JAIPURIA INSTITUTE OF MANAGEMENT

LUCKNOW

FINAL PROJECT REPORT ON Study of “Consumer Perception” regarding State Bank of India’s Housing Loan BY SHWETANK SETU (CFT08_140) STATE BANK OF INDIA (RACPC) Ahmedabad Summer Internship Project (Batch of 2008-10)

PROJECT TITLE Study of “Consumer Perception” regarding State Bank of India’s Housing Loan

A report submitted in partial fulfillment of the requirements of PGDM program

COMPANY GUIDE Mr.Ch Durga Prasad AGM, RACPC Ahmedabad State Bank of India SUBMITTED BY Shwetank Setu (CFT08_140) Jaipuria Institute of Management

Lucknow

Acknowledgements
If words are considered to be signs of gratitude then let these words convey the very same. My sincere gratitude to State Bank of India for providing me with an opportunity to work with State Bank of India and giving necessary directions on doing this project to the best of my abilities. I am highly indebted to Shri Ch. Durga Prasad, Assistant General Manager (RACPC) and company project guide, who has provided me with the necessary information and also for the support extended out to me in the completion of this report and his valuable suggestion and comments on bringing out this report in the best way possible. I am grateful to all faculty members of Jaipuria Institute of Management, Lucknow and my friends who have helped me in the successful completion of this project. I extend my heartfelt thanks to Mr. V.K Sinha, Assistant General Manager (SMECCC) SBI Ahmedabad, Mr. Deepak Kumar Sahay, Assistant Manager (RACPC), and Mr. Shripal J. Shah, Marketing Excutive (HLST), to help me during this project.

Introduction
Background
The State Bank of India is the oldest and largest bank in India, with more than $250 billion (USD) in assets. It is the second-largest bank in the world in number of branches; it opened its 10,000th branch in 2008. The bank has 84 international branches located in 32 countries and approximately 8,500 ATMs. Additionally, SBI has controlling or complete interest in a number of affiliate banks, resulting in the availability of banking services at more than 14,600 branches and nearly 10,000 ATMs. SBI traces its heritage to the 1806 formation of the Bank of Calcutta. The bank was renamed the Bank of Bengal in 1809 and operated as one of the three premier "presidency" banks (the presidency banks had the exclusive rights to manage and circulate currency and were provided capital to establish branch networks). In 1921, the government consolidated the three presidency banks into the Imperial Bank of India. The Imperial Bank of India continued until 1955, when India's central bank, the Reserve Bank of India, acquired the majority interest in the bank and changed its name to the State Bank of India (SBI).In 1959, the Indian government passed the State Bank of India Act, resulting in the acquisition (majority shareholding) of eight stateaffiliated banks and the creation of the State Bank of India Group (SBI Group). The SBI itself is now majority owned by the Indian government, which purchased the shares held by the Reserve Bank of India.

Evolution of SBI
The origin of the State Bank of India goes back to the first decade of the nineteenth century with the establishment of the Bank of Calcutta in Calcutta on 2 June 1806. Three years later the bank received its charter and was re-designed as the Bank of Bengal (2 January 1809). A unique institution, it was the first joint-stock bank of British India sponsored by the Government of Bengal. The Bank of Bombay (15 April 1840) and the Bank of Madras (1 July 1843) followed the Bank of Bengal. These three banks remained at the apex of modern banking in India till their amalgamation as the Imperial Bank of India on 27 January 1921. Primarily Anglo-Indian creations, the three presidency banks came into existence either as a result of the compulsions of imperial finance or by the felt needs of local European commerce and were not imposed from outside in an arbitrary manner to modernize India's economy. Their evolution was, however, shaped by ideas culled from similar developments in Europe and England, and was

influenced by changes occurring in the structure of both the local trading environment and those in the relations of the Indian economy to the economy of Europe and the global economic framework.

Establishment
The establishment of the Bank of Bengal marked the advent of limited liability, joint-stock banking in India. So was the associated innovation in banking, viz. the decision to allow the Bank of Bengal to issue notes, which would be accepted for payment of public revenues within a restricted geographical area. This right of note issue was very valuable not only for the Bank of Bengal but also its two siblings, the Banks of Bombay and Madras. It meant an accretion to the capital of the banks, a capital on which the proprietors did not have to pay any interest. The concept of deposit banking was also an innovation because the practice of accepting money for safekeeping (and in some cases, even investment on behalf of the clients) by the indigenous bankers had not spread as a general habit in most parts of India. But, for a long time, and especially up to the time that the three presidency banks had a right of note issue, bank notes and government balances made up the bulk of the ingestible resources of the banks. The three banks were governed by royal charters, which were revised from time to time. Each charter provided for a share capital, four-fifth of which were privately subscribed and the rest owned by the provincial government. The members of the board of directors, which managed the affairs of each bank, were mostly proprietary directors representing the large European managing agency houses in India. The rest were government nominees, invariably civil servants, one of whom was elected as the president of the board.

Business
The business of the banks was initially confined to discounting of bills of exchange or other negotiable private securities, keeping cash accounts and receiving deposits and issuing and circulating cash notes. Loans were restricted to Rs.One lakh and the period of accommodation confined to three months only. The security for such loans was public securities, commonly called Company's Paper, bullion, treasure, plate, jewels, or goods 'not of a perishable nature' and no interest could be charged beyond a rate of twelve per cent. Loans against goods like opium, indigo, salt woolens, cotton, cotton piece goods, mule twist and silk goods were also granted but such finance by way of cash credits gained momentum only from the third decade of the nineteenth century. All commodities, including tea, sugar and jute, which began to be financed later, were either pledged or hypothecated to the bank. Demand promissory notes were signed by

the borrower in favour of the guarantor, which was in turn endorsed to the bank. Lending against shares of the banks or on the mortgage of houses, land or other Real properties was, however, forbidden. Indians were the principal borrowers against deposit of Company's paper, while the business of discounts on private as well as salary bills was almost the exclusive monopoly of individuals Europeans and their partnership firms. But the main function of the three banks, as far as the government was concerned, was to help the latter raise loans from time to time and also provide a degree of stability to the prices of government securities.

RACPC (Retail Assets Central Processing Centre)
State Bank of India has separated its loaning division to the RACPC department it is called as the Business Process Reengineering process by the bank. The branches serve as the servicing capsule for the customers it is the place where the customers can get the details of the loan and various other servicing operations. The RACPC is the processing and the maintenance department for the retail loans. Retail loans are defined as the loans which are for the personal individual use and are availed on the basis of one’s income status in no way these loans can be used for the business purposes. As I was in the RACPC (Ahmedabad) which is located in Ambavadi’s administrative office of the State Bank of India, I observed the various processes in which the whole process is taken out. Briefly describing , the first customer interface is the Marketing division of the loans these people are there to convince as well as attract customers they provide the first hand information about the loan and the various requirements for pursuing that loan. Then there is the Sanctioning Department which verifies the potentiality of the customer to repay the loan, and the various documents are verified here. There is an advocate and an in house property valuator who assists these people in getting a clear view about the customer. If everything is found to be up to the requirements set by the Bank, the loan is sanctioned to the customer. A Sanction letter is issued, and then the process of getting all things notarized. After all the documents and legal formalities of the loan is complete a loan account is being opened and the margin money is transferred to that account. When all these process gets over the disbursement cheque is issued to the customer. And if the customer is having his/her salary account in a different bank post dated cheques are collected from the customers for the collection of the equated monthly installments (EMI). This is the whole process which is carried in order to avail a loan. The various products available at the RACPC are:-

• • • • • • •

SBI Housing Loan SBI Car Loan SBI Education Loan SBI Personal Loan Loan against mortgage of property Loan against Shares & Debentures SBI Loan for Pensioners

SBI Housing Loan
"THE MOST PREFERRED HOME LOAN PROVIDER" voted in AWAAZ Consumer Awards along with the MOST PREFERRED BANK AWARD in a survey conducted by TV 18 in association with AC Nielsen-ORG Marg in 21 cities across India. SBI HOME LOANS now offers Interest Rates concessions on GREEN HOMES in accordance with SBI's commitment to Environment protection. SBI Home Loans come to you on the solid foundation of trust and transparency built in the tradition of State Bank of India. Best Practices followed in SBI mentioned below will tell you why it makes sense to do business with State Bank of India Best practices followed in SBI People dealing with End to End service by Permanent employees of SBI who are you accountable to you. SBI branch of your choice will service your loan account. You Place can always meet our employees face to face. Complete transparency. Price Interest charged on the daily reducing balance. Prepayment No penalty for prepayments made, out of bonafide savings or charges windfall gains for which evidence is produced. Costs hidden in fine No hidden costs print Complete transparency. All the features of our product, Transparency including interest rates, are in the public domain.

Unique features

• • • • • • • • • • • • • • • • • •

Provision for on the spot "In principle" approval. Loan sanctioned within 6 days of submission of required documents. Option to avail Home Loan as a Term Loan or as an Overdraft facility to save on interest and maximise gains (see SBI MaxGain in the following sections) Option to club income of your spouse and children to compute eligible loan amount Provision to finance cost of furnishing and consumer durables as part of project cost Repayment permitted upto 70 years of age Free personal accident insurance cover upto Rs.40 Lac. Optional Group Insurance from SBI Life at concessional premium (Upfront premium financed as part of project cost) Interest calculated on daily reducing balance basis, and starts from the date of disbursement. ‘Plus’ schemes which offer attractive packages with concessional interest rates to Govt. Employees, Teachers, Employees in Public Sector Oil Companies. Special scheme to grant loans to finance Earnest Money Deposits to be paid to Urban Development Authority/ Housing Board, etc. in respect of allotment of sites/ house/ flat Option to avail loan at the place of employment or at the place of construction Complimentary international ATM-Debit card Complimentary SBI Classic/ International Credit Card Option for internet-banking Concessional package under ‘Credit Khazana’ for prospective Auto Loan, Student Loan, Personal Loan borrowers whose accounts are conducted satisfactorily 50% concession in charges in respect of all personal remittances/ collection of outstation cheques Personal loan at attractive rates under SBI Home Plus scheme tailored exclusively for SBI Home Loan customers

Purpose • • • • Purchase/ Construction of House/ Flat Purchase of a plot of land for construction of House Extension/ repair/ renovation/ alteration of an existing House/ Flat Purchase of Furnishings and Consumer Durables as a part of the project cost

Takeover of an existing loan from other Banks/ Housing Finance Companies.

Eligibility • • • Minimum age 18 years as on the date of sanction Maximum age limit for a Home Loan borrower is fixed at 70 years, i.e. the age by which the loan should be fully repaid. Availability of sufficient, regular and continuous source of income for servicing the loan repayment.

Loan Amount 40 to 60 times of NMI, depending on repayment capacity as % of NMI as under; Net Annual Income Upto Rs.2 lacs Above Rs.2 lac to Rs. 5 lacs Above Rs. 5 lacs To enhance loan EMI/NMI Ratio 40% 50% 55% eligibility you have option to add:

1. Income of your spouse/ your son/ daughter living with you, provided they have a steady income and his/ her salary account is maintained with SBI. 2. Expected rent accruals (less taxes, cess, etc.) if the house/ flat being purchased is proposed to be rented out. 3. Depreciation, subject to some conditions. 4. Regular income from all sources. Note: NMI – Net Monthly Income EMI – Equated Monthly Installment

Margin Purchase/ Construction of a new House/ Flat/ Plot of land: 20% for loans up to Rs.30 Lacs, 20% for loans above Rs.30 lacs and upto Rs.75 lacs. 25% for loans above Rs.75 lacs. (w.e.f. 01.01.2009). Processing Fee 0.50% of Loan amount with a cap of Rs.10,000/-(including Service Tax) Pre-closure Penalty No penalty if the loan is preclosed from own savings/windfall gains for which documentary evidence is produced by the customer. In case, such proof is not produced by the borrower, penalty @2% on the amount prepaid in excess of normal EMI dues shall be levied if the loan is pre-closed within 3 years from the date of commencement of repayment. Security Equitable mortgage of the property. Other tangible security of adequate value like NSCs, Life Insurance policies etc., if the property cannot be mortgaged. Maximum Repayment Period • • For applicants up to 45 years of age: 25 years For applicants over 45 years of age: 15 years

Moratorium Up to 18 months from the date of disbursement of first installment or 2 months after final disbursement in respect of loans for construction of new house/ flat (moratorium period will be included in the maximum repayment period)

Disbursement • • In lump sum direct in favour of the builder/ seller in respect of outright purchase In stages depending upon the actual progress of work in respect of construction of house/ flat etc.

Documents • • • • • • • • Completed application form Passport size photograph Proof of Identity – PAN Card/ Voters ID/ Passport/ Driving License Proof of Residence – Recent Telephone Bill/ Electricity Bill/ Property tax receipt/ Passport/ Voters ID Proof of business address in respect of businessmen/ industrialists Sale Deed, Agreement of Sale, Letter of Allotment, Non encumbrance certificate, Land/ Building Tax paid receipt etc. (as applicable and subject to satisfaction report from our empanelled lawyer) Copy of approved plan and approval from the Local Body Statement of Bank Account/ Pass Book for last 6 months

‘SBI-Flexi’ Home Loans
A customized product designed to enable borrowers to hedge their Home Loan against unfavorable movement in interest rates. The product gives you a one time irrevocable option to choose one of the three customized combinations of fixed and floating interest rates and also to choose the order in which the fixed and floating rate will be availed. Minimum Loan Amount: Rs.5 lacs (Other terms and conditions – as applicable to regular Home Loans).

‘SBI-Maxgain’ Home Loans
An innovative and customer-friendly product to enable you to earn optimal yield on your savings and minimize interest burden on Home Loans, with no extra cost. The loan is granted as an Overdraft facility with the added flexibility for you to operate your Home Loan Account like your SB or Current Account. The product serves to minimize your interest cost by enabling you to park your surplus funds in ‘SBI-Maxgain’ (with the benefit to withdraw the surplus funds whenever you require), specially in the wake of low yields from other deposit/ investment avenues. Minimum Loan Amount: Rs.5 lacs (Other terms and conditions – as applicable to regular Home Loans).

‘SBI-Realty’ Home Loans
A unique product if you are on the look out for a loan to purchase a plot of land for house construction. The loan is available for a maximum amount of Rs.1 crore* and with a comfortable repayment period of upto 25 years. You are also eligible to avail another Housing Loan for construction of house on the plot financed above with the benefit of running both the loans concurrently. (House construction should commence within 2 years from the date of availment of ‘SBI-Realty’ Housing Loan) (Other terms and conditions – as applicable to regular Home Loans) (* relaxation considered on case to case basis)

‘SBI-Freedom’ Home Loans
A revolutionary product designed for customers who are on the look out for a source of finance for a property they want to invest in without mortgaging the same. All you have to do is pledge any financial security that you have and you will get a Home Loan for your dream home. A must-take for those who do not want to pay stamp duty for mortgage of their property or go through the hassles of creation of mortgage. You also have an option to take the loan by way of mortgage of the property and pledge financial securities in lieu of margin money. Repayment is highly customized, giving you the option to repay through regular EMIs or through maturity proceeds of the securities pledged. (Other terms and conditions – as applicable to regular Home Loans).

‘SBI-Optima’ Additional Home Loans ‘SBI-Homeline’ Special Personal Loans
Innovative and value added products extended to existing Home loan borrowers with a satisfactory repayment record of 3 years and whose loan is Standard Asset, with a view to reinforce the customer loyalty and to maintain long term relationship with the borrowers. In case of take-over of Home Loans from other Banks/HFCs, the borrower should have fulfilled the above conditions with the present Bank/HFC.

Purpose ‘SBI-Optima’ Additional Home Loans ‘SBI-Homeline’ Special Personal Loans Eligibility ‘SBI-Optima’ Additional Home Loans

to meet expenditure towards major repair, renovation, addition to their house/flat, purchase of furniture, fixtures and consumer durables General purpose loan to meet expenditure to meet forseen/unforeseen contingencies

18 times NMI (for salaried borrowers)/ 1 ½ times NAI ( for others) or (i)25% of the original project cost of house/flat (ii) 85% of the cost of repairs etc. or (iii) gap between 85% of the current market price of flat/house and actual outstanding loan dues , whichever is lower (EMI/NMI ratio of all loans should not exceed 60%) 18 times NMI (for salaried borrowers)/ 1 ½ times NAI (for others)

‘SBI-Homeline’ Special Personal Loans

Interest Rates/processing fee ‘SBI-Optima’ Additional Home Loans ‘SBI-Homeline’ Special Personal Loans As applicable to Home Loans Interest rates 50 bps above rates applicable to the repayment tenure (floating rates only) Processing fee : 0.50% of the loan amount (including service tax) Other Salient Features Inbuilt provision for availment of the loans on the expiry of each bloc of 5 years, the first bloc commencing on the expiry of 5 years from the date of sanction of original Home Loan. Original Home Loan and all ‘SBI-Optima’ Home Loans/’SBI-HomeLine’ Personal Loans can run concurrently

Comfortable repayment obligations – Tenure of the loans equal to the residual maturity of the original Home Loans -

Credit Khazana
The "SBI Credit Khazana" Scheme offers Housing Loan customers, concessions in interest rates and margins when they subsequently avail of any of the following loans: Car Loan, Scoom, Education Loan, Personal Loan, Tractor Loan. Eligibility Housing Loan customers who have serviced the loan regularly for at least one year and where Equitable Mortgage has been created. Concession in Interest There will be a concession of 0.25% in interest when any of the above mentioned loans are availed. Concession in Margin There will be a concession of 10% in case of Car Loan and 5% in case of Tractor Loan. Under the SCOOM Scheme, the margin has been maintained at 5%. Security The security required to be taken under the individual schemes would be taken and additionally, the Equitable Mortgage taken for the Housing Loan would be extended to cover the new loan(s). Insurance Free accident insurance cover (to cover death only) is available in case of Car Loan. Other terms & Conditions: Other terms & conditions like Amount of Loan, Repayment, Documentation will be the same as those laid down for the individual schemes.

Project Report
Problem Statement
To study the consumer perception regarding the State Bank of India’s Housing Loan product.

Need and Scope of the Study
Customer satisfaction is one such element of the service industry which cannot be taken lightly by any organization. While initial days with the State Bank of India I found many customers who were approaching the marketing department people for the takeover of their existing loan. This fact led me to study the consumer perception regarding this SBI’s Housing Loan product, actually presently the rate of interest offered by SBI is comparatively lower than other private banks, so it can analyzed that is it only the rate of interest or other factors also involved in this transition. Further more this study will help the senior officers of the State Bank of India to look into the lacking and could implement the same.

Objective & Methodology
The objectives of the study are:• To study the penetration of the SBI product in and around Ahmedabad (Both Customers & Non-customers) • To study the awareness level of the customer regarding SBI housing loan • To study the level of satisfaction regarding SBI product

Limitations of the Study
The study report consists of few limitations: • The report has been conducted within a limited time frame. • The study is self financed. • Only selected Branches and Banks have been considered for the study. • Samples were selected conveniently. • For the convenient of study non probability samples have been used. • Amateur use of MS-Excel software for Data Analysis. • The sample size does not represent the total population.

Literature Review
Superior service quality is widely acknowledged as a driver of perceived value, which, in turn, will enhance customer loyalty (Parasuraman and Grewal, 2000) and improve the provider’s image, sales and profitability (Buzzell and Gale, 1987; Gummesson, 1993). Therefore, the notion of service quality has been examined in for the Housing Loan Product of the State Bank of India. Customer Satisfaction Customer satisfaction, a business term, is a measure of how products and services supplied by a company meet or surpass customer expectation. It is seen as a key performance indicator within business and is part of the four perspectives of a Balanced Scorecard. In a competitive marketplace where businesses compete for customers, customer satisfaction is seen as a key differentiator and increasingly has become a key element of business strategy. Measuring Customer Satisfaction Organizations are increasingly interested in retaining existing customers while targeting non-customers; measuring customer satisfaction provides an indication of how successful the organization is at providing products and/or services to the marketplace. Customer satisfaction is an ambiguous and abstract concept and the actual manifestation of the state of satisfaction will vary from person to person and product/service to product/service. The state of satisfaction depends on a number of both psychological and physical variables which correlate with satisfaction behaviors such as return and recommend rate. The level of satisfaction can also vary depending on other options the customer may have and other products against which the customer can compare the organization's products. Because satisfaction is basically a psychological state, care should be taken in the effort of quantitative measurement, although a large quantity of research in this area has recently been developed. Work done by Berry, Brodeur between 1990 and 1998 defined ten 'Quality Values' which influence satisfaction behavior, further expanded by Berry in 2002 and known as the ten domains of satisfaction. These ten domains of satisfaction include: Quality, Value, Timeliness, Efficiency, Ease of Access, Environment, Inter-departmental Teamwork, Front line Service Behaviors, Commitment to the Customer and Innovation. These factors are emphasized for continuous improvement and organizational change measurement and are most often utilized to develop the architecture for satisfaction measurement as an integrated model. Work done by Parasuraman, Zeithaml and Berry between 1985 and 1988 provides the basis for the measurement of customer satisfaction with a service by using the gap between the customer's expectation of performance and their perceived experience of

performance. This provides the measurer with a satisfaction "gap" which is objective and quantitative in nature. Work done by Cronin and Taylor propose the "confirmation/disconfirmation" theory of combining the "gap" described by Parasuraman, Zeithaml and Berry as two different measures (perception and expectation of performance) into a single measurement of performance according to expectation. According to Garbrand, customer satisfaction equals perception of performance divided by expectation of performance. The usual measures of customer satisfaction involve a survey with a set of statements using a Likert Technique or scale. The customer is asked to evaluate each statement and in term of their perception and expectation of the performance of the organization being measured. More than a decade ago, Parasuraman, Zeithaml and Berry (1988, 1991) conducted extensive studies in different industries and developed the SERVQUAL instrument: a 22-item scale with a set of service quality dimensions to quantify a customer’s assessment of a company’s service quality. Five key dimensions of service quality — reliability, responsiveness, assurance, empathy and tangibles — have been identified and form the foundation on which a lot of other studies on service quality have been built. SERVQUAL is widely recognized and used, and it is regarded as applicable to a number of industries, including the banking industry (Yavas, Bilgin, Shemuell, 1997). However, SERVQUAL has been subject to certain criticisms, including vagueness in the definition of expectations, its dubious applicability in some industries (Teas, 1993), the need for expectation measurement (Cronin and Tayer, 1992, 1994), and SERVQUAL’s dimensionality (Carman, 1990). Moreover, the traditional service quality dimensions cannot directly apply to Internet banking, because it represents a different and unique service delivery process. SERVQUAL The SERVQUAL instrument has been the predominant method used to measure consumers’ perceptions of service quality. It has five generic dimensions or factors that are stated as follows (van Iwaarden et al., 2003): (1) Tangibles: Physical facilities, equipment and appearance of personnel; (2) Reliability: Ability to perform the promised service dependably and accurately; (3) Responsiveness: Willingness to help customers and provide prompt service; (4) Assurance (including competence, courtesy, credibility and security): Knowledge and courtesy of employees and their ability to inspire trust and confidence;

(5) Empathy (including access, communication, understanding the customer): Caring and Individualized attention that the firm provides to its customers; Service quality has been shown to be a significant predictor of behavioral intentions, e.g. likelihood of recommending, repeat purchase, switching, and complaining (Bitner, 1990). Woodside, Frey and Daly (1989) found that there is a significant correlation between service quality and repurchase behavior in the health care industry. Findings from Dabholkar (1996) indicate that customers’ feelings correlate positively with the intention to use. In light of these findings, the present study investigates the relationship between service quality, customer satisfaction and future consumption behavior. SERVQUAL Findings Tangibles * Excellent banks (refer to cable TV companies, hospitals, or the appropriate service business throughout the questionnaire) will have modern-looking equipments. * The physical facilities at excellent banks will be visually appealing. * Employees at excellent banks will be neat in appearance. * Materials (e.g., brochures or statements) associated with the service will be visually appealing in an excellent bank. Reliability * When excellent banks promise to do something by a certain time, they will do so. * When customers have a problem, excellent banks show a sincere interest in solving it. * Excellent banks will perform the service right the first time. * Excellent banks will provide their services at the time they promise to do so. * Excellent banks insist on error free records. Responsiveness * Employees of excellent banks will tell customers exactly when service will be performed.

* Employees of excellent banks will give prompt service to customers. * Employees of excellent banks are always willing to help customers. * Employees of excellent banks are never too busy to respond to customer requests. Assurance * The behavior of employees of excellent banks will instill confidence in customers. * Customers of excellent banks will feel safe in their transactions. * Employees of excellent banks are consistently courteous with customers. * Employees of excellent banks are having the knowledge to answer customer questions. Empathy * Excellent banks will give customers individual attention. * Excellent banks will have operating hours convenient to all their customers. * Excellent banks will have employees who give customers personal attention. * Employees of excellent banks will understand the specific needs of their customers.

Research Design
Exploratory Design The survey research method will be the basic research design. The respondents will be classified into three types namely the SBI customer, Non SBI customer and the Managers. We will be conducting an experience survey in which we are going to have Expert Interview that will be conducted with the experts who are qualified and have good knowledge in the field and the interview will last around 30- 40 minutes. We will also be conducting a Non- disguised, qualitative analysis called In-depth Interview of the consumers that is expected to last between 15-20 minutes. By this we came to know about their perception regarding the procurement of the Housing Loan and after sales services.

Target Population

The target population was the people who avail Housing Loan from different banks. The research was conducted under a sampling frame of people living in and around Ahmedabad who were already availing the housing loan from different banks and specially State Bank of India.

Sampling Design
The sampling design adopted was convenience and quota of non probabilistic in which we got filled questionnaire from 56 respondents 50 were from State Bank of India’s customer and the rest 6 from the customer’s of other banks. So my sample size would be 56. Eligible respondents will be adults over the age of 18. The quota that we had taken was on the basis of the Net Monthly Income of the household and the Amount Sanctioned for the Loan dividing it equally on both the ranges.

Questionnaire Formulation
The scaling technique used in the questionnaire was the Non-Comparative Scaling technique. Under Itemized Rating we used the Likert Scale where we asked the questions for which the respondents would had to answer on the scale of 1to 5, 1 being strongly disagree and 5 being strongly agree, and also for the satisfaction level of the customers 1 being totally dissatisfied and 5 being totally satisfied.

Reliability
For the complete study, 62 responses were generated using the pilot tested questionnaire, but only 56 completely filled questionnaires were retrieved. The reliability of the completely filled questionnaires was tested using the correlation technique used by the OATBRAN and it came out to be 0.39.

Data Collection
For the complete survey respondents were chosen in such a way that the responses can be analyzed on each other. I chose respondents mainly from State Bank of India keeping in mind about the Quota of the Net Monthly Income of the house hold and the Loan amount to be sanctioned. I conducted a personal interview for the customers who visited the bank and the maximum number of my responses was taken on an interview over telephone. For the responses of the other bank’s customer I visited other banks and interviewed through laddering questions about not being a customer of the State Bank of India.

Classification and Tabulation of the Data
The raw data obtained from questionnaire must undergo preliminary preparation before it can be analyzed using statistical techniques. The quality of results obtained from statistical techniques and there subsequent integration depends to a greater degree on how well the data were prepared and converted into a form suitable for analysis. The data after collection has to be processed and analyzed in accordance with the outline laid down for the purpose at the time of developing the research plan. The processing operation includes: • • Editing: Editing of data is a process of examining the collected raw data to detect errors and commissions and to correct them whenever possible. Coding: The process of assigning numerals or other symbols to answers so that responses can be put into a limited number of categories in order to make the analysis strong and effective. Classification: The process of arranging data in groups or classes on the basis of common characteristics. Tabulation: Comprises sorting of data into different categories and counting the number of cases belonging to each category.

• •

Findings
Dimension-wise Analysis Tangibility: The data in Table-1 brings to light the perception of the State Bank of India with its respective customers on tangibles. The data reveals that the modern scenario of SBI is changing. These days the bank is concentrating on the ambience and other facilities which all make customers feel more friendly and find it a comfortable place. All the customers interviewed has on an average awarded 91.2% weight age to tangibles. Reliability: The analysis of reliability dimension of service quality shows an impressive figure. SBI (4.52) figure shows that the name of the bank is considered reliable to the customers. The customers rate State Bank of India 90.4% when it comes to reliability and it was obvious also as State Bank of India is one of the best bank and more over a government enterprise. Responsiveness: The data in Table-3 brings to light that responsiveness pattern of the customers of SBI is not as good as that of other bank’s customers. The

perpetual difference on said dimensions between SBI and other banks is wide (0.60). The element wise analysis of this dimension shows that SBI is falling below the perceptions of their customers on employees providing prompt services. Assurance: The perceptual difference between SBI and other banks customer is very low. The respondents of SBI have given appreciable rating the assurance dimension to the bank. The element wise analysis shows that SBI is exceeding the perceptions of their customers as far as trust worthiness and feeling safe in transacting with the bank is concerned. Empathy: The data analysis of Table-5 discloses the fact that banks such as SBI stand away from their customers regarding delivery of quality services. There exists a wide gap between the perceptions of banks such as SBI and their customers as is evident from the high mean difference (1.05). Table 1
S No. 1 SERVQUAL Dimension

Proper lighting, ambience and seating arrangements available Proper arrangements for heat, ventilation and air conditioning 2 made The bank along with loan provides additional facilities of 3 having a saving account, ATM, credit card facility Tangibility (1+2+3)
Maximum

Mean 4.6 4.6 4.5 13.7 15

Table 2
S No. 1 2 3 4 5 6 7 8 9 10 SERVQUAL Dimension

The name of the bank is reliable The loan is worth to avail The product (Housing Loan) is tested by users The bank is updating the web sites about the housing loan for the knowledge of the customers Proper ethic advertisements Briefed about all the various types of housing loan schemes How satisfied are you with how your telephone enquiries were dealt with The rate of interest which is charged is suitable How easy was it to find information on the Scheme How satisfied are you with the availability of the Complaint Register Reliability (1+2+3+4+5+6+7+8+9+10)
Maximum

Mean 4.6 4.4 4.4 3.9 4 4.2 4.1 3.7 3.7 3.7 40.7 45

Table 3
S No. 1 2 3 4 5 6 7 SERVQUAL Dimension

The feed back of the customer is taken care of The bank has taken a proper survey about the product Followed the policy of “Customer is King” The time taken for getting the loan is proper How satisfied are you with the ease of contacting the person you needed How satisfied are you with the time taken to respond to telephone enquiries How satisfied are you with the time taken to respond to written /postal enquiries Responsiveness (1+2+3+4+5+6+7)
Maximum

Mean 4.1 4.2 4.2 3.8 4.1 4.1 3.7 28.2 35

Table 4
S No. 1 2 3 4 5 6 7 8 9 10 11 12 13 SERVQUAL Dimension

The financial institutions (Bank) is legal Proper assistance in filling the form and other formalities The marketing executive is properly trained for the purpose to help the customers Properly welcomed by the employee The customer is treated in the same way after getting the loan sanctioned and disbursed Assistants have proper product knowledge You will recommend other people about this loan scheme Proper assistance is provided also after the loan is availed How satisfied are you with the clarity of information or advice provided How easy was it to understand and complete the application form How satisfied are you with the relevant knowledge of the staff you dealt directly with How satisfied are you with the way problems were resolved How satisfied are you with the speed in which the service/product was delivered Assurance (1+2+3+4+5+6+7+8+9+10+11+12+13)
Maximum

Mean 4.4 4.6 4.3 4.5 3.6 4.2 4.4 3.7 4 4.4 3.9 3.9 3.9 53.8 65

Table 5
S No. 1 2 3 4 5 6 7 SERVQUAL Dimension

You will be a loyal customer of this bank life time You feel that you are cheated and would like to shift to other bank How satisfied are you with the courtesy of the staff How satisfied are you with the help fullness of the staff How satisfied are you that the staff showed interest in you as an individual / treated you as a valued customer How satisfied are you with the way problems were resolved How satisfied are you with the general behavior of the staff members Empathy (1+2+3+4+5+6+7)
Maximum

Mean 4.5 4.5 4.3 4.2 4 4.2 4.2 29.9 35

State Bank of India
Factors Tangibles Reliability Responsiveness Assurance Empathy Aggregate Mean 4.56 4.52 4.03 4.13 4.27 4.30 STD. Deviation 0.03 0.32 0.17 0.31 1.05 0.38

4.6 4.5 4.4 4.3 4.2 4.1 4 3.9 3.8 3.7 Tangibles Reliability Responsiveness Mean Assurance Empathy

Other Banks
Factors Mean

Tangibles Reliability Responsiveness Assurance Empathy Aggregate

4.42 4.08 4.63 4.02 4.86 4.40

Aggregate Customer Satisfaction Level score of SBI (RACPC) Ahmedabad is 4.30 which indicate a good performance where good is considered in between 4.00 to 4.50. Moreover, SBI has established a strong position in terms of Tangibles & Reliability, indicating that customers of SBI are very much reliable on the services it provides. Overall the customers have expressed positive perception in terms of assurance, responsiveness, and empathy also.

Conclusion & Recommendations
The banking sector in India is undergoing major changes due to competition and the advent of technology. The customer is looking for better quality services which enhance his/her satisfaction. From the above analyses, it is evident that SBI has many positive features and the customers are mostly satisfied with the services offered. In spite of this fact, it has been observed that many customers are not aware of all sort facilities provided by SBI. Though this study can’t provide conclusive evidence to determine particular courses of action and further research will be required to provide conclusive evidence. But the management of SBI (Ahmedabad) should consider the findings and take all necessary steps for further research and if they think that the customers of SBI are homogeneous in their choice and preferences, they may consider the following recommendations to gain more customer base and achieve more customer satisfaction along with maintaining existing customers’ delights • • The Management of SBI should conduct more product & services awareness campaign. They should increase the level of providing personal attention to individual customers. In delivery of quality service in banks, what matter are speed, accuracy, promptness, reliability, individualized attention, etc. Better results can be

achieved through proper use of relevant banking technology. These are the areas where our banks are still lagging behind. Still as observed SBI is using a lot of paper files instead of computer files. • The SBI Management should critically evaluate the deviation in means in order to create balance in all dimensions of customer satisfaction measurement tools.

The customer satisfaction in terms of service quality is a relational marketing paradigm. The relationships are mostly viewed from the perspective of the firm providing services. For service firm in this case the banks, building strong relationship is important for improving customer satisfaction through service quality. Banks should continually assess and reassess how customers perceive bank services so as to know whether the bank meets or exceeds or is below the expectations of their customers. Such an appraisal, however, is a tedious task because customer service is complex in nature and dynamic in action. Moreover, it can vary greatly from one branch to another. Also, what is 'good service' today may become 'indifferent service' tomorrow and 'bad service' the next day. Frequent customer surveys, therefore, throw light on ratification and refinement which will go a long way to improve the service quality in banks.

Only for State Bank of India Responses
Income Group
Valid Valid <20000 Frequency 13 Percent 26.0 Percent 26.0 Cumulative Percent 26.0

20000 – 30000 30000 – 40000 40000 – 50000 Above 50000 Total

14 11 7 5 50

28.0 22.0 14.0 10.0 100.0

28.0 22.0 14.0 10.0 100.0

54.0 76.0 90.0 100.0

Age Group
Valid Valid Below 20 20 – 30 30 – 40 40 – 50 Above 50 Total Frequency 0 14 15 18 3 50 Percent 0 28.0 30.0 36.0 6.0 100.0 Percent 0 28.0 30.0 36.0 6.0 100.0 Cumulative Percent 0 28.0 58.0 94.0 100.0

Occupation
Valid Valid Govt. Ltd. Co Private Own Business Total Frequency 16 6 15 13 50 Percent 32.0 12.0 30.0 26.0 100.0 Percent 32.0 12.0 30.0 26.0 100.0 Cumulative Percent 32.0 44.0 74.0 100.0

Loan Sanctioned
Valid Valid <10 Lacks 10 – 20 Lacks 20 – 50 Lacks > 50 Lacks Total Frequency 32 12 6 0 50 Percent 64.0 24.0 12.0 0 100.0 Percent 64.0 24.0 12.0 0 100.0 Cumulative Percent 64.0 88.0 100.0 100.0

Educational Qualification

Valid Valid High School Intermediate Graduation PG & Above Total Frequency 3 7 30 10 50 Percent 6.0 14.0 60.0 20.0 100.0 Percent 6.0 14.0 60.0 20.0 100.0

Cumulative Percent 6.0 20.0 80.0 100.0

For State Bank of India
Sr No. 1. 2. 3. 4. 5. 6. Choice Criteria Trusted Bank Low Rate of Interest Word of Mouth Time Taken to avail loan Employee Attitude Transparent Transaction Yes 44 38 33 16 28 40 %age 88.0 76.0 66.0 32.0 56.0 80.0 No 6 12 17 34 22 10 %age 12.0 24.0 34.0 68.0 44.0 20.0 Total 50 / 100% 50 / 100% 50 / 100% 50 / 100% 50 / 100% 50 / 100%

For Other Banks
Sr No. 1. 2. 3. 4. 5. 6. Choice Criteria Trusted Bank Low Rate of Interest Word of Mouth Time Taken to avail loan Employee Attitude Transparent Transaction Yes 2 1 5 6 5 1 %age 33.33 16.67 83.33 100.0 83.33 16.67 No 4 5 1 0 1 5 %age 66.67 83.33 16.67 0 16.67 83.33 Total 6 / 100% 6 / 100% 6 / 100% 6 / 100% 6 / 100% 6 / 100%

Customer’s Feedback
Table 1 S No. SERVQUAL Dimension 1 Proper lighting, ambience and seating arrangements available Proper arrangements for heat, ventilation and air conditioning 2 made The bank along with loan provides additional facilities of 3 having a saving account, ATM, credit card facility Tangibility (1+2+3) Maximum Mean 4.6 4.6 4.5 13.7 15

Customer’s Feedback: The common customer’s feedback was that the ambience and other facilities of SBI have changed a lot, with the due passage of time. No problem with these facilities and one have to keep all these update to be in competition too.
Table 2 S No. SERVQUAL Dimension 1 The name of the bank is reliable 2 The loan is worth to avail 3 The product (Housing Loan) is tested by users The bank is updating the web sites about the housing loan for 4 the knowledge of the customers 5 Proper ethic advertisements 6 Briefed about all the various types of housing loan schemes How satisfied are you with how your telephone enquiries were 7 dealt with 8 The rate of interest which is charged is suitable 9 How easy was it to find information on the Scheme How satisfied are you with the availability of the Complaint 10 Register Reliability (1+2+3+4+5+6+7+8+9+10) Maximum Mean 4.6 4.4 4.4 3.9 4 4.2 4.1 3.7 3.7 3.7 40.7 45

Customer’s Feedback: About the reliability quotient almost all the customer’s gave a feedback that as SBI is a government body, and has been functioning for such a long time there is no question on its being reliable. Updating of websites (3.9) many of the customers were not accessing internet for the procedure of loans and all so many gave a Neutral feedback. When it is about the interest rate (3.7) no body wishes to pay that interest also and many were having a problem that when RBI reduces rates there is no automatic change in their existing interest rates. And when enquired also many officials were not able to clarify all the doubts. Finding information on scheme is easy but when some body personally assists and explains everything it becomes very easy to understand. About complaint register (3.7) many responses were that it is not visible as it should be in and around customer area only. Some told that there was an open feedback box so if one writes any thing bad the officials will tear it and no actions will be taken.

S No. 1 2 3 4

Table 3 SERVQUAL Dimension The feed back of the customer is taken care of The bank has taken a proper survey about the product Followed the policy of “Customer is King” The time taken for getting the loan is proper How satisfied are you with the ease of contacting the person 5 you needed How satisfied are you with the time taken to respond to 6 telephone enquiries How satisfied are you with the time taken to respond to written 7 /postal enquiries Responsiveness (1+2+3+4+5+6+7) Maximum

Mean 4.1 4.2 4.2 3.8 4.1 4.1 3.7 28.2 35

Customer’s Feedback: The responsiveness earned on average same marks. The time taken to avail the loan (3.8) was an issue the customers gave a response that taking long time is not an issue but give correct information about the time that has to be taken. Many employees are giving false information regarding the time. About postal enquires again many customers had never tried it so awarded it a neutral mark.
Table 4 S No. SERVQUAL Dimension 1 The financial institutions (Bank) is legal 2 Proper assistance in filling the form and other formalities The marketing executive is properly trained for the purpose to 3 help the customers 4 Properly welcomed by the employee The customer is treated in the same way after getting the loan 5 sanctioned and disbursed 6 Assistants have proper product knowledge 7 You will recommend other people about this loan scheme 8 Proper assistance is provided also after the loan is availed How satisfied are you with the clarity of information or advice 9 provided How easy was it to understand and complete the application 10 form How satisfied are you with the relevant knowledge of the staff 11 you dealt directly with 12 How satisfied are you with the way problems were resolved Mean 4.4 4.6 4.3 4.5 3.6 4.2 4.4 3.7 4 4.4 3.9 3.9

How satisfied are you with the speed in which the 13 service/product was delivered Assurance (1+2+3+4+5+6+7+8+9+10+11+12+13) Maximum

3.9 53.8 65

Customer’s Feedback: In this section the major problem is regarding the treatment of the customer after the loan has been availed (3.6) & (3.7). Most of the customers were complaining about the unavailability of the loan statement on time for the IT returns procedure. It is not the fault of RACPC but the branches are very bad in responding to these queries. This should be strictly taken care of, many customers suggested to charge some annual fee and to deliver the statement at home as other private banks are doing. About the knowledge of the staff a few customers were complaining that the bank officials on one go are not explaining all the requirements which causes wastage of time and money.

Table 5 S No. SERVQUAL Dimension 1 You will be a loyal customer of this bank life time You feel that you are cheated and would like to shift to other 2 bank 3 How satisfied are you with the courtesy of the staff 4 How satisfied are you with the help fullness of the staff How satisfied are you that the staff showed interest in you as 5 an individual / treated you as a valued customer 6 How satisfied are you with the way problems were resolved How satisfied are you with the general behavior of the staff 7 members Empathy (1+2+3+4+5+6+7) Maximum Customer Feedback:

Mean 4.5 4.5 4.3 4.2 4 4.2 4.2 29.9 35

When it is regarding the loyalty, being a word of mouth, and good traits of personality of the staff almost all of the customers awarded good marks to the survey of SBI.

Reference

SBI Group, Personal Segment Loan Products 6th Edition (December 2008), A brief History, available at www.sbi.co.in , www.statebankofindia.com Parasuraman, A., Zeithaml, V.A. and Berry, L.L. (1994), "Reassessment of expectations as a comparison standard in measuring service quality: implications for future research", Journal of Marketing, Vol. 58, pp. 111-124. Interrogating SERVQUAL: a critical assessment of service quality measurement in a high street retail bank, Karin Newman, Professor, Middlesex University Business School, London, UK East, R., 1997, Consumer Behavior: Advances and Applications in Marketing, London: Prentice--Hall. Levesque, T, and GHG McDougall, 1996, 'Determinants of Customer Satisfaction in Retail Banking,' International Journal of bank Marketing, Vol 14, No 7 pp 12-20 Anne M. Smith, "Measuring Service Quality: Is SERVQUAL Now Redundant?" Journal of Marketing Management (Jan/Feb/Aril 1955) pp 257-276

QUESTIONNAIRE
This questionnaire is designed only for an academic project survey; information being provided by you will be kept confidential and will be used only for the project purpose. Gender Age Marital Status Family Structure Monthly Income (Household) Loan Sanctioned  Male  Female  Below 20  20 – 30  30 – 40  40 – 50  Above 50 Single  Married Spouse working  Yes  No  Nuclear  Joint  <20000  20000 – 30000  30000 – 40000  40000 – 50000  Above 50000  < 10 Lacks  10 – 20 Lacks  20 – 50 Lacks  Above 50 Lacks Educational Qualification  High School  Intermediate  Graduation  PG & Above Service/Business  Govt.  Ltd Co  Private  Own Business 1. Please indicate your agreement with the following statements. 1=Totally disagree ---------3=Neutral --------- 5=Totally agree The name of the bank is reliable The loan is worth to avail The financial institutions (Bank) is legal The product (Housing Loan) is tested by users The bank is updating the web sites about the housing loan for the knowledge of the customers 1 1 1 1 1 1 2 2 2 2 2 2 3 3 3 3 3 3 4 4 4 4 4 4 5 5 5 5 5 5

The feed back of the customer is taken care of Proper assistance in filling the form and other formalities The marketing executive is properly trained for the purpose to help the customers Proper ethic advertisements The bank has taken a proper survey about the product Properly welcomed by the employee Followed the policy of “Customer is King” Briefed about all the various types of housing loan schemes Proper lighting, ambience and seating arrangements available Proper arrangements for heat, ventilation and air conditioning made The customer is treated in the same way after getting the loan sanctioned and disbursed Assistants have proper product knowledge The time taken for getting the loan is proper The rate of interest which is charged is suitable You will recommend other people about this loan scheme You will be a loyal customer of this bank life time The bank along with loan provides additional facilities of having a saving account, ATM, credit card facility Proper assistance is provided also after the loan is availed You feel that you are cheated and would like to shift to other bank 2. 3. How long you have been availing the loan  < 1 Year  1 – 5 Year  5 – 10 Year  > 10 Years

1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1

2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2

3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3

4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4

5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5

Indicate the level of satisfaction based on your expectations for the housing loan product 1=Totally Dissatisfied-------3=Neutral-------5=Totally Satisfied 1 2 3 4 How satisfied are you with the ease of contacting the person you 1 2 3 4 needed How satisfied are you with the clarity of information or advice 1 2 3 4 provided How satisfied are you with the time taken to respond to 1 2 3 4 telephone enquiries How satisfied are you with how your telephone enquiries were 1 2 3 4 dealt with How satisfied are you with the time taken to respond to written 1 2 3 4 /postal enquiries How easy was it to find information on the Scheme 1 2 3 4 How easy was it to understand and complete the application form 1 2 3 4 How satisfied are you with the relevant knowledge of the staff 1 2 3 4 you dealt directly with How satisfied are you with the courtesy of the staff 1 2 3 4 How satisfied are you with the help fullness of the staff 1 2 3 4 How satisfied are you that the staff showed interest in you as an 1 2 3 4 individual / treated you as a valued customer

5 5 5 5 5 5 5 5 5 5 5 5

How satisfied are you with the way problems were resolved How satisfied are you overall with the service you received How satisfied are you with the speed in which the service/product was delivered How satisfied are you with the availability of the Complaint Register How satisfied are you with the general behavior of the staff members

1 1 1 1 1

2 2 2 2 2

3 3 3 3 3

4 4 4 4 4

5 5 5 5 5

4.

Do you visited any other bank for housing loan before availing it from the bank you are availing right now?  Yes  No Mention your Bank _____________________________________________ If Yes Which bank/s  ICICI Bank  Syndicate Bank  United Bank of India  HDFC bank  Bank of Baroda  Union Bank of India  IDBI Bank  Punjab National Bank  Central Bank of India  State Bank of India  Others (Please Specify) ________________________________________

5.

Why you chose your particular Bank?  Trusted Bank  Low Rate of Interest  Time taken to avail loan  Employee attitude  Transparent transactions Rank the following products an the scale 1 – 10 1 – Best Facility 10 – Worst Facility Personal banking ATM facility Credit Card facility Car Loan Personal Loan Education Loan Housing Loan Mortgaged Loan Small Medium Enterprises Credit Insurance Products

 Word of mouth

6.

Thank You for your co-operation

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