CHAPTER 1

INTRODUCTION
Private Banks are banks owned by either an individual or a general partner (s) with
limited partner(s). Private Banks are not incorporated. In any such case the creditors
can looks to both the entirely of the banks assets as well as the entirely of the sole
proprietors general-partners assets.
Private Banks can also refers to non government owned banks in general, In contrast
to government owned (or nationalized) banks, which were prevalent in communist,
socialist and some social democratic states in the 20th century.
A public bank is a bank a financial institution in which state or public actors are the
owners. It is a company under state control. Higher spending on infrastructure, speedy
implementation of projects and continuation of reforms will provide further impetus
to growth. All these translates into a strong growth for banking sector too, as rapidly
growing business turn to banks for their credit needs, thus helping them grow very
fast. Also, with the advancements in technology, mobile and internet banking services
have come to the fore. Banks are focusing more and more to provide better services
to their clients and have also started upgrading their technology infrastructure, which
can help improve customer experience as well as give banks a competitive edge. The
operations of all the banks in India are controlled by the RBI. All the Indian banks are
governed by the RBI. This governing body took over the reasonability of formally
regulating the Indian banks in 1935. Banks in India are classified into 2 broad
categories namely, Public sector banks and Private sector banks. Public sector banks
are controlled and managed by the government of India. Public sector banks have
been serving the nation for over centuries and well known for their affordable and
quality services. The banking sector in India is mostly dominated by the public sector
banks. The concept of private banking was introduced about twenty years ago. These
are the banks that do not have any government stakes. Private Banks have gained
quite a strong foothold in the Indian banking industry over the last few years
especially because of optimum use of technology.
DEFINITION OF BANK

The Oxford dictionary defines the Bank as, An establishment for the custody of
money, which it pays out, on a customers order.
According to Whitehead,
A Bank is defined as an institution which collects surplus funds from the
public, safeguards them, and makes them available to the true owner when required
and also lends sums be their true owners to those who are in need of funds and can
provide security.
Banking Company in India has been defined in the Banking Companies act 1949,
One which transacts the business of banking which means the accepting, for the
purpose of lending or investment of the deposits of money from the public, repayable
on demand, or otherwise and withdraw able be cheque, draft, order or otherwise.
The banking system is an integral subsystem of the financial system. It represents an
important channel of collecting small savings from the households and lending it to
the corporate sector.
The Indian banking system has Reserve Bank of India (RBI) as the apex body for all
matters relating to the banking system. It is the central Bank of India. It is also known
as the Banker To All Other Banks.
EVOLUTION OF INDIAN BANKING
Ancient banking system of India constituted of indigenous bankers. They have been
carrying on their age-old banking operations in different parts of the country under
different names. The modern age of banking constitutes the fundamental basis of
economic growth. The term Bank is being used since long time but there is no clear
conception regarding its beginning. According to the viewpoint, in good old days.
Italian money leaders were known as Banchi because they kept a special type of
table to transact their business.
IMPORTANCE OF BANKS
Today banks have become a part and parcel of Kotak Bank's life. There was a time
when dwellers of the city alone could enjoy their services. Now banks offer access to
even a common man and their activities extend to areas hitherto untouched. Banks
2

cater to the needs of agriculturalists, industrialists, traders and to all the other sections
of the society. In modern age, the banking constitutes the fundamental basis of
economic growth. Thus, they accelerate the economic growth of a country and steer
the wheels of the economy towards its goals of self reliance in all fields. It naturally
arouses Kotak Bank's interest in knowing more about the Bank and the various men
and the activities connected with it.
Indian Banking System
Banking in India has its origin as early as the Vedic period. It was believed that
transition from money lending to banking must have occurred even before Manu, The
great Hindu Jurist, who has devoted a section of his work to deposit advance and laid
down rules relating to rates of interest. During the Mogul period, the indigenous
Bankers played a very important role in lending money financing foreign trade and
commerce. During the days of East India Company, it was turn over the agency
houses to carry on the business. The General Bank of India was the first to join
sector in the year 1786.The others that followed were the Bank of Hindustan and the
Bengal bank. The bank of Hindustan is reported to have continued till 1906 while the
other two failed in the meantime.
In the first half of the 19th century the East India Company established three banks:
1

Bank of Bengal (1809)

Bank of Bombay (1840)

Bank of Madras (1843)

These three banks are also known as Presidency Banks were independent units and
functioned well. These three banks were amalgamated in 1920 and Imperial Bank of
India was established on 27th january1921, which started as private shareholders
banks, mostly Europeans shareholders, with the passing of time Imperial bank was
taken over by the newly constituted State bank of India act in1955.In 1865 Allahabad
Bank was established and first time exclusively by Indians, Punjab National Bank
Ltd. was set up in 1894 with headquarters at Lahore. Between 1906 and 1913, Bank
of India, Central Bank of India, Bank of Baroda, Canara Bank, Indian Bank, and Bank
of Mysore were set up. Reserve Bank of India came in 1935. On July, 1969, 14 major
3

Research and development in the banking sector. Banks of India were nationalized
and on 15th April, 1980 six more commercial private banks were also taken over by
the government.

PUBLIC SECTOR BANKS

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 nationalized on 19 July 1960.The next
major nationalization of banks took place in 1969 when the government of
India, under prime minister India Gandhi, nationalized an additional 14
major banks. The total deposits in the banks nationalized in 1969
amounted to 50 crores. This move increased the presence of nationalized
banks in India, with 84% of the total branches coming under government
control
The next round of nationalization took place in April 1980. The
government nationalized 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 nationalization where:

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

families,
o To prevent the concentration of wealth and economic power,
o To mobilize savings from masses from all parts of the country,
o To cater to the needs of the priority sectors.....
List of Public Sector Banks
o State Bank of Bikaner & Jaipur
o State Bank of Hyderabad
o State Bank of Indore
o State Bank of Mysore
o State Bank of Saurastra
o State Bank of Travancore
Other Nationalised banks are:

Allahabad Bank

Andhra Bank

Bank of Baroda

Bank of India

Bank of Maharastra

Canara Bank
5

Central Bank of India

Corporation Bank

Dena Bank

Indian Bank

Indian Overseas Bank

Oriental Bank of Commerce

Punjab & Sind Bank

Punjab National Bank

Syndicate Bank

UCO Bank

Union Bank of India

United Bank of India

Vijaya Bank
PRIVATE SECTOR BANKS

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 "privatesector 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 nationalized by the Indian government. However
since liberalization 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 liberalization 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
nationalization in 1969 and kept their independence because they were either
too small or specialist to be included in nationalization. The new private sector
banks are those that have gained their banking license since the liberalization
in the 1990s.
List of Private Sector Bank

Bank of Punjab

Bank of Rajasthan

Catholic Syrian Bank

Centurion Bank

City Union Bank

Dhanalakshmi Bank

Development Credit Bank

Federal Bank

HDFC Bank
7

ICICI Bank

IDBI Bank

IndusInd Bank

ING Vysya Bank

Jammu & Kashmir Bank

Karnataka Bank

Karur Vysya Bank

Laxmi Vilas Bank

South Indian Bank

United Western Bank

UTI Bank

COMPARISON BETWEEN SBI BANK AND ICICI BANK

HISTORY OF SBI BANK
The

State Bank of India traces its roots to the first decade of 19th

century, when the Bank of Calcutta, later renamed the Bank of Bengal, was
established on 2 June 1806.

The government amalgamated Bank of

Bengal and two other Presidency banks, namely, the Bank of Bombay (incorporated
on 15 April 1840) and the Bank of Madras on 27 January 1921, and named the
reorganized banking entity the Imperial Bank of India. All these Presidency banks had
been incorporated as joint stock companies, and were the result of the royal charters.
The Imperial Bank of India continued as a joint stock company. Until the
8

establishment of a central bank in India the Imperial Bank and its early predecessors
served as India's central bank, at least in terms of issuing the currency. The State Bank
of India Act 1955, enacted by the Parliament of India, authorized the Reserve Bank of
India, which is the central banking organization of India, to acquire a controlling
interest in the Imperial Bank of India, which was renamed the

State

Bank of India on 30 April 1955.

June 2, 1806: The Bank of Calcutta established.
January 2, 1809: This became the Bank of Bengal.
April 15, 1840: Bank of Bombay established.
July 1, 1843: Bank of Madras established.
1861: Paper Currency Act passed.
January 27, 1921: all three banks amalgamated to form Imperial Bank of
India.
July 1, 1955:

State Bank of India formed; becomes the first

Indian bank to be nationalized.

1959:

enabling the

State Bank of India (Subsidiary Banks) Act passed,

State Bank of India to take over eight former

State-associated banks as its subsidiaries.

1980s When Bank of Cochin in Kerala faced a financial crisis,

the government merged it with

State

Bank of India. June 29, 2007: The Government of India today acquired the
entire Reserve Bank of India (RBI) shareholding in

State

Bank of India (SBI), consisting of over 314 million equity shares at a total
amount of over 355 billion rupees.
SBI PROFILE

COMPANY
OVERVIEW:State Bank of India (SBI) is a multinational banking and financial services company
based in India. It is a government-owned corporation with its headquarters
in Mumbai, Maharashtra. As of December 2013, it had assets of US$388 billion and
17,000 branches, including 190 foreign offices, making it the largest banking and
financial services company in India by assets.
State Bank of India is one of the Big Four banks of India, along with ICICI
Bank, Punjab National Bank and Bank of Baroda.
The bank traces its ancestry to British India, through the Imperial Bank of India, to
the founding in 1806 of the Bank of Calcutta, making it the oldest commercial bank in
the Indian Subcontinent. Bank of Madras merged into the other two presidencies
10

banksBank of Calcutta and Bank of Bombayto form the Imperial Bank of India,
which in turn became the State Bank of India. Government of India owned the
Imperial Bank of India in 1955, with Reserve 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.
The eight banking subsidiaries are:
1-State Bank of Bikaner and Jaipur (SBBJ)
2-State Bank of Hyderabad (SBH)
3-State Bank of India (SBI)
4-State Bank of Indore (SBIR)
5-State Bank of Mysore (SBM)
6-State Bank of Patiala (SBP)
7-State Bank of Saurashtra (SBS)
8-State Bank of Travancore (SBT)
INTRODUCTION OF SBI (state bank of India)
The State Bank of India, the countrys oldest Bank and a premier in terms of balance
sheet size, number of branches, market capitalization and profits is today going
through a momentous phase of Change and Transformation the two hundred year
old Public sector behemoth is today stirring out of its Public Sector legacy and
moving with an ability to give the Private and Foreign Banks a run for their money.
The origin of the state bank of India goes back to the first decade of the nineteenth
century with the establishment of the Bank of Calcutta in Calcutta on2 June 1806.
The bank is operating into many businesses with strategic tie ups Pension Funds,
General Insurance, Custodial Services, Private Equity, Mobile Banking, Point of Sale
Merchant Acquisition, Advisory Services, structured products etc each one of these
initiatives having a huge potential for growth.
It is also focusing at the top end of the market, on whole sale banking capabilities to
provide Indias growing mid / large Corporate with a complete array of products and
services. It is consolidating its global treasury operations and entering into structured
products and derivative instruments. Today, the Bank is the largest provider of

11

infrastructure debt and the largest arranger of external commercial borrowings in the
country. It is the only Indian bank to feature in the Fortune 500 list.
SBI have about 8500 of its own 10000 branches and another 5100 branches of its
Associate Banks, today it offers the largest banking network to the Indian customer.
The Bank is also in the process of providing complete payment solution to its clientele
with its over 8500 ATMs.
It presently has 52 foreign offices in 34 countries across the globe. It has also 5
Subsidiaries in India
SBI Capital Markets- SBICAP Securities, SBI DFHI, SBI Factors and Commercial
Services Pvt Ltd (SBI FACTORS), SBI Funds Management Pvt Ltd (SBI FUNDS)
and SBI Cards & Payments Services Pvt. Ltd. SBICPSL) - forming a formidable
group in the Indian Banking scenario. It is in the process of raising capital for its
growth and also consolidating its various holdings.

HISTORY OF ICICI BANK

ICICI Bank was originally promoted in 1994 by ICICI Limited, an Indian
financial institution, and was its wholly-owned subsidiary. ICICI's shareholding
in ICICI Bank was reduced to 46% through a public offering of shares in India
in fiscal 1998, an equity offering in the form of ADRs listed on the NYSE in
fiscal 2000, ICICI Bank's acquisition of Bank of Madura Limited in an all-stock
amalgamation in fiscal 2001, and secondary market sales by ICICI to
institutional investors in fiscal 2001 and fiscal 2002. ICICI was formed in 1955
12

at the initiative of the World Bank, the Government of India and representatives
of Indian industry. The principal objective was to create a development financial
institution for providing medium-term and long-term project financing to Indian
businesses.
In the 1990s, ICICI transformed its business from a development financial
institution offering only project finance to a diversified financial services group
offering a wide variety of products and services, both directly and through a
number of subsidiaries and affiliates like ICICI Bank. In 1999, ICICI become
the first Indian company and the first bank or financial institution from nonJapan Asia to be listed on the NYS
After consideration of various corporate structuring alternatives in the context
of the emerging competitive scenario in the Indian banking industry, and the
move towards universal banking, the managements of ICICI and ICICI Bank
formed the view that the merger of ICICI with ICICI Bank would be the optimal
strategic alternative for both entities, and would create the optimal legal
structure for the ICICI group's universal banking strategy. The merger would
enhance value for ICICI shareholders through the merged entity's access to lowcost deposits, greater opportunities for earning fee-based income and the ability
to participate in the payments system and provide transaction-banking services.
The merger would enhance value for ICICI Bank shareholders through a large
capital base and scale of operations, seamless access to ICICI's strong corporate
relationships built up over five decades, entry into new business segments,
higher market share in various business segments, particularly fee-based
services, and access to the vast talent pool of ICICI and its subsidiaries.
In October 2001, the Boards of Directors of ICICI and ICICI Bank approved
the merger of ICICI and two of its wholly-owned retail finance subsidiaries,
ICICI Personal Financial Services Limited and ICICI Capital Services Limited,
with ICICI Bank. The merger was approved by shareholders of ICICI and ICICI
Bank in January 2002, by the High Court of Gujarat at Ahmadabad in March
2002, and by the High Court of Judicature at Mumbai and the Reserve Bank of
India in April 2002. Consequent to the merger, the ICICI group's financing and

13

banking operations, both wholesale and retail, have been integrated in a single
entity.

ICICI BANK PROFILE

ICICI Bank is Indias second-largest bank with total assets of 3,997.95 billion (US$
100 billion) at March 31, 2008and profit after tax of Rs. 41.58 billion for the year
ended March 31, 2008. ICICI Bank is the most valuable bank in India in terms of
market capitalization and is ranked second amongst all the companies listed on the
Indian stock exchanges .In terms of free float market capitalization*.The Bank
has a network of about 130 branchesand3,950 ATMs in India and presence in 18
countries. ICICI Bank offers a wide range of banking products and financial
services to corporate and retail customer through a variety of delivery
channels and through its specialized subsidiaries and affiliates in the areas of
investment banking, life and non-life insurance, venture capital and asset
management. The Bank currently has subsidiaries in the United Kingdom, Russia and
Canada, branches in Singapore, Bahrain, Hong Kong, Sri Lanka and Dubai International
Finance Center and representative offices in the United Stat es, United
Arab Emirates, China, South Africa, Bangladesh, Thailand, Malaysia and
Indonesia. UK subsidiary has established a branch in Belgium. ICICI Bank's equity shares
are listed in India on Bombay Stock Exchange ( B S E ) a n d t h e
National Stock Exchange (NSE) of India Limited and its
14

American Depositary Receipts (ADRs) are listed on the New York

Stock Exchange (NYSE).

INTRODUCTION TO ICICI BANK

ICICI Bank is India's second-largest bank with total assets of about Rs.1,67,659
crore at March 31, 2005 and profit after tax of Rs. 2,005 crore for the year
ended March 31, 2005 (Rs. 1,637 crore in fiscal 2004). ICICI Bank has a
network of about 560 branches and extension counters and over 1,900 ATMs.
ICICI Bank offers a wide range of banking products and financial services to
corporate and retail customers through a variety of delivery channels and
through its specialized subsidiaries and affiliates in the areas of investment
banking, life and non-life insurance, venture capital and asset management
ICICI Bank set up its international banking group in fiscal 2002 to cater to the
cross border needs of clients and leverage on its domestic banking strengths to
offer products internationally. ICICI Bank currently has subsidiaries in the
United Kingdom and Canada, branches in Singapore and Bahrain and
representative offices in the United States, China, United Arab Emirates,
Bangladesh and South Africa.
ICICI Bank's equity shares are listed in India on the Stock Exchange, Mumbai
and the National Stock Exchange of India Limited and its American Depositary
Receipts (ADRs) are listed on the New York Stock Exchange (NYSE).
As required by the stock exchanges, ICICI Bank has formulated a Code of
Business Conduct and Ethics for its directors and employees.
At April 4, 2005, ICICI Bank, with free float market capitalization of about Rs.
308.00 billion (US$ 7.00 billion) ranked third amongst all the companies listed
on the Indian stock exchanges.

15

ICICI Bank was originally promoted in 1994 by ICICI Limited, an Indian

financial institution, and was its wholly-owned subsidiary. ICICI's shareholding
in ICICI Bank was reduced to 46% through a public offering of shares in India
in fiscal 1998, an equity offering in the form of ADRs listed on the NYSE in
fiscal 2000, ICICI Bank's acquisition of Bank of Madura Limited in an all-stock
amalgamation in fiscal 2001, and secondary market sales by ICICI to
institutional investors in fiscal 2001 and fiscal 2002. ICICI was formed in 1955
at the initiative of the World Bank, the Government of India and representatives
of Indian industry.
The principal objective was to create a development financial institution for
providing medium-term and long-term project financing to Indian businesses. In
the 1990s, ICICI transformed its business from a development financial
institution offering only project finance to a diversified financial services group
offering a wide variety of products and services, both directly and through a
number of subsidiaries and affiliates like ICICI Bank. In 1999, ICICI become
the first Indian company and the first bank or financial institution from nonJapan Asia to be listed on the NYSE.
After consideration of various corporate structuring alternatives in the context
of the emerging competitive scenario in the Indian banking industry, and the
move towards universal banking, the managements of ICICI and ICICI Bank
formed the view that the merger of ICICI with ICICI Bank would be the optimal
strategic alternative for both entities, and would create the optimal legal
structure for the ICICI group's universal banking strategy.
The merger would enhance value for ICICI shareholders through the merged
entity's access to low-cost deposits, greater opportunities for earning fee-based
income and the ability to participate in the payments system and provide
transaction-banking services.
The merger would enhance value for ICICI Bank shareholders through a large
capital base and scale of operations, seamless access to ICICI's strong corporate
relationships built up over five decades, entry into new business segments,
higher market share in various business segments, particularly fee-based
services, and access to the vast talent pool of ICICI and its subsidiaries.
16

In October 2001, the Boards of Directors of ICICI and ICICI Bank approved the
merger of ICICI and two of its wholly-owned retail finance subsidiaries, ICICI
Personal Financial Services Limited and ICICI Capital Services Limited, with
ICICI Bank.
The merger was approved by shareholders of ICICI and ICICI Bank in January
2002, by the High Court of Gujarat at Ahmadabad in March 2002, and by the
High Court of Judicature at Mumbai and the Reserve Bank of India in April
2002. Consequent to the merger, the ICICI group's financing and banking
operations, both wholesale and retail, have been integrated in a single entity.

SBI v/s ICICI

SBI stands for State Bank of India. It is a public sector institution

(government owned), with a huge customer base all over India. It has seven
associate banks operating under its SBI name. It has over thirteen thousand branches
across India and in some selected international countries and a 56,000 ATM network
across India. The
Standard Bank of India inherited the Bank of Calcutta, which was founded in
1806, and has been in existence for over two hundred years.
On the other hand, the ICICI is a private sector bank (privately owned), with
a relatively smaller clientele base. It is one of the major banks in India (precisely the
second largest), but much smaller than the SBI. It has 950 branches, with 3,500
branches across India. The bank has deposits of Rs 1.65 lakh crore compared to
SBIs Rs 3.8 lakh crore (accumulated in a period of twelve years), racking up a net
worth of Rs 22,000 against Rs 27,000 for the State Bank of India. This represents Rs
17

9 crore business generated by each ICICI employee per year, compared to Rs 3 crore
worth of business per employee of the ICICI.
While the State Bank pays 4.7 percent on deposits, and earns less on
advances, the ICICI pays 0.7 less (4 percent), while earning more on advances, and
thus earns
0.4 percent more on assets than the SBI. This is no surprise, as theres seemingly
limitless access to funds from the government for the state owned SBI.
On money transfers from overseas accounts, with the SBI, once a transfer
transaction is completed, you will be able to know the exchange rate used, and there
are no restrictions on the amounts you can transfer a day. However, the ICICI
transfer is somewhat different. After completion of a money transfer transaction, the
exchange rate can only be known after five days, and there is a daily limit of $5000
that can be transferred a day.
Although the SBI has generally performed well in the past, in recent years,
the ICICI has seen very good performance, almost edging out the SBI in every
aspect, especially financially. The financial years between 2001-2002 and 2005, and
2006, saw very strong gains for the ICICI bank. Its deposits grew by 200 percent,
five times more than the SBIs, and while SBIs revenue grew by 30 percent and the
ICICI banks revenue grew by seven times that percentage. This trend means that
ICICIs growth will eventually overtake SBIs in the future, in terms of deposits.

The SBI is a government owned bank (public sector), while ICICI is a

privately owned bank (private sector).

The SBI is much older (more than 200 years old) and more established than
the ICICI, which is less than 25 years old.

The SBI does not limit daily international transfer amounts, while the ICICI
limits daily transfers to $5000 a day.

The SBI bank pays a higher percentage on deposits than the ICICI bank.

MISSION AND VISION OF SBI BANK

MISSION STATEMENT:

18

To retain the Banks position as premiere Indian Financial Service Group, with world
class standards and significant global committed to excellence in customer,
shareholder and employee satisfaction and to play a leading role in expanding and
diversifying financial service sectors while containing emphasis on its development
banking rule.
VISION STATEMENT:
Premier Indian Financial Service Group with prospective world-class Standards of
efficiency and professionalism and institutional values.
Retain its position in the country as pioneers in Development banking.
Maximize the shareholders value through high-sustained earnings per Share.
An institution with cultural mutual care and commitment, satisfying and
Good work environment and continues learning opportunities.
MISSION AND VISION OF ICICI BANK
MISSION
We will leverage our people, technology, speed and financial capital to:

Be the banker of first choice for our customers by delivering high quality,
world-class products and services.

Expand the frontiers of our business globally.

Play a proactive role in the full realisation of Indias potential.

Maintain a healthy financial profile and diversify our earnings across

businesses and geographies.

Maintain high standards of governance and ethics.

Contribute positively to the various countries and markets in which we

operate.
19

create value for our stakeholders

Provide the social facilities to the society

IN order to build some brand equity by doing social service, ICICI Bank has decided
to undertake a MISSION for reducing low birth weight incidence at the village level.
VISION
To be the leading provider of financial services in India and a major global bank.
To be the preferred brand for total financial and banking solutions for both corporates
and individuals
To be the dominant Life, Health and Pensions player built on trust by world-class
people and service.
This we hope to achieve by:

Understanding the needs of customers and offering them superior products and
service

Leveraging technology to service customers quickly, efficiently and

conveniently

Developing and implementing superior risk management and investment

strategies to offer sustainable and stable returns to our policyholders

Providing an enabling environment to foster growth and learning for our

employees

And above all, building transparency in all our dealings

The success of the company will be founded in its unflinching commitment to 5 core
values -- Integrity, Customer First, Boundary less, Ownership and Passion. Each of
the values describes what the company stands for, the qualities of our people and the
way we work.

20

We do believe that we are on the threshold of an exciting new opportunity, where we

can play a significant role in redefining and reshaping the sector. Given the quality of
our parentage and the commitment of our team, there are no limits to our growth.

PRODUCTS AND SERVICES OF SBI

Terms deposit scheme

Recurring deposits scheme
E- Pays
Atm service
Safe deposit locker
Working capital finance
Project finance
Deferred payment guarantees
Corporate term loan
Equipment leasing
Loan syndication
Fund transfer
Loans
I.
Car loan
II.
Home loan
III.
Business loan
IV. Personal loan
V. Loan against property

1. Term deposit

Provide security, trust and competitive rate of interest.

Flexibility in period of term deposit from 15 days to 10 years
Affordable Low Minimum Deposit Amount:
.One can open a term deposit with SBI for a nominal amount of Rs.1000/- only.
Flexibility in choosing the amount one wish to invest and the maturity period.

2. Recurring deposit
Recurring deposit refers to a little investment by an investor to meet his financial
goals of future (Childrens education or marriage, buy a car etc.) Recurring
deposit provides the element of compulsion to save at high rates of interest, wide
choice in period of deposit.
Features:-

21

 Flexibility in period of deposit with maturity ranging from 12 months to 120

months.
Low minimum monthly deposit amount.
One can start a Recurring Deposit with SBI for a monthly installment of Rs.100/only.
3. E- pays
Bill Payment at Online SBI (e-Pay) will let you to pay your Telephone, Mobile,
Electricity, Insurance and Credit Card bills electronically over our Online SBI
website
Book your Railways Ticket Online.
The facility has been launched wef Ist September 2003 in association with
IRCTC. The scheme

facilitates Booking of

Railways Ticket Online

4. Atm services
State Bank offers you the convenience of over 8000 ATMs in India, the largest
network in the country and continuing to expand fast! This means that you can
transact free of cost at the ATMs of State Bank Group (This includes the ATMs of
State Bank of India as well as the Associate Banks namely, State Bank of
Bikaner & Jaipur, State Bank of Hyderabad, State Bank of Indore, State Bank of
Mysore, State Bank of Patiala, State Bank of Saurashtra, and State Bank of
Travancore) and wholly owned subsidiary viz. SBI Commercial and International
Bank Ltd., using the State Bank ATM-cum-Debit (Cash Plus) card.
5. Safe deposit locker
For the safety of your valuables we offer our customers safe deposit vault or
locker facilities at a large number of our branches. There is a nominal annual
charge, which depends on the size of the locker and the centre in which the branch
is located.
6. Working Capital Finance
SBI offers working capital finance to meet the entire range of short-term fund
requirements that arise within a corporate day-to-day operational cycle. The SBI
22

working capital loans can help your company in financing inventories, managing
internal cash flows, supporting supply chains, funding production and marketing
operations, providing cash support to business expansion and carrying current assets.
7. Project Finance
The SBI has formed a dedicated Project Finance Strategic Business Unit to assess
credit proposals from and extend term loans for large industrial and infrastructure
projects. Apart from this, project term loans for medium sized projects and smaller
clients are delivered through the CAG and the NBG.
8. Deffered Payment Guarantees
SBI can extend deferred payment guarantees to industrial projects for obtaining
imported equipment. The DPG is a standby credit guaranteeing deferred payments,
usually for payments for capital goods, turnkey contracts etc.
9. Corporate Term Loan
The SBI corporate term loans can support your company in funding ongoing business
expansion, repaying high cost debt, technology upgradation, R&D expenditure,
leveraging specific cash streams that accrue into your company, implementing early
retirement schemes and supplementing working capital.
10. Equipment Leasing
The SBI's has deployed a dedicated Strategic Business Unit for lease financing that is
richly experienced in arranging lease contracts for procuring expensive equipment for
your project or plant. At SBI, we arrange lease agreements as stand alone contracts or
as part of a structured package.
11. Loan Syndication
The SBI leverages its vast network of relationships to arrange syndicated credit
products for corporate clients and industrial projects.

23

With its rich experience and strong reputation, SBI's syndication desk can assemble
large loan packages involving a ring of reputed financial entities, domestic and
international, that match the large credit requirements of infrastructure projects.
12. Funds Transfer
You can now avail a bouquet of funds transfer services through Internet banking
Transfer funds within your own accounts
Transfer funds to third party account held in the same bank
Make an Inter bank funds transfer to any account held in any bank including State
Bank Group
Pay any VISA credit card bill
Transfer funds to religious and Charitable institutions
Record standing instructions to transfer a fixed amount at a scheduled frequency
for a period not exceeding one year
Transfer funds to NRE PIS accounts to facilitate online trading
13. Loans
I.

Car loan
Move ahead in life with SBI Car Loans with more than 6000 Branches
offering Car Loans. If you have been putting off purchasing that Car, SBI
invites you to an attractive Car Loan Scheme with low interest rates, free
accidental insurance, easy repayment options, optional SBI life cover, total
transparency. Loan finance will include vehicle registration charges, insurance,
one-time road tax and accessories worth Rs.25000/-.

II.

Home loan
"The Most Preferred Home Loan Provider" voted in Awaaz Consumer Awards
along with the Most Preferred Bank Award in a survey conducted by TV 18 in
24

association with AC Nielsen-ORG Marg in 21 cities across India. SBI HOME

LOANS now offers Interest Rates concessions on GREEN HOMES in
accordance with SBI's commitment to Environment protection. SBI Home
Loans come to you on the solid foundation of trust and transparency built in
the tradition of State Bank of India.
III.

Business loan
Traders Easy Loan scheme is launched by SBI to provide hassle free loan to
Traders. Any businessman/ entrepreneur/ professional and self employed
person can avail this loan. Loan under the scheme can be availed to meet
normal business requirements and is sanctioned against equitable mortgage of
property.

IV.

Personal loan
SBI Saral - Personal Loan makes funds readily available to you whenever you
desire

or

need.

Access this facility from over 3000 branches across the country and
confidently face the challenge of meeting any kind of personal expenses
V.

Loan against property

A dream come true! An all purpose loan for anything that life throws up at
you!! Do you need funds for a marriage ceremony, want to take your family to
a well-deserved holiday or for a sudden medical emergency? you have some
property, but would rather not sell it? Then why not avail of this all purpose
loan from SBI? SBI now makes it very much possible for you to not only keep
your property but also have liquid funds.

Types of loans
Car loan
Home loan
Business loan
Personal loan
Loan against property

Interest rates
10.75% per annum
9.25%-9.30%
12.50%-13%
12.55%-17.65%
15.25%-15.50%

PRODUCTS AND SERVICES OF ICICI BANK

25

Special saving account

Life plus senior citizens account
Fixed deposit
Recurring account
Salary account
Child education planning
Tax saver fixed deposit
Cards
I.
Credit cards
II.
Debit cards
III.
Pre-paid cards
IV. Business cards
E-instructions
Consolidation demat account
NRI banking
Investments
Property solutions
Insurance
Corporate banking
Trade services
Foreign exchange services
Loans
I.
Car loan
II.
Home loan
III.
Business loan
IV. Personal loan
V. Loan against property

1. Special Savings Account

ICICI Banks Special Savings Account provides comprehensive banking services to
non profit motive organizations like Trusts, Associations, Societies, Clubs, NGOs,
Hospitals, Educational and Research Institutes and section 25 companies and entities
eligible for a Savings Account as per RBI Guidelines.
2. Life plus Senior Citizens Account
Carry out your day-to-day banking transactions independently with ICICI Banks
Life Plus Senior Citizens Savings Account, a saving account designed for our
customers above 60 years of age.
We have special Senior Citizen desks at all our branches, where you can carry out all
your banking transactions, without having to wait in queues.

26

3. Fixed deposit
A sum of money given to a bank, financial institution or company whereby the
receiving entity pays interest at a specified percentage for the time duration of
the deposit. At the end of the time period of the deposit the amount that is
originally given is returned to the investor. Fixed deposits are also known as
term deposits. Fixed deposits are operated by ideal money. the interest is charge
9 to10% per annum. the facilities are provided by fixed deposit receipt.

4. Recurring Deposit
Recurring deposit are a good investment option for small investors if they do not
have a lump sum amount to invest at one go, but wish to save a smaller sum of money
on a regular basis. As one of the leading private sector banks in India, ICICI Bank
offers its customers highly flexible RD options at competitive interest rates.
5. Salary Account
ICICI Bank Salary Account is a benefit-rich payroll account for Employers and
Employees.As an organization, you can opt for our Salary Accounts to enable easy
disbursements of salaries and enjoy numerous other benefits. Additionally, ICICI
Bank offers a host of advantages for your employees like instant credit of salaries,
offers on bill payments, Phone Banking, Free Internet Banking and much more. To
know more about the ICICI Bank Salary Accoun
6. Child Education Planning
Planning for your childs special education needs isnt an easy task, but its not
insurmountable either. While support services vary from state to state, all states are
required to assist your child in receiving the same education they provide every other
child in school. The resources in this section can help you develop a plan to address
your childs education needs
7.Tax saver fixed deposit
Tax saver fixed deposit is a type of fixed deposit by investing in which you can get
tax deduction under section 80C of the Indian Income Tax Act, 1961. Normally, tax
saver deposits are of two types - Single holder Type Deposits" and Joint holder
Type Deposits. Such deposits are offered for a lock-in period of 5 years. Any
27

investor can claim a deduction of maximum Rs.1, 50,000 by investing in tax saver
fixed deposit.
8. Cards
I.

Credit cards
ICICI Bank Credit Cards give the customers the facility of cash, convenience
and a range of benefits, anywhere in the world. These benefits range from
life time free cards, Insurance benefits, global emergency assistance service,
discounts, utility payments, travel discounts and much more.

II.

Pre-paid cards
ICICI Bank brings to the customers a complete bouquet of pre-paid cards
providing payment solutions at their fingertips. ICICI Bank pre-paid cards
are a safe & convenient way for associate payments, disbursements, gifting &
small ticket transactions. Pre-paid cards are available on a VISA platform thus
providing accessibility to over 3.5 Lakh merchant establishments & cash
withdrawal from all VISA ATMs in India.

III.

Debit cards
The ICICI Bank Debit Card is a revolutionary form of cash that allows
customers to access their bank account around the clock, around the
world. The ICICI Bank Debit Card can be used for shopping at more
than 3.5 Lakh merchants in India and 24 million.

IV.

Business cards
The ICICI Bank Business Card is aimed at SMEs as an enabler for their
business. The Business card is a smart alternative to cheques, cash, and
personal credit cards. With its purchasing convenience, cost savings,
available credit, and detailed reporting facilities, the ICICI Bank
Business Credit offers what their business needs to stay on top.

9. E-instructions

28

Through this anyone can transfer securities 24 hours a day and 7 days a week
through internet at a lower cost. It can also be done through customer care
officer.
10. Consolidation demat account
Through this anyone can dematerialize their physical shares in various holding
patterns and consolidate all such scattered holdings into their primary demat
accounts at reduced costs.
11. NRI banking
Under NRI Banking ICICI Bank provides a variety of services
Money Transfer
Bank Accounts
Investments
Property Solutions
Insurance
Loans
12. Investments
Under investments it provides various services. Some of they are as follows International deposit
Mutual fund
Online share trading
Structured deposit
Private equity
Commercial real state
13. Property solutions
Under property solutions it provides some services to the customers. Like it
provides home loan to the customers. It also provides help to the customers in
searching houses.
14. Insurance
Under insurance ICICI Bank provides both general as well as life insurance
services to its customers.
29

15.Corporate banking
ICICI BANK gives a number of facilities under corporate banking services.

Corporate Net Banking

Cash Management Trade Services
Tradeway
Forex Online
Sme Services
Online Taxes

16. Trade services

ICICI Bank offers a wide range of Trade Services designed to assist you in
building on your strengths, so that your company can size business
opportunities across the world. ICICI Bank has in place a Centralized TradeServices Unit, which adheres to six sigma standards. As a result, ICICI Bank
customers experience fewer delays in receiving payment, require less effort in
locating collection information, gain increased control over foreign receivables
and experience improved cash flows.
17. Foreign Exchange Services

Competitive rates

Free Replacement Card along with ICICI Bank Travel Card on purchase

Online purchase of Foreign Exchange and delivery at doorstep in select cities.

24x7 international toll free numbers for ICICI Bank Travel Card holders in select
countries

Wide network of 1600+ Foreign Exchange serving branches in India .Located

your nearest branch
18. LOANS
I

Car loan
Turn your dream into reality. Own that new car you have always desired, with a

little help from ICICI.

30

The bank offer cars loans up to 90% of the ex-showroom price of the car. Its
interest rates would
Pleasantly. surprise you. What's more, you can take up to 5 years to repay the
loan. ICICI Bank offers new car loans with fixed rate option only.
II

. Home loan
We, at ICICI Bank Home Loans, offer unbeatable benefits to ensure that you
get the best deal without any hassles. As one of the leading home loan
provider, ICICI Bank understands how special building a new home is for you
and our Home Loan help you lay the foundation for your dream home. ICICI
offers you the most convenient home loan plans to suit your needs. With so
many attractive features in every type of home loan we offer, creating the
home you always wanted is no longer a distant dream.

III

Business loan
ICICI Bank's Dealer Financing schemes offer short-term unsecured finance at
reasonable cost to selected dealers of large corporates, extended for
procurement of goods from corporates. These are commonly available on a
non-recourse basis, with corporate recourse available by way of First Loss
Deficiency Guarantee in some cases.

IV

Personal loan
ICICI Personal Loans is provided only to an existing ICICI Bank customer. It
is possible to secure

a loan even without having to visit

your bank branch. If you have been an ICICI Bank customer for the past 9
V

months, you might have a pre-approved loan offer waiting for you.
Loan against property
Loan Against Property is the perfect way to unlock the hidden value of your
property. With this loan,You can fully benefit from lifes little surprises you
may have earlier passed over due to lack of funds. Live your dreams with a
Loan Against Property! This multi-purpose loan puts funds at your disposal to
use as you wish. Whats more, this loan is available at a reasonable rate and
can be repaid comfortably over as many as 10 years.The ICICI Banks Loan
Against Property can be used for any purpose.

31

Types of loans

Interest rates

Car loan

11.5%-16.5%

Home loan

9.40%-9.45%

Business loan

15.00%-19.00%

Personal loan

11.49%-17.50%

Loan against property

12% per annum

ANALYSIS AND INTERPRETATION OF SERVICES

Case 1 Sale of Gold during Akshya Tritiya (2012) SBI

ICICI

We can see here that SBI advertises sale of mutual fund units in their Gold
Fund scheme during the festival of Akshaya Tritiya. Investors who have knowledge
about the market will know very well that gold as a commodity yields an average
20% Yon and has since never saw a negative rate of return. SBI also had a scheme
that offered 1% discount on all denominations of Gold coins except those above
100gms during their campaign. The drawback of advertising like this is, many do
not know the benefits of investing in paper gold. Which means, gold mutual funds
or gold exchange traded funds; this form of investment has superior advantages than
investing in gold as a physical commodity. ICICI however had decorated all its
32

branches during the festival and even offered a larger discount, 8% on gold coins
being purchased online. Many Indians today still choose gold as a physical
commodity and it is possible that ICICI had better sales than SBI in comparison to
gold coins.
SBI could simply mention the rate of return on its gold mutual funds or offer
the advantages of

paper gold over physical gold in its advertisements during

Akshaya Tritiya. The

advantages of investing in paper gold are not

even mentioned on their mutual funds website by means of a flash advertisement.

Case 2-ATM Services

SBI
Cash Withdrawal
Fund Transfers
Mobile Recharge
Mini Statement
Balance Enquiry
Pay SBI Credit Card Bills
Pay Utility Bills (MTNL and Besom only)
Donate to relief funds
Pay SBI Life Insurance premium

ICICI
Cash Withdrawal
Fund Transfers
Mobile Recharge
Mini Statement
Balance Enquiry
Pay ICICI credit card bills
Pay Utility Bills (All)
Request cheque book
Pay ICICI Prudential Insurance premium

Donate to temple trusts

Pay fees of certain colleges

SBI ATMs do have more services than what ICICI ATMs offer. But there is a
small glitch in their service delivery and marketing. SBI offers the basic services
(highlighted purple) in all the ATMs. However, the rest are available only in a select
few. The data for which is unavailable.
Only on their website in a link that shows up when you type ATM in the search
bar. Poor advertising of its ATM functionality has resulted in lack of awareness
among consumers regarding the services available. In fact, the SBI website also does
not advise any details on what services their ATMs offer.
The irony is, SBI keeps advertising on the number of ATMs and cash
withdrawals made by consumers over the years in these ATMs. This advertising is
irrelevant. As a customer of SBI, it makes no difference on the number of ATMs

33

added over the years since the data is irrelevant. ICICI however offers all the
services in all of its ATMs. And the advertising of its services has been clearly seen
on all its branches. There is even a flash demo on the banks website that provides
details on the services available at its ATMs. Their current marketing campaign,
suggests Our
ATM is almost a bank branch indicating

customers the improvised

convenience offered to them.

Figure 6.1. Innovative Banking Services

Banks
17

ICICI
SBI

83

On being asked about the innovative nature of banking services, 83.2 % of

the customers of ICICI bank said that the banking schemes offered by ICICI
bank are very much innovative.

The SBI customer were asked about the innovative nature of SBI services,
around 77.5 % customers out of 100 said that the schemes are very much
innovative.

34

Figure 6.2.

Innovative Banking Services

Banks

48.5
51.5

ICICI
SBI

As far as the comparisons of innovative scheme of both the banks are

concerned; it is found that ICICI bank offers more innovative schemes than
SBI.

About the dynamic nature of banking services offered by ICICI bank only
51.5% of the customers out of 100 said that the services are very much
dynamic in nature whereas 33.3% SBI customers fell that the services
provided by SBI are dynamic. In comparison with SBI about dynamic
services, ICICI bank stands first.

35

Banks

43.6

ICICI
SBI

56.4

Figure 6.3
5

Dynamic Services

In terms of competitiveness of banking schemes ICICI bank has only 56.4%

customer saying its services are very much competitive.

SBI customers are negative about the competitiveness of banking schemes of

SBI. Around 37.3% customers feel that the services are very much
competitive whereas majority of customers i.e. 50% have the opinion that the
schemes offered by SBI are very less competitive.

The customers of ICICI bank are satisfied with the services offered by ICICI
bank. Since 83.2 % of the, customers responded yes to the question
whether they are satisfied with the services of ICICI bank.

36

Figure 6.5.

Service Satisfaction

Banks
17

ICICI
SBI

83

8.SBI customers are also satisfied with the banking services offered by SBI. The
customers who are satisfied with ICICI bank services stand at 76.5%.
Figure 6.6.

Banking Services

Banks

23.5

SBI
ICICI
76.5

37

9.It was obvious that ICICI bank customers are more satisfied with 83.2% out of
total 100 respondents when compared with SBI bank in terms of satisfaction.
Figure 6.7

Customer Satisfaction

Banks
17

ICICI
SBI

83

10.Private sector banks give more importance to customer satisfaction. For private
sector banks, not only the product and services are important, but also the
way they communicate about their new services, opening of new branches,
changes in interest rates etc. to their customers. It shows that 80.2 % out of
total respondents are satisfied with the communication from ICICI bank.

38

Figure 6.8

Product Satisfaction

Banks

20

ICICI
SBI

80

11. SBI customers are more satisfied at 85.3 % about communication from SBI
about new services, changes in interest rates opening of new branches, etc.

39

Figure 6.9

Communication Satisfaction

Banks

14.7

SBI
ICICI

85.3

12

When ICICI bank and SBI are compared on satisfaction with the
communication from banks it is found that SBI is more prompt and efficient
in communication with the customers.

13

It is found that 34.6 % customers of ICICI bank are always satisfied with the
way ICICI bank markets it banking services. And 61.4% of the ICICI bank
customers are sometimes satisfied with marketing of ICICI bank services.

14

it is found that 50% customers of SBI are sometimes satisfied with the SBI
markets its products, 47.1% customers of SBI are always satisfied with the
way bank markets its services.

15

ICICI bank has 11.9% customers who are not satisfied with the service of
ICICI bank. The study also attempts to find out the reasons for dissatisfaction
of services of ICICI bank, it is found that;

8.9% customers are not satisfied because of services

1.0% customers are not satisfied because of schemes offered by ICICI bank.
40

7.9% customers are not satisfied with the staff of ICICI bank.

7.0% customers of ICICI bank are not satisfied because of banking charges.

4.0% percent customers of ICICI bank are not satisfied because of the time
taken for transaction

41

. Figure 6.10

Staff and Scheme Satisfaction of ICICI Bank

Banks
19.8

14.8

166
13.2
12
7

ICICI
ICICI
ICICI
ICICI
ICICI
ICICI

767.2

SBI

16. SBI has 7.9% out of the total respondents who are not satisfied with the services
of SBI. The Study also attempts to find out the reasons for dissatisfaction of
services of SBI It is found that:

6.9% of the customers of SBI are not satisfied because of services.

3.9% customers of SBI are not satisfied with the schemes offered by SBI

13.7% of the customers are not satisfied with the staff SBI
10.8% Customers of SBI are not satisfied with service charges charged by

SBI

3.9% of the customers of SBI are not satisfied because of the time taken for
transaction.

42

Figure 6.11

Staff and Scheme satisfaction of SBI

Banks
11.5 6.5
13.2

22.8
18
6.5

SBI
SBI
SBI
SBI
SBI
SBI
ICICI
922.5

17

It is found out from the above study that the major reason for dissatisfaction of ICICI
bank customers is banking staff and charges by ICICI bank.

18

It is found out from the above study that the major reason for dissatisfaction of SBI
customers is banking staff with 13.7% and service charges with 10.8%.

19

When Customers of ICICI bank asked to rate ICICI bank on the basis of customer
services the customer of ICICI bank have rated ICICI bank as follows:

32.7% of the total respondents said ICICI bank is excellent in terms of

customer services.
28.7% of the total respondents said ICICI bank is very good in terms of
customer service.

43

30.7% of the total respondents said ICICI bank is good in terms of customer
service.
7.9% of the total respondents said ICICI bank is poor in terms of customer
service.
Figure 6.12

ICICI Customer Service

Banks
7.9

32.7

ICICI
ICICI

30.7

ICICI
ICICI
SBI

28.7

20

When customers of SBI asked to rate SBI on the basis of customer services the
customers of SBI have rated SBI as follows:

25.5% of the total respondents said SBI is excellent in terms of customer

services.
34.4% of the total respondents said SBI is very good in terms of customer
services.
37.3% of the total respondents said SBI is good in terms of customer services.

44

4.9% of the total respondents said SBI is poor in terms of customer services.
21.
When asked about the Redresses of complaints most of the marketing staff of ICICI
bank replied in negative terms. Around 32% said it is satisfactory, 26% said it is poor.
And 6% said the Redresses of complaints at ICICI bank is excellent, 10% said it is
very good and 26% said it is

45

Figure 6.14

Complaint Redresses

Banks
4
ICICI

32

26

ICICI
ICICI
ICICI
ICICI

10

SBI
6

22

26

The question regarding customer complaints when asked to marketing

staff of SBI they replied in following way: reply to customer complaints
at SBI is excellent 12%, very good 6%, good 45% and 16% satisfactory
around 21% said it is poor.

43

Figure 6.15 Customer complaints

Banks

12

SBI
6

21

SBI
SBI
SBI

16

SBI
45

23

ICICI

IT is found that the marketing problems faced by marketing staff of SBI

is related to banking products 8%, marketing strategies 12%, service
charges 55% banking staff 20% and other 5%.

Figure 6.16

Marketing Staff

Banks
5 4

SBI

12

SBI

20

SBI
SBI
SBI
ICICI

55

44

In case of ICICI bank it is found that the marketing problems faced by

marketing staff is related to banking products 9% marketing strategies
10% service charges 63% banking staff 10 and other 8%.

It is found that most of the time ICICI bank marketing staff faces
problems in convincing the customers because of reasons such as service
charges, banking staff, etc. at 79% where SBI staff faces problems at
51%.

The major question remains whether all these problems affect the
marketing staff in convincing the customer about other products. Only
2% of ICICI bank marketing staff feels that they have problem in
convincing the customers all the times because of all these problems
stated above, 9% have problems most of the time. 79% have problems
some times, and 10% never have problems because of all these reason to
convince the customers.

SWOT ANALYSIS OF SBI

Strength:
SBI is the largest bank in India in terms of market share, revenue and assets.
The bank has its presence in 32 countries engaging currency trade all over the
world.
SBI has the first mover advantage in commercial banking service.
Weakness:
Lack of proper technology driven services when compared to private banks
The banks spends a huge amount on its rented buildings
SBI has the largest number of employees in banking sector, hence the bank spends
a considerable amount of its income in employees salary compensation
In spite of modernization, the bank still carries the perception of traditional bank
to new age customers
Opportunities:
45

 Merger of associate banks with SBI ,as it will expand the market share and
increase4 the revenues
Opening up of new branches And ATMs.
Pool in talent to replace the going top management to serve the next
generation
Threats:
Customer prefer to switch to private banks and financial service providers for
loans and mortgages, as SBI involves stringent verification procedures and
take long time for processing.
More private banks are venturing into rural areas.
SBI is currently operating at lowest CAR. Insufficient capital may restrict the
growth prospects of the
Banks going forward.
Delay in technology upgradation could result in loss of market shares.

SWOT ANALYSIS OF ICICI BANK

Strength:
Online Services: ICICI Bank provides online services of all its banking
facilities. It also provides D Mart account facilitates on-line, so a person can
access his account from anywhere he is.
Advanced infrastructure: Branches of ICICI Bank are well equipped with
advanced technology to provide the customers with taster banking services.
All the computerized machines are located in suitable manner & are very
useful to the customers & staff of the bank.
Friendly Staff: The staff of ICICI Bank in all branches is very friendly & help
the customers in all cases They provide faster services along with bonding &
personal relationship with the customers
46

 24 hrs. Banking services: Compared to other bank ICICI bank provides long
hours of services i.e. 8-8 services to the customers. This service is one of its
kinds & is very helpful for the customers who are in urgent need of money.

Weakness:
High bank service charges: ICICI bank charges highly to customers for the
services provided by them when compared to other bank & that are why it is
only in the reach of higher class of society.
Less Credit Period: ICICI bank provides credit facilities but only up to limited
period. Even when the credit period is not over it sends reminder letters to the
customers which may annoy them.

Opportunities:
Bank Insurance services: The bank should also provide insurance services. That
means the bank can have a tie-up with a insurance company. The bank will
advertise & promote the different policies introduced by the insurance company &
convince their customers to buy insurance policies.
Increase in percentage of Returns on increase: The bank should provide higher
returns on deposits in comparison of the present situation. This will also up to
large extent help the bank cam profits & popularity
Recruit professionally guided students: Bank & Insurance is a special non-aid
course where the students specialize in the functioning & services of the bank &
so are knowledge about various tax policies. The bank can recruit these students
through tie-ups with colleges. Such students will surely prove as an asset to the
bank.

47

 Associate with social cause: The bank can also associate itself with social cases
like providing relief aid patients funding towards natural calamities. But this falls
in the 4 quadrant so the bank should neglect it.

Threats:
Competition: lClCl Bank is facing tight competition locally as well as
internationally. Bank like CITI Bank. HSBC, ABM, Standard Chartered.
HDFC so provide equivalent facilities like ICICI do.
Net Services: ICICI Bank provides all kind of services on-line. There can be easy
access to the e-mail ids of the customers through wrong people. The confidential
information of the customers can be leaked easily through the e-mail ids.
No Proper Facilities To Uneducated customers: ICICI Bank provides l services
through electronic computerized machines. This creates problems to the less
educated people. But this threat falls in the 4 quadrant so its negligible. The
company can avoid this threat.

ADVANTAGES OF ICICI OVER SBI:

ICICI is growing at a very fast rate with a totalasset of Rs. 3,744.10 billion.In the area of
human relations, the two are takingdivergent paths. SBI, which had over 1
lacksemployees, has reduced headcount through avoluntary retirement scheme
and is cautious aboutadding headcount.ICICI Bank, on the other hand, is setting
upregional hubs where its workforce would be
concentrated and plans to add 20,000 to itsheadcount every year. The group plans to
addbetween 75,000 and 1, 00,000 employees in thenext few years. ICICI Bank is also set
to outdo SBI is in itsinternational book- An area where it has been very
aggressive.
ADVANTAGES OF SBI OVER ICICI:
SBI is the largest and oldest bank of India. Itsmajor stocks are held by government of
India. Sothis bank enjoys the trust of its Customers a lot.
48

 SBI offers flexible tenures of loan repayment.

State bank of India has vast experience in thefield of SME(Small and Medium
Enterprises) Financing.
As it is the oldest name so it enjoys public trust alot.SBI have four national level
Apex TrainingColleges and 54Learning Centers spread all over the countrythe
Bank isContinuously engaged in skill enhancement of its employees.Some of the
training programs are attended bybankers frombanks in other countries.
SBI group, which has over 10,000 branches, isplanning to add another 3,000 branches.
It is also set to become the largest issuer of debit cards and is the second largest credit
card issuer

CHAPTER - 2
LITERATURE REVIEW
A study on public and private sector banks and their study shows that quality gap
between expectations of consumers and perceptions of service delivered is highest in
public sector banks and lowest in private sector banks(using gap 5). Another study
found out that public sector banks are better than private sector banks. Other studies
and their findings are given below
Jamal, A., Naser, K., 2002-The study examined key drivers of customer satisfaction
using 167 customers and it was found that core and relational performances had
impact on customer satisfaction and there was negative relationship between customer
expertise and customer satisfaction
Navdeep Aggarwal and Mohit Gupta (2003)- This study basically finds out the
primary dimensions and sub dimensions of service quality. Informal structured
interviews are conducted with branch managers and academicians to formulate a
banking service quality model. The study found out that service time and personal
interactions are very important along with ambience for service quality
49

Zhou, L( 2004)- The study analysed impact of service quality in banks on customer
satisfaction in chinas retail banking and it was found out that reliability and assurance
were the primary drivers of customer satisfaction. It was also found out that there
were significant variations in expectations and perceptions in customers
Arora S (2005)- This study analysed factors influencing customer satisfaction in
public sector, private sector and foreign banks in northern India. 300 customers were
given questionnaires which revealed that significant differences exist in customer
satisfaction level of customers in each group of banks regarding routine operation and
situational and interactive factors. Foreign banks were found to be the leaders in
mechanization and automation
Mushtaq M Bhat (2005)- This study finds out service quality parameters in bank
through SERVQUAL and influence of demographic variables . The study was limited
to SBI,PNB ,Jammu and Kashmir bank Citi bank and Standard Chartered Grind lays
bank. Sample size was 800 and study found out that foreign banks are better than
Indian banks. SBI was found to be relatively poor on reliability and responsiveness.
Banks in Delhi were comparatively better in service quality
Alka Sharma,Varsha Mehta(2005)-The study focuses on service quality of four
leading banks and their comparison.
Joshua A J, V Moli, P. Koshi (2005)- The study evaluated and compared service
quality in old and new banks using sample size of 480. The study found out that
customers were satisfied in reliability, empathy and price and for other parameters the
difference between expectations and perceptions were smaller than public sector
banks
Mohammad et al(2005)- The study tries to develop a comprehensive model of
banking automated service quality taking into consideration unique attributes of each
delivery channel and other dimensions which influence service quality
Raul and Ahmed(2005)-The study investigated customer service in public sector
banks in 3 districts in Assam and it was found that customers were dissatisfied with
the management, technology and interactive factors along with high service charges.
Communication gap was the root cause of poor service and service was different in
rural and urban sectors
Sharma and Sharma( 2006)-The study analysed customer delight in urban consumer
banking. The study found out that customers were satisfied with loan facilities, bank
environment, routine work procedures, location ,interest rates etc and were
dissatisfied with loan formalities and promotion through media.
Dash et al(2007)- The study measured customer satisfaction through 5 service quality
dimensions in Noida and Ghaziabad and findings revealed that assurance was the
most important dimension of service quality followed by reliability and
responsiveness. Tangibles was found to be least important
Sharma S, et al (2007)-The study did a comparison of public and private banks with
respect to perceptions of customers regarding service quality. It was found out that
service quality is associated with satisfaction and there was significant difference

50

between quality of services provided by banks. Banks in smaller cities are far behind
big cities in this regard
Tracey Dagger ,Jillian Sweeney (2007)- The study consists of qualitative research to
investigate the effect of consumption stage on service quality perceptions and then
development of hypothesis. The findings indicate the evidence that customers rely
more heavily on attributes that are search based in the initial stages of service
experience and in later stages consumption becomes important
Dr.Vannirajan&B.Anbazagan(2007)- The study tries to make an assessment of
SERVPERF scale in the Indian Retail banking sector by doing a survey in banks at
Madhurai. The study found that in public sector banks tangibles and assurance are
most important and in private sector banks reliability ,,responsiveness and tangibles
are most important.
P K Gupta(2008)-Objective of this study was to find out the behavior of customers
with respect to internet banking vis--vis conventional banking. The study found out
that internet banking was found to be easier and speedier than conventional banking
and trust, accuracy and confidentiality were the most important factors here.
Ellaine Wallce&Leslie De Cheratatony(2009)-Study finds out the importance of
,assurance and reliability, customer orientation teamwork etc in performance of . Also
the study highlights criticality of branch& employee teamwork for performance.
Continuous commitment and service recovery were also found important
Mohammed Siddique Khan,Siba Sankar Mahapatra(2009)-The study was to
identify important parameters affecting service quality in internet banking. Factor
analysis of the data collected finds 7 factors which included factors like reliability,
access, user friendliness privacy etc. Correlation analysis shows that a significant
positive correlation exists between factors..Also it was found out that business class
differs from other classes in perception
Padhy P K and B N Swar(2009)- the paper investigated role of technology in
banking and its impact on perceived service quality in public, private and foreign
banks in Orissa using a s ample size of 300 customers. Foreign bank was found to be
very close to expectations of customers followed by ICICI and AXIS. Service quality
in public sector banks was found to be very low
Rod et al(2009)-The study focused on relationship between service quality, overall
internet banking service quality and customer satisfaction in New Zealand. The study
51

found out that online customer service quality and online information systems were
significantly and positively related to overall customer internet banking service
quality. Overall internet banking service quality and customer satisfaction were
positively correlated
Sandip Khosh Hazra, Dr.Kailash Srivatava (2010)-The study was done to find out
the association between service quality, customer satisfaction ,loyalty and
commitment. SERVQUAL is used and the study finds out that in private banks
dimensions of service quality, assurance and reliability are significant for satisfaction
of customers, loyalty and commitment. The banks taken differed in these parameters.
Akiko Ueno(2010)- The paper talks about the importance of quality. The study finds
out the features that are fundamental in supporting service quality. The secondary
research finds out the human resource functions like recruitment, teamwork etc in
maintain service quality
Monica Bedi(2010)-The study investigates relationship between service quality,
customer satisfaction and behavioral intentions. The findings also indicated the
importance of service quality. The study also found out that banks differed in the
service quality parameters.
Fulbag Singh, Davinder Kaur(2010-11)- The study combines all literature review
done in service quality And related areas in banking till 2010. It contains the works of
Cronin& Taylor, Bahia and Nantel and others on this area
Dr Ravichandran et al(2010)- The paper analyses existing study and tries to
understand socio demographic and rational profile of public retail banking consumers.
It also finds out the importance of service quality dimensions to predict the
multidimensional model of behavioral intentions among public sector consumers in
India. Loyalty was found to be influenced by operating hours, modern equipments,
error free records etc. Service quality parameters like tangibility, responsiveness and
empathy dimensions were also found to be very important.
Davood Feiz et al(2010)-The study uses hypothesis to find out service quality in Iran
railways. It was found out that perceived service was found to be within zone of
tolerance and service was satisfactory. The difference between ideal level and current
level was significant. There was significant relationship between service adequacy
variables and perceived value. The study in nutshell gives an image of service quality
Sachin Mittal&Rajnish Jain(2010)-This paper is basically a literature review of
banking industry and effect of IT based services on customer satisfaction. The study
52

highlights customer satisfaction levels among young customers in banking industry. A

survey indicates the gaps between customers expectations and perception with
respect to IT based banking services. Findings indicated need to improve the IT based
services for enhancing customer satisfaction
H.Emari et al(2011)- The main objective of this research was to determine the
dimensions of service quality in the banking industry of Iran. For this the study
empirically examined the European perspective (i.e., Gronrooss model) suggesting
that service quality consists of three dimensions, technical, functional and image. The
results from a banking service sample revealed that the overall service quality is
identified more by a consumers perception of technical quality than functional
quality
Kumbhar, Vijay (2011)- It examined the relationship between the demographics and
customers satisfaction in internet banking,. It also found out relationship between
service quality and customers satisfaction as well as satisfaction in internet banking
service provided by the public sector bank and private sector banks. The study found
out that overall satisfaction of employees, businessmen and professionals are higher in
internet banking service. Also it was found that there is significant difference in the
customers perception in internet banking services provided by the public and privates
sector banks.
Kailash M (2012)- The paper compares public and private sector banks in
Vijayawada city using SERVQUAL model. The findings revealed that private sector
banks have good services to customers and they retained customers by providing
better facilities. The study finds out importance of new products and services for
banks for retaining customers.

The studies mentioned above clearly points out to the importance of having a
structured study on this where banks in different categories are compared with respect
to the service quality aspect which will help them to find out their core competencies
and to capitalize on them and at the same time find out the areas where they can
improve. This is the major aim of my thesis

53

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

54

Data collection: Banking Customers are the base for study.

Data Sources:
Primary data- Collected from banking employees.Primary data is the data which
is used or collected for 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.
I choose the following resources for our research:
QUESTIONNAIRE:-This method of data collection is quite popular, particular in
case of big enquiries. Here in our research we set 15 simple questions and request the
respondents to answer these questions with correct information.
RESPONDENTS:-Respondents helps in creation of more accurate idea about our
research. I personally meet the respondents inside and outside the banks.
Secondary Data
Secondary data is the data which is available in readymade form and which is already
used by people for some purposes. There may be various sources of secondary data
such as-newspapers, magazines, journals, books, reports, documents and other
published information.

BANKS ANNUAL REPORTS:- Banks issues there annual reports to get the people
informed with the profitability and growth of the bank. These annual reports helps us
a lot to get the latest data and other related information for our research. It tells us
about the increase or decrease in profits and other facilities.

JOURNALS AND PUBLICATIONS OF DIFFERENT BANKS :- I also take into

consideration the journals and publications issued by the bank at different times. I
comes to know about the Branches, ATM, locations and other useful information.

55

MANUALS AND BROACHERS OF DIFFERENT BANKS:-I take the help of

bank staff and other people who gives me deep information and data which may not
be available at anywhere. They gives their full co-operation.

INTERNET:-I also take into consideration the internet facility with which i collect
lot of latest information.

Objectives:

find the bank sector that is largely availed by the customer.

To study the factors the factors influencing the choice of a bank for 3.availing

services.
find and compare the satisfaction level of customers in public sector 5.as well

as in private sectors bank.

To study the problem faced by customer.
get suggestions for improvement or change in the services of public and

private sector banks.

To study what do people expect in the new era of banking.

CHAPTER - 3
LIMITATIONS OF THE STUDY
56

Due to constraints of time and resources, the study is likely to suffer from certain
limitations. Some of these are mentioned here under so that the findings of the study
may be understood in a proper perspective.
The limitations of the study are:
Some of the respondents of the survey were unwilling to share information.
The research was carried out in a short period of 6 weeks. Therefore

the

sample size and other parameters were selected accordingly so as to finish

the work within the given time frame.
The information given by the respondents might be biased because some of
them might not be interested to give correct information.
The officials of the bank supported me a lot, but did not have sufficient time to
make the points more clear.

CHAPTER 4
DATA ANALYSIS AND INTERPRETATION
57

Analysis of Data collected

1.The respondents were asked about which banking sectors services

do their

avail.
Table1: banking sectors services which the respondents avail.
Banking sector

Number of respondents

Public

03

Private

05

Both

02

6
5
4
Public

Private
Both

2
1
0
No of respondents

58

Graph 1: Banking Sectors services which the respondents avails

Interpretation:-It was found that most of the respondents were availing services of
private sectors banks while those of the public sector banks were less as compare to
private sector.

2. The respondents were asked about the type of account they have in the public
sector as well as Private sector banks

Table 2.1 Number of type of account held in Public sectors banks

Type of Accounts
Name

of Savings

Current

Demat

Account
Total

Fixed

Salary

deposits
no

of 04

02

01

02

01

respondents

59

Total no of respondents
4.5
4
3.5
3
Total no of respondents

2.5
2
1.5
1
0.5
0
Saving

Current

Demat Fixed deposits Salary

Graph 2.1:-Number of type of accounts held in Public sector banks

Analysis: 40% people own Saving Account, 20% own Current account, 10%
demat,20% fixed deposits account and 10% salary Account
Interpretation: It was found that in case of public sector banks, maximum number of
account holders owns Saving Account. After Saving account most prefer account is
salary account prefer by people and the next priority goes to fixed deposits Accounts.

3. The aim to ask this question was to know he reasons for their preference in
different banks:Reasons

No of respondents

Friendly Behavior of the Staff

03

Reliability/trust

02

Quick and fast services

04

60

Location

01

Table 3:- Reason for account in different banks

4
3.5
3
2.5
2
1.5
1
0.5
0

Column2

Graph 3:-Reasons for account in different banks

Inpretation: By analyzing this graph, we can conclude that most of the people is
influenced by the quick and speedy services provided by the bank and location is
given less preference than others
61

4.The respondents were asked about the facilities they were availing in public as
well as private sector banks :-

Table 4.1 Number of people availing different facilities at public sector banks:

Facilities Availed

No of respondents

ATM/Debit card

04

Demat

Internet/Mobile/Phone Banking

Insurance

03

4
3.5
3
ATM/Debit card

2.5

Demat
Internet/Mobile/Phone
banking

2
1.5

Insurance

1
0.5
0
No of Respondents

Graph 4.1: Number of people availing different facilities at public sector banks

62

Interpretation: From the above graph, it was found that was availed by most of the
people at public sector banks was that of ATM/Debit cards . It is clearly observed by
the graph that Insurance are neck to neck holding 20% of respondent each

5. The purpose of this question is to know the satisfaction level they were having
with their banks overall performance:Public sector banks
Table 5.1 Satisfaction level of the customers regarding the facilities availed from
the public sector banks
Level of Satisfaction

No.of respondents

%age

Excellent

02

20%

Good

03

30%

Very Good

05

50%

63

60%
50%

50%
40%
30%

30%
20%

20%

10%
0%

Excellent

Good

Very Good

Graph 5.1 Satisfaction level of Customers regarding the facilities availed from the
public sector banks.
Analysis: It was found that in case of public sectors banks, 20% of the respondents
were highly satisfied ranked excellent from the products and services availed by them.
30% were just satisfied given very good and 50% have moderate view.
Interpretation: People have mixed type of view regarding public sector banks.

64

6. The aim to ask this question was to know whether the respondents faces any
problem regarding the services provided them by their preferred bank :Table 6. Problem faced by customers.

Types of problem

No of respondents

Time consuming

02

Introduction

01

Reference

03

Too many formalities

01

No facility of photograph instantly

01

No problem

02

20%

Time Consuming

20%

10%

Introduction
10%

10%
30%

Reference
Too many Formalities
No facilities of photograph
instantly
No problem

Interpretation: It was found that most of the respondents are facing problem of
reference. Respondents also find that the time and too much formalities also cause
problem in banks

65

The basic purpose of this question was to know the most preferred bank.
Table 7. Number of respondents preferring different banks
Names of Banks

Number of respondents

ICICI Bank

02

HDFC Bank

02

State Bank Group

02

Punjab National Bank

03

Punjab And Sind Bank

01

3.5
3
2.5
ICICI bank

HDFC Bank
State Bank Group

1.5

P.N.B
Punjab and sind Bank

1
0.5
0
Number of respondents

66

Analysis: From above graph, it is seen that 30% stake of the respondents follows to
Punjab National bank followed by ICICI bank. It is the bank which provide 12-hour
banking also the ATM machine is more as compared to the other private sector banks.
Interpretation : From the above graph, it is seen that Punjab national is the most
preferred bank as compared to other Public and Private sector Banks. The reason for
preference of public sector bank is the minimum amount of deposit for saving
account.
Table 7 Number of customers ready to shift from present bank.

80
70
60
50
40
30
20
10
0
Yes

No

67

Table 8: . Which Sector bank do you have your account?

Type of banks
Public
Private
Both

No. of respondents
03
05
02

public

5
both

4
3
2

private
both

private

1
0

public
no.of respondents

Interpretation: from above graph we can see that most of the respondents are
available in private sector while those public sector less as compared to private sector

Table9:In Case you have yours Account in more than one a Bank which one is your
most preferred bank
Type of banks
ICICI bank
SBI bank
HDFC bank

No. of respondents
04
03
03

68

12
10
8
HDFC bank

SBI bank
ICICI bank

4
2
0
no.of respondents

Analysis: from the above graph it seen that 40% stake of the respondents follows to
ICICI bank. ICICI bank it is a bank which provide 12 hour banking also the ATM
machine.
Interpretation: from the above graph it is seen that ICICI bank is the most preferred
bank as compared to other bank.
Table 10:- Number of customers ready to shift from their present bank or not.
Response
Customers
Percent

YES
03
30%

NO
07
70%

69

80
70
60
50
40
30
20
10
0
Yes

No

Interpretation:

From this above Graph, we can conclude that the number of respondents ready to shift
from their present bank is 30% while 70% customers seems to be satisfied from their
bank and hence willing to shift from their present bank to other.

CLASSIFICATION OF BANKS

70

On the basis of Ownership

PUBLIC SECTOR BANKS
Public sector banks are those banks that are owned by the government. The
government owns these banks. In India 20 banks were nationalized in 1969 and 1980
respectively. Social welfare is there main objective.
PRIVATE SECTOR BANKS
These banks are those banks that are owned and run by private sector. An individual
has control over these banks in proportion to the shares of the banks held by him.
CO-OPERATIVE BANKS
These are those banks that are jointly run by a group of individuals. Each individual
has an equal share in these banks. Its shareholders manage the affairs of the bank.
.According to the Law
SCHEDULED BANK
Schedule banks are the banks, which are included in the second schedule of the
banking regulation act 1965. According to this schedule bank:

71

1. Must have paid-up capital and reserve of not less than Rs500, 000.
2. Must also satisfy the RBI that its affairs are not conducted in a manner
Determinate to the interest of its depositors.
Schedule banks are sub-divided as:a) State co-operative banks
b) Commercial banks
NON-SCHEDULED BANKS
Non -schedule banks are the banks, which are not included in the second schedule of
the banking regulation act 1965. It means they do not satisfy the conditions lay down
by that schedule. These are the banks having paid up capital, less than Rs.5Lakhs.
They are further classified as follows:A. Central Co-operative banks and Primary Credit Societies.
B. Commercial banks
According to Function
COMMERCIAL BANKS
These are the banks that do banking business to earn profit. These banks make loans
for short to business and in the process create money. Credit creation is the main
function of these banks.
FOREIGN BANKS
These are those banks that are incorporated by foreign company. They have set up
their branches in India. These banks have their head offices in foreign countries. Their
principle function is to make credit arrangement or the export and the import of the
country and these banks deals in foreign exchange.
INDUSTRIAL BANKS
Industrial banks are those banks that offer long term and medium term loan to the
industries and also work for their development. These banks help industries in sale of

72

their shares, debentures and bonds. They give loan to the industries for the purchase
of land and machinery.
AGRICULTURAL BANKS
Agricultural banks are those banks that give credit to agricultural sector of the
economy.
SAVING BANKS
The principle function of these banks is to collect small savings across the country
and put them to the productive use. In India department of post office functions a
savings banks.
CENTRAL BANK
Central Bank is the apex bank of the banking system of the country. It issues currency
notes and acts a banker's bank. Economic stability is the principle function of this
bank. In short, it regulates and controls the banking system of the country. RBI is the
Central Bank of India.
PRIVATIZATION OF INDIAN BANKING
For the public sector banks, the era of bumper profit is over. For much of the last
decade the process of collaborated financial liberalization had cleared up the Banks
balance sheet enabling them to with stand increased competition, global financing,
turmoil and even unprotected industrial slow down. But the cycle of liberalization has
run its full course. Now it is the time for the big structural leap, rationalization,
mergers, and privatization. Unless the banks undertake these fundamental changes,
their profit will stay under pressure.

There are two areas of competitions which banking industry is facing internationally
and nationally. In the pre-liberalization era, Indian banks could grow in a closed
economy but the banking sector opened up for private competition. It is possible that
private banks could become dominant players even within India. It has been recorded
a rapid rise of the new private sector banks and it has tracked the transformation of the
public sector banks as they grapple with the changes of financial deregulation.

73

Use of ATM cards, Internet Banking, Phone Banking, Mobile Banking are the new
innovative channels of banking which are being widely used as they result in saving
both time and money which are two essential things that everyone is short of and is
running to catch hold of them. Moreover private sector banks are aligning its
infrastructures, marketing quality and technology to build deep commitment in
building consumer and retail banking. The main focus of these banks is on innovative
range of services or products.
1.10 Business of Banking

Money

Money Surplus Units Money deficit Units

(SAVERS)

INTERMEDIARIES

( Banks)

(INVESTORS)

(BANKS)
COMMERCIAL BANKS

74

PRIMARY FUNCTIONS :
1

Accepting of Deposits: A bank accepts deposits from the public. People can
deposit their cash balances in either of the following accounts to their
convenience:-

Fixed or Time Deposit Account: Cash is deposited in this account for a fixed
period. The depositor gets receipts for the amount deposited. It is called Fixed
Deposit Receipt. The receipt indicates the name of the depositor, amount of
deposit, rate of interest and the period of deposit. This receipt is not transferable. If
the depositor stands in need of the amount before the expiry of fixed period, he can
withdraw the same after paying the discount to the bank.

Savings Account: This type of deposit suits to those who just want to keep their
small savings in a bank and might need to withdraw them occasionally. Banks
provide a certain rate of interest on the minimum balance kept by the depositor
during the month.

Current Account : This type of account is kept by the businessman who are
required to withdraw money every new and then. Banks do not pay any interest on
this account. Any sum or any number of withdrawals can be presented by such an
account holder.

Advancing of Loans : The bank advances money in any one of the following
ways.

i Overdraft Facilities: Customers of good trading are allowed to overdraw from their
current account. But they have to pay interest on extra amount they have withdrawn.
Overdrafts are allowed to provide temporary accommodation since the extra amount
withdrawn is payable within a short period.
ii Money at Call: It is the money lent for a very short period varying from 1 to 14
days. Such advances are usually made to other banks and financial institutions only.
Money at call ensures liquidity. In the Interbank market it enables bank to make
adjustment according to their liquidity requirements.
iii Loans: Loans are granted by the banks on securities which can be easily disposed off
in the market. When the bank has satisfied itself regarding the soundness of the party,
a loan is advanced.

75

iv Cash Credit: The Debtor is allowed to withdraw a certain amount on a given

security. The debtor withdraws the amount within this limit, interest is charged by the
bank on the amount actually withdrawn.
v Discounting Bill of Exchange : It is another method of making advances by the
banks. Under this method, bank give advance to their clients on the basis of their
bills of exchange before the maturity of such bills.
vi Investment in Government Securities : Purchasing of government securities by the
banks tantamount to advancing loans by them to the Government. Banks prefer to
buy government securities as these are considered to be the safest investment. For
example : Indira Vikas Patra : It enables the banks to meet requirement of statutory
liquidity ratio (SLR)
3

Credit Creation: One of the main functions of banks these days is to create credit.
Banks create credit by giving more loans than their cash reserves. Banks are able
to create credit because the demand deposits i.e. a claim against the bank is
accepted by the public in settlement of their debts. In this process the bank creates
money. For this reason Prof. Sayers has called bank the manufactures of money.

4) Cheque system of Payment of Funds

A cheque, a negotiable instrument, which in fact is a bill of exchange, drawn upon a
banker, is the most popular credit instrument used by the client to make payments.
Cheque system is the main credit instrument in the banking world.
Although a cheque is not a legal tender money, the serves as a medium of exchange in
a limited way as it is a negotiable instrument.
Because of clearing houses and clearing operations of the banks, cheques can be
and are used for transferring funds from one centre to another. In the modern days they
can also be used for transferring funds from one country to another.
SECONDARY FUNCTIONS
Besides the above primary functions, banks also perform may secondary functions
such as agency functions, general utility and social functions.
1) Agency Functions
Banks act as agents to their customers in different ways:
76

Collection and Payment of Credit and Other Instruments: The Commercial

banks

collect and pay cheques, bills of exchange, promissory notes,

hundies, rent, interest etc. On behalf of their customers and also make payments of
income tax, fees, insurance

premium etc. on behalf of the customers. Customers

can leave standing instructions with the banker for various periodic payments
ensuring the regular payments and avoiding the trouble of performing it themselves
. Purchase and Sale of Securities: The modern commercial banks also undertake

II

the purchase and sale of various securities like shares, stocks, bonds units and
debentures etc. On behalf of the customers, banks do not give any advice regarding
the suitability or otherwise of a security but simply perform the functions of a
broker.
Trustee and Executor: Banks also acts as trustees and executors of the property of

III

their customers on their advice. Sometimes banks also undertake income tax
IV

services on behalf of the customers.

Remittance of Funds: The Commercial banks remit funds on behalf of clients

from one place to another through cheques, drafts, mail transfers etc.
Representation and Correspondence : Sometimes commercial banks acts as
representatives or correspondents of the clients especially in handling various
applications. For instance, passports and travel tickets, booking of vehicles, plots
etc.
Billion Trading: In many countries, the commercial banks trade is billions like

VI

gold and silver. In Oct

1997, 8 banks including SBI, IOB, Canara Bank and Allahabad Bank have been
VII

allowed import of gold which has been put under open general licensed category.
Purchase and Sale of Foreign Exchange: Banks buy and sell foreign exchange,
promoting international trade. This function is mainly discharged by foreign

VIII

Exchange Banks.
Letter of References: Banks also give information about economic position of
their customers to domestic and foreign traders and vice versa.
2) GENERAL UTILITY SERVICES
In addition to agency services, banks render many more utility services to the public.
These services are :-

i Locker Facilities: Banks provide locker facilities to their customers. People can
keep their valuables or important documents in these lockers. Their annual rent is
very nominal.
77

ii Acting as a referee: It desired by the customers, the bank can be a referee i.e. who
could be referred by the third parties for seeking information regarding the financial
position of the customers. The bank will acts as referee only and only if it is desired
by the customer, otherwise the secrecy of a customers is account is maintained very
carefully.
iii Issuing letters of credit: Bankers in a way by issuing letters of credit certify the
credit worthiness of the customers. Letters of credit are very popular in foreign trade.
iv Acting as Underwriters: Banks also underwrite the securities issued by the
Government and Corporate bodies for a commission. The name of bank as an
underwriter encouraged investors to have faith in the security.
v Acting as information banks: Commercial banks also acts as information bureau
as they collect the financial, economic and statistical data relating to industry, trade
and commerce. HDFC Bank is providing information relating to NRI Schemes and
commentaries of experts on development in the areas of finance through Internet.
vi Issuing Travelers cheques and credit cards: Banks have been rendering great
service by issuing travelers cheques, which enable a person to travel without fear of
theft or loss of money. Now, some banks have started credit card system under which
a credit card holder is allowed to avail credit from the listed outlets without any
additional cost or effort. Thus, credit card holder need not carry or handle cash all the
time. Now, international credit cards are joining hands with Indian Banks.
vii Issuing of gift cheques: Certain banks issue gift cheques of various denominations,
e.g. Some Indian banks issue gift cheques f the denominations of Rs. 21, 31, 51 and
101 etc. They are generally issued free of charge.
viii Dealing in Foreign Exchange: Major branches of commercial banks also transact
business of foreign exchange. Commercial banks are the main authorized dealers of
foreign exchange in India.
ix Merchant banking Services: Commercial banks also render merchant banking
services to the customers. They help in availing loans from non-banking financial
institutions.
x Help in Transportation of Goods: Big businessmen or industrialists after
consigning goods to their retailers send the Railway Receipt (Consignment Note) to
the bank.

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CHAPTER - 5
CONCLUSION
The customers now days are not only exposed of what type of service is being
provided by banks in India but in the world as a whole. They expect much more than
what is actually being provided. So the new coming private sector banking is
providing and catering to all the needs of the customers more effectively as compare
to public sector banks, otherwise it is difficult to survive in the competition coming
up. They not only expect the safety of money but also best ways to invest that money
which needs to be fulfilled. Banks need to have a better outlook towards to actually
what customers are requiring. Entries of the private sector banks have made the
competition tougher. If a bank is not functioning properly it is being closed. So it is
difficult to face these types of conditions. Here a simple philosophy can work that
customers are God and we need to follow this to survive and serve better.
The banking sector is poised for explosive growth. In this, scenario, it is imperative
that banks adopt technology at an aggressive Pace, if they wish to remain competitive.
In the prevailing scenario, a number of banks have adopt a new deployment strategy
of infrastructure outsourcing, to lower the cost of service channels. As a result, other
banks too will need to align their reinvented business models. The required changes at
both the business and technology levels are enormous. In highly competitive banking
markets, early adopters are profiting from increased efficiencies. So there is need to
make more improvisation in terms of services provided by public sector banks.

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CHAPTER - 6
SUGGESTIONS
Based on the study conducted, there are some of the suggestions given by the
customers of how the modern banking should be. These are the comment given by
them about the improvement of the banking sector in India.

Banks should obey the RBI norms and provide facilities as per the norms,
which are not being followed by the banks. While the customer must be given
prompt services and the bank officer should not have any fear on mind to
provide the facilities as per RBI norms to the units going sick.

Banks should increase the rate of saving account

Maintenance of proper hierarchy should be done. A good hierarchy set up can
ensure better results with in the bank.
Banks should provide loan at the lower interest rate and education loans
should be given with ease without much documentation. All the banks must
provide loans against shares.
Fair dealing with the customers. More contribution from the employee of the
bank. The staff Should be co-operative, friendly and must be capable of
understanding the problems of customers
Internet banking facility must be made available in all the banks.
Prompt dealing with permanent customers and speedy transaction without
harassing the customers
Each section of every bank should be computerized even in rural areas also.
Real time gross settlement can play a very important role.
More ATM coverage should be provided for the convenience of the customers.
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 No limit on cash withdrawals on ATM cards.

The bank should bring out new schemes at time-to-time so that more people
can be attracted. Even some gifts and prizes may be offered to the customers
for their retention.
24 hours banking should be induced so as to facilitate the customers who may
not have a free time in the daytime. It will help in facing the competition more
effectively.
The charges for saving account opening are high, so they should also be
reduced.
The need of the customer should properly be understood so that customer feels
satisfied. The relationship value should be maintained.
Maintenance of proper hierarchy should be done. A good hierarchy set up can
ensure better results with in the bank.
Banking sector is improving by leaps but still it needs to be improved. Proper and
efficient relationship staffs having knowledge for one stop banking, customer friendly
atmosphere, and better rate of interest are need of the hour. The concept of
privatization has overall improved the services in all the banks. Home banking will be
order of the day.
CHAPTER - 7
FINDING

More number of people has account with private banks.

Majority of the respondents whether in public sectors or in private sector

banks have savings account with banks.

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

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

People are more satisfied form the private sector banks due to their better
services provided by them in terms of speedy transactions, fully computerized
facilities, more working hours (in case of ICICI bank, the number of working
hour are 12), good investment Advisory services, efficient and co-operative
staff, better approach to Customer Relationship Management.
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In private sector banks proper promotional activities should be taken up so

as to make the population aware of the services provided by the banks even
in rural areas.

The facility that was availed by most of the people at public sector banks was
that of ATM/Debit cards. The least availed facility was that of Demat account
and foreign transfer of funds.

The facility that was availed by most of the people at private sector banks was
that of Internet/Phone banking by ATM/Debit card.

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

From the above study it is clear that private banks are providing better services
than nationalized banks. 95% respondents favored that private banks are
providing better services than nationalized banks while 5% respondents are
not agree with it.

From the above study it is clear that majority of the respondents said that the
average balance requirement for operating their saving account is between
5000-10000. 20% said it is between 10000-20000 and remaining 5% said it is
between 20000-50000 in private sector banks which as compared to Public
sector bank is very high.

Positive reaction in the favour of bank. 30% respondents favored that their
problems are solved by bank executives and 20% respondents said they are
received with smile by bank executives. So there is a mix response.

Majority of the respondents said that the average time taken for transactions is
between 25 to 50 minutes in their bank. 30% respondents said the average
time taken for transaction is between 20-25 minutes, 20% said it is between 10
to 25 min. and remaining 10% said that the average time taken for transaction
by their bank is 5 to 10 minutes.

CHAPTER - 8
RECOMMENDATIONS
For Public Sector Banks:

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Bank staff should be customer friendly and highly motivated to

serve the normal customer.

As far as possible, banks should reduce its documentation process

while providing loans.

Computerization should be done in banks at all level and the

operators should de properly trained.

Token system should be induced so as to minimize the waiting

lines in the banks.

Proper ambience in the banks can develop a healthy working

culture.

Quick services should be provided.

For Private sector Banks

24 hours banking should be induced so as to facilitate the

customers who may not have free time in the day time. It will help in
facing the competition more effectively.

More ATM coverage should be provided for the convenience of the

customers.

Customer care services should be provided by banks.

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CHAPTER - 9
BIBLIOGRAPHY

WEBSITES

http://www.google.com

http://www.statebankofindia.com

http://www.icicibank.com

http://www.rbi.org.in
Weblography

BOOKS:

Icici bank annual report

State bank of India annual report

principles and practices of banking and insurance.

Newspapers:
Times of India
Economic times
DNS newspaper

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