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RESEARCH REPORT ON

FINANCIAL PROJECT ON RETAIL BANKING SERVICES


Submitted in the partial fulfillment of the degree of the award of Master of Business Administration (MBA) Session 2011-13

Submitted To

Submitted by:

Mr.Amit Srivastava (Lecturer) (Sherwood College Of Management, Lucknow)

Mohd. Aazim MBA 4th Semester Roll No.:1106170071

SHERWOOD COLLEGE OF MANAGEMENT SEC-25 INDIRANAGAR,

LUCKNOW

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SHERWOOD COOLEGE OF MANAGEMENT


Approved by AICTE. Ministry of HRD, Govt. of India & Affiliated to G.B. Technical University, Lucknow

(Under the Management of U.S. Srivastava Memorial Education Society)


Sector-25, Indra Nagar, Lucknow 226016. (U.P.) INDIA Ph.: (0522) 2716630
Fax: 0522-2716526, Phone: 0522-2716630, Website: www.sherwooindia.in, E-mail: scm@sherwooindia.in

Date: __________

CERTIFICATE

This is to certify that Mr.Mohd Aazim of Master of Business Administration session 2012-2013 has completed his Research Report on the Topic FINANCIAL PROJECT ON RETAIL BANKING SERVICES for partial fulfillment for award of Master of Business Administration. The Report submitted by him is a genuine work done by him and the same is being submitted for evaluation.

(Dr. Vivek Inder Kochhar) Professor, Director (Mr.Amit Srivastava) Internal Guide

Place: Lucknow Date:

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PREFACE We are lucky that, we got the opportunity for making the research report on FINANCIAL PROJECT ON RETAIL BANKING SERVICES .. This report is written account of what we learnt and experienced during the survey. We wish, those going through it will not only find it readable but also get as useful Information. The main limitation of our experience was that as the above said banking industry is reserved with corporate formalities, we had faced a little bit difficulties to fill the questionnaire completely.

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ACKNOWLEDGEMENT

During the entire research project work I have received endless help from my all teachers who encouraged me for developing ideas and supported me in each and every step for completing the whole project. I am greatly thankful to Dr. Vivek Inder Kochhar (Prof. Director, SCM, Lucknow) and my project guide Mr.Amit Srivastava (Lecturer, SCM, Lucknow) for assigning an innovative project that developed a feeling of fully practical work. I owe my humble gratitude to all those treasures of knowledge that are equally responsible for the successful completion of this task.

INDEX Certificate Preface Acknowledgement Chapter-1: Introduction on topic Chapter 2 : Literature Review Chapter - 3 : Research Methodlogy Research Objective Research Design Sampling Plan Sampling Technique Sample Unit Chapter - 3 :Data Analysis and Findings Chapter 4: Suggestion and Recommendation Chapter 5: Conclusion Limitation of the Study Bibliography Annexure PAGE NO. ii iii iv 1 56 65

69 85 88 90 91

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CHAPTER-I INTRODUCTION

INDUSTRY PROFILE

Commercial banks in India have traditionally focused on meeting the short-term financial needs of industry, trade and agriculture. At present, there are 286 scheduled commercial banks in the country, with a network of 67,742 branches. Scheduled commercial banks are the ones that are listed in the second schedule to the RBI Act, and may further be classified as public sector banks, private sector banks and foreign banks Scheduled commercial banks have a presence throughout India, with nearly 69.72% of bank branches located in rural or semi-urban areas of the country. A large number of these branches belong to the public sector banks.

Public sector banks make up the largest category of banks in the Indian banking system. There are 27 public sector banks in India. They include the SBI and its associate banks and 19 nationalized banks. Nationalized banks are governed by the Banking Companies (Acquisition and Transfer of Undertakings) Act 1970 and 1980. The banks nationalized under the Banking Companies (Acquisition and Transfer of Undertakings) Act 1970 and 1980 are referred to as corresponding new banks. Syndicate Bank is a corresponding new bank, nationalized in 1969 under the Bank Acquisition Act.

Public sector banks operate in the remotest possible areas of the country and give employment opportunity to one and all. Contrary to their private sector counterparts, technological up gradation is still in infancy in public sector banks. The most 2

astonishing feature of the public sector banks is that many employees are not computer literate and the personnels average age is 40+. These banks are also subject to limited government interference. But the last decade has seen many positive developments in the Indian banking sector. These banks have established an outstanding track record of innovation, growth and value creation. While bank lending has been a significant driver of GDP growth and employment, periodic instances of the failure of some weak banks have often threatened the stability of the system. But nonetheless, the banking sector is the fastest growing and the most flourishing sector in the Indian economy. The major players in this sector are private and public sector banks.

Though the banking sector is going through a rough patch nowadays, still this sector contributes the most to the world GDP. These banks should strive to penetrate the untapped areas of the market to overshadow the downward trend in this sector.

COMPANY PROFILE

The difference between a successful person and others is not a lack of strength, not a lack of knowledge, but rather lack of will

Syndicate Bank was established in 1925 in Udupi, and was originally known as Canara Industrial and Banking Syndicate Limited. It was renamed as Syndicate Bank Limited with effect from Jan 1, 1964 and was nationalized in 1969. It was started with a capital of Rs.8000/- by three visionaries - Sri Upendra Ananth Pai, a businessman, Sri Vaman Kudva, an engineer and Dr. T M A Pai, a physician. Their objective was primarily to extend financial assistance to the local weavers who were crippled by a crisis in the handloom industry through mobilizing small savings from the community. The bank collected as low as 2 annas daily at the doorsteps of the depositors through its Agents under its Pigmy Deposit Scheme started in 1928. This scheme is the Bank's brand equity today and the Bank collects around Rs. 2 crore per day under the scheme. The progress of Syndicate Bank has been synonymous with the phase of progressive banking in India. Spanning over 80 years of pioneering expertise, the Bank has created for itself a solid customer base comprising customers of two or three generations. Being firmly rooted in rural India and understanding the grass root realities, the Bank's perception had vision of future India. It has been propagating innovations in Banking and also has been receptive to new ideas, without however getting uprooted from its distinctive socio-economic and cultural ethos. Its philosophy of growth by mutual sustenance of both the Bank and the people has paid rich dividends. The Bank has been operating as a catalyst of development across the 4

country with particular reference to the common man at the individual level and in rural/semi urban centers at the area level.

Syndicate Bank today is placed in the league of large and leading public sector banks in India. The bank is a pioneer in introducing several initiatives such as agricultural financing and door-to-door banking, which are now recognized as benchmark by the industry. The bank offers wide gamut of services including deposits, corporate and retail loans, cash management, foreign trade services, cards, insurance. Syndicate bank has won accolades for its service in rural communities and achieving exemplary customer service is an ongoing priority for the bank. The bank has a large network of 2,125 branches in India with overseas presence in London and boasts of a workforce of over 25000 employees.

In addition, it has been managing exchange companies in the Middle East to channelize remittance from expatriates to India. The Bank has launched an ambitious technology plan called Core Banking Solution (CBS) whereby 500 of our strategic branches with their ATMs are being networked nationwide over a 4 year period. The bank has made steady progress over the years and has had a consistent performance throughout. The IT initiatives of the Bank have been amply recognized and rewarded both nationally and globally, which can be seen from the following awards won by the Bank during this year.

1. Best use of IT for customer service in Semi-urban and Rural areas by IDRBT, Hyderabad.

2. Best Core Banking Project among Large Banks in Asia Pacific Region The Asian Banker IT Implementation Awards 3. The Asian banker IT implementation AWARD 06 for best core banking project for large banks The bank is known for its customer friendly approach. The bank is committed to providing high quality customer service and timely redressal of customer grievance.

VISION

Consolidating position as a premier public sector bank with increased global outreach.

Emerging as a strong, vibrant, responsive, competitive bank. Embracing state-of-art technology harnessing human potential and effectively participating in the process of nation building.

Serving its constituents and shareholders as a faithful friendly financial partner.

MISSION

The bank continuously envisages to:

Add core deposits continuously

Offer better customer service

Enhance tolerance level in dealing with customers and get better understanding of their requirements

Design and deliver the products and services according to its customers needs so as to give them an exhilarating and enthusiastic experience.

Acquire accounts aggressively

Year of NPA resolution

GOALS
The goals articulated for each of the functional areas of the bank is:

1. Business: To achieve global business of Rs. 250 thousand crores by March 2010. 2. Resources: To achieve global deposits of Rs. 170000 crore by March 2010 with emphasis on low cost resources by planned strategic initiatives including branch expansion, aggressive marketing and active involvement of each and every employee. 3. Advances: To build qualitative asset base of around Rs. 90000 crore by March 2010 to augment the income portfolio of the bank. 4. Priority sector credit: To have accelerated and qualitative growth in priority sector lending to reach a level of Rs. 23800 crore, Rs. 10200 crore under agriculture, Rs. 3514 crore under SME through various customer friendly credit products and to take maximum advantage of Financial Inclusion so as to expand the clientele base of the bank, and provide financial assistance to all eligible candidates. 5. Information Technology: To harness state-of-art technology and network all branches so as to make available reliable MIS for DSS and deploy best practices in Information Security to manage the business effectively and profitably. 6. Management of assets : To make 2008-09 truly a year of NPA resolution by striving for getting A rating under asset quality by upgrading NPAs, bringing down gross NPA and net NPA level both in

absolute and percentage terms below march 2009 figure and accomplish NPA recovery target as per commitment. 7. Foreign exchange and treasury: To profitably manage the forex and investment assets of the bank to achieve an export-import turnover of Rs. 15000 crore and Rs. 12750 crore respectively. To achieve treasury income of Rs. 2345 crore with an investment of Rs. 35000 crore. 8. Profitability: To make every branch a profits centre and ensure best possible returns to the shareholders. 9. Risk management: To continuously upgrade the risk management systems and processes, imbibe risk management in business activities and implement Basel II requirements for the benefit of all stakeholders. 10. Human resources and organizational structure: To mould and strengthen the organizational structure to meet the future business requirements and challenges. To redefine and to redevelop peoples management techniques so as to unleash human potential, drive growth and nurture leadership of high quality corporate governance, 11. Customer relationship management : To fine-tune its marketing strategies to meet the ever growing market odds, to ensure that our products and services adapt to the changing needs and expectations of the customers, to provide the customer the ideal banking ambience, to reorient its publicity so as to provide increased visibility to its brand. 12. Inspection: To migrate progressively from the present transaction oriented system to a risk based audit exercise enhancing the effectiveness of risk management, control and governance processes.

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RETAIL MARKETING

The Bank has been keeping a close watch on the market dynamics and introduction of new products and services are tailored and customized to suit the customers' requirements. During the year 2007-08, the Bank has launched innovative new products and services to its existing portfolio. The bank has launched various products since its inception to cater to its customers needs. These products are:

A. PARA BANKING ACTIVITIES :

1. Syndicate Bank Global Debit Card 2. Syndicate Bank Global Credit Cards

B. BANCASSURANCE:

1. Life Insurance Products 2. Non Life Insurance Products 3. Cash Management (SCMS) deposit schemes

C. Deposit schemes

1. Synd 400 Plus and Synd 500 Plus 2. Savings Deposit Account 3. Special Premium Savings Accounts (CBS branches only) 4. Fixed Deposit

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5. Vikas Cash 6. Social Security Deposit 7. Senior Citizens Security 8. Syndicate Suvidha 9. Cumulative Deposit 10. Synd Corporate 11. Suvidha Deposit 12. SyndTaxShield Deposit Scheme 13. Pigmy Deposit 14. Super Premium Savings Bank Account 15. Synd Samanya Savings Bank Account (No Frills Account) 16. SyndFlexi Current Account

D. SYND BANK SERVICES (BPO)

E. LOAN PRODUCTS : 1. SyndRent 2. SyndSaral 3. SyndSenior 4. SyndNivas 5. SyndKisan 6. SyndVahan 7. Synd Laghu Udyami

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8. Synd Mahila 9. Synd Mortgage

10.Synd Pravasi
11. SyndSmallCredit 12. Synd Suvidha 13. Synd Udyog 14. Synd Vyapar 15. SyndShakti

F. AGRICULTURAL LOAN PRODUCTS 1. Animal Husbandry Scheme 2. Development of Irrigation Infrastructure 3. Farm Mechanization 4. Hi-tech Agriculture 5. SyndJaiKisan 6. Jewel Loans for Agriculture 7. Land Development Schemes 8. Purchase of Land For Agricultural Purpose 9. Rural Employment Generation Program 10. Solar Water Heater 11. Syndicate 2/3/4 Wheelers Scheme 12. Syndicate Farm House Scheme 13. Syndicate Kisan Credit Card(SKCC)

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14. Tenant Farm Loan G. OTHER SERVICES : 1. Tele Internet Banking 2. Any Branch Banking 3. Multi City Accounts 4. Synd Bill 5. On-Line Collection of Direct Taxes 6. On-line Railway Ticket Booking 7. Western Union Money Transfer 8. SyndInstant - (RTGS System for instant transfer of funds 9. Electronic Funds Transfer (EFT) System 10. Syndicate Gift 11. Insurance Cover for Deposits 12. Stop Payment Facility 13. Dormant Accounts 14. Safe Deposit Lockers 15. Tele Banking 16. Internet Banking 17. Any Branch Banking 18. Multi City Accounts 19. Synd Bill Pay 20. On-Line Collection of Direct Taxes 21. On-line Railway Ticket Booking 22. Western Union Money Transfer

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23. SyndInstant 24. Electronic Funds Transfer (EFT) System

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BRIEF HISTORY Syndicate Bank was established in 1925 in Udupi, the abode of Lord Krishna in coastal Karnataka with a capital of Rs.8000/- by three visionaries - Sri Upendra Ananth Pai, a businessman, Sri Vaman Kudva, an engineer and Dr.T M A Pai, a physician who shared a strong commitment to social welfare. Their objective was primarily to extend financial assistance to the local weavers who were crippled by a crisis in the handloom industry through mobilising small savings from the community. The bank collected as low as 2 annas daily at the doorsteps of the depositors through its Agents under its Pigmy Deposit Scheme started in 1928. This scheme is the Bank's brand equity today and the Bank collects around Rs. 2 crore per day under the scheme. The progress of Syndicate Bank has been synonymous with the phase of progressive banking in India. Spanning over 80 years of pioneering expertise, the Bank has created for itself a solid customer base comprising customers of two or three generations. Being firmly rooted in rural India and understanding the grassroot realities, the Bank's perception had vision of future India. It has been propagating innovations in Banking and also has been receptive to new ideas, without however getting uprooted from its distinctive socio-economic and cultural ethos. Its philosophy of growth by mutual sustenance of both the Bank and the people has paid rich dividends. The Bank has been operating as a catalyst of development across the country with particular reference to the common man at the individual level and in rural/semi urban centres at the area level.

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The Bank is well equipped to meet the challenges of the 21st century in the areas of information technology, knowledge and competition. A comprehensive IT plan is being put in place and the skills and knowledge of the Bank's personnel are being upgraded through a variety of training programmes to promote customer delight in every sphere of its activity. The Bank has launched an ambitious technology plan called Centralised Banking Solution (CBS) whereby 500 of our strategic branches with their ATMs are being networked nationwide over a 4 year period. The Bank is pioneer among Public Sector Banks on launching CBS. Our bank has already achieved CBS implementation among all its branches. Thus, the bank is 100% CBS enabled.

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BOARD OF DIRECTORS

Shri Madhukant Girdharlal Sanghvi Mr. Madhukant Girdharlal Sanghvi has taken over charge as the Chairman & Managing Director of Syndicate Bank with effect from 1st March, 2012. Mr.Sanghvi was the Executive Director of Bank of Maharastra prior to the present assignment. Shri Ravi Chatterjee Shri Ravi Chatterjee has been appointed as Executive Director of SyndicateBank by the Government of India. Shri M Anjaneya Prasad Shri M Anjaneya Prasad has been appointed as Executive Director of SyndicateBank by the Government of India.

Shri H. Pradeep Rao Shri A S Rao Shri Dinkar S Punja Shri Narendra L Dave Shri Dilip Kumar Saxena Shri Jagdish Raj Shrimali Shri Ramesh L Adige

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Deposit Products

SAVINGS BANK ACCOUNT CURRENT ACCOUNT SYND SAMANVAYA ACCOUNT

Term Deposit Products


FIXED DEPOSIT SYND TAX SHIELD DEPOSIT VIKAS CASH CERTIFICATE RECURRING DEPOSIT PIGMY 1928 DEPOSIT SYND CORPORATE SUVIDHA DEPOSIT

Savings Bank Account

These accounts are designed to help the individuals (personal customers) to inculcate the habit of saving money and to meet their future requirement of money. Amounts can be deposited/withdrawn from these accounts by way of cheques / withdrawal slips.

These accounts can be opened by eligible person/s and certain organisations / agencies (as approved by the Reserve Bank of India (RBI)

As required by law, while opening SB account, the Bank will satisfy itself about the identity, including verification of address, of a person/s seeking to

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open an account, to assist in protecting the prospective customer/s, members of the public and ourselves against fraud and other misuses of the banking system.

The Bank requires a satisfactory introduction of the person/s opening the account by a person acceptable to the Bank.

The Bank is required to obtain two recent photographs of the person/s opening the account, as per RBI directives.

The Bank is required to obtain Permanent Account Number (PAN) or General Index Register (GIR) Number or alternatively obtain declaration in Form No. 60 or 61 as per the Income Tax Act (vide Section 139 A) from the person/s opening the account.

The Bank will provide to the prospective customers details of the documents required for identification of the person/s opening the account in addition to a satisfactory introduction. Documents normally accepted are the current gas / telephone / electricity bill or voter's identity card or driving licence or passport etc.

The account holder is required to maintain certain minimum balance in the account, as specified by the Bank from time to time according to the population category of the branch concerned and also depending on, whether account holder wants to avail the cheque book facility or not. Non-compliance of this would attract service charges. Interest is presently paid on half yearly basis

Cheques, dividend warrants drawn in the name of account holder/s will only be collected through this account. Instruments endorsed in favour of the account holder/s will not be collected through savings bank account.

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Business transactions shall not be routed through Savings Bank Account. If routed, the Bank will recover the interest paid and may also close the account. The Bank has the right to close any undesirable/unremunerative account without giving any reason by a simple notice to the account holders.

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Current Account

Current Accounts can be opened by individuals, partnership firms, private and public limited companies, HUFs/specified associates, societies, trusts, etc.

As required by law, while opening this account, the Bank will satisfy itself about the identity, including verification of address, of a person/s seeking to open an account, to assist in protecting the prospective customer/s, members of the public and ourselves against fraud and other misuses of the banking system.

The Bank requires a satisfactory introduction of the person/s opening the account by a person acceptable to the Bank.

The Bank is required to obtain two recent photographs of the person/s opening / operating the account, as per R B I directives.

The Bank is required to obtain Permanent Account Number (PAN) or General Index Register (GIR) Number or alternatively obtain declaration in Form No.60 or 61 as per the Income Tax Act (vide Section 139 A) from the person/s opening the account (i.e. including partners of Registered / Unregistered partnership as also Registered / Incorporated bodies / companies).

The Bank will provide the prospective customers details of the documents required for identification of the person/s opening the account in addition to a satisfactory introduction. Documents normally accepted are the current gas / telephone / electricity bill or voter's identity card or driving licence or passport etc.

Minimum balance as stipulated from time to time will be required to be maintained.

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No interest is paid on credit balances kept in current account. Service charges are levied for Ledger folio used, cheque books issued, Nonmaintenance of minimum balance, Return of cheques etc.

For opening special types of current accounts like for Executors, Administrators, Trustees, Liquidators etc., the Branch Manager may be contacted who will help in opening these types of accounts.

As per RBI directive, the applicant (i.e. account opener) should declare in the account opening form or separately that he is not enjoying any credit facility with any Bank and if he does enjoy any facility / facilities, he should declare full particulars thereof indicating the name of the bank and name of the branch wherefrom he has availed these facilities.

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Fixed Deposit A regular interest earning scheme. A flexible and convenient deposit scheme which ensures that your money never remains idle. Even very small amounts earn interest for very short periods. Yes. You can deposit an amount of just Rs.1000/- for a period as short as 15 days and make it grow. Salient features of the scheme are:

Minimum deposit Rs.1000/Deposits accepted for periods ranging from 15 days to 120 months. Option available for receiving monthly interest at discounted rates or quarterly interest.

Premature withdrawal of deposit is permitted any time subject to payment of prescribed penalty.

Loans available upto a maximum of 95% of the deposit amount depending on the length of the unexpired period of the deposit.

Senior Citizens & Staff will be eligible for additional Rate of interest as per applicable norms.

Nomination facility available. The rates of interest on deposits are as fixed by the Bank from time to time.

Recurring Deposit

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An ideal scheme of monthly savings for salaried people, businessmen professionals etc .Small amounts saved every month for a long period come in handy to meet large financial commitments in the future. Salient features of the scheme are:

Minimum deposit is Rs.100/-per month. Period of deposit ranges from 12 months to 10 years. Delayed payment of instalments are accepted with nominal penalty. Monthly minimum balance in the account earns compound interest every quarter.

No tax is deducted from the interest on the deposit. Loans up to maximum of 95% of the deposit amount available depending on the length of the unexpired period of the deposit.

Nomination facility available. The rates of interest are as fixed by the Bank from time to time.

NEW PIGMY DEPOSIT SCHEME PIGMY + 2007

Save money at

your convenience. A new deposit scheme comparable to the Banks Pigmy 25

(1928) Deposit Scheme, but with added features for increased customer compatibility. The Banks Authorized agent will collect your savings at your doorsteps at daily or less frequent intervals in tune with your convenience. Any day after 12 months of opening the Deposit, the amount equal to or exceeding ` 5000/- in the Deposit Account, can be transferred to a term deposit account at the ruling interest rate subject to the terms of the Scheme, listed below:

1. Minimum Contribution per occasion : `5/2. Period of Deposit : 72 months 3. Premature refund : i) Before 24 months: Permitted with penalty and without interest. ii) 24 months & above : Interest on deposit will be paid at rates ranging from 2 % to 5%, (as fixed by the Bank from time to time), depending upon the period for which the deposit has remained with Bank.

4. Loan /Overdraft : Loan/OD available up to 75 % of the outstanding balance

5. Nomination facility : Available 6. Tax Deduction at source : No tax will be deducted on the interest earned on the Pigmy +2007 deposit (Before conversion)

7. Conversion :

a. The deposit can be converted in to a Term Deposit at the customers option after 12 months of opening the account provided the balance outstanding in account is Rs.5000/ or more.

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b. The converted deposit should have a tenor equal to or exceeding the remaining maturity period of the original Pigmy+2007 Deposit.

c. Interest as on other Domestic Term Deposits of corresponding maturities will be applicable on converted deposit.

d. Loan/overdraft will be available upto 75 % of the outstanding balance of the converted Term Deposit on the usual terms and conditions as are applicable to other term deposits

e. TDS rules in force as applicable to other term deposits will be applicable to the converted term deposit also.

f. In case of premature closure of the converted Term Deposit, no advantage of Term Deposits, shall be applicable and the same rules as in the case of Pigmy+2007 (collection account), will apply .

SYND TAX SHIELD DEPOSIT

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The new product SYND TAX SHIELD DEPOSIT is drawn on the lines of the Union Government notification on Bank Term Deposit Scheme, 2006 for the purpose of Sec 80C(2)(xxi) of the Income Tax Act.

Eligibility Individuals / HUF eligible to open an account with the Bank.

Minimum Deposit Rs. 100/- and multiples of thereof. Maximum Deposit Rs. 1,00,000/- per person per annum .

Tenure Minimum of 5 Years.

Rate of Interest Deposits under SyndTaxShield Scheme will earn interest at the rate applicable to the relevant period.

Senior Citizens & Staff will be eligible for additional Rate of Interest as per applicable norms

Withdrawal Facility No premature withdrawal facility available upto 5 years from the date of deposit.

Nomination Facility available.

Deposits Account may be opened under Single / Joint holder type of Accounts.

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Payment of Interest

Option I - Interest may be paid in Lump sum at the time of maturity Option II- Interest may be paid every quarter or every month at discounted value as per rules in force.

Term Deposits under this scheme are not eligible for pledge to secure loan or as security to any other asset.

Interest Income from these term deposits shall be liable to tax under the IT Act.

The Deposit under the Scheme has to be in the prescribed form with the Fixed Deposit Receipt bearing Permanent Account Number (PAN) and signature of the assessee along with the name and address of the account holder and other details.

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Vikas Cash Certificate A Money Multiplier scheme - Vikas Cash Certificate is a convenient and attractive reinvestment plan where interest earns interest every quarter to provide a tidy sum on maturity. An ideal and fast growing scheme for those with big future commitments in mind viz., children's education, daughter's marriage, house purchase etc. Salient features of the scheme are:

Minimum deposit Rs.1000/- and thereafter in multiples of Rs.100/Period of deposit ranges from 6 months to 10 years in completed quarters. Interest compounded every quarter. Senior Citizens & Staff will be eligible for additional Rate of interest as per applicable norms.

Premature withdrawal of the deposit is permitted any time on payment of the prescribed penalty.

Loans upto a maximum of 95% of the balance available depending on the length of the unexpired period of the deposit.

Nomination facility available. The rates of interest are as fixed by the Bank from time to time

Syndicate Suvidha Deposit

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A Fixed Deposit with partial withdrawal facility - A flexible and convenient scheme whereby a deposit is made for a fixed period from which amounts can be withdrawn as and when needed. It is ideally designed for those who desire the high interest on their fixed deposit with the operational convenience of withdrawals in times of need. Salient features of the scheme are:

Deposit accepted for periods ranging from 15 days to 120 months. Deposit accepted in multiples of Rs.1000/- with a minimum of Rs.1000/Interest is payable every quarter. Option is available to withdraw a portion of the deposit in multiples of Rs.1000/- whenever needed.

No penalty is payable on such partial withdrawals. Senior Citizens & Staff will be eligible for additional Rate of interest as per applicable norms.

Nomination facility available. The rates of interest are as fixed by the Bank from time to time.

Synd Corporate Suvidha Deposit Scheme We have pleasure in informing launching of a new deposit scheme namely Synd Corporate Suvidha Deposit Scheme . 31

The salient features of the scheme are as follows :

Amount of deposit : The minimum quantum of deposit under the scheme is fixed at Rs.500 lacs and thereafter in multiples of Rs.100 lac.

Period of deposit : 7 days to 180 days. Rate of interest : As applicable to other domestic term deposits. No special or extra rate can be offered.

Payment of interest : Simple interest is payable at quarterly intervals at the contracted rate.

Premature refunds : Premature withdrawal in multiple of Rs.100 lac permitted subject to one day notice. However minimum balances of Rs.5 crores should be retained after such partial withdrawal.

There is no restriction regarding frequency and number of withdrawals. No penalty is to be charged on partial withdrawals . Interest payable on such portion shall be the interest applicable at the time of accepting the deposit for the period the amount remained with the Bank.

Loans on Deposit : LD can be arranged only on the balance amount held with the Bank and under no circumstances withdrawals beyond the margin stipulated for the LD, shall be permitted.

RETAIL BANKING DEFINITION:

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Retail banking is typical mass-market banking where individual customers use local branches of larger commercial banks. Services offered include: savings and checking accounts, mortgages, personal loans, debit cards, credit cards, and so

The Retail Banking environment today is changing fast. The changing customer demographics demands to create a differentiated application based on scalable technology, improved service and banking convenience. Higher penetration of technology and increase in global literacy levels has set up the expectations of the customer higher than never before. Increasing use of modern technology has further enhanced reach and accessibility. The market today gives us a challenge to provide multiple and innovative contemporary services to the customer through a consolidated window as so to ensure that the banks customer gets Uniformity and Consistency of service delivery across time and at every touch point across all channels. The pace of innovation is accelerating and security threat has become prime of all electronic transactions. High cost structure rendering mass-market servicing is prohibitively expensive. Present day tech-savvy bankers are now more looking at reduction in their operating costs by adopting scalable and secure technology thereby reducing the response time to their customers so as to improve their client base and economies of scale. The solution lies to market demands and challenges lies in innovation of new offering with minimum dependence on branches a multi-channel bank and to eliminate the disadvantage of an inadequate branch network. Generation of leads to cross sell and creating additional revenues with utmost customer satisfaction has become focal point worldwide for the success of a Bank. RETAIL BANKING AN INTRODUCTION

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Retail banking is, however, quite broad in nature - it refers to the dealing of commercial banks with individual customers, both on liabilities and assets sides of the balance sheet. Fixed, current / savings accounts on the liabilities side; and mortgages, loans (e.g., personal, housing, auto, and educational) on the assets side, are the more important of the products offered by banks. Related ancillary services include credit cards, or depository services. Retail banking refers to provision of banking services to individuals and small business where the financial institutions are dealing with large number of low value transactions. This is in contrast to wholesale banking where the customers are large, often multinational companies, governments and government enterprise, and the financial institution deal in small numbers of high value transactions. The concept is not new to banks but is now viewed as an important and attractive market segment that offers opportunities for growth and profits. Retail banking and retail lending are often used as synonyms but in fact, the later is just the part of retail banking. In retail banking all the needs of individual customers are taken care of in a well-integrated manner.

Todays retail banking sector is characterized by three basic characteristics:

Multiple products (deposits, credit cards, insurance, investments and securities)

o o

Multiple channels of distribution (call center, branch, internet)

Multiple customer groups (consumer, small business, and corporate).

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ORIGIN OF BANKING

Banks are among the main participants of the financial system in India. Banking offers several facilities and opportunities. Banks in India were started on the British pattern in the beginning of the 19 th century. The first half of the 19th century, The East India Company established 3 banks The Bank of Bengal, The Bank of Bombay and The Bank of Madras. These three banks were known as Presidency Banks. In 1920 these three banks were amalgamated and The Imperial Bank of India was formed. In those days, all the banks were joint stock banks and a large number of them were small and weak. At the time of the 2 nd world war about 1500 joint stock banks were operating in India out of which 1400 were non- scheduled banks. Bad and dishonest management managed quiet a quiet a few of them and there were a number of bank failures. Hence the government had to step in and the Banking Companys Act (subsequently named as the Banking Regulation Act) was enacted which led to the elimination of the weak banks that were not in a position to fulfil the various requirements of the Act. In order to strengthen their weak units and review public confidence in the banking system, a new section 45 was enacted in the Banking Regulation Act in the year 1960, empowering the Government of India to compulsory amalgamate weak units with the stronger ones on the recommendation of the RBI. Today banks are broadly classified into 2 groups namely (a) Scheduled banks. (b) Non-Scheduled banks.

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BENEFITS OF RETAIL BANKING

Traditional lending to the corporate are slow moving along with high NPA risk, treasure profits are now loosing importance hence Retail Banking is now an alternative available for the banks for increasing their earnings. Retail Banking is an attractive market segment having a large number of varied classes of customers. Retail Banking focuses on individual and small units. Customize and wide ranging products are available. The risk is spread and the recovery is good. Surplus

deployable funds can be put into use by the banks. developed and marketed as per individual needs.

Products can be designed,

SCOPE FOR RETAIL BANKING IN INDIA

o o o

All round increase in economic activity Increase in the purchasing power. The rural areas have the large purchasing power at their disposal and this is an opportunity to market Retail Banking. India has 200 million households and 400 million middleclass population more than 90% of the savings come from the house hold sector. Falling interest rates have resulted in a shift. Now People Want To Save Less And Spend More.

Nuclear family concept is gaining much importance which may lead to large savings, large number of banking services to be provided are day-by-day increasing.

Tax benefits are available for example in case of housing loans the borrower can avail tax benefits for the loan repayment and the interest charged for the loan.

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Structure of Indian Banking Industry

The banking system, largely, comprises of scheduled banks (banks that are listed under the Second Schedule of the RBI Act, 1934). Unscheduled banks form a very small component (function in the form of Local Area Bank). Scheduled banks are further classified into commercial and cooperative banks, with the basic difference in their holding pattern. Cooperative banks are cooperative credit institutions that are registered under the Cooperative Societies Act and work according to the cooperative principles of mutual assistance.

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Major Players in the Indian Banking Industry

Public Sector Banks (SBI and associates + Nationalised banks) control more than 74-75% of the total credit and deposits businesses in India whereas Private Sector Banks around 17-18%.

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How does the industry work? Here is the analysis

The banking industry in India is highly regulated. Few important regulations are mentioned in the diagram below:

The core operating income of a bank is interest income (comprises 75-85% in the total income of almost all Indian Banks). Besides interest income, a bank also generates fee-based income in the form of commissions and exchange, income from treasury

39

operations and other income from other banking activities. As banks were assigned a special role in the economic development of the country, RBI has stipulated that a portion of bank lending should be for the development of under-banked and underprivileged sections, which is called the priority sector. Current rules stipulate that domestic banks should lend 40% and the foreign banks should lend 32% of their net credit to the priority sector. On the cost sides, the major items for a bank are interest paid on different types of deposits, bonds issued and borrowings, and provisioning cost for Non-performing Assets (NPAs).

The banking business can be broadly categorized into Retail Banking, Wholesale or Corporate Banking, Treasury Operations and Other Banking Activities.

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ADVANTAGES AND DISADVANTAGES OF RETAIL BANKING

ADVANTAGES Retail banking has inherent advantages outweighing certain disadvantages. Advantages are analyzed from the resource angle and asset angle.

RESOURCE SIDE

o o o o

Retail deposits are stable and constitute core deposits.

They are interest insensitive and less bargaining for additional interest.

They constitute low cost funds for the banks.

Effective customer relationship management with the retail customers built a strong customer base.

Retail banking increases the subsidiary business of the banks.

ASSETS SIDE o Retail banking results in better yield and improved bottom line for a bank.

o o o

Retail segment is a good avenue for funds deployment.

Consumer loans are presumed to be of lower risk and NPA perception.

Helps economic revival of the nation through increased production activity.

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Improves lifestyle and fulfils aspirations of the people through affordable credit.

o o

Innovative product development credit.

Retail banking involves minimum marketing efforts in a demand driven economy.

Diversified portfolio due to huge customer base enables bank to reduce their dependence on few or single borrower

Banks can earn good profits by providing non fund based or fee based services without deploying their funds.

DISADVANTAGES

Designing own and new financial products is very costly and time consuming for the bank.

Customers now-a-days prefer net banking to branch banking. The banks that are slow in introducing technology-based products, are finding it difficult to retain the customers who wish to opt for net banking.

o o

Customers are attracted towards other financial products like mutual funds etc.

Though banks are investing heavily in technology, they are not able to exploit the same to the full extent.

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A major disadvantage is monitoring and follow up of huge volume of loan accounts inducing banks to spend heavily in human resource department.

Long term loans like housing loan due to its long repayment term in the absence of proper follow-up, can become NPAs.

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OPPORTUNITIES

Retail banking has immense opportunities in a growing economy like India. As the growth story gets unfolded in India, retail banking is going to emerge a major driver. The rise of Indian middle class is an important contributory factor in this regard. The percentage of middle to high-income Indian households is expected to continue rising. The younger population not only wields increasing purchasing power, but as far as acquiring personal debt is concerned, they are perhaps more comfortable than previous generations. Improving consumer purchasing power, coupled with more liberal attitudes towards personal debt, is contributing to Indias retail banking segment. The combination of above factors promises substantial growth in retail sector, which at present is in the nascent stage. Due to bundling of services and delivery channels, the areas of potential conflicts of interest tend to increase in universal banks and financial conglomerates. Some of the key policy issues relevant to the retail-banking sector are: financial inclusion, responsible lending, and access to finance, long-term savings, financial capability, consumer protection, regulation and financial crime prevention.

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CHALLENGES TO RETAIL BANKING IN INDIA

The issue of money laundering is very important in retail banking. This compels all the banks to consider seriously all the documents which they accept while approving the loans.

The issue of outsourcing has become very important in recent past because various core activities such as hardware and software maintenance, entire ATM set up and operation (including cash, refilling) etc., are being outsourced by Indian banks.

o o

Banks are expected to take utmost care to retain the ongoing trust of the public. Customer service should be at the end all in retail banking. Someone has rightly said, It takes months to find a good customer but only seconds to lose one. Thus, strategy of Knowing Your Customer (KYC) is important. So

the banks are required to adopt innovative strategies to meet customers needs and requirements in terms of services/products etc.

The dependency on technology has brought IT departments additional responsibilities and challenges in managing, maintaining and optimizing the performance of retail banking networks. It is equally important that banks should maintain security to the advance level to keep the faith of the customer.

The efficiency of operations would provide the competitive edge for the success in retail banking in coming years.

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The customer retention is of paramount important for the profitability if retail banking business, so banks need to retain their customer in order to increase the market share.

One of the crucial impediments for the growth of this sector is the acute shortage of manpower talent of this specific nature, a modern banking professional, for a modern banking sector.

If all these challenges are faced by the banks with utmost care and deliberation, the retail banking is expected to play a very important role in coming years, as in case of other nations.

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STRATEGIES FOR INCREASING RETAIL BANKING BUSINESS

Constant product innovation to match the requirements of the customer segments

The customer database available with the banks is the best source of their demographic and financial information and can be used by the banks for targeting certain customer segments for new or modified product. The banks should come out with new products in the area of securities, mutual funds and insurance.

Quality service and quickness in delivery

As most of the banks are offering retail products of similar nature, the customers can easily switchover to the one, which offers better service at comparatively lower costs. The quality of service that banks offer and the experience that clients have, matter the most. Hence, to retain the customers, banks have to come out with competitive products satisfying the desires of the customers at the click of a button.

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Introduction of new delivery channels

Retail customers like to interface with their bank through multiple channels. Therefore, banks should try to give high quality service across all service channels like branches, Internet, ATMs, etc.

Tapping of unexploited potential and increasing the volume of business

This will compensate for the thin margins. The Indian retail banking market still remains largely untapped giving a scope for growth to the banks and financial institutions. With changing psyche of Indian consumers, who are now comfortable with the idea of availing loans for their personal needs, banks have tremendous potential lying in this segment. Marketing departments of the banks be geared up and special training be imparted to them so that banks are successful in grabbing more and more of retail business in the market.

Infrastructure outsourcing

This will help in lowering the cost of service channels combined with quality and quickness.

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Detail market research

Banks may go for detail market research, which will help them in knowing what their competitors are offering to their clients. This will enable them to have an edge over their competitors and increase their share in retail banking pie by offering better products and services.

Cross-selling of products

PSBs have an added advantage of having a wide network of branches, which gives them an opportunity to sell third-party products through these branches.

Business process outsourcing

Outsourcing of requirements would not only save cost and time but would help the banks in concentrating on the core business area. Banks can devote more time for marketing, customer service and brand building. For example, Management of ATMs can be outsourced. This will save the banks from dealing with the intricacies of technology.

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Tie-up arrangements

PSBs with regional concentration can reap the benefit of reaching customers across the country by entering into strategic alliance with other such banks with intensive presence in other regions. In the present regime of falling interest and stiff competition, banks are aware that it is finally the retail banking which will enable them to hold the head above water. Hence, banks should make all out efforts to boost the retail banking by recognizing the needs of the customers. It is essential that banks would be imaginative in predicting the customers' expectations in the ever-changing tastes and environments. It is the innovative and competitive products coupled with high quality care for clients will only hold the key to success in this area. In short, bankers have to run very fast even to stay where they are now. It is the survival of the fastest now and not only survival of the fittest.

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SPECIAL FEATURES OF RETAIL CREDIT

One of the prominent features of Retail Banking products is that it is a volume driven business. Further, Retail Credit ensures that the business is widely dispersed among a large customer base unlike in the case of corporate lending, where the risk may be concentrated on a selected few plans. Ability of a bank to administer a large portfolio of retail credit products depends upon such factors :

Strong credit assessment capability

Because of large volume good infrastructure is required. If the credit assessment itself is qualitative, than the need for follow up in the future reduces considerably.

Sound documentation

A latest system for credit documentation is necessary pre-requisite for healthy growth of credit portfolio, as in the case of credit assessment, this will also minimize the need to follow up at future point of time.

Strong possessing capability

Since large volumes of transactions are involved, today transactions, maintenance of backups is required

Regular constant follow- up

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Ideally, follow up for loan repayments should be an ongoing process. It should start from customer enquiry and last till the loan is repaid fully.

Skilled human resource

This is one of the most important pre-requisite for the efficient management of large and diverse retail credit portfolio. Only highly skilled and experienced man power can withstand the river of administrating a diverse and complex retail credit portfolio.

Technological support

This is yet another vital requirement. Retail credit is highly technological intensive in nature, because of large volumes of business, the need to provide instantaneous service to the customer large, faster processing, maintaining database, etc.

EMERGING ISSUES IN HANDLING RETAIL BANKING

O KNOWING CUSTOMER
Know your Customer is a concept which is easier said than practiced. Banks face several hurdles in achieving this. In order to that the product lines are targeted at the right customers-present and prospective-it is imperative that an integrated view of customers is available to the banks. The benefits flowing out of cross-selling and up-selling will remain a far cry in the absence of this vital input. In this regard the customer databases available with most of the public sector banks, if not all, remain far from being enviable.

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What needs to be done is setting up of a robust data warehouse where from meaningful data on customers, their preferences, there spending patterns, etc. can be mined. Cleansing of existing data is the first step in this direction. PSBs have a long way to go in this regard.

O TECHNOLOGY ISSUES
Retail banking calls for huge investments in technology. Whether it is setting up of a Customer Relationship Management System or Establishing Loan Process Automation or providing anytime, anywhere convenience to the vast number of customers or establishing channel/product/customer profitability, technology plays a pivotal role. And it is a long haul. The Issues involved include adoption of the right technology at the right time and at the same time ensuring volumes and margins to sustain the investments. It is pertinent to remember that Citibank, known for its deployment of technology, took nearly a decade to make profits in credit cards. It has also to be added in the same breath that without adequate technology support, it would be well nigh possible to administer the growing retail portfolio without allowing its health to deteriorate. Further, the key to reduction in transaction costs simultaneously with increase in ability to handle huge volumes of business lies only in technology adoption. PSBs are on their way to catch up with the technology much required for the success of retail banking efforts. Lack of connectivity, stand alone models, concept of branch customer as against bank customer, lack of convergence amongst available channels, absence of customer profiling, lack of proper decision support systems, etc., are a few deficiencies that are being

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overcome in a great way. However, the initiatives in this regard should include creating flexible computing architecture amenable to changes and having scalability, a futuristic approach, networking across channels, development of a strong Customer Information Systems (CIS) and adopting

O ORGANIZATIONAL

ALIGNMENT

It is of utmost importance that the culture and practices of an institution support its stated goals. Having decided to take a plunge into retail banking, banks need to have a well defined business strategy based on the competitive of the bank and its potential. Creation of a proper organization structure and business operating models which would facilitate easy work flow are the needs of the hour. The need for building the organizational capacity needed to achieve the desired results cannot be overstated. This would mean a strong commitment at all levels, intensive training of the rank and file, putting in place a proper incentive scheme, etc. As a part of organizational alignment, there is also the need for setting up of an effective Corporate Marketing Division. Most of the public sector banks have only publicity departments and not marketing setup. A fully fledged marketing department or division would help in evolving a brand strategy, address the issue of alienation from the upwardly mobile, high net worth customer group and improve the recall value of the institution and its products by arresting the trend of getting receded from public memory. The much needed tie-ups with manufacturers/distributors/builders will also facilitated smoothly. It is time to break the myth PSBs are not customer friendly. The attention is to be diverted

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to vast databases of customers lying with the PSBs till unexploited for marketing.

O PRODUCT INNOVATION
Product innovation continues to be yet another major challenge. Even though bank after bank is coming out with new products, not all are successful. What is of crucial importance is the need to understand the difference between novelty and innovation? Peter Drucker in his path breaking book:

Management Challenges for the 21st Century has in fact sounded a word of caution: innovation that is not in tune with the strategic realities will not work; confusing novelty with innovation (should be avoided), test of innovation is that it creates value; novelty creates only amusement. The days of selling the products available in the shelves are gone. Banks need to innovate products suiting the needs and requirements of different types of customers. Revisiting the features of the existing products to continue to keep them on demand should not also be lost sight of.

O PRICING OF PRODUCT
The next challenge is to have appropriate policies in place. The industry today is witnessing a price war, with each bank wanting to have a larger slice of the cake that is the market, without much of a scientific study into the cost of 55

funds involved, margins, etc. The strategy of each player in the market seems to be: under cutting others and wooing the clients of others. Most of the banks that use rating models for determining the health of the retail portfolio do not use them for pricing the products. The much needed transparency in pricing is also missing, with many hidden charges. There is a tendency, at least on the part of few to camouflage the price. The situation cannot remain his way for long. This will be one issue that will be gaining importance in the near future.

O PROCESS CHANGES
Business Process Re-engineering is yet another key requirement for banks to handle the growing retail portfolio. Simplified processes and aligning them around delivery of customer service impinging on reducing customer touchpoints are of essence. A realization has to drawn that automating the

inefficiencies will not help anyone and continuing the old processes with new technology would only make the organization an old expensive one. Work flow and document management will be integral part of process changes. The documentation issues have to remain simple both in terms of documents to be submitted by the customer at the time of loan application and those to be executed upon sanction.

O ISSUE CONCERNING HUMAN RESOURCES


While technology and product innovation are vital , the soft issues concerning the human capital of the banks are more vital. The corporate initiatives need 56

to focus on bringing around a frontline revolution.

Though the changes

envisaged are seen at the frontline, the initiatives have to really come from the back end. The top management of banks must be seen as practicing what preaches. The initiatives should aim at improved delivery time and methods of approach. There is an imperative need to create a perception that the banks are market-oriented. This would mean a lot of proactive steps on the part of bank management which would include empowering staff at various levels, devising appropriate tools for performance measurement bringing about a transformation cant do to can do mind-set change from restrictive practices to total flexible work place, say. By having universal tellers, bringing in managerial controlling work place, provision of intensive training on products and processes, emphasizing, coaching etiquette, good manners and best behavioural models, formulating objective appraisals, bringing in transparency, putting in place good and acceptable reward and punishment system, facilitating the placement of young /youthful staff in front-line by projecting them as sellers of

defining a new role for front-line staff

products rather than clerks at work and changing the image of the banks from a transaction provider to a solution provider.

O RURAL ORIENTATION
As of now, action that is taking place on the retail front is by and large confined two metros and cities. There is still a vast market available in rural India, which remains to be trapped. Multinational Corporations, as

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manufacturers and distributors, have already taken the lead in showing the way by coming out with exquisite products, packaging and promotions, keeping the rural customer in mind. Washing powders and shampoos in Re.1 sachet made available through an efficient network and testimony to the determination of the MNCs to penetrate the rural market. In this scenario, banks cannot lack behind. In particular PSBs, which have a strong rural presence, need to address the needs of rural customers in a big way. These and only these will propel retail growth that is envisaged as a key strategy for portfolio expansion by most of the banks.

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Chapter 2 LITERATURE REVIEW

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RETAIL BOOM

Keeping pace with the average 8.5 per cent growth of the Indian economy over the past few years, the retail banking sector in India has also witnessed phenomenal growth. It has faced up to the need of the hour and introduced anytime, anywhere banking, for its customers through ATMs, mobile and internet banking. It has also offered services like D-MAT, plastic money (credit and debit cards), online transfers, etc. This has not only helped in reducing operational costs but facilitated greater conveniences to its customers.

High-Tech Banking

ATMs - With growing technological innovations, banks have significantly expanded their ATM network over the past three years. According to the RBI data as of end-June 2008, the number of ATMs in the country had climbed to 36,314 compared to 27,088 and 20,267 as at end-March 2007 and 2006, respectively.

Loan disbursement

Technology has facilitated the growth in retail loan disbursements, making the whole process simpler and faster. The sector has delivered a growth of around 30 per cent per year over the past 4-5 years. As per the RBI data, although the retail portfolio of banks saw a slowdown to 29.9 per cent during 2006-07 from 40.9 per cent in 2005-06, the growth was faster than the overall credit portfolio of the banking sector (28.5 per cent).

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Plastic Money

Credit cards have also played an important role in promoting retail banking. The use of credit cards has been growing significantly over the last few years. The number of credit cards outstanding at the end- June 2008 stood at 27.02 million as against 24.39 million in June 2007, with usage increasing by 10.73 per cent during this period.

Core Banking Solutions (CBS)

The concept of CBS, which allows a customer to fulfil a wide range of banking operation online, has come alive during the past four years. The number of bank branches providing CBS rose rapidly to 44 per cent at endMarch 2007 from 28.9 per cent at end March 2006. Electronic fund transfer facilities and mobile banking are expected to provide a further fillip to the retail banking in the coming years.

Future Outlook

Indian retail banking, according to a report, is likely to grow at a CAGR of 28 per cent till 2010 to Rs 97,00 billion. So, although the revolution in retail banking has changed the face of the Indian banking industry as a whole, it has still miles to go.

The reasons for this shift to retail, particularly the housing finance segment, are many. The important among these include

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The poor credit off take to the corporate, commercial and other business sector
because of industrial slowdown.

Risky nature of lending to corporate, given in industry recession and uncertainty


prevalent in the economy.

High disintermediation pressure, leading many highly rated corporates to tap the
domestic and/or overseas markets directly for finance, rather than approaching the banks.

Relatively safe nature of some of the retail credit finance with lesser incidence of
loan turning bad.

Rising disposable income, changing lifestyles/aspirations and willingness to spend


for more luxuries of the higher middle class.

Better availability of loans, because of the consultancy lowering interest rates, as a


result of the low interest regime followed by the regulating authorities, the housing loans interest rates hailed to almost 7.5 8% in last 5 years.

Increased government incentives in form of tax rebates etc. in the case of certain
loans like housing loans.

Banks are aware with abundant reserve requirement by RBI, they are searching
revenues for packing the surplus funds.

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FUTURE OF RETAIL BANKING

Retail banking has significant past and glorious future over the years. Retail banking has proved as an effective tool not only to improve the bottom lines of the banks concerned but also to significantly contribute to the development of the individual consumers availing the services or products in particular and to the overall development of the society in general with the needs of the consumers ever multiplying. There is definitely a vast scope for the furtherance of the Retail Banking business. The society is made of the individuals and the environment surrounding him. As development takes place in the society, the needs of the people grow faster than ever. The wealth creation and its professional management are yet another distinct advantage the society or nation can derive from Retail Banking. The depth of the untapped resources in the retail segment is not yet measured. These resources could be channelized for nation building. On the whole, looking ahead, the prospects of retail banking are brighter than ever and the bankers have to give continued thrust to this area of banking. Thus, with the consumers ever multiplying needs there is definitely a vast scope for the furtherance of the retail banking business. Operationally, there is a possibility that technology go beyond merely reducing the cost & improving the quality of current products. It may prove possible, even profitable, to combine functions in new ways.

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PRODUCTS AND SERVICES: Syndicate Bank provides various banking products and services to its customers. They are as follows:

Retail Banking Rural/Agri Banking Wholesale Banking SME Banking Wealth Management Demat Product Enquiry Internet Banking NRI Remittances Baroda e-Trading Interest Rates Deposit Products Loan Products ATM / Debit Cards

2) Price: The pricing decisions or the decisions related to interest and fee or commission charged by banks are found instrumental in motivating or influencing the target market. The RBI and the IBA are concerned with regulations. The rate of interest is regulated by the RBI and other charges are controlled by IBA. The pricing policy of a bank is considered important for raising the number of customers vis- -vis the

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accretion of deposits. Also the quality of service provided has direct relationship with the fees charged. Thus while deciding the price mix customer services rank the top position. The banking organizations are required to frame two- fold strategies. First, the strategy is concerned with interest and fee charged and the second strategy is related to the interest paid. Since both the strategies throw a vice- versa impact, it is important that banks attempt to establish a correlation between two. It is essential that both the buyers as well as the sellers have feeling of winning. Home Loan to Individuals / NRIs / PIOs The pricing factor is very important because of the kind of competition that is prevailing today in the Indian market. However it is very important to understand that in the banking sector, the main pricing policy is concerned with the interest rate charged. This interest rate is however regulated by the RESERVE BANK OF INDIA and THE INDIAN BANKING ASSOCAITION. Any one particular bank or a group of banks does not regulate it. The interest rate charged cannot be higher than that decide by the RBI and the INDIAN BANKING ASSOCIATION. 3) Place: The Syndicate Bank has good location across the country. Syndicate Bank has an extensive network of branches spanning the length and breadth of the country. There is a branch in the vicinity of everyone in need of a banking solution.

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With a customer centric approach of being operational 24 hours a day, across countries, the bank branches are the last door you will have to knock while on the lookout for an answer to your queries. .4) Promotion: Promotion is nothing but making the customer more and more aware of the services and benefits provided by the bank. Bank of Baroda uses a lot of new technology to communicate to their customers. Two of the fastest growing modern tools of communicating with the customers are: 1. Internet Banking 2. Mobile Banking 3. Public Relations: In todays competitive scenario developing strong public relations is very important for any bank to be successful. Most banks today have a separate Public Relations department. However primarily it is considered as a responsibility of the various bank managers to develop a steady and strong relationship with their present customers as well as potential customers. Syndicate Bank keeps good relations with their customers by a constant follow up, small programmes etc. Television: Consumer behavior is very complex phenomenon, which is considered primarily in marketing decisions. It has been rightly said Understand, you do not understand, you will not understand, you cannot understand all your customers but still you have 67

to do your best to understand them. So advertisers of Syndicate Bank are advertising with the help of television which is the need of every Indian home.

Newspapers and Magazines: Mass media advertising includes TV commercials and advertising in national level newspapers which have a wide coverage. Advertising in these has made maximum people aware about the offerings of the banks and established most of the bank names as big brands. Syndicate Bank advertises in many newspapers like The Times of India, The Economic Times, DNA, The Business Line,etc. Magazines like Business Today, India Today, Business World, etc. are considered for corporate advertising.

5) People: Syndicate Bank has always had an immense faith in the infinite potential of its people. This has been historically demonstrated in its recruitment practices, developmental initiatives, placement processes and promotion policies. Strategic HR interventions like, according cross border and cross cultural work exposure to its managers, hiring diverse functional specialists to support line functionaries and complementing the technical competencies of its people by imparting conceptual, managerial and leadership skills, gave the Bank competitive advantage. The elaborate man management policies also made the Bank a breeding ground for business leaders. The Bank provided around a dozen CEOs to the industry- men who went on to build other

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great institutions. People initiatives were blended with IR initiatives to create an effectively harmonious workplace, where everyone prospered.

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Chapter 3 RESEARCH METHODOLOGY

70

OBJECTIVE

The objective of the study is to find out the ways in which the unique selling preposition (USP) of spread Syndicate Bank in the form of large network of branches

over the country, may be used meaningfully in marketing strategies of

Syndicate Bank, and its associates offering various types of services. Retail Banking is now become a backbone for banks to increase its credibility and services. How Indian banks become beneficiary for Indian exporter as well as foreign importers.

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METHODOLOGY OF THE PROJECT:

Method : - Observational Method Method of Primary data collection : 1. By carrying out actual project work in a bank branch for 2 months 2. Questionairre (The questionairre format is different for different designation for a branch) 3. Personal interview Method of secondary data collection : 1. Internet 2. Library Research Observational design :Conditions under which observations are to be made Structured or well thought out instruments for data collection by personal project work/observation, personal interview and by questionnaire.

Process Phase 1 Analysis of the exact Retail bank environment This is done by personal visit & by undertaking the project work on retail banking for

72

Phase 2 Interviewing & Observing the work carried out by all real branch players from the top level to bottom level This is done by core observation & creating a questionnaire. Phase 3 Analysis of data obtained This is done by analyzing the data obtained from actual project work using various techniques.

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Chapter 4 DATA ANALYSIS AND INTERPRETATION

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DATA ANALYSIS AND INTERPRETATION


Q1. What is your occupation?

Business

Govt. services

Private company employee

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Q2.How frequently do you visit the bank?

Weekly

Half yearly

Yearly

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77

Q3. How frequently do you use telephone banking? Daily Weekly Monthly Dont Use

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Q4. How often do you use online banking services? Weekly Monthly Yearly Dont Use

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Q5. What is the most convenient way to avail banking service? Visiting a branch Telephone banking Online banking

80

Q6. Do you think human contact is important for banking relations? Completely Somewhat Dubious Not at all

81

Q7. Do you have a bank account? Yes No

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Q8. How do you invest your savings? Savings account Term deposits Recurring deposits Other Investment

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Q9. Which type of deposit is more productive? Savings account Term deposits Recurring deposits

84

Q10. How often have you taken a loan from a bank? Once Twice More than that Never

85

Q11.Which type of loan has proved useful to you? Education loan Housing loan Vehicle loan

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Q12. Are you satisfied with the retail banking services of syndicate bank? Yes No

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Q13. Where do you prefer saving your money ? Banks LIC Mutual Funds Other pvt. Institution

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Q14. Why do you prefer a bank while saving? Security Fixed returns Less Risks

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Q15. Which Segment mostly prefers pigmy deposit schemes? Lower Segment Middle Segment Upper Segment

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Chapter 5 SUGGESTION/ RECOMMENDATION

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SUGGESTIONS

The growth of retail portfolio with the banks in the last few years has been impressive. The retail portfolio is useful to banks for managing business mix and earning a fee income. That the retail portfolio can be securitized and sold out makes it attractive to loan issuing banks .This aspect makes the portfolio, attractive to banks with surplus liquidity though they may not have the reach to increase the portfolio by direct sales of products. The Bank has now started to adopt a retail strategy in their operations. They have started to waive a net to catch customers. The another angel of the Retail Banks to caught a customer is like; If you are employed or have a regular income, about 25 years of age or more able to provide proof about your address and identity then Better be ready for an onslaught of marketing by retail bankers for a home loan, or a personal loan or a card or all of these .It does not matter if you have already taken loan and possess a credit card or two .in fact these enhance your reliability! Out bound calls (calls made by BPO employees to the prospective clients) are particularly focused on those who have already established their credit worthiness by borrowing! Out bond callers hunt good customers and shower them with fires. You have arrived in the city of your destination by flight. Dont throw away your boarding pass at the end of the journey. Not yet. Persons with almost no knowledge of credit cards (or banking) will be waiting in the car park/taxi stand to offer you lifetime free gold card. Nonchalantly they will also add that nothing more than a boarding pass is indeed (to prove the credit worthiness) and they will not ask for anything else!

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Have you used the credit card to make some purchase and intend to send a cheque to the card company? Wait. It is not uncommon for banks to ring up and offer to convert your credit card purchases/dues into loans by offering you installment options. You already have a credit card? There will be upgrade offers! New card issuers offer to take over credits. Some of the card companies will offer fresh cash backs. Mobile companies will exhort you not to pay your bill and that you have a generous credit limit. Grocers and Hire Purchase (HP) vendors have joined the long list of people who offer you retail credit. Welcome to the new world of retail banking where banks vie with each other to innovate retail products and increase out reach. The Retail banks make all the effort to trap the customers but sometimes, this make a relatively opposite impact on the customers mind. This may be a one of the cause to lose the market. The bank shouldnt be so much aggressive in selling products this may result in losing their market image. Customers may get irritated with continuous marketing calls from the banks. In such a case bank should have to design a systematic marketing plan to pitch the customers rather than calling continuously. The sales staff employed by the bank for marketing purpose, the way these people representing to the customers is so poor customer cannot be at all impressed by them. The bank should have adopt a Personality Development course for this people where they can improve on their skills such as, soft skills, dressing sense, etc

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Chapter 6 CONCLUSION

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CONCLUSION:

From above all information it is seen that, retail banking is directed at salaried and self employed persons. That is on those people who can meet EMI

commitments. Thus retail tends to be urban and semi urban in focus. Yet it is seen that retail banking products do not have uniform or standard terms of credit. In fact, despite being marketed to the salaried / self employed class it is seen that terms such as the amount of loan, repayment period, rate of interest, margin, collateral, etc could be different from person to person. It is the appraisal methodology which is score card driven and easy delivery format that makes the retail product unique and capable of fast multiplication.

Unlike the past when bank products were marketed in the branches, retail is out in the open. Retail products / loans are issued/ marketed in branches, loan melas, factories, and malls. In additional to bank staff, BPOs, mail order, telephone & email are used to marketing retail. The list of Marketing Avenue is endless. It is enough if the banks touch base with one of them.

Thanks to IT also, information about customers is immediately put on the retail highway. Almost no information (lead) escapes the eye of the retail marketing units.

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LIMITATIONS: The Summer Project which I did was in Retail Bank Front office only; I couldnt able to go for back office operations process of banking. The questions for which I couldnt able got the answers are; 1. What happened about the various forms which is newly filled by the customers when sends to the back office? How it is approved? 2. How the processing on the form is done to understand the eligibility of the customers for different products. For E.g.: When the welcome call report come from the back office it includes, the date of opening an account, Name of the customer, Contact, details and also the eligibility for various product like Gold credit card, Loan, FD, etc. 3. What happened to the amount which is parked as a Fixed Deposit at a particular a/c no.? 4. How the credit analysis of the particular loan applicant is did? 5. How the loan amount for the particular customer is decided by the bank? 6. How the treasury operations are carried out? 7. How the bank collects its debt? 8. What happened with NPA (non performing assets)? 9. How the bank designs various scheme for the customers 10. How the various rate of interest is decided by the bank?

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BIBLOGRAPHY

For the completion of this project following books and websites have been referred and help from other sources has been taken. Those are mentioned below :

BOOKS: 1.STEPPHIN.P.ROBBINS ORGANIZATIONAL BEHAVIOUR 2. C.P MEMORIA HUMAN RESOURCE MANAGEMENT 3. PHILIP KOTLER MARKETING MANAGEMENT

WEBSITES: 1.WWW.GOOGLE.COM 2.WWW.SYNDICATEBANK.IN 3.WWW.ECONOMICTIMES.COM

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