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Introduction

History of Banking in India:


Without a sound and effective banking system in India it cannot have a healthy
economy. The banking system of India should not only be hassle free but it should be
able to meet new challenges posed by the technology and any other external and internal
factors.
For the past three decades India's banking system has several outstanding achievements
to its credit. The most striking is its extensive reach. It is no longer confined to only
metropolitans or cosmopolitans in India. In fact, Indian banking system has reached even
to the remote corners of the country. This is one of the main reasons of India's growth
process.
The government's regular policy for Indian bank since 1969 has paid rich dividends with
the nationalization of 14 major private banks of India.

Not long ago, an account holder had to wait for hours at the bank counters for getting a
draft or for withdrawing his own money. Today, he has a choice. Gone are days when the
most efficient bank transferred money from one branch to other in two days. Now it is
simple as instant messaging or dial a pizza. Money have become the order of the day.

The first bank in India, though conservative, was established in 1786. From 1786 till
today, the journey of Indian Banking System can be segregated into three distinct phases.
They are as mentioned below:-

•Early phase from 1786to1969 of Indian Banks

•Nationalization of Indian Banks and up to 1991 prior to Indian banking sector Reforms.

•New phase of Indian Banking System with the advent of Indian Financial & Banking
Sector Reforms after1991.

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To make this write-up more explanatory, I prefix the scenario as Phase I, Phase II and
PhaseIII.

PhaseI.
The General Bank of India was set up in the year 1786. Next came Bank of Hindustan
and Bengal Bank. The East India Company established Bank of Bengal (1809), Bank of
Bombay (1840) and Bank of Madras (1843) as independent units and called it Presidency
Banks.

These three banks were amalgamated in 1920 and Imperial Bank of India was established
which started as private shareholders banks mostly Europeans shareholders

.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 setup. Reserve Bank of India came in1935.

During the first phase the growth was very slow and banks also experienced periodic
failures between 1913 and 1948. There were approximately 1100 banks, mostly small. To
streamline the functioning and activities of commercial banks, the Government of India
came up with The Banking Companies Act, 1949 which was later changed to Banking
Regulation Act 1949 as per amending Act of 1965 (Act No. 23 of 1965). Reserve Bank
of India was vested with extensive powers for the supervision of banking in India as the
Central Banking Authority.

During those day’s public has lesser confidence in the banks. As an aftermath deposit
mobilization was slow. Abreast of it the savings bank facility provided by the Postal
department was comparatively safer. Moreover, funds were largely given to traders.

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PhaseII
Government took major steps in this Indian Banking Sector Reform after independence.
In 1955, it nationalized Imperial Bank of India with extensive banking facilities on a
large scale especially in rural and semi-urban areas. It formed State Bank of India to act
as the principal agent of RBI and to handle banking transactions of the Union and State
Governments all over the country.

Seven banks forming subsidiary of State Bank of India was nationalized in 1960 on 19th
July, 1969, major process of nationalization was carried out. It was the effort of the then
Prime Minister of India, Mrs. Indira Gandhi. 14 major commercial banks in the country
was nationalized.

Second phase of nationalization Indian Banking Sector Reform was carried out in 1980
with seven more banks. This step brought 80% of the banking segment in India under
Government ownership.

The following are the steps taken by the Government of India to Regulate Banking
Institutions in the Country:

• 1949:-Enactment of Banking Regulation Act.


• 1955:-Nationalization of State Bank of India.
• 1959:-Nationalization of SBI subsidiaries.
• 1961:-Insurance cover extended to deposits.
• 1969:-Nationalization of 14 major banks.
• 1971:-Creation of credit guarantee corporation
• 1975:-Creation of regional rural banks.
• 1980:- Nationalization of seven banks with deposits over200 core.

After the nationalization of banks, the branches of the public sector bank India rose to
approximately 800% in deposits and advances took a huge jump by 11,000%.

Banking in the sunshine of Government ownership gave the public implicit faith and
immense confidence about the sustainability of these institutions.

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PhaseIII
This phase has introduced many more products and facilities in the banking sector in its
reforms measure. In 1991, under the chairmanship of M Narasimham, a committee was
set up by his name which worked for the liberalization of banking practices.

The country is flooded with foreign banks and their ATM stations. Efforts are being put
to give a satisfactory service to customers. Phone banking and net banking is introduced.
The entire system became more convenient and swift. Time is given more importance
than money. The financial system of India has shown a great deal of resilience. It is
sheltered from any crisis triggered by any external macroeconomics shock as other East
Asian Countries suffered. This is all due to a flexible exchange rate regime, the foreign
reserves are high, the capital account is not yet fully convertible, and banks and their
customers have limited foreign exchange exposure.

Nationalization Of Banks In India

The nationalization of banks in India took place in 1969 by Mrs. Indira Gandhi the then
prime minister. It nationalized 14 banks then. These banks were mostly owned by
businessmen and even managed by them

• Central Bank of India


• Bank of Maharashtra
• Dena Bank
• Punjab National Bank
• Syndicate Bank
• Canara Bank
• Indian Bank
• Indian Overseas Bank
• Bank of Baroda
• Union Bank
• Allahabad Bank

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• United Bank of India
• UCO Bank
• Bank of India

Be for the steps of nationalization of Indian banks, only State Bank of India (SBI) was
nationalized. It took place in July 1955 under the SBI Act of 1955. Nationalization of
Seven State Banks of India (formed subsidiary ) took place on 19th July, 1960.

The State Bank of India is India's largest commercial bank and is ranked one of the top
five banks worldwide. It serves 90 million customers through a network of 9,000
branches and it offers -- either directly or through subsidiaries -- a wide range of banking
services.

The second phase of nationalization of Indian banks took place in the year 1980. Seven
more banks were nationalized with deposits over 200 crores. Till this year, approximately
80% of the banking segment in India were under Government ownership.

After the nationalization of banks in India, the branches of the public sector banks rose to
approximately 800% in deposits and advances took a huge jump by 11,000%.

• 1955: Nationalisation of State Bank of India.


• 1959: Nationalisation of SBI subsidiaries.
• 1969: Nationalisation of 14 major banks.
• 1980: Nationalisation of seven banks with deposits over 200 crores.

Scheduled Commercial Banks In India

The commercial banking structure in India consists of:

•Scheduled Commercial Banks in India

•Unscheduled Banks in India

Scheduled Banks in India constitute those banks which have been included in the
Second Schedule of Reserve Bank of India(RBI) Act, 1934. RBI in turn includes only

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those banks in this schedule which satisfy the criteria laid down vide section 42 (6)
(a)of the Act.

As on 30th June, 1999, there were 300 scheduled banks in India having a total
network of 64,918 branches. The scheduled commercial banks in India comprise of
State bank of India and its associates (, nationalized banks (19), foreign banks (45),
private sector banks (32), co-operative banks and regional rural banks.

"Scheduled banks in India" means the State Bank of India constituted under the State
Bank of India Act, 1955 (23 of 1955), a subsidiary bank as defined in the State Bank
of India (Subsidiary Banks) Act, 1959 (38 of 1959), a corresponding new bank
constituted under section 3 of the Banking Companies (Acquisition and Transfer of
Undertakings) Act, 1970 (5 of 1970), or under section 3 of the Banking Companies
(Acquisition and Transfer of Undertakings) Act, 1980 (40 of 1980), or any other bank
being a bank included in the Second Schedule to the Reserve Bank of India Act, 1934
(2 of 1934),but does not include a co-operative bank".

"Non-scheduled bank in India" means a banking company as defined in clause (c) of


section 5 of the Banking Regulation Act, 1949 (10 of 1949), which is not a scheduled
bank".

The following are the Scheduled Banks in India (Public Sector):


•State Bank of India

•State Bank of Bikaner and Jaipur

•State Bank of Hyderabad

•State Bank of Indore

•State Bank of Mysore

•State Bank of Patiala

•State Bank of Saurashtra


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•Andhra Bank

•Allahabad Bank

•Bank of Maharashtra

•Central Bank of India

•Corporation Bank

•Dena Bank

•Indian Overseas Bank

•Indian Bank

•Oriental Bank of Commerce

•Punjab National Bank

•Punjab and Sind Bank

•Syndicate Bank

•Union Bank of India

•United Bank of India

•UCO Bank

The following are the Scheduled Banks in India (Private Sector):


• Vysya Bank Ltd

•Axis Bank Ltd

• Indusind Bank Ltd

•ICICI Banking Corporation Bank Ltd

•Global Trust Bank Ltd

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Role of Banking
• Banks provide funds for business as well as personal needs of individuals. They
play a significant role in the economy of a nation. Let us know about the role of
banking.
• It encourages savings habit amongst people and thereby makes funds available for
productive use.
• It acts as an intermediary between people having surplus money and those
requiring money for various business activities.
• It facilitates business transactions through receipts and payments by cheques
instead of Currency.
• It provides loans and advances to businessmen for short term and long-term
purposes.
• It also facilitates import export transactions.
• It helps in national development by providing credit to farmers, small-scale
industries and self- employed people as well as to large business houses which
lead to balanced economic development in the country .
• It helps in raising the standard of living of people in general by providing loans
for purchase of consumer durable goods, houses, automobiles, etc.

BANK MARKETING

We define bank marketing as follows: “Bank marketing is the aggregate of functions,


directed at providing services to satisfy customers’ financial (and other related) needs and
wants, more effectively and efficiently that the competitors keeping in view the

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organizational objectives of the bank”. Bank marketing activity. This aggregate of
functions is the sum total of all individual activities consisting of an integrated effort to
discover, create, arouse and satisfy customer needs. This means, without exception, that
each individual working in the bank is a marketing person who contributes to the total
satisfaction to customers and the bank should ultimately develop customer orientation
among all the personnel of the bank. Different banks offer different benefits by offering
various schemes which can take care of the wants of the customers.

Marketing helps in achieving the organizational objectives of the bank. Indian banks
have duel organizational objective – commercial objective to make profit and social
objective which is a developmental role, particularly in the rural area.

Marketing concept is essentially about the following few thing which contribute towards
banks’ success:

1) The bank cannot exist without the customers.


2) The purpose of the bank is to create, win, and keep a customer.
3) The customer is and should be the central focus of everything the banks does.
4) It is also a way of organizing the bank. The starting point for organizational
design should be the customer and the bank should ensure that the services are
performed and delivered in the most effective way. Service facilities also should
be designed for customers’ convenience.
5) Ultimate aim of a bank is to deliver total satisfaction to the customer.
6) Customer satisfaction is affected by the performance of all the personal of the
bank.
All the techniques and strategies of marketing are used so that ultimately they induce the
people to do business with a particular bank. Marketing is an organizational philosophy.
This philosophy demands the satisfaction of customers needs as the pre-requisite for the
existence and survival of the bank. The first and most important step in applying the
marketing concept is to have a whole hearted commitment to customer orientation by all
the employees. Marketing is an attitude of mind. This means that the central focus of all

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the activities of a bank is customer. Marketing is not a separate function for banks. The
marketing function in Indian Bank is required to be integrated with operation.

Marketing is much more than just advertising and promotion; it is a basic part of total
business operation. What is required for the bank is the market orientation and customer
consciousness among all the personal of the bank. For developing marketing philosophy
and marketing culture, a bank may require a marketing coordinator or integrator at the
head office reporting directly to the Chief Executive for effective coordination of
different functions, such as marketed research, training, public relations, advertising, and
business development, to ensure customer satisfaction. The Executive Director is the
most suitable person to do this coordination work effectively in the Indian public sector
banks, though ultimately the Chief Executive is responsible for the total marketing
function. Hence, the total marketing function involves the following:

a) Market research i.e. identification of customer’s financial needs and wants and
forecasting and researching future financial market
needs and competitors’ activities.
b) Product Development i.e. appropriate products to meet consumers’ financial
needs.
c) Pricing of the service i.e., promotional activities and distribution system in
accordance with the guidelines and rules of the
Reserve Bank of India and at the same time looking
for opportunities to satisfy the customers better.
d) Developing market i.e., marketing culture – among all the customer-
consciousness ‘Personnel’ of the bank through
training.

Thus, it is important to recognize the fundamentally different functions that bank


marketing has to perform. Since the banks have to attract deposits and attract users of

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funds and other services, marketing problems are more complex in banks than in other
commercial concerns.

INCREASING IMPORTANCE OF MARKETING IN BANKING


INDUSTRY

The various other factors which have led to the increasing importance of marketing in the
banking industry are categorized as follows:

Government Initiatives

The Indian economy embarked on the process of economic reform and various policy
measures initiated by the government resulted in the increasing competition in the
banking industry, thereby highlighting the importance of effective marketing. The
Narasimhan Committee Report evidence of the Government’s desire to ‘re-regulate’ the
banking industry so as to encourage efficiency through competition. The Government
initiatives include:

Deregulation of Interest Rates

The bank may reduce their Minimum Lending Rates so as to attract customers
(individual and corporate). Such reduction in lending rates reduce the spread between the
deposit rates and lending rates, i.e. the banks margins would decline and they would have
to increase their volumes or provide attractive services so as to maintain profits. This
calls for bank marketing.

Increasing Emphasis on Bank Profitability:

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With the Narasimhan Committee Report, banks have been directed to improve their
efficiency, productivity and profitability. Banks are required to be self-sufficient. In fact,
the report has adopted the BIS standards of capital adequacy (though in a phased
manner).

Foreign Banks

Foreign banks offer stiff competition to the Indian Banks and with their superior services
and technology offer them a competitive advantage. Thus Indian Banks have to
effectively apply marketing concepts to attract customers.

Entry of New Private Banks

In the early ‘90s new competition emerged in the form of new Private Banks, who
brought along with them a high technology-based banking matching with International
Standards and have made a significant dent in the banking business by capturing
substantial share in the profits of the banking industry.

Reduction of Statutory Liquidity Ratio:

With the Government’s aim of reducing the SLR to 25 percent, the banks will have
surplus funds for which they will have to attract users.

Social Environment

Increasing Urbanization, Education and Awareness: The higher literacy level,


migration to urban areas and higher awareness due to the boom in the mass media have
important implications for the retail banker. He needs to be conscious of the fact the
increasing proportion of people are aware of financial service and are, therefore
demanding and expecting higher quality services.

Increasing Urbanization, Education and Awareness: The higher literacy level,


migration to urban areas and higher awareness due to the boom in the mass media have
important implications for the retail banker. He needs to be conscious of the fact the

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increasing proportion of people are aware of financial service and are, therefore
demanding and expecting higher quality services.

Decline in Traditional Indian Values (Borrowing as Taboo), Rising Consumerism, Rise


in the Percentage of Working Women.

Technology Development

Modernization of Technology has facilitated the introduction of new banking services as


to attract new customers. An example of this is the ‘Automated Teller Machines’ or the
facility of ‘Any Time Money’. Also in foreign countries, banks are experimenting with
money transmission at Point of sale, e.g., petrol station linked with banking network.

Comparison of Financial performance of State Bank Of India


and HDFC Bank

• Graph showing income of State Bank Of India and HDFC Bank

Fig 1

Fig 2

Figure 1 shows the income of HDFC Bank and figure 2 shows the income of
State Bank Of India in last 5 years . from the above figure it can be easily
seen that the income of both HDFC Bank and State Bank Of India continues
to increase but at end of march 2010 both the bank earn less amount in
comparison to previous years. HDFC Bank earns only RS 180 crore at end
of march 2010 in comparison to 7482.51 crore at end of2009, and SBI earns
RS 9482.29 crore almost half of the income earn in the end of march 2009 ie
18131.04.

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• Graph showing expenses :-

Fig 1

Fig 2
Fig 1 shows the expenses of State Bank of India and fig 2 shows the
expenses of HDFC Bank. In the last 5 years it is clearly seen from the
graph that expenses of both the bank increases the reason behind this
is that both the bank income continues to increase as result expenses
also increase. But at the end of march 2010 both the bank expenses
fall down the reason was fall in income of both the bank. HDFC BANK
expenses fall to 523 crore ie from 17557.96 crore to 17034.82 crore
and SBI expenses fall to Rs 9437.47 crore in comparison to 15738.93
in 2009.

• Graph showing net profit

Fig 1

Fig 2

Fig 1 shows net profit of State Bank Of India and fig 2 represents HDFC Bank . from
the above graph it can be easily seen that net profit of SBI continues to increase but in
end of march 2010 SBI net profit falls to RS 44.82 crore in comparison to 2392.crore in
end of march 2009. If we talk about HDFC Bank net profit continues to fluctuates since
2006 . in 2008 net profit falls to RS 207 crore in comparison to 266 crore in 2007,
similarly in 2010 RS 703.76 crore from RS 862.40 in 2009.

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• Graph showing earning per share

Fig 1

Fig 2

Fig 1 shows earning per share of HDFC Bank and fig 2 explains earning per share of SBI. From
the above graph it can be easily seen that HDFC Bank earning per share continues to fluctuates .
At the end of march 2008 earning per share fall to RS 1.98 crore in comparison to 2008 i.e. RS
9.65 crore . in the end of march 2010 earning per share increases to RS 12.65 crore highest
earning per share in last 5 years.SBI earning per share also fluctuates since 2006. In 2009 earning
per share was highest in last 5 years i.e. RS 37.11 crore but at end of march 2010 there was
drastic fall in last 5 years.

• Graph showing total profit of both the bank

Fig 1

Fig 2

Fig 1 shows total profit of HDFC BANK and Fig 2 shows total profit OF SBI from the
graph it can be easily seen that total profit of HDFC Bank continues to increase except in
2008 .IN 2010 total profit increased by 1584 crore . Total profit of SBI continues to

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increase since 2006 but there was drastic fall at the end of march 2010 total profit
earned was just RS 44 crore in comparison to 2392 crore in 2009.

Consumer Behavior and Segmentation

Need for segmentation

Philip Kotler has described the dilemma of the seller (especially, a seller dealing with
masses, e.g. banks) as follows:

“How the seller determines which buyer’s characteristics produce the best partitioning of
a particular market? The seller does not want to treat all customers alike nor does he want
to treat them all differently”.

Banks deal with individuals, group of persons and corporates, all of whom have their
likes and dislikes. No bank can afford to assess the needs of each and every individual
buyer (actual or potential).

Segmentation of the market into more or less homogenous groups, in terms of their needs
and expectations from the banking industry, provides a solution to this problem.

This involves dividing the market into major market segments, targeting one or more of
this segments, and developing products and marketing programs tailor-made for these
segments.

In the first segmentation, the market is divided from a unitary whole, to groups of buyers
who might require separate products and marketing mix. The marketer typically tries to
identify different segments in the market and develop profiles of resulting market
segments.

The second step is market targeting in which each segment’s attractiveness is measured
and a target segment is chosen based on tits attractiveness.

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The third step is product positioning which is the act of establishing a viable competitive
position of the firm and its offer in the target segment chosen.

In the process of segmentation, the market can be divided into major segments which are
gross slices of the market, or into smaller specially formed segments, otherwise known as
niches. Niche customers have a specific set of needs which the markerter tries to address.
While a market segment attracts several competitors, a niche attracts fewer competitors
and therefore, a company should clearly define its target segment and devise strategies to
target the customer, so that it has a competitive advantage in the segment.

These concepts can be applied in personal banking by an Indian Bank. Traditionally,


Indian Banks have not had any conscious strategy for selecting customers from the
personal banking area, apart from some banks which have a geographic concentration
strategy such as concentrating on a particular region or state. These banks will have to
segment the market on certain basis, and identify market segments or niches which they
want to cater to. For example, a bank like SBI may not be able to cater high income
groups (say, managers, professional, NRIs, etc. who earn above Rs. 4,00,000 p.a. and
who want a higher quality of products / services and who are willing to pay for them), as
the services required by such a profile of customers are entirely different from the kind of
products / services SBI can offer.

Initiation of Segmentation in India

Station Bank of India was the first Indian Bank to adopt the concept of market
segmentation. In 1972, it reorganized itself on the basis of major market segments
dividing customers on the basis of activity and carved out 4 major market segments, viz.
Commercial and Institutional, Small Industries and Small Business Segment,
Agriculture, Personal and Services Banking. The objectives of this scheme were:

• Deeper penetration and coverage of market by looking outwards.


• Adequate flexibility of organization to accommodate growth and rapid change,
• Delegation of work for releasing senior management for more futuristic tasks.

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Criteria for Segmentation

Segmentation in a right fashion makes the ways for profitable marketing. This helps
policy planner in formulating and innovating the policies and at the same time also
simplifies the task of bank professionals while formulating an innovating the strategic
decisions. The following criteria make possible rig segmentation.

An important criterion for market segmentation the economic system in which we find
agricultural sector, industrial sector, services sector, household sector, institutional sector
and rural sector requiring of weightage while segmenting.

Agricultural Sector: In the agricultural sector, there are four category rise since the
needs of all the categories cant’s be identical.

The mechanization of agriculture, the improved or scientific system of activation, the


help of nature, the magnitude of risk, the availability infrastructural facilities influence
the level of expectations vis-à-vis the needs and requirements. The banking organization
are supposed to know and under stand the changing requirements of different categories
of farmers.

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Industrial Sector: The banking organizations subserve the interests of the industrial
sector. The large-sized, small-sized co-operative and tiny industries use the services of
banks. The expectations of all the categories cant’s be uniform.

The banking organizations are supposed to have an indepth knowledge of the changing
needs and requirements of the industrial segment.

Services sector: It is an important sector of the economy where the banking


organizations get profitable business. The two categories of organizations such as profit-
making and not-for-profit making are found important in the very context.

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The banking organizations need to identify the changing needs and requirements of the
services sector. With the frequent use of information technologist and with the mounting
pressure of inflation and competition, we find a change in the hierarchy of needs.

Household Sector: This is also constitutes an important sector where different income
group have different needs and requirements. in below figure we find the different
segments of the household sector.

Household Segment: The high income group, middle income group, low income group,
substance level group and marginal income group have different hierarchy of need which
influence the level of their expectations.

Gender Segment: In the gender segments, we find male and female having different
needs and requirements. The banking organizations are supposed to identify the level
expectations of both sexes.

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Some of the women are housewives and therefore they have different need and
requirements whereas some of them are working ladies having different needs and
requirements.

In the profession segments, we find different categories of professions an therefore we


find a change in their needs and requirements.

The technocrats, bureaucrats, corporate executives, intellects, white and blue – collar
employees have different needs and requirements and therefore the banking organizations
should know their expectations.

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Some of the organizations are known as cultural organizations, some of them are not for
–profit making, some of them are philanthropic and some of them are related to trade and
commerce. The emerging trends in the social transformation process determine the
hierarchy of needs.

Markets segmentation thus simplifies the task of understanding the customers/prospects.


The bank professional find it convenient to formulate and innovate the marketing mix of
world class which simplify the process of excelling competition.

In the Indian perspective where we find agrarian economy contributing substantially to


the transformation of national economy, it is pertinent that the banking organizations
assign due weightage to the rural sector of the economy where we find tremendous
opportunities.

The urbanization is likely to gain the momentum and villages, outskirts of big towns and
cities are to be developed on a priority basis. Almost all the organizations are to get
tremendous opportunities there. The marketing resources if of innovative nature would
make the ways for capitalizing on the same profitably.

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THE MARKETING MIX IN BANKING SECTOR SERVICE
Recently, banks are in a period that they earn money in servicing beyond selling money.
The prestige is get as they offer their services to the masses. Like other services, banking
services are also intangible. Banking services are about the money in different types and
attributes like lending, depositing and transferring procedures. These intangible services
are shaped in contracts. The structure of banking services affects the success of
institution in long term. Besides the basic attributes like speed, security and ease in
banking services, the rights like consultancy for services to be compounded are also
preferred.
PRICE
The price which is an important component of marketing mix is named differently in the
base of transaction exchange that it takes place. Banks have to estimate the prices of their
services offered. By performing this, they keep their relations with extant customers and
take new

ones. The prices in banking have names like interest, commission and expenses. Price is
the sole element of marketing variables that create earnings, while others cause
expenditure. While marketing mix elements other than price affect sales volume, price
affect both profit and sales volume directly. Banks should be very careful in determining
their prices and price policies. Because mistakes in pricing cause customers’ shift toward
the rivals offering likewise services.
DISTRIBUTION
The complexities of banking services are resulted from different kinds of them. The most
important feature of banking is the persuasion of customers benefiting from services.
Most banks’ services are complex in attribute and when this feature joins the intangibility
characteristics, offerings take also mental intangibility in addition to physical
intangibility. On the other hand, value of service and benefits taken from it mostly
depend on knowledge, capability and participation of customers besides features of
offerings. This is resulted from the fact that production and consumption have non
separable characteristics in those services. Most authors argue that those features of

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banking services makes personal interaction between customer and bank obligatory and
the direct distribution is the sole alternative. Due to this reason, like preceding
applications in recent years, branch offices use traditional method in distribution of
banking services.

PROMOTION
One of the most important elements of marketing mix of services is promotion which is
Consist of personal selling, advertising, public relations, and selling promotional tools.

PERSONAL SELLING
Due to the characteristics of banking services, personal selling is the way that most banks
prefer in expanding selling and use of them. Personal selling occurs in two ways. First
occurs in a way that customer and banker perform interaction face to face at branch
office. In this case, whole personnel, bank employees, chief and office manager, takes
part in selling. Second occurs in a way that customer representatives go to customers’
place. Customer representatives are specialist in banks’ services to be offered and they
shape the relationship between bank and customer.

ADVERTISING

Banks have too many goals which they want to achieve. Those goals are for
accomplishing the objectives as follows in a way that banks develop advertising
campaigns and use media.
1. Conceive customers to examine all kinds of services that banks offer
2.Increase use of services
3. Create well fit image about banks and services.
4. Change customers’ attitudes
5. Introduce services of banks
6. Support personal selling

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7. Emphasize well service
Advertising media and channels that banks prefer are newspaper, magazine, radio, direct
posting and outdoor ads and TV commercials. In the selection of media, target market
should
be determined and the media that reach this target easily and cheaply must be preferred.
Banks should care about following criteria for selection of media.:
1.Which media the target market prefer
2. Characteristics of service
3. Content of message
4.Cost
5. Situation of rivals

PUBLIC RELATIONS
Public relations in banking should provide;
1. Establishing most effective communication system
2. Creating sympathy about relationship between bank and customer
3. Giving broadest information about activities of bank.
It is observed that the banks in Turkey perform their own publications, magazine and
Sponsoring activities.

SELLING PROMOTIONAL TOOLS


Another element of the promotion mixes of banks is improvement of selling. Mostly used
selling improvement tools are layout at selling point, rewarding personnel, seminaries,
special gifts, premiums, contests.

\HISTORY OF STATE BANK OF INDIA

The History of State Bank Of India dates back to the first decade of the nineteenth
century with the setting up of Bank of Calcutta in Calcutta on 2 June 1806.After three

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years it was renamed as Bank Of Bengal (2 January 1809).On 15th April 1840, the Bank
Of Bombay was initiated and on 1st July 1843, the The Bank of Madras was established.
The integration of the three banks resulted in the creation of Imperial Bank of India on
27th January 1921.

Structure and Organization

The Banks Corporate Office is located at Mumbai. Its domestic operational area is
divided into 14 Circles, each with one Local Head Office and a few Zonal and Regional
Offices. The Bank is present not just in the major metropolises of India but has wide
reach in the villages of India. The Bank's top management consists of the Chairman,
group executives for National Banking Group, Corporate Banking Group, International
Banking Group and Associates & Subsidiaries, and four staff functionaries in charge of
finance, credit, human resources & technology management and inspection &audit.
Three Strategic Business Units (SBUs) under the Corporate Banking Group have been
set up by SBI to pay attention to big corporate customers. Distinguishing features of the
SBUs are assimilation of operational planning with operations within each SBU, an alert
delivery system with suitable specialist inputs and focused attention on profitability.
The staff and functionaries at various levels have been delegated higher financial powers
to ensure quicker decision making in credit areas and disposal of a large number of credit
proposals at operating units' level. A committee approach has been adopted, both at the
apex and circle levels, for sanction of large advances and loans. Keeping this in mind
Central Office Credit Committee and Circle Credit Committees have been set up to
ultimately ensure faster delivery. Credit and systemic risk processes have thus
accordingly been restructured. Simplified and concise credit appraisal formats have been
designed to ensure improvement in the quality of credit decisions, better quality of assets
and reduction of Non Performing Assets or NPAs.

Transformation in SBI

26
The SBI has undergone major transformation in the recent years. The bank has ventured
into new areas of business like Pension Funds, General Insurance, Custodial Services,
Private Mobile Banking, Point Of Sale, Merchant Acquisition, Advisory Services, and
Structured Products etc. The bank foresees tremendous growth potential in all these
areas. The bank has made forays into the rural banking with state of the art technology.
The bank has outlaid an ambitious plan to expand rural banking to 100,000 villages in the
next few years .

The bank has ambitious plans to focus on the high end market to support India's
increasing mid/large Corporate with a wide range of products and services. The bank is
consolidating its global treasury operations and diversifying into structured products and
derivative instruments. At present SBI provides the largest amount of infrastructure debt
and the bank is the largest provider of commercial borrowings in the country.SBI is a
Fortune500company.

The Bank is in the process of expanding its base overseas. Currently it has 82 offices
abroad spread over 32 countries. The seven subsidiaries of SBI are SBI Capital Markets,
SBICAP Securities, SBI DFHI, SBI Factors, SBI Life and SBI Cards.

COMPANY PROFILE
State Bank of India is the largest and one of the oldest commercial bank in India, in
existence for more than 200 years. The bank provides a full range of corporate,
commercial and retail banking services in India. Indian central bank namely Reserve
Bank of India (RBI) is the major share holder of the bank with 59.7% stake. The bank is
capitalized to the extent of Rs.646bnwith the public holding (other than promoters) at
40.3%. SBI has the largest branch and ATM network spread across every corner of India.

27
The bank has a branch network of over 14,000branches (including subsidiaries). Apart
from Indian network it also has a network of 73overseas offices in 30 countries in all
time zones, correspondent relationship with 520International banks in 123 countries. In
recent past, SBI has acquired banks in Mauritius, Kenya and Indonesia. The bank had
total staff strength of 198,774 as on 31st March, 2006. Of this, 29.51% are officers,
45.19% clerical staff and the remaining 25.30% were sub-staff. The bank is listed on the
Bombay Stock Exchange, National Stock Exchange, Kolkata Stock Exchange , Chennai
Stock Exchange and Ahmedabad Stock Exchange while its GDRs are listed on the
London Stock Exchange. SBI group accounts for around 25% of the total business of the
banking industry while it accounts for 35% of the total foreign exchange in India. With
this type of strong base, SBI has displayed a continued performance in the last few years
in scaling up its efficiency levels. Net Interest Income of the bank has witnessed a CAGR
of13.3% during the last five years. During the same period, net interest margin (NIM) of
the bank has gone up from as low as 2.9% in FY02 to 3.40% in FY06 and currently is at
3.32%.

Management

The bank has 14 directors on the Board and is responsible for the management of the
Bank’s business. The board in addition to monitoring corporate performance also carries
out functions such as approving the business plan, reviewing and approving the annual
budget sand borrowing limits and fixing exposure limits. Mr. O. P. Bhatt is the Chairman
of the bank. The five-year term of Mr. Bhatt will expire in March 2011. Prior to this
appointment, Mr. Bhatt was Managing Director at State Bank of Travancore. Mr. Bhatt
has more than 30 years of experience in the Indian banking industry and is seen as
futuristic leader in his approach towards technology and customer service. Mr. Bhatt has
had the best of foreign exposure in SBI. We believe that the appointment of Mr. Bhatt
would be a key to SBI’s future growth momentum. Mr. T S Bhattacharya is the
Managing Director of the bank and known for his vast experience in the banking

industry. Recently, the senior management of the bank has been broadened considerably.
The positions of CFO and the head of treasury have been segregated , and new heads for

28
rural banking and for corporate development and new business banking have been
appointed. The management’s thrust on growth of the bank in terms of network and size
would also ensure encouraging prospects in time to come.

Key Areas of Operations

The business operations of SBI can be broadly classified into the key income generating
areas such as National Banking, International Banking, Corporate Banking, &Treasury
operations.

HISTORY OF HDFC BANK:-

The Housing Development Finance Corporation Limited (HDFC) was amongst the first

to receive an 'in principle' approval from the Reserve Bank of India (RBI) to set up a
bank in the private sector, as part of the RBI's liberalization of the Indian Banking
Industry in1994. The bank was incorporated in August 1994 in the name of 'HDFC Bank
Limited', with its registered office in Mumbai, India. HDFC Bank commenced operations
as a Scheduled Commercial Bank in January 1995. HDFC is India's premier housing
finance company and enjoys an impeccable track record in India as well as in
international markets. Since its inception in 1977, the Corporation has maintained a
consistent and healthy growth in its operations to remain the market leader in mortgages..
With its experience in the financial markets, a strong market reputation, large shareholder
base and unique consumer franchise, HDFC was ideally positioned to promote a bank in
the Indian environment.

29
HDFC Bank's mission is to be a World-Class Indian Bank. The objective is to build
sound customer franchises across distinct businesses so as to be the preferred provider of
banking services for target retail and wholesale customer segments, and to achieve
healthy growth in profitability, consistent with the bank's risk appetite. The bank is
committed to maintain the highest level of ethical standards, professional integrity,
corporate governance and regulatory compliance . HDFC Bank's business philosophy is
based on four core values – Operational Excellence Customer, Focus, Product Leadership
and People.

COMPANY PROFILE
The Housing Development Finance Corporation Limited (HDFC) was amongst the first
to receive an 'in principle' approval from the Reserve Bank of India (RBI) to set up a
bank in the private sector, as part of RBI's liberalization of the Indian Banking Industry
in 1994. The bank was incorporated in August 1994 in the name of 'HDFC Bank
Limited', with its registered office in Mumbai, India. HDFC Bank commenced operations
as a Scheduled Commercial Bank in January 1995.

PROMOTER
HDFC is India's premier housing finance company and enjoys an impeccable track
record in India as well as in international markets. Since its inception in 1977, the
Corporation has maintained a consistent and healthy growth in its operations to remain
the market leader in mortgages. Its outstanding loan portfolio covers well over a million
dwelling units. HDFC has developed significant expertise in retail mortgage loans to
different market segments and also has a large corporate client base for its housing
related credit facilities. With its experience in the financial markets, strong market
reputation, large shareholder base and unique consumer franchise, HDFC was ideally
positioned to promote a bank in the Indian environment.

BUSINESS FOCUS

30
HDFC Bank's mission is to be a World Class Indian Bank. The objective is to build
sound customer franchises across distinct businesses so as to be the preferred provider of
banking services for target retail and wholesale customer segments, and to achieve
healthy growth in profitability, consistent with the bank's risk appetite. The bank is
committed to maintain the highest level of ethical standards, professional integrity,
corporate governance and regulatory compliance. HDFC Bank's business philosophy is
based on four core values: Operational Excellence, Customer Focus, Product Leadership
and People.

CAPITAL STRUCTURE
As on 31st December, 2009 the authorized share capital of the Bank is Rs. 550 crore. The
paid-up capital as on said date is Rs. 455,23,65,640/- (45,52,36,564 equity shares of Rs.
10/- each). The HDFC Group holds 23.87 % of the Bank's equity and about 16.94 % of
the equity is held by the ADS Depository (in respect of the bank's American Depository
Shares (ADS) Issue). 27.46 % of the equity is held by Foreign Institutional Investors
(FIIs) and the Bank has about 4,58,683 shareholders.
The shares are listed on the Bombay Stock Exchange Limited and The National Stock
Exchange of India Limited. The Bank's American Depository Shares (ADS) are listed on
the New York Stock Exchange (NYSE) under the symbol 'HDB' and the Bank's Global
Depository Receipts (GDRs) are listed on Luxembourg Stock Exchange under ISIN No
US40415F2002.

AMALGAMATION OF TIMES BANK & CENTURION BANK OF PUNJAB


WITH HDFC BANK
On May 23, 2008, the amalgamation of Centurion Bank of Punjab with HDFC Bank was
formally approved by Reserve Bank of India to complete the statutory and regulatory
approval process. As per the scheme of amalgamation, shareholders of C Bop received 1
share of HDFC Bank for every 29 shares of C Bop.
The merged entity will have a strong deposit base of around Rs1,22,000 crore and net
advances of around Rs89,000 crore . The balance sheet size of the combined entity would

31
be over Rs1,63,000 crore. The amalgamation added significant value to HDFC Bank in
terms of increased branch network, geographic reach, and customer base, and a bigger
pool of skilled man power.
In a milestone transaction in the Indian banking industry, Times Bank Limited (another
new private sector bank promoted by Bennett, Coleman & Co. / Times Group) was
merged with HDFC Bank Ltd., effective February 26, 2000. This was the first merger of
two private banks in the New Generation Private Sector Banks. As per the scheme of
amalgamation approved by the shareholders of both banks and the Reserve Bank of
India, shareholders of Times Bank received 1 share of HDFC Bank for every 5.75 shares
of Times Bank.

DISTRIBUTION NETWORK
HDFC Bank is headquartered in Mumbai. As on December 31, 2009, the Bank has a
network of 1725 branches in 771 cities across India. All branches are linked on an online
real-time basis. Customers in over 500 locations are also serviced through Telephone
Banking. The Bank's expansion plans take into account the need to have a presence in all
major industrial and commercial centres, where its corporate customers are located, as
well as the need to build a strong retail customer base for both deposits and loan
products. Being a clearing / settlement bank to various leading stock exchanges, the Bank
has branches in centres where the NSE / BSE have a strong and active member base.

The Bank also has a network of 3898 ATMs across India. HDFC Bank's ATM network
can be accessed by all domestic and international Visa / MasterCard, Visa Electron /
Maestro, Plus / Cirrus and American Express Credit / Charge cardholders.

MANAGEMENT
Mr. Jagdish Capoor took over as the Bank's Chairman (non-executive) in July 2001. Prior
to this, Mr. Capoor was a Deputy Governor of the Reserve Bank of India.
The Bank's Managing Director, Mr. Aditya Puri, has been a professional banker for over

32
25 years. Before joining HDFC Bank in 1994, he was heading Citibank's operations in
Malaysia.
The Bank's Board of Directors is composed of eminent individuals with a wealth of
experience in public policy, administration, industry and commercial banking. Senior
executives representing HDFC are also on the Board.
Senior banking professionals with substantial experience in India and abroad, head
various businesses and functions and report to the Managing Director. Given the
professional expertise of the management team and the overall focus on recruiting and
retaining the best talent in the industry, the bank believes that its people are a significant
competitive strength.

TECHNOLOGY
HDFC Bank operates in a highly automated environment in terms of information
technology and communication systems. All the bank's branches have online
connectivity, which enables the bank to offer speedy funds transfer facilities to its
customers. Multi-branch access is also provided to retail customers through the branch
network and Automated Teller Machines (ATMs).
The Bank has made substantial efforts and investments in acquiring the best technology
available internationally, to build the infrastructure for a world class bank. In terms of
core banking software, the Corporate Banking business is supported by Flex cube, while
the Retail Banking business by Fin ware, both from i-flex Solutions Ltd. The systems are
open, scale able and web -enabled.
The Bank has prioritized its engagement in technology and the internet as one of its key
goals and has already made significant progress in web-enabling its core businesses. In
each of its businesses, the Bank has succeeded in leveraging its market position, expertise
and technology to create a competitive advantage and build market share.

BUSINESS PROFILE

33
HDFC Bank caters to a wide range of banking services covering commercial and
investment banking on the wholesale side and transactional / branch banking on the retail
side. The bank has three key business segments:

Wholesale Banking

The Bank's target market is primarily large, blue-chip manufacturing companies in the
Indian corporate sector and to a lesser extent, small & mid-sized corporates and agri-
based businesses. For these customers, the Bank provides a wide range of commercial
and transactional banking services, including working capital finance, trade services,
transactional services, cash management, etc. The bank is also a leading provider of
structured solutions, which combine cash management services with vendor and
distributor finance for facilitating superior supply chain management for its corporate
customers. Based on its superior product delivery / service levels and strong customer
orientation, the Bank has made significant inroads into the banking consortia of a number
of leading Indian corporates including multinationals, companies from the domestic
business houses and prime public sector companies. It is recognised as a leading provider
of cash management and transactional banking solutions to corporate customers, mutual
funds, stock exchange members and banks.

Treasury

Within this business, the bank has three main product areas - Foreign Exchange and
Derivatives, Local Currency Money Market & Debt Securities, and Equities. With the
liberalisation of the financial markets in India, corporates need more sophisticated risk
management information, advice and product structures. These and fine pricing on
various treasury products are provided through the bank's Treasury team. To comply with
statutory reserve requirements, the bank is required to hold 25% of its deposits in
government securities. The Treasury business is responsible for managing the returns and
market risk on this investment portfolio.

Retail Banking
The objective of the Retail Bank is to provide its target market customers a full range of
financial products and banking services, giving the customer a one-stop window for all

34
his/her banking requirements. The products are backed by world-class service and
delivered to customers through the growing branch network, as well as through
alternative delivery channels like ATMs, Phone Banking, NetBanking and Mobile
Banking.
The HDFC Bank Preferred program for high net worth individuals, the HDFC Bank Plus
and the Investment Advisory Services programs have been designed keeping in mind
needs of customers who seek distinct financial solutions, information and advice on
various investment avenues. The Bank also has a wide array of retail loan products
including Auto Loans, Loans against marketable securities, Personal Loans and Loans for
Two-wheelers. It is also a leading provider of Depository Participant (DP) services for
retail customers, providing customers the facility to hold their investments in electronic
form.
HDFC Bank was the first bank in India to launch an International Debit Card in
association with VISA (VISA Electron) and issues the Mastercard Maestro debit card as
well. The Bank launched its credit card business in late 2001. By March 2009, the bank
had a total card base (debit and credit cards) of over 13 million. The Bank is also one of
the leading players in the "merchant acquiring" business with over 70,000 Point-of-sale
(POS) terminals for debit / credit cards acceptance at merchant establishments. The Bank
is well positioned as a leader in various net based B2C opportunities including a wide
range of internet banking services for Fixed Deposits, Loans, Bill Payments, etc.

PRODUCTS AND SERVICES


STATE BANK OF INDIA PRODUCT AND SERVICES
State Bank of India is actively involved since 1973 in non-profit activity called
Community Services Banking. State Bank of India Services are most varied and
innovative amongst all its contemporaries. State Bank of India Services includes a host of
products and services to suit all types of consumer.

State Bank of India Services are offered through the following subsidiaries and Joint
Ventures -

35
Banking Subsidiaries - State Bank of Bikaner and Jaipur (SBBJ), State Bank of
Hyderabad (SBH), State Bank of Indore (SBIr), State Bank of Mysore (SBM), State
Bank of Patiala (SBP), State Bank of Saurashtra (SBS) and State Bank of Travancore
(SBT).

Foreign Subsidiaries - State bank of India International (Mauritius) Ltd., State Bank of
India (California), State Bank of India (Canada) and INMB Bank Ltd, Lagos.

Non- banking Subsidiaries - SBI Capital Markets Ltd (SBICAP), SBI Funds
Management Pvt Ltd (SBI FUNDS), SBI DFHI Ltd (SBI DFHI), SBI Factors and
Commercial Services Pvt Ltd (SBI FACTORS) and SBI Cards & Payments Services Pvt.
Ltd. (SBICPSL)

Joint ventures - SBI Life Insurance Company Ltd (SBI LIFE).

State Bank of India offers its products and services in domains like -

Personal Banking.

NRI Services.

Agriculture.

International.

Corporate.

SME.

Domestic Treasury.

State Bank of India Services offers the following products through its well managed,
efficient and deep-rooted network:

Domestic Treasury.

36
SBI Vishw Yatra Foreign Travel Card.

Broking Services

Revised Service Charge.

ATM Services.

Internet Banking.

E-Pay.

E-Rail.

RBIEFT.

Safe Deposit Lockers.

Gift Cheques.

MICR Codes.

Foreign Inward Remittances.

State bank of india also includes

1. Working Capital Financing

A. Assistance extended both as Fund based and Non-Fund based facilities to


Corporates , Partnership firms , Proprietary concerns

B. Working Capital finance extended to all segments of industries and services sector
such as IT.

2. Term Loans
To support capital expenditures for setting up new ventures as also for expansion,
renovation etc.

3. Deferred Payment Guarantees

To support purchase of capital equipments

4. Corporate Loans

For a variety of business related purposes to corporates.

37
5. Export Credit

To Corporates / Non Corporates

6 . Strategic Business Units

(i) Corporate Accounts Group (CAG)

(ii) Project Finance

(iii) Lease Finance

 An exclusive unit providing one s shopping to Corporates

 A dedicated set up specialized in financing of infrastructure and other large


projects

 Exclusive set up for handling large ticket leases.

7. Pricing

 SBI's Prime Lending Rates (PLR) are among the lowest

 Presently Bank has two PLR's

 SBAR for loans payable on demand and upto one year

 SBMTLR for loans payable beyond one year

8. Project Finance Strategic Business Unit

A one-stop-shop of financial services for new projects as well as expansion,


diversification and modernization of existing projects in infrastructure and non –
infrastructure sectors.

Expertise

38
Being India's largest bank and with the rich experience gained over generation, SBI
brings considerable expertise in engineering financial packages that address complex
financial requirements.

Project Finance SBU is well equipped to provide a bouquet of structured financial


solutions with the support of the largest Treasury in India (i.e. SBI's), International
Division of SBI and SBI Capital Markets Limited.

The global presence as also the well spread domestic branch network of SBI ensures that
the delivery of your project specific financial needs are totally taken care of.

Lead role in many projects

Allied roles such as security agent, monitoring/TRA agent etc.

Synergy with SBI cap s (exchange of leads, joint attempt in bidding for projects, joint
syndication etc.). In a way, the two institutions are complimentary to each other. We
have in house expertise (in appraising projects) in infrastructure sector as well as non-
infrastructure sector. Some of the areas are as follows: Infrastructure sector:

Infrastructure sector:

 Road & urban infrastructure

 Power and utilities

 Oil & gas, other natural resources

 Ports and airports

 Telecommunications

Non-infrastructure sector:

 Manufacturing: Cement, steel, mining,


engineering, auto components, textiles, Pulp

39
& papers, chemical & pharmaceuticals …

 Services: Tourism & hospitality,


educational Institutions, health industry …

Expertise

• Rupee term loan


• Foreign currency term loan/convertible bonds/GDR/ADR
• Debt advisory service
• Loan syndication
• Loan underwriting
• Deferred payment guarantee
• Other customized products i.e. receivables securitisation, e.t.c

Why project Finance SBU?

Since its inception in 1995 the Project Finance SBU has built-up a strong reputation for
it's in-depth understanding of the infrastructure sector as well as non-infrastructure sector
in India and we have the ability to provide tailor made financial solutions to meet the
growing & diversified requirement for different levels of the project. The recent
transactions undertaken by PF-SBU include a wide range of projects undertaken by the
Indian Corporates.

What's in it for you?

Single window solution

 Appetite for large value loans.

40
 Proven ability to arrange/syndicate
loans.

 Competitive pricing.

Professional team

 Dedicated group with sector expertise.

 Panel of legal and technical experts.

 Procedural ease

 Standardized information requirements.

 Credit appraisal/ delivery time period is


minimized.

Eligibility

The infrastructure wing of PF SBU deals with projects wherein


The project cost is more than Rs 100 Crores. The proposed share of SBI in the term loan
is more than Rs.50 crores. In case of projects in Road sector alone, the cut off will be
project cost of Rs.50 crores and SBI Term Loan Rs. 25 Crores, respectively.

The commercial wing of PF SBU deals with projects wherein;


The minimum project cost is Rs. 200 crores (Rs. 100 crores in respect of Services sector).

The minimum proposed term commitment is of Rs. 50 crores from SBI.

Introduction to Advance Product:

41
Now a day not all the people have the capacity to fulfill their requirement by their own
earning, that’s why they need help from others. For this so many government & private
sector bank provide them money to fulfill their requirement, that’s call the Advance
Product (loan product) of the bank. All the banks have so many different types of
advance product as per the requirement of the people or customers. In Bhubaneswar also
there are so many banks those provide loan to the people for different causes.

Types of Advance Product of SBI


➢ Home Loan
➢ Educational Loan
➢ Car Loan
➢ Personal Loan
➢ Property Loan
➢ Loan Against Shares\Debentures
➢ Etc.
Now a day a large no. of people are taking loan form different banks. It helps people to
fulfill their need and it really easy to repayment the loan amount with a longer repayment
period
SBI Home Loans:
Purpose
• Purchase/ Construction of House/ Flat
• Purchase of a plot of land for construction of House
• Extension/ repair/ renovation/ alteration of an existing House/ Flat
• Purchase of Furnishings and Consumer Durables as a part of the project cost.
• Takeover of an existing loan from other Banks/ Housing Finance Companies.
Eligibility
• Minimum age 18 years as on the date of sanction
• Maximum age limit for a Home Loan borrower is fixed at 70 years, i.e. the age by
which the loan should be fully repaid.

42
• Availability of sufficient, regular and continuous source of income for servicing
the loan repayment.
Loan Amount 40 to 60 times of NMI, depending on repayment capacity as % of NMI
as under –
Net Annual Income EMI/NMI Ratio
Upto Rs.2 lacs 40%
Above Rs.2 lac to Rs. 5 lacs 50%
Above Rs. 5 lacs 55%
To enhance loan eligibility you have option to add:
1. Income of your spouse/ your son/ daughter living with you, provided they have a
steady income and his/ her salary account is maintained with SBI.
2. Expected rent accruals (less taxes, cess, etc.) if the house/ flat being purchased is
proposed to be rented out
3. Depreciation, subject to some conditions.
4. Regular income from all sources

Margin (Special Festival Season Offer)


• Purchase/ Construction of a new House/ Flat/ Plot of land: 15% for loans up to
Rs. 1 cr., 20% for loans above Rs. 1 cr.
• Repairs/ Renovation of an existing House/ Flat: 15%

CAR LOAN:
Purpose
• You can take finance for:
1. A new car, jeep or Multi Utility Vehicles\(MUVs)
2. A used car / jeep (not more than5yearsold).(Any make or model).
3. Take over of existing loan from other Bank/Financial institution (Conditions
apply)

Eligibility
To avail an SBI Car Loan, you should be :

43
• Individual between the age of 21-65 years of age.
• A Permanent employee of State / Central Government, Public Sector Undertaking
• Private company or a reputed establishment or
• A Professionals or self-employed individual who is an income tax assessee or
• A Person engaged in agriculture and allied activities.

.Net Annual Income Rs. 100,000/- and above.

Salient Features
Loan Amount
There is no upper limit for the amount of a car loan. A maximum loan amount of 2.5
times the net annual income can be sanctioned. If married, your spouse's income could
also be considered provided the spouse becomes a co-borrower in the loan. The loan
amount includes finance for one-time road tax, registration and insurance!
No ceiling on the loan amount for new cars.
Loan amount for used car is subject to a maximum limit of Rs. 15 lacs.
Type of Loan
1. Term Loan
2. Overdraft –
a) For New vehicles only
b) Minimum loan amount: Rs. 3 lacs.
Documents required you would need to submit the following documents along with the
completed application form if you are an existing SBI account holder:
1. Statement of Bank account of the borrower for last 12 months.
2. passport size photographs of borrower(s).
3. . Signature identification from bankers of borrower(s).
4. .A copy of passport /voters ID card/PAN card.
5. Proof of residence.
6. Latest salary-slip showing all deductions

44
7. I.T. Returns/Form 16: 2 years for salaried employees and 3 years for
professional/self- employed/businessmen duly accepted by the ITO wherever
applicable to be submitted.
8. Proof of official address for non-salaried individuals
If you are not an account holder with SBI you would also need to furnish documents
that establish your identity and give proof of residence.

EDUCATION LOAN:
A term loan granted to Indian Nationals for pursuing higher education in India or abroad
where
Admission has been secured.
Eligible Courses
• All courses having employment prospects are eligible.
• Graduation courses/ Post graduation courses/ Professional courses
• Other courses approved by UGC/Government/AICTE etc.
• Expenses considered for loan
• Fees payable to college/school/hostel
• Examination/Library/Laboratory fees
• Purchase of Books/Equipment/Instruments/Uniforms
• Caution Deposit/Building Fund/Refundable Deposit (maximum 10% tution fees
for the
entire course)
• Travel Expenses/Passage money for studies abroad
• Purchase of computers considered necessary for completion of course
• Cost of a Two-wheeler upto Rs. 50,000/-
Any other expenses required to complete the course like study tours, project work etc.
Amount of Loan

45
• For studies in India, maximum Rs. 10 lacs
• Studies abroad, maximum Rs. 20 lacs

SBI SARAL PERSONAL LOAN:


Purpose
The loan will be granted for any legitimate purpose whatsoever (e.g. expenses for
domestic or foreign travel, medical treatment of self or a family member, meeting any
financial liability, such as marriage of son/daughter, defraying educational expenses of
wards, meeting margins for purchase of assets etc.)

Eligibility
You are eligible if you are a Salaried individual of good quality corporate, self employed
engineer, doctor, architect, chartered accountant, MBA with minimum 2 years standing.

Salient Features
Loan Amount
Your personal loan limit would be determined by your income and repayment capacity.
• Minimum: Rs.24,000/- in metro and urban centres
• Rs.10, 000/- in rural/semi-urban centres
• Maximum: 12 times Net Monthly Income for salaried individuals and pensioners
subject to a ceiling of Rs.10 lacs in all centres

Documents Required
Important documents to be furnished while opening a Personal Loan Account:
For existing bank customers
• Passport size photograph
From salaried individuals
Latest salary slip and Form 16
Margin
We do not insist on any margin amount.
Interest Rates
3.25% above SBAR floating i.e. 15.50% p.a

46
PROPERTY LOAN:
Purpose
This is an all purpose loan, i.e., the loan can be obtained for any purpose whatsoever. If
amount of loan is Rs.25.00 lacs and above then purpose of loan will have to be specified
along with an undertaking that loan will not be used for any speculative purpose
whatever including speculation on real estate and equity shares.
Eligibility
You are eligible if you are:
A. An individual who is;
a. An Employee or
b. A Professional, self-employed or an income tax assesse or
c. Engaged in agricultural and allied activities.
B. Your Net Monthly Income (salaried) is in excess of Rs.12,000/- or Net Annual Income
(others) is in excess of Rs.1,50,000/-.
The income of the spouse may be added if he/she is a co-borrower or a guarantor.
C. Maximum age limit: 60 years.
Salient Features
Loan Amount
Minimum: Rs.25, 000/-
Maximum: Rs.1 crore. The amount is decided by the following calculation:
24 times the net monthly income of salaried persons (Net of all deductions including
TDS) OR
2 times the net annual income of others (income as per latest IT return less taxes
payable)
Margin
We will finance upto 75% of the market value of your property.
Interest
Term Loan 0.75% above SBAR. i.e.13.00% p.a. Floating
Repayment

47
Maximum of 60 equated monthly installments, upto 120 months for salaried individuals
with check-off facility. You could opt to divert any surplus funds towards prepayment of
the loan without attracting any penalty.
Security
As per banks extant instructions

LOAN AGAINST SHARES \ DEBENTURES:


Eligibility
This facility is available to our existing individual customers enjoying a strong
relationship with SBI. This loan could be availed either singly or as a joint account with
spouse n' Either or Survivor'/ 'Former or Survivor' mode. It is offered as an Overdraft or
Demand Loan.
The facility is available at 50 select centers.

Salient Features:
Purpose
For meeting contingencies and needs of personal nature. Loan will be permitted for
subscribing to rights or new issue of shares / debentures against the security of existing
shares / debentures. Loan will not be sanctioned for (i) speculative purposes (ii) inter-
corporate investments or (iii) acquiring controlling interest in company / companies.

Loan Amount
You can avail of loans up to Rs 20.00 lacs against your shares/debentures.
Documents Required
You will be required to submit a declaration indicating:
1. Details of loans availed from other banks/ branches for acquiring shares/ debentures.
2. Details of loans availed from other banks/ branches against security of shares/
debentures
Margin

48
You will need to provide a margin amount of 50% of the prevailing market prices of the
shares/non-convertible debentures being offered as security. (The market prices refer to
the prices inthe Stock Exchanges as reported in the Economic Times.)
Interest
At SBAR Floating i.e. 12.25% p.a.
Repayment Schedule
To be liquidated in maximum period of 30 months through a suitable reducing DP
programme.
In case of a default or if the outstanding is over Rs.20.00 lacs, the shares/debentures will
be
transferred in the name of the Bank.
Security:
Pledge of the demat shares/debentures against which overdraft is granted

HDFC BANK PRODUCT AND SERVICES

Accounts & Deposits Loans Cards

49
Savings Accounts Personal Loans Credit Cards
Regular Savings Smart Draft Silver Credit Card
Account Home Loans Value Plus Credit
Savings Plus Card
Two Wheeler Loans
Account
New Car Loans Gold Credit Card
Savings Max
Account Used Car Loans Titanium Credit Card

Senior Citizens Gold Loan Woman's Gold Credit


Account Card
Educational Loan
No Frills Account Platinum Plus Credit
Loan Against Securities Card
Institutional Savings Loan Against Property
Account Visa Signature Credit
Loans Against Rental Card
Salary Accounts Receivables World MasterCard
Payroll Health Care Finance Credit Card
Classic Retail Agri Loans Corporate Platinum
Regular Credit Card
Tractor Loans
Premium Corporate Credit
Defence Commercial Vehicle
Card
Finance
No Frills Salary Business Platinum
Account Working Capital
Credit Card
Reimbursement Finance
Business Gold Credit
Current Account Construction
Card
Equipment Finance
Kid's Advantage Purchase Card
Account Warehouse Receipt
Loans Distributor Card
Pension Saving Bank
Account Debit Cards
Family Savings Easy Shop
Group International Debit
Kisan No Frills Card
Savings Easy Shop Gold
Kisan Club Savings Debit Card
Easy Shop
Current Accounts
International
Plus Current Account Business Debit Card
Trade Current Easy Shop Woman's
Account Advantage Debit
Card

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Premium Current Easy Shop Titanium
Account Debit Card
Regular Current Easy Shop Platinum
Account Debit Card
RFC - Domestic Easy Shop NRO
Account Debit Card
Flexi Current Prepaid Cards
Account Forex Plus Card
Apex Current
Gift Plus Card
Account
Max Current Food Plus Card
Account Money Plus Card
Merchant Advantage Forex Plus Chip Card
Current Account
Merchant Advantage
Plus Current Account
Fixed Deposits
Regular Fixed
Deposit
5 Year Tax Saving
Fixed Deposite
Super Saver Facility
Sweep-in Facility
Recurring Deposit
Demat Account

Investments & Insurance Payment Services Access Your Bank

Wealth Advisory Net Safe Net Banking


Services Merchant Services
Credit Cards Online
Mutual Funds Prepaid Refill
One View
Tax Planning
Insta Alerts
Insurance Bill Pay
Mobile Banking
General & Health Visa Bill Pay
Insurance Pay Now ATM

51
Bonds Register & Pay Phone Banking
Knowledge Centre Instant Pay Email Statements
Equities & Derivatives Direct Pay Branch Network
Mudra Gold Bar m Check
Visa Card Pay
RTGS Funds Transfer
e-Monies Electronic
Funds Transfer
Excise & Service Tax
Payment
Online Payment of Direct

Services:-

Payment services:-

With HDFC Bank's payment services, you can bid goodbye to queues and paper work.
Our range of payment options make it easy for you to pay for a variety of utilities and
services.

Verified by Visa (VBV)/ MasterCard Secure Code

Do you want to be worry free for your online purchases. Now you can shop securely
online with your existing Visa Debit/Credit card.

Net Safe

Now shop on line without revealing your HDFC Bank Credit Card number. What’s

52
more, you can now use your HDFC Bank Debit Card also for online purchases.

Merchant Services

Accept all Visa, MasterCard, credit and Debit cards at your outlets through state of the
art POS Machines or through your website and experience hassle free payment
acceptance.

Prepaid Mobile Refill

If you are an HDFC Bank Account holder, you can now recharge your Prepaid Mobile
Phone with this service.

Bill Pay

pay your telephone, electricity, mobile phone bills and insurance premium at your
convenience, through Internet. ATM or your phone - with Bill Pay, a comprehensive bill
payments solution

Visa Bill Pay

Pay your utility bills from the comfort of your home! Pay using your HDFC Bank Visa
credit card and forget long.queue and late payments forever

Pay Now

Use your HDFC Bank Credit Card to pay your utility bills online, make subscriptions and
donations; no registration required. Enjoy credit free period and reward points as per
your credit card features.

Register & Pay

Enjoy complete bill payment solution under one roof. View and pay all your mobile,
telephone, electricity bills and insurance premia on-line. Register once and get sms and e-
mail alerts every time your bill is received.

Insta Pay

53
Pay your bills, make donations and subscribe to magazines without going through the
hassles of any registration.

Direct Pay

Shop or Pay bills online without cash or card. Debit your account directly with our Direct
Pay service!

Visa Card Pay

Transfer funds to any Visa Card (debit or credit) within India at your own convenience
through HDFC Bank's Net Banking facility.

e-Monies National Electronic Funds Transfer

Transfer funds from your account to other Bank accounts across India using HDFC
Bank's Net Banking facility

Online Payment of Excise & Service Tax

Make your Excise and Service Tax payments at your own convenience through HDFC
Bank's Net Banking facility.

Online Payment of Direct Tax

HDFC Bank was the first private sector bank to be authorized by the Central Board of
Direct Taxes (CBDT) as well as the Reserve Bank of India for collection of direct tax

Online payment of DVAT and CST

HDFC Bank is one of the first few banks to launch an Internet payment option for
payment Online payment of Delhi Value Added Tax (DVAT) and Central Sales Tax
(CST). Through this facility you can now make your DVAT & CST payments at your
own convenience through HDFC Bank's Net Banking facility.

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Online payment of GVAT

HDFC Bank is one of the first few banks to launch an Internet payment option for
payment Online payment of Gujarat Value Added Tax (Gujarat VAT). Through this
facility you can now make your VAT payments at your own convenience through HDFC
Bank's Net Banking.

Religious Offerings

Now donate to your favorite temple easily and securely using HDFC BANK's Net
Banking.

Donate to Charity

Now donate to your favorite organization easily and securely using HDFC BANK's Net
Banking.

RTGS Funds Transfer

RTGS is an inter-bank funds transfer system, where funds are transferred as and when
the transactions are triggered (i.e. real time).

Investments and insurance

When you bank with us, we ensure your money is not just in safe hands; it also works to
your advantage. We help you invest wisely through our financial and investment
services. Profit from our expertise.

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Wealth Advisory Services

This exclusive service* comes to you with an array of unmatched benefits.

Mutual Funds

Invest through the Mutual Fund route to meet your varied investment objectives

Tax Planning

At HDFC Bank we offer a number of advantageous tax saving investment options

General Insurance

Complete protection for your home, travel & more.

Health Insurance

Complete protection for your health.

Bonds

A secure investment avenue giving you stable returns with tax benefits.

Knowledge Centre

Profit from our research and make informed investment decisions

IPO Application through ASBA

Now you can invest in IPOs without moving funds from your Savings Account.

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Private Banking

At HDFC Bank, we understand the value of your time and the opportunities it holds for
you. Your personal financial investment needs might get overlooked, while you attend to
your business and professional needs. In line with this, we are pleased to offer to you a
customized Investment Advisory Service for your existing portfolios and regular
investable surpluses.

The service offers research – based advice to optimize returns on your investment
portfolio across a range of financial instruments, keeping in line with your profile and
investment objectives. Your existing portfolio is analyzed to advice you on rebalancing

57
to obtain an optimum asset mix. Here, a dedicated advisor regularly guides you through
the evolution of new market opportunities, to evaluate and restructure your existing
investment portfolio.

Recognition from UTI MF & CNBC TV 18

HDFC Bank has been awarded as the 'Best Performing National Financial Advisor Bank'
at the UTI MF - CNBC TV18 Financial Advisor Awards 2009 - 2010 for the second
time. These awards are one of India's most authoritative evaluations that recognize best
financial advisors across the country and also the contribution they have made to the
creation of wealth & to the distribution of productive financial advice

Recognition from Financial Times

A yet another prestigious recognition for HDFC Bank is to be awarded as 'Best Private
Bank in India' at the 2010 Global Private Banking Awards, presented by The Banker and
the Professional Wealth Management (PWM) magazine brought out by the Financial
Times. The award recognizes institutions that are successfully adapting to the ever-
evolving economic landscape while fully satisfying their clients. The award focused on
the alignment of interests between banks, their relationship managers and their clients.
It's a deserving honor for our private banking business as amongst the other 74
submissions, we were judged by an expert panel of 7 industry professionals based in
North America, Asia and Europe, reflecting the high standards and global presence of the
award.

Advisory services

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The starting point is profiling

The advice we give is as unique as you are. It is based purely on your appetite for risk,
time horizons and need for liquidity. So at the very inception, we work intensively
towards understanding you. Your requirements and profile is agreed upon and then
documented through a consultative process. We take cognizance of the fact that your
profile is likely to change with time and hence we follow this process on a continual
basis.

Allocation – A time tested fundamental principle of investment

A lot of emphasis is laid on the mechanics of asset allocation, as we believe that this is
the basic tenet of portfolio optimization. This involves allocating your portfolio across
various asset categories - essentially debt, equity and cash.

Deciding upon your asset allocation is a synthesis of science, art and investment
discipline.

Portfolio analysis and financial planning

We analyse your existing portfolio allocation and recommend changes in line with
current opportunities, your profile and cash flows, risk appetite and financial
requirements.

A comprehensive investment plan is drawn out to meet your long and short- term
financial goals across multiple asset categories.

59
Portfolio review and tracking

Your portfolio is tracked on an ongoing basis to monitor the portfolio returns, cash flows
and asset allocation. We continually advice you on appropriate rebalancing of your
portfolio on the basis of performance of each asset category and analysis of future
expectations. All portfolios are approved by our research desk on an ongoing basis.

Advice across asset categories

We offer research-based advice across asset categories like mutual funds, equity and its
derivatives, insurance and more. Hence, our service is a one-stop-shop for your entire
portfolio needs saving valuable time. Also, a holistic view of your portfolio across all
asset categories helps us advice you better and offer you a consolidated wealth statement.

Dedicated investment advisor

For you, time is priceless, which is why a trained personal advisor is assigned to you as a
one-point contact, guiding you and attending to all your investment related needs. The
advisor on an ongoing basis helps you restructure and monitor your portfolio based on
research desk's recommendations as well as provides procedural assistance, both through
online and offline modes.

Value added services

We also offer value added services that help your portfolio like transaction audit for
transactions done through HDFC Bank, tax guidance and opinions in related areas.

Research Reports

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In- house research desk

With the help of our experts, our advice comes unbiased as it is based on due diligence,
and does not follow the herd mentality. Selection of mutual funds is based on broad
parameters and is built on statistical models and quantitative tools like standard
deviation, volatility, rolling returns, expense ratio and more. Active inputs are also taken
from our equity desk in the selection process. Our equity desk tracks various sectors and
uses a bottom-up approach to identify stocks. Exposure to these is recommended basis on
your risk profile – be it conservative, aggressive or super aggressive.

Research Reports

In this world of communication clutter, it is becoming increasingly difficult to sift out


information that is relevant to your portfolio. Multiple reports running into multiple
pages with points and sub-points leave you with complex data you don’t have time to go
through. Our research reports are designed to provide you relevant information in the
simplest formats.

AAG – At A Glance

An exclusive monthly magazine is available only to our investment advisory clients. It is


a widely acknowledged monthly publication produced by the bank’s research team that

61
analyses specific mutual funds, stocks, sectors and the equity / debt / forex markets,
providing a sharp view of the equities and debt markets.

HDFC Bank brings, HDFC home loans to your doorstep. Over 3 decades of
exclusive experience, a dedicated team of experts and a complete package to
meet all your housing finance needs, HDFC Home Loans, help you realize your
dream.
The HDFC Advantage

 Pioneers of Housing Finance in India with over 33 years of lending


experience.

 Widest range of Home Loan Products.

 Most experienced and empowered personnel to ensure smooth & easy


processing.

 Counseling and advisory services for acquiring a property.

 Loan from any office for purchase of home anywhere in India

 Loan approval even before a property is selected

 Flexible loan repayment options

 Free & safe document storage.

HDFC ADVANCE PRODUCT:-


Home Loans Features & Benefits

Home Loan - Home loans for individuals to purchase (fresh / resale) or

62
construct houses. Application can be made individually or jointly. HDFC
finances up to 80% of the cost of the property (including the cost of the land)
based on the repayment capacity of the customer.
Home Improvement Loan - The interiors of any home reflect the personal
preferences and tastes of its owners making it imperative to constantly
upgrade to keep up with changing times. HIL facilitates internal and external
repairs and other structural improvements like Painting, Waterproofing and
Roofing, Plumbing and Electrical Works, Tiling and Flooring, Grills,
Aluminum Windows compound walls and much more. HDFC finances up to
85% of the cost of improvement. This is however subject to 80% of market
value as assessed by HDFC.
Home Extension Loan - HEL for adding more space to your existing home
for meeting the requirements of your growing family be it an extra bedroom
for your children, a reading room for yourself or a cozy coffee corner. It is
easy to extend your home anyway you like. HDFC finances up to 85% of the
cost of extension. This is however subject to 80% of market value as assessed
by HDFC.
Land Purchase Loan - Be it land for a dream house, or just an investment for
the future, HDFC Land Purchase Loan is a convenient loan facility to
purchase land. HDFC finances up to 80% of the cost /value of the land
(Conditions Apply). Repayment of the loan can be done over a maximum
period of 15 years.
Choose from Fixed Rate or Floating Rate with options to structure your
loan as Partly Fixed or Partly Floating.
Flexible repayment options to suit your individual needs.
Loan cover Term Assurance Plan - HDFC Standard Life Insurance
Company Ltd. offers an insurance plan*, which is designed to ensure that
life's uncertainties do not affect your family's interests and your precious
home. LCTAP provides a lump-sum payment on the unfortunate demise of
the life assured.

63
This pure risk plan is designed in a way that the cover decreases as you repay
your home loan making it a low cost premium insurance plan.
*Insurance is the subject matter of solicitation.
Automated Repayment of Home loan EMI - You can give us standing
instructions to repay your Home Loan EMIs directly from your HDFC Bank
Savings Account, thus, saving you the trouble of procuring, signing and
tracking post-dated cheques.
HDFC also offers In-house scrutiny of Property documents for your
complete peace of mind.
Customer privileges - If you are an existing HDFC Home Loan customer,
you can avail of other loans (such as Personal Loans, Car Loans, Two-wheeler
Loans and Loan against securities) at lower interest rates.
With HDFC bank student education loans, pursue your dream higher studies without
worrying for financial assistance. We provide student education loans for all Graduate,
Post-Graduate, Engineering, Medical, MBA , Vocational Courses (Multi-Media, ERP)
offered by recognized institutions in India. No more running from pillar to post for
availing student loans! Our friendly sales managers will guide you in every step to make
your dreams into reality.

EDUCATION LOANS

Features & Benefits –Indian Education

Student Loans Upto Rs. 15 Lakhs for education In India


Unsecured Lending Upto INR 7.5 Lakhs
No Collateral Or Third Party Guarantee**
Wider Range Of Collateral For Loans Above INR 7.5 Lakhs
Residential Property
HDFC Bank Fixed Deposit

64
LIC/NSC/KVP
Loan available upto tenure of 7 years including moratorium period
Repayment to start 1 year after course completion / 6 months after obtaining
employment (whichever is earlier)
Loans available for short duration/ job oriented courses also
Avail the tax rebate, offered under section 80-E of the Income Tax Act 1961* for the
entire interest amount paid towards your education loan.

LOAN AGAINST PROPERTY


Features & Benefits
• Loans to expand your business or to meet any personal need
• Residential & Commercial properties accepted
• Maximum Loan to value*
• Flexible product offerings - EMI based loan / Overdraft facility available.
• High tenure loans for ease of repayment
• Attractive interest rates.
• Specially designed products for Self Employed.

MARKETING STRATEGY USED BY SBI

Generic strategies adopted by State Bank of India:


• Institution for advanced learning: to provide state of the art training in financial
products to middle level and senior level executives.
• Internal consultant/change agent: to act as a catalyst for change in attitudes and
orientation of banking staff and to provide expertise and consultative support
• Feedback supplier: to capture and structure feedback from trainees and from the
market
• Think tank: to provide expert and inform suggestions, model business strategies,
analysis of market developments from a banker perspective.

65
• Research and development role: to carry out research on contemporary subjects
that are relevant to the banks short term and medium term and operational needs
and policy formulation

Overlapping staff training canters: to validate and closely monitor the staff training
canters in seven circles attached to the academy.

The Marketing Initiatives


SBI carried out various marketing initiatives to enhance its
reach. They included

➢ Segregating and targeting existing high value


customers,
➢ Cross sales of other products,
➢ Setting up call centres and outbound sales force to
secure new customers.
➢ Plans were also made to utilize database marketing
to pursue large and medium sized corporate,
government and trade finance customers.
➢ Database marketing was expected to draw increased
revenue from cross selling, lower costs and
increased customer loyalty.

SBI also introduced various other ways of reaching out to


customers like

➢ extension of hours of work(SBI increased daily


working hours by two hours and Sunday banking
was introduced) and
➢ Aggressive marketing through print and television
media.

66
SBI`s Strategies in the current scenario

SBI have set up capacity in places where they are not


very strong. It’s time for them to follow overall SBI
philosophy of planning new branches, given the huge
untapped potential. Besides, this is also the best time to
benefit from their past expansion, since there is a lot of trust
in SBI.

Brand SBI is very strong, while people may be generally


cautious about some other brands. They can not only tap the
potential better but can also provide a safe and transparent
insurance alternative to the public.

The bank is entering into many new 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.

Some of the strategies to cope with the current scenario


are listed below:

• It is the part of SBI`s philosophy to open new


branches .The Bank is forging ahead with cutting
edge technology and innovative new banking
models, to expand its Rural Banking base, looking
at the vast untapped potential in the hinterland and
proposes to cover 100,000 villages in the next two
years. SBI is planning to hire 11,000 employees in
the current fiscal.

67
The Bank is also in the process of providing
complete payment solution to its clientele with its
over 8500 ATMs, and other electronic channels
such as Internet banking, debit cards, mobile
banking, etc.
• Country’s largest lender, State Bank of India (SBI)
has prepared a blueprint to go retail in its
international operations. Such strategy would help
the bank to promote its lead in syndication of loans
in the overseas market, at a cheaper cost. The
bank’s overseas operations have been instructed to
thrust more on promoting retail banking locally,
SBI is assessing that by opening more branches
across foreign locations and promoting retail
services by mobilising deposits at interest rates as
low as 3-3.5%, the bank will be able to increase its
operating margins by 250-300 basis points in
overseas markets where syndication opportunities
arise often.SBI is expected to open \seven new
branches over next eight months in the United
Kingdom where it operates six branches currently.

• In response to signals from the central bank, SBI


have progressively reduced their PLR from 13.75%
to 12.25% during the past few months in stages,
and further softening in interest rates cannot be
ruled out.

SBI is introducing loan products at sub-PLR rates -


in home loans at 8%, auto loans at 10%, special
products for SMEs and... agriculture sector at 8%,
but it may not be possible for them to reduce the

68
interest rate beyond a certain point.

• SBI is working on infrastructure sector projects,


which has seen a growth of 26% in the current year.
For the year 2008 the Rs 10,000 crores was
sanctioned for the infrastructure projects while in
the current year from April 08 to February 09 the
amount sanctioned for the infrastructure project is
Rs 13,000 crores,out of which project worth Rs
8000 crore is in pipeline. Despite of various
viability issues the growth in this sector for SBI is
been intact.

• With market-linked products finding fewer takers,


insurance companies are launching more
“guaranteed” products to lure investors. The latest to
join the bandwagon is SBI Life insurance with SBI
Smart ULIP, a product that guarantees returns based
on the highest NAV recorded by the fund in the first
seven years.

BUSINESS STRETEGY
Hdfc bank mission is to a World Class Indian Bank", benchmarking themselves against
international standards and best practices in terms of product offerings , technology,
service levels, risk management and audit & compliance. The objective is to build sound
customer franchises across distinct businesses so as to be a preferred provider of banking
services for target retail and wholesale customer segments , and to achieve a healthy
growth in profitability, consistent with the Bank's risk appetite. Bank is committed to do
this while ensuring the highest levels of ethical standards, professional integrity, corporate
governance and regulatory compliance. Continue to develop new product and technology

69
is the main business strategy of the bank. Maintain good relation with the customers is the
main and prime objective of the bank

HDFC BANK business strategy emphasizes the following


Increase market share in India’s expanding banking and financial services industry by
following a disciplined growth strategy focusing on quality and not on quantity and
delivering high quality customer service.
• Leverage our technology platform and open scale able systems
to deliver more products to more customers and to control operating costs.
• Maintain current high standards for asset quality through
Disciplined credit risk management.
• Develop innovative products and services that attract the targeted customers and
address inefficiencies in the Indian financial sector.
• Continue to develop products and services that reduce bank’s
cost of funds.

. TECHNOLOGY USED IN HDFC BANK

In globalization each and every sector faced the stiff competition from their rivals. And
world also converted into the flat from the globe. After the policy of liberalization and
RBI initiatives to take the step for the private sector banks, more and more changes are
taking the part into it. And there are create competition between the private sector banks
and public sector bank. Private sector banks are today used the latest technology for the
different transaction of day to day banking life. As we know that Information
Technology plays the vital role in the each and every industries and gives the optimum
return from the limited resources.

70
Centralized Processing Unit Derived Economies of Scale

Electronic Straight Through Reduced Transaction Cost


Processing
Data Warehousing , CRM Improve cost efficiency, Cross sell

Innovative Technology Application Provide new or superior Products

Banks are service industries and today IT gives the innovative Technology application to
Banking industries. HDFC BANK is the leader in the industries and today IT and HDFC
BANK together combined they reached the sky. New technology changed the mind of

the customers and changed the queue concept from the history banking transaction.
Today there are different channels are available for the banking transactions.

We can see that the how technology gives the best results in the below diagram. There
are drastically changes seen in the use of Internet banking, in a year 2001 (2%) and in the
year 2008 ( 25%).These type of technology gives the freedom to retail customers.

SWOT ANALYSIS OF SBI BANK


STRENGTH

➢ Brand name
➢ Market Leader
➢ Wide Distribution Networks
➢ Government Owned
➢ Diversified Portfolio

WEAKNESS
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➢ Minor hindrances
➢ Hierarchical management
➢ Lags modernization

Opportunities

➢ Merger of associate banks with SBI


➢ Opportunities for public sector banks
➢ New Branches and ATM's
➢ Expansion on Foreign soil
Threats
➢ Advent of MNC banks
➢ CRM Private banks venturing into the rural
➢ Employee Strike

SWOT ANALYSIS OF HDFC BANK

STRENGTH

➢ Right strategy for the right products.


➢ Superior customers services vs. competitors
➢ Great brand image
➢ Product have required accreditations
➢ Good place to work
➢ Dedicated workforce aiming at making a long term career in the field.

WEAKNESS

➢ Some gaps for range in certain sectors


➢ Customer service staff needs training.
➢ Management cover insufficient.

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➢ Sectoral growth is constrained by low unemployment levels and competition for
staff.

OPPORTUNITIES:-

➢ Profit Margin will be good.


➢ Could extend to overseas broadly
➢ New specialist applications
➢ Could seek better customer deals
THREATS
➢ Legislation Could impact
➢ Great risk involved
➢ Very high completion prevailing in the industry
➢ Vulnerable to reactive attack by competitors.
➢ Lack of infrastructure in rural areas could constrain investment.

COMBINED SWOT ANALYSIS OF HDFC


AND SBI
➢ Strength of Bank is Direct Banking channels. As Direct banking channels saves
time and money both as a customer does not need to go to bank for any kind of
transaction except cash withdrawal and cash deposits all other things are done
sitting anywhere in the world.
➢ State Bank of India (SBI) is the leading commercial bank in India, offering
services such as retail banking, commercial banking, international banking and
treasury operations. The bank is an integral part of State Bank Group, which
includes seven other banks and offers additional services such as mutual funds
and insurance. The bank primarily operates in India. It is headquartered in
Mumbai, India and employs about 205,896 people. The bank recorded revenues
of INR335, 639.3 million (approximately $6,484.6 million) in the financial year
(FY) ended March 2009, an increase of 30.5% over FY2008. The operating profit
of the company was INR179, 152.3 million (approximately $3,461.2 million) in
FY2009, an increase of 36.7% over FY2008. The net profit was INR91,212.4
million (approximately $1,762.2 million) in FY2009, an increase of 35.5% over
FY2008.All services or products of HDFC
Bank is available through direct banking channels.
➢ Free ATM, Net Banking, Mobile Banking, Phone Banking and 24 hours services.
➢ Very easy to access and use.

73
➢ A highly personalized services provided by the bank.
➢ HDFC’s Direct Banking channels provide real time and accurate information.
➢ HDFC’s Direct Banking is user friendly any one can easily operate it.
➢ Now International Debit Card is Free for one year.
➢ The Bank has strategic business alliance with Chase Manhattan Bank, largest
bank of USA.
WEAKNESS:
➢ Unawareness about all Direct Banking Channels due to less advertisement.
➢ Other private banks have started direct banking channels it may put some
competition to HDFC Bank in near future. Resistance to Change.
➢ One should have the knowledge of the operations of the computers and of course
the Internet.
OPPURTUNITIES:
➢ As Nationalized Banks and Co-operative Banks do not provide Direct Banking
services, so HDFC Bank can attract more customers.
➢ Centralized banking makes easy for HDFC Bank to provide services to
customers.
➢ Huge market of shareholders.
THREATS:
➢ Competition from other private sector banks.
➢ Attacks of web hackers.
➢ Personalized attention i.e. relationship banking should be reduced, thus by
creating a distance between the bank and its customers.

SEGMENTATION, TARGETING, POSITONING OF HDFC


BANK
Segmentation strategy
 Demographics variables
 Location
-Metros & divisional cities
 Occupation
- Business person

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-Salaried class (both govt. & private)
 Age
- Senior citizens
- Minor
 psychographic variables
 Lifestyle
-People who believes in modern banking with higher set of service i. e. internet banking (in
contact, mobile refill, travel currency card etc.)

Targeting strategy
 Target market
 Corporate banking market This market target the industries & fulfill their
financial needs.
 Capital market : This segment is targeted on the long term needs of the individual
as well as of industries.
 Retail banking market This segment is for retail investors & provide them short
term financial credit for their personal, house hold needs

Positioning strategy
 HDFC Bank has positioned itself as a bank which gives higher standard of services
through product innovation for the diverse need of individual & corporate clients. So
they want to highlight following points in their positioning segment:

-Customer centric

-Service oriented

-Product innovation

Marketing mix Hdfc bank

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Product:- The products offered are the services which include various types of bank
accounts, different types of loans, investment services , credit cards, demat accounts,
online banking, mobile banking, many more.

Hdfc bank ltd.

1. Home improvement loans


• Flat, row house, bungalow from developers
• Existing freehold properties
• Properties in an existing or proposed cooperative housing society or apartement.
• Owners association
1. Home extension loans
• To facilitate the extension of an existing dwelling unit.
• The maximum amount of such loan is rs 100lacs or 100%of cost of extension
whichever is lower.
• Monthly duration is of 20 years and is to be repaid in equated monthly
installments.

Pricing:-Includes interest, fees or commission charged by the bank. Also the interest
paid by the bank.

Typical for banking sector since RBI regulates rates of interest , organization are
supposed to sub serve weaker sections and the rural regions of the country. Buyers look
for satisfaction which differs from person to person. Keeping in view the level of
satisfaction of a particular segment, the banks have to frame the pricing strategies..

The interest charged and the interest paid should have a correlation between them.

Home Improvement Loan

HDFC finances up to 85% of the cost of improvement. This is however subject to 80% of
market value as assessed by HDFC.

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Land Purchase Loan

HDFC finances up to 80% of the cost /value of the land (Conditions Apply). Repayment
of the loan can be done over a maximum period of 15 years.

EDUCATION LOANS

Student Loans Upto Rs. 15 Lakhs for education In India


Unsecured Lending Upto INR 7.5 Lakhs
General steps for pricing:-

Develop marketing strategy

Make marketing mix decisions.

Estimate the demand curve

Calculate cost

Place:-

• It refers to the establishment and functioning of a network of branches and other


offices through which banking services are delivered
• Objective is to get the right product, at right place at right time at least cost.
• Extensive branch network –access to large section of people.
• Proximity may play a determinant role in selecting the bank.
• Banks are coming up with extension counters, specialized branches , mobile
branches , bank acquisition and amalgamation so as to have sufficient points of
contact with the customer.
• With the advent of technology other point of contact have come up such as:
Atm
Telephone banking
Online banking]
Mobile banking

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Video banking

Promotion:-

Gold Credit card: For providing the better services to the customers and promoting their
Business, HDFC has launched the Gold Credit Cards. It's overloaded with travel
benefits -discounts, cash back offers, air miles redemption.
Gold Credit Card Features & Benefit.
Attractive Reward Points
Earn 1 reward point per Rs 150 spent on the Gold Credit Card.
Rewards points redemption
After earning all those reward points on your HDFC Bank Gold Credit Card,
redeemthem for exciting gifts and services! You could even convert them to airline miles
withIndia's leading airlines through the My Rewards programme.
Worldwide acceptance
Accepted at over 23 million Merchant Establishments around the world, including
110,000 Merchant Establishments in India.
Revolving credit facility
Pay a minimum amount, which is 5% (subject to a minimum amount of Rs.200) of your
total bill amount or any higher amount whichever is convenient and carry forward the
balance to a better financial month. For this facility you pay a nominal charge of
just3.25% per month (39.0% annually).
Free Add-on card
You can share these wonderful features with your loved ones too - we offer the facility of
an add-on card for your spouse, children or parents. Allow us to offer add-on cards to
you FREE OF COST with our compliments.
Interest free credit facility
Avail of up to 50 days of interest free period from the date of purchase (subject to the
submission of the charge by the Merchant).

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Zero liability on lost card
If you happen to lose your Card, report it immediately to our 24-hour call centre. After
reporting the loss, you carry zero liability on any fraudulent transactions on your card
Platinum Cards Get Additional Benefits
HDFC Bank Platinum Card Customers Get Additional Benefits compared to Gold / silver
or other entry level cards. For instance, consider this, HDFC Cards has a Co-Branded
Online Shop with Surat Diamonds . By virtue of being HDFC Bank Customer, you are
already getting big discount. Now add any item to your cart and enter 558818 [6 Starting
Digits of Platinum Card], you get additional discount. This is just one such instance. You
also get Petrol Surcharge Waiver, IRCTC Charges Waived, etc.
Clear Trip Discount to Debit Card Holders
Use your HDFC Bank Debit Card to book any flight, hotel or train & get 10%* cash
back Domestic Air Offer - Book any Domestic Flight and get 10% cash back on Base
Fare orRs.250 cash back per booking (whichever is less).
Trains - Book any Train and get 10% cash back or Rs.50 cash back per booking
(whichever
is less) International Air Offer - Book any International Flight and get 10% cash back on
Base Fare or Rs.600 cash back per booking (whichever is less). Hotels Offer - Book any
Hotel (Domestic/International) and get 10% cash back on Base Price or Rs.500 cash back
per booking (whichever is less). To avail the cash back kindly enter coupon code HDFC
TRIP during step 3 of the booking process before payment.

Process:-

• Refers to the system used to assist the organization in delivering the service.
• Aids to the promotion of customer satisfaction

It evolves:-

1. Speeding delivery of services


2. Reducing the paper work

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3. Standardization of procedures
4. Customization as per individual demand simplicity etc.

Physical evidence

• It includes the signage, report, punch lines, other tangibles, employees dress code
etc.
• The company financial reports are issued to the customers to emphasis or
credibility.
• Signage:-each and every bank has its logo by which person can identify the
company. it creates visualization and corporate identity for the banks.
• TANGIBLE:-Bank give pens, writing pads to the customer.
• Punch line:- depicts the philosophy and attitude of the bank. Bank have influential
punch line to attract the customers.

People:-

people will ultimately going to use the product services by the bank.

1. Employee of the bank

2.General public

SEGMENTATION, TARGETING, POSITONING OF


STATE BANK OF INDIA
Segmentation strategy
 Demographics variables
 Location
-Both urban and rural areas
 Occupation

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- Business person and students
-Salaried class (both govt. & private)
 Age
- Senior citizens
- Minor
 psychographic variables
 Lifestyle
-People who believes in modern banking with higher set of service i. e. internet banking (in
contact, mobile refill, travel currency card etc.)

Targeting strategy
 Target market
 Corporate banking market This market target the industries & fulfill their
financial needs.
 Capital market : This segment is targeted on the long term needs of the individual
as well as of industries.
 Retail banking market This segment is for retail investors & provide them short
term financial credit for their personal, house hold needs

Customer Targeting

Successful new products and services meet real customer needs. Because different
products appeal to different kinds of people, and because truly innovative products (those
that offer dramatic change in the way people live) attract small groups of early adopters
before going mass market, it is important to have a clear picture of who the end-user
customers will be as early as possible. Having a clearly defined customer target enables
more accurate matching of product features and benefits to the target and improves the
ability to estimate market demand.

SBI uses VALS™ as a lens for understanding consumer psychology. VALS strengthens
consumer-segment profiles beyond demographics by identifying the psychological
drivers of purchase behavior and lifestyle choice. And VALS provides more than just a
snapshot of customers in the current marketplace. VALS is a predictive tool that
stimulates thinking about innovation needs for the future.

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SBI uses VALS with its clients to:

• Hypothesize about customers' future wants and needs.

• Identify distinct types of early adopters.

• Match features and benefits to potential user groups.

• Select the right customer target.

• Develop targeted product positioning and messaging.

• Map new product-diffusion pathways and estimate market potential


• Understanding customers is critical to marketing. VALS™
strengthens demographic characterizations by explaining the
deeper psychological drivers of consumer behavior.

• Applications
In the business world, VALS™ has been used effectively in:

• New Product Development

• Positioning

• Communications

• Geolocation

• Policy
• Educational institutions

Positioning strategy

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 SBI has positioned itself as a bank which gives higher standard of services
through product innovation for the diverse need of individual & corporate clients. So
they want to highlight following points in their positioning segment:

-Customer centric

-Service oriented

-Product innovation
-increasing working hours

Marketing mix State Of India

Product:- The products offered are the services which include various types of bank
accounts, different types of loans, investment services , credit cards, demat accounts,
online banking, mobile banking, many more.

Various advanced product are also included like:-

➢ Home Loan
➢ Educational Loan
➢ Car Loan
➢ Personal Loan
➢ Property Loan
➢ Loan Against Shares\Debentures

Pricing:-Includes interest, fees or commission charged by the bank. Also the interest
paid by the bank.

83
Typical for banking sector since RBI regulates rates of interest , organization are
supposed to sub serve weaker sections and the rural regions of the country. Buyers look
for satisfaction which differs from person to person.Keeping in view the level of
satisfaction of a particular segment, the banks have to frame the pricing strategies..

The interest charged and the interest paid should have a correlation between them.

CAR LOAN:
A maximum loan amount of 2.5 times the net annual income can be sanctioned.

Loan amount for used car is subject to a maximum limit of Rs. 15 lacs.
EDUCATION LOAN:
• For studies in India, maximum Rs. 10 lacs
• Studies abroad, maximum Rs. 20 lacs

PERSONAL LOAN:

Your personal loan limit would be determined by your income and repayment capacity.
• Minimum: Rs.24,000/- in metro and urban centres
• Rs.10, 000/- in rural/semi-urban centres
• Maximum: 12 times Net Monthly Income for salaried individuals and pensioners
subject to a ceiling of Rs.10 lacs in all centres

General steps for pricing:-

Develop marketing strategy

Make marketing mix decisions.

Estimate the demand curve

Calculate cost

Place:-
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• It refers to the establishment and functioning of a network of branches and other
offices through which banking services are delivered
• Objective is to get the right product, at right place at right time at least cost.
• Extensive branch network –access to large section of people.
• Proximity may play a determinant role in selecting the bank.
• Banks are coming up with extension counters, specialized branches , mobile
branches , bank acquisition and amalgamation so as to have sufficient points of
contact with the customer.
• With the advent of technology other point of contact have come up such as:
Atm
Telephone banking
Online banking
Mobile banking
Video banking

Promotion:-

1. Setting up call centers and outbound sales force to secure new customers.
2. Opening Saving account with zero balance.

Process:-

• Refers to the system used to assist the organization in delivering the service.
• Aids to the promotion of customer satisfaction

It evolves:-

1. Speeding delivery of services


2. Reducing the paper work
3. Standardization of procedures

85
4. Customization as per individual demand simplicity etc.

Physical evidence

• It includes the signage, report, punch lines, other tangibles, employees dress code
etc.
• The company financial reports are issued to the customers to emphasis or
credibility.
• Signage:-each and every bank has its logo by which person can identify the
company. it creates visualization and corporate identity for the banks.
• TANGIBLE:-Bank give pens, writing pads to the customer.
• Punch line:- depicts the philosophy and attitude of the bank. Bank have influential
punch line to attract the customers.

People:-

people will ultimately going to use the product services by the bank.

1.Employee of the bank

2.much more focus on students , results tie up various colleges.

RESEARCH - METHODOLGY

Research means a search for knowledge or gains some new knowledge and methodology
can properly refer to the theoretical analysis of the methods appropriate to a field of study
or to the body of methods and principles particular to a branch of knowledge. A Research
methodology has a specified framework for collecting the data in an effective manner.

86
Research methodology means a ‘defining a problem, defining the research objectives,
developing the research plan, collecting the information, analyzing the information and
presentation of finding’. The research process that was followed by me consisting
following steps: -

Research technique
The technique I have used for this research is descriptive research

Research objectives:-
1. To study the marketing strategies adopted by SBI & HDFC BANK
2. To analyze the product and services State Bank Of India and HDFC Bank dealing
with.

3. To know the areas/ parameters that has to be corrected to increase the satisfaction
level of the customers.
4. To know the income and profitability of both the banks

Source of Data: For conducting this project, I have used Secondary data.

Secondary Data: The secondary data can be defined as data collected by someone else
for purposes other than solving problem being investigation and previously meant for
another purpose. . We will use magazines, journals, paper and internet for the collection
of data. It helps us to better determine our problem and formulate an appropriate research
design.
It is the data which is collected by others. It is ‘re-used’ by the researcher.

The various sources of secondary data are :-


1. Websites,

87
2. Newspapers,

3. Magazine,

4. Books and Journals

5. RBI Bulletien

FINDINGS:-

➢ Procedure in HDFC Bank for deposits is very simple.

➢ Customer services in private banks are very good customers are satisfied with the
functioning and services provided by the banker.

➢ The HDFC Bank is functioning with more advanced technology in comparison to


State Bank Of India.

➢ The co- operation of staff of HDFC Bank dealing quick solution in comparison to
State Bank Of India and customer satisfactions are praise worthy.

➢ Income of both the banks continues to increase since 2006 but there was great
fall in the end of march 2010.

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➢ Profitability was also effected in the end of march 2010 of both the banks.

LIMITATIONS
1. Huge amount of interest is charged on advance product by both HDFC Bank and
State Bank Of India.
2. HDFC BANK has only targeted metros and divisional cities for his product and
cities.
3. Time period for repayment of education loan is very less in both the banks.
4. Less schemes are provided on products by both of the banks.
5. Information is not provided by both the banks regarding deduction of any
monetary charge .
6. Up gradation of technology in State Bank of India is very slow in comparison to
HDFC Bank.

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7. Advanced training should be provide to the agents of both the banks.
8. Both the bank financial performance continues to fluctuates.

SUGGESTIONS

➢ Customer awareness programme is required so that more people should

attract towards their product.

➢ Both banks should more concern about physical verification rather than

phone verification so it will avoid fraud or cheating.

➢ Advance product selling agents must not give any type of wrong

information regarding advance product.

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➢ For the better service new offers would be require.

➢ SBI customer care should more concern about the fastest settlement of

customer problems. HDFC bank is already doing.

➢ Before deducting or charging any monetary charge SBI & HDFC must

consult with customer.

➢ Agents should be trained, well educated & proper trained to convince the

people about different advance product.

➢ It is the duty of the bank to disclose all the material facts regarding

advance product, like ROI, repayment period and any types of charges,

etc.

➢ Special scheme should be implemented to encourage both customer and

agents.

➢ SBI and HDFC BANK should more focus on Retaining existing

customers.

➢ Both bank must focus on Segmentation based on customer knowledge

Product offering based on customer demand.

➢ SBI and HDFC Bank must take feedbacks of customers regarding

features & services.

• More time period for repayment of education loan.

• Education loan should be providing to private college also which is not under

AICTE approval.

• SBI should take steps to solve customer problems immediately.

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• Agents should be trained, well educated & proper trained to convince the people

about different advance product.

• Loan sanction date should be according to customer convenience.

• A customer awareness programme should be taking place in rural area.

• Guarantee should give in investment money in share market

Conclusion

Most of the people are aware of the services given by the both banks either HDFC or

SBI. New generation people mostly the students taking the advantage of the private

banks services. Only the educated people are fully aware of the private banks services.

Here, advertisement plays a major in making people aware of the services offered by the

different banks. Srevices given to the senior citizen really attractive in state bank of

India because today also they believe in public sector bank because of attractive schemes

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provided by them . As we know that SBI is a Public Sector Bank. So its Brand image is

much higher than any other private Competing Bank. And under this analysis also the

SBI has very strong financial position in comparison to HDFC bank. Both the bank have

great advantage of using their advance products which help a lot in maintain their market

position.

BIBLIOGRAPHY

REFRENCES:-
www.hdfcbank.com
www.sbi.co.in

www.reservbank.com

www.etstrategicmarketing.com

www.managementparadise.com

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NEWSPAPER AND MAGAZINES

➢ The economics times


➢ Business standard
➢ Business today

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