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PROJECT REPORT ON Awareness of Consumer Regarding Banking

In the partial fulfillment of the requirement for the degree of BACHELOR OF BUSINESS ADMINISTRATION Session: 2007-2010

Nitesh kumar Roll No. 7084241241 BBA 6 Semester




Words often fail to express ones inner feelings of indebtedness. To start with it is my proud privilege to express my deepest gratitude and sense of deep indebtedness from the core of my heart to Mr. Hukam Chand Bansal Chairman of RIMT-IMCT, Mandi Gobindgarh. I also want to thank to Mr. Surinder Singh Director of RIMT-IMCT Mandi Gobindgarh. At last but not least I would bow my head to The Almighty GOD for His blessings which keeps me sailing against all the hazards of this world and with whose grace and blessings, I have been able to complete my project. I am also indebted to my family members that it was due to their continuous support, love, help, inspiration and loving emotions which helped me to make my project a grand success.

Nitesh kumar R. No. 7084241241


I Nitesh kumar studying in RIMT, Mandi Gobindgarh do hereby declare that this Dissertation Report relating to Consumer awareness regarding banking has been prepared by me after doing a research, as part of the requirements of the BBA Program of Punjab Technical University (Batch of 2010). I further declare that this Dissertation Report has not been submitted earlier to any other University or Institute for the award of any Degree. 2007

Nitesh kumar R. No. 7084241241





The Indian bank industry What is bank all about Types of bank account How bank works How do banks make money

5 - 13


Research Objectives Research Methodology



Data Analysis & Interpretation

Interpretations & Analysis Findings




5. 6.

Bibliography Questionnaire

32 33-34


The Indian Banking industry, which is governed by the Banking Regulation Act of India, 1949 can be broadly classified into two major categories, non-scheduled banks and scheduled banks. Scheduled banks comprise commercial banks and the co-operative banks. In terms of ownership, commercial banks can be further grouped into nationalized banks, the State Bank of India and its group banks, regional rural banks and private sector banks (the old/ new domestic and foreign). These banks have over 67,000 branches spread across the country. The first phase of financial reforms resulted in the nationalization of 14 major banks in 1969 and resulted in a shift from Class banking to Mass banking. This in turn resulted in a significant growth in the geographical coverage of banks. Every bank had to earmark a minimum percentage of their loan portfolio to sectors identified as priority sectors. The manufacturing sector also grew during the 1970s in protected environs and the banking sector was a critical source. The next wave of reforms saw the nationalization of 6 more commercial banks in 1980. Since then the number of scheduled commercial banks increased four-fold and the number of bank branches increased eight-fold. After the second phase of financial sector reforms and liberalization of the sector in the early nineties, the Public Sector Banks (PSB) s found it extremely difficult to compete with the

new private sector banks and the foreign banks. The new private sector banks first made their appearance after the guidelines permitting them were issued in January 1993. Eight new private sector banks are presently in operation. These banks due to their late start have access to state-of-the-art technology, which in turn helps them to save on manpower costs and provide better services. During the year 2000, the State Bank of India (SBI) and its 7 associates accounted for a 25 percent share in deposits and 28.1 percent share in credit. The 20 nationalized banks accounted for 53.2 percent of the deposits and 47.5 percent of credit during the same period. The share of foreign banks (numbering 42), regional rural banks and other scheduled commercial banks accounted for 5.7 percent, 3.9 percent and 12.2 percent respectively in deposits and 8.41 percent, 3.14 percent and 12.85 percent respectively in credit during the year 2000.

Current Scenario
The industry is currently in a transition phase. On the one hand, the PSBs, which are the mainstay of the Indian Banking system, are in the process of shedding their flab in terms of excessive manpower, excessive non Performing Assets (NPAs) and excessive governmental equity, while on the other hand the private sector banks are consolidating themselves through mergers and acquisitions. PSBs, which currently account for more than 78 percent of total banking industry assets are saddled with NPAs (a mind-boggling Rs 830 billion in 2000), falling revenues from traditional sources, lack of modern technology and a massive workforce while the new

private sector banks are forging ahead and rewriting the traditional banking business model by way of their sheer innovation and service. The PSBs are of course currently working out challenging strategies even as 20 percent of their massive employee strength has dwindled in the wake of the successful Voluntary Retirement Schemes (VRS) schemes. The private players however cannot match the PSBs great reach, great size and access to low cost deposits. Therefore one of the means for them to combat the PSBs has been through the merger and acquisition (M& A) route. Over the last two years, the industry has witnessed several such instances. For instance, Hdfc Banks merger with Times Bank Icici Banks acquisition of ITC Classic, Anagram Finance and Bank of Madura. Centurion Bank, Induslandnd Bank, Bank of Punjab, Vysya Bank are said to be on the lookout. The UTI bank- Global Trust Bank merger however opened a pandoras box and brought about the realization that all was not well in the functioning of many of the private sector banks. Private sector Banks have pioneered internet banking, phone banking, anywhere banking, and mobile banking, debit cards, Automatic Teller Machines (ATMs) and combined various other services and integrated them into the mainstream banking arena, while the PSBs are still grappling with disgruntled employees in the aftermath of successful VRS schemes. Also, following Indias commitment to the W To agreement in respect of the services sector, foreign banks, including both new and the existing ones, have been permitted to open up to 12 branches a year with effect from 1998-99 as against the earlier stipulation of 8 branches. Talks of government diluting their equity from 51 percent to 33 percent in November 2000 have also opened up a new opportunity for the takeover of even the PSBs. The FDI rules being more

rationalized in Q1FY02 may also pave the way for foreign banks taking the M& A route to acquire willing Indian partners. Meanwhile the economic and corporate sector slowdown has led to an increasing number of banks focusing on the retail segment. Many of them are also entering the new vistas of Insurance. Banks with their phenomenal reach and a regular interface with the retail investor are the best placed to enter into the insurance sector. Banks in India have been allowed to provide fee-based insurance services without risk participation invest in an insurance company for providing infrastructure and services support and set up of a separate joint-venture insurance company with risk participation.


India has a well developed banking system. Most of the banks in India were founded by Indian entrepreneurs and visionaries in the pre-independence era to provide financial assistance to traders, agriculturists and budding Indian industrialists. The origin of banking in India can be traced back to the last decades of the 18th century. The General Bank of India and the Bank of Hindustan, which started in 1786 were the first banks in India. Both the banks are now defunct. The oldest bank in existence in India at the moment is the State Bank of India. The State Bank of India came into existence in 1806. At that time it was known as the Bank of Calcutta. The role of central banking in India is looked by the Reserve Bank of India, which in 1935 formally took over these responsibilities from the then Imperial Bank of India. Reserve Bank was nationalized in 1947 and was given broader powers. In 1969, 14

largest commercial banks were nationalized followed by six next largest in 1980. But with adoption of economic liberalization. The commercial banking structure in India consists of: Scheduled Commercial Banks and Unscheduled Banks. Scheduled commercial Banks constitute those banks, which have been included in the Second Schedule of Reserve Bank of India (RBI) Act, 1934. RBI includes only those banks in this schedule, which satisfy the criteria laid down vide section 42 (6) (a) in Act. Indian banks can be broadly classified into public sector banks, private banks (government doe not have a stake in these banks; they may be publicly listed and traded on stock exchanges) and foreign.


Bank Fixed Deposits Bank Fixed Deposits are also known as Term Deposits. In a Fixed Deposit Account, a certain sum of money is deposited in the bank for a specified time period with a fixed rate of interest. The rate of interest for Bank Fixed Deposits depends on the maturity period. It is higher in case of longer maturity period. Current Account Current Account is primarily meant for businessmen, firms, companies, and public enterprises etc. that have numerous daily banking transactions. Current Accounts are cheque operated

accounts meant neither for the purpose of earning interest nor for the purpose of savings but only for convenience of business. Demat Account Demat refers to a dematerialised account. Demat account is just like a bank account where actual money is replaced by shares. Just as a bank account is required if we want to save money or make cheque payments, we need to open a demat account Recurring Bank Deposits Under a Recurring Deposit account (RD account), a specific amount is invested in bank on monthly basis for a fixed rate of return. The deposit has a fixed tenure, at the end of which the principal sum as well as the interest earned during that period is returned to the investor in that particular time. Savings Bank Account Savings Bank Accounts are meant to promote the habit of saving among the citizens while allowing them to use their funds when required. The main advantage of Savings Bank Account is its high liquidity and safety.

How bank works?

Bank is an institution that deals in money and its substitutes and provides other financial services. Banks accept deposits and make loans and derive a profit from the difference in the interest rates paid and charged, respectively.

Banks are critical to our economy. The primary function of banks is to put their account holders' money to use by lending it out to others who can then use it to buy homes, businesses, send kids to college. When you deposit your money in the bank, your money goes into a big pool of money along with everyone else's, and your account is

Credited with the amount of your deposit. When you write checks or make withdrawals, that amount is deducted from your account balance. Interest you earn on your balance is also added to your account. Banks create money in the economy by making loans. The amount of money that banks can lend is directly affected by the reserve requirement set by the RBI. The reserve requirement is currently 3 percent to 10 percent of a bank's total deposits. This amount can be held either in cash on hand or in the bank's reserve account with the Fed. To see how this affects the economy, think about it like this. When a bank gets a deposit of $100, assuming a reserve requirement of 10 percent, the bank can then lend out $90. That $90 goes back into the economy, purchasing goods or services, and usually ends up deposited in another bank. That bank can then lend out $81 of that $90 deposit, and that $81 goes into the economy to purchase goods or services and ultimately is deposited into another bank that proceeds to lend out a percentage of it. In this way, money grows and flows throughout the community in a much greater amount than physically exists. That $100 makes a much larger ripple in the economy than you may realize!



How do Banks make money?

Banks are just like other businesses. Their product just happens to be money. Other businesses sell widgets or services; banks sell money -- in the form of loans, certificates of deposit (CDs) and other financial products. They make money on the interest they charge on loans because that interest is higher than the interest they pay on depositors' accounts. The interest rate a bank charges its borrowers depends on both the number of people who want to borrow and the amount of money the bank has available to lend. As we mentioned in the previous section, the amount available to lend also depends upon the reserve requirement the RBI Board has set. At the same time, it may also be affected by the funds rate, which is the interest rate that banks charge each other for short-term loans to meet their reserve requirements. Loaning money is also inherently risky. A bank never really knows if it'll get that money back. Therefore, the riskier the loan the higher the interest rates the bank charges. While paying interest may not seem to be a great financial move in some respects, it really is a small price to pay for using someone else's money. Imagine having to save all of the money you needed in order to buy a house. We wouldn't be able to buy houses until we retired! Banks also charge fees for services like checking, ATM access and overdraft protection. Loans have their own set of fees that go along with them. Another source of income for banks is investments and securities.


Research Methodology




The research focused on major issues. To study the awareness of the customer regarding banking. The preference of the customer toward different kind of banks To know about the sources of information which influence the behaviour of the consumers regarding selection of the bank To study the investment opinion of the consumer.


Are they know about the bank services and policies


The Research Methodology used by me for the purpose of this project is as follows:Research Design:The research design used here for this project is exploratory research. First a general know about of the schemes and services of Banks. Then personal interactions with the consumers concerned are made to figure out the results.

Data Collection Method:According to the needed research of the project; I pursued primary data collection method. To ensure the accuracy of the results the primary data collection method used is the questionnaire.

Sampling:The sampling units in my project are general consumers of Khanna. The sample size was small by following the convenience


sampling method. There were queries for the persons interacted & the questionnaire has been attached at last.

Questionnaire: - The questionnaires are given to respondent with no pressurization at all, i.e. he/she is free to provide the information whatever the concern is. One thing to be kept in mind those personal questions apart from name, address etc. should not be included.

Sampling design, Procedure & Sample size: - A sample is always a part of the desired universe & it should represent each & every aspect of the study being conducted. The only thing is that the sample being chosen is of relevance & accurate source of information.

Sample size: - My sample size was 50 the respondent which I select are shopkeepers business people and housewives Sampling technique: - I choose respondent through my convenience so here my sampling technique is convenience sampling technique

Scope of the study: - The scope of my study is khanna I have covered only one city for my research

Data Analysis and Interpretation



1. Do you have a bank account?

Yes No Total

50 0 50



Out of 50 persons from which I asked this question 50 said that they have a bank account. The awareness about banking in Khanna is good


2. Which bank do you prefer?

8 15


Out of 50 persons, 9 said that they prefer IDBI bank. 18 respondents said that they prefer ICICI bank.15 said that they prefer HDFC bank remaining 8 said that they prefer AXIS bank this is quite exciting but this type of figure may not be the representative of the whole city as people were not very cooperative in revealing about their experience towards banking.


3. Why do you prefer?

0 13 25 12 Good Raputation Better Services More Services

It has been seen from the fact that ICICI still capturing the market, rest competitors are trying their best to arise. In this 25 prefer the bank because of better services 12 prefer because of more services 13 prefer because of good reputation It is the better incentives, better services and better approach has made them to get firmed in the market.


4. How many person of your family have a bank account?

0 10 13 All One or two None 27

Out of 50 Persons 13 said that all the members of his family have a bank account 27 said that one or two persons of his family have a bank account remaining 10 said that none of his family have a bank account



Who influence your decision of choosing Bank?

5 12 20 Agent Advertisem ent Friend 13 Other

As the chart reveals 20 persons are influenced by agents 13 are influenced by advertisement 12 are influenced by friends remaining 5 are influenced by others


6. What percentage of salary do you invest in schemes?

3 23 Up to 5% 5%to 10%


10%to 20% More than 20%

As revealed by the chart 23 persons are interested in invest up to 5% in the bank account 17 are interested in invest up to 5% to 10% 7 are interested in invest up to 10% to 20% only remaining 3 are interesting in invest more than 20%


7. Do you think that bank services should be operated with mobile phones?

0 14

Yes No 36

In our survey 36 persons are agreed to operate the banking on mobile phones 14 persons are not agreed to operate banking on mobile phones



Do you have any other scheme along with the bank?

18 Yes No 32

32 persons said they have also another scheme along with the bank but 18 said that they have no other scheme along with the bank


9. Are you aware of all banking services?

12 Yes No 38

Out of 50 people 38 said that they are fully aware about all the bank services remaining 12 said that they are not fully aware about the bank services



The research focussed on the awareness of consumers with regard to different services and schemes of the Bank, the facilities, benefits and investment options availed by them. The research also focussed on registering complaints of the customers and taking their suggestions for improvements. The complaints put forward were discussed and necessary actions and plans to rectify the same were laid. The possible suggestions given by the respondents were also incorporated.

This section has been equipped with all the related findings of the researcher the researcher has tried and analyzed all the aspects such as variables and factors given in the questionnaire. The researcher has given all the findings individually.

The customers are satisfied with the performance of their respective bank.

Most of the consumers are aware about bank services. Most of the respondents feel that their concerns were resolved very well as and when required. The schemes and the services are really good as per the customers they are highly satisfied with the benefits and features of the schemes.


The area which I have covered does not show the overall market There was lack of time from the part of respondent There may be some bias information provided by the respondent

The size of the research may not be substantial



Less time should be taken in recording and completing the transaction The employee should tell their customer about the new schemes launched by the bank The quarries of the customer should be solved as soon as possible

Banks are yet to adopt a purely customer-centric approach in the country and the approach remains more focussed on products offered by banks. Banks are now talking about moving to a consumer-focussed approach in banking. "Banking today is still function-centric and not customer-centric. In a customer-centric model that we all are aspiring to move to, employees will handle entire relationships and not specific products. This will result in deeper relationships, better cross-sell ratio and increased income from customers". The key to success of this model would be to give clear ownership of accounts to relationship managers as well as incentive and disincentive mechanism based on measurable performance parameters.


Inconsistent customer management processes, uneconomic sales and service model and insufficient sales force in terms of skills and time are the biggest value destructors for banks. On the other hand, segmentation of customers by value and not size, correct gauging of profits from each customer and resultant service differentiation by value are the key value generators in business. "Most entities in India are certainly customer-focussed; however, what is missing totally is the focus on customer relationships. The focus of banks has to be such that they take a 360 degree view of the entire relationship each time there is a contact with the customer Customer relationship management (CRM) is not a technology solution, but a business strategy. This strategy should be owned by the organisation. Technology is just a tool to help enhance efficiency and performance of the strategy. "It is important that we remember that technology is just a facilitator and not the business".


The BIBLIOGRAPHY is very important as it is used in the project as Secondary data. As per the project which is entitled as Consumers awareness regarding banking is concerned. The bibliography is given as follows. WEBSITES:

www.google.com en.wikipedia.org/wiki/Bank www.socialstudieshelp.com/Eco_Bank_Types.htm

RESEARCH METHODOLOGY C.R KOTHARI. Mohit gupta Navdeep agarwal


Name ___________ Age ____________ Gender ____________ Occupation __________ Contact No.___________

Do you have a bank account? Yes No

Which bank do you prefer? IDBI ICICI HDFC AXIS

Why do you prefer? Better Services Good Reputation More Schemes

How many persons of your family have bank accounts? All One or two None


Who influence(s) your decision of choosing schemes? Agent Advertisement Friends Other

What percentage of your salary due you invests in schemes? Up to 5% 10 to 20 % 6 to 10% More than 20%

Are you aware of all the banking policy? Yes No

Do you think Bank accounts should be operated with mobile phones? Agree Disagree

Do you have any other scheme along with the bank? Yes No