Executive Summary

From this study one can know what is banking industry as a whole. To know how is the coverage of two banks one from private and one from public. As far as public banks are concern they are providing education loan which is one the non-profitable loan. But the private bank doesnt provide such a facility which is most needed buy the present generation. This study is divided into three segments or phases namely:1. Strategic analysis of ICICI Bank and State Bank of India. 2. Evaluating the feasibility of loan allotment criteria of banks. 3. Customer satisfaction gain by bank in loan allotment.

This project has tried to give some efforts to explain each type of loan and it suggession will help the bankers to support a organizations and will help the organization to evaluate their performance and of bank credit sydencatations also.

In this project from the analysis I found that there is always a gap between what the financial service provider delivers and what he ultimate consumers perceives. I found the majority of the people are satisfied with their banker but it would be better if they could provide them with better service. Sufficient concentration on Credit Appraisal of the borrower. Bank has to take sufficient and correct information of the borrower like. Complete residential address. Complete working/office address. Contact numbers of both resident and office. Complete residential address of guarantor. Complete working/office address of guarantor. Contact numbers of both resident and office of guarantor. Bank should properly verify all the documents submitted by the borrower. If borrower is enjoying any other credit facilities provided by SBI or other banks then bank should verify that whether the person is regular in repayment or not. This is very useful information for the bank. Proper verification of securities. They should very the BASAL report before granting the loan.

Chapter 1 Introduction of the Banking Industry as a whole and Company

FINANCIAL SECTOR OVERVIEW The past year saw the process of financial sector reforms being carried forward with particular focus on banks and financial institutions. Considerable attention was given to asset classification and provisioning norms in banks. RBI announced guidelines on universal banking to facilitate the transformation of financial institutions into banks. It also proposed the enactment of new legislation for banking sector reforms and foreclosure laws. The Union Budget also permitted incorporation of subsidiaries by foreign banks. The liquidity scenario during the past year wax comfortable. RBI has indicated that the policy of active demand management of liquidity through open market operations and liquidity adjustment facility would be continued. Credit growth and investment demand would be supported by maintaining the bias towards soft interest rates. RBI has also given a significantly boost to housing finance by reducing the risk weighted on residential housing loans and mortgage-backed securities pertaining to residential housing loans from 100% to 50%. Fiscal 2004 saw significant developments in the financial sector. In terms of credit growth, the banking system continued to witness robust growth in retail credit, with indications of revival in corporate credit demand as well. The year also saw significant growth in securitization of debt, which is positive for the future of financial intermediation in India. Liquidity in the system continues to be strong supported by steady deposit growth, with excess liqui8dity being absorbed by RBIs Liquidity Adjustment Facility and the newly introduced Market Stabilization Scheme. The year witnessed an improvement in the financial position of banks, with large provisions being made against non-performing loans by utilizing treasury gains arising from the declining interest rate environment. The bond buyback scheme of the Government of India also provided banks an opportunity to realized gains and cushion the impact of credit losses. Asset Reconstruction Company (India) Limited was operationalized during the year and commenced acquisition of non-performing assets The Honorable Supreme Court has upheld the constitutional validity of the Securitization and Reconstruction of Financial Assets and Enforcement of Security interest (SARFAESI) Act, 2002, thus paving the way for speedy recovery of distressed secured debt.
2

The Indian banking system continued to make rapid progress towards international benchmarks and best practices, with the adoption of the 90-day rule for recognition of nonperforming assets effective fiscal 2004, the accelerated provisioning norms announced recently and the introduction of capital charge for market risk. Efficiency in the banking system, which playas pivotal role in economic activity was sought to be enhanced by the introduction of the Real Time Gross Settlement system. As a result of the process of reform, the Indian banking system now operated in an increasingly more efficient and competitive environment and is well placed to support the larger economy to achieve sustained growth.

ICICI Bank ltd

ICICI Bank is India's second-largest bank with total assets of Rs. 3,634.00 billion (US$ 81 billion) at March 31, 2010 and profit after tax Rs. 40.25 billion (US$ 896 million) for the year
3

ended March 31, 2010. The Bank has a network of 2,528 branches and 6,000 ATMs in India, and has a presence in 19 countries, including India. ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialized subsidiaries in the areas of investment banking, life and non-life insurance, venture capital and asset management. The Bank currently has subsidiaries in the United Kingdom, Russia and Canada, branches in United States, Singapore, Bahrain, Hong Kong, Sri Lanka, Qatar and Dubai International Finance Centre and representative offices in United Arab Emirates, China, South Africa, Bangladesh, Thailand, Malaysia and Indonesia. Our UK subsidiary has established branches in Belgium and Germany. ICICI Bank's equity shares are listed in India on Bombay Stock Exchange and the National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE). FEATURES OF ICICI Bank:

Stability: A second largest bank in India. Capital base: A large capital base of over Rs. 60billion. Leadership: Indias first universal bank. Relationship: Extensive corporate and retail customer relationship. Reach: Extended reach of over 540 branches and offices, over 1000 ATMs, Internet call centers. People: A vast talent pool efficiently blending professionalism with an arm personal approach to serve the customer. Processes: Technology-enabled distribution and product delivery systems.

Over the last few years, ICICI Bank has taken rapid strides in developing new businesses in line with its proposition of offer complete financial services to both corporate and retail customers. ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialized subsidiaries and affiliates in the areas of investment banking, life and non-life insurance, venture
4

capital and asset management. ICICI Bank set up its international banking group in fiscal 2002 to cater to the cross-border needs of clients and leverage on its domestic banking strength to offer products internationally.

ICICI Bank was originally promoted in 1994 by ICICI limited, an Indian financial institution, and was its wholly owned subsidiary. In the 1990s, ICICI transformed its business from a development financial institution offering only project finance to a diversified financial services group offering a wide variety of products and services, both directly and through a number of subsidiaries and affiliates like ICICI Bank. In 1999, ICICI become the first Indian company and the first bank or financial institution from non-Japan Asia to be listed on the NYSE.

HISTORY OF ICICI BANK

Industrialization 1955-1964

An era, in which rapid industrialization with a particular on basic and heavy industry took shape, ICICI, amongst the worlds first development banks in the private sector, quickly emerged as an important source of foreign currency loans in the country, to facilitate import of industrial machinery and technology. ICICI assisted over 400 companies during this period. Reorganization 1965-1974 Having set the course for industrial development, the country now focused on other sectors as well. This resulted in the green revolution for food sufficiency; rise in exports to earn foreign exchange; development of industries in the backward areas to broad-base growth; and encouragement to small enterprises. Responding to the emerging needs, ICICI started export finance, confessional funding in industrially backward areas and loans for small enterprises. In this period, over 1,000 enterprises and 2,000 projects were assisted by ICICI. Consolidation 1975-1984 With broad-based growth underway, India continued to consolidate and enhance selfsufficiencies to counter intermittent obstacles such as the oil shock of the 1970s. ICICI played its role in consolidating and broad-basing the financial system, setting up state level financial and technical institutions and the countrys first specialized housing finance institution, during this decade, over 2,000 enterprises and 4,500 projects were assisted. ICICI became one of the first financial institutions to harness the power of information technology. Liberalization 1985-1994 Having consolidated its base, India was ready to open up. Private enterprise and free play of market forces were actively encouraged. ICICI saw the opportunity to diversify to meet the requirements of the new paradigm. In the wake of reforms, ICICI set up the countrys first rating agency, first venture capital company and entered into asset management and banking. In this period of high growth in business, total approvals crossed Rs. 400.00 billion. Globalization India moved to integrate itself with the global economy. This created both challenges and opportunities. ICICI enabled consumption-led growth by accelerating the availability and
6

affordability of retail finance and bringing world class technology to banking. ICICI Bank became the first Indian bank to list on the New York Stock Exchange and emerged as the leading universal bank in India, going on to build an international footprint with the aim of becoming a truly global Indian bank. 1995: The Industrial Credit and Investment Corporation of India Limited (ICICI) incorporated at the initiative of the World Bank, the Government of India and representatives of Indian industry, with the objective of creating a development financial institution for providing medium-term and long-term project financing to Indian businesses. Mr. A. Ramaswami Mudaliar elected as the first Chairman of ICICI Limited. ICICI emerges as the major source of foreign currency loans to Indian industry. Besides funding from the World Bank and other multi-lateral agencies, ICICI also among the first Indian companies to raise funds from International markets. 1956: ICICI declared its first Dividend at 3.5%. 1958: Mr. G.L.Mehta was appointed the 2nd Chairman of ICICI Ltd. 1960: ICICI building at 163, Back bay Reclamation was inaugurated. 1961: The first West German loan of DM 5 million from Kredianstalt was obtained by ICICI. 1967: ICICI made its first debenture issue for Rs.6 crore, which was oversubscribed.1969: First two regional offices in Calcutta and Madras were opened. 1972: Second entity in India to set-up merchant banking services. Mr. H.T. Parekh appointed as the third Chairman of ICICI. 1977: ICICI sponsors the formation of Housing Development Finance Corporation, Managed its first equity public issue. 1978: Mr. James Raj appointed as the fourth Chairman of ICICI. 1979: Mr. Siddharth Mehta appointed as the fifth Chairman of ICICI.

1982:

Becomes the first ever-Indian borrower to raise European Currency Units. ICICI commences leasing business.

1984: Mr. S. Nadkarni appointed as the sixth Chairman of ICICI. 1985: Mr. N. Vaghul appointed as the seventh Chairman and managing Director of ICICI. 1986: ICICI first Indian Institution to receive ADB Loans. First public issue by an Indian entity in the Swiss Capital Markets ICICI along with UTI sets up Credit Rating Information Services of India Limited, (CRISIL) Indias first Professional credit rating agency ICICI promotes Shipping Credit and Investment Company of India Limited (SCICI) the Corporation made a Public issue of Swiss Franc 75 million in Switzerland, the first public issue by any Indian equity in the Swiss Capital Market. 1987: ICICI signed a loan agreement for Sterling Pound 10 million with Commonwealth Development Corporation (CDC), the first loan by CDC for financing projects in India. 1988: ICICI promotes TDICI Indias first venture capital company. 1993: ICICI sets-up ICICI Securities and Finance Company Limited in joint venture with J. P. Morgan. ICICI sets up ICICI Asset Management Company.

1994: ICICI becomes the first company in the Indian financial sector to raise GDR. ICICI announces merger with SCICI. Mr. K.V.Kamath appointed the Managing Director and CEO of ICICI Ltd. 1998: Introduces the new logo symbolizing a common corporate identity for the ICICI Group. ICICI announces takeover of Anagram Finance. 1999: ICICI launches retail finance car loans, house loans and loans for consumer durables. ICICI becomes the first Indian Company to list on the NYSE through an issue of American Depositary Shares. 2000: ICICI Bank becomes the first commercial bank from India to list its stock on NYSE. ICICI Bank announces merger with Bank of Madura.
8

2001: The Boards of ICICI Ltd and ICICI Bank approved the merger of ICICI with ICICI Bank. 2002: Moodys assign higher than sovereign rating to ICICI. Merger of ICICI Limited, ICICI capital Services Ltd and ICICI Personal Financial Services Limited with ICICI Bank. 2003: DM Review Magazine-World Class Solution Award 2003 in the Business Intelligence category for its Teradata enterprise data warehouse solution. 2004: Best Corporate / Institutional Internet Bank in India" by Global Finance 2008: ICICI Bank wins the 2008 Symantec visionary awards, recognising the way the Bank secures and manages systems and information. 2009: In the Domestic Banking Awards of Finance Asia Country Awards for Achievement, 2009 held at Hongkong, ICICI Bank won the 'Best Foreign Exchange Bank, India' and 'Best Trade Finance Bank, India' 2010: ICICI Bank was voted as the Most Trusted Brand among private sector banks in the 2010 Economic Times - Brand Equity Most Trusted Brands Awards and ranked 7th in the list of Top 50 service brands. 2011: ICICI Bank UK, HiSAVE product range has been awarded the Consumer Moneyfacts Awards 2011 for the 'Best Online Savings Provider.

State Bank Of India Ltd

State Bank of India is one the giant banking organization of Indian banking industry. Infact State Bank of India one of the Indian profit making Public Sector Unit (PSU). SBI is public sector bank but it is number one bank in Indian banking industry. State bank of India has been proved as earning son for the government of India there is no doubt that SBI is number one bank of India today.
9

State Bank of India is the bank which works according to its slogan

with u-all

the way the state bank believes in helping with pure banking nothing else Sate banks is the countrywide bank which has a great network in India not only in India but its global operations also have been spreading widely by the time span. State Bank of India (SBI) is India's largest commercial bank. SBI has a vast domestic network of over 9000 branches (approximately 14% of all bank branches) and commands onefifth of deposits and loans of all scheduled commercial banks in India. The State Bank Group includes a network of eight banking subsidiaries and several nonbanking subsidiaries offering merchant banking services, fund management, factoring services, primary dealership in government securities, credit cards and insurance. The eight banking subsidiaries are : (1) State Bank of India (SBI) (2) State Bank of Bikaner and Jaipur (SBBJ) (3) State Bank of Hyderabad (SBH) (4) State Bank of Indore (SBIR) (5) State Bank of Mysore (SBM) (6) State Bank of Patiala (SBP) (7) State Bank of Saurashtra (SBS) (8) State Bank of Travancore (SBT)

The origins of State Bank of India date back to 1806 when the Bank of Calcutta (later called the Bank of Bengal) was established. In 1921, the Bank of Bengal and two other Presidency banks (Bank of Madras and Bank of Bombay) were amalgamated to form the Imperial Bank of India. In 1955, the controlling interest in the Imperial Bank of India was acquired by the Reserve Bank of India and the State Bank of India (SBI) came into existence by an act of Parliament as successor to the Imperial Bank of India. Today, State Bank of India (SBI) has spread its arms around the world and has a Network
10

of branches spanning all time zones. SBI's International Banking Group delivers the full range of cross-border finance solutions through its four wings - the Domestic division, the Foreign Offices division, the Foreign Department and the International service division.

HISTORY AND DEVELOPMENT OF SBI

The State Bank of India, the countrys oldest Bank and a premier in terms of balance sheet size, number of branches, market capitalization and profits is today going through a momentous phase of Change and Transformation the two hundred year old Public sector behemoth is today stirring out of its Public Sector legacy and moving with an agility to give the Private and Foreign Banks a run for their money. 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. 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. It is also focusing at the top end of the market, on whole sale banking capabilities to provide Indias growing mid/large Corporate with a complete array of products and services. It is consolidating its global treasury operations and entering into structured products and derivative instruments. Today, the Bank is the largest provider of infrastructure debt and the largest arranger of external commercial borrowings in the country. It is the only Indian bank to feature in the Fortune 500 list. The Bank is changing outdated front and back end processes to modern customer friendly processes to help improve the total customer experience. With about 8500 of its own 10000 branches and another 5100 branches of its Associate Banks already networked, today it offers the largest banking network to the Indian customer. The Bank is also in the process of providing complete payment solution to its clientele with its over 8500 ATMs, and other electronic channels such as Internet banking, debit cards, mobile banking, etc.
11

With four national level Apex Training Colleges and 54 learning Centers spread all over the country the Bank is continuously engaged in skill enhancement of its employees. Some of the training programs are attended by bankers from banks in other countries. The bank is also looking at opportunities to grow in size in India as well as internationally. It presently has 82 foreign offices in 32 countries across the globe. It has also 7 Subsidiaries in India SBI Capital Markets, SBICAP Securities, SBI DFHI, and SBI Factors, SBI Life and SBI Cards - forming a formidable group in the Indian Banking scenario. It is in the process of raising capital for its growth and also consolidating its various holdings. Throughout all this change, the Bank is also attempting to change old mindsets, attitudes and take all employees together on this exciting road to Transformation. In a recently concluded mass internal communication programme termed Parivartan the Bank rolled out over 3300 two day workshops across the country and covered over 130,000 employees in a period of 100 days using about 400 Trainers, to drive home the message of Change and inclusiveness. The workshops fired the imagination of the employees with some other banks in India as well as other Public Sector Organizations seeking to emulate the programme. The CNN IBN, Network 18 recognized this momentous transformation journey, the State Bank of India is undertaking, and has awarded the prestigious Indian of the Year Business, to its Chairman, Mr. O. P. Bhatt in January 2008.

EVOLUTION AND ESTABLISHMENT

The origin of the State Bank of India goes back to the first decade of the nineteenth century with the establishment of the Bank of Calcutta in Calcutta on 2nd June 1806. Three years later the bank received its charter and it was re-designed as the Bank of Bengal (2nd January 1809). A unique institution, it was the first joint-stock bank of British India sponsored by the Government of Bengal. The Bank of Bombay (15 April 1840) and the Bank of Madras (1 July 1843) followed the Bank of Bengal. These three banks remained at the apex of modern banking in India till their amalgamation as the Imperial Bank of India on 27 January 1921.

12

Primarily Anglo-Indian creations, the three presidency banks came into existence either as a result of the compulsions of imperial finance or by the felt needs of local European commerce and were not imposed from outside in an arbitrary manner to modernize India's economy. Their evolution was, however, shaped by ideas culled from similar developments in Europe and England, and was influenced by changes occurring in the structure of both the local trading environment and those in the relations of the Indian economy to the economy of Europe and the global economic framework.

Chapter 2 Research Methodology Research Objectives:

1. Strategic comparison of both the banks i.e. State Bank Of India and ICICI Bank. Where in there will be compression between both the companies their strategies etc. 2. Study of Customer satisfaction related to the services provided by banks.

13

A structured questionnaire will be use to check the feasibility of loan allotment criteria. 3. To check the flexibility of loan allotment Criteria. A questionnaire will be use to check the flexibility of loan allotment criteria and customer ranking on that basis.

Nature of Study:
Descriptive research design

Type of sampling:
Simple random Sampling

Sample size:
100 Questionnaires will be used for the survey where 50 will be filled by customers of ICICI Bank and rest will be by customers of SBI.

Tools used:
1. For strategic analysis SWOT, BCG, PORTER FIVE FORCE model will be used. 2. Personal interview for loan allotment Criteria. 3. Questionnaire for consumer satisfaction. 4. SPSS for data analysis.

Limitations of the Study:

14

1. Study of Loan allotment criteria will depend on data provided by the bank officials 2. Study is limited to two banks i.e. SBI and ICICI 3. Customer responses may be biased, which may make results less reliable. 4. Customers view may be biased towards their bank.

Scope of the Study

The study focus on comparison of service provided by ICICI Bank and the State Bank of India. The study focuses on feasibility of loan allotment criteria of banks. This study has given enough efforts to evaluate the gap between the services of provided by the banks. This studies evaluate the problem of gap between what is provided by the banks and what is gained by the consumers i.e. loan holders. It also shows the process by which the loan are allotted by banks and their process behind sanctioning these loans. The study analysis the factor which help the loan holders to understand the process done and due to which they can maintain relations with them. This project will help the loan holder to understand the loan allotment process and will help the in future if they want to barrow the loan from the bank.

Theoretical aspects of the study Banking Industry

15

A "commercial bank" is what is commonly referred to as simply a "bank". The term "commercial" is used to distinguish it from an "investment bank," a type of financial services entity which, instead of lending money directly to a business, helps businesses raise money from other firms in the form of bonds (debt) or stock (equity). The primary operations of banks include:

Keeping money safe while also allowing withdrawals when needed Issuance of checkbooks so that bills can be paid and other kinds of payments can be delivered by post Provide personal loans, commercial loans, and mortgage loans (typically loans to purchase a home, property or business) Issuance of credit cards and processing of credit card transactions and billing Issuance of debit cards for use as a substitute for checks Allow financial transactions at branches or by using Automatic Teller Machines (ATMs) Provide wire transfers of funds and Electronic fund transfers between banks Facilitation of standing orders and direct debits, so payments for bills can be made automatically Provide overdraft agreements for the temporary advancement of the Bank's own money to meet monthly spending commitments of a customer in their current account. Provide Charge card advances of the Bank's own money for customers wishing to settle credit advances monthly. Provide a check guaranteed by the Bank itself and prepaid by the customer, such as a cashier's check or certified check. Notary service for financial and other documents Private banking - Private banks provide banking services exclusively to high net worth individuals. Many financial services firms require a person or family to have a certain minimum net worth to qualify for private banking services.] Private banks often provide more personal services, such as wealth management and tax planning, than normal retail banks. Capital market bank - bank that underwrite debt and equity, assist company deals (advisory services, underwriting and advisory fees), and restructure debt into structured finance products. Bank cards - include both credit cards and debit cards. Bank Of America is the largest issuer of bank cards. Credit card machine services and networks - Companies which provide credit card machine and payment networks call themselves "merchant card providers".

Foreign exchange services are provided by many banks around the world. Foreign exchange services include:
16

Currency Exchange - where clients can purchase and sell foreign currency banknotes. Foreign Currency Banking - banking transactions are done in foreign currency. Wire transfer - where clients can send funds to international banks abroad. Asset management - the term usually given to describe companies which run collective investment funds. Also refers to services provided by others, generally registered with the Securities and Exchange Commission as Registered Investment Advisors. Hedge fund management - Hedge funds often employ the services of "prime brokerage" divisions at major investment banks to execute their trades. Custody services - the safe-keeping and processing of the world's securities trades and servicing the associated portfolios. Assets under custody in the world are approximately $100 trillion. Intermediation or advisory services - These services involve stock brokers (private client services) and discount brokers. Stock brokers assist investors in buying or selling shares. Primarily internet-based companies are often referred to as discount brokerages, although many now have branch offices to assist clients. These brokerages primarily target individual investors. Full service and private client firms primarily assist and execute trades for clients with large amounts of capital to invest, such as large companies, wealthy individuals, and investment management funds. Private equity - Private equity funds are typically closed-end funds, which usually take controlling equity stakes in businesses that are either private, or taken private once acquired. Private equity funds often use leveraged buyouts (LBOs) to acquire the firms in which they invest. The most successful private equity funds can generate returns significantly higher than provided by the equity markets Venture capital is a type of private equity capital typically provided by professional, outside investors to new, high-potential-growth companies in the interest of taking the company to an IPO or trade sale of the business. Angel investment - An angel investor or angel (known as a business angel or informal investor in Europe), is an affluent individual who provides capital for a business start-up, usually in exchange for convertible debt or ownership equity. A small but increasing number of angel investors organize themselves into angel groups or angel networks to share research and pool their investment capital. Conglomerates - A financial services conglomerate is a financial services firm that is active in more than one sector of the financial services market e.g. life insurance, general insurance, health insurance, asset management, retail banking, wholesale banking, investment banking, etc. A key rationale for the existence of such businesses is the existence of diversification benefits that are present when different types of businesses are aggregated i.e. bad things don't always happen at the same time. As a consequence, economic capital for a conglomerate is usually substantially less than economic capital is for the sum of its parts.

Debt resolution is a consumer service that assists individuals that have too much debt to pay off as requested, but do not want to file bankruptcy and wish to payoff their debts owed. This debt can be accrued in various ways including but not limited to personal loans, credit cards or in some cases merchant accounts. There are many
17

services/companies that can assist with this. These can include debt consolidation, debt settlement and refinancing.

FINANCE
Maximizing Shareholder Value is a primary objective for most organization. Same way the ICICI Banks primary objective is to maximize its Shareholders value In this context, they concentrate on reducing cost of funds, maximizing group synergies and effective balance sheet
18

management become key priorities. The target capital structure and the market conditions at any point largely determine the strategies for managing Finance.

The ICICI group ahs consistently focused on building shareholder value as its primary objective. Their approach to shareholder value creation has extended beyond delivering nearterm financial results, to developing a sustainable, long-term value proposition. The key elements of ICICI Banks strategy have been to capitalize on new business opportunities, build a strong brand and distribution capability, leverage technology, establish robust systems and processes and develop their human capital. ICICI Bank believes that these elements are essential enablers of future growth.

While the basic forms of fund raising include debt and equity, innovations in the financial markets have led to the creation of a range of quasi-debt and quasi-equity instruments. There are instruments that can be structured to suit the risk profile of the provider of funds and the requirements of corporate availing of these funds. The actual terms of the funding raised by the corporate can be structured taking into account the interest rate prevailing at a point in time, while other products can be designed to enable an arbitrage on the yield curve.

Literature Review Financial Analysis of Indian Commercial Banks: A Comparison of various Bank Groups By Dr. Monika Aggarval.
19

1. This literature contains the banking performance by comparing different bank groups on their performance (efficiency, productivity and profitability) by using various ratios in five different ownership groups in India. 2. The time period for the performance analysis is 1991-2008. 3. It employs ANOVA test and ratio analysis for comparison of banks.

Objectives.
1. To analysis the performance of different bank groups on various parameters of cost efficiency, productivity and profitability. 2. To suggest measures to improve the performance of different banks.

Suggestions:
1. Needs to bring down operating cost. 2. Improve labour productive. 3. Need to increase Non interest sources of income.

20

Strategic Analysis Porter Five Force model:

The banking industry is such an industry where there are many regulation imposed by the government. Also there are large number of Sellers (investors, depositors, lenders) and buyers (borrowers). There is strong rivalry among the competitors as there are strong players in this industry amongst the players.

1. Bargaining power of suppliers:

21

There is reasonable power of suppliers as their suppliers are the equity and preference shareholders and the borrowers who provide finance to the industry as this industry is very important from the economic point of view. There are chances of bankruptcy due to capital deficiency.

2. Bargaining power of buyers:

a.The buyers have a reasonable power in this industry as all the factor in this industry is policy determined. b.All the forces in this industry are market driven, so buyers have no option to accept it. c.There is a threat of Non Performing Assets (NPA) from the side of buyers as there are chances of default by the borrowers. d.The buyers have the right to switch-over to the rivals any time he likes.

3. Threat of new entrants

a. i. ii. The banking industry is regulated by two regulatory bodies they are: Banking Regulation Act, 1949. Companies Act, 1956.

b. There are many provisions which restrict the entry to new entrants in this industry. c. Also banks have to work or operate as per the guidelines of The Reserve Bank of India.

4. Threat of substitutes
a. There is large number of substitutes available for products offered by banks.

b. There are many products like Mutual Funds, equity investment, post office deposits and govt. bonds which are providing higher return or similar safety of investments that substitute inflows of funds. c. Also there are many products or moneylenders like NBFCs, Micro and small Industry lenders and chit funds which substitutes out flows of fund.

5. Rivalry among competitors

a. There are numbers of competitors playing in this industry they are classified according to the type of industry are:
22

i. ii. iii. iv.

Private sector. Public sector. Cooperative society. Foreign banks or MNCs.

b. There is a cut-through competition among the rivals as there are many established players in the industry like ICICI Bank SBI etc. c.Still banking industry is being consolidated as there is large number of merger & acquisitions taking place.

23

Vision and mission Vision of ICICI Bank Vision:

To be the leading provider of financial services in India and a major global bank.

Mission:
We will leverage our people, technology, speed and financial capital to:

be the banker of first choice for our customers by delivering high quality, world-class products and services. expand the frontiers of our business globally. play a proactive role in the full realisation of Indias potential. maintain a healthy financial profile and diversify our earnings across businesses and geographies. maintain high standards of governance and ethics. contribute positively to the various countries and markets in which we operate. create value for our stakeholders.

Rating of Icici bank vision & mission Rating Scale of ICICI bank ltd. Rate out of 5 (1for poorest and 5 for the best ) 4 4 3 5 3 3.80

Flexible Ethical Value Global coverage Scope for development Average Score.

24

Vision and mission of State Bank Of India

Vision STATEMENT: To retain the Banks position as premiere Indian Financial Service Group, with world class standards and significant global committed to excellence in customer, shareholder and employee satisfaction and to play a leading role in expanding and diversifying financial service sectors while containing emphasis on its development banking rule. Mission STATEMENT: Premier Indian Financial Service Group with prospective world-classs tandards of efficiency and professionalism and institutional values. Retain its position in the country as pioneers in Development banking. Maximize the shareholders value through high-sustained earnings per share. An institution with cultural mutual care and commitment, satisfying and g ood work environment and continues learning opportunities.

Rating of State bank of India vision & mission Rating Scale of sbi Rate out of 5 (1for poorest and 5 for the best ) 2 4 4 3 4 3.4

Flexible Ethical Value Global coverage Scope for development Average Score.

25

SWOT ANALYSIS SWOT analysis of ICICI Bank

STRENGHTS: 1) Online Services: ICICI Bank provides online services of all its banking facilities. It also provides Demat account facilities on-line, so a person can access his account from anywhere he is. [Demat is a dematerialized account opened by a salaried person for purchase & sale of shares of different companies.] 2) Advanced Infrastructure: Branches of ICICI Bank are well equipped with advanced technology to provide the customers with taster banking services. All the computerized machines are located in suitable manner & are very useful to the customers & staff of the bank. 3) Friendly Staff: The staff of ICICI Bank in all branches is very friendly & helps the customers in all cases. They provide faster services along with bonding & personal relationship with the customers. 4) 12 hrs. Banking services: Compared to other bank ICICI bank provides long hrs. Of services i.e. 8-8 services to the customers. This service is one of its kinds & is very helpful for the customers who are in urgent need of money. 5) Other Facilities to the Customers & Employees: ICICI Bank also provides other facilities like drinking water facilities, proper sitting arrangements to the customers. And there are also proper Ventilation & sanitary facilities for the employees of the bank.

Weakness
1. High Bank Service Charges: ICICI bank charges highly to customers for the services provided by them when compared to other bank & that is why it is only in the reach of higher class of society. 2) Less Credit Period: ICICI bank provides credit facilities but only upto limited period. Even when the credit period is not over it sends reminder letters to the customers which may annoy them.

26

OPPORTUNITIES: 1) Bank assurance services: The bank should also provide insurance services. That means the bank can have a tie-up with a insurance company. The bank will advertise & promote the different policies introduced by the insurance company & convince their customers to buy insurance policies. 2) Increase in percentage of Returns on increase: The bank should provide higher returns on deposits in comparison of the present situation. This will also upto large extent help the bank earn profits & popularity. 3) Recruit professionally guided students: Bank & Insurance is a special non-aid course where the students specialize in the functioning & services of the bank & also are knowledge about various tax policies. The bank can recruit these students through tieups with colleges. Such students will surely prove as an asset to the bank. 4) Associate with social cause: The bank can also associate itself with social causes like providing relief aid patients, funding towards natural calamities. But this falls in the 4th quadrant so the bank should neglect it. Threats 1) competition: ICICI Bank is facing tight competition locally as well as internationally. Bank like CITI Bank, HSBC, ABM, Standard Chartered, HDFC also provide equivalent facilities like ICICI do and also ICICI do not have consistency in its international operation. 2) Net Services: ICICI Bank provides all kind of services on-line. There can be easy access to the e-mail ids of the customers through wrong people. The confidential information of the customers can be leaked easily through the e-mail ids. 3) Decentralized Management: Each branch manager is given the authority of taking decisions in their respective branches. The decisions made by different managers are diverse and any one wrong decision can laid to heavy losses to the bank. 4) No Proper Facilities to Uneducated customers: ICICI Bank provides all services through electronic computerized machines. This creates problems to the less educated people.
27

Rating of Icici Groups Swot analysis Rating Scale of ICICI Group ltd. Rate out of 5 (1for poorest and 5 for the best ) 4 3 4 2 3.25

Online Services Advanced Infrastructure Competition Customer education service Average Score.

28

SWOT ANANLSIS OF STATE BANK OF INDIA. STRENGTHS: Brand name: SBI Bank has earned a reputation in the market over the period of time (Being the oldest bank in India tracing history back to 1806) Market Leader: SBI is ranked at 380 in 2008 Fortune Global 500 list, and ranked 219 in 2008 Forbes Global 2000. With an asset base of $126 billion and its reach, it is a regional banking behemoth. Wide Distribution Network: Excellent penetration in the country with more than 10000 core branches and more than 5100 branches of associate banks (subsidiaries). Diversified Portfolio: SBI Bank has all the products under its belt, which help it to extend the relationship with existing customers Bank has umbrella of products to offer their customers, if once customer has relationship with the bank. Some Products, which SBI Bank is offering are: Retail Banking Business Banking Merchant Establishment Services (EDC Machine) Personal loans & Car loans Insurance Housing Loans Government Owned: Government owns 60% stake in SBI. This gives SBI an edge over private banks in terms of customer security. Low Transition Costs-SBI offers very low transition costs which attracts small customers. Continued effort to increase low cost deposit would ensure improvement in NIMs and hence earnings. WEAKNESSES: The existing hierarchical management structure of the bank although strength in some respects, is a barrier to change. Though SBI cards are the 2nd largest player in the credit card industry, it has the highest nonperforming assets (NPAs) in the industry, which stand out to be at 16.28 % (Dec 2007). Modernisation: SBI lags with respect to private players in terms of modernisation of its processes, infrastructure, centralisation, etc. SBI is currently operating at a lowest CAR(8%). Insufficient capital may restrict the growth prospects of the bank going forward. Delay in technology up gradation could result in loss of market shares. Management indicated a likely pension shortfall on account of AS-15 to be close to Rs50bn. Contribution of retail credit to total bank credit stood at 26%. Significant thrust on growing retail book poses higher credit risk to the bank.

OPPORTUNITIES:

29

 Merger of associate banks with SBI: Merger of all the associate banks (like SBH, SBM, etc) into SBI will create a mega bank which streamlines operations and unlocks value. Planning to add 2000 branches and 3000 ATMs in 2008- 2009. This will further increase its reach. Increasing trade and business relations and a large number of expatriate populations offers a great opportunity to expand on foreign soil. Global expansion: SBI already has expanded globally and start its operations internationally in 32 countries like Australia, Bangladesh, etc.... and has more plans of expansion in other global markets. Growing retail & SMEs thrust would lead to higher business growth. Micro Finance: there is a lot of growth opportunity in the area of micro finance. Strong economic growth would generate higher demand for funds pursuant to higher orporate demand for credit on account of capacity expansion. THREATS: threats from MNC banks: Large numbers of MNC banks are mushrooming in the Indian market due to the friendly policies adopted by the government. This can increase the level of competition and prove a potential threat for the market share of SBI bank. Consumer expectations have increased many folds in last few years and the bank has not been responsive enough to meet them on time. Private banks have started venturing into the rural and semiurban sector, which used to be the bastion of the State Bank and other PSU banks Employee Strike: There was an employee strike in the year 2006 which disrupted SBIs activities. This can be repeated in the future. Stiff competition, especially in the retail segment, could impact retail growth of SBI and Hence slowdown in earnings growth. Slow down in domestic economy would pose a concern over credit off-take thereby Impacting earnings growth. The changing interest rates and the changing policies of RBI.

Rating Score on the State Bank of India

Rating Scale of Sbi Rate out of 5 (1for poorest and 5 for the
30

best ) Online Services Advanced Infrastructure Competition Customer education service Average Score. 4 3 5 3 3.75

Structure Questionnaire Analysis

STRUCTURE QUESTIONNAIRE ICICI BANK 1. What are the documents required to apply for a loan?
31

I. II. III. IV. V. VI.

KNOW YOUR CUSTOMER (KYC). Income. Property. Other Documents Where check-off is proposed. Additional Requirements & Legal agreements. 2. How you evaluate a persons capability to re-pay the loan amount?

The take help of software. The software works on some criteria i.e. they use their income and some other liability is still lying on that person or not is entered within in few minutes they get the result of it. There are three process involved in these process. They are I. II. III. Processing Maintenance Storage Department

The first step is completed by using software. There after they use CIBIL reports to check the persons history of getting loans and bank details. There all the information is shared and the ultimately decision is taken. This process is concluded in three to four says. 3. Does rejection from any other bank affects your decision? If yes, to what extent. Yes rejection from any bank does affect our decision but the bank had to see what the reasons for their rejections are. If income is the factor than at this point only the decision defers. Also relation with the client matters in this case decision may defer in case of banks. 4. Is there any provision for getting guarantee for a loan? Yes as given in our list only these documents of guarantor but they only see that guarantor should be a reputed or golden client of the bank. 5. Which loan is better in terms of profitability for banks? And why? As far as profitability is concern loans which has a floating rate of interest is more profitable because if we considered the loan interested is floating for loan holders but not for deposit holders so it becomes cheap for banks.
32

6. Whether decision to grant loan is affected by social barriers? Certainly no because we use software so we only see the loan repaying capability of the applicant whether he has the capacity or not. If doubt arises we ask for any reputed guarantor. It also depends on the person even because ultimately we have to decide whether to grant the loan or not.

7. What is the NPA of your bank or branch for the last completed period? Up to last financial year banks NPA was 1.87% which amount to Rs. 2,091.22 8. For home loan collaboration with builders, what are the points except documents, which you expect from applicant builders? Generally we dont go for such an activity for it we have a separate division call ICICI HOME FINANCE COMPANY

Thanking You Mr. Saurabh Branch Manager, Ankur cross road Branch, Ahmedabad & Mr. Prakash Dave Operations Executive Mobile No. 81289-98542

33

Structure questionnaire by STATE BANK OF INDIA

1. What are the documents required to apply for a loan?
Refer list of SBI

KNOW YOUR CUSTOMER (KYC). Income. Property. Other Documents Where check-off is proposed. Additional Requirements & Legal agreements.

2. How you evaluate a persons capability to re-pay the loan amount?

The take help of software. The software works on some criteria i.e. they use their income and some other liability is still lying on that person or not is entered within in few minutes they get the result of it. There are three process involved in these process. They are

Processing Maintenance Storage Department

The first step is completed by using software. There after they use CIBIL reports to check the persons history of getting loans and bank details. There all the information is shared and the ultimately decision is taken. This process is concluded in three to four says.

3. Does rejection from any other bank affects your decision? If yes, to what extent.

34

Rejection from any bank does affect our decision but the bank had to see what the reasons for their rejections are. If income is the factor than at this point only the decision defers. Also relation with the client matters in this case decision may defer in case of banks.

4. Is there any provision for getting guarantee for a loan?

Yes as given in our list only these documents of guarantor but they only see that guarantor should be a reputed or golden client of the bank.

5. Which loan is better in terms of profitability for banks? And why?

As far as profitability is concern loans which has a floating rate of interest is more profitable because if we considered the loan interested is floating for loan holders but not for deposit holders so it becomes cheap for banks.

6. Whether decision to grant loan is affected by social barriers?

Certainly no because we use software so we only see the loan repaying capability of the applicant whether he has the capacity or not. If doubt arises we ask for any reputed guarantor.

7. What is the NPA of your bank or branch for the last completed period? Cash recoveries of Rs.1,617 crore, up gradation of NPAs to standard assets of Rs.958 crore and write-off of bad debts worth Rs.3,974 crore were achieved as on March 31, 2004. The gross reduction till the end of March 2004 was Rs.6, 549 crore, but the overall reduction was affected by fresh slippages of Rs.5,721 crore.

8. For home loan collaboration with builders, what are the points except documents, which you expect from applicant builders? That a separate kind of business generally we always use to combine and get all the necessary documents so that the applicant does not have to worry about the documentations part.

Thanking You
35

Mr. C V Narsimarao Branch Manager, CG Road Branch, Ahmedabad & Mr. Amit Sardana Asst- Manager, SBI Contact No.079-26446946, Mobile No. 76000-38943

Questionnaire
The samples were collected from the customers of Icici bank and State bank of India. In total there are in total 100 questionnaire of which 50 are filled by customers of Icici bank and rest by customers of State bank of India. Their analysis is as follows: For the above survey following had become the result.

1. The people who have been ask for security and there income level.

36

Security asked by the banks because the appicent who had applied does no hold sufficient income to justify his savings as well as income level. To this reason form some of the applicent banks have asked for security,

2. Chart of loan approval and income level.

37

It is not true that the people who have high income level get loan easily. Bank check that wheather the person has suitable income to justify their cost and due to this they check twice before franting loan to any person. 3. Chart of processing time of different types of loan?

Well some of the loan are self secured where as some loans like personal loan and education are not as secured as home and auto loan so there is a difference in processing time of these loans. 4. Income level and type of account with the bank
38

Those whose income is sourced through business these people have current account where as those who have salary income would have a current account.

Recommendations
1. In this project from the analysis I found that there is always a gap between what the financial service provider delivers and what he ultimate consumers perceives.
39

2. I found the majority of the people are satisfied with their banker but it would be better if they could provide them with better service. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. Sufficient concentration on Credit Appraisal of the borrower. Bank has to take sufficient and correct information of the borrower like Complete residential address. Complete working/office address. Contact numbers of both resident and office. Complete residential address of guarantor. Complete working/office address of guarantor. Contact numbers of both resident and office of guarantor. Bank should properly verify all the documents submitted by the borrower. If borrower is enjoying any other credit facilities provided by SBI or other banks then bank should verify that whether the person is regular in repayment or not. This is very useful information for the bank.
13.

Proper verification of securities. They should very the BASAL report before granting the loan.

14.

Appendix Structured Questionnaire the question which were asked to banks Questions to be ask to the bank officials
40

1. What are the documents required to apply for a loan?

2. How you evaluate a persons capability to re-pay the loan amount?

3. Does rejection from any other bank affects your decision? If yes, to what extent.

4. Is there any provision for getting guarantee for a loan?

41

5. Which loan is better in terms of profitability for banks? And why? Fixed rate Floating rate.

6. Whether decision to grant loan is affected by social barriers?

7. What is the NPA of your bank or branch for the last completed period?

42

8. For home loan collaboration with builders, what are the points except documents, which you expect from applicant builders?

QUESTIONAIRE Dear Respondent, I am student of S K Patel Institute of Management and Computer Studies, Gandhinagar. I am conducting a research study on Strategic comparison of ICICI Bank and SBI and evaluating the Feasibility of loan allotment criteria. I will appreciate your cooperation in this regard by filling up the questionnaire carefully. All the information provided by you will be kept confidential. Name Age : _______________________ : _______________________
43

Income level per month Less than Rs. 10,000

Gender (M/F) : _______________________ Profession : _______________________

Rs.10,000 to Rs.20,000 Rs.20,000 to Rs.30,000 More than Rs.30,000

1. In which bank(s), do you have your account? (please tick any one ) a. ICICI Bank. b. State Bank of India. 2. Which type of account, you have with the bank? a. Savings Account b. Current Account d. Term Deposit e. Cash/Credit Account

c. Loan Account f. Others______________

3. How frequently, you use banking service provided by your bank? a. Daily b. weekly. c. Twice a week.

d.

Monthly

e. Occasionally.

4. Have you applied for loan at any of the two banks mentioned above? a. Yes. b. No

(If b. No then go directly on Question no. 11) 5. Is the loan approved by the bank? a. Yes. b. No.

6. In which bank, you have applied for loan? a. ICICI Bank. b. State Bank of India.

7. Which type of loan you have applied for? a. Home loan. b. Auto loan.
44

c. Personal Loan. d. Education loan. e. Others. Please specify._____________________ 8. What was the processing time of the loan? a. Immediate. d. 11 to 15 days. b. 1 to 5 days. e. More than 15. c. 6 to10 days.

9. Have you given any kind of security to the bank for the loan? a. Yes. b. No.

(If answer to the pervious Question is a. Yes than skip the next question.) 10. What is the reason given to you by the bank for rejection of the loan? a. Under /above age d. Not aware about. 11. Which of the following services you use, are provided by your bank? a. Cash transfer. d. Locker facility. b. ATM. e. Credit Card. c. Other e-banking service. f. Forex Services. b. Past Record. c. In-sufficient income.

e. Others please specify ____________________ 12. Rate the over-all service of your bank for satisfaction in terms of service between 1 to 10. (1 for poorest and 10 for the best.) ______________. 13. Please give suggestion for improvement in service to the bank. (If any) _____________________________________________________________________________ _ _____________________________________________________________________________ _ _____________________________________________________________________________.

45

THANK YOU.

References
Book Referred:Arthur A Thompson Jr, Crafting and Executing Strategy, The Tata McGraw-Hill companies publication. Naresh K Malhotra, Marketing Research an applied orientation, Pearson publication.

Journal Referred.
Gyan Management Journal, Volume-4 Issue-1 , June 2010, page 74-87
46

Website referred.
http://www.icicibank.com/aboutus/annual.html http://sbi.co.in/user.htm

47