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ANKIT GUPTA
Chief Manager
(Defence Services Banking)
CERTIFICATE OF COMPLETION
Date:
As per our assessment and reporting structure, we found him/ her hard working and excellent
performer during the training programme.
We wish him/ her all the success for his/ her future.
Signature
Designation
ACKNOWLEDGEMENT
Its my proud privilege to release my feeling of gratitude on people who trusted me and relied on
me to complete this project. I would also thank all people whom I met during the course of
Project Completion. I would especially thank my Industry Guide Mr. Amit Kumar, S.B.I for his
guidance and extreme support.
I would also thanks Mr. Vikas Madhukar, Deputy Director, Amity Business School, Gurgaon for
his vision and kind support to all students and creating a platform where one could know the
Industry requirements beforehand.
I would also like to thanks CRC (Corporate Resource Centre) for our Summer Internship and
subsequent worry for our well being and Completion Status so that we could complete the
Project within stipulated time frame.
I would like to thanks Mr. P.K.Sharma for his teaching in classes which we could easily
implement at Industry level .Also thanks for other Faculty Members for their teachings.
At last I would like to thanks Mr. Prabuddha Banerji, Faculty Guide for his guidance and he
shared his experience so that we could learn from that and incorporate those learning into our
real life.
TABLE OF CONTENTS
TOPICS:
PAGE.NO
CERTIFICATE OF COMPLETION............................................................02.
ACKNOWLEDGEMENT..............................................................................03.
1.
INTRODUCTION:.....................................................................................( 05 -09 )
Brief profile of student......................................................................................06.
Brief profile of project mentor at the bank (optional)...................................06.
Brief profile of organization.............................................................................06.
Nature of the project.........................................................................................08.
Brief objectives/ responsibilities assigned by the project mentor................09.
2.
FRAMEWORK OF STUDY.....................................................................( 10 38 )
Theoretical framework ....................................................................................11.
Specific objectives of the project.................................................................36.
Limitations of study.........................................................................................37.
Period of study.................................................................................................38.
3.
4. LIST OF CHARTS
Table I........................................................................................................45.
Table II......................................................................................................46.
Table III.....................................................................................................47.
Table IV.....................................................................................................48
5. Conclusions................................................................................................(49 51 )
Conclusions/....................................................................................................50.
Recommendations...........................................................................................51.
6. BIBLIOGRAPHY.........................................................................................55.
INTRODUCTION
INTRODUCTION:
Brief profile of student:
I am Ankit Gupta, and I am a resident of Siliguri, West Bengal. My father Mr. Suresh Kr. Gupta
is a businessman and my mother Mrs.Nirmala Gupta, is a house wife. Currently I am pursuing
MBA (Banking & Finance) from Amity Business School, Amity University Haryana. I am
member of Corporate Resource Centre of University and I always take a keen part in all the
college activities. I completed my graduation in B.Com (Accountancy Hons) from Gyan Jyoti
College, North Bengal University. I have done my intermediate from Mahbert High School
affiliated to ICSE board and my high school from Modella Caretaker Centre and School
affiliated to Cbse board from Siliguri. I am a keen worker who likes surfing internet, playing
sports, reading blogs. I have been runner up in Quiz competition and Cricket during my
graduation and presently I am working as an intern in State Bank of India for 2 months.
Bank of India taking a 60% stake, and renamed it the State Bank of India. In 2008, the
government took over the stake held by the Reserve Bank of India. SBI was ranked 285th in
the Fortune Global 500 rankings of the world's biggest corporations for the year 2012.
HISTORY
The roots of the State Bank of India lie in the first decade of 19th century, when the Bank of
Calcutta, later renamed the Bank of Bengal, was established on 2 June 1806. The Bank of Bengal
was one of three Presidency banks, the other two being the Bank of Bombay (incorporated on 15
April 1840) and the Bank of Madras (incorporated on 1 July 1843). All three Presidency banks
were incorporated as joint stock companies and were the result of the royal charters. These three
banks received the exclusive right to issue paper currency till 1861 when with the Paper
Currency Act; the right was taken over by the Government of India. The Presidency banks
amalgamated on 27 January 1921, and the re-organized banking entity took as its name Imperial
Bank of India. The Imperial Bank of India remained a joint stock company but without
Government participation.
Pursuant to the provisions of the State Bank of India Act of 1955, the Reserve Bank of India,
which is India's central bank, acquired a controlling interest in the Imperial Bank of India. On 30
April 1955, the Imperial Bank of India became the State Bank of India. The government of India
recently acquired the Reserve Bank of India's stake in SBI so as to remove any conflict of
interest because the RBI is the country's banking regulatory authority.
In 1959, the government passed the State Bank of India (Subsidiary Banks) Act, which made
eight state banks associates of SBI. A process of consolidation began on 13 September 2008,
when the State Bank of Saurashtra merged with SBI.
Associate banks
a) State Bank of Bikaner & Jaipur
b) State Bank of Hyderabad
c) State Bank of Mysore
d) State Bank of Patiala
e) State Bank of Travancore
7
The project titled Impact of Removal of Minimum Balance Requirement in Saving Bank
Account is extremely important Subject in modern Banking Scenario as Government of
India strongly feels the need to Bank the Unbanked through special drives and measures.
The study would also help us in analyzing Psychological and Behavioral patterns of
saving and depositing it in banks, Measures undertaken by banks to Increase Financial
Literacy and Awareness of the Program.
We would discuss the different Marketing Programs launched by SBI along with
discussion with different BC (Business Correspondents).
The study would include impact of Minimum Balance Removal on CASA and Cross
Selling.
We would also aware customers during our visit to different branches because one of the
bottleneck we felt during our visits was the level of awareness is not up to the optimum
level from where branch managers would motivate the customers to open the account .
One of the greatest achievements of this scheme is that the customer base is tremendously
increasing and we would like to study the same.
The study would also include the impact of income on SBI different products and
services like Insurance and Debit Cards and Credit Cards through Cross Selling and Price
Bundling Mechanisms.
At last visiting across all the branches of Guwahati we would study the impact of SBI on
Banking with market share against the competitors and various products and services.
Saving account is not just any other account, and it varies greatly from the other accounts such as
current account and fixed account. In saving account an individual can deposit as many money as
it wants and can withdraw it as and when he wants to. Banks even give interest on such accounts
and now with the removal of minimum balance requirement more and more people are going to
come under the banking sector and will open their account and with it the all sections of the
society will be covered by the banks. Financial inclusion is the delivery of financial services at
an affordable cost to the vast sections of disadvantaged and low income group of people who
have been excluded from it. In 2005-06, the RBI exhorted the banks to make available a basic
banking no frills savings account either with nil or very low minimum balances. Reserve Bank of
India advised banks, in November 2005, to make available basic banking no frills account. The
RBI, followed up, by urging the banks to make available such no frills savings account with
relaxed Know Your Customer (KYC) norms for any who does not have a bank account.
The Project involves meeting different types of customers having different aspirations and also
knowing their requirement and also knowing the impact of removal of minimum balance
requirement on them. The project objective is to study the impact on banks customer base
whether it has increased or decreased and also the banks overall business in terms of
deposits/loans and other services like cross selling. Our responsibility is to study the customers
thinking and their inclination to open the saving account with SBI where no minimum balance is
required in comparison to other banks where minimum balance requirement still prevails.
The project objective is to study the impact on different segments of the society viz students,
small labourers, businessman, traders, employees of state or central or semi Government sector,
small income groups, housewives etc. Our other objective is to study the impact on banks
business or customers delight with a light on change of installed application in Saving Bank
account from monthly average to daily balance method.
Theoretical Framework
10
Theoretical Framework
Overview of Savings Account
For most of us, the first association with a bank is through a savings account. There was a
time not long ago when you needed an existing account holder's endorsement to open the
account, whose only aim was keeping liquid money. The account, like the banking
system, has evolved a lot since.
Now, you have a lot of options. Similarly, after the Reserve Bank of India, or RBI,
deregulated the interest rate on savings accounts, some banks have started offering 5-6%
per year on these deposits. The account can get you facilities such as an insurance cove.
In order to attract new customers, State Bank of India (SBI) has done away with
minimum balance criteria for savings bank account.
The bank will not levy any charge for breaching minimum balance criteria.
For the normal SBI savings account with cheque book facility, a customer had to
maintain a minimum balance of Rs 1,000 in his or her account failing which it attracted
penalty.
There are certain saving account products of the bank where the minimum monthly
balance is as low as Rs 50.
Depending on features and facility, the minimum average monthly balance varies.
The waiver would help the bank in improving customer base, an official said, adding, it
will also help the bank in generating low cost deposits as the savings bank account earns
interest rate of just 4 per cent.
As of March 2012, SBI had 15.39 crore saving banks accounts. During 2011-12, the bank
opened 2.19 crore such accounts.
11
On the other hand, the minimum balance requirement for savings bank account of private
sector bank like ICICI Bank and HDFC Bank is Rs 10,000. This is for an individual
having account in any branch in a metro centre..
12
1. Saving Account
2. Saving Plus Account
Card Convenience.
Moderate Earning.
Money Multipliers.
Transfer of accounts between our wide networks of branches without any charge.
13
Any surplus funds in the account exceeding the threshold limit, for a minimum
amount of Rs.10000/- and in multiple of Rs.1000/- in any one instance, are transferred
as Term Deposit and earns interest as applicable to Term Deposits.
Highlights
Bank
Category
Privileged Account
Minimum AQB
Metro/Urban/Semi-Urban
Interest Rate
4%
Card Offered
Main Features
Open a Savings Plus Account and set a threshold limit.
Any surplus funds in the account exceeding the threshold limit, for a minimum amount of
Rs.10000/- and in multiple of Rs.1000/- in any one instance, are transferred as Term
Deposit and earns interest as applicable to Term Deposits.
14
Transfer of accounts between our wide networks of branches without any charge.
15
achievement. A savings account is able to exchange a few words about discipline and
stability to a loan representative.
d) Security The capital that you deposit in a money market or savings account is protected by FDIC
insurance. Which means that even if your bank were to suddenly go bankrupt and close,
the government will substitute your funds up to a certain amount? Money can be lost,
destroyed or stolen but if you deposit that same money with a bank in a savings account,
more or less it is secured. You are also able to earn some interest while depositing your
money in an interest bearing savings account.
e) Self-Determination From Credit A savings account may enable you to attain your financial targets without employing the
use of credit or a loan. When you purchase something on credit, you are paying for the
freedom of being able to get the item right away, although you don't actually have the
money on hand to purchase it. If you amass a decent amount of money in a savings
account, it permits you to purchase some things that you desire without having to rely on
a loan or use credit and possibly lower your credit score.
Moreover, there is a general agreement throughout the financial expert community that
having a savings account will help to give you peace of mind, since it enables a person to
plan for whatever he/she desires to accomplish, purchase, or repair. So the next time you
set up a checking account or walk into your bank, ask them about their savings account
options. It really is one of the best financial decisions that you can make for yourself and
for your family.
The State Bank of India has asked its branches to remove the minimum balance
stipulation and refund charges that were collected for failure to maintain the same.The
circular issued on April 25 said the bank has decided to waive the requirement of
maintenance of minimum balance for all types of savings bank accounts with immediate
effect.
Accordingly, no minimum balance charges would be levied every quarter henceforth, the
circular addressed to chief general managers of all SBI circles said.
Branches were advised to use approved publicity material to the effect and to have them
displayed prominently on branch premises. In a preceding circular sent only the day
before, the bank ordered refund of charges for non-maintenance of minimum balance of
personal segment' customers.
This was aimed at setting right an earlier order that sought to apply charges for nonmaintenance of minimum balances on all eligible accounts for the quarter ended March
31, 2012.
REFUND ORDERED
The circular said that the competent authority has since approved refund of minimum balance
charges recovered, if any, in respect of non-maintenance of minimum balance for the quarter. A
senior official of SBI said, We are doing this to help improve our customer base. It has been in
the offing for some time.
17
Banks, including SBI, fixed a higher minimum savings balance for customers in order to help
compensate for services they provided. The waiver of minimum balance therefore represents a
major departure from the bank's policy. The official did not elaborate on why the change was
done.
Details of Minimum Balance of Private Leading Banks(ICICI BANK, HDFC Bank , Axis
Bank)
On the reverse ICICI Bank, HDFC Bank, Axis Bank has instructed his customer to
maintain average minimum balance on Monthly basis instead of Quarterly Basis.Means
Now you have to pay charges if you have failed to maintain average monthly minimum
balance. As per earlier instructions if customers maintain average quarterly balance more
than the limit prescribed then no charges is to debited.
The top three private sector banks have tightened their minimum savings bank deposit
balance norm. Against the normal practice of maintaining minimum average quarterly
balance, these banks want customers to maintain minimum balance on a monthly basis.
What this means is that customers will have to keep higher balances.
The move to get customers to maintain minimum balance on a monthly basis follows the
Reserve Bank of India deregulating the savings bank deposit rate in October 2011.
The RBI has not stipulated any minimum balance to be maintained in savings accounts to
any bank. The RBI guidelines only state that account holders should get from their banks
a month's notice on any change in the minimum balance norm.
ICICI Bank's minimum monthly balance requirement is Rs 10,000 at metro and urban
locations; Rs 5,000 at semi-urban branches; and Rs 2,000 in rural areas.
Similarly, the minimum monthly balance requirement at metro and urban areas is Rs
10,000 for Axis Bank and HDFC Bank.
In the case of semi-urban areas, the minimum balance requirement is Rs 5,000 for the
two banks. In rural areas, the minimum balance requirement is Rs 5,000 in the case of
HDFC Bank and Rs 2,500 in the case of Axis Bank.
18
Bank
No
1
ICICI
area
areas
10000
5000
2000
10000
5000
5000
10000
5000
2500
BANK
2
HDFC
BANK
AXIS
BANK
These private sector lenders have also tweaked the penalty charge for non-maintenance of
minimum monthly balance. Charges for HDFC Bank and ICICI Bank range between Rs 250 and
Rs 350; while, those of Axis Bank are Rs 750 (metro and semi-urban) and Rs 500 (rural).
According to Ms Chitra Pandeya, Senior President, YES Bank, the lenders are targeting good
quality customers through the move. When minimum balance has to be maintained on a monthly
basis, customers will keep enough funds in their accounts to ensure that they do not have to pay
non-maintenance charges.
Analysts say the switch to monthly maintenance of balance is a positive for banks' margins.
This will generate higher float money via the saving account balances, a banking analyst said.
The largest PSU lender, State Bank of India, which had imposed charges for non-maintenance of
minimum balance a few months ago, rolled back the move.
19
Opening a Zero balance Account in a Nationalized Bank or most popular Private Sector bank is a
good deal for young generations.
20
20th of the month. Hence, the balance used for calculating interest is Rs 15,000 and the interest
for the month will be Rs 44.
By the new daily balance method, there will be a minute look at the changes that have taken
place and hence there will be a different method for the calculation. Lets assume a month of 30
days, there will be interest paid on Rs 50,000 for five days (1st to 5th of the month), then on Rs
25,000 for 15 days (5th to the 20th of the month) and lastly, on Rs 15,000 for 10 days (20th to
the 30th of the month). Therefore, the total interest earned on various available balances will
amount to Rs 75, higher than what is earned as per the present norm.
Now consider the same case, where instead of a withdrawal towards the end of the month, there
is a deposit of Rs 15,000 on the 25th of the month due to interest received on a fixed deposit. If
we go by the current norms, there will be no change in the interest, that is the interest earned will
be around Rs 44. The reason: The deposit does not impact the lowest balance figure between the
10th and the end of the month so the total interest received stands at Rs 43.75. The daily interest
method will compute interest on Rs 50,000 for 5 days, Rs 25,000 for 15 days, Rs 15,000 for 5
days (20th to 25th of the month) and then Rs 30,000 for 5 days (25th to 30th of the month, as the
deposit was made on the 25th). So, in this case, the total interest earned will be Rs 82 for the
month, almost double of what is earned by the old method.
22
behind the private sectorbanks. The products and tools are available in most of the cases, butdue
to knowledge gap, our staff is not able to use them properly.Training is required for the
employees to provide them properknowledge of the products and for customers, awareness
programmay be conducted through different media and through branchesregarding new
generation products like internet banking, mobilebanking etc.
On the banks website the facility may be provided tothe customers for putting up the technical
problems or queriesrelated with Internet banking, Mobile banking and ATM. Presentlyall kind of
requests can be generated through Internet bankingfacility, in addition to that facility may be
provided that the customercan refer the pending requests to the vertically higher office in case
ofabnormal delay.
(ii) Marketing and development of new hybrid products andproper marketing of the
existing products
Nowadays, customerdoes not want to come to the branch for every transaction and heexpects
from the banker his deposits will be kept in such a manner togive him maximum returns. Our
bank has very good hybrid productslike Savings plus, which is one of the best such products in
themarket. These kinds of products should be marketed vigorously. Allthe private banks are
capitalizing on the different variants of thesame products, only due to better marketing and better
technicalsupport.
(iii) Drives for opening more new accounts
For savings bankdeposits, opening of more and more new accounts is the bestalternative. Our
bank is planning to double its savings account basein rural area as on March 09 within two years.
The campaigns shouldbe designed and launched with suitable strategies matching to thedifferent
conditions prevailing during the period based on the factorsdiscussed earlier in the report.
(iv)Providing all financial services under one roof
Presently weare providing other facilities to our customers only for the companiesassociated with
the State Bank of India, viz. SBI life, SBI MF etc. Thisrestricts the opportunity for the customers
and the chances ofmigration of an urban customer start if he plans to invest in othercompanies.
Providing investment opportunity to the customer byoffering products of all the major companies
may be a good option.This is one of successful strategies applied by private banks likeHDFC
bank. If the complete financial planning will be provided forthe urban customers with excellent
customer service and supportedby better technology, it would certainly help in improving
thesavings bank deposits.
24
(v) Targets for each officer and reward for best performances
Monthly targets may be set for the officers and staff of each branchfor the number of accounts
and amount mobilized both. Higherreward and recognition schemes may be launched for the
bestperformers.
(vi)Popularizingdemat services
With the strong emergence ofelectronic media, interest of retail customers in the stock market
hasincreased significantly. The young and tech savvy generation alwayswant to do it themselves
while sitting in their office/ home. It isrequired to market our product but
Simultaneously it is also required toreduce the processing time for the opening of new accounts.
In urbancenter this product alone is sufficient to attract a huge amount of lowcost deposits.
25
26
1. Preparation of data base:- The bank should collect the required data and prepare the data
base of customers. The required information can be collected from the concerned customer when
he comes to the bank for opening an account in the bank. It is the data base of customers on
which the entire exercise of cross-selling is based. With the data-base banks can assess the credit
worthiness of the customer with more accuracy. Moreover, it is easier and cheaper to get
customers from one's own data- base than going out for getting new customers.
2. Identification of Customer:-On the basis of data-base and bank's relationship with
customers, possible customer for cross-selling should be identified. In the same way the product
should be identified which can be offered to the customer.
3. Selecting target customers:- After identification of possible customers, the targeted
customers should be selected and efforts should be made to narrow down the product-range. If
required, even new products may be developed to meet the specific need of the group of
customers.
4. Proper Training to Staff:- Proper training should be imparted to the staff entrusted with the
task of cross-selling It not only creates team spirit but also enables the staff to meet the
customer's needs in a better way. It also enables them to understand the complexities of product
and to identify the appropriate product to suit the specific requirement of the customer.
5. Proper selection of tools - Based on the market size, tools selected for targeting the customer
also matters. For large banks with large number of customers tools may be CRM (Customer
Relationship Management), Profitability Analysis, Complete Activity Management, Information
Support System, etc. Effective and economical tools should be selected keeping in mind the
market size, customers' preferences, etc.
6. Motivation and Incentives- Having proper tools and systems to cross-sell does not end the
process of selling. Getting the bank employees involved in this exercise and motivating them to
sell is also an important aspect. It is important for banks to provide reward for the cross sale that
is commensurate with profitability of the product to the bank. Efforts should also be made to
involve the staff in coming out with innovative campaign and also ideas which will stimulate
them to sell newer products.
7. Cross-selling as a part of employees' appraisal - As an initiative for employees involvement
for cross-selling, cross-selling can be made a part of an employee's performance appraisal along
with monetary and non-monetary rewards for employees.
27
Under cross-selling existing customers are approached and cost of approaching existing
customer is much less than acquiring new customers. It reduces per customer cost and
increases the per customer earning.
Benefits of economies are available which reduces the cost further and increases the
profits.
It helps in building the brand value, if the loyalty of customer can be ensured for the
brand. In that case the likelihood of shifting the business dealings by the customer to
another bank is reduced substantially.
28
Product
Company
URL
i) Life Insurance
www.sbilife.co.in
www.sbigeneral.in
www.sbimf.com
www.sbicard.com
www.sbidfhi.com
v)
29
The removal of minimum balance has not only affected banks but also customers.
The removal of minimum balance has induced customers to open more and more
accounts and it has increased banks customer base also.
Customers are now willing to open more accounts and with it the Government has also
succeeded in its policy of financial inclusion which means to include all the sections of
the society in the banking sector of the country.
The students are mostly affected by the removal and students have started opening more
and more accounts and it has helped them as students are not earning and so the money
they get from their parents is less and previously they had to keep Rs 1000 in their
account as minimum balance but now with this removal students are able to use those
money for their personal use and so it has impacted them a lot.
Salary employed persons are also affected by this removal and in Guwahati most of the
branches have account mostly opened by salary employed persons such as teachers,
lawyers, Government officials and so on and so with the removal of minimum balance
this segments of customers are mostly affected and with the research we came to know
that it is the salary employed person who are opening more and more accounts.
SMEs (Small and Medium Enterprise) and businessman are not affected as they have
their accounts maintained in current account and they cannot switch on to savings
account as there is a limit on the number of transactions in savings account and so
businessman prefer opening account in current accounts only. SMEs also have their
accounts maintained in current account and in Guwahati minimum balance requirement
for SMEs in current account are Rs 25000 and so the removal of minimum balance
requirement has had no affect on SMEs and businessman.
30
FINANCIAL INCLUSION
"Financial inclusion is delivery of banking services at an affordable cost ('no frills' accounts,) to
the vast sections of disadvantaged and low income group. Unrestrained access to public goods
and services is the sine qua non of an open and efficient society. As banking services are in the
nature of public good, it is essential that availability of banking and payment services to the
entire population without discrimination is the prime objective of the public policy."
Areas of concern by banks
The banking industry has shown tremendous growth in volume and complexity during
the last few decades.
Despite making significant improvements in all the areas relating to financial viability,
profitability and competitiveness, there are concerns that banks have not been able to
reach and bring vast segment of the population, especially the underprivileged sections of
the society, into the fold of basic banking services.
Internationally also efforts are being made to study the causes of financial exclusion and
design strategies to ensure financial inclusion of the poor and disadvantaged.
The reasons may vary from country to country and so also the strategy but all out efforts
are needed as financial inclusion can truly lift the standard of life of the poor and the
disadvantaged.
No-Frills' Account:
In the Mid Term Review of the Policy (2005-06), RBI exhorted the banks, with a view to
achieving greater financial inclusion, to make available a basic banking 'no frills' account either
with 'NIL' or very minimum balances as well as charges that would make such accounts
31
accessible to vast sections of the population. The nature and number of transactions in such
accounts would be restricted and made known to customers in advance in a transparent manner.
All banks are urged to give wide publicity to the facility of such 'no frills' account, so as to
ensure greater financial inclusion.
SBI offers different types of accounts for different segments of customers and the facilities
offered also varies among different customers. Below are the details of the different types of
accounts and how to apply for such accounts.
32
You can apply for a student bank account online through SBI's website
http://www.sbi.co.in
You can apply for a student bank account by a direct visit to the nearby SBI branch.
Take a print out of the form and fill the form will all the valid details.
Along with a filled form, the person also has to submit a photocopy of college ID proof,
two passport size photographs and identity proof like passport, voter id card as well as
any address proof (though for college students, address of hostel is sufficient).
Now you can submit the application form to the nearby SBI branch.
Your student bank account will be opened within few days of time.
A welcome kit will be given to you, containing ATM card and a check book. Though the
account gets open in matter of days, sometimes the check book and ATM card can take
couple of weeks to arrive. It normally ships to the address mentioned in the account form.
If downloading and filling the form is not possible, the person can also get the form
directly from nearest SBI Branch.
As documents, the student has to provide Identity proof, college Id proof and 2 passport
size photographs.
Fill the form and submit it in the bank, students can fill their college room address as
temporary address and are required to fill their home address as permanent address.
A welcome kit will be given to you, containing ATM card and a check book.
33
No need for Pan card (as often needed for big transactions)
Student Bank accounts are normally get disabled after 4 years or gets upgraded to normal
bank account.
diamond account: for the employee with gross salary (GS) Rs.50001 to Rs.100000
platinum account: for the employee with gross salary more than Rs.1 lac
Minimum requirements to open a SBI salary account are:
Minimum salary of the employee should be Rs. 5000
The organization/institution where he/she is employed should have 25 employees at least
Employer must have the tie-up with State Bank of India
Required documents:
Properly filled application form
Employee Identity card
Three copies of passport photographs
Latest three months salary slips
Proof of salary details
Residential proof
Extensive alternate channels - 26,000+ ATMs, Internet Banking and Mobile Banking
35
The Project involves meeting different types of customers having different aspirations
and also knowing their requirement and also knowing the impact of removal of minimum
balance requirement on them.
The project objective is to study the impact on banks customer base whether it has
increased or decreased and also the banks overall business in terms of deposits/loans and
other services like cross selling.
Our objective is to study the customers thinking and their inclination to open the saving
account with SBI where no minimum balance is required in comparison to other banks
where minimum balance requirement still prevails.
The project objective is to study the impact on different segments of the society viz
students, small labourers, businessman, traders, employees of state or central or semi
Government sector, small income groups, housewives etc.
Our final objective is to study the impact on banks business or customers delight with a
light on change of installed application in Saving Bank account from monthly average to
daily balance method.
36
Limitations of study
Though the benefits of removal of minimum balance are at large to Banks and customers the
limitations binding it restricts SBI from popularizing the regulation and also attracting much
more customers than it can attract. After going through the research and after interacting with
customers and employees of SBI of Guwahati there were few limitations that arose out of the
research.
Customers are unaware of the regulation issued by RBI on May 2012. Its been a year but
still majority of the customers are unaware of the regulation and it is due to lack of
advertisement by SBI in Guwahati.
SBI has mostly concentrated on advertisement on car loans and education loans in
Guwahati and not on removal of minimum balance requirement. Even the Government
employees are unaware of the scheme and no move made by RBI also to regulate this
scheme on national basis.
Customers are unwilling to open their accounts with SBI due to strict KYC norms in
comparison to other banks where there are relaxed KYC norms. SBI maintains strict
KYC norms for individuals who want to open their account with them and so many
people like the students who do have proper documents with are unwilling to open their
accounts with SBI.
There was a decrease in the profitability of SBI due to removal of minimum balance
requirement. Previously when such a regulation was not there than banks would have
charged fine against clients who failed to maintain minimum balance in their accounts
and those charges were an income for SBI but now with the regulation of removal of
minimum balance SBI is not able to earn from those charges and therefore its profitability
has decreased.
The dormancy of no-frill accounts (NFAs). With the removal of minimum balance
requirement more and more NFAs are being opened and banks study showed us that over
30% of banks clients in Guwahati with NFAs transacted at least once in 3 months,
while others who have zero balance accounts operate their accounts more infrequently or
not at all. A primary reason for this dormancy is the focus of banks on fulfillment of
financial inclusion requirement.
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Period of study
The project was given to us by SBI Guwahati. The topic of the project was communicated to us
by Mr. Amit Kumar. The topic of our project is to study the impact of removal of minimum
balance requirement in savings bank account. The duration of the project is eight weeks. Our
project commenced from 20th may and it was quite interesting and a new study for us. The topic
was very challenging as we had to visit different type of customers and also all the branches of
SBI in Guwahati and few other banks. And as we are not from Guwahati language also became
one of the barriers as while interacting with many customers, we were not able to understand
their language. During the period of study we interacted with various types of customers, and
also branch managers of different branches of SBI. While interacting with the bank employees
we came to know many things about savings account and also the other products offered by
banks that we did not knew earlier.
The project has ended on 20th July and we hope our work and research during the period of our
study will be beneficial to SBI.
38
METHODOLOGY AND
ANALYSIS
39
METHODOLOGY
Research Methodology
Research Methodology is a methodology for collecting all sorts of information and data
pertaining to the subject in question. The objective is to examine all the issues involved and
conduct situational analysis.
The methodology includes the overall research design , sampling procedure and fieldwork done
and finally the analysis procedure . The methodology used in the study consistent of both
Primary data and Secondary data. Primary data has been collected with help of questionnaire.
SAMPLE SIZE
Sample Size of 80 was taken on basis of stratified sampling.
In statistical surveys, when subpopulations within an overall population vary, it is advantageous
to sample each subpopulation (stratum) independently.
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Stratified Sampling
Stratification is the process of dividing members of the population into homogeneous subgroups
before sampling. The strata should be mutually exclusive: every element in the population must
be assigned to only one stratum. The strata should also be collectively exhaustive: no population
element can be excluded. Then simple random sampling or systematic sampling is applied within
each stratum. This often improves the representativeness of the sample by reducing sampling
error. It can produce a weighted mean that has less variability than the arithmetic mean of
a simple random sample of the population.
Advantages
If the population is large and enough resources are available, usually one will use multi-stage
sampling. In such situations, usually stratified sampling will be done at some stages. However
the main advantage remains stratified sampling being the most representative of a population.
Disadvantages
Stratified sampling is not useful when the population cannot be exhaustively partitioned into
disjoint subgroups. It would be a misapplication of the technique to make subgroups' sample
sizes proportional to the amount of data available from the subgroups, rather than scaling sample
sizes to subgroup sizes.
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SAMPLING TECHNIQUE
We conducted the sampling on basis of Multi Stage Sampling Technique. Entire Population was
firstly divided into 80 by Stratified Sampling and then we chose Simple Random Sampling.
SAMPLING UNITS
House Wives
-09
Students
-17
Salaried Class
-27
Government Staff
-07
Bank Staff
-10
Retired People
-04
Business Class
-06
DATA COLLECTION
For PRIMARY DATA we conducted the Simple Random Sampling and asked the respondents
to fill the questionnaire.
Collection of secondary data was done through the following sources:
1.
Websites
2.
Journals
3.
Articles
4.
Reports
5.
Financial Papers
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DATA ANALYSIS
After Collection of data we were able to analyze customer views, opinions and ideas related to
the removal of minimum balance requirement in saving bank account and also about other
products of SBI and we hope that the data will help SBI in knowing customer requirements.
DATA INTERPRETATION
Interpretation was done through various statistical tools like graphs and Line Charts to represent
our Conclusions.
Representations include:
1.
Pie Diagram
2.
Line Charts
3.
Bar Graph
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OBERVATION
We observed the impact, the removal had on different sections of people and also on the
banks. We also came to know what other products and services offered by SBI to its
customers.
Majority of the customers were unaware of the feature of zero balance account and this
was mainly due to lack of advertisements and lack of information among the customers.
There was no action taken by SBI or any other banks to promote this feature of saving
account.
Majority of account holders in savings account are serviceman and the impact was also
mostly on them.
Businessman had no affect by this new feature of savings account. Students appreciated
this new feature of savings account and started opening savings account by their name
itself.
The removal of minimum balance most of the branches of SBI in Guwahati have
increased their customer base.
The numbers of account openings have increased from last year in most of the branches
and with this more people are getting associated with SBI.
The employees of SBI had no affect on them by this new feature as all the employees
working in SBI get the benefit of opening zero balance account and this benefit was
given to them before the scheme was announced by RBI and after also.
We interacted with the branch managers and even the Chief Manager of SBI and we
found out the possible reasons for the removal of minimum balance.
The main reason given by majority of the branch managers was that in order to increase
the customers base RBI has issued such a norm and also to fulfil the feature of financial
inclusion RBI has given drive to account openings.
Overall the observation was very helpful to us and it provided us good knowledge about
banking services and products and we hope our observation and research help us and SBI
in near future.
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ANALYSIS
I have analyzed the data collected through the questionnaire and have classified it into tables
Table 1:
The Bar graph given below shows the response of 80 customers towards the LEVEL OF
KNOWLEDGE ABOUT ZERO BALANCE FEATURE IN SAVINGS ACCOUNT.
Level of knowledge
GOOD
08
AVERAGE
29
POOR
43
TABLE 1
50
40
43
30
29
TABLE 1
20
10
8
0
GOOD
AVERAGE
POOR
45
Interpretation
Out of 80 customers only 08 people have good knowledge about zero balance features, 29 people
have average knowledge and remaining 43 people have poor or no knowledge about the feature.
Table 2:
The bar chart given below shows How do you come to know about zero balance features
Employees
17
Advertisements
25
Friends/Relatives
38
TABLE 2
40
35
30
25
TABLE 2
20
15
10
5
0
EMPLOYEES
ADVERTISEMENTS
FRIENDS/RELATIVES
INTERPRETATION
The above graph shows that only 17 customers came to know about the feature from bank
employees, 25 of them came to know from advertisements and the maximum awareness is from
friends and relatives that is 38 people.
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TABLE 3:
The graph below shows the personal level of satisfaction of 80 customers for the scheme
Satisfied
61
Normal
13
Dissatisfied
06
Unsatisfied
Series 3
Series 2
Table 3
Normal
Satisfied
10
20
30
40
50
60
70
INTERPRETATION
The above graph shows that maximum number of customers that is 61 customers is satisfied with
the scheme and only 6 customers is dissatisfied and the remaining 13 are normal to the change.
Table 4:
47
Quick Response
45
23
12
Table 4
Quick Response
Good Customer Relation
Extra Facility for Existing
Customer
Interpretation
Out of 80 customers, 45 of them said they expect Quick Response from SBI bank, 23 said that
they expect Good Customer Relation and remaining 12 said that they expect Extra facility for
existing customer.
48
Conclusion &
Recommendations
49
Conclusion
The project undertaken has helped us on gaining tremendous knowledge of Impact of Removal
of Minimum Balance on Saving Bank Account
The bank provides a framework for Financial Inclusion through this policy.
1) The Banking Sector and Saving Bank account Zero Balance feature is a very vast subject
and covering all aspects in such a small duration of time frame is difficult but we have
done our sincere and honest work to bring the Project to a conclusion.
2) In pursuance to RBI instruction and directives the SBI is granting the Zero Balance
Account feature.
3) The concerned efforts put by Management and staffs of bank has helped bank to achieve
a significant and remarkable progress in this field.
4) As of March 2012, SBI had 15.39 crore savings account. Duringn2011-12, the bank
opened 2.19 crore such accounts after regulation of such scheme.
5) With these figure the success of the scheme is well evident and self explanatory but as
they say It is better to take many small steps in the right direction than to make a great
leap forward only to stumble backward
6) The efforts have made SBI the No. 1 bank in Banking Industry.
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Recommendation
After going through entire Research and Project Study we recommend some suggestions
which might be beneficial to SBI.
Awareness
Outreach visit by SBI Executives, Marketing and Sales personnel, and other
support staff should be done to educate public about the new feature.
Opening of FLCs (Financial Literacy Centres) and Training Centres to train the
SBI officials about new schemes.
Schemes like SBI TINY for Urban Customer Service Point have to increase its
scope and no. of such staffs should increase.
Cross Selling
Proper Training should be given to SBI Officials to educate them about how to
Cross Sell SBIs other products and schemes.
Manpower
No. of Branch officials should increase for proper and smooth functioning of the
Branch.
General
Interest rates for Saving Account should increase so that more and more
customers bank with SBI.
ATM machine working should be user friendly and active at all times.
SBI should tie up with other organizations like Educational Institutes, Hospitals,
and Corporate for their entire Banking Solution
51
QUESTIONAIRE
Dear Sir/ Madam, A s p a r t o f my MB A c u r r i c u l u m, W e H a r s h
A g r aw a l a n d An ki t G u p t a a r e c onducting a market research regarding
the impact and awareness of Removal of Minimum Balance in Saving Account
for which I need your personal views regarding banking products
&services in shape of a questionnaire designed by us . The data being
collected are solely for academic purpose. I request you to kindly extend your
co-operation.
NAME
________________________________________________________
AGE
________________Yrs
OCCUPATION
_________________________________________________________
SEX
(b) No
Q2.What is the level of your knowledge about Zero Balance Feature of Saving
Account?
(a) Good
(b) Average
(c) Poor
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Q3. If poor, what is the possible reason that you are unaware about Zero
Balance Feature?
Ans.
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
____________________________________
b) HDFC
c) ICICI
Q7.If you prefer SBI for opening your account than what influence you to
open account with SBI?
Ans.
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
____________________________________
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Q8. What kind of training would you prefer to be given to SBI Officials, in
order to be educated about Zero Balance Feature?
(a)Intense
(b) Average
Q9. What channel would you prefer to promote Zero Balance Feature in
Guwahati?
(a) Mass Marketing b) Camps (C) Business Correspondents (d) Personalized
Services
(b) Normal
(c) Dissatisfied
Q11. Are you satisfied with the small session with us in which we have given
you a brief overview about Zero Balance Feature?
(a) Yes
(b) No
Q12. Did the SBI official when talked about zero Balance scheme also talked
about other SBI Products and services like
(a)Yes
(b) No
Q13. On behalf of SBI, any suggestion that you want to give to increase
Subscribers of Zero Balance
Ans._______________________________________________________________
__________________________________________________________________
_______________________
54
BIBLIOGRAPHY
55
BIBLIOGRAPHY
INTERNET
1. www.sbi.co.in
2. www.wikipedia.com
3. www.ekikrat.in
4. www.yahooindia.com
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