Description
COMPETITON ANALYSIS OF HDFC BANK
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Summer Project Certificate
This is to certify that Mr. / Ms. _____________________________ Roll No. _________ a student of PGDM has worked on a summer pro ect titled ____________________________________________ __________________________________________________________ ____________ at ______________________ after Trimester!""" in partial fulfillment of the re#uirement for the Post
Graduate Diploma in Mana$ement pro$ramme. This is his/her ori$inal work to the %est of my knowled$e.
Date&___________ 'i$nature ________________
(_________________________) Name of Faculty
*"MT+,- '+./ 0
ACKNOWLEDGEMENT
The purpose of this project report is not whose name appears but to acknowledge the value additions ant contributions. Success can never be achieved through individual effort but through guidance and teamwork. I would like to take this opportunity to thank my industry guide Mr. RACHIT SRIVASTAV, BRANCH MANAGER (DWARKA) and my faculty guide Prof R.J. MASILAMANI who helped me to complete this challenging task. I would like to extend my gratitude to Mrs. MANISHA VARMA, Person ! B n"er, HD#C $ n" (D% r" ) and MR. VIVEK PATHAK Person ! B n"er A&'(or)*er, HD#C $ n" (D% r" ) who went out of their way to guide me throughout my project and gave varied insights. I am grateful to MR. SH+BHANKAR BOSE, BRANCH MANAGER (ANAND NIKETAN) for his constant interest, involvement and support. Besides, I thank all those invisible hands without whose contribution this project would not have been possible. I would like to thank all the concerned executives and staff members of HD#C $ n" and other bank staff members who acted as a constant support for me and also helped by providing valuable insights. I would like to express my gratitude towards my parents for their moral and financial support in completion of this project. ast but not least I would like to thank my colleagues and friends for their valuable support during my summer internship.
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TABLE O# CONTENTS
Page No
E,EC+TIVE S+MMAR-.............................. / INTROD+CTION............................0 COMPAN- OVERVIEW............................1 OBJECTIVE O# THE ST+D-.......................23 HD#C BANK PROD+CT PORT#OLIO...................21 STRATEGIES O# HD#C BANK ......................45 RETAIL BANKING6 ANAL-SIS.....................78 HD#C BANK RETAIL PROD+CTS...................73 COMPETATIVE ANAL-SIS........................89 SERVICE MARKETING6SERV:+AL MODEL ON HD#C BANK.......33 ANAL-SIS ; RECOMMENDATIONS...................50 RE#ERENCES
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E,EC+TIVE S+MMARThe pace of development for the Indian banking industry has been tremendous over the past decade. !s the world reels from the global financial meltdown, India"s banking sector has been one of the very few to actually maintain resilience while continuing to provide growth opportunities, a feat unlikely to be matched by developed markets around the world. Transition from class banking to mass banking and increased customer focus is drastically changing the landscape of Indian banking. #xpansion of retail banking has a lot of potential as retail assets are just $$% of the total banking assets and the contribution of retail loans to &'( is a mere )% in India compared to *+% in ,hina. This report discusses the retail products available with -'., bank and compares them with the products of competitor banks. This paper describes work undertaken to determine both retail customer and staff perceptions of those factors which determine service /uality. The paper presents some conclusions of significance for retail
banking in particular, and service providers in general. It provides a useful comparison of different banks with its key competitors i.e. I,I,I bank, !0IS bank, 12T!1 3!-I4'5! bank and (647!B 4!TI24! bank and presents the attributes of service marketing with the help of S#5896! model. It outlines the implementation of the S#5896! model in the
bank"s subse/uent /uality improvement programme, as evidenced through the bank"s customer satisfaction endeavors and also what information I receive through customer interaction and by interaction in different banks. :ith time it has emerged consistently in the recent services marketing literature is the importance of frontline employees in service delivery. The internal marketing concept is based on the belief that a firm"s internal market;employees can be motivated to strive for customer<consciousness, market orientation and sales<mindedness through the application of accepted external marketing approaches and principles. This project considers
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that the objectives of the firm could be achieved by aligning them with the values to frontline employees as well as with the customers. The information was gained after continuous interaction from the customers and the different banks and analy=ing their culture. .
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INTROD+CTION
In'ro<&=')on 'o $ n")n> C( n>)n> f =e of $ n")n> s ser?)=e )n<&s'r@
Banking in India has changed with time, it has seen a revolution and it has been growing. India has experienced tremendous reform in financial and banking sector. The jump of economy from the manufacturer industry, which used to be the most revenue generating industry, to the service industry has seen the makeover of the banking sector. The banking sector is one of the largest service providing sectors in India. These services are of utmost importance to the customers as it takes care of their financial needs, in fact even maintain them. 4ow this concept of banks as the service provider has underwent transformation as the concept of services is growing and has become more and more complex. In India the banking sector is segregated as public or private sector banks, cooperative banks and regional rural banks. .oreign banks have been given a different head followed by upcoming foreign banks in this section. 'ue to this the customers demand has seen a major rise. These changes has given rise to the need of the banking industry to analysis their competition and to have a defined marketing strategy , to become the leader in providing the bou/uet of services at customers end as well as giving them the best financial advice. The Indian banking industry with time has achieved an astonishing and tremendous growth rate. :hen asked from bank executives or rather the expert in the field, the revenue from the banks has been growing and has recorded positive results for the year $>>?<*>. !ccording to them the growth must have been around *+<$>% and is expected to grow more than $>% in the upcoming years.
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.igure< (rojected growth rate for banks
Ne% AAro =(
The development of technology has led to a more convenient retail banking system. !T3, 3obile banking, S3S banking and most popular these days net banking facilities are available to and being increasingly availed of by customers. :ith more persons open to the concept of easy banking, all the leading banks have started strategi=ing on the concept of convenient banking looking at the fast growing needs of the customers. 4ow the banks are striving to achieve this by having a cost effective approach, which means that to achieve maximum of profit but with minimum of cost. The banks now have such a close competitive angle in almost all of its products and services within the banking area that it has become difficult for the customers to distinguish between them. ! progressively growing balance sheet, higher pace of credit expansion, expanding profitability and productivity akin to banks in developed markets, lower incidence of nonperforming assets and focus on financial inclusion have contributed to making Indian banking vibrant and strong. Indian banks have begun to revise their growth approach and re<evaluate the prospects on hand to keep the economy rolling. The way forward for the Indian banks is to innovate to take advantage of the new business opportunities and at the same time ensure continuous assessment of risks.
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G!o$ ! !)n" >e
2ur country with time has seen many collaborations in this sector with foreign banks taking large stakes in Indian banks. This has widened the hori=ons for banking services considerably and enabled operations on a much higher scale to meet the growing demands of customers. Some of the foreign banks operating successfully in India are !B4<!352, ,iti Bank, 'eutsche Bank, -SB,, Standard ,hartered Bank and etc. The Indian banks have now become focused on being customer centric and the future challenge in front of them is to become a global brand example by providing an exhilarating experience to the customers in the service industry without compromising on the profit. .or this the banks need to have a competition analysis of their competitive banks and by being able to develop uni/ue marketing strategy for penetrating within the market.
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HD#C BANKB =oCA n@ o?er?)e%
A$o&' HD#C
-'., bank was among the few private banks to have started their operations in *??@ after the government of India allowed new private banks to emerge in Indian banking sector. -ousing development and .inance ,orporation of India has been credited with being one of the best financial bank in India with the track record of giving the best financial advice to its customers and offering the best products and services in banking area. 'ue to its impeccable service offered to the customer as per their demand and convenience, -'., bank has become one of the leading banks in India offering customer service. In fact customers credit it for being one of the finest in customer service leading to easy and convenient banking. :ith its experience in the financial markets, a strong market reputation, large shareholder base and uni/ue consumer franchise, -'., has positioned itself as being the bank that cares for the customers. -'., Bank provides a variety of wholesale, retail, and depository financial services through more than *,@>> branches and some A,>>> !T3s throughout India. #stablished by the -ousing 'evelopment .inance ,orporation in *??@, the bank offers deposit accounts, loans, credit cards, insurance, investments, and related services. -'., Bank targets individual customers in the middle and upper<class, as well as trusts, small businesses.
CoCA n@ Arof)!e
-'., bank is a leading private sector bank and financial services company in India. The bank aspires to be the preferred provider of financial services to upper< and middle<income individuals and leading corporations in India. The strategy of the bank over the years have been to provide a comprehensive range of financial products and services for the customers through multiple distribution channels, with high /uality service and superior execution of the services offered. The bank principally deals into mainly three business activities which can be categori=ed asB retail banking, wholesale banking and treasury operations. The bank has achieved tremendous growth since it started its operations in 7anuary *??+. 2ver the last five years it has expanded operations from $A* branches and CA$ !T3s in *$$ cities to *,@*$ branches and $,D?> !T3s in +$C cities in India as on 'ecember A*, $>>D. !dditionally
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the Bank has a branch in Bahrain and representative offices in the 6.!.# and 1enya. 'uring the five years, bankEs customer base grew from A.@> million customers to over *C million customers. !s with time the -'., bank expanded its geographical reach and market penetration, with this the bank"s assets also increased, and it grew from 5s. A>,@$@ crore as of 3arch A*, $>>A to 5s. *DA,*D+ crore as of 'ecember A*, $>>D. The net income also recorded an increase from 5s. ADD crore for the fiscal year $>>A to 5s. *,+?> crore for the fiscal year $>>D at a compounded annual growth rate of A$.)>%. 4otwithstanding the pace of growth, the bank has maintained a strong balance sheet and a low cost of funds. !s of 'ecember A*, $>>D net non<performing assets constituted >.)% of net advances. The average non<interest bearing current accounts and low<interest savings accounts represented +*.C>% of total deposits for fiscal $>>D. These low<cost deposits, which include the cash float associated with bank"s transactional services, led to an average cost of funds including e/uity for fiscal $>>D of @.*>%. -'., bank is a part of the -'., group of companies founded by our principal shareholder, -ousing 'evelopment .inance ,orporation imited FG-'., imitedHI, which is a public limited company established under the laws of India. -'., imited and its subsidiaries owned *?.AD% of bank"s outstanding e/uity shares as of .ebruary >), $>>?. The Bank has two subsidiariesB -'., Securities imited FG-S HI and -'B .inancial Services imited FG-'B.SHI. -S is primarily in the business of providing brokerage services through the internet and other channels. -'B.S is a non<deposit taking non<bank finance company FG4B.,HI, for the establishment of which the Bank received 5eserve Bank of India FG5BIHI approval during the fiscal year $>>D.
-'., bank is a commercial bank of India, promoted by the housing development finance corporation, a premier housing finance company of India. The company head/uarters are situated in 3umbai and has around all the branches in +$D cities which are all linked on an online real< time basis. -'., bank is a type of public company and was founded by 3r. 'eepak (arekh. The bank has approximately total assets of I45 *>>).D$ billion. .or the fiscal year $>>D<>?, the bank has reported net profit of 5s.$, $@@.? crore, up @*% from the previous fiscal. Total annual earnings of the bank increased by +D% reaching at 5s.*?, )$$.D crore in $>>D<>?.
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The chairman of -'., is 3r. 7agdish capoor and 3r. !ditya (uri serves as the company managing director. They have been responsible for making the company people"s company with their efforts. The company revenue in $>>? 5s. *?C.+ billion and its profit has been 5s. $.$@ billion. The company now has total assets of 5s. *.D trillion and has +$,)DC employees currently working with -'.,. The bank has about +C>,>>> shareholders. The shares are listed on the Stock #xchange, 3umbai and the 4ational Stock #xchange. The bankJs !merican 'epository Shares are listed on the 4ew Kork Stock #xchange F4KS#I under the symbol J-'BJ.
A=D&)s)')ons n< Mer>ers
In a milestone transaction in the Indian banking industry, Times Bank imited Fpromoted by
Bennett, ,oleman L ,o. ; Times &roupI was merged with -'., Bank td., in $>>>. This was the first merger of two private banks in India. !s per the scheme of amalgamation approved by the shareholders of both banks and the 5eserve Bank of India, shareholders of Times Bank received * share of -'., Bank for every +.C+ shares of Times Bank. In $>>D -'., Bank ac/uired ,enturion Bank of (unjab taking its total branches to more than *,>>>. The amalgamated bank emerged with a strong deposit base of around 5s. *, $$,>>> crore and net advances of around 5s. D?,>>> crore. The balance sheet si=e of the combined entity is over 5s. *, )A,>>> crore. The amalgamation added significant value to -'., Bank in terms of increased branch network, geographic reach, and customer base, and a bigger pool of skilled manpower. The mergers can be termed as a /uest for growth in the Indian banking environment.
Bo r< =oCC)''ees
The Board has constituted committees of 'irectors to take informed decisions in the best interest of the Bank. These committees monitor the activities falling within their terms of reference. 8arious committees of the Board were reconstituted during the year due to induction of additional 'irector namelyM 3r. (andit (alande. The BoardJs ,ommittees are as followsB The BoardJs ,ommittees are as followsB !udit and ,ompliance ,ommittee ,ompensation ,ommittee
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InvestorsJ &rievance FS-!5#I ,ommittee 5isk 3onitoring ,ommittee ,redit !pproval ,ommittee The (remises ,ommittee 4omination ,ommittee .raud 3onitoring ,ommittee
CoCAens ')on CoCC)''ee
The ,ompensation ,ommittee reviews the overall compensation structure and policies of the Bank with a view to attract, retain and motivate employees, consider grant of stock options to employees, reviewing compensation levels of the BankJs employees vis<N<vis other banks and industry in general. The BankJs compensation policy is to provide a fair and consistent basis for motivating and rewarding employees appropriately according to their job ; role si=e, performance, contribution, skill and competence. The ,ommittee met A FthreeI times during the year.
T(e PreC)ses CoCC)''ee
The (remises ,ommittee approves purchases and leasing of premises for the use of BankJs branches, back offices, !T3s and residence of executives in accordance with the guidelines laid down by the Board. The ,ommittee is chaired by 3rs. 5enu 1arnad. The ,ommittee met @ FfourI times during the year.
#r &< Mon)'or)n> CoCC)''ee
(ursuant to the directions of the 5eserve Bank of India, the Bank has constituted a .raud 3onitoring ,ommittee, exclusively dedicated to the monitoring and following up of cases of fraud amounting to 5s.* crore and above. The objective of this ,ommittee is the effective detection of frauds and immediate reporting thereof to regulatory and enforcement agencies and actions taken against the perpetrators of frauds.
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C&s'oCer Ser?)=e CoCC)''ee
,ommittee monitors the /uality of services rendered to the customers and also ensures implementation of directives received from 5BI in this regard. The terms of reference of the ,ommittee are to formulate comprehensive deposit policy incorporating the issues arising out of death of a depositor for operations of his account, the product approval process, and the annual survey of depositor satisfaction and the triennial audit of such services. The ,ommittee met @ FfourI times during the year.
CorAor 'e >o?ern n=e
-'., Bank recogni=es the importance of good corporate governance, which is generally accepted as a key factor in attaining fairness for all stakeholders and achieving organi=ational efficiency. This ,orporate &overnance (olicy, therefore, is established to provide a direction and framework for managing and monitoring the bank in accordance with the principles of good corporate governance.
Co<e of =orAor 'e >o?ern n=e
The Bank believes in adopting and adhering to best recogni=ed corporate governance practices and continuously benchmarking itself against each such practice. The Bank understands and respects its fiduciary role and responsibility to shareholders and strives hard to meet their expectations. The Bank believes that best board practices, transparent disclosures and shareholder empowerment are necessary for creating shareholder value. The Bank has infused the philosophy of corporate governance into all its activities. The philosophy on corporate governance is an important tool for shareholder protection and maximi=ation of their long term values. The cardinal principles such as independence, accountability, responsibility, transparency, fair and timely disclosures, credibility etc. serve as the means for implementing the philosophy of corporate governance in letter and spirit.
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Pro>ress
The Bank"s staffing needs continued to increase during the year particularly in the retail banking businesses in line with the business growth. Total number of employees increased from *@DCD as of 3archA*, $>>) to $*@CC as of 3arch A*, $>>C. The Bank continues to focus on training its employees on a continuing basis, both on the job and through training programs conducted by internal and external faculty. The Bank has consistently believed that broader employee ownership of its shares has a positive impact on its performance and employee motivation. The Bank"s employee stock option scheme so far covers around ?>>> employees. -'., Bank has demonstrated very consistent delivery of performance over the last so many years and has already notched up its place as the one of the largest private sector bank in the country and the growth momentum is expected to continue. The bank has stepped up to retail customer ac/uisition with deposit accounts increasing from ).$ million to D.C million and total cards issued Fdebit and credit cardsI increasing from C million to ?.$ million FapproxI. 4ot only the retail banking of -'., is blooming day by day but its services offered in wholesale banking has also given tremendous growth to the bank. The online banking system i.e. net banking has been an eye attraction for the customers as it gives them fast and convenient banking. !s already mentioned about its growing distribution network the bank is continually planning for expansion of the branches of the bank. ,ustomers are efficiently serviced through telephone banking also. The BankJs expansion plans take into account the need to have a presence in all major industrial and commercial centers 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 the centers where the 4S#;BS# has a strong and active member base. :ith the excellent distribution network -'., aspires to have as strong position in the market and with the customers. -'., bank has always aspired to become a world class bank and has been trying to adopt an efficient and effective approach to understand the ever changing customer demands and to offer them superior service. -'., thus has been marketing itself with the tagline saying Gwe understand your worldH.
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4ow if one observes the revenue earned by -'., during last year than it can be said that revenue growth was driven principally by an increase in net income. The other income Fnon interest revenueI increased primarily due to fees and commissions, profit; FlossI on revaluation ; sale of investment and income from foreign exchange and derivates income. 2perating Fnon< interestI expenses increased due to higher infrastructure and staffing expenses in relation to the expansion in the branch network, and growth in the retail loan and credit card businesses.
net revenuebreak downF Y09
treasury and other operatin$ incom e 29 fore: incom e 79
fee incom e 169
net incom e 479
.igure< -'., bank revenue breakdown
A% r<s n< =()e?eCen's
-'., has earned several awards for its growth and progressive services offered to the customers. ! few are listed belowB • ,orporate best bank award O 'un and Bradstreet O!merican #xpress corporate best bank award $>>C • • Best Bank !ward in the private sector category< outlook money and 4'T8 profit Best 5etail Bank in India O The !sian banker excellence in retail financial services awards.
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• •
#uromoney !wards $>>? <JBest Bank in IndiaJ #conomic Times Brand #/uity L 4ielsen 5esearch annual survey $>>? 3ost Trusted Brand < 5unner 6p
• • •
!sia 3oney $>>? !wards < JBest 'omestic Bank in IndiaJ IB! Banking Technology !wards $>>?<JBest IT &overnance !ward < 5unner upJ &lobal .inance !ward <JBest Trade .inance Bank in India for $>>?
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OBJECTIVE O# THE ST+DThe objective of this study is to study the products available with -'., bank in the retail category and to understand and analy=e the marketing. !nother objective is to compare them with products provided by other banks in the retail category. The banks chosen for competitive analysis are O I,I,I bank !0IS bank 12T!1 3!-I4'5! bank (647!B 4!TI24! bank The study also aims to understand how -'., bank works in the service marketing by using the serv/ual model. The study will help to understand the following objectivesB< • It will also help to understand and analy=e the dimensions of the awareness and satisfaction level of customers with regard to the services provided by the selected branches of the major banking customers. • The study will help to identify and differentiate the best banking sector among the above banks in terms of customer satisfaction, • To ascertain the relevant dimensions of service /uality in banks, and,
•
To offer suggestions, if needed, based on the analytical results of the current study.
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-ence, the study seeks to develop a common understanding of service /uality in the banking industry across different customer segments. The models of marketing like serv/ual model have been used to analy=e services of -'., and strategic marketing of -'., bank. It helps -'., bank to maintain a competitive edge. The data was collected through two sources which help me understand the working of -'., bank and also make analysis for the project. The data was collected through following waysB< Secondary sources< Secondary data provide a starting point for study and offer the valuable source of information. The secondary data was the most important source for my project because it helped in collecting desired information (rimary sources< (rimary data are data freshly gathered for a specific purpose. The various sources of primary data for my project are as follows. ? Banks. ? ,ustomers of different banks ? (eople from industries
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HD#C BANK PROD+CT PORT#OLIO
Pro<&='s n< ser?)=es ' >! n=e
-'., Bank mainly provides three kinds of banking servicesB
• • •
(ersonal Banking 45I Banking :holesale Banking
NR" %ankin$ 159
wholesale %ankin$ 069
personal %ankin$ 339
.igure< product breakup according to the customer preferences If the customer needs to deal in foreign currency and keep tabs on exchange rates, transfer funds to India, make payments etc, -'., Bank has a range of products and services that a customer
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can choose from to transact smoothly, efficiently and in a timely manner. -'., Bank offers /uick, economical and convenient options to remit and transfer funds to India. :ith -'., Bank"s payment services, one can bid goodbye to /ueues and paper work. -'.,"s range of payment options make it easy to pay for a variety of utilities and services. Bank offers (rivate Banking services to high net worth individuals and institutions.
,orporate Banking reflects -'., Bank"s strengths in providing corporate clients, a wide array of commercial, transactional and electronic banking products. -'., Bank acts as an active medium between the government and the customers by means of various services. -'., deals with basically three areas which can be segmented asB< • • • :holesale banking services 5etail banking services Treasury
It has entered the banking consortia of over +> corporate for providing working capital finance, trade services, corporate finance and merchant banking. It is also providing sophisticated product structures in areas of foreign exchange and derivatives, money markets and debt trading and e/uity research.
W(o!es !e B n")n> Ser?)=es
The BankJs target market ranges from large, blue<chip manufacturing companies in the Indian corporate to small L mid<si=ed corporate and agri<based businesses. .or these customers, the Bank provides a wide range of commercial and transactional banking services, including
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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. -'., Bank has made significant inroads into the banking consortia of a number of leading Indian corporate including multinationals, companies from the domestic business houses and prime public sector companies. It is recogni=ed as a leading provider of cash management and transactional banking solutions to corporate customers, mutual funds, stock exchange members and banks.
Re' )! B n")n> Ser?)=es
The objective of the 5etail 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 his;her banking re/uirements. 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 !T3s, (hone Banking, 4et Banking and 3obile Banking. -'., Bank was the first bank in India to launch an International 'ebit ,ard in association with 8IS! F8IS! #lectronI and issues the 3aster,ard 3aestro debit card as well. The Bank launched its credit card business in late $>>*. By 3arch $>>?, the bank had a total card base Fdebit and credit cardsI of over *A million. The Bank is also one of the leading players in the Gmerchant ac/uiringH business with over C>,>>> (oint<of<sale F(2SI terminals for debit ; credit cards acceptance at merchant establishments. The Bank is well positioned as a leader in various net based B$, opportunities including a wide range of internet banking services for .ixed 'eposits, oans, Bill (ayments, etc.
Tre s&r@
:ithin this business, the bank has three main product areas < .oreign #xchange and 'erivatives, ocal ,urrency 3oney 3arket L 'ebt Securities, and #/uities. These services are provided through the bankJs Treasury team. To comply with statutory reserve re/uirements, the bank is
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re/uired to hold $+% of its deposits in government securities. The Treasury business is responsible for managing the returns and market risk on this investment portfolio.
PERSONAL BANKING
S ?)n>s ==o&n' C&rren' ==o&n' #)Ee< <eAos)'s Lo ns In?es'Cen's ; Ins&r n=e C r<s
< 5egular Savings !ccount
(lus current account
5egular fixed deposit
(ersonal oans
3utual .unds< Insurance
Silver ,redit ,ard
< Savings (lus !ccount
Trade current account
+ year Tax savings fixed deposits
Two :heeler oans
Bonds
&old ,redit ,ard
Savings3ax !ccount
(remium current account
Super saver facility
4ew ,ar oan
.inancial (lanning
manJs &old ,redit ,ard
< Senior ,iti=ens !ccount
5egular current account
Sweep in facility
6sed ,ar oans
#/uities L 'erivatives
(latinum plus ,redit ,ard
01
< 4o .rills !ccount
5.,< domestic account
2verdraft against ,ar
3udra &old Bar
Titanium ,redit ,ard
< Institutional Savings !ccount
.lexi current account
#xpress oans
8alue plus ,redit ,ard
< (ayroll Salary !ccount
!pex current account
oan against Securities
-ealth plus ,redit ,ard
< ,lassic Salary !ccount
3ax current account
oan against (roperty
-'., Bank Idea Silver ,ard
< 5egular Salary 3erchant !ccount advantage current account < (remium Salary !ccount 3erchant advantage plus current account < 'efense Salary !ccount 5ecurring deposits
,ommercial 8ehicle .inance
-'., Bank Idea &old ,ard
,onstruction #/uipment .inance
'ebit ,ards
rking ,apital .inance
#asy ShopInternational 'ebit ,ard
< 1idJs
'emat
02
#asy Shop &old
!dvantage !ccount < (ension Saving Bank !ccount
account
'ebit ,ard
Safe deposits lockers
< #asy ShopInternational Business 'ebit ,ard
< .amily Savings !ccount
#asy Shopman"s !dvantage 'ebit ,ard
< 1isan 4o .rills Savings !ccount < 1isan ,lub Savings !ccount
(repaid ,ards
.orex plus card
1isan card
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WHOLESALE BANKING AND OTHER SERVICES
CorAor 'e $ n")n> SC !! n< Ce<)&C en'erAr)ses .unded Services .unded Services #)n n=) ! )ns')'&')on 'r&s's n< $ n" ,learing Sub< 3embership 5T&S O sub membership .und Transfer !T3 Tie<ups ,orporate Salary a;c Tax ,ollection 4on .unded Services 4on< funded services 3utual funds Travelers" ,he/ues !ccounts L 'eposits 5emittances Trade .inance !ccounts L 'eposits P5upee Saving a;c P5upee ,urrent a;c P5upee .ixed 'eposits P.oreign ,urrency 'eposits P!ccounts for 5eturning Indians #ORE, Ser?)=es NRI Ser?)=es
8alue added services
Speciali=ed services
Stock brokers
.oreign ,urrency ,ash
2ther services like <(rivate Banking <(ortfolio Investment Scheme <home oans < oans !gainst Securities < oans !gainst 'eposits <&old ,redit ,ard <(ayment Services !ccess
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To Bank <4etSafe <Bill(ay <Insta(ay <'irect(ay <8isa 3oney <2nline 'onation <4et Banking <2ne 8iew <Insta!lert <!T3 (hone Banking <#mail Statements <Branch 4etwork
Internet banking
Internet banking
.oreign ,urrency 'rafts
.oreign ,urrency ,he/ue 'eposits
.oreign ,urrency 5emittances .orex(lus
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,ard
STRATEGIES O# HD#C BANK
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OAer ')on ! s'r 'e>@
-'., bank has been a consistent player in the banking industry and has always been trying to produce the well balanced and right mix of products and services for both of its customers in retail base and corporate base. -'., bank operates in a highly automated environment in terms of information technology and communication systems. !ll the bankJs branches have online connectivity, which enables the bank to offer speedy funds transfer facilities to its customers. 3ulti<branch access is also provided to retail customers through the branch network and !utomated Teller 3achines F!T3sI. The Bank has made substantial efforts and investments in ac/uiring the best technology available internationally, to build the infrastructure for a world class bank. The BankJs business is supported by scalable and robust systems which ensure that the clients always get the finest services bank offer. The Bank has prioriti=ed 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. In the era of globali=ation each and every sector faced the stiff competition from their rivals. !nd world also converted into the flat from the globe. (rivate sector banks today used the latest technology for the different transaction of day to day banking life. !s we know that Information Technology plays the vital role in the each and every industries and gives the optimum return from the limited resources. Banks are service industries and today IT gives the innovative Technology application to Banking industries. -'., bank is the leader in the industries and today IT and -'., bank together combined they reached the sky. 4ew technology changed the mind of the customers and changed the /ueue concept from the history banking transaction. Today there are different channels which are available for the banking transactions.
07
There are drastically changes seen in the use of Internet banking, in a year $>>* F$%I and in the year $>>D F$+%I. This type of technology gives the freedom to retail customers. 4ew and improved technology results in the advantageous functioning of the bank smoothly and efficiently. -'., B!41 is the very consistent player in the new private sector banks. 4ew private sector banks to withstand the competition from public sector banks came up with innovative products and superior service. ,ustomer segments Fretail L wholesaleI account for D@% of 4et revenue F.K $>>?I .-igher retail revenues partly offset by higher operating and credit costs. -'., has tried to e/ually well position itself to grow both segments.
CoCAe')')?e S'ren>'(s
The bank attributes its growth and continuing success to the following competitive strengthsB aI HD#C $ n" )s !e <er Con> In<) n $ n"s )n '(e &se of 'e=(no!o>@
Since the bank"s inception, it has made substantial investments in technology platform and systems. Bank has built multiple distribution channels, including an electronically linked branch network, automated telephone banking, Internet banking and banking by mobile phone, to offer customers convenient access to our products. Technology platform has driven the development of innovative products and reduced operating costs. bI HD#C $ n" <e!)?ers ()>( D& !)'@ ser?)=e %)'( s&Aer)or eEe=&')on Bank tries to deliver efficient service with rapid response time. Bank"s focus on personali=ed service tries to draws customers to the products and increases existing customer loyalty. cI HD#C offer %)<e r n>e of Aro<&='s :hether in retail or wholesale banking, the bank tries to be a Gone<stop shopH for the ,ustomers" banking needs. The wide range of products creates multiple cross<selling opportunities for bank and improves customer retention rates.
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dI HD#C =! )Cs 'o ( ?e n eEAer)en=e< C n >eCen' 'e C !ccording to -'.,, many of the members of senior management team who have been with the bankM since inception seem to have substantial experience in multinational banking.
B&s)ness s'r 'e>@
-'., B!41 mission is to be Garld ,lass Indian BankH, benchmarking themselves against international standards and best practices in terms of product offerings, technology, service levels, risk management and audit L 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 BankJs risk appetite. Bank is committed to do this while ensuring the highest levels of ethical standards, professional integrity, corporate governance and regulatory compliance. ,ontinue to develop new product and technology is the main business strategy of the bank. 3aintain good relation with the customers is the main and prime objective of the bank. -'., B!41 business strategy emphasi=es the followingB PIncrease market share in India"s expanding banking following a disciplined growth delivering high /uality customer service. and financial services industry by strategy focusing on /uality and not on /uantity and
P everage our technology platform and open scalable systems to deliver more products to more customers and to control operating costs. P3aintain current high standards for asset /uality through disciplined credit risk management. P'evelop innovative products and services that attract the targeted customers and address inefficiencies in the Indian financial sector. P,ontinue to develop products and services that reduce bank"s cost of funds. P.ocus on high earnings growth with low volatility
11
SWOT ANAL-SIS
STRENGTH • • • • • • • • • • • Support of various promoters -igh level of services 1nowledge of Indian market 5ight strategy for the right products. Superior customer service vs. competitors &reat Brand Image (roducts have re/uired accreditations. -igh degree of customer satisfaction. &ood place to work ower response time with efficient and effective service. 'edicated workforce aiming at making a long<term career in the field.
. WEAKNESSES • • • • Some gaps in range for certain sectors. (roblems of sales staff. (rocesses and systems, etc. 4ot been fully able to position it correctly
10
OAAor'&n)')es • • • • • • • • • (rofit margins will be good. ,ould extend to overseas broadly. 4ew specialist applications. ,ould seek better customer deals .ast<track career development opportunities on an industry<wide basis. !n applied research centre to create opportunities for developing techni/ues to provide value<added services. &rowing Indian banking sector (eople are becoming more service oriented global market opportunity
T(re 's P egislation could impact. P&reat risk involved P8ery high competition prevailing in the industry. P8ulnerable to reactive attack by major competitors P ack of infrastructure in rural areas could constrain investment. P-igh volume;low cost market is intensely competitive.
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M r"e')n> s'r 'e>)es
• • • • • • • • • • • 'istribution ,hoice of channels for services 3odern technology 3aintaing public relationship Internet services !dvertising Strong marketing position (ersonal banking for the customers .ocus on 5elationship banking Bank tries to establish a customer relationship management in almost every branch. ,ustomer centric technologies
M r"e')n> = CA )>ns ! &n=(e< $@ HD#C $ n"
-'., Bank has launched neighborhood marketing initiatives in tier<two cities and towns to create awareness about its various products and services. These initiatives are especially targeted at those consumers who are not aware about the bankJs various value<added services such as
12
direct banking facilities. These campaigns demonstrated the advantages of net banking and mobile banking, as these concepts are relatively new to people living in smaller towns and cities. The bank has also launched another initiative called GBusiness 1i BatenH, which is targeted at areas where the bulk of the population comprises small businessmen. The bank would get experts to talk on a number of issues such as value<add tax and sales tax. !ccording to an article in -indu business line dated 4ovember @, $>>D, these campaigns provide bank with information about customer preferences that can be used for mass media communication, making it more effective. -'., can measure the result of a campaign through the sales that they generate and the customers that are added. There is a clear return on investment, which from a functional point of view gives the team a stronger voice. -'., has also been able to reduce ad spends by about *><*+ per cent and has also reduced the cost of ac/uisition. -'., wants to create an environment that is re/uired to support customer intelligence that leads to database marketing. -'., bank has invested in many cross< selling activities. -'., strategy has been not only the ac/uisition of new customers but at creating product awareness, enhancing usage and also providing value<added services to customers to reward them for their faith and loyalty. -'., also sends personali=ed mailers about their various products to the data base which they ac/uire. -'., tries to sell itself as one< stop financial super market.
C&s'oCers n< M r"e')n>6 (o% )s )' <one for re' )! Aro<&='s of '(e $ n"
The target market for retail services comprises upper< and middle<income persons and high net worth customers. -'., also target small businesses, trusts and non<profit corporations. The marketing of products is done through branches, telemarketing and a dedicated sales staff for niche market segments. -'., also use third<party agents and direct sales associates to market certain products and to identify prospective new customers. !dditionally, bank obtains new customers through joint marketing efforts with our wholesale banking department, such as our ,orporate Salary !ccount package. The marketing of auto loan and two<wheeler loan products are done through joint efforts with relevant manufacturers and distributors. There are programs that target other particular segments of the retail market. .or example, the private and preferred banking programs provide customi=ed financial planning to high net worth
13
individuals in order to preserve and enhance their wealth. (rivate banking customers receive a personal investment advisor who serves as their single<point -'., Bank contact, and who compiles personali=ed portfolio tracking products, including mutual fund and e/uity tracking statements. -'., bank private banking program also offers e/uity investment advisory products. :hile not as service<intensive as the private banking program, preferred banking offers similar services to a slightly broader target segment. Top revenue<generating customers of the preferred banking program are channeled into bank"s private banking program.
RETAIL BANKINGF AN ANAL-SIS
RETAIL BANKING
5etail banking is typical mass<market banking where individual customers use local branches of larger commercial banks. Services offered includeB savings and checking accounts, mortgages, personal loans, debit cards, credit cards, and so forth. This is very different from wholesale banking.
RETAIL BANKING IN INDIA
India is poised to become the worldJs fourth largest economy in the span of two decades. #conomic prosperity is providing many in this populous nation with real purchasing powerM it simply is an opportunity that cannot be overlooked by global banks. 'uring the last decade, India has emerged as one of the biggest and fastest growing economies in the world. The strengthening economy in India has been fueled by the convergence of several key influencesB liberali=ation policies of the government, growth of key economic sectors, development of an #nglish< speaking, well<educated work force and the emergence of a middle class population.
REASONS #OR THE CHANGE OVER #ROM CORPORATE BANKING TO RETAIL BANKINGB
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•
The financial sector reforms undertaken by the &overnment since the year *??* have accelerated the process of disintermediation which has encouraged blue chip corporate to access cheaper funds to meet their working capital re/uirements directly from investors in India. The deregulation of markets and interest rates has lead to cut throat competition among Banks for corporate loans and offer other valued services at comparatively cheaper rates to big and high value corporate. In the process, most of the banks have experienced substantial reduction in interest spreads and drain on their profitability.
•
The risks involved in corporate loans are very high as corporate have to keep all their eggs in one basket. The risks involved in retail Banking advances are comparatively less and well diversified as loan amounts are relatively small ranging from 5s. +>>> to 5s. *>> lack and repayable normally in short period of A<+ years except housing loans Fwhere repayment period is long up to *+ years in some casesI and from fixed source of income like salaries.
•
:hereas corporate loans give average return of just >.+ to *.+ percent only, the retail advances offer attractive interest spread of Ato @ percent, because retail borrowers are less interest rate sensitive than the ,orporate. !nother reason for large interest spreads on retail advances is that the retail customers are too fragmented to bargain effectively.
•
:hile corporate loans are subject to ups and downs in trade fre/uently, retail loans are comparatively independent of recession and continue to deliver even during the sluggish phase of economy.
•
•
5etail Banking gives a lot of stability and public image to banks as compared to corporate banking. The greater amount of consumerism in the country with upswing in income levels of burgeoning middle class, which has propensity to consume to raise their standard of living, is enlarging the retail markets. &iven the easy li/uidity scenario in the country the growth rate in this sector is likely to go up manifold in the years come.
•
5etail Banking clients are generally loyal and tend not to change from one Bank to another very often. arge numbers of 5etail clients facilitate marketing, mass selling and ability to categori=e;select clients using scoring system and data mining. Banks can cut
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costs and achieve economies of scale and improve their bottom<line by robust growth in retail business volume. • • • Through product innovations and competitive pricing strategies Banks can foster business relationship with customers to retain the existing clients and attract new ones. Innovative products like asset securiti=ation can open new vistas in sustaining optimal capital ade/uacy and asset liability management for banks. 5etail Banking offers opportunities to banks to cross sell other retail products like credit card, insurance, mutual fund products and demat facilities etc. to depositors and investors.
HD#C BANK RETAIL PROD+CTSF PERSONAL BANKING
-'., bank principal banking activities consist of retail banking, wholesale banking and treasury operations. The retail banking operations of the -'., bank have been discussed below.
Re' )! B n")n>F O?er?)e%
-'., bank considers itself a one<stop shop for the financial needs of upper< and middle<income individuals. It provide a comprehensive range of financial products including deposit products, loans, credit cards, debit cards, third<party mutual funds and insurance products, investment advice, bill payment services and other services. It offers high /uality service and greater convenience by leveraging our technology platforms and multiple distribution channels. -'., bank goal is to provide banking and financial services to our retail customers on an Ganytime, anywhere, anyhowH basis. -'., bank market services aggressively through its branches and direct sales associates, as well as through the bank"s relationships with automobile dealers and corporate clients. :hat the bank does is to establish a relationship with a retail customer and then expand it by offering more products and expanding their distribution channels so as to make it easier for the customer to do business with bank. Bank believes in this strategy, so that it can
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lead to general growth of the Indian economy and the Indian upper and middle classes, can afford bank"s significant opportunities for growth. -'., Es plan is to continue to expand their branch and !T3 network as well as their other distribution channels, subject to receiving regulatory approvals.
Re' )! Lo ns n< O'(er Asse' Pro<&='s
?
-'., Bank offers a wide range of retail loans, including loans for the purchase of automobiles, personal loans, retail business banking loans, loans for the purchase of commercial vehicles and construction e/uipment finance, two<wheeler loans, credit cards and loans against securities. The retail loans were +?.)% of bank"s gross loans as of 'ecember A*, $>>D. !part from the branches of the bank, -'., use their !T3 screens and the Internet to promote its loan products and they also employ additional sales methods depending on the type of products. -'., bank themselves performs credit analyses of the borrowers and the value of the collateral. The bank also buys mortgage and other asset<backed securities and invests in retail loan portfolios through assignments. In addition to taking collateral in many cases, -'., bank obtains post< dated checks covering all payments at the time a retail loan is made. It is a criminal offense in India to issue a bad check. Though through my observation in bank I have seen that bank also sometimes obtain irrevocable instructions to debit the customer"s account directly for the making of payments. EMI = !=&! 'or6 The bank offers proper details on how it is done in fact the bank makes sure that the customers are aware about its use and how is it relevant. It makes use of amorti=ation table for its calculation. The term and #3I has been explained below. ED& 'e< Mon'(!@ Ins' !!Cen' (EMI) !n e/uated monthly installment F#3II is the fixed monthly payment made by a borrower to the lender each calendar month. The amount of the #3I depends upon the loan amount, interest rate charged for the loan and the duration in which the loan is to be repaid. The #3I is made up of two parts, the principal amount and the interest on the principal amount divided across each month in the loan tenure. The #3I is always paid
17
?
up to the lender on a fixed date each month until the loan is paid off in full at the end of the tenure. The benefit of an #3I for borrowers is that they know precisely how much money they will need to pay toward their loan each month, making the personal budgeting process easier. ACor')* ')on T $!es n< W(@ T(e@ Are +sef&! 4ow, one might assume that the #3I is applied in e/ual parts towards the principal and the interest every month, however this not the case. 'uring the initial years the interest component repaid is higher and during the latter years of repayment the principal component is higher. :hile a portion of every payment is applied towards both the interest and the principal balance of the loan, the exact amount applied to principal each time varies Fwith the remainder going to interestI. !n amorti=ation schedule reveals the amount applied towards interest, as well as the amount paid towards the principal balance, with each payment. Initially, a large portion of each payment is devoted to interest. !s the loan matures, larger portions go towards paying down the principal. In addition to breaking down each payment into interest and principal portions, an amorti=ation schedule also reveals the remaining principal balance on each payment date .
?
?
Lo n reA @Cen' = !=&! 'or The following table shows the value and share of our retail loan products Fnet of loans securiti=ed outIB F5s. croreI
P r')=&! rs As ' De=eC$er 72, 4995 G of 'o' ! ? !&e !uto oans ,ommercial 8ehicle and ,onstruction #/uipment (ersonal oans oans !gainst Securities Two :heeler oans *+,*$@ $+.@% D,A$* *A.?% D,?*C *@.?% )?? *.$% $,>?$ A.+%
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,redit ,ards 2ther 5etail oans To' ! Re' )! Lo ns
@,>+A ).D% ),DD* **.+% 81,0/3 299.99G
-'., bank offer secured loans at fixed interest rates for financing new and used automobile purchases. In addition to their general marketing efforts for retail loans, -'., market this product through building their relationships with car dealers, corporate packages and joint promotion programs with automobile manufacturers.
CoCCer=) ! Ve()=!es n< Cons'r&=')on ED&)ACen' #)n n=e
-'., bank provides secured financing for commercial vehicles and provides working capital, bank guarantees and trade advances to customers who are transportation operators. In addition to funding domestic assets, bank also finance imported assets for which they open foreign letters of credit and offer treasury services such as forward exchange cover. To do this smoothly bank coordinates with manufacturers to jointly promote their financing options to their clients.
Person ! Lo ns
The bank offer unsecured personal loans at fixed rates to specific customer segments, including salaried individuals and self<employed professionals. In addition, they offer unsecured personal loans to small businesses and individuals.
Lo ns > )ns' Se=&r)')es
It also offers loans against e/uity shares, mutual fund units, bonds issued by the 5BI and other securities that are on our approved list. -'., bank limits their loans against e/uity shares to 5s. $> lacks per retail customer in line with regulatory guidelines and limits the amount of their total exposure secured by particular securities. Bank lend only against shares in book<entry
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Fdemateriali=edI form, which ensures that they obtain perfected and first<priority security interests. The minimum margin for lending against shares is prescribed by the 5BI.
T%o W(ee!er Lo ns
-'., offer loans for financing the purchase of scooters or motorcycles. The bank markets this product in ways similar to their marketing of auto loans.
Re' )! B&s)ness B n")n>
-'., bank address the borrowing needs of the community of small businessmen near the bank branches by offering facilities such as credit lines, term loans for expansion or addition of facilities and discounting of credit card receivables. The bank classifies these business banking loans as a retail product. Such lending is typically secured with current assets as well as immovable property and fixed assets in some cases. The bank also offer letters of credit, guarantees and other basic trade finance products and cash management services to such businesses.
Cre<)' C r<s
-'., bank offer credit cards from the 8IS! and 3aster,ard stable including gold, silver, corporate, platinum and titanium credit cards. !s per the information gained from bank, the bank had approximately @+ lacks cards outstanding as of 'ecember A*, $>>D as against AD lacks as of 3arch A*, $>>D.
O'(er Re' )! Lo ns
Such loans primarily include overdrafts against time deposits, health care e/uipment financing loans, tractor loans, loans against gold and ornaments and small loans to farmers. ,urrently other loans also include home loans disbursed by the erstwhile ,enturion Bank of (unjab td.
Re' )! DeAos)' Pro<&='s
5etail deposits provide the bank with a low cost, stable funding base and have been a key focus area for -'., since commencing operations. 5etail deposits represented )C% of bank"s total
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deposits as of 'ecember A*, $>>?. The following chart shows the value of our retail deposits by our various deposit products as of the same dateB
T@Ae of DeAos)' V !&e (Rs. =rore) G of To' !
Savings ,urrent .ixed deposits To' ! A>,C)* A*.)C% *@,>>* *@.@*% +$,AC$ +A.?$ 13,278 299.99G
-'., bank"s individual retail account holders have access to the benefits of a wide range of direct banking services, including debit and !T3 cards, access to the growing branch and !T3 network, access to other distribution channels and eligibility for utility bill payments and other services. The retail deposit products include the followingB aI Savings accounts, which are demand deposits in checking accounts designed primarily for individuals and trusts. These accrue interest at a fixed rate set by the 5BI Fcurrently A.+>% per annumI. bI ,urrent accounts, which are non<interest bearing checking accounts designed primarily for small businesses. ,ustomers have a choice of regular and premium product offerings with different minimum average /uarterly account balance re/uirements. cI Time deposits, which pay a fixed return over a predetermined time period. Bank also offers special value<added accounts, which offer the customers added value and convenience. These include a time deposit account that allows for automatic transfers from a
21
time deposit account to a savings account, as well as a time deposit account with an automatic overdraft facility. #<Broking accounts are offered as current accounts to customers of stock brokers where all transactions are routed electronically between the broker and beneficiaries.
O'(er Re' )! Ser?)=es n< Pro<&='s De$)' C r<s
The debit cards may be used with more than @>>,>>> merchant point<of<sale machines and over A>,>>> !T3s in India and more than $.?> crore merchant outlets and *> lacs !T3s worldwide. -'., was the first in India to issue international 8isa #lectron debit cards on a nationwide basis and currently issue both 8isa and 3aster,ard debit cards.
In<)?)<& ! DeAos)' r@ A==o&n's
Bank provides depositary accounts to individual retail customers for holding debt and e/uity instruments. Securities traded on the Indian exchanges are generally not held through a broker"s account or in street name. Instead, an individual will have his own account with a depositary participant for the particular exchange. 'epositary participants, including us, provide services through the major depositaries established by the two major stock exchanges. 'epositary participants record ownership details and effectuate transfers in book<entry form on behalf of the buyers and sellers of securities. :e provide a complete package of services, including account opening, registration of transfers and other transactions and information reporting.
M&'& ! #&n< S !es
-'., offer retail customers units in most of the large and reputable mutual funds in India. .or this bank earns front<end commissions for new sales and in some cases additional fees in subse/uent years. Bank distributes mutual fund products primarily through branches and private banking advisors.
Ins&r n=e
22
-'., has arrangements with -'., Standard
ife Insurance ,ompany and Bajaj !llian=
&eneral Insurance ,ompany to distribute their life insurance products and general insurance products to the customers. .or this also bank earns upfront commissions on new premiums collected as well as some trailing income in subse/uent years while the policy is still in force.
Pre=)o&s Me' !s
-'., bank also import gold bars for sale to retail customers through branch network.
In?es'Cen' A<?)=e
Bank offer customers a broad range of investment advice including advice regarding the purchase of Indian debt, e/uity shares, and mutual funds. Bank provides private banking customers with a personal investment advisor who can consult with them on their individual investment needs.
B)!! P @Cen' Ser?)=es
Besides bank also offer customers utility bill payment services for leading utility companies including electricity, telephone, mobile telephone and Internet service providers. ,ustomers can also review and access their bill details through direct banking channels. This service is valuable to customers because utility bills must otherwise be paid in person in India. These services !5# offered to customers through multiple distribution channelsQ!T3s, telephone banking, Internet banking and mobile telephone banking.
CorAor 'e S ! r@ A==o&n's
-'., offer ,orporate Salary !ccounts, which allow employers to make salary payments to a group of employees with a single transfer. Bank then transfer the funds into the employees" individual accounts, and offer them preferred services, such as preferential loan rates, and in some cases lower minimum balance re/uirements.
Non6Res)<en' In<) n Ser?)=es
4on<resident Indians are an important target market segment for Indian banking industry given their relative affluence and strong ties with family members in India.
Re' )! #ore)>n EE=( n>e
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-'., bank purchase foreign currency from and sell foreign currency to retail customers in the form of cash, traveler"s checks, demand drafts and other remittances. Banks also provide out foreign currency check collections. -'., Bank has been one of the pioneers in extending internet banking services to cater to anytime, anywhere banking needs of its customers by leveraging on to its state<of<the<art technology platforms. Internet Banking has also been exploited by hackers and fraudsters to deceive the bankJs customer and commit frauds. :hile the bank has best<of<the<breed solutions, processes and people deployed to extend secure banking to its customers, it is important for our customers to know that RSec6rity is incomplete without 6R.
C)')*ensH =( r'er
-'., bank"s ,iti=enJs ,harter offers relevant information about the products, facilities and services we provide. ,ustomers can also find out about the time norms for various banking transactions, our policy on customer information, and the process followed for redressal of grievances.
T@Aes of DeAos)' A==o&n's
:hile various deposit products offered by the bank are assigned different names, the deposit products can be categori=ed broadly into the following types. 'efinition of major deposit schemes are as under B < • • • R'emand 'eposits R means a deposit received by the bank which is withdraw able on demandM RSavings 'epositsR means a form of 'emand 'eposit which is subject to restrictions as to the number of withdrawals as also the amounts of withdrawals permitted by the bank during any specified periodM • RTerm 'epositR means a deposit received by the bank for a fixed period withdraw able only after the expiry of the fixed period and includes deposits such as 5ecurring ; 'ouble Benefit 'eposits ; Short 'eposits ; .ixed 'eposits ; 3onthly Income ,ertificate ; 9uarterly Income ,ertificate etc.
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• •
JJ4otice 'epositJJ means Term 'eposit for a specific period but withdraw able on giving at least one complete banking dayJs noticeM R,urrent !ccountR means a form of 'emand 'eposit wherefrom withdrawals are allowed any number of times depending upon the balance in the account or up to a particular agreed amount and will also include other deposit accounts which are neither Savings 'eposit nor Term 'epositM
A==o&n' OAen)n> ; OAer ')on of DeAos)' A==o&n'
Before opening any 'eposit !ccount, the bank will carry out due diligence as re/uired under R1now Kour ,ustomerR F1K,I guidelines issued by 5BI and or such other norms or procedures adopted by the bank. If the decision to open an account of a prospective depositor re/uires clearance at a higher level, reasons for any delay in opening of the account will be informed to him and the final decision of the bank will be conveyed at the earliest to him. The account opening forms and other material would be provided to the prospective depositor by the bank. The same will contain details of information to be furnished and documents to be submitted for verification and ; or for record. It is expected of the bank official to explain the procedural formalities and provide necessary clarifications sought by the prospective depositor when he approaches the bank for opening a 'eposit !ccount. .or deposit products like Savings Bank !ccount and ,urrent 'eposit !ccount, the bank will normally stipulate certain minimum;average balances to be maintained as a part of the terms and conditions governing operation of such accounts. .ailure to maintain stipulated minimum; average balance in the account will attract levy of charges as specified by the bank. .or Savings Bank !ccount, the bank may also restrict the number of transactions, cash withdrawals, etc., for a given period. Similarly, the bank may specify charges for issue of che/ue books, additional statement of accounts, duplicate pass book, folio charges, etc. !ll such details, regarding terms and conditions for operation of the accounts and schedule of charges for various services provided will be communicated to the prospective depositor while opening the account.
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Savings Bank !ccounts can be opened for eligible person ; persons and certain organi=ations ; agencies Fas advised by 5eserve Bank of India F5BII from time to timeI.These accounts are designed to help the individual Fpersonal customersI to inculcate the habit of saving money and to meet their future re/uirement of money. The amounts can be deposited;withdrawn from these accounts by use of che/ues;!T3. It helps customers to keep minimum cash at home besides earning interest. ,urrent !ccounts can be opened by Individuals ; (artnership firms ; (rivate and (ublic imited ,ompanies ; -6.s ; Specified !ssociates ; Societies ; Trusts, etc. Term 'eposit !ccounts can be opened by Individuals ; (artnership firms ; (rivate and (ublic imited ,ompanies ; -6.s; Specified !ssociates ; Societies ; Trusts, etc. Bank has tailored various deposit schemes to suit the needs and expectations of investing people in every walk of life. The due diligence process, while opening a 'eposit !ccount will involve satisfying about the identity of the person, verification of address, satisfying about his occupation and source of income. 2btaining introduction of the prospective depositor from a person acceptable to the bank and obtaining recent photographs of the person;s opening ; operating the account are part of the due diligence process. In addition to the due diligence re/uirements, under 1K, normsFi.e. know your customersI the bank is re/uired by law to obtain (ermanent !ccount 4umber F(!4I or &eneral Index 5egister F&I5I 4umber or alternatively declaration in .orm 4o. )> or )* as specified under the Income Tax !ct ; 5ules. 'eposit !ccounts can be opened by an individual in his own name FstatusB known as account in single nameI or by more than one individual in their own names FstatusB known as 7oint !ccountI. Savings Bank !ccount can also be opened by a minor jointly with natural guardian or with mother as the guardian FStatusB known as 3inorJs !ccountI. 3inors above the age of *$ will also be allowed to open and operate Saving Bank !ccount independently.
26
2peration of 7oint !ccountB The 7oint !ccount opened by more than one individual can be operated by single individual or by more than one individual jointly. The mandate for operating the account can be modified with the consent of all account holders. The Savings Bank !ccount opened by minor jointly with natural guardian ; guardian can be operated by natural guardian only. The joint account holders choose any of the following options for the disposal of balance in the above accountsB
•
#ither or Survivor B If the account is held by two individuals say, ! L B, the final balance along with interest, if applicable, will be paid to survivor on death of any one of the account holders.
•
!nyone or Survivor;s B If the account is held by more than two individuals say, !, B and ,, the final balance along with interest, if applicable, will be paid to the survivor on death of any two account holders.
The above mandates will be applicable to or become operational only on or after the date of maturity of term deposits. This mandate can be modified by the consent of all the account holders. !t the re/uest of the depositor, the bank will register the mandate ; power of attorney given by him authori=ing another person to operate the account on his behalf. The term deposit account holders at the time of placing their deposits can give instructions with regard to closure of deposit account or renewal of deposit for further period on the date of maturity ! statement of account will be provided by the bank to Savings Bank as well as ,urrent 'eposit !ccount -olders periodically as per terms and conditions of opening of the account. (assbook facility is available to all savings account holders free of cost.
27
NoC)n ')on # =)!)'@
4omination .acilityB Bank offers nomination facility in deposit accounts, safe deposit lockers, articles in safe custody etc. 4omination facility is available on all deposit accounts opened by the individuals. 4omination is also available to a sole proprietary concern account. 4omination can be made in favor of one individual only. 4omination so made can be cancelled or changed by the account holder;s any time. :hile making nomination, cancellation or change thereof, it is re/uired to be witnessed by a third party. 4omination can be modified by the consent of account holder;s. 4omination can be made in favor of a minor also subject to other major individual being named appointeeFsI during the minority period. The bank recommends that all depositors avail nomination facility. The nominee, in the event of death of the depositor;s, would receive the balance outstanding in the account as a trustee of legal heirs.
In'eres' P @Cen's M)norIs A==o&n's
The minor can open a savings bank account and the same can be operated by the natural guardian or by the minor himself ; herself, if he;she is above the age of *$ years. The account can also be opened jointly. 2n attaining majority, the erstwhile minor should confirm the balance in his;her account and if the account is operated by the natural guardian ; guardian, fresh specimen signature of erstwhile minor duly verified by the natural guardian would be obtained and kept on record for all operational purposes.
38
COMPETITIVE ANAL-SIS
ICICI $ n"
I,I,I Bank is IndiaJs second<largest bank with total assets of 5s. A,)A@.>> billion F6SS D* billionI at 3arch A*, $>*> and profit after tax 5s. @>.$+ billion F6SS D?) millionI for the year ended 3arch A*, $>*>. The Bank has a network of $,>>? branches and about +,$*? !T3s in India and presence in *D countries. I,I,I 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 speciali=ed subsidiaries in the areas of investment banking, life and non<life insurance, venture capital and asset management. The Bank currently has subsidiaries in the 6nited 1ingdom, 5ussia and ,anada, branches in 6nited States, Singapore, Bahrain, -ong 1ong, Sri anka, 9atar and 'ubai International .inance ,entre and representative offices in 6nited !rab #mirates, ,hina, South !frica, Bangladesh, Thailand, 3alaysia and Indonesia. 2ur 61 subsidiary has established branches in Belgium and &ermany. The bank has a presence in around *D countries across the globe. They offer a wide gamut of retail products to its retail customers and as well as other banking products related to the corporate segment. These include I,I,I personal loan, I,I,I home loan, I,I,I car loan, I,I,I credit cards, I,I,I !( etc. They also offer financial services that span asset management, venture capital, investment banking, life and non<life insurance. I,I,I e/uity shares find a place in the Bombay Stock #xchange and 4ational Stock #xchange in India with its !merican depositary receipts listed in the 4ew Kork Stock #xchange. I,I,I Bank is one of the most popular banks in recent times with its presence felt through a huge network of *,@?+ branches and @,D*) !T3s across
31
the country, with profits running into D.D billion in the /uarter ended 7une $>>?. The bank also has a presence in around *D countries across the globe. They offer a wide gamut of retail products to its retail customers and as well as other banking products related to the corporate segment.
M)!es'ones
• • • In *???, I,I,I become the first Indian company and the first bank or financial institution from non<7apan !sia to be listed on the 4KS#. 3erger of I,I,I Bank with Bank of 3adura imited in fiscal $>>* and $>>$. In 2ctober $>>*, I,I,I (ersonal .inancial Services and I,I,I ,apital Services wholly owned by I,I,I • imited were allowed to be merged with I,I,I Bank, which was formally approved by the 5BI in !pril $>>$. 1.8. 1amath is the ,hairman of the I,I,I group. ,handa '. 1ochhar, the 3anaging 'irector L ,#2 of I,I,I Bank was recently named in .orbes list of therld"s *>> 3ost (owerful men and ranked in the top $> of the list compiled by .orbes, sharing the honor with Sonia &andhi, ,ongress (resident who ranked *Ath.
ICICI $ n" re' )! Aro<&='s A==o&n's n< <eAos)'s S ?)n>s ==o&n'
I,I,I bank savings account offers the customers following featuresB< • • 'ebit<cum<!T3 ,ard 3oney 3ultiplier .acility
30
• • • • • •
Internet Banking ,ustomer ,are 3obile Banking Standing Instructions 4omination facility '' ,all and ,ollect
De$)'6=&C6ATM C r< 6 :ith I,I,I Bank S ?)n>s A==o&n' the customers will get a debit card that one can use to withdraw cash from any !T3. ,ustomers may also use their debit card to directly make purchases through a 8isa;3aster,ard (2S F(oint of SaleI machine available at most stores, according to the bank this will help customers access their money from anywhere. The I,I,I Bank International debit card is a debit<cum<!T3 card providing customers with the convenience of acceptance at merchant establishments and cash withdrawals at !T3s. If the customers want to withdraw cash from their I,I,I Bank Savings account, they can walk into any bankJs !T3 and use their I,I,I Bank !T3<cum<'ebit card for free. The above benefit is available free of cost for the first + transaction per month upto 5s *>,>>> per transaction. Mone@ M&!')A!)er # =)!)'@6The 3oney 3ultiplier feature gives customer the li/uidity of a Savings !ccount coupled with high earnings of a .ixed 'eposit. This is achieved by creating a .ixed 'eposit linked to customers Savings !ccount providing them the following facilities.
?
M E)C&C re'&rns B !ccording to the bank the customer"s money is never idle. ,reation of a linked .' ensures higher rate of interest on their Savings Bank 'eposits. 2ne can issue instructions through any channel such as the I,I,I Bank Branch, I,I,I Bank (hone Banking and I,I,I BankJs Internet Banking for creation of .ixed 'epositFsI from the surplus funds in your Savings Bank !ccount Fsubject to a minimum of 5s. *>,>>>I. The
31
.ixed 'eposits will be created in multiples of 5s. +,>>> for tenure of one year or more as instructed by the customer.
?
M E)C&C L)D&)<)'@ O The customers can withdraw the funds from their savings account through any channel such as the I,I,I Bank !T3, I,I,I Bank Internet Banking or by issuing a che/ue etc. !ll linked .ixed 'eposits will be enabled for automatic 5everse Sweep in multiples of 5s. +>>> on a ast<In<.irst<2ut F I.2I basis when the balance in the Savings !ccount falls below 5s.*>, >>>. The amount reverse swept will earn interest rates at the applicable rate for the period that the deposit was held with the Bank. The remaining amount will continue to earn higher interest at the original rate applicable to the fixed deposit.
?
A&'o Rene% ! < 6nder this facility, when their deposits fall due, the bank will automatically renew the principal and accrued interest for the same tenure as the original deposit.
In'erne' B n")n><.or internet banking the customers need to log in with their user I' and password and make banking a hassle<free routine. It is offered free of cost. C&s'oCer C re O The bank has $@<hour ,ustomer ,are service always available to answer any /uery or take their instructions. Mo$)!e B n")n> O The customers have an option of mobile banking through which they can do Transferring of funds or getting to know their balance. S' n<)n> Ins'r&=')ons < I,I,I Bank accepts and supports Standing Instructions. !ccording to them the customers donJt have to worry about the chore of carrying out a routine transaction. They can just set up a Standing Instruction and then the bank will manage. NoC)n ')on # =)!)'@ O The customers may nominate a person as beneficiary to their account proceeds. 4omination facility available for bank deposits. ? There can be only one 4ominee for a deposit account whether held singly or jointly.
32
? ! person legally empowered to operate a minorJs account can file a nomination on behalf of the minor. ? !pplicants can make nomination by filling up the .orm prescribed under the Banking ,ompanies F4ominationI 5ules *?D+ ? The nomination details can be changed during the subsistence of the account relationship by filling up the .orm prescribed under the Banking ,ompanies F4ominationI 5ules *?D+.
DD C !! n< Co!!e=' O according to the bank the customers need to wait in bank to collect '' they can do so on the way to the branch, by just calling ,ustomer ,are and providing them details of the '' to be prepared and collect it ready and signed at the branch.
S ! r@ ==o&n's
I,I,I Bank Salary !ccount is a benefit<rich payroll account for #mployers and #mployees. !s an organi=ation, one can opt for Salary !ccounts to enable easy disbursements of salaries and to have access to other benefits too. !ccording to the bank with I,I,I Bank Salary !ccounts employees will enjoy the convenience of having the largest network of !T3s, free $@ hour phone banking and free internet banking. :hat the customers would re/uire to do is to send I,I,I Bank an advice Fin form of a che/ue;debit instruction, ecs, etcI for the total salary amount along with the salary details of the designated employees in a soft and hard copy format and bank will credit the respective employeesJ accounts as per the company"s statement of advice. I,I,I Bank Salary !ccounts has the benefits of reduce paper work and saves remittance costs and also the employees receive instant credit of salaries. Besides all of the above, employees will automatically become I,I,I Bank account holders with special benefits and privileges of D<D banking, Investment advisory and much more. I,I,I Bank also has a special offeringB 'efense Banking Services designed exclusively for the armed forces.
33
#)Ee< <eAos)'s
The I,I,I bank fixed deposits offer following advantagesB<
? ? ? ? ? ?
:ide range of tenures. ,hoice of investment plans. (artial withdrawal permitted. Safe custody of fixed deposit receipts. !uto renewal possible. oan facility available.
#e '&res
? The customers can deposit any amount of money in .ixed 'eposit for as long as they wish between *+ days to *> years. !ll fixed deposits come with a set choice of investment plans. .ixed 5ate 'eposit accounts also provide .ixed oans. 5e<investment .ixed 'eposit rates do not change but works like a 5ecurring 'ebit !ccount transaction. In other words, 5e<investment (lans are compounded over traditional deposits and hence are more lucrative over different time periods. 2ther features includeB
M)n)C&C B ! n=e
? ,ustomers can avail of I,I,I Bank .ixed 'eposits for a minimum deposit of 5s *>,>>>.
NoC)n ')on
? 4omination facility available for bank deposits. ? There can be only one 4ominee for a deposit account whether held singly or jointly. ? ! person legally empowered to operate a minorJs account can file a nomination on behalf of the minor.
34
? !pplicants can make nomination by filling up the .orm prescribed under the Banking ,ompanies F4ominationI 5ules *?D+. ? The nomination details can be changed during the subsistence of the account relationship by filling up the .orm prescribed under the Banking ,ompanies F4ominationI 5ules *?D+. ? ,hoice of two investment plansB
Tr <)')on !
? Interest payable monthly or /uarterly as per your convenience ? 3aturity period ranges from *+ days to *> years
Re)n?es'Cen'
? Interest is compounded /uarterly and reinvested with principal amount ? 3aturity period ranges from ) months to *> years
Benef)'s
.ixed 'eposits at I,I,I Bank comes with nomination facility. The bank also offers online access to .ixed 'eposits through their Internet Banking channel. Internet Banking at I,I,I Bank allows customers to connect to their ,redit ,ard, oan and their .ixed 'eposit with their savings account. In re<investment deposits, the interest is compounded /uarterly and reinvested with the principal. Traditional term deposits provide tax shelter and shield you from factors affecting fixed deposits in India over longer periods of fixed time. !ll the facilities available with I,I,I bank can be listed as follows.
C( nne!s
35
I,I,I Bank has the following channels through which it offers its products and services to its customers. • • • • • Branches !T3s Internet Banking 3obile Banking (hone Banking
(roducts and services I,I,I Bank offers a host of products and services to its clients, which include 'eposits, oans, ,ards, Investments, Insurance, 'emat, 45I Services and 2nline Services etc.
DeAos)'s
.ollowing deposits are offeredB
• • • • • • •
Savings !ccount !dvantage 'eposit Special Savings !ccount ife (lus Senior ,iti=ens Savings !ccount .ixed 'eposits Security 'eposits 5ecurring 'eposits
36
• • • • • • • • • • • • • • • •
Tax<Saver .ixed 'eposit Koung Stars Savings !ccount ,hild #ducation (lan BankT,ampus Salary !ccount !dvantageman Savings !ccount ##., !ccount 5esident .oreign ,urrency F'omesticI !ccount (rivilege Banking 4o .rills !ccount 5ural Savings !ccount (eopleJs Savings !ccount Self -elp &roup !ccounts 2utward 5emittance .reedom Savings !ccount .amily Banking
Lo ns
I,I,I Bank offers following loan facilitiesB
37
• • • • • • • • •
-ome oans oan !gainst (roperty (ersonal oans ,ar oans Two :heeler oans ,ommercial 8ehicle oans oans !gainst Securities oan !gainst &old 2rnaments (re<approved oans
C r<s
I,I,I Bank is IndiaJs largest issuer of credit cards. It also offers other types of cards. The various cards offered by I,I,I bank are as belowB ,onsumer ,ards
? ? ?
,redit ,ards Travel ,ards 'ebit ,ards
,ommercial ,ards
? ? ? ?
,orporate ,ards (repaid ,ards (urchase ,ards 'istribution ,ards
48
?
Business ,ards
AE)s $ n"
!xis Bank, previously known as 6TI Bank, is one of the leading Banks of India along with -'., Bank and I,I,I Bank. #stablished in *??@, itJs the first of the new private sector banks in India to start its operations, when &overnment of India opened the gate for the private banks to flock into the Indian financial market. Though the bank started its operation with the name 6TI Bank, but later, in order to avoid ambiguities and confusion with other discrete entities carrying the same name, it changed its name to its current form F!xis BankI in !pril $>>C. !xis Bank imited recorded a total income of 5s. *A,C@+.>@ crore as on the year ended 3arch A*, $>>?. It also made a net profit of 5s. *,D*$.?A crore in the same financial year. !xis Bank offers a range of financial products and services to its clients throughout the country. It also has special strength in retail and corporate banking. !xis Bank offers following servicesB
• • • •
(ersonal Banking ,orporate Banking 45I (riority Banking
Person ! $ n")n>
The (ersonal Banking of !xis Bank includes following servicesB
A==o&n's
? ? ? ?
Uero Balance Savings !ccount 1rishi Savings !ccount #asy !ccess Savings !ccount (rime Savings !ccount
41
? ? ? ? ? ? ? ? ?
,orporate Salary !ccountmenJs Savings !ccount 'emat !ccount Senior ,iti=enJs !ccount 'efence salary !ccount Trust;4&2 Savings !ccount 5.,F'I !ccount !==adi < 4o .rills (ension Savings !ccount
DeAos)'s
? ? ? ?
.ixed 'eposits 5ecurring 'eposits #ncash $@ Tax Saver .ixed 'eposit
Lo ns
? ? ? ? ? ?
-ome oan ,ar oan (ersonal oan oan !gainst Shares oan !gainst (roperty oan !gainst Security
40
? ?
Study oan ,onsumer oan
C r<s
? ? ?
,redit ,ards 'ebit ,ards (repaid ,ards
P @Cen's
? ? ?
Bill (ay #lectronic ,learing Service Tax (ayments
• • •
Tax e<(ayments 'irect Tax (ayments (ension 'isbursement
O'(er Ser?)=es
? ? ? ?
3obile 5efill ocker 2nline Shopping I(2S mart
41
?
#<Statement
Cre<)'
?
arge ,orporate
• • • • • •
rking ,apital .inance Term oans Trade Services Structured .inance Supply ,hain 3anagement 2verseas Transactions
?
!gri Business
• • • • •
1isan (ower (owertrac ,ommodity (ower ,ontract .arming !rthia (ower
? ? ?
S3# Standard S3# .ast Track 3icrofinance
Pr)or)'@ $ n")n>
42
.ollowing services are offered under this categoryB
A==o&n's
? ?
5esident 45I
DeAos)'s
? ? ?
.ixed 'eposits 5ecurring 'eposits #ncash $@
Lo ns
? ? ? ? ? ? ?
-ome oan (ersonal oan oan !gainst (roperty oan !gainst Security ,ar loans ,onsumer (ower Study (ower
C r<s
? ?
(riority 'ebit ,ard ,redit ,ards
• •
(latinum ,redit ,ard &old (lus ,redit ,ard
43
• • • • ? ? ?
&old ,redit ,ard Silver ,redit ,ard Secured ,redit ,ard eShop ,ard
Travel ,urrency ,ard 5emittance ,ard &ift ,ard
O'(er Ser?)=es
o o o
3obile 5efill ocker 2nline Shopping
4/ (o&r $ n")n> ser?)=es
.ollowing services are offered under $@ x C BankingB
• •
In'erne' B n")n> Mo$)!e B n")n>
? ? ?
Savings !ccount 45I !ccount ,urrent !ccount
• •
P(one B n")n> V)s Mone@ Tr nsfer
44
• •
Po%er Tr nsfer ATM
KOTAK MAHINDRA BANK
1otak 3ahindra is among the leading financial organi=ation of India, with a range of financial services that caters to all customersJ day to day re/uirements. Their products spans from commercial banking, to stock broking, to mutual funds, to life insurance, to investment banking O diverse needs of individuals and corporate are catered to. The 1otak group has a net worth of more than 5s. ),C?? crore with the branches, franchisees, representative offices and satellite offices spread across cities and towns in India. They also have global offices in 4ew Kork, ondon, San .rancisco, 'ubai, 3auritius and Singapore. The 1otak &roup offers their services to approximately ).@ million customers. The 1otak 3ahindra &roup got incepted in *?D+ in the form of 1otak ,apital 3anagement .inance imited, being promoted by 6day 1otak, Sidney !. !. (into and 1otak L ,ompany. ! stake in the group was taken in by industrialists -arish 3ahindra and !nand 3ahindra and this is the time when the company changed its name to 1otak 3ahindra .inance imited.
Ko' " Gro&A Pro<&='s ; Ser?)=es
*. Bank $. ,redit ,ards A. ife Insurance
@. 3utual .unds +. ,ar .inance
45
). Securities C. Institutional #/uities D. Investment Banking ?. International Business *>. 1otak (rivate #/uity **. 1otak 5ealty .und *$. :ealth 3anagement
A$o&' Ko' " M ()n<r B n"
The flagship company of 1otak 3ahindra &roup, 1otak 3ahindra .inance td was established in *?D+. The same got converted into a bank < 1otak 3ahindra Bank td in 3arch $>>A. 1otak 3ahindra bank has presence in commercial vehicles, retail finance, corporate banking, treasury and housing finance.
Ser?)=es of Ko' " M ()n<r B n" DeAos)' A==o&n's
• • •
Savings account ,urrent !ccount Term 'eposits
Lo ns
• •
(ersonal oans -ome oans
46
•
oan !gainst (roperty
In?es'Cen' Ser?)=es
• • • •
'emat 3utual .und Insurance &old
Con?en)en=e B n")n>
• • • •
4et Banking 3obile Banking (hone Banking !T3 4etwork
P+NJAB NATIONAL BANK
The (unjab 4ational Bank or (4B is one of the well known commercial and banking institutions in India. It is the second largest government owned and regulated commercial bank in the country and offers speciali=ed solutions and financial services in a number of sectors. !round AC million customers are served by the bank on an average basis. The customi=ed facilities and services make it a trusted name in the domain of banking.
Gro%'( of P&nJ $ N ')on ! B n"
(unjab 4ational Bank was registered under the Indian ,ompanies !ct on *? 3ay in the year
47
*D?@ and its first office was set up at !narkali Ba=aar in ahore. Since then, the bank has become a great name in the field of banking and is very much preferred by the customers for the wide range of its services. Today, the bank has around @,?>@ branches in around C)@ cities. 'ue to its facilities and services of high standards, (unjab 4ational Bank has also been the recipient of a number of prestigious awards. It has been adjusted as the $@Dth biggest bank across the globe according to a recent survey made by Bankers !lmanac in ondon. The #conomic Times has also listed the bank as ADth among the premier +>> companies and the ?th among the most trusted brands in India. The total asset value of the bank amounts to around 6SS)> billion. There is also a subsidiary of the (4B in the 6nited 1ingdom. In addition the bank also has branches in some other cities likeB
• • • • •
1abul -onk 1ong 2slo Shanghai 'ubai
Ser?)=es of P&nJ $ N ')on ! B n"
(unjab 4ational Bank offers financial solutions and services in an array of sectors. !ll these services that are offered keep pace with the changing market trends in order to fulfill the needs and preferences of the customers. Some of the well known sectors on which the main functions of the bank are based areB
• • • •
(ersonal Banking ,orporate Banking !griculture finance services Industrial finance services
58
• •
Trade financial services International banking services
(4B also has commercial relationship with more than $>> prestigious international banks across the globe. It has the provisions of 5upee 'rawing !rrangements with around *+ exchange companies in the 6!# and * in Singapore. In case of the personal banking segment, the bank offers customi=ed solutions to take care of almost all financial needs of the customers. Some of the well known services that are offered in the bank areB
• • • •
Savings .und !ccount .ixed 'eposit scheme ,urrent account oan services
(unjab 4ational Bank is also a well known name in housing loan benefits. The bank offers both short term and long term loans. The rates are also affordable and can be paid within a particular time. The housing loans are given for a number of purposes such asB
• • • •
,onstruction of a building (urchase of a new house or a flat (urchase of flat or house on a .irst (ower of !ttorney basis .or the purpose of repair or renovation of a house or a building
The (4B -ousing .inance sanctions around D>% of the cost of the project. -owever, the maximum amount is around 5s +> lakh. The maximum loan amount for the purpose of renovation and repair is 5s + lakh. In most cases, the loan is available for a period between + and $> years before one becomes )+ years of age. The interest of the loan is based on the reducing balance and the principal amount of the loan is also based on the repaying capability of the borrower.
51
M&'& ! f&n<s of P&nJ $ N ')on ! B n"
The mutual funds of (unjab 4ational Bank are covered under the (rincipal (4B !sset 3anagement ,ompany. Some of the well known schemes of mutual funds areB
• • • • • • •
(rincipal &rowth Scheme (rincipal balanced .und (rincipal Income .und (rincipal government Securities .und (rincipal Income .und O Short Term 'ebt (rincipal ,ash management .und (rincipal Index .und
Table showing analysis on different parametersB<
S.NO
PARAMETE RS
HD#C BANK
ICICI BANK
A,IS BANK
KOTAK MAHINDR A BANK
P+NJAB AND NATIONA L BANK AD+>FI4'I !I $*AF'# II
*.
B5!4,-#S
*@*$ FI4'I!I *@*F'# -I I
$>>? FI4'I!I *>? F 'elhiI +$*? FI4'I!I
*C>>V FI4'I!I CDF'# -II @>++ FI4'I!I K#S
$@+ FI4'I!I ))F'# -II **Capprox. FI4'I!I K#S
$.
!T3s
A.
,-#96# '#(2SIT B20
K#S
K#S
K#S
50
@.
#!SK I4T#54#T B!41I4& !8#5!&# 96!5T#5 K B! !4,# S!8I4&S !,,264T 8! 6# !''#'
K#S
K#S
K#S
K#S
K#S
+.
S!8I4&S 5s.*>,>>> F65B!4 ;3#T52I 5s. +,>>> FS#3I 65B!4I S!8I4&S 3!0 !,,264T 5s. $+,>>> S#4I25 ,ITIU#4S 5s. +>>> 42 .5I 4I 1I'"S !'8!4T! &# !,,264T 5s. +>>> S<
5s. *>,>>> ;3#T52I 5s. +>>> FS#3I 65B!4I
U#52 B! !4,#< 5s.+,+>> #!SK !,,#SS< 5s. +,>>> in metro or urban centers, 5s. $,+>> in semi urban centers and 5s. *,>>> in rural centers. (5I3# S!8I4&S !,,264T< 5s +,>>> Furban L metropolitan branchesI or 5s $,+>> Frural L semi<urban branchesI
!,#B 5s.+>,>>> (52B 5s.$>,>>> #'&#B 5S.*>,>>>
(4B (5I'#4T S:##(< 5s.*>,>>> F65B!4 ;3#T52I 5s. +,>>> FS#3I 65B!4I T2T! .5##'2 3 S!8I4&S .64' S! !5K !,,264 T< 5s. >
5#&6 !5< F65B!4
51
S6(#5 S!8I4&S !,,264T ). 5!T# !(( I,!B # 24 S!8I4&S !,,264T C. D. 5s. $+>>> Saving !;c A.+>% on regular savings account Saving !;c A.+>% and interest paid -alf Kearly yes ;ree <uarter yes A.+>% and interest paid 9uarterly on easy access account yes ;ree <uarter yes A.+>% A.+% pa
&old debit card Kes Statement ;ree <uarter charges $@ hour phone banking Kes
Kes ;ree <uarter Kes
Kes .ree monthly Kes
?.
The following list of the fixed deposits that was created by interacting with the customers as what they prefer most of the listed banks. The customers said that they are not aware about the .'s of 1otak 3ahindra bank and don"t mind (unjab national bank as they trust the bank with all of its products. The comparison is made on the basis of what customers think was beneficial.
.I0#' '#(2SITS !ccount name .ixed 'eposit 5egular .ixed 'eposit Bank 4ame I,I,I B!41 Type of account .I0#' '#(2SITS -'., B!41 .I0#' '#(2SITS
52
5ate ?.+%
3inimum
Interest paid
balance;deposits 5s.*>,>>> 96!5T#5 K
D.C+%
5S. *>,>>>
96!5T#5 K
.ixed 'eposit
!0IS B!41
.I0#' '#(2SITS
$.+>%
5S. *>,>>>
96!5T#5 K
ANAL-SIS B
:hen discussed with customers regarding their preference for the various (rivate Banks the analysis from that was that I,I,I Bank and -'., are the two leading private banks of the city. This is mainly because. • • These two banks are the first private banks which has opened their branches in the city. I,I,I and -'., brands name, play an important part in their success in the city because people usually go through the name the company. The difference lies within the few parameters that seem to differ with in the banking structure of different banks especially public sector bank i.e. (unjab national bank and private sector banks i.e. -'.,, I,I,I, !0IS and 12T!1 3!-I45'! bank. If one closely observes there is not major difference between the services offered in these banks what differs is their banking culture and how they offer their services. The factors which distinguish are< • • • • • • Business process re<engineering (roper and timely management of changes arge number of transactions and changes Internal commitment !vailability of ade/uate finance Strategic -uman 5esources changes
53
?
(S6 banks which are a dominating force in the Indian banking system have lacked a proactive -5 environment. -owever, much has changed with the opening of other sectors and increased competition from newer banks in the system. So (unjab national bank has undergone a drastic change with in time and has been giving a serious competition to -'., bank. There is a reali=ation that skill development is extremely important for staff retention as well as the /uality of manpower, and all banks whether -'., or any other bank had in place a system of continuous professional learning. ! few banks like 1otak 3ahindra are time and again in the process of revamping their training processes and their emphasis is being laid on hard as well as soft skills. Banks are keen to tie up with external training agencies for in<house training. 4ow if one look at the retail products offered at different banks then the savings account facility offered at (unjab national bank finds more takers in the middle level earning group of people like for example the total freedom savings account of (4B where there is no need to maintain an average /uarterly balance and even the fees that is deducted for other accounts where the customers are not able to maintain average balance is much less than -'.,, I,I,I, !0IS and 12T!1 3!-I4'5! bank. 1otak 3ahindra bank seems to target customers of higher league as they don"t have many branches in 'elhi as compared to -'.,, I,I,I, and !0IS bank. They have their own exclusive class of customers and they market their products like that only. The current and savings account of 1otak 3ahindra bank is marketed with terms likeH the powerH to have an exclusive banking service. 4ow -'., bank has a very special way of treating its customers by giving them the convenience of imperia customer programme, classic customer programme and preferred customer programme. This helps the banks in attracting more and more customers for the retail products. This is referred as priority banking. The plus current account of -'., bank is preferred more by the customers the minimum balance re/uired to be paid is 5S. *, >>,>>> and the interest paid are nil. (unjab national bank actually has been able to develop a more trustworthy relation with the customers since it"s a public bank and does not charge much for not maintaining !9B. -'., bank has been a leader clearly among the private banks and has its own strong and loyal customer base I,I,I bank has been giving a close competition to -'., bank as told by the
54
customers. !fter the customers were contacted B n" #D eCer>es o&' 'o $e '(e Cos' Areferre< option for the clients to invest in the market after real estate. This is also dependant on various reasons which are given as underB o #asy loans available against the Bank .ixed 'eposits. o ,lients can withdraw their money at almost any time giving them the option of maintaining i/uidity. o :ith all this Bank .' also provides a decent return concerned the minimum of the risk in any of the available investment instruments. o :e have seen above in the analysis of nationali=ed vs. private banks that nationali=ed banks are the more preferred ones, this also adds weight to clients preferring Bank .'s due to trust build during all these years. T(en, neE' Areferre< oA')on for '(e =!)en's )s +n)' !)n" A! nKIns&r n=e . !nother thing that was noted were that majority of clients preferred the short term fixed deposits as their favorite option. 3ost of the clients use the ideal money which they have to meet the uncertainty or short term re/uirement. 4ow if we talk about insurances the preference of the people who had invested in the insurance sector, it is very clear that I, is the leading company in this field, because of many factors such asB<. ? I, is leading in this field mainly, because it is the first mover in the insurance sector and thereby had captured most of the market. ? I, had a very good network of agents, who can be seen as the back bone of the company. ? I, had provided better service in the past which had made trust in the mind of the people and for that reason they feel more comfortable.
55
?
-'., and I,I,I are the second in this field mainly because they had opened their branches recently but have made progress in capturing a significant share of the market and in the future the ratio is decrease, because there are many opportunity to cash in by both the company .
The features that distinguish -'., bank from other banks, according to the customers areB< *. The customers feel that services across different branches of the -'., bank differs since they have different branches for various departments for example 'warka sector $$ which deals with visa services because of this the customer have an advantage of convenience banking $. ,ustomers having long relationship with bank rely a lot on the investment services and advices offered by the bank since bank through one or the other way try to give some benefits to such customers, the bank named them as Gclassic customersH. A. ,ustomers call -'., bank as friendly and reliable bank because of its ,53 services @. -'., bank is also regarded as a leader in deploying technology in its services which makes it different from other banks. +. -'., bank has become relatively large especially by the virtue of introducing various schemes for the benefits of the customer. ). -'., bank has created a brand e/uity that reflects trust and integrity. C. -'., bank has also targeted kids by opening accounts for them and by introducing kid"s advantage plan under mutual funds. 'ue to these efforts of -'., bank lots of kids have become loyal customers of -'., already. D. -'., bank has positioned itself more than just bank. It is already perceived as Gcomprehensive financial supermarketH. !ccording to the customers they have created a virtual market place on the net.
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?. -'., bank !T3 services have been considered remarkable by the customers. The bank tries to handles the complaints it receives regarding !T3s and '#BIT card as efficiently and effectively as possible. This is because one will find maximum takers of -'., bank"s !T3 cards. *>. In a nutshell what differentiates -'., bank is Gthe ability to add< valueH, the Gglobal imageH and the personality of the bank i.e. being dynamic, innovative and vibrant .
#INDINGS6
? S !es S' ff <)ffer )n '(e)r )nforC ')on n< Te!eA(one C !!)n> $@ '(e HD#C $ n", ICICI $ n" n< ICICI Ar&<en') ! n< HD#C s' n< r< !)fe A<?)sors re <)s'&r$)n> '(e =!)en's6 There is excess calling by the employee of the -'., and I,I,I banks and by the !dvisors of insurance, and this is one of the reasons why they are not interested in the bank sometimes, and the other reason is that most of the time the sales staff does not give what they promise, their information generally differs from the bankers in the bank this create a bad impression about the company. ? In '(e $ n")n> se='or P&nJ $ n ')on ! $ n" )s '(e $ n" C n@ =&s'oCers Arefer 6 (4B is the most preferred bank because of its brand e/uity and also because it has an old and loyal customer which has proved to be a great advantage.. There are several things which favor them includingB ? ? The company"s image in the mind of the people The company"s successful track record in providing life long services to its customers
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? ?
! very good agent base #xcellent relationship with clients
? A ! r>e P r' of '(e M r"e' @e' 'o $e =o?ere< $@ M&'& ! #&n<s6 arge parts of the people do not know about the mutual funds investment and insurance and other retail products schemes but they have the power of 3oney. These clients should be cash in by the -'., bank.
SERVICE MARKETINGF ANAL-TICAL ST+D- ON THE BASIS O# HD#C BANK
Ser?:& ! Co<e! of C r"e')n>
The Service 9uality 3odel or Serv9ual model is used to measure the differences between consumers" perception and expectation of service /uality. !ccording to the serv/ual model there are five gapsB I G A < refers to the difference between customers" expected service and management"s perceptions of customers" expectations. This gap means that management may not correctly perceive customer expectations. II G A < refers to the difference between management perceptions of customers" expectations and service /uality specifications. This gap means that although the people in management level may perceive the correct expectations of the customers, they may not have suitable and sufficient service /uality specifications. III G A < refers to the difference between service /uality specifications and the real service delivery.
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This gap means that although the service providers may have suitable and sufficient service /uality specifications, they may not have the satisfactory service delivery in the real situation. That may be because service providers lack well<trained employees to deliver satisfactory service. IV G A < refers to the difference between the service delivered and external communication about the service with customers. That is, the service providers may not have suitable and sufficient communication with the customers or the service providers may have commitments that exceed what they can do or they may not sufficiently inform the customers of what they have done. V G A < is the difference between consumer expectation and their perception of service /uality < measured by the difference between what customers expect and what customers perceive about the service. In addition, gap + is a function of gap *, gap $, gap A, and gap @M that is, &ap +W f Fgap*, gap$, gapA, gap@I. This means that the service /uality is closely related to management perception, marketing, personnel management, communications with customers, service specifications and delivery.
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.igure < Serv9ual model
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GAP I< !s explained before, this gap means that the management is not able to correctly meet the customers" expectations. -'., bank main service focus is delivering excellent service for the customers. Infact when in/uired from the customers of the branch most of them claim that -'., bank service is at par than other banks. 3any of the bank customers have been with the bank since a long time. The customers have their loyalty towards the bank and even have trust with the bankers in the bank. !nother good point about the service is that management is always there for customer"s service in most of the branches of the bank one would easily find the branch managers available. In my view the management is able to correctly perceive customers expectations. The customers of the -'., bank have been able to develop their expectation from the bank on the basis of mostly word of mouth communication from their relationship managers in -'., bank or through their own relatives like for example many of the customers of the branch came to invest in the endowment plan, one of the insurance scheme offered by -'., bank, because they were given references by their senior citi=ens in the family. Though if one observes (unjab 4ational bank then their customers develops their expectations more on the basis of their needs and past experience. -'., bank is able to have more or less a clearer perception of customer expectations. GAP II6 ,ustomer value is perceived as one of the principal drivers of customers satisfaction which in turn act as a key determinant of repurchase and ultimately of customer retention and loyalty. Though -'., bank has clear perceptions about what customers expect from them what this gap discusses is that whether -'., bank has suitable specifications in the service basically it talks about the service design. 4ow in order to deliver customer satisfaction -'., bank has personal banking provisions for the customers, there is a Grelationship managerH assigned to the customers who look into the customers banking needs also almost every branch of -'., bank has a GtellerH who guides the customers. -owever, it cannot be denied that there is no scope for improvements. :hen contacted the customers they seems to be satisfied with the customer service they experience in the bank.
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GAP III< 3ost of the complaints that banking industry receives is in reference with this gap. There seems to be a discrepancy within the sales staff. The sales staff of the bank seems to make promises which they fail to deliver later. So what is re/uired is to be able to have a more trained sales staff which has a more clear understanding about each and every product area in which he;she deals so that they can deliver a more satisfactory service to the customers. -'., bank seems to suffer from this gap at certain level. GAP IV< -'., standard life has a very strong external communication but most of the retail products of the bank lacks in this. Though -'., bank"s fixed deposits seems to be a pull product rest most of the products are push products. -'., bank with time has made considerable efforts to market its products to the customers with advertising like big vans having ,' screens displaying the products of the bank. 5ecently -'., bank has been trying to get more and more customers for its loan products. It is looking for a customer base in retail as well as in corporate. -'., bank has involved itself into this type of marketing but there are not much advertisements one find about -'., bank retail products on television as compared to I,I,I bank which carefully markets it savings account as well as the personal banking experience for the customers. :ith customer and the bank people interaction I was able to identify certain key words which the customers look for while fulfilling their banking needs and what most of the banks promises about. These are basically the parameters by which the customers as well as the bank management measures service. These are as followsB< • • • • • • • • 5eliable Fconsistently do what bank sayI 5esponsive Fcheerfully do what bank sayI ,ompetent Fbank management has knowledge and expertiseI !ccessible Fbank management is available to talk toI ,ourteous Ftreat with respectI ,ommunication Flistens carefully and explains carefullyI ,redible Fhonest and trustworthyI Security Finformation of customers kept private and confidentialI
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• • • • • •
#mpathy Funderstands customers views and show genuine interestI Tangible Fmaintains good bank environment and good staffI Survey needs Fasks and understands needs and expectationsI 4eed fulfillment Fneeds and expectations are identified and metI 3istakes Fmistakes are properly correctedI Treatment Ftreat the customers the way they should beI
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#O+R :& <r n' D) >r C
The diagram is used to explain the relation of the various employees with the bank. It helps to understand that who proves to be star for the bank and who proves to be a dud.
S' rs Person ! $ n"ers Re! ')ons()A C n >ers S !es s' ff
D&<s
S' ff o&'s)<e $ n" !oo")n> for =&rren' ==o&n' n< s ?)n>s ==o&n' =&s'oCers
Te!!er ATM n< De$)' = r< ser?)=e eCA!o@ees
no' AA!)= $!e
Goo< AeoA!e
S' rs<
ne> ')?e eCA!o@ees
The diagram puts personal bankers and relationship managers as stars for the company because they have been providing -'., bank with revenue. By maintaing a healthy relation with the customers they attract the customers for new investments and new schemes infact in some cases
64
it was observed that the customers enter into investment deal because of their relationship manager or personal banker. Goo< AeoA!e< 4ow the teller and the bankers which help customers in !T3 and 'ebit card services have been regarded as good people because they are willing to help the customers in any way possible. Some of the branches of -'., bank like the one in ,onnaught place have a larger customer base for the !T3 and 'ebit card services. The stars and good people are important for -'., bank because they are the one bringing customers, basically their main function is ac/uisition of new customers and retaining them. D&<s B 'uds are basically referred to those employees who are not working properly or are not successful. The sales staff and the staff exclusively working for current and savings account does not have correct knowledge of information re/uired for opening the accounts in the bank and it results in dissatisfaction of customers. This happens because of the difference of opinion between those in the bank and those outside the bank. There have been lots of complaints regarding that sales staff promised something and it did not happened. Ne> ')?e eCA!o@ees6 4egative employees are basically those who work against the nature of banking or who are not interested in attracting customers. 'uds are different from them because though they do not work properly but they have all intentions to attract new customers and give revenue to bank but they lack in the way they work and their knowledge about their work. But negative employees on the
65
other hand are not interested in giving any business to the bank. I personally did not find any employee with those intentions in the bank. This diagram was constructed in order to make an observation about who are the employees that are most important for the bank. Since bank is one of the important examples of service industry, and these employees becomes the first encounter with the customers, representing bank. This encounter helps customer in deciding whether he;she wants to a investment relation with the bank or not.
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ANAL-SIS AND RECOMMENDATIONS
The service sector has assumed greater economic importance over the past decade. India is fifteenth in services output. ,urrently, banking in India is generally fairly mature in terms of supply, product range and reach<even though reach in rural India still remains a challenge for the private sector and foreign banks. In terms of /uality of assets and capital ade/uacy, Indian banks are considered to have clean, strong and transparent balance sheets relative to other banks in comparable economies in its region. The elimination of this waste and meeting customer expectations are the major challenges facing managers these days in the service sector. This is why /uality improvement is a vital concern for many service organi=ations. The serv/ual model represents a different approach to /uality improvement. 9uality is increasingly being seen as a key strategic differentiator within the financial services sector, with most major players undertaking some form of /uality initiative. .rom the customers" perspective, service /uality significantly influences customer satisfaction and customer satisfaction has direct influences on purchase intentions. 5esearch findings indicate that service /uality influences purchase intentions more than does customer satisfaction. It is therefore imperative on the part of bankers to stress upon both service /uality and customer satisfaction, in order to raise the purchase intentions of customers.
Ser?)=e :& !)'@ n< C&s'oCer S ')sf =')onF
The customer satisfaction paradigm posits that confirmed standards lead to moderate satisfactionM positively disconfirmed FexceededI standards lead to high satisfaction, and negatively disconfirmed FunderachievedI standards lead to dissatisfaction. The subject of continued Fand considerableI debate in the marketing literature, the distinction and association between service /uality and customer satisfaction remains at the forefront of many academic< and practitioner<oriented research endeavors. Service /uality and customer satisfaction do exhibit independence and are indeed different constructs from the customer"s point of view. ! small step in unearthing and understanding the constructs of service /uality and customer satisfaction and their implications on competitive fruition has been put forward in a study on banking services. The comparative analysis on the
67
services among the major banking segments revealed that the -'., and I,I,I banks have topped the list in terms of delivering /ualitative customer service. It has also been observed that the private sector banks compete successfully with foreign banks and make efforts to provide better banking services in tune with the changing global competitive scenario. -owever (unjab national bank has been credit by the customers as being the most trustworthy banks as it provides various features for the larger segment of customers. Through continuous interaction with the customers and the bank people it has been observed that customers of banks such as I,I,I, !0IS, -'.,, (4B and 12T!1 3!-I4'5! were either in service or self employed. 3any customers of (4B were found to be retired from their respective profession. Thus they recommended that banks should envisage a strategy to serve customers with different occupations L educational backgrounds. Banks must also advance their customer< centric strategies by providing satisfaction through services leading to better relationship building and earning profits for the banks. -owever it also depends on the location of the branch like for example a branch situated in the residential area will have more customers for pensions like in 'warka they were more customers for pensions and other senior citi=ens services while in branches like ,onnaught place or 1.&. 3arg one will find customers for other needs as well. It has been observed that poor service /uality in public sector banks is mainly because of deficiency in tangibility, lack of responsiveness and empathy. (rivate sector banks, on the other hand, were found to be more reformed in this regards. !bove all, the -'., bank is relatively close to the expectations of their customers with regard to various dimensions of service /uality. .urther, the study revealed that there existed service /uality variation across demographic variables, and suggested that management of banks should pay attention to potential failure points and should be responsive to customer problems. 4ow in order to deliver excellent service the necessity of employee contacts and evaluation of service experiences has been very effective. The problem of reliability in various measures of service /uality, and the perception responses has high reliability as compared to expectation responses. Service /uality in banking implies consistently anticipating and satisfying the needs and expectations of customers. -owever, evaluating service /uality sometimes is not an easy task due to the intangible nature of services.
78
Me s&reCen' of EEAe=' ')on n< Per=eA')on of Ser?)=e :& !)'@F
There are many reasons for poor service /uality across industries. 2ne reason may be an inability to collect or use collected data. .or example, in direct opposition to consumer opinion, bank executives perceive themselves and their companies to be doing an excellent job. This apparent discrepancy of opinion creates /uestions about banking service information<gathering effectiveness. Because perceived /uality is conceptuali=ed as the customerJs overall attitude towards the excellence of service, many researchers have relied on a single overall /uality /uestion, measured on a scale ranging from poor to excellent .3ore generally, however, service /uality perception is thought to be based on several /uality attributes . These areB reliability < reflecting the technical /uality of the outcome of the service encounter, i.e. what is received by the customerM and tangibles, responsiveness, assurance and empathy < reflecting the functional /uality of the process itself, i.e. how the service is provided. S#5896! was deemed Rto be applicable to retail and business services and relevant for banking servicesR.
Re=oCCen< ')ons
The bank needs to work in a way that it can communicate the features of its products to the customers in the most profitable way which would be cost effective for the bank.
Ho&se%)?es s '(e ' r>e' =&s'oCers6
The housewives can be targeted by the sales staff by explaining them to earn money from their monthly day to day expenses money by opening saving account in -'., bank. This is possible as with effect from *st !pril $>*> that the bank interest rate is earned on daily balance. #arlier it uses to be half early on the lowest balance maintained during the period. 6nder this scheme a housewifeXcustomer will open a bank account with initial deposit of 5s. *>>>> along with an amount e/ual to total expected expenses to be incurred by himXher during the month. !s a sample model the target customersXfamilies of 'warka residents have been taken into account on an average the expenses incurred by a family in 'warka having own house or rented have been worked out separately as underB<
71
S.no. *. $. A. @. +. ). C. D. ?. *>. **.
De' )!s of EEAenses (eEAe='e<) 5ent #lectricity, waterL maintenance charges Sweeper charges 3aid charges ,ar wash &roceries and toiletries School fees of two kids to be paid /uarterly F*>>>>YAI 8egetables and fruits 3ilk FT5s.A>Y$I (etrolXtransport 3iscellaneous expenses T2T!
# C)!@ on ren' *),>>> A>>> *+> C>> *+> A>>> A>>>> A>>> *D>> A>>> @+>> )+A>>
# C)!@ ( ?)n> o%n (o&se < A>>> *+> C>> *+> A>>> A>>>> A>>> *D>> A>>> @+>> @?A>>
The above table clearly reveals that expenses mentioned at serial no. * to ) are too incurred once in a month and expense at serial no. C will be incurred /uarterly where as remaining expenses are to be incurred on day to day basis. !ccordingly a family on an average will initially deposit in its saving account 5s. C>>>> which will include minimum balance of *>>>> i.e. !9B for -'., bank. The interest earned on above deposits after taking into account the expenses incurred by the family once in a month, /uarterly and on day to day basis are projected as underB aI Interest on minimum balance of 5s *>,>>>B 5s $D.CC bI Interest on item at serial number CB 5s D).A> cI Interest on expenses incurred once in a monthB 5s )).*) dI The other expenses which are to be incurred on day to day basis, it would be advised to concerned family;customer to withdraw money on weekly basis so that interest can be earned as underB F*I .irst week F5s ?@A> after withdrawing 5s $DC> for weekly expensesIB 5s +.@$ F$I Second week F5s )+)> BalanceIB 5s A.CC FAI Third week F5s A)?> BalanceIB 5s $.*$
70
F@I .ourth week F5s D$> BalanceIB 5s >.@C Y Interest has been calculated by using daily balance multiplied by no. of days multiplied by interest rate of saving account i.e. A.+;A)+>> This way a family will earn 5s *?A.>* per month i.e. *?A.>* Y *$ W $A*).*$ per year out off the expenses incurred by family. This scheme can be named as G#!54#' :-I # S(#4'I4&H. The concept is re/uired to be advertised properly among the dwarka families for which sales personnel can specially be deputed to visit personally to the families and motivate them for opening accounts and explaining them the benefits. The dwarka sub city provides for housing for about + lakh families. 3any of these families have not yet been able to move into their flats because of one or the other reason, however with the inception of metro rail system, thousands of families have been residing in the sub city. This clearly suggests there is huge scope for targeted customers. To be on safer side it is presumed that at least *% of the clientage could be convinced for opening the account under above scheme which would amount to +>>> customers;saving accounts.
V) $)!)'@ for HD#C B n" for '()sF
*I Initial deposit per customerB 5s C>,>>> and expected number of customers i. e. is +>>>, bank will get deposit of 5s A+>>>>>>>. $I Bank will give interest to customers T A.+%B*$$+>>>> AI Salary of sales personX administrative expensesB *+>>>Fapprox.I @I Total expenses of bank F$VAIB*$$)+>>> +I The bank can generate revenue by investing the initial deposit amount of 5s. A+>>>>>>> by choosing the best revenue generating scheme. !s a role model it is presumed that this amount will be invested in loan scheme T D.$+%, thus would generate 5s. *>*>)$+>>>>>>>>>>. )I Bank will earn F+<@IB 5s *>*>)$@??DCCA+>>>. 42T#B < the figures taken for this mathematical calculation are all approximation value and are expected but it clearly reveals that it is a beneficial scheme for the -'., bank.
Loo")n> for '(e o'(er Ao'en') ! =&s'oCers
71
The owners of GkiranaH stores or groceries stores have lot of money but have little knowledge of as to how to invest them productively for this the sales staff should go to them instead of waiting for them to come to the bank. The sales staffs that generally wait for the customers can actually prepare a database of the customers and try to explain them the products that best suit their needs rather randomly calling people. Thus they can be the other target customer and can be worked upon the above mentioned way.
G)?)n> )n=en')?es for !! re' )! Aro<&='s 'o eCA!o@ees
The employees should be given incentives for every customer conversion in retail products depending upon how much have invested by the customer. This will motivate the employees to attract customers not only for insurance but other products also.
ATMs K eE=!&s)?e sC !! $r n=(es
-'., bank can place its !T3 machines or open small branches exclusively in the corporate organi=ations this will increase their market penetration in the wholesale customers as well. This actually will help the bank spread a word about its retail products to the customers by placing small brochures of retail products for the target customers. By opening small branch exclusive for the organi=ations might results in spreading the features of the insurances or other accounts of -'., bank.
CRMneE' Prof)!es
The ,53next (rofiles can be used in a way to encourage more and more customers. The database can be properly created by carefully making note and observations from the profiles of the customers.
More )n?es'Cen' )n P! s')= Cone@ =&s'oCerHs $ se
The idea behind this is that the bank gives credit card swipe machines to the wholesalers and retailers so that they use the credit card of the bank. !s a result bank gets the wide list of customers of wholesalers and retailers. This will surely result in bulk sales for the bank. Through
72
this bank can create group transactions by selling products to wholesalers and retailers both. This will encourage retail products of the banks i.e. credit cards and debit cards and bank will get new customers. This will work by meeting the wholesalers first and getting details about their retailers and then explaining the benefits of using this transaction. This is actually indirect marketing. It means communicating benefits of your products to its customers.
S' r' M ")n> L)n" %)'( '(e N ')on !)*e< B n"s 'o >e' Core B&s)ness
:hen we look at the Small city, most of the customers prefer and have their account in nationali=ed banks, because this banks are giving good service for many years and If -'., can make tie<up with the employees of this banks then they can be able to get more business from this contact.
R&r ! $ n")n>
5ural markets are seen as the new profitable investment for banks in India with banks like I,I,I bank have been able to populari=ed micro financing in which they did a tie up with the S-& but what needs to look into is that how successful the banks have been in doing so. This type of banking is increasingly being populari=ed as social marketing. Infact even -'., bank started with B6SI4#SS ,255#S(24'#4T 32'# to make the viability of banks branches in the unbanked areas of India and did a tie up with 4&2"S and post offices. But the success of these models is still /uestioned. :hat -'., needs to do is o try to penetrate more into rural banking so that it will be able to ac/uire a larger customer base.
OAAor'&n)')es n< C( !!en>es for P! @ers
The bar for what it means to be a successful player in the sector has been raised. .our challenges must be addressed before success can be achieved. .irst, the market is seeing discontinuous growth driven by new products and services that include opportunities in credit
73
cards, consumer finance and wealth management on the retail side, and in fee<based income and investment banking on the wholesale banking side. These re/uire new skills in sales L marketing, credit and operations. Second, banks will no longer enjoy windfall treasury gains that the decade<long secular decline in interest rates provided. This will expose the weaker banks. Third, with increased interest in India, competition from foreign banks will only intensify. .ourth, given the demographic shifts resulting from changes in age profile and household income, consumers will increasingly demand enhanced institutional capabilities and service levels from banks.
Nee< 'o Cre 'e So=) ! De?e!oACen'
M r"e'6Dr)?en B n")n> Se='or %)'( A<eD& 'e #o=&s on
The term Gpolicy makersH used in this thesis, refers to the 3inistry of .inance and the 5BI and includes the other relevant government and regulatory entities for the banking sector. I believe a co<ordinate effort between the various entities is re/uired to enable positive action. This will spur on the performance of the sector as a whole. 2ther suggestions could beB< • • • • • #very bank should take precautions to keep customers experience safe. It should take continued efforts to safeguard online banking transactions. The bank should provide more customer awareness and need of transparency in their dealings. The banks should come up with innovative ways of service at their door steps this may be a costly affair but will surely give positive results in the long run. The banks should take the initiative of training the advisors about the new schemes from time to time which also makes the advisors connected to the bank. The banks should also emphasis on the monitoring of #3I which directly relates to the returns of a loan amount.
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• • •
The company should come up with proper fixed deposit plans at this point of time where the market is highly volatile and the investors become very cautious at this level. The banks should use brand ambassadors for example the ,#2"s of major companies where the company allocate the funds. This will probably ensure proper results. The banks should focus on the advertising strategy and also the marketing of the bank product.
Con=!&s)on
75
-'., bank has been the strong arm of -'., and with continual focus on the customer service has taken the bank to new heights in the banking industry. It is on the brim of increasing its customers through attractive schemes and offers. The project highlighted the strategies adopted by the bank and how it targets customers for retail products. It also explains the products -'., offers with its comparison to the close competitors and their retail products. Since banking industry now days focuses on service marketing so the project was able to identify the gaps with the -'., bank. -owever it cannot be denied that -'., bank has been a pioneer in delivering excellent service to its customers which leads to customer satisfaction ration higher and higher day by day.
Referen=es
76
www.wikipedia.com www.hdfcbank.com www.icicibank.com www.axisbank.com www.kotakmahindrabank.com www.punjanbationalbank.com www.google.com
Boo"s !rturo 3olina, 'avid 3artin< ,onsuegra, !gueda #steban, G5elational Benefits and ,ustomer Satisfaction in 5etail bankingH, International journal of Bank 3arketing, 8ol.$+, 4o.@, $>>C, $+A<$C*. &.S. Suresh ,hander, ,handrasekharan 5ajendran, 5.4. !nantharaman, G,ustomer (erceptions of Service /uality in the Banking Sector of a 'eveloping #conomyB ! ,ritical !nalysisH, International 7ournal of Bank 3arketing, 8ol $*, 4o+, $>>A, pp.$AA<$@$. !llred, !. and -. . !ddams, $>>*. Service /uality at banks and credit unionsB what do their customers sayZ 3anaging service /uality, *>B+$<)>
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doc_668239257.doc
COMPETITON ANALYSIS OF HDFC BANK
1
Summer Project Certificate
This is to certify that Mr. / Ms. _____________________________ Roll No. _________ a student of PGDM has worked on a summer pro ect titled ____________________________________________ __________________________________________________________ ____________ at ______________________ after Trimester!""" in partial fulfillment of the re#uirement for the Post
Graduate Diploma in Mana$ement pro$ramme. This is his/her ori$inal work to the %est of my knowled$e.
Date&___________ 'i$nature ________________
(_________________________) Name of Faculty
*"MT+,- '+./ 0
ACKNOWLEDGEMENT
The purpose of this project report is not whose name appears but to acknowledge the value additions ant contributions. Success can never be achieved through individual effort but through guidance and teamwork. I would like to take this opportunity to thank my industry guide Mr. RACHIT SRIVASTAV, BRANCH MANAGER (DWARKA) and my faculty guide Prof R.J. MASILAMANI who helped me to complete this challenging task. I would like to extend my gratitude to Mrs. MANISHA VARMA, Person ! B n"er, HD#C $ n" (D% r" ) and MR. VIVEK PATHAK Person ! B n"er A&'(or)*er, HD#C $ n" (D% r" ) who went out of their way to guide me throughout my project and gave varied insights. I am grateful to MR. SH+BHANKAR BOSE, BRANCH MANAGER (ANAND NIKETAN) for his constant interest, involvement and support. Besides, I thank all those invisible hands without whose contribution this project would not have been possible. I would like to thank all the concerned executives and staff members of HD#C $ n" and other bank staff members who acted as a constant support for me and also helped by providing valuable insights. I would like to express my gratitude towards my parents for their moral and financial support in completion of this project. ast but not least I would like to thank my colleagues and friends for their valuable support during my summer internship.
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TABLE O# CONTENTS
Page No
E,EC+TIVE S+MMAR-.............................. / INTROD+CTION............................0 COMPAN- OVERVIEW............................1 OBJECTIVE O# THE ST+D-.......................23 HD#C BANK PROD+CT PORT#OLIO...................21 STRATEGIES O# HD#C BANK ......................45 RETAIL BANKING6 ANAL-SIS.....................78 HD#C BANK RETAIL PROD+CTS...................73 COMPETATIVE ANAL-SIS........................89 SERVICE MARKETING6SERV:+AL MODEL ON HD#C BANK.......33 ANAL-SIS ; RECOMMENDATIONS...................50 RE#ERENCES
2
E,EC+TIVE S+MMARThe pace of development for the Indian banking industry has been tremendous over the past decade. !s the world reels from the global financial meltdown, India"s banking sector has been one of the very few to actually maintain resilience while continuing to provide growth opportunities, a feat unlikely to be matched by developed markets around the world. Transition from class banking to mass banking and increased customer focus is drastically changing the landscape of Indian banking. #xpansion of retail banking has a lot of potential as retail assets are just $$% of the total banking assets and the contribution of retail loans to &'( is a mere )% in India compared to *+% in ,hina. This report discusses the retail products available with -'., bank and compares them with the products of competitor banks. This paper describes work undertaken to determine both retail customer and staff perceptions of those factors which determine service /uality. The paper presents some conclusions of significance for retail
banking in particular, and service providers in general. It provides a useful comparison of different banks with its key competitors i.e. I,I,I bank, !0IS bank, 12T!1 3!-I4'5! bank and (647!B 4!TI24! bank and presents the attributes of service marketing with the help of S#5896! model. It outlines the implementation of the S#5896! model in the
bank"s subse/uent /uality improvement programme, as evidenced through the bank"s customer satisfaction endeavors and also what information I receive through customer interaction and by interaction in different banks. :ith time it has emerged consistently in the recent services marketing literature is the importance of frontline employees in service delivery. The internal marketing concept is based on the belief that a firm"s internal market;employees can be motivated to strive for customer<consciousness, market orientation and sales<mindedness through the application of accepted external marketing approaches and principles. This project considers
3
that the objectives of the firm could be achieved by aligning them with the values to frontline employees as well as with the customers. The information was gained after continuous interaction from the customers and the different banks and analy=ing their culture. .
4
INTROD+CTION
In'ro<&=')on 'o $ n")n> C( n>)n> f =e of $ n")n> s ser?)=e )n<&s'r@
Banking in India has changed with time, it has seen a revolution and it has been growing. India has experienced tremendous reform in financial and banking sector. The jump of economy from the manufacturer industry, which used to be the most revenue generating industry, to the service industry has seen the makeover of the banking sector. The banking sector is one of the largest service providing sectors in India. These services are of utmost importance to the customers as it takes care of their financial needs, in fact even maintain them. 4ow this concept of banks as the service provider has underwent transformation as the concept of services is growing and has become more and more complex. In India the banking sector is segregated as public or private sector banks, cooperative banks and regional rural banks. .oreign banks have been given a different head followed by upcoming foreign banks in this section. 'ue to this the customers demand has seen a major rise. These changes has given rise to the need of the banking industry to analysis their competition and to have a defined marketing strategy , to become the leader in providing the bou/uet of services at customers end as well as giving them the best financial advice. The Indian banking industry with time has achieved an astonishing and tremendous growth rate. :hen asked from bank executives or rather the expert in the field, the revenue from the banks has been growing and has recorded positive results for the year $>>?<*>. !ccording to them the growth must have been around *+<$>% and is expected to grow more than $>% in the upcoming years.
5
.igure< (rojected growth rate for banks
Ne% AAro =(
The development of technology has led to a more convenient retail banking system. !T3, 3obile banking, S3S banking and most popular these days net banking facilities are available to and being increasingly availed of by customers. :ith more persons open to the concept of easy banking, all the leading banks have started strategi=ing on the concept of convenient banking looking at the fast growing needs of the customers. 4ow the banks are striving to achieve this by having a cost effective approach, which means that to achieve maximum of profit but with minimum of cost. The banks now have such a close competitive angle in almost all of its products and services within the banking area that it has become difficult for the customers to distinguish between them. ! progressively growing balance sheet, higher pace of credit expansion, expanding profitability and productivity akin to banks in developed markets, lower incidence of nonperforming assets and focus on financial inclusion have contributed to making Indian banking vibrant and strong. Indian banks have begun to revise their growth approach and re<evaluate the prospects on hand to keep the economy rolling. The way forward for the Indian banks is to innovate to take advantage of the new business opportunities and at the same time ensure continuous assessment of risks.
6
G!o$ ! !)n" >e
2ur country with time has seen many collaborations in this sector with foreign banks taking large stakes in Indian banks. This has widened the hori=ons for banking services considerably and enabled operations on a much higher scale to meet the growing demands of customers. Some of the foreign banks operating successfully in India are !B4<!352, ,iti Bank, 'eutsche Bank, -SB,, Standard ,hartered Bank and etc. The Indian banks have now become focused on being customer centric and the future challenge in front of them is to become a global brand example by providing an exhilarating experience to the customers in the service industry without compromising on the profit. .or this the banks need to have a competition analysis of their competitive banks and by being able to develop uni/ue marketing strategy for penetrating within the market.
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HD#C BANKB =oCA n@ o?er?)e%
A$o&' HD#C
-'., bank was among the few private banks to have started their operations in *??@ after the government of India allowed new private banks to emerge in Indian banking sector. -ousing development and .inance ,orporation of India has been credited with being one of the best financial bank in India with the track record of giving the best financial advice to its customers and offering the best products and services in banking area. 'ue to its impeccable service offered to the customer as per their demand and convenience, -'., bank has become one of the leading banks in India offering customer service. In fact customers credit it for being one of the finest in customer service leading to easy and convenient banking. :ith its experience in the financial markets, a strong market reputation, large shareholder base and uni/ue consumer franchise, -'., has positioned itself as being the bank that cares for the customers. -'., Bank provides a variety of wholesale, retail, and depository financial services through more than *,@>> branches and some A,>>> !T3s throughout India. #stablished by the -ousing 'evelopment .inance ,orporation in *??@, the bank offers deposit accounts, loans, credit cards, insurance, investments, and related services. -'., Bank targets individual customers in the middle and upper<class, as well as trusts, small businesses.
CoCA n@ Arof)!e
-'., bank is a leading private sector bank and financial services company in India. The bank aspires to be the preferred provider of financial services to upper< and middle<income individuals and leading corporations in India. The strategy of the bank over the years have been to provide a comprehensive range of financial products and services for the customers through multiple distribution channels, with high /uality service and superior execution of the services offered. The bank principally deals into mainly three business activities which can be categori=ed asB retail banking, wholesale banking and treasury operations. The bank has achieved tremendous growth since it started its operations in 7anuary *??+. 2ver the last five years it has expanded operations from $A* branches and CA$ !T3s in *$$ cities to *,@*$ branches and $,D?> !T3s in +$C cities in India as on 'ecember A*, $>>D. !dditionally
18
the Bank has a branch in Bahrain and representative offices in the 6.!.# and 1enya. 'uring the five years, bankEs customer base grew from A.@> million customers to over *C million customers. !s with time the -'., bank expanded its geographical reach and market penetration, with this the bank"s assets also increased, and it grew from 5s. A>,@$@ crore as of 3arch A*, $>>A to 5s. *DA,*D+ crore as of 'ecember A*, $>>D. The net income also recorded an increase from 5s. ADD crore for the fiscal year $>>A to 5s. *,+?> crore for the fiscal year $>>D at a compounded annual growth rate of A$.)>%. 4otwithstanding the pace of growth, the bank has maintained a strong balance sheet and a low cost of funds. !s of 'ecember A*, $>>D net non<performing assets constituted >.)% of net advances. The average non<interest bearing current accounts and low<interest savings accounts represented +*.C>% of total deposits for fiscal $>>D. These low<cost deposits, which include the cash float associated with bank"s transactional services, led to an average cost of funds including e/uity for fiscal $>>D of @.*>%. -'., bank is a part of the -'., group of companies founded by our principal shareholder, -ousing 'evelopment .inance ,orporation imited FG-'., imitedHI, which is a public limited company established under the laws of India. -'., imited and its subsidiaries owned *?.AD% of bank"s outstanding e/uity shares as of .ebruary >), $>>?. The Bank has two subsidiariesB -'., Securities imited FG-S HI and -'B .inancial Services imited FG-'B.SHI. -S is primarily in the business of providing brokerage services through the internet and other channels. -'B.S is a non<deposit taking non<bank finance company FG4B.,HI, for the establishment of which the Bank received 5eserve Bank of India FG5BIHI approval during the fiscal year $>>D.
-'., bank is a commercial bank of India, promoted by the housing development finance corporation, a premier housing finance company of India. The company head/uarters are situated in 3umbai and has around all the branches in +$D cities which are all linked on an online real< time basis. -'., bank is a type of public company and was founded by 3r. 'eepak (arekh. The bank has approximately total assets of I45 *>>).D$ billion. .or the fiscal year $>>D<>?, the bank has reported net profit of 5s.$, $@@.? crore, up @*% from the previous fiscal. Total annual earnings of the bank increased by +D% reaching at 5s.*?, )$$.D crore in $>>D<>?.
11
The chairman of -'., is 3r. 7agdish capoor and 3r. !ditya (uri serves as the company managing director. They have been responsible for making the company people"s company with their efforts. The company revenue in $>>? 5s. *?C.+ billion and its profit has been 5s. $.$@ billion. The company now has total assets of 5s. *.D trillion and has +$,)DC employees currently working with -'.,. The bank has about +C>,>>> shareholders. The shares are listed on the Stock #xchange, 3umbai and the 4ational Stock #xchange. The bankJs !merican 'epository Shares are listed on the 4ew Kork Stock #xchange F4KS#I under the symbol J-'BJ.
A=D&)s)')ons n< Mer>ers
In a milestone transaction in the Indian banking industry, Times Bank imited Fpromoted by
Bennett, ,oleman L ,o. ; Times &roupI was merged with -'., Bank td., in $>>>. This was the first merger of two private banks in India. !s per the scheme of amalgamation approved by the shareholders of both banks and the 5eserve Bank of India, shareholders of Times Bank received * share of -'., Bank for every +.C+ shares of Times Bank. In $>>D -'., Bank ac/uired ,enturion Bank of (unjab taking its total branches to more than *,>>>. The amalgamated bank emerged with a strong deposit base of around 5s. *, $$,>>> crore and net advances of around 5s. D?,>>> crore. The balance sheet si=e of the combined entity is over 5s. *, )A,>>> crore. The amalgamation added significant value to -'., Bank in terms of increased branch network, geographic reach, and customer base, and a bigger pool of skilled manpower. The mergers can be termed as a /uest for growth in the Indian banking environment.
Bo r< =oCC)''ees
The Board has constituted committees of 'irectors to take informed decisions in the best interest of the Bank. These committees monitor the activities falling within their terms of reference. 8arious committees of the Board were reconstituted during the year due to induction of additional 'irector namelyM 3r. (andit (alande. The BoardJs ,ommittees are as followsB The BoardJs ,ommittees are as followsB !udit and ,ompliance ,ommittee ,ompensation ,ommittee
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InvestorsJ &rievance FS-!5#I ,ommittee 5isk 3onitoring ,ommittee ,redit !pproval ,ommittee The (remises ,ommittee 4omination ,ommittee .raud 3onitoring ,ommittee
CoCAens ')on CoCC)''ee
The ,ompensation ,ommittee reviews the overall compensation structure and policies of the Bank with a view to attract, retain and motivate employees, consider grant of stock options to employees, reviewing compensation levels of the BankJs employees vis<N<vis other banks and industry in general. The BankJs compensation policy is to provide a fair and consistent basis for motivating and rewarding employees appropriately according to their job ; role si=e, performance, contribution, skill and competence. The ,ommittee met A FthreeI times during the year.
T(e PreC)ses CoCC)''ee
The (remises ,ommittee approves purchases and leasing of premises for the use of BankJs branches, back offices, !T3s and residence of executives in accordance with the guidelines laid down by the Board. The ,ommittee is chaired by 3rs. 5enu 1arnad. The ,ommittee met @ FfourI times during the year.
#r &< Mon)'or)n> CoCC)''ee
(ursuant to the directions of the 5eserve Bank of India, the Bank has constituted a .raud 3onitoring ,ommittee, exclusively dedicated to the monitoring and following up of cases of fraud amounting to 5s.* crore and above. The objective of this ,ommittee is the effective detection of frauds and immediate reporting thereof to regulatory and enforcement agencies and actions taken against the perpetrators of frauds.
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C&s'oCer Ser?)=e CoCC)''ee
,ommittee monitors the /uality of services rendered to the customers and also ensures implementation of directives received from 5BI in this regard. The terms of reference of the ,ommittee are to formulate comprehensive deposit policy incorporating the issues arising out of death of a depositor for operations of his account, the product approval process, and the annual survey of depositor satisfaction and the triennial audit of such services. The ,ommittee met @ FfourI times during the year.
CorAor 'e >o?ern n=e
-'., Bank recogni=es the importance of good corporate governance, which is generally accepted as a key factor in attaining fairness for all stakeholders and achieving organi=ational efficiency. This ,orporate &overnance (olicy, therefore, is established to provide a direction and framework for managing and monitoring the bank in accordance with the principles of good corporate governance.
Co<e of =orAor 'e >o?ern n=e
The Bank believes in adopting and adhering to best recogni=ed corporate governance practices and continuously benchmarking itself against each such practice. The Bank understands and respects its fiduciary role and responsibility to shareholders and strives hard to meet their expectations. The Bank believes that best board practices, transparent disclosures and shareholder empowerment are necessary for creating shareholder value. The Bank has infused the philosophy of corporate governance into all its activities. The philosophy on corporate governance is an important tool for shareholder protection and maximi=ation of their long term values. The cardinal principles such as independence, accountability, responsibility, transparency, fair and timely disclosures, credibility etc. serve as the means for implementing the philosophy of corporate governance in letter and spirit.
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Pro>ress
The Bank"s staffing needs continued to increase during the year particularly in the retail banking businesses in line with the business growth. Total number of employees increased from *@DCD as of 3archA*, $>>) to $*@CC as of 3arch A*, $>>C. The Bank continues to focus on training its employees on a continuing basis, both on the job and through training programs conducted by internal and external faculty. The Bank has consistently believed that broader employee ownership of its shares has a positive impact on its performance and employee motivation. The Bank"s employee stock option scheme so far covers around ?>>> employees. -'., Bank has demonstrated very consistent delivery of performance over the last so many years and has already notched up its place as the one of the largest private sector bank in the country and the growth momentum is expected to continue. The bank has stepped up to retail customer ac/uisition with deposit accounts increasing from ).$ million to D.C million and total cards issued Fdebit and credit cardsI increasing from C million to ?.$ million FapproxI. 4ot only the retail banking of -'., is blooming day by day but its services offered in wholesale banking has also given tremendous growth to the bank. The online banking system i.e. net banking has been an eye attraction for the customers as it gives them fast and convenient banking. !s already mentioned about its growing distribution network the bank is continually planning for expansion of the branches of the bank. ,ustomers are efficiently serviced through telephone banking also. The BankJs expansion plans take into account the need to have a presence in all major industrial and commercial centers 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 the centers where the 4S#;BS# has a strong and active member base. :ith the excellent distribution network -'., aspires to have as strong position in the market and with the customers. -'., bank has always aspired to become a world class bank and has been trying to adopt an efficient and effective approach to understand the ever changing customer demands and to offer them superior service. -'., thus has been marketing itself with the tagline saying Gwe understand your worldH.
13
4ow if one observes the revenue earned by -'., during last year than it can be said that revenue growth was driven principally by an increase in net income. The other income Fnon interest revenueI increased primarily due to fees and commissions, profit; FlossI on revaluation ; sale of investment and income from foreign exchange and derivates income. 2perating Fnon< interestI expenses increased due to higher infrastructure and staffing expenses in relation to the expansion in the branch network, and growth in the retail loan and credit card businesses.
net revenuebreak downF Y09
treasury and other operatin$ incom e 29 fore: incom e 79
fee incom e 169
net incom e 479
.igure< -'., bank revenue breakdown
A% r<s n< =()e?eCen's
-'., has earned several awards for its growth and progressive services offered to the customers. ! few are listed belowB • ,orporate best bank award O 'un and Bradstreet O!merican #xpress corporate best bank award $>>C • • Best Bank !ward in the private sector category< outlook money and 4'T8 profit Best 5etail Bank in India O The !sian banker excellence in retail financial services awards.
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• •
#uromoney !wards $>>? <JBest Bank in IndiaJ #conomic Times Brand #/uity L 4ielsen 5esearch annual survey $>>? 3ost Trusted Brand < 5unner 6p
• • •
!sia 3oney $>>? !wards < JBest 'omestic Bank in IndiaJ IB! Banking Technology !wards $>>?<JBest IT &overnance !ward < 5unner upJ &lobal .inance !ward <JBest Trade .inance Bank in India for $>>?
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OBJECTIVE O# THE ST+DThe objective of this study is to study the products available with -'., bank in the retail category and to understand and analy=e the marketing. !nother objective is to compare them with products provided by other banks in the retail category. The banks chosen for competitive analysis are O I,I,I bank !0IS bank 12T!1 3!-I4'5! bank (647!B 4!TI24! bank The study also aims to understand how -'., bank works in the service marketing by using the serv/ual model. The study will help to understand the following objectivesB< • It will also help to understand and analy=e the dimensions of the awareness and satisfaction level of customers with regard to the services provided by the selected branches of the major banking customers. • The study will help to identify and differentiate the best banking sector among the above banks in terms of customer satisfaction, • To ascertain the relevant dimensions of service /uality in banks, and,
•
To offer suggestions, if needed, based on the analytical results of the current study.
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-ence, the study seeks to develop a common understanding of service /uality in the banking industry across different customer segments. The models of marketing like serv/ual model have been used to analy=e services of -'., and strategic marketing of -'., bank. It helps -'., bank to maintain a competitive edge. The data was collected through two sources which help me understand the working of -'., bank and also make analysis for the project. The data was collected through following waysB< Secondary sources< Secondary data provide a starting point for study and offer the valuable source of information. The secondary data was the most important source for my project because it helped in collecting desired information (rimary sources< (rimary data are data freshly gathered for a specific purpose. The various sources of primary data for my project are as follows. ? Banks. ? ,ustomers of different banks ? (eople from industries
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HD#C BANK PROD+CT PORT#OLIO
Pro<&='s n< ser?)=es ' >! n=e
-'., Bank mainly provides three kinds of banking servicesB
• • •
(ersonal Banking 45I Banking :holesale Banking
NR" %ankin$ 159
wholesale %ankin$ 069
personal %ankin$ 339
.igure< product breakup according to the customer preferences If the customer needs to deal in foreign currency and keep tabs on exchange rates, transfer funds to India, make payments etc, -'., Bank has a range of products and services that a customer
08
can choose from to transact smoothly, efficiently and in a timely manner. -'., Bank offers /uick, economical and convenient options to remit and transfer funds to India. :ith -'., Bank"s payment services, one can bid goodbye to /ueues and paper work. -'.,"s range of payment options make it easy to pay for a variety of utilities and services. Bank offers (rivate Banking services to high net worth individuals and institutions.
,orporate Banking reflects -'., Bank"s strengths in providing corporate clients, a wide array of commercial, transactional and electronic banking products. -'., Bank acts as an active medium between the government and the customers by means of various services. -'., deals with basically three areas which can be segmented asB< • • • :holesale banking services 5etail banking services Treasury
It has entered the banking consortia of over +> corporate for providing working capital finance, trade services, corporate finance and merchant banking. It is also providing sophisticated product structures in areas of foreign exchange and derivatives, money markets and debt trading and e/uity research.
W(o!es !e B n")n> Ser?)=es
The BankJs target market ranges from large, blue<chip manufacturing companies in the Indian corporate to small L mid<si=ed corporate and agri<based businesses. .or these customers, the Bank provides a wide range of commercial and transactional banking services, including
01
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. -'., Bank has made significant inroads into the banking consortia of a number of leading Indian corporate including multinationals, companies from the domestic business houses and prime public sector companies. It is recogni=ed as a leading provider of cash management and transactional banking solutions to corporate customers, mutual funds, stock exchange members and banks.
Re' )! B n")n> Ser?)=es
The objective of the 5etail 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 his;her banking re/uirements. 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 !T3s, (hone Banking, 4et Banking and 3obile Banking. -'., Bank was the first bank in India to launch an International 'ebit ,ard in association with 8IS! F8IS! #lectronI and issues the 3aster,ard 3aestro debit card as well. The Bank launched its credit card business in late $>>*. By 3arch $>>?, the bank had a total card base Fdebit and credit cardsI of over *A million. The Bank is also one of the leading players in the Gmerchant ac/uiringH business with over C>,>>> (oint<of<sale F(2SI terminals for debit ; credit cards acceptance at merchant establishments. The Bank is well positioned as a leader in various net based B$, opportunities including a wide range of internet banking services for .ixed 'eposits, oans, Bill (ayments, etc.
Tre s&r@
:ithin this business, the bank has three main product areas < .oreign #xchange and 'erivatives, ocal ,urrency 3oney 3arket L 'ebt Securities, and #/uities. These services are provided through the bankJs Treasury team. To comply with statutory reserve re/uirements, the bank is
00
re/uired to hold $+% of its deposits in government securities. The Treasury business is responsible for managing the returns and market risk on this investment portfolio.
PERSONAL BANKING
S ?)n>s ==o&n' C&rren' ==o&n' #)Ee< <eAos)'s Lo ns In?es'Cen's ; Ins&r n=e C r<s
< 5egular Savings !ccount
(lus current account
5egular fixed deposit
(ersonal oans
3utual .unds< Insurance
Silver ,redit ,ard
< Savings (lus !ccount
Trade current account
+ year Tax savings fixed deposits
Two :heeler oans
Bonds
&old ,redit ,ard
Savings3ax !ccount
(remium current account
Super saver facility
4ew ,ar oan
.inancial (lanning
manJs &old ,redit ,ard< Senior ,iti=ens !ccount
5egular current account
Sweep in facility
6sed ,ar oans
#/uities L 'erivatives
(latinum plus ,redit ,ard
01
< 4o .rills !ccount
5.,< domestic account
2verdraft against ,ar
3udra &old Bar
Titanium ,redit ,ard
< Institutional Savings !ccount
.lexi current account
#xpress oans
8alue plus ,redit ,ard
< (ayroll Salary !ccount
!pex current account
oan against Securities
-ealth plus ,redit ,ard
< ,lassic Salary !ccount
3ax current account
oan against (roperty
-'., Bank Idea Silver ,ard
< 5egular Salary 3erchant !ccount advantage current account < (remium Salary !ccount 3erchant advantage plus current account < 'efense Salary !ccount 5ecurring deposits
,ommercial 8ehicle .inance
-'., Bank Idea &old ,ard
,onstruction #/uipment .inance
'ebit ,ards
rking ,apital .inance#asy ShopInternational 'ebit ,ard
< 1idJs
'emat
02
#asy Shop &old
!dvantage !ccount < (ension Saving Bank !ccount
account
'ebit ,ard
Safe deposits lockers
< #asy ShopInternational Business 'ebit ,ard
< .amily Savings !ccount
#asy Shop
man"s !dvantage 'ebit ,ard< 1isan 4o .rills Savings !ccount < 1isan ,lub Savings !ccount
(repaid ,ards
.orex plus card
1isan card
03
WHOLESALE BANKING AND OTHER SERVICES
CorAor 'e $ n")n> SC !! n< Ce<)&C en'erAr)ses .unded Services .unded Services #)n n=) ! )ns')'&')on 'r&s's n< $ n" ,learing Sub< 3embership 5T&S O sub membership .und Transfer !T3 Tie<ups ,orporate Salary a;c Tax ,ollection 4on .unded Services 4on< funded services 3utual funds Travelers" ,he/ues !ccounts L 'eposits 5emittances Trade .inance !ccounts L 'eposits P5upee Saving a;c P5upee ,urrent a;c P5upee .ixed 'eposits P.oreign ,urrency 'eposits P!ccounts for 5eturning Indians #ORE, Ser?)=es NRI Ser?)=es
8alue added services
Speciali=ed services
Stock brokers
.oreign ,urrency ,ash
2ther services like <(rivate Banking <(ortfolio Investment Scheme <home oans < oans !gainst Securities < oans !gainst 'eposits <&old ,redit ,ard <(ayment Services !ccess
04
To Bank <4etSafe <Bill(ay <Insta(ay <'irect(ay <8isa 3oney <2nline 'onation <4et Banking <2ne 8iew <Insta!lert <!T3 (hone Banking <#mail Statements <Branch 4etwork
Internet banking
Internet banking
.oreign ,urrency 'rafts
.oreign ,urrency ,he/ue 'eposits
.oreign ,urrency 5emittances .orex(lus
05
,ard
STRATEGIES O# HD#C BANK
06
OAer ')on ! s'r 'e>@
-'., bank has been a consistent player in the banking industry and has always been trying to produce the well balanced and right mix of products and services for both of its customers in retail base and corporate base. -'., bank operates in a highly automated environment in terms of information technology and communication systems. !ll the bankJs branches have online connectivity, which enables the bank to offer speedy funds transfer facilities to its customers. 3ulti<branch access is also provided to retail customers through the branch network and !utomated Teller 3achines F!T3sI. The Bank has made substantial efforts and investments in ac/uiring the best technology available internationally, to build the infrastructure for a world class bank. The BankJs business is supported by scalable and robust systems which ensure that the clients always get the finest services bank offer. The Bank has prioriti=ed 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. In the era of globali=ation each and every sector faced the stiff competition from their rivals. !nd world also converted into the flat from the globe. (rivate sector banks today used the latest technology for the different transaction of day to day banking life. !s we know that Information Technology plays the vital role in the each and every industries and gives the optimum return from the limited resources. Banks are service industries and today IT gives the innovative Technology application to Banking industries. -'., bank is the leader in the industries and today IT and -'., bank together combined they reached the sky. 4ew technology changed the mind of the customers and changed the /ueue concept from the history banking transaction. Today there are different channels which are available for the banking transactions.
07
There are drastically changes seen in the use of Internet banking, in a year $>>* F$%I and in the year $>>D F$+%I. This type of technology gives the freedom to retail customers. 4ew and improved technology results in the advantageous functioning of the bank smoothly and efficiently. -'., B!41 is the very consistent player in the new private sector banks. 4ew private sector banks to withstand the competition from public sector banks came up with innovative products and superior service. ,ustomer segments Fretail L wholesaleI account for D@% of 4et revenue F.K $>>?I .-igher retail revenues partly offset by higher operating and credit costs. -'., has tried to e/ually well position itself to grow both segments.
CoCAe')')?e S'ren>'(s
The bank attributes its growth and continuing success to the following competitive strengthsB aI HD#C $ n" )s !e <er Con> In<) n $ n"s )n '(e &se of 'e=(no!o>@
Since the bank"s inception, it has made substantial investments in technology platform and systems. Bank has built multiple distribution channels, including an electronically linked branch network, automated telephone banking, Internet banking and banking by mobile phone, to offer customers convenient access to our products. Technology platform has driven the development of innovative products and reduced operating costs. bI HD#C $ n" <e!)?ers ()>( D& !)'@ ser?)=e %)'( s&Aer)or eEe=&')on Bank tries to deliver efficient service with rapid response time. Bank"s focus on personali=ed service tries to draws customers to the products and increases existing customer loyalty. cI HD#C offer %)<e r n>e of Aro<&='s :hether in retail or wholesale banking, the bank tries to be a Gone<stop shopH for the ,ustomers" banking needs. The wide range of products creates multiple cross<selling opportunities for bank and improves customer retention rates.
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dI HD#C =! )Cs 'o ( ?e n eEAer)en=e< C n >eCen' 'e C !ccording to -'.,, many of the members of senior management team who have been with the bankM since inception seem to have substantial experience in multinational banking.
B&s)ness s'r 'e>@
-'., B!41 mission is to be Ga
rld ,lass Indian BankH, benchmarking themselves against international standards and best practices in terms of product offerings, technology, service levels, risk management and audit L 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 BankJs risk appetite. Bank is committed to do this while ensuring the highest levels of ethical standards, professional integrity, corporate governance and regulatory compliance. ,ontinue to develop new product and technology is the main business strategy of the bank. 3aintain good relation with the customers is the main and prime objective of the bank. -'., B!41 business strategy emphasi=es the followingB PIncrease market share in India"s expanding banking following a disciplined growth delivering high /uality customer service. and financial services industry by strategy focusing on /uality and not on /uantity andP everage our technology platform and open scalable systems to deliver more products to more customers and to control operating costs. P3aintain current high standards for asset /uality through disciplined credit risk management. P'evelop innovative products and services that attract the targeted customers and address inefficiencies in the Indian financial sector. P,ontinue to develop products and services that reduce bank"s cost of funds. P.ocus on high earnings growth with low volatility
11
SWOT ANAL-SIS
STRENGTH • • • • • • • • • • • Support of various promoters -igh level of services 1nowledge of Indian market 5ight strategy for the right products. Superior customer service vs. competitors &reat Brand Image (roducts have re/uired accreditations. -igh degree of customer satisfaction. &ood place to work ower response time with efficient and effective service. 'edicated workforce aiming at making a long<term career in the field.
. WEAKNESSES • • • • Some gaps in range for certain sectors. (roblems of sales staff. (rocesses and systems, etc. 4ot been fully able to position it correctly
10
OAAor'&n)')es • • • • • • • • • (rofit margins will be good. ,ould extend to overseas broadly. 4ew specialist applications. ,ould seek better customer deals .ast<track career development opportunities on an industry<wide basis. !n applied research centre to create opportunities for developing techni/ues to provide value<added services. &rowing Indian banking sector (eople are becoming more service oriented global market opportunity
T(re 's P egislation could impact. P&reat risk involved P8ery high competition prevailing in the industry. P8ulnerable to reactive attack by major competitors P ack of infrastructure in rural areas could constrain investment. P-igh volume;low cost market is intensely competitive.
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M r"e')n> s'r 'e>)es
• • • • • • • • • • • 'istribution ,hoice of channels for services 3odern technology 3aintaing public relationship Internet services !dvertising Strong marketing position (ersonal banking for the customers .ocus on 5elationship banking Bank tries to establish a customer relationship management in almost every branch. ,ustomer centric technologies
M r"e')n> = CA )>ns ! &n=(e< $@ HD#C $ n"
-'., Bank has launched neighborhood marketing initiatives in tier<two cities and towns to create awareness about its various products and services. These initiatives are especially targeted at those consumers who are not aware about the bankJs various value<added services such as
12
direct banking facilities. These campaigns demonstrated the advantages of net banking and mobile banking, as these concepts are relatively new to people living in smaller towns and cities. The bank has also launched another initiative called GBusiness 1i BatenH, which is targeted at areas where the bulk of the population comprises small businessmen. The bank would get experts to talk on a number of issues such as value<add tax and sales tax. !ccording to an article in -indu business line dated 4ovember @, $>>D, these campaigns provide bank with information about customer preferences that can be used for mass media communication, making it more effective. -'., can measure the result of a campaign through the sales that they generate and the customers that are added. There is a clear return on investment, which from a functional point of view gives the team a stronger voice. -'., has also been able to reduce ad spends by about *><*+ per cent and has also reduced the cost of ac/uisition. -'., wants to create an environment that is re/uired to support customer intelligence that leads to database marketing. -'., bank has invested in many cross< selling activities. -'., strategy has been not only the ac/uisition of new customers but at creating product awareness, enhancing usage and also providing value<added services to customers to reward them for their faith and loyalty. -'., also sends personali=ed mailers about their various products to the data base which they ac/uire. -'., tries to sell itself as one< stop financial super market.
C&s'oCers n< M r"e')n>6 (o% )s )' <one for re' )! Aro<&='s of '(e $ n"
The target market for retail services comprises upper< and middle<income persons and high net worth customers. -'., also target small businesses, trusts and non<profit corporations. The marketing of products is done through branches, telemarketing and a dedicated sales staff for niche market segments. -'., also use third<party agents and direct sales associates to market certain products and to identify prospective new customers. !dditionally, bank obtains new customers through joint marketing efforts with our wholesale banking department, such as our ,orporate Salary !ccount package. The marketing of auto loan and two<wheeler loan products are done through joint efforts with relevant manufacturers and distributors. There are programs that target other particular segments of the retail market. .or example, the private and preferred banking programs provide customi=ed financial planning to high net worth
13
individuals in order to preserve and enhance their wealth. (rivate banking customers receive a personal investment advisor who serves as their single<point -'., Bank contact, and who compiles personali=ed portfolio tracking products, including mutual fund and e/uity tracking statements. -'., bank private banking program also offers e/uity investment advisory products. :hile not as service<intensive as the private banking program, preferred banking offers similar services to a slightly broader target segment. Top revenue<generating customers of the preferred banking program are channeled into bank"s private banking program.
RETAIL BANKINGF AN ANAL-SIS
RETAIL BANKING
5etail banking is typical mass<market banking where individual customers use local branches of larger commercial banks. Services offered includeB savings and checking accounts, mortgages, personal loans, debit cards, credit cards, and so forth. This is very different from wholesale banking.
RETAIL BANKING IN INDIA
India is poised to become the worldJs fourth largest economy in the span of two decades. #conomic prosperity is providing many in this populous nation with real purchasing powerM it simply is an opportunity that cannot be overlooked by global banks. 'uring the last decade, India has emerged as one of the biggest and fastest growing economies in the world. The strengthening economy in India has been fueled by the convergence of several key influencesB liberali=ation policies of the government, growth of key economic sectors, development of an #nglish< speaking, well<educated work force and the emergence of a middle class population.
REASONS #OR THE CHANGE OVER #ROM CORPORATE BANKING TO RETAIL BANKINGB
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•
The financial sector reforms undertaken by the &overnment since the year *??* have accelerated the process of disintermediation which has encouraged blue chip corporate to access cheaper funds to meet their working capital re/uirements directly from investors in India. The deregulation of markets and interest rates has lead to cut throat competition among Banks for corporate loans and offer other valued services at comparatively cheaper rates to big and high value corporate. In the process, most of the banks have experienced substantial reduction in interest spreads and drain on their profitability.
•
The risks involved in corporate loans are very high as corporate have to keep all their eggs in one basket. The risks involved in retail Banking advances are comparatively less and well diversified as loan amounts are relatively small ranging from 5s. +>>> to 5s. *>> lack and repayable normally in short period of A<+ years except housing loans Fwhere repayment period is long up to *+ years in some casesI and from fixed source of income like salaries.
•
:hereas corporate loans give average return of just >.+ to *.+ percent only, the retail advances offer attractive interest spread of Ato @ percent, because retail borrowers are less interest rate sensitive than the ,orporate. !nother reason for large interest spreads on retail advances is that the retail customers are too fragmented to bargain effectively.
•
:hile corporate loans are subject to ups and downs in trade fre/uently, retail loans are comparatively independent of recession and continue to deliver even during the sluggish phase of economy.
•
•
5etail Banking gives a lot of stability and public image to banks as compared to corporate banking. The greater amount of consumerism in the country with upswing in income levels of burgeoning middle class, which has propensity to consume to raise their standard of living, is enlarging the retail markets. &iven the easy li/uidity scenario in the country the growth rate in this sector is likely to go up manifold in the years come.
•
5etail Banking clients are generally loyal and tend not to change from one Bank to another very often. arge numbers of 5etail clients facilitate marketing, mass selling and ability to categori=e;select clients using scoring system and data mining. Banks can cut
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costs and achieve economies of scale and improve their bottom<line by robust growth in retail business volume. • • • Through product innovations and competitive pricing strategies Banks can foster business relationship with customers to retain the existing clients and attract new ones. Innovative products like asset securiti=ation can open new vistas in sustaining optimal capital ade/uacy and asset liability management for banks. 5etail Banking offers opportunities to banks to cross sell other retail products like credit card, insurance, mutual fund products and demat facilities etc. to depositors and investors.
HD#C BANK RETAIL PROD+CTSF PERSONAL BANKING
-'., bank principal banking activities consist of retail banking, wholesale banking and treasury operations. The retail banking operations of the -'., bank have been discussed below.
Re' )! B n")n>F O?er?)e%
-'., bank considers itself a one<stop shop for the financial needs of upper< and middle<income individuals. It provide a comprehensive range of financial products including deposit products, loans, credit cards, debit cards, third<party mutual funds and insurance products, investment advice, bill payment services and other services. It offers high /uality service and greater convenience by leveraging our technology platforms and multiple distribution channels. -'., bank goal is to provide banking and financial services to our retail customers on an Ganytime, anywhere, anyhowH basis. -'., bank market services aggressively through its branches and direct sales associates, as well as through the bank"s relationships with automobile dealers and corporate clients. :hat the bank does is to establish a relationship with a retail customer and then expand it by offering more products and expanding their distribution channels so as to make it easier for the customer to do business with bank. Bank believes in this strategy, so that it can
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lead to general growth of the Indian economy and the Indian upper and middle classes, can afford bank"s significant opportunities for growth. -'., Es plan is to continue to expand their branch and !T3 network as well as their other distribution channels, subject to receiving regulatory approvals.
Re' )! Lo ns n< O'(er Asse' Pro<&='s
?
-'., Bank offers a wide range of retail loans, including loans for the purchase of automobiles, personal loans, retail business banking loans, loans for the purchase of commercial vehicles and construction e/uipment finance, two<wheeler loans, credit cards and loans against securities. The retail loans were +?.)% of bank"s gross loans as of 'ecember A*, $>>D. !part from the branches of the bank, -'., use their !T3 screens and the Internet to promote its loan products and they also employ additional sales methods depending on the type of products. -'., bank themselves performs credit analyses of the borrowers and the value of the collateral. The bank also buys mortgage and other asset<backed securities and invests in retail loan portfolios through assignments. In addition to taking collateral in many cases, -'., bank obtains post< dated checks covering all payments at the time a retail loan is made. It is a criminal offense in India to issue a bad check. Though through my observation in bank I have seen that bank also sometimes obtain irrevocable instructions to debit the customer"s account directly for the making of payments. EMI = !=&! 'or6 The bank offers proper details on how it is done in fact the bank makes sure that the customers are aware about its use and how is it relevant. It makes use of amorti=ation table for its calculation. The term and #3I has been explained below. ED& 'e< Mon'(!@ Ins' !!Cen' (EMI) !n e/uated monthly installment F#3II is the fixed monthly payment made by a borrower to the lender each calendar month. The amount of the #3I depends upon the loan amount, interest rate charged for the loan and the duration in which the loan is to be repaid. The #3I is made up of two parts, the principal amount and the interest on the principal amount divided across each month in the loan tenure. The #3I is always paid
17
?
up to the lender on a fixed date each month until the loan is paid off in full at the end of the tenure. The benefit of an #3I for borrowers is that they know precisely how much money they will need to pay toward their loan each month, making the personal budgeting process easier. ACor')* ')on T $!es n< W(@ T(e@ Are +sef&! 4ow, one might assume that the #3I is applied in e/ual parts towards the principal and the interest every month, however this not the case. 'uring the initial years the interest component repaid is higher and during the latter years of repayment the principal component is higher. :hile a portion of every payment is applied towards both the interest and the principal balance of the loan, the exact amount applied to principal each time varies Fwith the remainder going to interestI. !n amorti=ation schedule reveals the amount applied towards interest, as well as the amount paid towards the principal balance, with each payment. Initially, a large portion of each payment is devoted to interest. !s the loan matures, larger portions go towards paying down the principal. In addition to breaking down each payment into interest and principal portions, an amorti=ation schedule also reveals the remaining principal balance on each payment date .
?
?
Lo n reA @Cen' = !=&! 'or The following table shows the value and share of our retail loan products Fnet of loans securiti=ed outIB F5s. croreI
P r')=&! rs As ' De=eC$er 72, 4995 G of 'o' ! ? !&e !uto oans ,ommercial 8ehicle and ,onstruction #/uipment (ersonal oans oans !gainst Securities Two :heeler oans *+,*$@ $+.@% D,A$* *A.?% D,?*C *@.?% )?? *.$% $,>?$ A.+%
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,redit ,ards 2ther 5etail oans To' ! Re' )! Lo ns
@,>+A ).D% ),DD* **.+% 81,0/3 299.99G
-'., bank offer secured loans at fixed interest rates for financing new and used automobile purchases. In addition to their general marketing efforts for retail loans, -'., market this product through building their relationships with car dealers, corporate packages and joint promotion programs with automobile manufacturers.
CoCCer=) ! Ve()=!es n< Cons'r&=')on ED&)ACen' #)n n=e
-'., bank provides secured financing for commercial vehicles and provides working capital, bank guarantees and trade advances to customers who are transportation operators. In addition to funding domestic assets, bank also finance imported assets for which they open foreign letters of credit and offer treasury services such as forward exchange cover. To do this smoothly bank coordinates with manufacturers to jointly promote their financing options to their clients.
Person ! Lo ns
The bank offer unsecured personal loans at fixed rates to specific customer segments, including salaried individuals and self<employed professionals. In addition, they offer unsecured personal loans to small businesses and individuals.
Lo ns > )ns' Se=&r)')es
It also offers loans against e/uity shares, mutual fund units, bonds issued by the 5BI and other securities that are on our approved list. -'., bank limits their loans against e/uity shares to 5s. $> lacks per retail customer in line with regulatory guidelines and limits the amount of their total exposure secured by particular securities. Bank lend only against shares in book<entry
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Fdemateriali=edI form, which ensures that they obtain perfected and first<priority security interests. The minimum margin for lending against shares is prescribed by the 5BI.
T%o W(ee!er Lo ns
-'., offer loans for financing the purchase of scooters or motorcycles. The bank markets this product in ways similar to their marketing of auto loans.
Re' )! B&s)ness B n")n>
-'., bank address the borrowing needs of the community of small businessmen near the bank branches by offering facilities such as credit lines, term loans for expansion or addition of facilities and discounting of credit card receivables. The bank classifies these business banking loans as a retail product. Such lending is typically secured with current assets as well as immovable property and fixed assets in some cases. The bank also offer letters of credit, guarantees and other basic trade finance products and cash management services to such businesses.
Cre<)' C r<s
-'., bank offer credit cards from the 8IS! and 3aster,ard stable including gold, silver, corporate, platinum and titanium credit cards. !s per the information gained from bank, the bank had approximately @+ lacks cards outstanding as of 'ecember A*, $>>D as against AD lacks as of 3arch A*, $>>D.
O'(er Re' )! Lo ns
Such loans primarily include overdrafts against time deposits, health care e/uipment financing loans, tractor loans, loans against gold and ornaments and small loans to farmers. ,urrently other loans also include home loans disbursed by the erstwhile ,enturion Bank of (unjab td.
Re' )! DeAos)' Pro<&='s
5etail deposits provide the bank with a low cost, stable funding base and have been a key focus area for -'., since commencing operations. 5etail deposits represented )C% of bank"s total
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deposits as of 'ecember A*, $>>?. The following chart shows the value of our retail deposits by our various deposit products as of the same dateB
T@Ae of DeAos)' V !&e (Rs. =rore) G of To' !
Savings ,urrent .ixed deposits To' ! A>,C)* A*.)C% *@,>>* *@.@*% +$,AC$ +A.?$ 13,278 299.99G
-'., bank"s individual retail account holders have access to the benefits of a wide range of direct banking services, including debit and !T3 cards, access to the growing branch and !T3 network, access to other distribution channels and eligibility for utility bill payments and other services. The retail deposit products include the followingB aI Savings accounts, which are demand deposits in checking accounts designed primarily for individuals and trusts. These accrue interest at a fixed rate set by the 5BI Fcurrently A.+>% per annumI. bI ,urrent accounts, which are non<interest bearing checking accounts designed primarily for small businesses. ,ustomers have a choice of regular and premium product offerings with different minimum average /uarterly account balance re/uirements. cI Time deposits, which pay a fixed return over a predetermined time period. Bank also offers special value<added accounts, which offer the customers added value and convenience. These include a time deposit account that allows for automatic transfers from a
21
time deposit account to a savings account, as well as a time deposit account with an automatic overdraft facility. #<Broking accounts are offered as current accounts to customers of stock brokers where all transactions are routed electronically between the broker and beneficiaries.
O'(er Re' )! Ser?)=es n< Pro<&='s De$)' C r<s
The debit cards may be used with more than @>>,>>> merchant point<of<sale machines and over A>,>>> !T3s in India and more than $.?> crore merchant outlets and *> lacs !T3s worldwide. -'., was the first in India to issue international 8isa #lectron debit cards on a nationwide basis and currently issue both 8isa and 3aster,ard debit cards.
In<)?)<& ! DeAos)' r@ A==o&n's
Bank provides depositary accounts to individual retail customers for holding debt and e/uity instruments. Securities traded on the Indian exchanges are generally not held through a broker"s account or in street name. Instead, an individual will have his own account with a depositary participant for the particular exchange. 'epositary participants, including us, provide services through the major depositaries established by the two major stock exchanges. 'epositary participants record ownership details and effectuate transfers in book<entry form on behalf of the buyers and sellers of securities. :e provide a complete package of services, including account opening, registration of transfers and other transactions and information reporting.
M&'& ! #&n< S !es
-'., offer retail customers units in most of the large and reputable mutual funds in India. .or this bank earns front<end commissions for new sales and in some cases additional fees in subse/uent years. Bank distributes mutual fund products primarily through branches and private banking advisors.
Ins&r n=e
22
-'., has arrangements with -'., Standard
ife Insurance ,ompany and Bajaj !llian=
&eneral Insurance ,ompany to distribute their life insurance products and general insurance products to the customers. .or this also bank earns upfront commissions on new premiums collected as well as some trailing income in subse/uent years while the policy is still in force.
Pre=)o&s Me' !s
-'., bank also import gold bars for sale to retail customers through branch network.
In?es'Cen' A<?)=e
Bank offer customers a broad range of investment advice including advice regarding the purchase of Indian debt, e/uity shares, and mutual funds. Bank provides private banking customers with a personal investment advisor who can consult with them on their individual investment needs.
B)!! P @Cen' Ser?)=es
Besides bank also offer customers utility bill payment services for leading utility companies including electricity, telephone, mobile telephone and Internet service providers. ,ustomers can also review and access their bill details through direct banking channels. This service is valuable to customers because utility bills must otherwise be paid in person in India. These services !5# offered to customers through multiple distribution channelsQ!T3s, telephone banking, Internet banking and mobile telephone banking.
CorAor 'e S ! r@ A==o&n's
-'., offer ,orporate Salary !ccounts, which allow employers to make salary payments to a group of employees with a single transfer. Bank then transfer the funds into the employees" individual accounts, and offer them preferred services, such as preferential loan rates, and in some cases lower minimum balance re/uirements.
Non6Res)<en' In<) n Ser?)=es
4on<resident Indians are an important target market segment for Indian banking industry given their relative affluence and strong ties with family members in India.
Re' )! #ore)>n EE=( n>e
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-'., bank purchase foreign currency from and sell foreign currency to retail customers in the form of cash, traveler"s checks, demand drafts and other remittances. Banks also provide out foreign currency check collections. -'., Bank has been one of the pioneers in extending internet banking services to cater to anytime, anywhere banking needs of its customers by leveraging on to its state<of<the<art technology platforms. Internet Banking has also been exploited by hackers and fraudsters to deceive the bankJs customer and commit frauds. :hile the bank has best<of<the<breed solutions, processes and people deployed to extend secure banking to its customers, it is important for our customers to know that RSec6rity is incomplete without 6R.
C)')*ensH =( r'er
-'., bank"s ,iti=enJs ,harter offers relevant information about the products, facilities and services we provide. ,ustomers can also find out about the time norms for various banking transactions, our policy on customer information, and the process followed for redressal of grievances.
T@Aes of DeAos)' A==o&n's
:hile various deposit products offered by the bank are assigned different names, the deposit products can be categori=ed broadly into the following types. 'efinition of major deposit schemes are as under B < • • • R'emand 'eposits R means a deposit received by the bank which is withdraw able on demandM RSavings 'epositsR means a form of 'emand 'eposit which is subject to restrictions as to the number of withdrawals as also the amounts of withdrawals permitted by the bank during any specified periodM • RTerm 'epositR means a deposit received by the bank for a fixed period withdraw able only after the expiry of the fixed period and includes deposits such as 5ecurring ; 'ouble Benefit 'eposits ; Short 'eposits ; .ixed 'eposits ; 3onthly Income ,ertificate ; 9uarterly Income ,ertificate etc.
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• •
JJ4otice 'epositJJ means Term 'eposit for a specific period but withdraw able on giving at least one complete banking dayJs noticeM R,urrent !ccountR means a form of 'emand 'eposit wherefrom withdrawals are allowed any number of times depending upon the balance in the account or up to a particular agreed amount and will also include other deposit accounts which are neither Savings 'eposit nor Term 'epositM
A==o&n' OAen)n> ; OAer ')on of DeAos)' A==o&n'
Before opening any 'eposit !ccount, the bank will carry out due diligence as re/uired under R1now Kour ,ustomerR F1K,I guidelines issued by 5BI and or such other norms or procedures adopted by the bank. If the decision to open an account of a prospective depositor re/uires clearance at a higher level, reasons for any delay in opening of the account will be informed to him and the final decision of the bank will be conveyed at the earliest to him. The account opening forms and other material would be provided to the prospective depositor by the bank. The same will contain details of information to be furnished and documents to be submitted for verification and ; or for record. It is expected of the bank official to explain the procedural formalities and provide necessary clarifications sought by the prospective depositor when he approaches the bank for opening a 'eposit !ccount. .or deposit products like Savings Bank !ccount and ,urrent 'eposit !ccount, the bank will normally stipulate certain minimum;average balances to be maintained as a part of the terms and conditions governing operation of such accounts. .ailure to maintain stipulated minimum; average balance in the account will attract levy of charges as specified by the bank. .or Savings Bank !ccount, the bank may also restrict the number of transactions, cash withdrawals, etc., for a given period. Similarly, the bank may specify charges for issue of che/ue books, additional statement of accounts, duplicate pass book, folio charges, etc. !ll such details, regarding terms and conditions for operation of the accounts and schedule of charges for various services provided will be communicated to the prospective depositor while opening the account.
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Savings Bank !ccounts can be opened for eligible person ; persons and certain organi=ations ; agencies Fas advised by 5eserve Bank of India F5BII from time to timeI.These accounts are designed to help the individual Fpersonal customersI to inculcate the habit of saving money and to meet their future re/uirement of money. The amounts can be deposited;withdrawn from these accounts by use of che/ues;!T3. It helps customers to keep minimum cash at home besides earning interest. ,urrent !ccounts can be opened by Individuals ; (artnership firms ; (rivate and (ublic imited ,ompanies ; -6.s ; Specified !ssociates ; Societies ; Trusts, etc. Term 'eposit !ccounts can be opened by Individuals ; (artnership firms ; (rivate and (ublic imited ,ompanies ; -6.s; Specified !ssociates ; Societies ; Trusts, etc. Bank has tailored various deposit schemes to suit the needs and expectations of investing people in every walk of life. The due diligence process, while opening a 'eposit !ccount will involve satisfying about the identity of the person, verification of address, satisfying about his occupation and source of income. 2btaining introduction of the prospective depositor from a person acceptable to the bank and obtaining recent photographs of the person;s opening ; operating the account are part of the due diligence process. In addition to the due diligence re/uirements, under 1K, normsFi.e. know your customersI the bank is re/uired by law to obtain (ermanent !ccount 4umber F(!4I or &eneral Index 5egister F&I5I 4umber or alternatively declaration in .orm 4o. )> or )* as specified under the Income Tax !ct ; 5ules. 'eposit !ccounts can be opened by an individual in his own name FstatusB known as account in single nameI or by more than one individual in their own names FstatusB known as 7oint !ccountI. Savings Bank !ccount can also be opened by a minor jointly with natural guardian or with mother as the guardian FStatusB known as 3inorJs !ccountI. 3inors above the age of *$ will also be allowed to open and operate Saving Bank !ccount independently.
26
2peration of 7oint !ccountB The 7oint !ccount opened by more than one individual can be operated by single individual or by more than one individual jointly. The mandate for operating the account can be modified with the consent of all account holders. The Savings Bank !ccount opened by minor jointly with natural guardian ; guardian can be operated by natural guardian only. The joint account holders choose any of the following options for the disposal of balance in the above accountsB
•
#ither or Survivor B If the account is held by two individuals say, ! L B, the final balance along with interest, if applicable, will be paid to survivor on death of any one of the account holders.
•
!nyone or Survivor;s B If the account is held by more than two individuals say, !, B and ,, the final balance along with interest, if applicable, will be paid to the survivor on death of any two account holders.
The above mandates will be applicable to or become operational only on or after the date of maturity of term deposits. This mandate can be modified by the consent of all the account holders. !t the re/uest of the depositor, the bank will register the mandate ; power of attorney given by him authori=ing another person to operate the account on his behalf. The term deposit account holders at the time of placing their deposits can give instructions with regard to closure of deposit account or renewal of deposit for further period on the date of maturity ! statement of account will be provided by the bank to Savings Bank as well as ,urrent 'eposit !ccount -olders periodically as per terms and conditions of opening of the account. (assbook facility is available to all savings account holders free of cost.
27
NoC)n ')on # =)!)'@
4omination .acilityB Bank offers nomination facility in deposit accounts, safe deposit lockers, articles in safe custody etc. 4omination facility is available on all deposit accounts opened by the individuals. 4omination is also available to a sole proprietary concern account. 4omination can be made in favor of one individual only. 4omination so made can be cancelled or changed by the account holder;s any time. :hile making nomination, cancellation or change thereof, it is re/uired to be witnessed by a third party. 4omination can be modified by the consent of account holder;s. 4omination can be made in favor of a minor also subject to other major individual being named appointeeFsI during the minority period. The bank recommends that all depositors avail nomination facility. The nominee, in the event of death of the depositor;s, would receive the balance outstanding in the account as a trustee of legal heirs.
In'eres' P @Cen's M)norIs A==o&n's
The minor can open a savings bank account and the same can be operated by the natural guardian or by the minor himself ; herself, if he;she is above the age of *$ years. The account can also be opened jointly. 2n attaining majority, the erstwhile minor should confirm the balance in his;her account and if the account is operated by the natural guardian ; guardian, fresh specimen signature of erstwhile minor duly verified by the natural guardian would be obtained and kept on record for all operational purposes.
38
COMPETITIVE ANAL-SIS
ICICI $ n"
I,I,I Bank is IndiaJs second<largest bank with total assets of 5s. A,)A@.>> billion F6SS D* billionI at 3arch A*, $>*> and profit after tax 5s. @>.$+ billion F6SS D?) millionI for the year ended 3arch A*, $>*>. The Bank has a network of $,>>? branches and about +,$*? !T3s in India and presence in *D countries. I,I,I 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 speciali=ed subsidiaries in the areas of investment banking, life and non<life insurance, venture capital and asset management. The Bank currently has subsidiaries in the 6nited 1ingdom, 5ussia and ,anada, branches in 6nited States, Singapore, Bahrain, -ong 1ong, Sri anka, 9atar and 'ubai International .inance ,entre and representative offices in 6nited !rab #mirates, ,hina, South !frica, Bangladesh, Thailand, 3alaysia and Indonesia. 2ur 61 subsidiary has established branches in Belgium and &ermany. The bank has a presence in around *D countries across the globe. They offer a wide gamut of retail products to its retail customers and as well as other banking products related to the corporate segment. These include I,I,I personal loan, I,I,I home loan, I,I,I car loan, I,I,I credit cards, I,I,I !( etc. They also offer financial services that span asset management, venture capital, investment banking, life and non<life insurance. I,I,I e/uity shares find a place in the Bombay Stock #xchange and 4ational Stock #xchange in India with its !merican depositary receipts listed in the 4ew Kork Stock #xchange. I,I,I Bank is one of the most popular banks in recent times with its presence felt through a huge network of *,@?+ branches and @,D*) !T3s across
31
the country, with profits running into D.D billion in the /uarter ended 7une $>>?. The bank also has a presence in around *D countries across the globe. They offer a wide gamut of retail products to its retail customers and as well as other banking products related to the corporate segment.
M)!es'ones
• • • In *???, I,I,I become the first Indian company and the first bank or financial institution from non<7apan !sia to be listed on the 4KS#. 3erger of I,I,I Bank with Bank of 3adura imited in fiscal $>>* and $>>$. In 2ctober $>>*, I,I,I (ersonal .inancial Services and I,I,I ,apital Services wholly owned by I,I,I • imited were allowed to be merged with I,I,I Bank, which was formally approved by the 5BI in !pril $>>$. 1.8. 1amath is the ,hairman of the I,I,I group. ,handa '. 1ochhar, the 3anaging 'irector L ,#2 of I,I,I Bank was recently named in .orbes list of the
rld"s *>> 3ost (owerful men and ranked in the top $> of the list compiled by .orbes, sharing the honor with Sonia &andhi, ,ongress (resident who ranked *Ath.ICICI $ n" re' )! Aro<&='s A==o&n's n< <eAos)'s S ?)n>s ==o&n'
I,I,I bank savings account offers the customers following featuresB< • • 'ebit<cum<!T3 ,ard 3oney 3ultiplier .acility
30
• • • • • •
Internet Banking ,ustomer ,are 3obile Banking Standing Instructions 4omination facility '' ,all and ,ollect
De$)'6=&C6ATM C r< 6 :ith I,I,I Bank S ?)n>s A==o&n' the customers will get a debit card that one can use to withdraw cash from any !T3. ,ustomers may also use their debit card to directly make purchases through a 8isa;3aster,ard (2S F(oint of SaleI machine available at most stores, according to the bank this will help customers access their money from anywhere. The I,I,I Bank International debit card is a debit<cum<!T3 card providing customers with the convenience of acceptance at merchant establishments and cash withdrawals at !T3s. If the customers want to withdraw cash from their I,I,I Bank Savings account, they can walk into any bankJs !T3 and use their I,I,I Bank !T3<cum<'ebit card for free. The above benefit is available free of cost for the first + transaction per month upto 5s *>,>>> per transaction. Mone@ M&!')A!)er # =)!)'@6The 3oney 3ultiplier feature gives customer the li/uidity of a Savings !ccount coupled with high earnings of a .ixed 'eposit. This is achieved by creating a .ixed 'eposit linked to customers Savings !ccount providing them the following facilities.
?
M E)C&C re'&rns B !ccording to the bank the customer"s money is never idle. ,reation of a linked .' ensures higher rate of interest on their Savings Bank 'eposits. 2ne can issue instructions through any channel such as the I,I,I Bank Branch, I,I,I Bank (hone Banking and I,I,I BankJs Internet Banking for creation of .ixed 'epositFsI from the surplus funds in your Savings Bank !ccount Fsubject to a minimum of 5s. *>,>>>I. The
31
.ixed 'eposits will be created in multiples of 5s. +,>>> for tenure of one year or more as instructed by the customer.
?
M E)C&C L)D&)<)'@ O The customers can withdraw the funds from their savings account through any channel such as the I,I,I Bank !T3, I,I,I Bank Internet Banking or by issuing a che/ue etc. !ll linked .ixed 'eposits will be enabled for automatic 5everse Sweep in multiples of 5s. +>>> on a ast<In<.irst<2ut F I.2I basis when the balance in the Savings !ccount falls below 5s.*>, >>>. The amount reverse swept will earn interest rates at the applicable rate for the period that the deposit was held with the Bank. The remaining amount will continue to earn higher interest at the original rate applicable to the fixed deposit.
?
A&'o Rene% ! < 6nder this facility, when their deposits fall due, the bank will automatically renew the principal and accrued interest for the same tenure as the original deposit.
In'erne' B n")n><.or internet banking the customers need to log in with their user I' and password and make banking a hassle<free routine. It is offered free of cost. C&s'oCer C re O The bank has $@<hour ,ustomer ,are service always available to answer any /uery or take their instructions. Mo$)!e B n")n> O The customers have an option of mobile banking through which they can do Transferring of funds or getting to know their balance. S' n<)n> Ins'r&=')ons < I,I,I Bank accepts and supports Standing Instructions. !ccording to them the customers donJt have to worry about the chore of carrying out a routine transaction. They can just set up a Standing Instruction and then the bank will manage. NoC)n ')on # =)!)'@ O The customers may nominate a person as beneficiary to their account proceeds. 4omination facility available for bank deposits. ? There can be only one 4ominee for a deposit account whether held singly or jointly.
32
? ! person legally empowered to operate a minorJs account can file a nomination on behalf of the minor. ? !pplicants can make nomination by filling up the .orm prescribed under the Banking ,ompanies F4ominationI 5ules *?D+ ? The nomination details can be changed during the subsistence of the account relationship by filling up the .orm prescribed under the Banking ,ompanies F4ominationI 5ules *?D+.
DD C !! n< Co!!e=' O according to the bank the customers need to wait in bank to collect '' they can do so on the way to the branch, by just calling ,ustomer ,are and providing them details of the '' to be prepared and collect it ready and signed at the branch.
S ! r@ ==o&n's
I,I,I Bank Salary !ccount is a benefit<rich payroll account for #mployers and #mployees. !s an organi=ation, one can opt for Salary !ccounts to enable easy disbursements of salaries and to have access to other benefits too. !ccording to the bank with I,I,I Bank Salary !ccounts employees will enjoy the convenience of having the largest network of !T3s, free $@ hour phone banking and free internet banking. :hat the customers would re/uire to do is to send I,I,I Bank an advice Fin form of a che/ue;debit instruction, ecs, etcI for the total salary amount along with the salary details of the designated employees in a soft and hard copy format and bank will credit the respective employeesJ accounts as per the company"s statement of advice. I,I,I Bank Salary !ccounts has the benefits of reduce paper work and saves remittance costs and also the employees receive instant credit of salaries. Besides all of the above, employees will automatically become I,I,I Bank account holders with special benefits and privileges of D<D banking, Investment advisory and much more. I,I,I Bank also has a special offeringB 'efense Banking Services designed exclusively for the armed forces.
33
#)Ee< <eAos)'s
The I,I,I bank fixed deposits offer following advantagesB<
? ? ? ? ? ?
:ide range of tenures. ,hoice of investment plans. (artial withdrawal permitted. Safe custody of fixed deposit receipts. !uto renewal possible. oan facility available.
#e '&res
? The customers can deposit any amount of money in .ixed 'eposit for as long as they wish between *+ days to *> years. !ll fixed deposits come with a set choice of investment plans. .ixed 5ate 'eposit accounts also provide .ixed oans. 5e<investment .ixed 'eposit rates do not change but works like a 5ecurring 'ebit !ccount transaction. In other words, 5e<investment (lans are compounded over traditional deposits and hence are more lucrative over different time periods. 2ther features includeB
M)n)C&C B ! n=e
? ,ustomers can avail of I,I,I Bank .ixed 'eposits for a minimum deposit of 5s *>,>>>.
NoC)n ')on
? 4omination facility available for bank deposits. ? There can be only one 4ominee for a deposit account whether held singly or jointly. ? ! person legally empowered to operate a minorJs account can file a nomination on behalf of the minor.
34
? !pplicants can make nomination by filling up the .orm prescribed under the Banking ,ompanies F4ominationI 5ules *?D+. ? The nomination details can be changed during the subsistence of the account relationship by filling up the .orm prescribed under the Banking ,ompanies F4ominationI 5ules *?D+. ? ,hoice of two investment plansB
Tr <)')on !
? Interest payable monthly or /uarterly as per your convenience ? 3aturity period ranges from *+ days to *> years
Re)n?es'Cen'
? Interest is compounded /uarterly and reinvested with principal amount ? 3aturity period ranges from ) months to *> years
Benef)'s
.ixed 'eposits at I,I,I Bank comes with nomination facility. The bank also offers online access to .ixed 'eposits through their Internet Banking channel. Internet Banking at I,I,I Bank allows customers to connect to their ,redit ,ard, oan and their .ixed 'eposit with their savings account. In re<investment deposits, the interest is compounded /uarterly and reinvested with the principal. Traditional term deposits provide tax shelter and shield you from factors affecting fixed deposits in India over longer periods of fixed time. !ll the facilities available with I,I,I bank can be listed as follows.
C( nne!s
35
I,I,I Bank has the following channels through which it offers its products and services to its customers. • • • • • Branches !T3s Internet Banking 3obile Banking (hone Banking
(roducts and services I,I,I Bank offers a host of products and services to its clients, which include 'eposits, oans, ,ards, Investments, Insurance, 'emat, 45I Services and 2nline Services etc.
DeAos)'s
.ollowing deposits are offeredB
• • • • • • •
Savings !ccount !dvantage 'eposit Special Savings !ccount ife (lus Senior ,iti=ens Savings !ccount .ixed 'eposits Security 'eposits 5ecurring 'eposits
36
• • • • • • • • • • • • • • • •
Tax<Saver .ixed 'eposit Koung Stars Savings !ccount ,hild #ducation (lan BankT,ampus Salary !ccount !dvantage
man Savings !ccount ##., !ccount 5esident .oreign ,urrency F'omesticI !ccount (rivilege Banking 4o .rills !ccount 5ural Savings !ccount (eopleJs Savings !ccount Self -elp &roup !ccounts 2utward 5emittance .reedom Savings !ccount .amily BankingLo ns
I,I,I Bank offers following loan facilitiesB
37
• • • • • • • • •
-ome oans oan !gainst (roperty (ersonal oans ,ar oans Two :heeler oans ,ommercial 8ehicle oans oans !gainst Securities oan !gainst &old 2rnaments (re<approved oans
C r<s
I,I,I Bank is IndiaJs largest issuer of credit cards. It also offers other types of cards. The various cards offered by I,I,I bank are as belowB ,onsumer ,ards
? ? ?
,redit ,ards Travel ,ards 'ebit ,ards
,ommercial ,ards
? ? ? ?
,orporate ,ards (repaid ,ards (urchase ,ards 'istribution ,ards
48
?
Business ,ards
AE)s $ n"
!xis Bank, previously known as 6TI Bank, is one of the leading Banks of India along with -'., Bank and I,I,I Bank. #stablished in *??@, itJs the first of the new private sector banks in India to start its operations, when &overnment of India opened the gate for the private banks to flock into the Indian financial market. Though the bank started its operation with the name 6TI Bank, but later, in order to avoid ambiguities and confusion with other discrete entities carrying the same name, it changed its name to its current form F!xis BankI in !pril $>>C. !xis Bank imited recorded a total income of 5s. *A,C@+.>@ crore as on the year ended 3arch A*, $>>?. It also made a net profit of 5s. *,D*$.?A crore in the same financial year. !xis Bank offers a range of financial products and services to its clients throughout the country. It also has special strength in retail and corporate banking. !xis Bank offers following servicesB
• • • •
(ersonal Banking ,orporate Banking 45I (riority Banking
Person ! $ n")n>
The (ersonal Banking of !xis Bank includes following servicesB
A==o&n's
? ? ? ?
Uero Balance Savings !ccount 1rishi Savings !ccount #asy !ccess Savings !ccount (rime Savings !ccount
41
? ? ? ? ? ? ? ? ?
,orporate Salary !ccount
menJs Savings !ccount 'emat !ccount Senior ,iti=enJs !ccount 'efence salary !ccount Trust;4&2 Savings !ccount 5.,F'I !ccount !==adi < 4o .rills (ension Savings !ccountDeAos)'s
? ? ? ?
.ixed 'eposits 5ecurring 'eposits #ncash $@ Tax Saver .ixed 'eposit
Lo ns
? ? ? ? ? ?
-ome oan ,ar oan (ersonal oan oan !gainst Shares oan !gainst (roperty oan !gainst Security
40
? ?
Study oan ,onsumer oan
C r<s
? ? ?
,redit ,ards 'ebit ,ards (repaid ,ards
P @Cen's
? ? ?
Bill (ay #lectronic ,learing Service Tax (ayments
• • •
Tax e<(ayments 'irect Tax (ayments (ension 'isbursement
O'(er Ser?)=es
? ? ? ?
3obile 5efill ocker 2nline Shopping I(2S mart
41
?
#<Statement
Cre<)'
?
arge ,orporate
• • • • • •
rking ,apital .inance Term oans Trade Services Structured .inance Supply ,hain 3anagement 2verseas Transactions?
!gri Business
• • • • •
1isan (ower (owertrac ,ommodity (ower ,ontract .arming !rthia (ower
? ? ?
S3# Standard S3# .ast Track 3icrofinance
Pr)or)'@ $ n")n>
42
.ollowing services are offered under this categoryB
A==o&n's
? ?
5esident 45I
DeAos)'s
? ? ?
.ixed 'eposits 5ecurring 'eposits #ncash $@
Lo ns
? ? ? ? ? ? ?
-ome oan (ersonal oan oan !gainst (roperty oan !gainst Security ,ar loans ,onsumer (ower Study (ower
C r<s
? ?
(riority 'ebit ,ard ,redit ,ards
• •
(latinum ,redit ,ard &old (lus ,redit ,ard
43
• • • • ? ? ?
&old ,redit ,ard Silver ,redit ,ard Secured ,redit ,ard eShop ,ard
Travel ,urrency ,ard 5emittance ,ard &ift ,ard
O'(er Ser?)=es
o o o
3obile 5efill ocker 2nline Shopping
4/ (o&r $ n")n> ser?)=es
.ollowing services are offered under $@ x C BankingB
• •
In'erne' B n")n> Mo$)!e B n")n>
? ? ?
Savings !ccount 45I !ccount ,urrent !ccount
• •
P(one B n")n> V)s Mone@ Tr nsfer
44
• •
Po%er Tr nsfer ATM
KOTAK MAHINDRA BANK
1otak 3ahindra is among the leading financial organi=ation of India, with a range of financial services that caters to all customersJ day to day re/uirements. Their products spans from commercial banking, to stock broking, to mutual funds, to life insurance, to investment banking O diverse needs of individuals and corporate are catered to. The 1otak group has a net worth of more than 5s. ),C?? crore with the branches, franchisees, representative offices and satellite offices spread across cities and towns in India. They also have global offices in 4ew Kork, ondon, San .rancisco, 'ubai, 3auritius and Singapore. The 1otak &roup offers their services to approximately ).@ million customers. The 1otak 3ahindra &roup got incepted in *?D+ in the form of 1otak ,apital 3anagement .inance imited, being promoted by 6day 1otak, Sidney !. !. (into and 1otak L ,ompany. ! stake in the group was taken in by industrialists -arish 3ahindra and !nand 3ahindra and this is the time when the company changed its name to 1otak 3ahindra .inance imited.
Ko' " Gro&A Pro<&='s ; Ser?)=es
*. Bank $. ,redit ,ards A. ife Insurance
@. 3utual .unds +. ,ar .inance
45
). Securities C. Institutional #/uities D. Investment Banking ?. International Business *>. 1otak (rivate #/uity **. 1otak 5ealty .und *$. :ealth 3anagement
A$o&' Ko' " M ()n<r B n"
The flagship company of 1otak 3ahindra &roup, 1otak 3ahindra .inance td was established in *?D+. The same got converted into a bank < 1otak 3ahindra Bank td in 3arch $>>A. 1otak 3ahindra bank has presence in commercial vehicles, retail finance, corporate banking, treasury and housing finance.
Ser?)=es of Ko' " M ()n<r B n" DeAos)' A==o&n's
• • •
Savings account ,urrent !ccount Term 'eposits
Lo ns
• •
(ersonal oans -ome oans
46
•
oan !gainst (roperty
In?es'Cen' Ser?)=es
• • • •
'emat 3utual .und Insurance &old
Con?en)en=e B n")n>
• • • •
4et Banking 3obile Banking (hone Banking !T3 4etwork
P+NJAB NATIONAL BANK
The (unjab 4ational Bank or (4B is one of the well known commercial and banking institutions in India. It is the second largest government owned and regulated commercial bank in the country and offers speciali=ed solutions and financial services in a number of sectors. !round AC million customers are served by the bank on an average basis. The customi=ed facilities and services make it a trusted name in the domain of banking.
Gro%'( of P&nJ $ N ')on ! B n"
(unjab 4ational Bank was registered under the Indian ,ompanies !ct on *? 3ay in the year
47
*D?@ and its first office was set up at !narkali Ba=aar in ahore. Since then, the bank has become a great name in the field of banking and is very much preferred by the customers for the wide range of its services. Today, the bank has around @,?>@ branches in around C)@ cities. 'ue to its facilities and services of high standards, (unjab 4ational Bank has also been the recipient of a number of prestigious awards. It has been adjusted as the $@Dth biggest bank across the globe according to a recent survey made by Bankers !lmanac in ondon. The #conomic Times has also listed the bank as ADth among the premier +>> companies and the ?th among the most trusted brands in India. The total asset value of the bank amounts to around 6SS)> billion. There is also a subsidiary of the (4B in the 6nited 1ingdom. In addition the bank also has branches in some other cities likeB
• • • • •
1abul -onk 1ong 2slo Shanghai 'ubai
Ser?)=es of P&nJ $ N ')on ! B n"
(unjab 4ational Bank offers financial solutions and services in an array of sectors. !ll these services that are offered keep pace with the changing market trends in order to fulfill the needs and preferences of the customers. Some of the well known sectors on which the main functions of the bank are based areB
• • • •
(ersonal Banking ,orporate Banking !griculture finance services Industrial finance services
58
• •
Trade financial services International banking services
(4B also has commercial relationship with more than $>> prestigious international banks across the globe. It has the provisions of 5upee 'rawing !rrangements with around *+ exchange companies in the 6!# and * in Singapore. In case of the personal banking segment, the bank offers customi=ed solutions to take care of almost all financial needs of the customers. Some of the well known services that are offered in the bank areB
• • • •
Savings .und !ccount .ixed 'eposit scheme ,urrent account oan services
(unjab 4ational Bank is also a well known name in housing loan benefits. The bank offers both short term and long term loans. The rates are also affordable and can be paid within a particular time. The housing loans are given for a number of purposes such asB
• • • •
,onstruction of a building (urchase of a new house or a flat (urchase of flat or house on a .irst (ower of !ttorney basis .or the purpose of repair or renovation of a house or a building
The (4B -ousing .inance sanctions around D>% of the cost of the project. -owever, the maximum amount is around 5s +> lakh. The maximum loan amount for the purpose of renovation and repair is 5s + lakh. In most cases, the loan is available for a period between + and $> years before one becomes )+ years of age. The interest of the loan is based on the reducing balance and the principal amount of the loan is also based on the repaying capability of the borrower.
51
M&'& ! f&n<s of P&nJ $ N ')on ! B n"
The mutual funds of (unjab 4ational Bank are covered under the (rincipal (4B !sset 3anagement ,ompany. Some of the well known schemes of mutual funds areB
• • • • • • •
(rincipal &rowth Scheme (rincipal balanced .und (rincipal Income .und (rincipal government Securities .und (rincipal Income .und O Short Term 'ebt (rincipal ,ash management .und (rincipal Index .und
Table showing analysis on different parametersB<
S.NO
PARAMETE RS
HD#C BANK
ICICI BANK
A,IS BANK
KOTAK MAHINDR A BANK
P+NJAB AND NATIONA L BANK AD+>FI4'I !I $*AF'# II
*.
B5!4,-#S
*@*$ FI4'I!I *@*F'# -I I
$>>? FI4'I!I *>? F 'elhiI +$*? FI4'I!I
*C>>V FI4'I!I CDF'# -II @>++ FI4'I!I K#S
$@+ FI4'I!I ))F'# -II **Capprox. FI4'I!I K#S
$.
!T3s
A.
,-#96# '#(2SIT B20
K#S
K#S
K#S
50
@.
#!SK I4T#54#T B!41I4& !8#5!&# 96!5T#5 K B! !4,# S!8I4&S !,,264T 8! 6# !''#'
K#S
K#S
K#S
K#S
K#S
+.
S!8I4&S 5s.*>,>>> F65B!4 ;3#T52I 5s. +,>>> FS#3I 65B!4I S!8I4&S 3!0 !,,264T 5s. $+,>>> S#4I25 ,ITIU#4S 5s. +>>> 42 .5I 4I 1I'"S !'8!4T! &# !,,264T 5s. +>>> S<
5s. *>,>>> ;3#T52I 5s. +>>> FS#3I 65B!4I
U#52 B! !4,#< 5s.+,+>> #!SK !,,#SS< 5s. +,>>> in metro or urban centers, 5s. $,+>> in semi urban centers and 5s. *,>>> in rural centers. (5I3# S!8I4&S !,,264T< 5s +,>>> Furban L metropolitan branchesI or 5s $,+>> Frural L semi<urban branchesI
!,#B 5s.+>,>>> (52B 5s.$>,>>> #'&#B 5S.*>,>>>
(4B (5I'#4T S:##(< 5s.*>,>>> F65B!4 ;3#T52I 5s. +,>>> FS#3I 65B!4I T2T! .5##'2 3 S!8I4&S .64' S! !5K !,,264 T< 5s. >
5#&6 !5< F65B!4
51
S6(#5 S!8I4&S !,,264T ). 5!T# !(( I,!B # 24 S!8I4&S !,,264T C. D. 5s. $+>>> Saving !;c A.+>% on regular savings account Saving !;c A.+>% and interest paid -alf Kearly yes ;ree <uarter yes A.+>% and interest paid 9uarterly on easy access account yes ;ree <uarter yes A.+>% A.+% pa
&old debit card Kes Statement ;ree <uarter charges $@ hour phone banking Kes
Kes ;ree <uarter Kes
Kes .ree monthly Kes
?.
The following list of the fixed deposits that was created by interacting with the customers as what they prefer most of the listed banks. The customers said that they are not aware about the .'s of 1otak 3ahindra bank and don"t mind (unjab national bank as they trust the bank with all of its products. The comparison is made on the basis of what customers think was beneficial.
.I0#' '#(2SITS !ccount name .ixed 'eposit 5egular .ixed 'eposit Bank 4ame I,I,I B!41 Type of account .I0#' '#(2SITS -'., B!41 .I0#' '#(2SITS
52
5ate ?.+%
3inimum
Interest paid
balance;deposits 5s.*>,>>> 96!5T#5 K
D.C+%
5S. *>,>>>
96!5T#5 K
.ixed 'eposit
!0IS B!41
.I0#' '#(2SITS
$.+>%
5S. *>,>>>
96!5T#5 K
ANAL-SIS B
:hen discussed with customers regarding their preference for the various (rivate Banks the analysis from that was that I,I,I Bank and -'., are the two leading private banks of the city. This is mainly because. • • These two banks are the first private banks which has opened their branches in the city. I,I,I and -'., brands name, play an important part in their success in the city because people usually go through the name the company. The difference lies within the few parameters that seem to differ with in the banking structure of different banks especially public sector bank i.e. (unjab national bank and private sector banks i.e. -'.,, I,I,I, !0IS and 12T!1 3!-I45'! bank. If one closely observes there is not major difference between the services offered in these banks what differs is their banking culture and how they offer their services. The factors which distinguish are< • • • • • • Business process re<engineering (roper and timely management of changes arge number of transactions and changes Internal commitment !vailability of ade/uate finance Strategic -uman 5esources changes
53
?
(S6 banks which are a dominating force in the Indian banking system have lacked a proactive -5 environment. -owever, much has changed with the opening of other sectors and increased competition from newer banks in the system. So (unjab national bank has undergone a drastic change with in time and has been giving a serious competition to -'., bank. There is a reali=ation that skill development is extremely important for staff retention as well as the /uality of manpower, and all banks whether -'., or any other bank had in place a system of continuous professional learning. ! few banks like 1otak 3ahindra are time and again in the process of revamping their training processes and their emphasis is being laid on hard as well as soft skills. Banks are keen to tie up with external training agencies for in<house training. 4ow if one look at the retail products offered at different banks then the savings account facility offered at (unjab national bank finds more takers in the middle level earning group of people like for example the total freedom savings account of (4B where there is no need to maintain an average /uarterly balance and even the fees that is deducted for other accounts where the customers are not able to maintain average balance is much less than -'.,, I,I,I, !0IS and 12T!1 3!-I4'5! bank. 1otak 3ahindra bank seems to target customers of higher league as they don"t have many branches in 'elhi as compared to -'.,, I,I,I, and !0IS bank. They have their own exclusive class of customers and they market their products like that only. The current and savings account of 1otak 3ahindra bank is marketed with terms likeH the powerH to have an exclusive banking service. 4ow -'., bank has a very special way of treating its customers by giving them the convenience of imperia customer programme, classic customer programme and preferred customer programme. This helps the banks in attracting more and more customers for the retail products. This is referred as priority banking. The plus current account of -'., bank is preferred more by the customers the minimum balance re/uired to be paid is 5S. *, >>,>>> and the interest paid are nil. (unjab national bank actually has been able to develop a more trustworthy relation with the customers since it"s a public bank and does not charge much for not maintaining !9B. -'., bank has been a leader clearly among the private banks and has its own strong and loyal customer base I,I,I bank has been giving a close competition to -'., bank as told by the
54
customers. !fter the customers were contacted B n" #D eCer>es o&' 'o $e '(e Cos' Areferre< option for the clients to invest in the market after real estate. This is also dependant on various reasons which are given as underB o #asy loans available against the Bank .ixed 'eposits. o ,lients can withdraw their money at almost any time giving them the option of maintaining i/uidity. o :ith all this Bank .' also provides a decent return concerned the minimum of the risk in any of the available investment instruments. o :e have seen above in the analysis of nationali=ed vs. private banks that nationali=ed banks are the more preferred ones, this also adds weight to clients preferring Bank .'s due to trust build during all these years. T(en, neE' Areferre< oA')on for '(e =!)en's )s +n)' !)n" A! nKIns&r n=e . !nother thing that was noted were that majority of clients preferred the short term fixed deposits as their favorite option. 3ost of the clients use the ideal money which they have to meet the uncertainty or short term re/uirement. 4ow if we talk about insurances the preference of the people who had invested in the insurance sector, it is very clear that I, is the leading company in this field, because of many factors such asB<. ? I, is leading in this field mainly, because it is the first mover in the insurance sector and thereby had captured most of the market. ? I, had a very good network of agents, who can be seen as the back bone of the company. ? I, had provided better service in the past which had made trust in the mind of the people and for that reason they feel more comfortable.
55
?
-'., and I,I,I are the second in this field mainly because they had opened their branches recently but have made progress in capturing a significant share of the market and in the future the ratio is decrease, because there are many opportunity to cash in by both the company .
The features that distinguish -'., bank from other banks, according to the customers areB< *. The customers feel that services across different branches of the -'., bank differs since they have different branches for various departments for example 'warka sector $$ which deals with visa services because of this the customer have an advantage of convenience banking $. ,ustomers having long relationship with bank rely a lot on the investment services and advices offered by the bank since bank through one or the other way try to give some benefits to such customers, the bank named them as Gclassic customersH. A. ,ustomers call -'., bank as friendly and reliable bank because of its ,53 services @. -'., bank is also regarded as a leader in deploying technology in its services which makes it different from other banks. +. -'., bank has become relatively large especially by the virtue of introducing various schemes for the benefits of the customer. ). -'., bank has created a brand e/uity that reflects trust and integrity. C. -'., bank has also targeted kids by opening accounts for them and by introducing kid"s advantage plan under mutual funds. 'ue to these efforts of -'., bank lots of kids have become loyal customers of -'., already. D. -'., bank has positioned itself more than just bank. It is already perceived as Gcomprehensive financial supermarketH. !ccording to the customers they have created a virtual market place on the net.
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?. -'., bank !T3 services have been considered remarkable by the customers. The bank tries to handles the complaints it receives regarding !T3s and '#BIT card as efficiently and effectively as possible. This is because one will find maximum takers of -'., bank"s !T3 cards. *>. In a nutshell what differentiates -'., bank is Gthe ability to add< valueH, the Gglobal imageH and the personality of the bank i.e. being dynamic, innovative and vibrant .
#INDINGS6
? S !es S' ff <)ffer )n '(e)r )nforC ')on n< Te!eA(one C !!)n> $@ '(e HD#C $ n", ICICI $ n" n< ICICI Ar&<en') ! n< HD#C s' n< r< !)fe A<?)sors re <)s'&r$)n> '(e =!)en's6 There is excess calling by the employee of the -'., and I,I,I banks and by the !dvisors of insurance, and this is one of the reasons why they are not interested in the bank sometimes, and the other reason is that most of the time the sales staff does not give what they promise, their information generally differs from the bankers in the bank this create a bad impression about the company. ? In '(e $ n")n> se='or P&nJ $ n ')on ! $ n" )s '(e $ n" C n@ =&s'oCers Arefer 6 (4B is the most preferred bank because of its brand e/uity and also because it has an old and loyal customer which has proved to be a great advantage.. There are several things which favor them includingB ? ? The company"s image in the mind of the people The company"s successful track record in providing life long services to its customers
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? ?
! very good agent base #xcellent relationship with clients
? A ! r>e P r' of '(e M r"e' @e' 'o $e =o?ere< $@ M&'& ! #&n<s6 arge parts of the people do not know about the mutual funds investment and insurance and other retail products schemes but they have the power of 3oney. These clients should be cash in by the -'., bank.
SERVICE MARKETINGF ANAL-TICAL ST+D- ON THE BASIS O# HD#C BANK
Ser?:& ! Co<e! of C r"e')n>
The Service 9uality 3odel or Serv9ual model is used to measure the differences between consumers" perception and expectation of service /uality. !ccording to the serv/ual model there are five gapsB I G A < refers to the difference between customers" expected service and management"s perceptions of customers" expectations. This gap means that management may not correctly perceive customer expectations. II G A < refers to the difference between management perceptions of customers" expectations and service /uality specifications. This gap means that although the people in management level may perceive the correct expectations of the customers, they may not have suitable and sufficient service /uality specifications. III G A < refers to the difference between service /uality specifications and the real service delivery.
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This gap means that although the service providers may have suitable and sufficient service /uality specifications, they may not have the satisfactory service delivery in the real situation. That may be because service providers lack well<trained employees to deliver satisfactory service. IV G A < refers to the difference between the service delivered and external communication about the service with customers. That is, the service providers may not have suitable and sufficient communication with the customers or the service providers may have commitments that exceed what they can do or they may not sufficiently inform the customers of what they have done. V G A < is the difference between consumer expectation and their perception of service /uality < measured by the difference between what customers expect and what customers perceive about the service. In addition, gap + is a function of gap *, gap $, gap A, and gap @M that is, &ap +W f Fgap*, gap$, gapA, gap@I. This means that the service /uality is closely related to management perception, marketing, personnel management, communications with customers, service specifications and delivery.
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.igure < Serv9ual model
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GAP I< !s explained before, this gap means that the management is not able to correctly meet the customers" expectations. -'., bank main service focus is delivering excellent service for the customers. Infact when in/uired from the customers of the branch most of them claim that -'., bank service is at par than other banks. 3any of the bank customers have been with the bank since a long time. The customers have their loyalty towards the bank and even have trust with the bankers in the bank. !nother good point about the service is that management is always there for customer"s service in most of the branches of the bank one would easily find the branch managers available. In my view the management is able to correctly perceive customers expectations. The customers of the -'., bank have been able to develop their expectation from the bank on the basis of mostly word of mouth communication from their relationship managers in -'., bank or through their own relatives like for example many of the customers of the branch came to invest in the endowment plan, one of the insurance scheme offered by -'., bank, because they were given references by their senior citi=ens in the family. Though if one observes (unjab 4ational bank then their customers develops their expectations more on the basis of their needs and past experience. -'., bank is able to have more or less a clearer perception of customer expectations. GAP II6 ,ustomer value is perceived as one of the principal drivers of customers satisfaction which in turn act as a key determinant of repurchase and ultimately of customer retention and loyalty. Though -'., bank has clear perceptions about what customers expect from them what this gap discusses is that whether -'., bank has suitable specifications in the service basically it talks about the service design. 4ow in order to deliver customer satisfaction -'., bank has personal banking provisions for the customers, there is a Grelationship managerH assigned to the customers who look into the customers banking needs also almost every branch of -'., bank has a GtellerH who guides the customers. -owever, it cannot be denied that there is no scope for improvements. :hen contacted the customers they seems to be satisfied with the customer service they experience in the bank.
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GAP III< 3ost of the complaints that banking industry receives is in reference with this gap. There seems to be a discrepancy within the sales staff. The sales staff of the bank seems to make promises which they fail to deliver later. So what is re/uired is to be able to have a more trained sales staff which has a more clear understanding about each and every product area in which he;she deals so that they can deliver a more satisfactory service to the customers. -'., bank seems to suffer from this gap at certain level. GAP IV< -'., standard life has a very strong external communication but most of the retail products of the bank lacks in this. Though -'., bank"s fixed deposits seems to be a pull product rest most of the products are push products. -'., bank with time has made considerable efforts to market its products to the customers with advertising like big vans having ,' screens displaying the products of the bank. 5ecently -'., bank has been trying to get more and more customers for its loan products. It is looking for a customer base in retail as well as in corporate. -'., bank has involved itself into this type of marketing but there are not much advertisements one find about -'., bank retail products on television as compared to I,I,I bank which carefully markets it savings account as well as the personal banking experience for the customers. :ith customer and the bank people interaction I was able to identify certain key words which the customers look for while fulfilling their banking needs and what most of the banks promises about. These are basically the parameters by which the customers as well as the bank management measures service. These are as followsB< • • • • • • • • 5eliable Fconsistently do what bank sayI 5esponsive Fcheerfully do what bank sayI ,ompetent Fbank management has knowledge and expertiseI !ccessible Fbank management is available to talk toI ,ourteous Ftreat with respectI ,ommunication Flistens carefully and explains carefullyI ,redible Fhonest and trustworthyI Security Finformation of customers kept private and confidentialI
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• • • • • •
#mpathy Funderstands customers views and show genuine interestI Tangible Fmaintains good bank environment and good staffI Survey needs Fasks and understands needs and expectationsI 4eed fulfillment Fneeds and expectations are identified and metI 3istakes Fmistakes are properly correctedI Treatment Ftreat the customers the way they should beI
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#O+R :& <r n' D) >r C
The diagram is used to explain the relation of the various employees with the bank. It helps to understand that who proves to be star for the bank and who proves to be a dud.
S' rs Person ! $ n"ers Re! ')ons()A C n >ers S !es s' ff
D&<s
S' ff o&'s)<e $ n" !oo")n> for =&rren' ==o&n' n< s ?)n>s ==o&n' =&s'oCers
Te!!er ATM n< De$)' = r< ser?)=e eCA!o@ees
no' AA!)= $!e
Goo< AeoA!e
S' rs<
ne> ')?e eCA!o@ees
The diagram puts personal bankers and relationship managers as stars for the company because they have been providing -'., bank with revenue. By maintaing a healthy relation with the customers they attract the customers for new investments and new schemes infact in some cases
64
it was observed that the customers enter into investment deal because of their relationship manager or personal banker. Goo< AeoA!e< 4ow the teller and the bankers which help customers in !T3 and 'ebit card services have been regarded as good people because they are willing to help the customers in any way possible. Some of the branches of -'., bank like the one in ,onnaught place have a larger customer base for the !T3 and 'ebit card services. The stars and good people are important for -'., bank because they are the one bringing customers, basically their main function is ac/uisition of new customers and retaining them. D&<s B 'uds are basically referred to those employees who are not working properly or are not successful. The sales staff and the staff exclusively working for current and savings account does not have correct knowledge of information re/uired for opening the accounts in the bank and it results in dissatisfaction of customers. This happens because of the difference of opinion between those in the bank and those outside the bank. There have been lots of complaints regarding that sales staff promised something and it did not happened. Ne> ')?e eCA!o@ees6 4egative employees are basically those who work against the nature of banking or who are not interested in attracting customers. 'uds are different from them because though they do not work properly but they have all intentions to attract new customers and give revenue to bank but they lack in the way they work and their knowledge about their work. But negative employees on the
65
other hand are not interested in giving any business to the bank. I personally did not find any employee with those intentions in the bank. This diagram was constructed in order to make an observation about who are the employees that are most important for the bank. Since bank is one of the important examples of service industry, and these employees becomes the first encounter with the customers, representing bank. This encounter helps customer in deciding whether he;she wants to a investment relation with the bank or not.
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ANAL-SIS AND RECOMMENDATIONS
The service sector has assumed greater economic importance over the past decade. India is fifteenth in services output. ,urrently, banking in India is generally fairly mature in terms of supply, product range and reach<even though reach in rural India still remains a challenge for the private sector and foreign banks. In terms of /uality of assets and capital ade/uacy, Indian banks are considered to have clean, strong and transparent balance sheets relative to other banks in comparable economies in its region. The elimination of this waste and meeting customer expectations are the major challenges facing managers these days in the service sector. This is why /uality improvement is a vital concern for many service organi=ations. The serv/ual model represents a different approach to /uality improvement. 9uality is increasingly being seen as a key strategic differentiator within the financial services sector, with most major players undertaking some form of /uality initiative. .rom the customers" perspective, service /uality significantly influences customer satisfaction and customer satisfaction has direct influences on purchase intentions. 5esearch findings indicate that service /uality influences purchase intentions more than does customer satisfaction. It is therefore imperative on the part of bankers to stress upon both service /uality and customer satisfaction, in order to raise the purchase intentions of customers.
Ser?)=e :& !)'@ n< C&s'oCer S ')sf =')onF
The customer satisfaction paradigm posits that confirmed standards lead to moderate satisfactionM positively disconfirmed FexceededI standards lead to high satisfaction, and negatively disconfirmed FunderachievedI standards lead to dissatisfaction. The subject of continued Fand considerableI debate in the marketing literature, the distinction and association between service /uality and customer satisfaction remains at the forefront of many academic< and practitioner<oriented research endeavors. Service /uality and customer satisfaction do exhibit independence and are indeed different constructs from the customer"s point of view. ! small step in unearthing and understanding the constructs of service /uality and customer satisfaction and their implications on competitive fruition has been put forward in a study on banking services. The comparative analysis on the
67
services among the major banking segments revealed that the -'., and I,I,I banks have topped the list in terms of delivering /ualitative customer service. It has also been observed that the private sector banks compete successfully with foreign banks and make efforts to provide better banking services in tune with the changing global competitive scenario. -owever (unjab national bank has been credit by the customers as being the most trustworthy banks as it provides various features for the larger segment of customers. Through continuous interaction with the customers and the bank people it has been observed that customers of banks such as I,I,I, !0IS, -'.,, (4B and 12T!1 3!-I4'5! were either in service or self employed. 3any customers of (4B were found to be retired from their respective profession. Thus they recommended that banks should envisage a strategy to serve customers with different occupations L educational backgrounds. Banks must also advance their customer< centric strategies by providing satisfaction through services leading to better relationship building and earning profits for the banks. -owever it also depends on the location of the branch like for example a branch situated in the residential area will have more customers for pensions like in 'warka they were more customers for pensions and other senior citi=ens services while in branches like ,onnaught place or 1.&. 3arg one will find customers for other needs as well. It has been observed that poor service /uality in public sector banks is mainly because of deficiency in tangibility, lack of responsiveness and empathy. (rivate sector banks, on the other hand, were found to be more reformed in this regards. !bove all, the -'., bank is relatively close to the expectations of their customers with regard to various dimensions of service /uality. .urther, the study revealed that there existed service /uality variation across demographic variables, and suggested that management of banks should pay attention to potential failure points and should be responsive to customer problems. 4ow in order to deliver excellent service the necessity of employee contacts and evaluation of service experiences has been very effective. The problem of reliability in various measures of service /uality, and the perception responses has high reliability as compared to expectation responses. Service /uality in banking implies consistently anticipating and satisfying the needs and expectations of customers. -owever, evaluating service /uality sometimes is not an easy task due to the intangible nature of services.
78
Me s&reCen' of EEAe=' ')on n< Per=eA')on of Ser?)=e :& !)'@F
There are many reasons for poor service /uality across industries. 2ne reason may be an inability to collect or use collected data. .or example, in direct opposition to consumer opinion, bank executives perceive themselves and their companies to be doing an excellent job. This apparent discrepancy of opinion creates /uestions about banking service information<gathering effectiveness. Because perceived /uality is conceptuali=ed as the customerJs overall attitude towards the excellence of service, many researchers have relied on a single overall /uality /uestion, measured on a scale ranging from poor to excellent .3ore generally, however, service /uality perception is thought to be based on several /uality attributes . These areB reliability < reflecting the technical /uality of the outcome of the service encounter, i.e. what is received by the customerM and tangibles, responsiveness, assurance and empathy < reflecting the functional /uality of the process itself, i.e. how the service is provided. S#5896! was deemed Rto be applicable to retail and business services and relevant for banking servicesR.
Re=oCCen< ')ons
The bank needs to work in a way that it can communicate the features of its products to the customers in the most profitable way which would be cost effective for the bank.
Ho&se%)?es s '(e ' r>e' =&s'oCers6
The housewives can be targeted by the sales staff by explaining them to earn money from their monthly day to day expenses money by opening saving account in -'., bank. This is possible as with effect from *st !pril $>*> that the bank interest rate is earned on daily balance. #arlier it uses to be half early on the lowest balance maintained during the period. 6nder this scheme a housewifeXcustomer will open a bank account with initial deposit of 5s. *>>>> along with an amount e/ual to total expected expenses to be incurred by himXher during the month. !s a sample model the target customersXfamilies of 'warka residents have been taken into account on an average the expenses incurred by a family in 'warka having own house or rented have been worked out separately as underB<
71
S.no. *. $. A. @. +. ). C. D. ?. *>. **.
De' )!s of EEAenses (eEAe='e<) 5ent #lectricity, waterL maintenance charges Sweeper charges 3aid charges ,ar wash &roceries and toiletries School fees of two kids to be paid /uarterly F*>>>>YAI 8egetables and fruits 3ilk FT5s.A>Y$I (etrolXtransport 3iscellaneous expenses T2T!
# C)!@ on ren' *),>>> A>>> *+> C>> *+> A>>> A>>>> A>>> *D>> A>>> @+>> )+A>>
# C)!@ ( ?)n> o%n (o&se < A>>> *+> C>> *+> A>>> A>>>> A>>> *D>> A>>> @+>> @?A>>
The above table clearly reveals that expenses mentioned at serial no. * to ) are too incurred once in a month and expense at serial no. C will be incurred /uarterly where as remaining expenses are to be incurred on day to day basis. !ccordingly a family on an average will initially deposit in its saving account 5s. C>>>> which will include minimum balance of *>>>> i.e. !9B for -'., bank. The interest earned on above deposits after taking into account the expenses incurred by the family once in a month, /uarterly and on day to day basis are projected as underB aI Interest on minimum balance of 5s *>,>>>B 5s $D.CC bI Interest on item at serial number CB 5s D).A> cI Interest on expenses incurred once in a monthB 5s )).*) dI The other expenses which are to be incurred on day to day basis, it would be advised to concerned family;customer to withdraw money on weekly basis so that interest can be earned as underB F*I .irst week F5s ?@A> after withdrawing 5s $DC> for weekly expensesIB 5s +.@$ F$I Second week F5s )+)> BalanceIB 5s A.CC FAI Third week F5s A)?> BalanceIB 5s $.*$
70
F@I .ourth week F5s D$> BalanceIB 5s >.@C Y Interest has been calculated by using daily balance multiplied by no. of days multiplied by interest rate of saving account i.e. A.+;A)+>> This way a family will earn 5s *?A.>* per month i.e. *?A.>* Y *$ W $A*).*$ per year out off the expenses incurred by family. This scheme can be named as G#!54#' :-I # S(#4'I4&H. The concept is re/uired to be advertised properly among the dwarka families for which sales personnel can specially be deputed to visit personally to the families and motivate them for opening accounts and explaining them the benefits. The dwarka sub city provides for housing for about + lakh families. 3any of these families have not yet been able to move into their flats because of one or the other reason, however with the inception of metro rail system, thousands of families have been residing in the sub city. This clearly suggests there is huge scope for targeted customers. To be on safer side it is presumed that at least *% of the clientage could be convinced for opening the account under above scheme which would amount to +>>> customers;saving accounts.
V) $)!)'@ for HD#C B n" for '()sF
*I Initial deposit per customerB 5s C>,>>> and expected number of customers i. e. is +>>>, bank will get deposit of 5s A+>>>>>>>. $I Bank will give interest to customers T A.+%B*$$+>>>> AI Salary of sales personX administrative expensesB *+>>>Fapprox.I @I Total expenses of bank F$VAIB*$$)+>>> +I The bank can generate revenue by investing the initial deposit amount of 5s. A+>>>>>>> by choosing the best revenue generating scheme. !s a role model it is presumed that this amount will be invested in loan scheme T D.$+%, thus would generate 5s. *>*>)$+>>>>>>>>>>. )I Bank will earn F+<@IB 5s *>*>)$@??DCCA+>>>. 42T#B < the figures taken for this mathematical calculation are all approximation value and are expected but it clearly reveals that it is a beneficial scheme for the -'., bank.
Loo")n> for '(e o'(er Ao'en') ! =&s'oCers
71
The owners of GkiranaH stores or groceries stores have lot of money but have little knowledge of as to how to invest them productively for this the sales staff should go to them instead of waiting for them to come to the bank. The sales staffs that generally wait for the customers can actually prepare a database of the customers and try to explain them the products that best suit their needs rather randomly calling people. Thus they can be the other target customer and can be worked upon the above mentioned way.
G)?)n> )n=en')?es for !! re' )! Aro<&='s 'o eCA!o@ees
The employees should be given incentives for every customer conversion in retail products depending upon how much have invested by the customer. This will motivate the employees to attract customers not only for insurance but other products also.
ATMs K eE=!&s)?e sC !! $r n=(es
-'., bank can place its !T3 machines or open small branches exclusively in the corporate organi=ations this will increase their market penetration in the wholesale customers as well. This actually will help the bank spread a word about its retail products to the customers by placing small brochures of retail products for the target customers. By opening small branch exclusive for the organi=ations might results in spreading the features of the insurances or other accounts of -'., bank.
CRMneE' Prof)!es
The ,53next (rofiles can be used in a way to encourage more and more customers. The database can be properly created by carefully making note and observations from the profiles of the customers.
More )n?es'Cen' )n P! s')= Cone@ =&s'oCerHs $ se
The idea behind this is that the bank gives credit card swipe machines to the wholesalers and retailers so that they use the credit card of the bank. !s a result bank gets the wide list of customers of wholesalers and retailers. This will surely result in bulk sales for the bank. Through
72
this bank can create group transactions by selling products to wholesalers and retailers both. This will encourage retail products of the banks i.e. credit cards and debit cards and bank will get new customers. This will work by meeting the wholesalers first and getting details about their retailers and then explaining the benefits of using this transaction. This is actually indirect marketing. It means communicating benefits of your products to its customers.
S' r' M ")n> L)n" %)'( '(e N ')on !)*e< B n"s 'o >e' Core B&s)ness
:hen we look at the Small city, most of the customers prefer and have their account in nationali=ed banks, because this banks are giving good service for many years and If -'., can make tie<up with the employees of this banks then they can be able to get more business from this contact.
R&r ! $ n")n>
5ural markets are seen as the new profitable investment for banks in India with banks like I,I,I bank have been able to populari=ed micro financing in which they did a tie up with the S-& but what needs to look into is that how successful the banks have been in doing so. This type of banking is increasingly being populari=ed as social marketing. Infact even -'., bank started with B6SI4#SS ,255#S(24'#4T 32'# to make the viability of banks branches in the unbanked areas of India and did a tie up with 4&2"S and post offices. But the success of these models is still /uestioned. :hat -'., needs to do is o try to penetrate more into rural banking so that it will be able to ac/uire a larger customer base.
OAAor'&n)')es n< C( !!en>es for P! @ers
The bar for what it means to be a successful player in the sector has been raised. .our challenges must be addressed before success can be achieved. .irst, the market is seeing discontinuous growth driven by new products and services that include opportunities in credit
73
cards, consumer finance and wealth management on the retail side, and in fee<based income and investment banking on the wholesale banking side. These re/uire new skills in sales L marketing, credit and operations. Second, banks will no longer enjoy windfall treasury gains that the decade<long secular decline in interest rates provided. This will expose the weaker banks. Third, with increased interest in India, competition from foreign banks will only intensify. .ourth, given the demographic shifts resulting from changes in age profile and household income, consumers will increasingly demand enhanced institutional capabilities and service levels from banks.
Nee< 'o Cre 'e So=) ! De?e!oACen'
M r"e'6Dr)?en B n")n> Se='or %)'( A<eD& 'e #o=&s on
The term Gpolicy makersH used in this thesis, refers to the 3inistry of .inance and the 5BI and includes the other relevant government and regulatory entities for the banking sector. I believe a co<ordinate effort between the various entities is re/uired to enable positive action. This will spur on the performance of the sector as a whole. 2ther suggestions could beB< • • • • • #very bank should take precautions to keep customers experience safe. It should take continued efforts to safeguard online banking transactions. The bank should provide more customer awareness and need of transparency in their dealings. The banks should come up with innovative ways of service at their door steps this may be a costly affair but will surely give positive results in the long run. The banks should take the initiative of training the advisors about the new schemes from time to time which also makes the advisors connected to the bank. The banks should also emphasis on the monitoring of #3I which directly relates to the returns of a loan amount.
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• • •
The company should come up with proper fixed deposit plans at this point of time where the market is highly volatile and the investors become very cautious at this level. The banks should use brand ambassadors for example the ,#2"s of major companies where the company allocate the funds. This will probably ensure proper results. The banks should focus on the advertising strategy and also the marketing of the bank product.
Con=!&s)on
75
-'., bank has been the strong arm of -'., and with continual focus on the customer service has taken the bank to new heights in the banking industry. It is on the brim of increasing its customers through attractive schemes and offers. The project highlighted the strategies adopted by the bank and how it targets customers for retail products. It also explains the products -'., offers with its comparison to the close competitors and their retail products. Since banking industry now days focuses on service marketing so the project was able to identify the gaps with the -'., bank. -owever it cannot be denied that -'., bank has been a pioneer in delivering excellent service to its customers which leads to customer satisfaction ration higher and higher day by day.
Referen=es
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www.wikipedia.com www.hdfcbank.com www.icicibank.com www.axisbank.com www.kotakmahindrabank.com www.punjanbationalbank.com www.google.com
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