Introduction to Banking

Bank is defined in many ways by various authors in the book son economics and
commerce. It is very difficult to define a bank; because a bank performs
multifarious functions may be defined in many ways according to their functions.
The evolution of different types of banks, each specializing in a particular field,
gives emphasis on each and every kind of bank. A general and comprehensive
definition to cover all types of banking institutions would be unscientific and
probably impossible. Each type of bank should have its own definition, explaining
its specialized functions. Legislators have understood this difficulty and that is why
the bill of exchange Act 1882 (England) defines

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

 From this definition it is clear to us that any institution, which performs the
various banking functions, may be termed as bank. But in practice it is found that
many banking functions wary from time to time and country to country. It is not
possible on the part of a single bank to perform all the banking functions at a time.
So there originated numbers of specialized banks with the objective of performing
one or more functions. As for example, Central Bank, Commercial bank, Industrial
Bank, Agricultural Bank, Co-operative Bank etc., are seen in the practical field.

 Dr. Herbert L. Hart has defined a banker as

 “A banker is one who in the ordinary course of business honours cheques drawn
upon him by persons for whom he receives money on current account”

 According to Sir John Paget

 “No one and nobody corporate and otherwise can be a banker who does not (i)
take deposit accounts (ii) take current accounts (iii) issue and pay cheques drawn
upon him(iv) collect cheques crossed and uncrossed for his customers”

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

 “Every person, firm or company using in the description or its title, bank or banker
or banking and accepting deposits of money subject to withdrawal by cheque, draft
or order”

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

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

 According to this precise definition a bank accepts deposits from public and
makes advances and loans to them. In practice bank receives deposits of money in
savings and current accounts at lower rate of interest or profit and gives on credit
to needy persons and businessmen at a higher rate of interest or profit. It also
transfers money for the clients from one city or country to another and also
performs various other agency services for earnings.

The largest and the oldest bank which is still in existence is the State Bank of
India (S.B.I). It originated and started working as the Bank of Calcutta in mid-June
1806. In 1809, it was renamed as the Bank of Bengal. This was one of the three
banks founded by a presidency government, the other two were the Bank of
Bombay in 1840 and the Bank of Madras in 1843. The three banks were merged in
1921 to form the Imperial Bank of India, which upon India's independence,
became the State Bank of India in 1955. For many years the presidency banks had
acted as quasi-central banks, as did their successors, until the Reserve Bank of
India[5] was established in 1935, under the Reserve Bank of India Act, 1934.[6][7]
In 1960, the State Banks of India was given control of eight state-associated banks
under the State Bank of India (Subsidiary Banks) Act, 1959. These are now called
its associate banks.[6] In 1969 the Indian government nationalised 14 major private
banks; one of the big banks was Bank of India. In 1980, 6 more private banks were
nationalised.[8] These nationalised banks are the majority of lenders in the Indian
economy. They dominate the banking sector because of their large size and
widespread networks.[9]

The Indian banking sector is broadly classified into scheduled and non-scheduled

banks. The scheduled banks are those included under the 2nd Schedule of the
Reserve Bank of India Act, 1934. The scheduled banks are further classified into:
nationalised banks; State Bank of India and its associates; Regional Rural
Banks (RRBs); foreign banks; and other Indian private sector banks.[7] The term
commercial banks refers to both scheduled and non-scheduled commercial banks
regulated under the Banking Regulation Act, 1949.[10]

Generally the supply, product range and reach of banking in India is fairly mature-
even though reach in rural India and to the poor still remains a challenge. The
government has developed initiatives to address this through the State Bank of
India expanding its branch network and through the National Bank for Agriculture
and Rural Development (NABARD) with facilities like microfinance.
 OBJECTIVES OF THE STUDY

This study has been conducted with a variety of important objectives in mind. The
following provides us with the chief objectives that have tried to achieve through
the study. The extent to which these objectives have been met could judged from
the conclusions and suggestions, which appear in the later of this study.
 
The Chief Objectives of this study (with respect to Cachar District) are:-

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

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

3. To study the problems faced by the customers in public as well as private sector
banks and also to compare between them.
4. To review the growth rate of both the banks under study.

5. To compare the service of different banking sectors which are largely offered by
them.
 SCOPE OF THE STUDY

The study aims to analyze The serives provided by private sector banks and public
sector banks and is expected to provide an insight into the issues banking sector.
The banking sector will be able to identify the problems related to their customres,
theirsatisfaction.

The study is expected to identify theBottlenecks faced by customres in different

banks.to identify that which type of bank is been prefered by most of the people
now a days are they happy with their banknig services.
LIMITATIONS OF THE STUDY

Due to constraints of time and resources the study is likely to suffer from certain
limitations. Some of them are mentioned below so that the findings of the study are
understood in proper perspective.

The limitations of the study are –

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

2) The research was carried out in a short period of time so. Therefore the sample
size and other parameters were selected accordingly so as to finish the work in
given time frame.

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

them might not be interested in providing correct information.

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

5) Since the sample unit is a semi urban place i.e. Cachar district with less presence
of private sector banks, hence the result is likely to tilt a bit towards the public
sector banks.
RESEARCH AND METHODOLOGY

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

and systematic search for pertinent information on a specific topic. The logic
behind taking research methodology into consideration is that one can have
knowledge about the method and procedure adopted for achievement of objectives
of the project. With the adoption of this others can evaluate the results also. Its
main aim is to keep the researchers on the right track.

The methodology adopted for studying the objectives was surveying the difference
between private and public sector banks. So keeping in view the nature of
requirements of the study to collect all the relevant information regarding the
comparison of saving account of with other banks, direct personal interview
method with structured questionnaire was adopted for the collection of primary
data.

Secondary data has been collected through the various magazines and newspapers
and by surfing on Internet. And the guide in the organization was consulted at
many times.

SAMPLE DESIGN:-A sample design is a definite plan for obtaining a sample

from a given population. It refers to the techniques or the procedure the researcher
would adopt in selecting items for the sample. Sample design may as well lay
down the number of items to be included in the sample i.e.,
the size of the sample. Sample design is determined before data are collected. Here
we select the population as sample in our sample design. The selected respondents
should be as representatives of the total population.

POPULATION:- The persons holding saving account related to business class of

District Jalandhar were taken into consideration.
DATA COLLECTION
Data was collected by using main two methods i.e primary data and secondary
data.
PRIMARY DATA
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. We 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. We 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.
JOURNALS AND PUBLICATIONS OF DIFFERENT BANKS :- We also take
into consideration the journals and publications issued by the bank at different
times. we comes to know about the Branches, ATM, locations and other useful
information.
MANUALS AND BROACHERS OF DIFFERENT BANKS:-We take the help
of bank staff and other people who gives us deep information and data which may
not be available at anywhere. They gives us there full co-operation.
INTERNET:-We also take into consideration the internet facility with which we
collect lot of latest information.

SAMPLE PLAN :
SAMPLE SIZE: Keeping in mind all the constraints the size of the sample
of the study was selected as 80.

 SAMPLING UNIT:
Due to nature of study, we also visited various different banks ICICI, HDFC,
SBI, PUNJAB NATIONAL BANK etc. of Jalandhar District.

 SAMPLING TECHNIQUE:- Stratified convenient sampling.

All the saving account holders were taken into consideration. Research was
conducted on clear assumptions that the respondents would give frank and
fair answers in a pragmatic way and without any bias.

 SAMPLING DESCRIPTION:- In order to understand the nature and

characteristics of various respondents in this study, the information was
collected and analyzed according to their socio economic background which
included the characteristic of their respondents like education, age marital
status and monthly income. This description shows that respondents
 included in this survey belong to different backgrounds and this turn
increase the scope of the study.

LITERATURE REVIEW

A literature review provides an overview and a critical evaluation of a body of

literature relating to a research topic or a research problem. It analyses a body of
literature in order to classify it by themes or categories, rather than simply
discussing individual works one after the other.

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

PURPOSE OF A LITERATURE REVIEW -

A literature review situates our topic in relation to previous researches and

illuminates a spot for our research. It accomplishes several goals –

 Provides background for topic using previous research.

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

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

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

A Shrivastava, P Purang

The International Journal of Human Resource Management 22 (03), 632-647,

2011

Performance appraisal is the most critical human resource practice and an

indispensable part of every organization; however, the practice continues to
generate dissatisfaction among employees and is often viewed as unfair and
ineffective. Indian banking sector is one of the biggest and fastest growing
financial service sectors. The post-liberalization era has witnessed significant
changes in the structure and operations of banks operating in India. Arrival of new
private and foreign banks has given a cause to public sector banks to be more
competitive, effective and innovative in their approach. Past researches have
compared public and private sector banks and have indicated that new private
sector banks are outscoring public sector banks in terms of technical and economic
efficiency parameters. However, no study could be found that compared public and
private banks in India on fairness perceptions of performance appraisal system.

Arunima Shrivastava, Pooja Purang

Asian Academy of Management Journal 14 (2), 2009

The present study examined the job satisfaction level of a public sector and private
sector bank employees in India. The sample consisted of 340 bank employees from
both sectors. Job Diagnostic Survey by Hackman and Oldham (1975) was used to
ascertain the level of job satisfaction. This study used independent samples t-test
and qualitative analysis to study the differences in employee attitudes. Results
indicated that the means of the public and private banks were significantly
different from each other. It was found that private sector bank employees perceive
greater satisfaction with pay, social, and growth aspects of job as compared to
public sector bank employees. On the other hand, public sector bank employees
have expressed greater satisfaction with job security as compared to private sector
bank employees. The findings of the study highlight important satisfiers and
dissatisfiers present in the job and suggest both the banks to take performance
initiatives in the areas where employees have reported reduced satisfaction.

Richa Sharma Vyas, Nijaguna Rudrayya Bhusnur Math

Journal of Financial Services Marketing 10 (4), 123-134, 2006

This paper is a study of cross-selling practices in Indian public and private sector
banks through the case study method. The study revealed that cross-selling
practices in public sector and private sector banks are quite different. These
differences emerge mainly from their different philosophy, background and
distinct target customer segments. However, both sectors can learn from each
other; public sector banks can introduce specialised training and incentives,
whereas private sector banks need to introduce appropriate control mechanisms
and avoid indiscriminate cross-selling. The paper also brings out the elements of
successful cross-selling in India.