings Schemes of Government of India, insurance companies, etc. Further, since

September 2010, RBI had permitted banks to engage "for profit" companies registered under

the Indian Companies Act, 1956, excluding Non-Banking Financial Companies (NBFCs), as

BCs in addition to individuals/entities permitted earlier. According to the data maintained by

RBI, as in December, 2012, there were over 152,000 BCs deployed by Banks. During 2012-

13, over 183.8 million transactions valued at  165 billion (US$2.8 billion) had been

undertaken by BCs till December 2012.

Swabhimaan Campaign: Under "Swabhimaan" - the Financial Inclusion Campaign launched

in February 2011, banks had provided banking facilities by March, 2012 to over 74,000

habitations having population in excess of 2000 using various models and technologies

including branchless banking through Business Correspondents Agents (BCAs). Further, in

terms of Finance Minister's Budget Speech 2012-13, the "Swabhimaan" campaign has been

extended to habitations with population of more than 1,000 in North and to habitations which

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have crossed population of 1,600 as per census 2001. About 40,000 such habitations have

been identified to be covered under the extended "Swabhimaan" campaign.

Setting up of Ultra Small Branches (USBs): Considering the need for close supervision and

mentoring of the Business Correspondent Agents (BCAs) by the respective banks and to

ensure that a range of banking services are available to the residents of such villages, Ultra

Small Branches (USBs) are being set up in all villages covered through BCAs under

Financial Inclusion. A USB would comprise of a small area of 100 sq ft (9.3 m2) - 200 sq ft

(19 m2) where the officer designated by the bank would be available with a laptop on pre-

determined days. While the cash services would be offered by the BCAs, the bank officer

would offer other services, undertake field verification and follow up on the banking

transactions. The periodicity and duration of visits can be progressively enhanced depending

upon business potential in the area. A total of over 50,000 USBs have been set up in the

country by March, 2013.

Banking Facilities in Unbanked Blocks: All the 129 unbanked blocks (91 in North East States

and 38 in other States) identified in the country in July 2009, had been provided with banking

facilities by March 2012, either through Brick Mortar Branch or Business Correspondents or

Mobile van. As a next step it has been advised to cover all those blocks with BCA and Ultra

Small Branch which have so far been covered by mobile van only.

USSD Based Mobile Banking: National Payments Corporation of India (NPCI) worked upon

a "Common USSD Platform" for all banks and telcos who wish to offer the facility of Mobile

Banking using Unstructured Supplementary Service Data (USSD) based Mobile Banking.

The Department helped NPCI to get a common USSD Code *99# for all telcos. More than 20

banks have joined the National Uniform USSD Platform (NUUP) of NPCI and the product

has been launched by NPCI with BSNL and MTNL. Other telcos are likely to join in the near

future. USSD based Mobile Banking offers basic Banking facilities like Money Transfer, Bill

Payments, Balance Enquiries, Merchant Payments etc. on a simple GSM based Mobile

phone, without the need to download application on a phone as required at present in the

IMPS based Mobile Banking.

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Steps taken by Reserve Bank of India (RBI) to strengthen the Banking Infrastructure

RBI has permitted domestic Scheduled Commercial Banks (excluding RRBs) to open

branches in tier 2 to tier 6 cities (with population up to 99,999 as per census 2001) without

the need to take permission from RBI in each case, subject to reporting.

RBI has also permitted SCBs (excluding RRBs) to open branches in rural, semi-urban and

urban centres in North Eastern States and Sikkim without having the need to take permission

from RBI in each case, subject to reporting.

Regional Rural Banks (RRBs) are also allowed to open branches in Tier 2 to Tier 6 centres

(with population up to 99,999 as per Census 2001) without the need to take permission from

RBI in each case, subject to reporting, provided they fulfill the following conditions, as per

the latest inspection report:

CRAR of at least 9%;

Net NPA less than 5%;

No default in CRR / SLR for the last year;

Net profit in the last financial year;

CBS compliant.

Domestic SCBs have been advised that while preparing their Annual Branch Expansion Plan

(ABEP), they should allocate at least 25% of the total number of branches proposed to be

opened during the year in unbanked Tier 5 and Tier 6 centres i.e. (population up to 9,999)

centres which do not have a brick and mortar structure of any SCB for customer based

banking transactions.

RRBs have also been advised to allocate at least 25% of the total number of branches

proposed to be opened during a year in unbanked rural (Tier 5 and Tier 6) Centres).

New private sector banks are required to ensure that at least 25% of their total branches are in

semi-urban and rural centres on an ongoing basis.

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1.6 Types of Banks

Central bank

Development Bank

Investment Bank

Cooperative Credit Bank

Regional Rural Bank

Non Banking Financial Companies

Central Bank

The money market that acts as the central monetary authority of the country, serving as the

government bank as well as the bankers’ bank is known as a central bank of the country. The

main functions of central bank of a country are functions of note issue, bankers to

government, banker’s bank etc.The RBI as the central bank of the country is the centre of the

Indian financial and monetary system. It has been guiding, monitoring, and regulating,

controlling, and promoting destiny of the IFS. It is quite young compared with such central

banks as the Bank of England, Risks bank of Sweden, and the Federal Reserve Board of the

U.S.

Main Functions of The Reserve bank of India

As the central banking authority of India, the reserve Bank of India performs the following

traditional functions of the central bank:

It provides currency and operates the clearing system for the government and banks.

It formulates and implements monetary and credit policies.

It functions as the government’s and banker’s bank

It supervises the operations of credit institutions.

It regulates foreign exchange transactions.

It moderates the fluctuations in the exchange value of the rupee.

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In addition to the traditional functions of the central banking authority, the Reserve bank of

India performs several functions aimed at developing the Indian financial system:

It seeks to integrate the unorganized financial sector with the organized financial

sector.

It encourages the extension of the commercial banking system in the rural areas.

It influences the allocation of credit.

It promotes the development of new institutions.

Development Banks

A development bank may be defined as a financial institution concerned with providing all

types of financial assistance to business units in the form of loans, underwriting, investment

and guarantee operations and promotional activities-economic development in general and

industrial development in particular.A development bank is basically a term lending

institution. It is a multipurpose financial institution with a broad development outlook. The

concept of development banks in a post independence phenomenon in India. With the end of

II World War there was an urgent need for speed industrial development in India. The usual

agencies that provided finance for large industries were inadequate. So the govt. of India

came forward to set-up a series of financial institution to provide funds to industries. The

industrial finance corporation of India, the first development bank was established in 1948.

Subsequently many other institutions were set-up. Ex. IDBI, IFCI, SIDBI etc.

Investment Banks

Financial intermediaries that acquire the savings of people and direct these funds into the

business enterprises seeking capital for the acquisition of plant and equipment and for

holding inventories are called ‘investment banks’.

Features:-Long term financing, Security, merchandiser, Security middlemen, Insurer,

Underwriter

Functions: - Capital formation, Underwriting, Purchase of securities, Selling of securities,

Advisory services, Acting as dealer.

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Cooperative Banking Sector

These banks play a vital role in mobilizing savings and stimulating agricultural

investment.Co-operativecredit institutions account for the second largest proportion of 44.6%

of total institutional credit of Rs.3854000 corer to agricultural and allied activities in the rural

sector in 1998 to 99.

Types of Co-operative Banking sector

The co-operative sector is very much useful for rural people. The co-operative banking sector

is divided into the following categories.

State co-operative Banks

Central co-operative banks

Primary Agriculture Credit Societies

Non Banking Finance companies

According to RBI it means financial institutions which is a company and a non banking

institution and which has as its principal business the receiving of deposits under any

schemes or arrangement or in any other manner or lending in any manner.

Merchant Banks

Institution that render wide range of services such as the management of customer’s

securities, portfolio management, counseling, insurance, etc are called ‘Merchant Banks’.

Functions: - Sponsoring issues, Loan syndication, Servicing of issues, Portfolio,

management, arranging fixed deposits, helps in merger& acquisition.

Commercial Banks

Commercial banks comprising public sector banks, foreign banks, and private sector banks

represent the most important financial intermediary in the Indian financial system.

The changes in banking structure and control have resulted dueto wider geographical spread

and deeper penetration of rural areas, higher mobilization of deposits, reallocation of bank

credit to priority activities, andlower operational autonomy for a bank management.

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The largest commercial Banks in India, (SBI), was set up in 1955 when the Imperial Bank

was nationalized and merged with some banks of the princely states. In 1969, in one fell

swoop, the fourteen largest privately – owned commercial banks were nationalized.

Subsequently, several other privately – owned commercial banks were nationalized. As a

result of these actions, public sector commercial banks, dominate the commercial banking

scene in the country.

1.7 Functions of commercial banks

Saving mobilization

Special loans

Bills discount

Credit creation

Agencies function

General utility function

1.8 Public Sector Banks in Cachar District

State Bank of India .

17 out of 20 nationalized banks except Andhra Bank , Bank of Maharashtra and

BharatiyaMahila Bank.

Regional rural banks, Assam GrameenVikasBank,sponsored by United Bank of India

Regional rural Bank

They are oriented towards meeting the needs of the weaker section of the rural population

consisting of small and marginal farmers, agricultural laborerand small entrepreneurs. These

banks were set up after the nationalization of banks in 1969.

REGIONAL RURAL BANKS ACT, 1976 ACT NO. 21 OF 1976 [9th February, 1976.] An

Act to provide for the incorporation, regulation and winding up of Regional Rural Banks with

a view to developing the rural economy by providing, for the purpose of development of

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agriculture, trade, commerce, industry and other productive activities in the rural areas, credit

and other facilities, particularly to the small and marginal farmers, agricultural laborers,

artisans and small entrepreneurs, and for matters connected therewith and incidental thereto.

Definition of Public Sector Bank

Public Sector Banks (PSBs) are banks where a majority stake (i.e. more than 50%) is held by

a government. The shares of these banks are listed on stock exchanges. There are a total of 21

PSBs in India..

Emergence of Public Sector Banks

The Central Government entered the banking business with the nationalization of the

Imperial Bank Of India in 1955. A 60% stake was taken by the Reserve Bank of India and the

new bank was named as the State Bank of India. The seven other state banks became the

subsidiaries of the new bank when nationalised on 19 July 1960.[2] The next major

nationalisation of banks took place in 1969 when the government of India, under prime

minister Indira Gandhi, nationalised an additional 14 major banks. The total deposits in the

banks nationalised in 1969 amounted to 50 crores. This move increased the presence of

nationalised banks in India, with 84% of the total branches coming under government

control.[3]

The next round of nationalisation took place in April 1980. The government nationalised six

banks. The total deposits of these banks amounted to around 200 crores. This move led to a

further increase in the number of branches in the market, increasing to 91% of the total

branch network of the country. The objectives behind nationalisation where:

To break the ownership and control of banks by a few business families,

To prevent the concentration of wealth and economic power,

To mobilize savings from masses from all parts of the country,

To cater to the needs of the priority sectors.....

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1.9 List of Private sector Bank in Cachar District

The private-sector banks in India represent part of the Indian banking sector that is made up

of both private and public sector banks. The "private-sector banks" are banks where greater

parts of stake or equity are held by the private shareholders and not by government.

Banking in India has been dominated by public sector banks since the 1969 when all major

banks were nationalised by the Indian government. However since liberalisation in

government banking policy in 1990s, old and new private sector banks have re-emerged.

They have grown faster and bigger over the two decades since liberalisation using the latest

technology, providing contemporary innovations and monetary tools and techniques

The private sector banks are split into two groups by financial regulators in India, old and

new. The old private sector banks existed prior to the nationalisation in 1969 and kept their

independence because they were either too small or specialist to be included in

nationalisation. The new private sector banks are those that have gained their banking license

since the liberalisation in the 1990s.

List of Private Banks in Cachar District

Axis Bank

Federal Bank

HDFC Bank

ICICI Bank

IndusInd Bank

Yes Bank

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1.10 Business of Banking  

Figure no.1

Business of Banking

Money Surplus Units

Money deficit Units

( Savers)

(Investors)

Money

Intermediary

( Banks)

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Functioning of a Bank

General Functions of a

Bank

Lending Money To Public ( Loans)

Transferring Money from One place to another ( remittance)

Accepting Deposits from public/Others ( deposits)

Doing Government Business Transactions

Keeping Valuables in safe custody

Acting as Trustees

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Figure no.2

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Chapter 2

2.1 OBJECTIVES OF THE STUDY

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This study has been conducted with a variety of important objectives in mind. The following

provides us with the chief objectives that have tried to achieve through the study. The extent

to which these objectives have been met could judged from the conclusions and suggestions,

which appear in the later of this study.

 

The Chief Objectives of this study (with respect to Cachar District) are:-

1. To find the banking sector largely preferredby the customers.

2. To find out the factors which influences the customers to choose a bank.

3. To study the problems faced by the customers in public as well as private sector banks and

also to compare between them.

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2.2 LITERATURE REVIEW

A literature review provides an overview and a critical evaluation of a body of literature relating to a research topic or a research problem. It analyses a body of literature in order to classify it by themes or categories, rather than simply discussing individual works one after the other.

A literature review often forms part of a larger research project such as within a thesis, or it may be an independent written work, such as a synthesis written paper.

PURPOSE OF A LITERATURE REVIEW -

A literature review situates our topic in relation to previous researches and illuminates a spot for our research. It accomplishes several goals –

Provides background for topic using previous research. Shows we are familiar with previous, relevant research. Evaluates the depth and breadth of the research with regards to our topic. Determines relating questions or aspects of our topic in need of research.

In our research the main source of information has been the questionnaire filled up by the respondents as well as the internet. The topic of our research “ comparative study of the PSU banks and private banks for Cachar district” has not been published earlier. So the main argument of the topic whether PSU banks or private banks rule in the Cachar district has been the main focus. The internet, questionnaire served by us to the respondents, website of particular banks have been the major source of information. Few worth literatures like kiranprakashan bank books, Arihants banking knowledge have been very valuable.

The facts and figures have provided in these respective books and have been very helpful to us.

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2.3 RESEARCH METHODOLOGY

Research is an art of scientific investigation. In other words research is a scientific and

systematic search for pertinent information on a specific topic. The logic behind taking

research methodology into consideration is that one can have knowledge regarding the

method and procedure adopted for achievements of objective of the project. With the

adoption of this others can also evaluate the results too.

The methodology adopted for studying the objective of the project was surveying the bank

account holders of the Cachar district. So keeping in view the nature of requirement of the

study to collect all the relevant information regarding the comparison of public sector banks

and the private sector banks direct personal interview method with the help of structured

questionnaire was adopted for collection of primary data.

Secondary data has been collected through the various magazines and newspaper and by

surfing on internet and also by visiting the websites of Indian Banking Association.

SAMPLE DESIGN – A sample design is a definite plan for obtaining a sample from a given

population.It refers to the techniques or the procedures that the researchers would adopt in

selecting items for the samples.Sampledesignmay as well lay down the number of items to be

included in the sample i.e the size of the sample. Sample design is determine before data are

collected. Here we select the population as sample in our sample design. The selected

respondents should be as representatives of the total population.

POPULATION – The persons holding bank accounts in the cachar district were taken into

consideration.

DATA COLLECTION

Data was collected by using two main methods i.e. primary data and secondary data.

PRIMARY DATA – primary data is the data which is used or collected for the first time and

it is not used by anyone in the past. There are number of sources of primary data from which

the information can be collected. We took the following resources for our research.

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a) QUESTIONNAIRE – This method of data collection is quite popular, particularly in case

of big enquiries. Here in our research we set 15 simple questions and requested the

respondents to answer these questions with correct information.

SECONDARY DATA – Secondary data is the data which is available in readymade form

and which has already been used by other people for various purposes. The sources of

secondary data are newspaper, internet, websites of IBA, journals and other published

documents.

SAMPLE PLAN

SAMPLE SIZE - Keeping in mind all the constraints the size of the sample of our study was

selected as 80.

SAMPLING UNIT – State bank of India, Tarapur branch in Cachar district. Due to nature of

study we also visited various branches of SBI, UBI, ICICI, AXIS etc in Cachar district.

SAMPLING TECHNIQUE – Stratified convenient sampling. All the bank account holders

were taken into considerations. Research was conducted on clear assumptions that the

respondents would give frank and fair answer in a pragmatic way without any bias.

SAMPLING DESCRIPTION – In order to understand the nature and characteristics of

various respondents in this study, the information was collected and analyzed according to

their socio - economic background like education, occupation, age, gender, place of domicile

etc .This descriptions show that these respondents that have been included in the study belong

to different background and this in turn enhances the capability and accuracy of the study.

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2.4 PERSONAL DETAILS OF RESPONDENTS

a) AGE –

Figure no.3

AGE

Below 2020 - 3031 - 4445 and above

Table no.2

PARTICULARS NO. OF RESPONDENTS

BELOW 20 7

20-30 41

31-44 21

45 and above 11

ANALYSIS AND INTERPRETATION – From the above result we come to know that out

of 80 respondents, 7 are below 20 years of age, 41 belongs to 20 – 30 years, 21 belong to 31 –

44, 11 belong to 45 and above years of age. This shows that majority of our respondents are

young people between the age 20 to 30.

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b) GENDER –

Figure no.4

GENDER

MALEFEMALE

Table no.3

PARTICULARS NO. OF RESPONDENTS

MALE 56

FEMALE 24

ANALYSIS AND INTERPRETATION – From the above result it can be inferred that

majority of our respondents are male, number being 56 as compared to 24 females in a total

of 80.

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c) HIGHEST EDUCATIONAL QUALIFICATION –

Figure no.5

Highest educational qualification

upto matricgraduate and professionalpost graduateilliterate

Table no. 4

PARTICULARS NO. OF RESPONDENTS

UPTO MATRIC 9

GRADUATE AND PROFESSIONAL 43

POST GRADUATE 23

ILLITERATE 5

ANALYSIS AND INTERPRETATION – From the above result it can be inferred that

majority of our respondents are graduate and professionals, number being 43, while the

second most respondents are post graduates with number being 23. Illiterates are 5 and up to

metric level education are 9 in our total tally of 80 respondents.

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d) OCCUPATION –

Figure no.6

OCCUPATION

BUSINESSMANGOVT.STUDENTOTHERS

Table no.5

PARTICULARS NO. OF RESPONDENTS

BUSINESSMAN 14

GOVT. 37

STUDENT 22

OTHERS 7

ANALYSIS AND INTERPRETATION – The above result shows that 37 of our

respondents are govt. employees while the second most respondents are students, number

being 22.Businessman comprises 14 and others are 7 in our total respondents of 80.

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e) PLACE OF DOMICILE –

Figure no.7

PLACE OF DOMICILE

URBANRURAL

Table no.6

PARTICULARS NO. OF RESPONDENTS

URBAN 52

RURAL 28

ANALYSIS AND INTERPRETATION – From the above results it can be inferred that

majority of our respondents are urban people, number being 52 out of 80, while rural people

are 28.

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f) AWARE OF THE DIFFERENCE BETWEEN PSU BANKS AND PRIVATE BANKS

Figure no.8

AWARENESS

YESNOPARTIALLY

Table no.7

PARTICULARS NO. OF RESPONDENTS

YES 41

NO 27

PARTIALLY 12

ANALYSIS AND INTERPRETATIONS – From the above result it can be said that

regarding the awareness between public sector and private sector banks with respect to

differences, the responses are mixed.41 respondents are aware of the differences which

comprises 50 % of the tally while 27 people don’t know the difference between PSU banks

and private banks. 12 are those who are not sure.

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Chapter 3

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LIMITATIONS OF THE STUDY

Due to constraints of time and resources the study is likely to suffer from certain limitations.

Some of them are mentioned below so that the findings of the study are understood in proper

perspective.

The limitations of the study are –

1) Some of the respondents of the survey were unwilling to share information.

2) The research was carried out in a short period of time so. Therefore the sample size and

other parameters were selected accordingly so as to finish the work in given time frame.

3) The information given by the respondents might be biased because some of them might

not be interested in providing correct information.

4) The officials of the bank supported me a lot but did not have sufficient time to clear all the

points elaborately.

5) Since the sample unit is a semi urban place i.e. Cachar district with less presence of private

sector banks, hence the result is likely to tilt a bit towards the public sector banks.

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Chapter 4

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DATA ANALYSIS AND INTERPRETATION

Analysis of data collected –

1) The respondents were asked about which banking sector services they avail. The

result is as follow –

Table no.8

BANKING SECTOR NO. OF RESPONDENT

PUBLIC 62

PRIVATE 14

BOTH 4

ANALYSIS AND INTERPRETATION –

Figure no.9

BANKING SECTOR

PUBLICPRIVATEBOTH

From the above pie – chart it can be inferred that majority of our respondents avail public

sector banks.62 respondents out of 80 avail public sector services, which in itself is a very

thumping number. The number of private sector respondents is 14 and both sector users are

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minimal, number being 4. Hence it can inferred that public sector banks outweigh the private

sector banks with respect to customer in this particular region of Cachar district.

2) They respondents were asked regarding the account that they are maintaining in

their respective banks. Here is the result –

Table no.9

ACCOUNT SAVING CURRENT FD SALARY

NO. OF

RESPONDENT

55 4 7 14

ANALYSIS AND INTERPRETATION – From the above results it can be inferred that

majority of our respondents are availing saving bank account. Almost 70 % of our

respondents are saving bank account holders. Saving bank account holders are 55 out of 80

while the next best account that is maintained in this part of country is salary account,14 out

of 80,current account 4 and FD is 7. This means that in Cachar district majority of people

prefer saving bank account.

Figure no.10

TYPE OF ACCOUNT

ACCOUNTSAVINGCURRENTFDSALARY

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3) They respondents were asked regarding the Bank that they prefer the most –

Table no.10

BANK PREFERRED NO. OF RESPONDENTS

UBI 21

SBI 43

ICICI 5

AXIS 9

OTHERS 2

ANALYSIS AND INTERPRETATION –

Figure no.11

PREFERRED BANK

UBISBIICICIAXISOTHERS

From the above pie-chart it can be said that almost 50% of our respondents like SBI, which is

a public sector bank, while the next best bank is UBI with 21 respondents which is again a

public sector bank. ICICI is liked by 5 while AXIS is preferred by 9 followed by others at 2.

Hence it can be safely inferred that out of 80 respondents 64 respondents prefer public sector

bank which is a staggering 80 % of the total number of respondents.

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4) The respondents were asked regarding the reasons for choosing a particular

bank. Here are the results –

Table no.11

REASON NO. OF RESPONDENTS

FRIENDLY BEHAVIOUR BY STAFF 4

TRUST/RELIABILITY 43

QUICK AND FAST SERVICES 9

LOCATION 24

ANALYSIS AND INTERPRETATION –

Figure no.12

REASON

FRIENDLY BEHAVIOUR BY STAFFTRUST/RELIABILITYQUICK AND FAST SERVICESLOCATION

From the above pie-chart it can be inferred that almost 50% of our respondents i.e 43 out of

80 pick banks according to trust/reliability. The next best factor comes out to be location with

24 respondents. These two factors are the major hindrance in private sector banking that is

why they are lacking the competition in this part of the country. They have less presence in

rural areas while public sector banks have extensive reach and are following the financial

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inclusion policy of RBI. 4 respondents choose bank due to behavior towards customers and 9

respondents value the quick and fast services of the bank.

5) They respondents were asked regarding the services that they are availing from

their respective banks –

Table no.12

SERVICES AVAILING NO. OF RESPONDENTS

ATM/DEBIT 66

MOBILE 3

INSURANCE 9

CREDIT CARD 2

ANALYSIS AND INTERPRETATION -

Figureno.13

SERVICES

ATM/DEBIT CARDMOBILE BANKINGINSURANCECREDIT CARD

From the above analysis it can be inferred that majority of the respondents use automated

teller machine (ATM) services that is being provided by all the banks except the RRBs. ATM

users are 66 out of 80 respondents which is more than 80%. Mobile banking is used by 3

respondents; insurance services are availed by 9 respondents while credit card services are

used by 2 respondents. This shows that in this part of country they are more concerned with

the conservative way of using the bank and not ready to explore yet to other services.

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6) The respondents were asked regarding their satisfaction level towards their bank

Table no.13

SATISFACTION LEVEL NO. OF RESPONDENTS

PRIVATE SECTOR BANK 12

PUBLIC SECTOR BANK 53

BOTH 15

ANALYSIS AND INTERPRETATION –

Figure no.14

SATISFACTION LEVEL OF THE RE-SPONDENTS

PRIVATEPUBLICBOTH

From the above result it can be inferred that the customers of public sector banks are satisfied

toward their banks with number being 53 while 12 respondents are satisfied towards their

private sector bank. There are 15 respondents who like both.

7) The respondents were asked regarding the factor for choosing the public sector

banks –

Table no.14

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REASON FOR CHOOSING PSU BANK NO. OF RESPONDENTS

FRIENDLY BEHAVIOUR BY STAFF 0

TRUST/RELIABILITY 43

QUICK AND FAST SERVICES 1

LOCATION 22

ANALYSIS AND INTERPRETATION –

Figure no.15

REASON FOR CHOOSING PSU BANK

FRIENDLY BEHAVIOUR BY STAFFTRUST/RELIABILITYQUICK AND FAST SERVICESLOCATION

From the above analysis it can be inferred that the PSU banks are chosen by respondents

mainly due to 2 factors and that are Trust/Reliability and Location.

Out of 66 respondents those two factors alone comprises 65 respondents which is a

staggering number.Surprisingly not a single respondent gave the factor friendly behavior by

staff towards the customers which puts PSU banks in bad light. Due to financial inclusion

policy of RBI the PSU bank have wide range of coverage and thus are a step ahead of the

private banks. Also the amount deposited by customers is insured by DICGC (deposit

insurance and credit Guarantee Corporation) which is why trust factor is there in public sector

banks.

8) The respondents were asked regarding the factors for choosing the private sector

banks –

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REASON FOR CHOOSING PRIVATE

BANK

NO. OF RESPONDENTS

FRIENDLY BEHAVIOUR BY STAFF 6

TRUST/RELIABILITY 1

QUICK AND FAST SERVICES 9

LOCATION 2

Table no.15

ANALYSIS AND INTERPRETATION – from the above analysis it can said that out of the

total 18 respondents, 50% of the respondents like private sector banks due to its quick and

fast services while 33 % of the respondents like the friendly behavior of the staff towards the

customers. Location is a factor for only 2 respondents while only one respondent have given

the reply as trust/reliability. It is quite surprising to see the trust factor so less in private sector

banks in these parts of country as the private sector deposits are also insured by DICGC but

maybe it is the awareness factor which is lacking in these districts respondents.

Figure no.16

REASON FOR CHOOSING PRIVATE BANK

FRIENDLY BEHAVIOUR BY STAFFTRUST/RELIABILITYQUICK AND FAST SERVICESLOCATION

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Chapter 5

FINDINGS OF THE STUDY

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More number of people have account in public sector banks.

Majority of the respondents whether public sector or private sector banks have saving

banks account in their respective banks.

People want a change in the behaviour of the staff towards customers in public sector

banks.

There needs to be more awareness regarding the trust factor in private sector banks

and the amount deposited there in this part of country.

People are more satisfied with the public sector banks in this part of country. The

main reason for their satisfaction is Trust factor and the Location of the branch.

The private sector banks need to enhance the number of their branches and specially

cover the rural area so as to attract more customers. In addition they need to create

awareness among customers to enhance the trust factor in them.

The facility that was availed most was the ATM/Debit card facility whether in private

sector bank or in public sector bank.

Majority of the respondents do not want to shift from their current bank.

The most favoured bank in this part of country is the SBI and UBI.

From the above study it is clear that the respondents of public sector banks have

chosen the respective banks due to adequate branches i.e. location and due to the trust

factor.

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From the above study it is clear that the respondents of private sector banks like them

because of the friendly behaviour of the staff as well as the quick and fast services

that is being provided.

As the public sector banks working under the financial inclusion policy of RBI hence

they have got more number of customers because they have “ no frill account “ now a

day’s called BSBDA (Basic saving bank deposit account)

From the above study it can be assured that BANCASSURANCE is still not a part in

this part of the country. Negligible amount of respondents have shown their interest in

this services along with mobile banking and credit card facility.

From the above study it can safely said that public sector banks wins over the private

sector banks but they also need to improve a lot.

FINDINGS OF THE STUDY WITH RESPECT TO THE OBJECTIVES .

1. To find the banking sector largely preferred by the customers.

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It has been found that in Cachar district the PSU Banks are more preferred as compared to

Private Banks. The study suggests that out of the 80 respondents 62 of them have their

accounts in PSU Banks, also 4 of them have accounts in both PSU and Private Sector Banks

(refer to table no. 7 and graph no. 7).

Also it has been found that SBI and UBI are the most preferred ones in this part of the

country.

Out of the 66 respondents 64 of them have accounts alone in SBI & UBI with 43 in SBI and

21 in UBI (refer to Table no. 9 and Graph no. 9).

2. To find out the factors which influences the customers to choose a bank.

The main factors which influence the customers of Cachar district according to our study are

Trust/Reliability and Location (refer to Table no. 10 and Graph no. 10). According to our

study, out of the 80 respondents 43 of them voted for Trust/Reliability factor while 24 of

them considered location as a very important factor.

The other two factors quick and fast services and the friendly behaviour by staff attracted

meagre response.

Refer Table no. 13 and graph no. 13 the factors which influences the customers of this part

of the country for PSU Banks are Trust/reliability and Location with 43 and 22 respectively.

Refer Table no. 14 and Graph no. 14 the factors which influences the customers of this part

of the country for Private Banks are quick and fast services and the friendly behaviour by

staff.

3. To study the problems faced by the customers in public as well as private sector banks and

also to compare between them.

For PSU Banks

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The main problems faced by the customers in PSU banks are unfriendly behaviour of the

staff towards them also the services provided to them are not quick enough.

Refer to Table no. 13 and Table no. 13

For Private Banks

The main problems faced by the customers in PrivateBanks trust/reliability and location.

Since the private sector banks do not have enough number of branches in this part of the

country hence they are facing the problem of including large number of customers.

The unawareness factor regarding the DICGC assurance to the private sector banks is what

leading to lack of trust/reliability in them.

Refer to table no. 14 and Graph no. 14

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Chapter 6

SUGGESTIONS

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Based on the study conducted there are some of the suggestions given by the customers.

These are the comments given by them regarding the improvement of banking services in

India.

Banks should obey RBI norms and should provide facilities as per the norms. While

the customers should be given prompt services and the bank officials should be

willingly serving the customers.

Bank should increase rate of saving accounts

Bank should provide loans at a lower interest rate and education loan should be given

with ease without much documentation.

Fair dealings with the customers. More contribution from the employee to the bank.

The staff should be co-operative, friendly and must be capable of understanding the

problem of customers.

Prompt dealing with permanent customer and speedy transaction without harassing

the customers.

Each branch of each bank should be computerized even in rural areas for speedy

transaction.

RTGS and NEFT can play a very important role in speedy transaction.

More ATM coverage should be provided for the convenience of the customers

No limit of cash withdrawals should be there on customers

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24 hour banking should be induced so as to facilitate the customers who don’t have

time in the day time or in the week days. This will enhance the services

The charges for opening saving bank account in private bank are too high. This

should be taken care off.

Customers generally complain that full knowledge regarding products and services

are not given to them. Hence the bank should be fair enough in disclosing the proper

terms and conditions of the product and services.

The branch should promote cooperation and coordination among employees which

can enhance the rate of efficiency.

Knowledge of local language should be a must for employees of banks.

Maintenance of proper hierarchy should be there in the bank employees.

Customer relationship management in public sector banks should be given extra

importance.

\

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Chapter 7

RECOMMENDATION

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FOR PUBLIC SECTOR BANKS –

Bank staff should be customer friendly and highly motivated to serve the

normal customers.

As far as possible the bank should reduce the documentation process while

providing loan.

Computerization should be done in banks at all levels and the operators should

be properly trained.

Token system should be introduced so as to reduce the waiting line in the

bank.

Proper ambience in the banks can develop a healthy work culture.

Should be flexible in providing interest of the deposited money.

Quick services should be provided.

FOR PRIVATE SECTOR BANKS –

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24 hours banking should be introduced so as to facilitate the customers who don’t

have time in day time or week days.

More ATM coverage should be provided for convenience of the customers.

Should reduce the amount while opening a new saving bank account.

Should maintain a proper recruitment policy like the PSU to attract genuine talent to

work for the customers. Rather than recruiting on internal recommendation they

should follow the IBPS for recruitment to get better talent and better services from

their employees.

Should enhance the number of branches in rural areas to attract more customers.

Should advertise extensively regarding their operations and services to garner faith in

them.

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Chapter 8

CONCLUSION

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From the above study we can conclude that the people of Cachar have more faith on PSU

Bank than Private sector Bank. The main reasons are as follows

Since Cachar district is a semi-urban place, so there are less number of branches of private

sector banks in this area and also the trust factor is less in case of private sector banks.

Whereas for PSU Banks they are working under the financial inclusion policy of the RBI and

thus have adequate number of branches in this place which Private Sector Banks do not.

Hence with respect to this place it is the PSU Bank mainly SBI & UBI as revealed in our

study which is far ahead of the Private Sector Banks with respect to customer base.

Since, banking industry is bound to grow extensively in the next few years; it is up to the

private sector banks to enhance the number of branches in the Cachar District to attract

customers of the said place.

For the PSU Bank in order to sustain the large customer base, they to change their view

regarding the customer relationship management (CRM). Their employees need to change

their behavior and attitude towards its customers in order to serve its customer whole

heartedly and willingly.

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Chapter 9

APPENDIX

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Questionnaire Format

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References

Books :-

KiranPrakashan

Arihant’s “How to crack Banking Interviews

Reports :-

Report on Securities research on the ICICI Bank and SBI

Report on “Indian Economic Survey 2012-2013”

Websites :-

www.iba.com

www.kiranprakashan.com

www.ibps.in