GROWTH IN

INDIAN BANKING SECTOR

Submitted By:

Vikrant Baghi
Rohit Aggarwal
Yogeshwar Dhaliwal
Ravinder Kumar Garg
 Declaration

I hereby declare that the project title "Growth in Indian Banking Sector" is a work of our own an
all reference sources have been accurately reported and acknowledged. We would also mention
that our information gathered, analyzed and documented for this project is entirely in our
possession which is authentic and genuine. We will mention that the work done is not purchased
or acquired by any unfair means or any external sources. The data and the information presented
in the report are accurate and updated to the best of our knowledge. However, for the purpose of
the project, information already compiled in many sources has been utilized.

Place: Signature:

Date:
 Acknowledgement

We are grateful to thank our Dean Mr. Amit Baruah for giving us this great opportunity to do
this project.

We also extend our thankfulness to our beloved parents and friends for their continuous
encouragement at every moment.
 India's Growing Banking Sector

India's banking sector is booming at a great pace in spite of its relatively small size in
comparison of its counterparts in other leading economies. Indian banking sector has been found
lucrative by eminent players from the international world. For e.g., In India, Citibank and
Standard Chartered Bank has more than half of all credit card receivables and personal loans,
which has generated more than Rs. 200 crore of profit for both banks. In 2003, Oriental Bank of
Commerce was listed by Forbes magazine in its 'Global 200 Best Companies' list. In 1990s, after
a long gap of more than 20 years, the apex bank, Reserve Bank of India (RBI) has issued licenses
to 9 new private banks. In this, Times Bank got merged with the HDFC Bank. The RBI also
allowed Kotak Mahindra Finance Company to become a bank. These banks have shown their
edge over each others with the introduction of new products and technologies. Most of the banks
paid their focus on the retail sector and provide internet banking, phone banking and mobile
banking services to their customers and have cornered one of the largest segments of the India's
banking sector by targeting the India's growing middle income class. The Indian banking sector
has seen a proliferation of new services which has shown an improvement in customer service.

What is a Bank?

A banker or bank is a financial institution whose primary activity is to act as a payment agent for
customers and to borrow and lend money. In other words, an institution where one can place and
borrow money and take care of financial affairs.

Function of Banks

• Lending money to public (loans)

• Transferring money from one place to another (Remittances)
• Acting as trustees
• Keeping valuables in safe custody
• Government business

Types of Banks

• Public sector Banks

• Private sector Banks
• Co-operative Bank
• Development Bank/Financial institutions

Reserve Bank of India

RBI is the banker to banks—whether commercial, cooperative, or rural. The relationship is

established once the name of a bank is included in the Second Schedule to the Reserve Bank of
India Act, 1934. Such bank, called a scheduled bank, is entitled to facilities of refinance from
RBI, subject to fulfillment of the following conditions laid down in Section 42 (6) of the Act, as
follows:
It must have paid-up capital and reserves of an aggregate value of not less than an amount
specified from time to time. It must satisfy RBI that its affairs are not being conducted in a
manner detrimental to the interests of its depositors.

Services Provided By a Bank

• Demat Account
• Lockers
• Cash Management
• Insurance Product
• Mutual Fund Product
• Loans
• ECS (Electronic clearance system)
• Taxes

An Overview

The country’s middle class accounts for over 320 million people. In correlation with the growth
of the economy, rising income levels, increased standard of living, and affordability of banking
products are promising factors for continued expansion.

The Indian banking Industry is in the middle of an IT revolution, focusing on the expansion of
retail and rural banking. Players are becoming increasingly customer-centric in their approach,
which has resulted in innovative methods of offering new banking products and services. Banks
are now realizing the importance of being a big player and are beginning to focus their attention
on mergers and acquisitions to take advantage of economies of scale and/or comply with Basel II
regulation.
"Indian banking industry assets are expected to reach US$1 trillion by 2010 and are poised to
receive a greater infusion of foreign capital. The banking industry should focus on having a small
number of large players that can compete globally rather than having a large number of
fragmented players."

History of Indian Banking Sector

Without a sound and effective banking system in India it cannot have a healthy economy. The
banking system of India should not only be hassle free but it should be able to meet new
challenges posed by the technology and any other external and internal factors.

For the past three decades India's banking system has several outstanding achievements to its
credit. The most striking is its extensive reach. It is no longer confined to only metropolitans or
cosmopolitans in India. In fact, Indian banking system has reached even to the remote corners of
the country. This is one of the main reasons of India's growth process.

The government's regular policy for Indian bank since 1969 has paid rich dividends with the
nationalization of 14 major private banks of India.

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

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

• Early phase from 1786 to 1969 of Indian Banks

• Nationalization of Indian Banks and up to 1991 prior to Indian banking sector Reforms.
• New phase of Indian Banking System with the advent of Indian Financial & Banking
Sector Reforms after 1991.

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

Foundation Phase

The General Bank of India was set up in the year 1786. Next were Bank of Hindustan and
Bengal Bank. The East India Company established Bank of Bengal (1809), Bank of Bombay
(1840) and Bank of Madras (1843) as independent units and called it Presidency Banks. These
three banks were amalgamated in 1920 and Imperial Bank of India was established which started
as private shareholders banks, mostly Europeans shareholders.

In 1865 Allahabad Bank was established and first time exclusively by Indians, Punjab National
Bank Ltd. was set up in 1894 with headquarters at Lahore. Between 1906 and 1913, Bank of
India, Central Bank of India, Bank of Baroda, Canara Bank, Indian Bank, and Bank of Mysore
were set up. Reserve Bank of India came in 1935.

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

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

Expansion Phase

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

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

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

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

• 1949: Enactment of Banking Regulation Act.

• 1955: Nationalization of State Bank of India.
• 1959: Nationalization of SBI subsidiaries.
• 1961: Insurance cover extended to deposits.
• 1969: Nationalization of 14 major banks.
• 1971: Creation of credit guarantee corporation.
• 1975: Creation of regional rural banks.
• 1980: Nationalization of seven banks with deposits over 200 crore.
After the nationalization of banks, the branches of the public sector bank India rose to
approximately 800% in deposits and advances took a huge jump by 11,000%.

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

Consolidation Phase

The phase started in 1985 when a series of policy initiatives were taken by RBI which saw
marked slowdown in the branch expansion. Attention was paid to improving house-keeping,
customer service, credit management, staff productivity and profitability of banks. Measures
were also taken to reduce the structural constraints that obstructed the growth of money market.

Reforms Phase

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

The country is flooded with foreign banks and their ATM stations. Efforts are being put to give a
satisfactory service to customers. Phone banking and net banking is introduced. The entire
system became more convenient and swift. Time is given more importance than money.

The financial system of India has shown a great deal of resilience. It is sheltered from any crisis
triggered by any external macroeconomics shock as other East Asian Countries suffered. This is

all due to a flexible exchange rate

regime, the foreign reserves are high, the capital account is not yet fully convertible, and banks
and their customers have limited foreign exchange exposure.

BANK NATIONALISATION & PUBLIC SECTOR BANKING

Organized banking in India is more than two centuries old. Till 1935 all the banks
were in private sector and were set up by individuals and/or industrial houses which
collected deposits from individuals and used them for their own purposes. In the
absence of any regulatory framework, these private owners of banks were at liberty
to use the funds in any manner, they deemed appropriate and resultantly, the bank
failures were frequent.

Move towards State ownership of banks started with the nationalization of RBI and
passing of Banking Companies Act 1949. On the recommendations of All India Rural
Credit Survey Committee, SBI Act was enacted in 1955 and Imperial Bank of India
was transferred to SBI. Similarly, the conversion of 8 State-owned banks (State Bank
of Bikaner and State Bank of Jaipur were two separate banks earlier and merged)
into subsidiaries (now associates) of SBI during 1959 took place. During 1968 the
scheme of ‘social control’ was introduced, which was closely followed by
nationalization of 14 major banks in 1969 and another six in 1980.

Keeping in view the objectives of nationalization, PSBs undertook expansion of

reach and services. Resultantly the number of branches increased 7 fold (from 8321
to more than 60000 out of which 58% in rural areas) and no. of people served per
branch office came down from 65000 in 1969 to 10000. Much of this expansion has
taken place in rural and semi-urban areas. The expansion is significant in terms of
geographical distribution. States neglected by private banks before 1969 have a
vast network of public sector banks. The PSBs including RRBs, account for 93% of
bank offices and 87% of banking system deposits.

STRUCTURE OF THE BANKING INDUSTRY

According to the RBI definition, commercial banks which conduct the business of
banking in India and which (a) have paid up capital and reserves of an aggregate
real and exchangeable value of not less than Rs 0.5 mn and (b) satisfy the RBI that
their affairs are not being conducted in a manner detrimental to the interest of their
depositors, are eligible for inclusion in the Second Schedule to the Reserve Bank of
India Act, 1934, and when included are known as ‘Scheduled Commercial Banks’.
Scheduled Commercial Banks in India are categorized in five different groups
according to their ownership and/or nature of operation. These bank groups are (i)
State Bank of India and its associates, (ii) Nationalised Banks, (iii) Regional Rural
Banks, (iv) Foreign Banks and (v) Other Indian Scheduled Commercial Banks (in the
private sector). All Scheduled Banks comprise Schedule Commercial and Scheduled
Co-operative Banks. Scheduled Cooperative banks consist of Scheduled State Co-
operative Banks and Scheduled Urban Cooperative Banks
.

There are 71,177 bank offices spread across the country, of which 43 % are located
in rural areas, 22% in semi-urban areas, 18% in urban areas and the rest (17 %) in
the metropolitan areas. The major bank groups (as defined by RBI) functioning are
State Bank of India and its seven associate banks, 19 nationalised banks and the
IDBI Ltd, 19 Old Private Sector Banks, 8 New Private Sector Banks and 29 Foreign
Banks.

Public Sector Banks in India

Among the Public Sector Banks in India, United Bank of India is one of the 14 major banks
which were nationalized on July 19, 1969. Its predecessor, in the Public Sector Banks, the United
Bank of India Ltd., was formed in 1950 with the amalgamation of four banks viz. Comilla
Banking Corporation Ltd. (1914), Bengal Central Bank Ltd. (1918), Comilla Union Bank Ltd.
(1922) and Hooghly Bank Ltd. (1932).

Oriental Bank of Commerce (OBC), a Government of India Undertaking offers Domestic, NRI
and Commercial banking services. OBC is implementing a GRAMEEN PROJECT in Dehradun
District (UP) and Hanumangarh District (Rajasthan) disbursing small loans. This Public Sector
Bank India has implemented 14 point action plan for strengthening of credit delivery to women
and has designated 5 branches as specialized branches for women entrepreneurs.
The following are the list of Public Sector Banks in India

• Allahabad Bank
• Andhra Bank
• Bank of Baroda
• Bank of India
• Bank of Maharashtra
• Canara Bank
• Central Bank of India
• Corporation Bank
• Dena Bank
• Indian Bank
• Indian Overseas Bank
• Oriental Bank of Commerce
• Punjab & Sind Bank
• Punjab National Bank
• Syndicate Bank
• UCO Bank
• Union Bank of India
• United Bank of India
• Vijaya Bank

Private Sector Banks

Private banking in India was practiced since the beginning of banking system in India. The first
private bank in India to be set up in Private Sector Banks in India was IndusInd Bank. It is one of
the fastest growing Private Sector Bank in India. IDBI ranks the tenth largest development bank
in the world as Private Banks in India and has promoted a world class institution in India.

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

ING Vysya, yet another Private Bank of India was incorporated in the year 1930. Bangalore has
a pride of place for having the first branch inception in the year 1934. With successive years of
patronage and constantly setting new standards in banking, ING Vysya Bank has many credits to
its account.

List of Private Banks in India

• Bank of Punjab
• Bank of Rajasthan
 • Catholic Syrian Bank
• Centurion Bank
• City Union Bank
• Dhanalakshmi Bank
• Development Credit Bank
• Federal Bank
• HDFC Bank
• ICICI Bank
• IDBI Bank
• IndusInd Bank
• ING Vysya Bank
• Jammu & Kashmir Bank
• Karnataka Bank
• Karur Vysya Bank
• Laxmi Vilas Bank
• South Indian Bank
• United Western Bank
• UTI Bank

Banking Industry at a Glance

Table 1: Indian Banking at a Glance

Source: Reserve Bank of India

Table 2: Number of Banks, Group Wise

Source: Indian Banks’ Association/ Reserve Bank of India.
* Includes Industrial Development Bank of India Ltd.

Table 3: Group Wise: Comparative Average

Source: Reserve Bank of India.

Table 4: Bank Groups: Key Indicators

Source: Reserve Bank of India.

Major reforms initiatives

Some of the major reform initiatives in the last decade that have changed the face
of the Indian banking are:-

• Interest Rate Deregulation-Interest rates on deposits and lending have been deregulated
with banks enjoying greater freedom to determine their rates.
• Government equity in banks has been reduced and strong banks have been allowed to
access the capital market for raising additional capital.
 • New private sector banks have been set up and foreign banks permitted to expand their
operations in India including through subsidiaries.
• New areas have been opened up for bank financing like- insurance, credit cards,
infrastructure financing, leasing, gold banking, besides of course investment banking,
asset management, factoring, etc.
• Banks have specialized committees to measure and monitor various risks and have been
upgrading their risk management skills and systems.
• Adoption of prudential norms in terms of capital adequacy, asset classification, income
recognition, provisioning, exposure limits, investment fluctuation reserve, etc.

Emergence of New Competitive Spirit in context of the customers

Different economic reforms in the early 1990s have injected competition in the banking sector
with the entrant of many new private and foreign players. The RBI issued new bank licenses
with the motive of forming a new cohort of private players, which would ensure high level of
service to customers and ensure unprecedented growth of the India. The last half of the nineties
has witnessed the massive growth of the new private banking players, which has grown by
approximately 50% per year and by 2001, they hold more than 6% of assets and nearly 10% of
profits.

Effect of New Technologies on Banks

The Indian banking sector has seen an acceleration with the introduction of technological
transformation like ATMs, telephone banking, online banking, web based products, e-cheques,
call centers etc. Use of credit cards, debit cards has touched the sky of popularity. Even the old
public sector banks are keeping themselves tune with the new technological changes. Like State
Bank of India (SBI) has set aside more than Rs 500 crore during its 3 years of time span for the
up gradation of its IT systems along with the computerization and networking of branches.
Presently, SBI has more than 3000 computerized branches and over 1000 new ATMs. Similarly,
United Bank of India (UTI) has started its computerization process in 1986 and so far it has
completed its computerization work of more than 774 branches. It has also set up 25 ATMs in
throughout the India and has signed agreement with other banks of the public sector for ATM
sharing. In some of its branches, it has already started doing tele-banking and mobile banking.

Banks and the Internet World

Due to the advantages of inherent conveniences, 24x7 internet banking has proved to be an
attractive service for the customers. Transactions done through the internet cost relatively less as
compare to visit bank branch. Some banks also offer unique features of internet banking to their
customers. Like Punjab National Bank has come up with their new online payment service,
facilitating the online railway reservation. Notable features of the internet banking are -

• Transfer of money to your account at the same bank's branch in another city.
• Opening of a fixed deposit.
 • Issuing of a banker's cheque or a demand draft.
• Checking of bank balance.
• Stopping the clearance of cheque.
• Request for the cheque book.
• Retail Sector Growth

Earlier the Indian mortgage market was minuscule- less than 1% of GDP. But after the
introduction of economic reforms by the government, tremendous development has been seen in
the mortgage market, getting an impetus from the declination of the interest rates. Many banks
like HDFC, SBI and ICICI has put the housing finance on their priority list. As per an estimate,
India's mortgage assets have reached to nearly 2% of the India's GDP, Which could heightened
to the 20%. Credit card has emerged out as another important product of the personal finance
which is growing rapidly. Personal loan is another area which is growing rapidly. HDFC Bank is
quick enough in providing new products like car loans, personal loans, debit cards etc. The bank
is also engage in loan pricing in various innovative ways for building healthy customer
relationship.

Mergers & Acquisitions

There has been in recent months a renewed interest in mergers and acquisitions in the banking
sector in view of the growing openness of the Indian financial system. The focal point of interest
is about the size of the banking firm.

The undercurrent of thinking is that the larger the bank the higher its competitiveness and better
its prospects of survival. This argument implies that Indian banks are not in a position to
compete for business internationally — in terms of funds mobilization, credit disbursal,
investments and rendering of financial services — essentially because of their relatively small
size. It is said that the only Indian bank that could compete internationally would be the State
Bank of India, that too if consolidated with some mergers.

In this background, one needs to know the why mergers and their impact. But the decisions about
mergers would require that a view be taken of the optimal number of banks in the country in the
context of the opening up of the financial sector for foreign banks to acquire, and amalgamate
with banks in the foreign bank category as well as with Indian banks. Before dealing with these
issues, let us have a bit of contemporary history of mergers in India.

Mergers of banks took place in India in the 1960s under the direction of the Reserve Bank of
India. From 566 reporting commercial banks (of which non-scheduled banks were 474) at the
end of 1951, the number came down to 292 (of which 210 were non-scheduled) at end 1961, to
100 (27 non-scheduled) at the end of 1966; and to 85 (14 non-scheduled) by the end of 1969.

The number of bank offices increased sharply during this period: From 4151 in 1951 to 5012 in
1961, to 6593 in 1966 and to 9005 in 1969. The branch offices of scheduled commercial banks
increased over this period while those of non-scheduled commercial banks declined. Unviable
banks were weeded out, as recommended by the Travancore-Cochin Banking Inquiry
Commission (1956). This meant either closure or amalgamation with other, relatively strong
banks. This process was accelerated when two scheduled banks failed in 1960. The 1960 episode
was essentially an exercise for preserving banking stability.

Much of the general literature on mergers in banking relates to private banking. The complexities
involved in mergers of public sector banking are rarely discussed. In the early 1990s when the
then National Bank of India was merged with Punjab National Bank, problems of personnel
integration cropped up. After this experiment, public sector bank mergers were not
contemplated. On the other hand, there were private banks mergers since about the late 1990s for
diverse reasons including building up financial strength, capturing larger portion of the growing
retail business and securing better regional presence.

Mergers of ICICI Bank and Bank of Madura, as well as HDFC Bank and Times Bank are
important examples. These mergers, mooted by the merging banks in the first instance and
approved by the authorities, were not entirely for reasons of banking stability as such.

There were also mergers of private banks with public sector banks, the prominent among them
being the mergers of Benares State Bank with Bank of Baroda in 2002; Nedungadi Bank with
Punjab National Bank in 2003; and, more recently, Global Trust Bank with Oriental Bank of
Commerce. But these mergers were at the initiative of the authorities, undertaken for preserving
banking stability.

The merger of ICICI with ICICI Bank and the reverse merger of IDBI Bank with IDBI served
multiple objectives. First, the institutions were strengthened financially. Second, they helped to
avoid the complex processes of restructuring the weaker of the units and to foster financial
stability. Finally, they have opened the possibilities of actively promoting universal banking.

The above examples of mergers have been facilitated to a large extent by banking sector reforms
that helped relax some of the restrictions on asset portfolio distribution. Also, to an extent the
advances in information technology have given banks the incentive to consolidate to scale up
operations.

However, they are not meant, at least in the short term, to cut costs, improve efficiency or raise
profits. Implied is the argument that efficiency and profits would be assured once the economies
of scale operate.

On the other hand, mergers could lead to charging of higher fees for the services rendered,
especially if there is no `effective' competition or if smaller banks exhibit `herd behaviour' in
imitating the bigger entities. This negative aspect of mergers may not, however, be as serious as
when mergers lead to loss of availability of or access to credit or to lower employment,
especially of female labour.

Unfortunately, there is little of published empirical literature on the impact of mergers in banking
in India. The general literature on the subject views the impact from two angles: One based on
accounting data and the other based on stock price reaction. Till almost the mid-1990s, studies in
the US suggested that mergers based on former did not lead to significant gains either in
efficiency or cost-saving.

More recently, however, empirical data supported the view that banks significantly improve their
profit and operational efficiency following mergers. Studies that use stock market data did not
show gains from consolidation. They, in fact, suggested that bidders often suffer negative returns
partly because of high offer prices and partly because markets revise downward their
expectations from the merger.

In the present context of global financial market integration, Indian banks seeking international
presence by exploiting the economies of scale and if possible of scope is an appealing argument.

But this alone cannot be a good ground for consolidation. Banking stability is much more
important. What is also important is that it should not lower the number of banks to levels that
destroy competition. The proposition that banks would be `too large to fail' is passé as the 1990s
financial crises experience shows. The question about the optimal number of banks in the
country, and the associated issues of their capital adequacy and their capacity to help
universalisation of banking are matters to be yet settled.

There is no official view about the optimal number of banks in a country. The Banking
Commission recommended in 1972 that national banks be reorganized into two or three all-India
banks and six other entities, each specializing in developing services in a broad region.

This was not pursued. But there is need for intense research on the issue, before one takes a
judgmental view about the number of Indian banks that could have international presence and
could compete for international banking business. While such a view would obviously be based
on their financial strength, that by itself would not be enough.

Good internal governance mechanisms and transparency practices need to be also in place.
Besides the authorities should resist the temptation of taking a proactive stance in determining
which Indian bank should have international presence. Instead they should allow banks to grow
into international entities on their own internal dynamic impulses.

The issue however could become complex if foreign banks are allowed to buy out Indian banks.
The RBI has done well to be transparent by going in for public views on ownership and
governance. One only hopes that political considerations do not influence the final view on the
matter.

State Bank of India

Company Profile of SBI:

State Bank of India (SBI) is India's largest commercial bank. SBI has a vast domestic network of
over 9000 branches (approximately 14% of all bank branches) and commands one-fifth of
deposits and loans of all scheduled commercial banks in India.
The State Bank Group includes a network of eight banking subsidiaries and several non-banking
subsidiaries offering merchant banking services, fund management, factoring services, primary
dealership in government securities, credit cards and insurance.

The eight banking subsidiaries are:

• State Bank of Bikaner and Jaipur (SBBJ)

• State Bank of Hyderabad (SBH)
• State Bank of India (SBI)
• State Bank of Indore (SBIR)
• State Bank of Mysore (SBM)
• State Bank of Patiala (SBP)
• State Bank of Saurashtra (SBS)
• State Bank of Travancore (SBT)

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

Today, State Bank of India (SBI) has spread its arms around the world and has a network of
branches spanning all time zones. SBI's International Banking Group delivers the full range of
cross-border finance solutions through its four wings - the Domestic division, the Foreign
Offices division, the Foreign Department and the International Services division.

State Bank of India (SBI) (LSE: SBID) is the largest bank in India. If one measures by the
number of branch offices and employees, SBI is the largest bank in the world. Established in
1806 as Bank of Calcutta, it is the oldest commercial bank in the Indian subcontinent. SBI
provides various domestic, international and NRI products and services, through its vast network
in India and overseas. With an asset base of $126 billion and its reach, it is a regional banking
behemoth. The government nationalized the bank in 1955, with the Reserve Bank of India taking

a 60% ownership stake. In recent years the bank has focused on three priorities,
1), reducing its huge staff through Golden handshake schemes known as the Voluntary
Retirement Scheme, which saw many of its best and brightest defect to the private sector, 2),
computerizing its operations and 3), changing the attitude of its employees (through an ambitious
programme aptly named 'Parivartan' which means change) as a large number of employees are
very rude to customers.

Roots:
The State Bank of India traces its roots to the first decade of 19th century, when
the Bank of Calcutta, later renamed the Bank of Bengal, was established on 2 June 1806.

The government amalgamated Bank of Bengal and two other Presidency banks,
namely, the Bank of Bombay (incorporated on 15 April 1840) and the Bank of Madras on 27
January 1921, and named the reorganized banking entity the Imperial Bank of India. All these
Presidency banks had been incorporated as joint stock companies, and were the result of the
royal charters. The Imperial Bank of India continued as a joint stock company. Until the
establishment of a central bank in India the Imperial Bank and its early predecessors served as
India's central bank, at least in terms of issuing the currency. The State Bank of India Act 1955,
enacted by the Parliament of India, authorized the Reserve Bank of India, which is the central
banking organization of India, to acquire a controlling interest in the Imperial Bank of India,

which was renamed the State Bank of India on 30 April 1955.

Timeline:

June 2, 1806: The Bank of Calcutta established.

January 2, 1809: This became the Bank of Bengal.

April 15, 1840: Bank of Bombay established.

July 1, 1843: Bank of Madras established.

1861: Paper Currency Act passed.

January 27, 1921: All three banks amalgamated to form Imperial Bank of India.

July 1, 1955: State Bank of India formed; becomes the first Indian bank to be
nationalized.

1959: State Bank of India (Subsidiary Banks) Act passed, enabling the

State Bank of India to take over eight former State-associated banks as its
subsidiaries.

1980s: When Bank of Cochin in Kerala faced a financial crisis, the government

merged it with State Bank of India.

June 29, 2007: The Government of India today acquired the entire Reserve Bank of India (RBI)

shareholding in State Bank of India (SBI), consisting of over 314 million equity
shares at a total amount of over 355 billion rupees.

Associate Banks:

There are seven other associate banks that fall under SBI. They all use the "State Bank of" name
followed by the regional headquarters' name. These were originally banks belonging to princely

states before the government nationalized them in 1959. In tune with the first Five

Year Plan, emphasizing the development of rural India, the government integrated

these banks with the State Bank of India to expand its rural outreach. The State
Bank group refers to the seven associates and the parent bank. All the banks use the same logo of
a blue keyhole. Currently, the group is merging all the associate banks into SBI, which will
create a "mega bank", and one hopes, streamline operations and unlock value.

• State Bank of Bikaner & Jaipur

• State Bank of Hyderabad
• State Bank of Indore
• State Bank of Mysore
• State Bank of Patiala
• State Bank of Saurashtra
• State Bank of Travancore

Foreign Offices:

State Bank of India is present in 32 countries, where it has 84 offices serving the
international needs of the bank's foreign customers, and in some cases conducts retail operations.
The focus of these offices is India-related business.

Foreign Branches:

SBI has branches in these countries:

• Australia
• Bahrain
• Bangladesh
• Belgium
• Canada
• Dubai
 • France
• Germany
• Hong Kong
• Israel
• Japan
• People's Republic of China
• Republic of Maldives
• Singapore
• South Africa
• Sri Lanka
• Sultanate of Oman
• The Bahamas
• U.K.
• U.S.A

Subsidiaries and Joint Ventures:

In addition to the foreign branches above, SBI has these wholly owned subsidiaries and joint
ventures:

• Nepal State Bank Limited

• SBI Mauritius
• Indian Ocean International Bank (Mauritius)
• SBI Canada
• SBI California

Growth:

Mumbai, India.

State Bank of India has often acted as guarantor to the Indian Government, most
notably during Chandra Shekhar's tenure as Prime Minister of India. With more than 9400
branches and a further 4000+ associate bank branches, the SBI has extensive coverage.

Following its arch-rival ICICI Bank, State Bank of India has electronically
networked most of its metropolitan, urban and semi-urban branches under its Core Banking

System (CBS), with over 4500 branches being incorporated so far. The bank has

the largest ATM network in the country having more than 5600 ATMs. The State
Bank of India has had steady growth over its history, though the Harshad Mehta scam in 1992
marred its image. In recent years, the bank has sought to expand its overseas
operations by buying foreign banks. It is the only Indian bank to feature in the top 100 world
banks in the Fortune Global 500 rating and various other rankings. According to the Forbes 2000
listing it tops all Indian companies.

Fortune Global 500 Ranking – 2007:

SBI debuted in the Fortune Global 500[2] at 498 in 2006. In 2007 it moved up to 495. As per
fortune 500-2007 following are the data for SBI in $ million. Revenues 15,119.4. Profits 1,407.3.
Assets 187,547.1. Stockholders' Equity 9,786.2

Group companies:

• SBI Capital Markets Ltd

• SBI Mutual Fund (A Trust)
• SBI Factors and Commercial Services Ltd
• SBI DFHI Ltd
• SBI Cards and Payment Services Pvt Ltd
• SBI Life Insurance Co. Ltd - Bancassurance (Life Insurance)
• SBI Funds Management Pvt Ltd
• SBI Canada

IT Initiatives:

According to PM Network (December 2006, Vol. 20, No. 12), State Bank of India
launched a project in 2002 to network more than 14,000 domestic and 70 foreign offices and
branches. The first and the second phases of the project have already been completed and the
third phase is still in progress. As of December 2006, over 10,000 branches have been covered.
The new infrastructure serves as the bank's backbone, carrying all applications, such as the IP
telephone network, ATM network, Internet banking and internal e-mail. The new infrastructure

has enabled the bank to further grow its ATM network with plans to add another
3,000 by the end of 2007 raising the total number to 8,600. As of September 20, 2007 SBI has
7236 ATMs.

Corporate Details:

This site provides comprehensive information on State Bank of India or SBI Bank, the premier
Nationalized Indian Bank. State Bank of India is actively involved since 1973 in non-profit
activity called Community Services Banking.
State Bank of India is India's largest bank amongst all public and private sector banks operating
in India. State Bank of India owns and operates the following subsidiaries and Joint Ventures –

• State Bank Of India Credit Card

• State Bank Of India Online
• State Bank Of India USA
• State Bank Of India Services
• State Bank Of India Mutual Funds
• State Bank Of India Branch
• State Bank Of India NRI Account

Banking Subsidiaries:

• State Bank of Bikaner and Jaipur (SBBJ)

• State Bank of Hyderabad (SBH)
• State Bank of Indore (SBI)
• State Bank of Mysore (SBM)
• State Bank of Patiala (SBP)
• State Bank of Saurashtra (SBS)
• State Bank of Travancore (SBT)

Foreign Subsidiaries:

• State bank of India International (Mauritius) Ltd

• State Bank of India (California)
• State Bank of India (Canada)
• INMB Bank Ltd, Lagos

Non- banking Subsidiaries:

• SBI Capital Markets Ltd (SBICAP)

• SBI Funds Management Pvt Ltd (SBI FUNDS)
• SBI DFHI Ltd (SBI DFHI)
• SBI Factors and Commercial Services Pvt Ltd (SBI FACTORS)
• SBI Cards & Payments Services Pvt. Ltd. (SBICPSL)

Joint ventures:

• SBI Life Insurance Company Ltd (SBI LIFE).

Activities:

State Bank of India administrative structure is well equipped to oversee the large network of
branches in India and abroad. The State Bank of India 14 Local Head Offices and 57 Zonal
Offices are located at important cities spread throughout the country. State Bank of India has 52
foreign offices in 34 countries across the globe. The Corporate Accounts Group is a Strategic
Business Unit of the Bank set up exclusively to fulfill the specialized banking needs of top
corporate in the country.

The main activities are -

• Personal Banking.
• NRI Services.
• Agriculture.
• International.
• Corporate.
• SME.
• Domestic Treasury

State Bank of India offers the following services to its customers:

• Domestic Treasury.
• SBI Vishwa Yatra Foreign Travel Card.
• Broking Services
• Revised Service Charge.
• ATM Services.
• Internet Banking.
• E-Pay.
• E-Rail.
• RBIEFT.
• Safe Deposit Lockers.
• Gift Cheques.
• MICR Codes.
• Foreign Inward Remittances.

Moreover, State Bank of India has Colleges/Institutes/Training Centers that are the seats of
learning and research and development. It caters not only to the employees of State Bank of
India but also other banks/establishments in India and abroad.

Performance:

State Bank of India, the country’s largest lender, today reported a 68.11 per cent
rise in its consolidated net profit to Rs 2,758.53 crore during the first quarter of the
current financial year, thanks largely to the performance of its treasury.

The bank’s total income went up 39.52 per cent to Rs 33,132.70 crore during April-
June 2009, against Rs 23747.43 crore during the corresponding period last year. On
a standalone basis, SBI’s net profit went up 42.03 per cent to Rs 2,330.37 crore,
while total income was 29.86 per cent higher at Rs 21,041.51 crore.

While net interest income rose 4.30 per cent to Rs 5,025 crore, there was a 48.46
per cent rise in other income to Rs 3,568.75 crore during the first quarter of the
current financial year. The treasury operations generated pre-tax profit of Rs 4,075
crore during the quarter-ended June 2009, as against a loss of Rs 817 crore during
the corresponding period last year.

Exceeds Expectations:

(Rs crore) April-June % Change

2008 2009
Interest income 20224.08 24641.11 21.84
Other income 3523.35 8491.59 141.01
Total income 23747.43 33132.70 39.52
Interest paid 13509.96 17524.15 29.71
Total expenses 18578.47 28238.18 51.99
Operating profit 5168.96 4894.52 (5.31)
Non-tax provisions 2640.28 394.40 (85.06)
Net profit 1640.92 2758.53 68.11
Gross NPA 10827.81 15318.29 41.47
Net NPA 6298.44 8402.48 33.41
Gross NPA % of advances 2.42 2.79
Net NPA % of advances 1.42 1.55
NPA data is for SBI standalone Source: SBI

The bank’s net interest income was affected due to a rise in interest payments that went up 38.5
per cent due the deposit mobilization under the 1,000 day scheme, under which the bank was
paying 10.5 per cent interest in October. The scheme had resulted in a mop up of around Rs
1,000 crore on a daily basis for a few months.
The pressure was also seen on the net interest margin (NIM), which fell by 73 basis points over
the last 12 months to 2.30 per cent at the end of June 2009. Compared with the 2008-09, NIM, at
the end of the first quarter of the current financial year, the decrease was to the tune of 63 basis
points. SBI Chairman
O P Bhatt said he expected NIM to improve by four to six basis points during the second quarter
but it would still be below his comfort level of 3 per cent.
With operating expenses rising 51 per cent, thanks mainly due to higher provision (of Rs 767
crore) for wage revision and a higher pension liability (Rs 429 crore), SBI’s operating profit for
the quarter fell by 7.28 per cent to Rs 3,673.87 crore.
On non-tax provisions, there was a decline of nearly 89 per cent to Rs 172.73 crore as it reversed
provisions of Rs 1,200 crore on investment depreciation. During the first quarter of the last
financial year, SBI had provided Rs 1,656 crore partly due erosion in the value of its bond and
equity portfolio. In contrast during April-June 2009, bond yields were stable and the value of
equities went up, reflected in an increase of almost 50 per cent in the BSE Sensex.
The reversal of the provisions also masked the steep rise in provisions for bad debt, which went
up to Rs 1,234 crore, as against a write-back of Rs 247 crore on loan-loss provisions. The level
of gross non-performing assets went up over 41 per cent to Rs 15,318 crore. But compared with
the March-end level of Rs 15,589 crore, there was an improvement. SBI said it had restructured
loans to the tune of Rs 8,000 crore.
Organization:

State Bank of India is headed by Mr. Shri O. P. Bhatt, Chairman.

Company Profile of ICICI:

ICICI Bank is India's second-largest bank with total assets of Rs. 3,849.70 billion (US$ 82
billion) at September 30, 2008 and profit after tax Rs. 17.42 billion for the half year ended
September 30, 2008. The Bank has a network of about 1,400 branches and 4,530 ATMs in India
and presence in 18 countries. ICICI Bank offers a wide range of banking products and financial
services to corporate and retail customers through a variety of delivery channels and through its
specialized subsidiaries and affiliates in the areas of investment banking, life and non-life
insurance, venture capital and asset management. The Bank currently has subsidiaries in the
United Kingdom, Russia and Canada, branches in United States, Singapore, Bahrain, Hong
Kong, Sri Lanka, Qatar and Dubai International Finance Centre and representative offices in
United Arab Emirates, China, South Africa, Bangladesh, Thailand, Malaysia and Indonesia. Our
UK subsidiary has established branches in Belgium and Germany.

ICICI Bank's equity shares are listed in India on Bombay Stock Exchange and the National Stock
Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New
York Stock Exchange (NYSE).

History:

ICICI Bank was originally promoted in 1994 by ICICI Limited, an Indian financial institution,
and was its wholly-owned subsidiary. ICICI's shareholding in ICICI Bank was reduced to 46%
through a public offering of shares in India in fiscal 1998, an equity offering in the form of
ADRs listed on the NYSE in fiscal 2000, ICICI Bank's acquisition of Bank of Madura Limited in
an all-stock amalgamation in fiscal 2001, and secondary market sales by ICICI to institutional
investors in fiscal 2001 and fiscal 2002. ICICI was formed in 1955 at the initiative of the World
Bank, the Government of India and representatives of Indian industry. The principal objective
was to create a development financial institution for providing medium-term and long-term
project financing to Indian businesses. In the 1990s, ICICI transformed its business from a
development financial institution offering only project finance to a diversified financial services
group offering a wide variety of products and services, both directly and through a number of
subsidiaries and affiliates like ICICI Bank. In 1999, ICICI become the first Indian company and
the first bank or financial institution from non-Japan Asia to be listed on the NYSE.

After consideration of various corporate structuring alternatives in the context of the emerging
competitive scenario in the Indian banking industry, and the move towards universal banking,
the managements of ICICI and ICICI Bank formed the view that the merger of ICICI with ICICI
Bank would be the optimal strategic alternative for both entities, and would create the optimal
legal structure for the ICICI group's universal banking strategy. The merger would enhance value
for ICICI shareholders through the merged entity's access to low-cost deposits, greater
opportunities for earning fee-based income and the ability to participate in the payments system
and provide transaction-banking services. The merger would enhance value for ICICI Bank
shareholders through a large capital base and scale of operations, seamless access to ICICI's
strong corporate relationships built up over five decades, entry into new business segments,
higher market share in various business segments, particularly fee-based services, and access to
the vast talent pool of ICICI and its subsidiaries. In October 2001, the Boards of Directors of
ICICI and ICICI Bank approved the merger of ICICI and two of its wholly-owned retail finance
subsidiaries, ICICI Personal Financial Services Limited and ICICI Capital Services Limited,
with ICICI Bank. The merger was approved by shareholders of ICICI and ICICI Bank in January
2002, by the High Court of Gujarat at Ahmadabad in March 2002, and by the High Court of
Judicature at Mumbai and the Reserve Bank of India in April 2002. Consequent to the merger,
the ICICI group's financing and banking operations, both wholesale and retail, have been
integrated in a single entity.

ICICI Bank has formulated a Code of Business Conduct and Ethics for its directors and
employees.

ICICI Bank (BSE: ICICI) (formerly Industrial Credit and Investment Corporation of India) is
India's largest private sector bank in market capitalization and second largest overall in terms of
assets. Bank has total assets of about USD 100 billion (at the end of March 2008), a network of
over 1,399 branches, 22 regional offices and 49 regional processing centres, about 4,485 ATMs
(at the end of September 2008), and 24 million customers (at the end of July 2007). ICICI Bank
offers a wide range of banking products and financial services to corporate and retail customers
through a variety of delivery channels and specialised subsidiaries and affiliates in the areas of
investment banking, life and non-life insurance, venture capital and asset management. (These
data are dynamic.) ICICI Bank is also the largest issuer of credit cards in India. ICICI Bank has
got its equity shares listed on the stock exchanges at Kolkata and Vadodara, Mumbai and the
National Stock Exchange of India Limited, and its ADRs on the New York Stock Exchange
(NYSE).

The Bank is expanding in overseas markets and has the largest international balance sheet among
Indian banks. ICICI Bank now has wholly-owned subsidiaries, branches and representatives
offices in 18 countries, including an offshore unit in Mumbai. This includes wholly owned
subsidiaries in Canada, Russia and the UK, offshore banking units in Bahrain and Singapore, an
advisory branch in Dubai, branches in Belgium, Hong Kong and Sri Lanka, and representative
offices in Bangladesh, China, Malaysia, Indonesia, South Africa, Thailand, the United Arab
Emirates and USA. Overseas, the Bank is targeting the NRI (Non-Resident Indian) population in
particular.

Timeline:

1955: The Industrial Credit and Investment Corporation of India Limited (ICICI) was
incorporated at the initiative of World Bank, the Government of India and representatives of
Indian industry, with the objective of creating a development financial institution for providing
medium-term and long-term project financing to Indian businesses. Mr.A.Ramaswami Mudaliar
is elected as the first Chairman of ICICI Limited.
ICICI emerges as the major source of foreign currency loans to Indian industry. Besides funding
from World Bank and other multi-lateral agencies, ICICI was also among the first Indian
companies to raise funds from international markets.

1956: ICICI declared its first dividend, of 3.5%.

1958: Mr.G.L.Mehta appointed the second Chairman of ICICI Ltd.

1960: ICICI building at 163, Backbay Reclamation, inaugurated.

1961: The first West German loan of DM 5 million from Kredianstalt obtained.

1967: ICICI made its first debenture issue for Rs.6 crore, which was oversubscribed.

1969: The first two regional offices set up in Calcutta and Madras.

1972: ICICI becomes the second entity in India to set up merchant banking services.

Mr. H. T. Parekh appointed the third Chairman of ICICI.

1977: ICICI sponsored the formation of Housing Development Finance Corporation and
manages its first equity public issue.

1978: Mr. James Raj appointed the fourth Chairman of ICICI.

1979: Mr.Siddharth Mehta appointed the fifth Chairman of ICICI.

1982: ICICI became the first ever Indian borrower to raise European Currency Units.

ICICI commences leasing business.

1984: Mr. S. Nadkarni appointed the sixth Chairman of ICICI.

1985: Mr. N.Vaghul appointed the seventh Chairman and Managing Director of ICICI.

1986: ICICI became the first Indian institution to receive ADB Loans.

ICICI, along with UTI, set up Credit Rating Information Services of India Limited, India's first
professional credit rating agency.

ICICI promotes Shipping Credit and Investment Company of India Limited. The Corporation
made a public issue of Swiss Franc 75 million in Switzerland, the first public issue by any Indian
entity in the Swiss Capital Market.

1987: ICICI signed a loan agreement for Sterling Pound 10 million with Commonwealth
Development Corporation (CDC), the first loan by CDC for financing projects in India.

1988: Promoted TDICI - India's first venture capital company.

1993: ICICI Securities and Finance Company Limited in joint venture with J. P. Morgan set up.

ICICI Asset Management Company set up.

1994: ICICI Bank set up.

1996: ICICI Ltd became the first company in the Indian financial sector to raise GDR.

SCICI merged with ICICI Ltd.

Mr. K.V.Kamath appointed the Managing Director and CEO of ICICI Ltd

1997 : ICICI Ltd was the first intermediary to move away from a single prime rate structure to a
three-tier prime rates structure and introduced yield-curve-based pricing. The name "The
Industrial Credit and Investment Corporation of India Ltd" changed to "ICICI Ltd."

ICICI Ltd. announced the takeover of ITC Classic Finance.

1998: A new logo symbolizing the common corporate identity for the ICICI Group was
introduced.

ICICI announced takeover of Anagram Finance.

1999 : ICICI launched retail finance - car loans, home loans and loans for consumer durables.

ICICI becomes the first Indian company to get listed on the NYSE through an issue of American
Depositary Shares.

2000 : ICICI Bank became the first commercial bank from India to get its stock listed on the
NYSE.

ICICI Bank announces merger with Bank of Madura.

2001: The Boards of ICICI Ltd and ICICI Bank approved the merger of ICICI Ltd. with ICICI
Bank.

2002: ICICI Ltd merged with ICICI Bank Ltd to create India’s second-largest bank in terms of
assets. ICICI assigned higher than "Sovereign" rating by Moody’s.

ICICI Bank launched India’s first CDO (Collateralized Debt Obligation) Fund named Indian
Corporate Collateralized Debt Obligation Fund (ICCDO Fund). "E-Lobby", a self-service
banking centre and a first of its kind in India, is inaugurated in Pune.

ICICI Bank launched Private Banking. A 1,100-seat Call Centre for Customer Care by phone
and e-mail was set up in Hyderabad. ICICI Bank Home Shoppe, the first-ever permanent
aggregation and display of housing projects in the county, launched in Pune.

ATM-on-Wheels, India’s first mobile ATM, launched in Mumbai.

2003: The first Integrated Currency Management Centre launched in Pune.

ICICI Bank announced the setting up of its first-ever offshore branch in Singapore. The first
offshore banking unit (OBU) at SEEPZ Special Economic Zone, Mumbai, was launched.

ICICI Bank’s representative office inaugurated in Dubai.

Representative office set up in China. ICICI Bank’s UK subsidiary launched.

India’s first ever "Visa Mini Credit Card", a credit card 43% smaller in dimensions was
launched. A subsidiary of ICICI Bank was set up in Canada.

Temasek Holdings acquired 5.2% stake in ICICI Bank.

ICICI Bank became the market leader in retail credit in India.

2004: Max Money, a home loan product that offers the dual benefit of higher eligibility and
affordability to a customer, introduced.

Mobile banking service in India launched in association with Reliance Infocomm.

India’s first multi-branded credit card with HPCL and Airtel launched.

Kisan Loan Card and innovative, low-cost ATMs were launched in rural India.

ICICI Bank and CNBC TV 18 announced India’s first ever awards recognizing the achievements
of SMEs, a pioneering initiative to encourage the contribution of Small and Medium Enterprises
to the growth of the Indian economy.

ICICI Bank opened its 500th branch in India.

ICICI Bank introduced partnership model wherein ICICI Bank would forge an alliance with
existing micro finance institutions (MFIs). The MFI would undertake the promotional role of
identifying, training and promoting the micro-finance clients and ICICI Bank would finance the
clients directly on the recommendation of the MFI.

ICICI Bank introduced 8 to 8 Banking wherein all the branches of the Bank would remain open
from 8a.m. to 8 p.m. from Monday to Saturday.

ICICI Bank introduced the concept of floating rate for home loans in India.

2005: First rural branch and ATM launched in Uttar Pradesh at Delpandarwa, Hardoi.

"Free for Life" credit cards launched wherein annual fees of all ICICI Bank Credit Cards were
waived off.

ICICI Bank and Visa jointly launched mChq – a revolutionary credit card on the mobile phone.
Private Banking Masters 2005, a nationwide Golf tournament for high networth clients of the
Private Banking division launched. This event is the largest domestic invitation amateur golf
event conducted in India.

Becomes the first Indian company to make a simultaneous equity offering of $1.8 billion in
India, the United States and Japan.

Acquired IvestitsionnoKreditny Bank of Russia.

ICICI Bank became the largest bank in India in terms of its market capitalization.

ICICI Bank became the first private entity in India to offer a discount to retail investors for its
follow-up offer.

2006: ICICI Bank became the first Indian bank to issue hybrid Tier-1 perpetual debt in the
international markets.

ICICI Bank subsidiary set up in Russia.

Introduced a new product - ‘NRI smart save Deposits’ – a unique fixed deposit scheme for
nonresident Indians.

Representative offices opened in Thailand, Indonesia and Malaysia.

ICICI Bank became the largest retail player in the market to introduce a biometric enabled smart
card that allows banking transactions to be conducted on the field. A low-cost solution, this
became an effective delivery option for ICICI Bank’s micro-finance institution partners.

Financial counseling centre Disha launched. Disha provides free credit counseling, financial
planning and debt management services.

Bhoomi puja conducted for a regional hub in Hyderabad, Andhra Pradesh.

2007: ICICI Bank makes a USD 2 billion three-tranche international bond offering, which
becomes the largest bond offering by an Indian bank.

Sangli Bank was amalgamated with ICICI Bank.

ICICI Bank raised Rs 20,000 crore (approx $5 billion) from domestic and international markets
through a follow-on public offer.

ICICI Bank’s GBP 350 million international bond offering marked the inaugural deal in the
sterling market from an Indian issuer and also the largest deal in the sterling market from Asia.

Launched India’s first ever jewellery card in association with jewellery major Gitanjali Group.

ICICI Bank became the first bank in India to launch a premium credit card -- The Visa Signature
Credit Card.
The foundation stone for a regional hub in Gandhinagar, Gujarat was laid.

ICICI Bank introduced SME Toolkit, an online resource centre, to help small and medium
enterprises start, finance and grow their business.

ICICI Bank signed a multi-tranche dual currency US$ 1.5 billion syndication loan agreement in
Singapore.

ICICI Bank became the first private bank in India to offer both floating and fixed rate on car
loans, commercial vehicles loans, construction equipment loans and professional equipment
loans.

In a first-of-its-kind, nationwide initiative to attract bright graduate students to pursue careers in

banking, ICICI Bank launched the "Probationary Officer Programme".

Launched Bank@Home services for all savings and current account customers residing in India

ICICI Bank Eurasia LLC inaugurated its first branch at St Petersburg, Russia.

2008: ICICI Bank enters USA, launches its first branch in New York

ICICI Bank enters Germany, opens its first branch in Frankfurt

ICICI Bank launched iMobile, a breakthrough innovation in banking where practically all
Internet banking transactions can now be done easily on the mobile phone.

ICICI Bank concluded India's largest ever securitization transaction of a pool of retail loan assets
aggregating to Rs. 48.96 billion (equivalent of USD 1.21 billion) in a multi-tranche issue backed
by four different asset categories. It is also the largest deal in Asia (ex-Japan) in 2008 till date
and the second largest deal in Asia (ex-Japan and Australia) since the beginning of 2007.

ICICI Bank launches ICICIACTIVE-Banking Interactive Service - along with DISH TV, which
will allow viewers to see information about the Bank's products and services and contact details
on their DISH TV screens.

ICICI Bank and British Airways launch a co-branded credit card, designed to earn cardholders
accelerated reward points with every British Airways flight or by spending on everyday
purchases

Personal Banking:

• Deposits
• Loans
• Cards
• Investments
• Insurance
• Demat Services
 • Wealth management

NRI Banking:

• Money Transfer
• Bank Accounts
• Investments
• Property Solutions
• Insurance
• Loans

Business Banking:

• Corporate net banking

• Cash Management
• Trade services
• FXonline
• SME services
• Online taxes
• Custodial services

Performance:

ICICI Bank, the country’s second largest bank, has seen its net profit fall by around 35% during
the fourth quarter of 2008-09 to Rs 744 crore against Rs 1,150 crore in the corresponding period
last fiscal. With this, the bank is witnessing the sharpest decline in profit in over six years.
The bank’s total income for the reporting period went down by around 11% to Rs 9,203 crore
against Rs 10,391 crore earned in the corresponding period of fiscal 2007-08. However, ICICI
Bank board has declared a dividend of Rs 11 per share.
In view of rising bad loans, ICICI Bank has scaled down its unsecured lending and would focus
on enhancing the net interest income (NII), current and savings accounts (CASA) and fee-
income.
The bank expects a 5-10% loan growth in retail and corporate portfolios in the current fiscal
2008-09.
The bank’s provisioning for the fourth quarter of the fiscal 2008-09 rose by around 15% to Rs
1,085 crore, against Rs 947 crore in the same period last fiscal. As on March 31, 2009, the
bank’s NPA ratio was 1.96%.
The bank’s total loan book has share of 49% of retail, 37% of corporate, 10% rural and 4% of
SME.
For the financial year 2008-09, ICICI Bank’s profit after tax (PAT) plunged by around 11% to
Rs 3,758 crore, compared to Rs 4,158 crore earned in 2007-08.
The bank’s total income for the last financial year went down by marginally around 2% to Rs
38,696 crore, against Rs 39,599 crore in 2007-08. The net interest margin improved marginally
to 2.4% in 2008-09, against 2.2% in 2007-08. The total deposits of the bank were Rs 218,348
crore as on March 31, 2009 against Rs 244,431 crore deposits as on March 31, 2008.
The loan book of ICICI Bank also decreased to Rs 218,311 crore as on March 31, 2009 against
Rs 226,616 crore as on March 31, 2008. During the last fiscal, the bank restructured loans
aggregating to Rs 1,115 crore.
The bank’s capital adequacy ratio and CASA as on March 31, 2009 were 15.53% and 28.7%,
respectively.
Organization:

Chanda Kochhar has been appointed as non-executive chairperson of ICICI Life, ICICI General,
ICICI Prudential Asset Management Company, ICICI Securities, ICICI Bank UK PLC and
ICICI Bank Canada

Research Objective:

• To study whether the customers are satisfied with their services among ICICI bank and
SBI bank
• To know about the Customer preferences among ICICI and SBI bank
• To give Suggestions to improve the services

Review of Literature:

The banking sector in India has made remarkable progress since the economic reforms in 1991.
New private sector banks have brought the necessary competition into the industry and
spearheaded the changes towards higher utilization of technology, improved customer service
and innovative products. Customers are now becoming increasingly conscious of their rights and
are demanding more than ever before. The recent trends show that most banks are shifting from a
“product-centric model” to a “customer-centric model” as customer satisfaction has become one
of the major determinants of business growth. In this context, prioritization of preferences and
close monitoring of customer satisfaction have become essential for banks. Keeping these in
mind, an attempt has been made in this study to analyze the factors that are essential in
influencing the investment decision of the customers of the public sector banks. For this purpose,
Factor Analysis, which is the most appropriate multivariate technique, has been used to identify
the groups of determinants. Factor analysis identifies common dimensions of factors from the
observed variables that link together the seemingly unrelated variables and provides insight into
the underlying structure of the data. Secondly, this study also suggests some measures to
formulate marketing strategies to lure customers towards banks.

Key Words:

Mobile Banking:

Mobile banking (also known as M-Banking, mbanking, SMS Banking etc.) is a term used for
performing balance checks, account transactions, payments etc. via a mobile device such as a
mobile phone. Mobile banking today (2007) is most often performed via SMS or the Mobile
Internet but can also use special programs called clients downloaded to the mobile device.

Internet Banking:

Online banking (or Internet banking) allows customers to conduct financial transactions on a
secure website operated by their retail or virtual bank, credit union or building society.

Core Banking System:

Core Banking is a general term used to describe the services provided by a group of networked
bank branches. Bank Customers may access their funds and other simple transactions from any
of the member branch offices.

Atm:

An automated teller machine (ATM) is a computerized telecommunications device that provides

the customers of a financial institution with access to financial transactions in a public space
without the need for a human clerk or bank teller. On most modern ATMs, the customer is
identified by inserting a plastic ATM card with a magnetic stripe or a plastic smartcard with a
chip, that contains a unique card number and some security information, such as an expiration
date or CVC (CVV). Security is provided by the customer entering a personal identification
number (PIN).

Using an ATM, customers can access their bank accounts in order to make cash withdrawals (or
credit card cash advances) and check their account balances as well as purchasing mobile cell
phone prepaid credit. ATMs are known by various other names including automated banking
machine, money machine, bank machine, cash machine, hole-in-the-wall, cash point, Bancomat
(in various countries in Europe and Russia), Multibanco (after a registered trade mark, in
Portugal), and Any Time Money (in India).
 Research
Methodology
Sampling Design:

Target Population:

The target population in this research refers to the bank customers who are having an account in
SBI bank and ICICI bank due to the convenience in collecting the data. The respondents can be
any gender, any income level, any occupation and any education level.

Sampling Unit:

The sampling units are customers of ICICI bank and SBI bank.

Sampling Method:

For this research we use non-probability sampling. Zikmund (1997) stated that in non-probability
sampling, the probability of any particular member of the population being chosen is unknown.
The element in the population does not have any probability attached to their being chosen as
sample subjects.

Snow ball sampling will be applied in this research. Snow ball sampling is used to collect the
data from the customers. Snow ball sampling refers to the procedure that involves the selection
of additional respondents based on referrals of initial respondents.

Sample Size:

Sample size depends on the desired precision from the estimate. Precision is the size of the
estimating interval when the problem is one of estimating a population parameter. This research
selects 60 respondents as the sample size due to limited of time by asking them that they are
having an account in SBI bank and ICICI bank due to the convenience in collecting the data.
The respondents can be any gender, any income level, any occupation and any education level.

Sampling Plan:

The researcher is going to collect the data from the ATMS and also by visiting the bank.

Pilot Study:

A pilot study can refer to many types of experiments, but generally the goal of study is to
replicate the full scale experiment, but only on a smaller scale.
A pilot is often used to test the design of the full-scale experiment. The design can then be
adjusted in time. This can turn out to be valuable: should anything be missing in the pilot, it can
be added to the experiment and chances are that the full-scale (and more expensive) experiment
will not have to be re-done.
Validity:

The ability of a scale or a measuring instrument to measure what it is intended to measure can be
termed as the validity of the measurement. Validity can be measured through several methods
like face validity, content validity, criterion – related validity and construct validity. For this
comparative study the researcher has taken the face validity.

Face Validity:

Face validity refers to the collective agreement of the experts and researchers on the validity of
the measurement scale. The researcher has gave the questionnaire to the experts in banking field.

Research Methodology:

Sources of Data:

• The data is basically primary in nature.

• It was obtained from the customers.

Data Collection Method:

Our communication approach was basically structured questioning, that is personal interview
with the aid of printed questionnaires.

Data Analysis:
Appropriate statistical analysis will be adopted. The data will be tabulated and analyzed.

Limitations of the Study:

• The study is limited to a particular branch of SBI and ICICI bank.

• Since the time is less the researcher has taken a sample of 30 people and it will not reveal
the whole population of a country.
 Data Analysis
And Interpretation
Data Analysis and Interpretation:

The following information contains the data interpretation of the questionnaires. The
respondent’s responses for the questions have been interpreted and a finding has been made
based on the respondents responses.

Frequency Table for the Demographic Details of the SBI Respondent’s

Table: 1

Age of the Respondents

Frequency Percentage
25-35 yrs 12 38.7
36-45 yrs 5 16.1
46-55 yrs 5 16.1
Above 55 yrs 8 25.8
Total 30 100

Interpretation:

From the above table 38.7% respondents are belonging to the age category of 25yrs-35yrs. And
16.1% respondents are belonging to the category of 36yrs-45yrs and 46yrs-55yrs. And 25.8%
respondents are belonging to the category of above 55yrs.

Table: 2

Gender of the Respondents

Frequency Percentage
Female 15 48.4
Male 15 48.4
Total 30 100
Interpretation:

From the above table 48.4% respondents are belonging to the category of female. And the
remaining 48.4% respondents are belonging to the category of male.

Table: 3

Educational Qualification of the Respondents

Frequency Percentage
School 3 9.7
UG 9 29.0
PG 14 45.2
Professional Course 3 9.7
M.phil/PhD 1 3.2
Total 30 100

Interpretation:

From the above table 9.7% of respondents are belonging to the category of school and
professional course. And 29.0% of respondents are belonging to the category of UG. And 45.2%
of respondents are belonging to the category of PG. And 3.2% of respondents are belonging to
the category of M.phil/PhD.

Table:4

Occupation of the Respondent

 Frequency Percentage
Salaried Person 25 80.6
Professionals 1 3.2
Supervisor 1 3.2
Managerial 3 10.0
Total 30 100

Interpretation:

From the above table 80.6% of respondents are falling under the category of salaried person.
And 3.2% of respondents are falling under the category of professionals and supervisor. And
10% of respondents are belonging to the category of managerial.

Table: 5

Income level of the Respondents

Frequency Percentage
Rs.5,000-Rs.15,000 17 54.8
Rs.15,001-Rs.25,000 8 25.8
Rs.25,001-Rs.35,000 4 12.9
Above Rs.45,000 1 3.2
Total 30 100

Interpretation:

From the above table 54.8% of respondents are falling under the income range between Rs.5,
000-Rs.15, 000. And 25.8% are falling under the income range between Rs.15, 001-Rs.25, 000.
And 12.9% of respondents are falling under the income range between Rs.25, 001-Rs.35, 000.
And 3.2% of respondents are falling under the income range between Above Rs.45, 000.
Table: 6

Reasons to Choose the Service

Frequency Percentage
Efficient Customer Service 14 45.2

Time Saving 8 25.8

Transaction Cost 3 9.7
Technology 1 3.2
More ATMs 4 12.9
Total 30 100

Interpretation:

From the above table 45.2% of respondents are saying that the reason to choose SBI is they are
providing efficient customer service. And 25.8% of respondents are saying that the reason to
choose SBI is they are reducing our waiting time. And 9.7% of respondents are saying that the
reason to choose SBI is Transaction costs. And 3.2% of respondents are saying that the reason to
choose SBI is Technology. And 12.9% of respondents are saying that the reason to choose SBI is
they are provided more ATM facility.

Table: 7

Type of Service Prefer the Most

Frequency Percentage
ATM Service 19 61.3
Internet Banking 3 9.7
Mobile Banking 3 9.7
Core Banking System 5 16.1
Total 30 100

Interpretation:

From the above table 61.3% of respondents prefer the ATM service. And 9.7% of respondents
are preferred the internet banking and mobile banking. And 16.1% of respondents prefer the core
banking system.

Frequency Graph for the Demographic Details of the SBI Respondent’s

Graph: 1

Graph: 2
Graph: 3

Graph: 4

Graph: 5

Graph: 6

Graph: 7

Frequency Table for the Demographic Details of the ICICI Respondent’s

Table: 8

Age of the ICICI Respondents

Frequency Percentage

25-35 yrs 29 96.7

Above 55 yrs 1 3.3

Total 30 100
Interpretation:

From the above table 96.7% of respondents are falling under the age group of 25yrs-35yrs. And
3.3% of respondents are falling under the group of above 55yrs.

Table: 9

Gender of the ICICI Respondents

Frequency Percentage

Female 12 40

Male 18 60

Total 30 100

Interpretation:

From the above table 40% of respondents are belonging to the female category. And 60% of
respondents are belonging to the male category.

Table: 10

Education Level of ICICI Respondents

Frequency Percentage

UG 2 6.7

PG 21 70.0

Professional 6 20.0

M.Phil/Ph.D 1 3.3

Total 30 100
Interpretation:

From the above table 6.7% of respondents are belonging to the category of UG. And 70% of
respondents are belonging to the category of PG. And 20% of respondents are belonging to the
category of professionals. And 3.3% of respondents are belonging to the category of
M.Phil/Ph.D.

Table 3.11

Occupation of the ICICI Respondents

Frequency Percentage

Salaried Person 23 76.7

Businessman 3 10.0

Professionals 3 10.0

Managerial 1 3.3

Total 30 100

Interpretation:

From the above table 76.7% of respondents belong to the category of salaried person. And 10%
of respondents are belonging to the category of businessman and professionals. And 3.3% of
respondents are belonging to the category of managerial.

Table: 12

Income Level of the ICICI Respondents

Frequency Percentage
Rs.5,000-Rs.15,000 16 53.3
Rs.15,001-Rs.25,000
Rs.25,001-Rs.35,000
Rs.35,001-Rs.45,000
Above Rs.45,000
Total
2 6.7
9 30.0
2 6.7
1 3.3
30 100

Interpretation:

From the above table 53.3% of respondents are falling under the income level of Rs.5, 000-
Rs.15, 000. And 6.7% of respondents are falling under the income level of Rs.15, 001-Rs.25, 000
and Rs.35, 001-Rs.45, 000. And 30% of respondents are falling under the income level of Rs.25,
001-Rs.35, 000. And 3.3% of respondents are falling under the income level of above Rs.45,
000.

Table: 13

Reason for Choosing ICICI Services

Frequency Percentage
Efficient Customer Service 8 26.7
Efficient Complaints Handling 8 26.7
Time Saving 4 13.3
Transaction Costs 2 6.7
Technology 4 13.3
Reliable 4 13.3
Total 30 100

Interpretation:

From the above table 26.7% of respondents are saying that the reason to choose ICICI is they are
providing efficient customer service and efficient complaint handling. And 13.3% of respondents
are saying that the reason to choose ICICI is they are reducing our waiting time, technology and
reliable. And 6.7% of respondents are saying that the reason to choose ICICI is Transaction
costs.

Table: 14

Type of Services Prefer the Most

Frequency Percentage
ATM Service 13 43.3
Internet Banking 9 30.0
Mobile Banking 4 13.3
Core Banking System 4 13.3

Total 30 100

Interpretation:
From the above table 43.3% of respondents prefer the ATM service. And 30% of respondents are
preferred the internet banking. And 13.3% of respondents prefer the core banking system and
mobile banking.
Graph: 8

Graph: 9

Graph: 10

Graph: 11

Graph: 12

Graph: 13

Graph: 14

Conclusion:

• Since both the banks are competing equally with each other.
• But SBI bank is little bit below the line in customer complaints handling when compared
to ICICI bank.
 • The ICICI bank is little bit below the line in concentrating on female customers when to
SBI bank.

Findings:

• Sum Of the respondents to choose the SBI bank is because the bank is proving more
ATM facility to the customers.
• Many of the respondents are saying the reason to choose the services of the SBI bank is
because they are good in efficient customer service.
• The income level of the respondents who are having an account in SBI bank falling under
the income level of Rs. 5,000 – Rs.15.000.
• The age group of 25yrs – 35yrs respondents mostly is having an account in SBI bank.
• The both gender are equally having an account in SBI bank.
• Many of the respondents are not aware of the many services rendered by the SBI bank.
The few are deposit of cash in ATM, request for cheque book in ATM, end of the day
balance in mobile, etc.
• Sum Of the respondents to choose the ICICI bank is because the bank is more reliable to
the customers.
• Many of the respondents are saying the reason to choose the services of the ICICI bank is
because they are good in efficient customer service and efficient complaint handling.
• The income level of the respondents who are having an account in ICICI bank falling
under the income level of Rs. 5,000 - Rs.15.000.
• The age group of 25yrs - 35yrs respondents mostly is having an account in ICICI bank.
• The male gender is mostly having an account in ICICI bank.
• Many of the respondents are not aware of the many services rendered by the ICICI bank.
The few are deposit of cash in ATM, request for cheque book in ATM, end of the day
balance in mobile, etc.

Recommendation:

• Since many of the respondents are not aware of their key services. The bank has to take
some initiatives.
• The bank can post a list of services that they are rendered to the customers inside the
bank Premises.
• They can post demo of all these services in their bank website.
 • They can concentrate more on the respondents are falling under the age group 25yrs –
35yrs.
• The SBI bank can concentrate on customer complaints handling.
• The ICICI bank can concentrate on the female gender.
• The bank can also send a post to their customers by informing there services and how to
proceed with that and all details they can mention it in the post.

BIBLIOGRAPHY:

Research Methodology
Statistical Analysis – S.P. Gupta

Websites:

• www.rbi.com
• www.iba.org.in
• www.wikipedia.com
• www.googlesearchengine.com
Questionnaire

Personal details

1. Name:

2. Age: a) □ 25yrs- 35 yrs b) □ 36 yrs - 45yrs c) □ 46 – 55 yrs d) □ above 55 yrs

3. Gender: a) Male □ b) Female □

4. Educational Qualification: a) Illiterate □ b) School □ c) UG □ d) PG □

e) Professional Course □ f) Others □

5. Occupation: a) House wife □ b) Students □ c) Salaried person □

d) Business man □ e) Professionals □ f) Supervisor □

g) Managerial □ h) pensioner □

6. Income level:

a) Rs.5,000 – Rs.15,000 b) Rs.15,001-Rs.25,000

c) Rs.25,001- Rs.35,000 d) Rs.35,001-Rs.45,000

e) Above Rs. 45,000

7. In which bank do you have an account?

a) ICICI bank □ b) SBI bank □

8. What is the reason to choose the services of the bank?

a) Efficient customer service □ b) efficient complaints handling □

c) Time saving □ d) transaction costs □ e) technology

f) Others _________ pls specify

9. What type of services do you prefer the most?

a) ATM service b) Internet Banking c) Mobile Banking

d) Core banking system e) Others _____________ pls specify

Customer service questionnaire

Please use (/) mark to give your responses for the following questions

1=strongly disagree, 2= disagree, 3= neutral, 4= agree, 5= strongly agree

S.no 1 2 3 4 5
ATM Service
1 I am facing problems in withdrawing cash from ATM.
2 I am facing problems like insufficient cash in ATM.
3 ATM services are useful for me to deposit cash and cheques
4 ATM services are useful for me to request for cheque book
5 ATM services are useful for me to get the enquiry statement
 of my account.
Internet Banking
1 Internet banking helps me to transfer funds from the bank to
the personalized transactions
2 Internet banking saves me time for the banking transactions
3 Internet banking helps me in bill payments
4 Internet banking secures the money transactions
5 Internet banking helps in online trading
Mobile banking
1 Mobile banking is useful for me to know the end of day
account balance.
2 Mobile banking is useful for me to know the cheque details
3 Mobile banking is useful for me to know the Debit/credit
above certain limit in my account.
4 Mobile banking is useful for me to Stop inward/outward
cheques.
5 Mobile banking is useful for my bill payments
6 Mobile banking helps me to know about the debit/credit
details
7 Mobile banking provides me a support for ticketing,
recharging mobiles etc.
Core Banking system
1 Core banking system helps me to transfer funds from
different branches
2 Core banking system makes me convenient to know about
the deposit details
3 Core banking system helps me to protect my personal
information
4 Core banking system helps me for the ATM service
transactions
5 Core banking system helps me for the internet banking
transactions