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“A STUDY ON SAVINGS & INVESTMENT PATTERNS OF PEOPLE IN JAIPUR CITY”
Submitted in partial fulfillment of Master of Business Administration programme (2008-10) Of U.P. Technical University, Lucknow
Under the Supervision: Mr. Rahul Gupta
Submitted by: Shakeel Ahmad M.B.A. - IVth Semester Roll no. 0801570087
Invertis Institute of Management Studies Bareilly
TO WHOM IT MY CONCERN
This is to certify that Mr. SHAKEEL AHMAD student of MBA IVth Semester in our institute has successfully completed his Winter Project entitled “A STUDY ON
SAVINGS & INVESTMENT PATTERNS OF PEOPLE IN JAIPUR CITY” for the partial fulfillment of the Master
Degree. of Business Administration
Mr. Shaileswar Gosh MBA Co-ordinater I.I.M.S.
Mr. Rahul Gupta Project Guide I.I.M.S.
As part of this two year programmed leading to Masters Degrees in Business Administration from Invertis Institute of Management Studies, Bareilly, affiliated to UPTU (Utter Pradesh Technical University), Lucknow (U.P.) curriculum of which includes both theoretical orientation in specialized areas.
In fulfillment of this objective, I had observed the organization ICICI Bank Limited. I made a report on “A STUDY ON SAVINGS & INVESTMENT PATTERNS OF PEOPLE IN JAIPUR CITY”, a very analytical topic.
Our report would not be complete without acknowledging the contribution of certain special people who have made our internship a great learning experience. We express our deep gratitude and thanks to Mr. Shaileshwar Gosh MBA Co-ordinater I.I.M.S. for his constant guidance. We are also thankful to Mr. Rahul Gupta, Faculty Guide under whose supervision we were able to do our project as expected by organization. We have learnt a lot under his guidance. During our project we were able to learn a great deal of managerial lessons and principles of Sale & Marketing under his expert guidance and supervision. We are also thankful to all members of ICICI Bank Limited who helped us during our training period. SHAKEEL AHMAD MBA I.I.M.S. BAREILLY
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Executive Summary Indian Banking Industry Introduction Overview History An Analysis of Indian Banking Sector Facilities Offered by ICICI Bank Objective of Study Research Methodology A Study on Savings & Investment Patterns Of People in Jaipur City Findings Recommendations Suggestions Limitations Swot Analysis Conclusion Bibliography
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“The scaling of one peak gives an impetus to the mountaineer to conquer other higher peaks. It opens new doors, new vistas. It is the beginning of another long voyage on wide seas. It has given us wings; it is for us to fly to distant horizons.” It has been a good learning experience to do our project training in the well known & prestigious organization, ICICI BANK, as a part of MBA program. The study has been made an attempt to gain better understanding about the working of the bank and banking industry. The project “process mapping of HH segment of ICICI BANK ”& “Study of savings and investment pattern of people in Jaipur”:- Here we studied the savings and spending habit of people & also the how the various type of accounts are opened with icici bank. The main objective of the project was to enhance the efficiency of reporting system and study savings and investment behaviour of people in the city so that the organization can target those people who can be the potential customers for the bank but still untapped. On the whole it was a wonderful experience & a great learning opportunity. The complete project was an eye opener which no book taught us. There were times when we were disheartened & disappointed, but there were times when things went Right & made us feel proud. Success does not come at once; we have to start right from the scratch & struggle our way through all hardships with courage & determination & always remember, “No one climbs a mountain just by gazing at it, It is through commitment & action from the present, That makes it possible".
INDIAN BANKING INDUSTRY
The Indian Banking industry, which is governed by the Banking Regulation Act of India, 1949 can be broadly classified into two major categories, non-scheduled banks and scheduled banks. Scheduled banks comprise commercial banks and the co-operative banks. In terms of ownership, commercial banks can be further grouped into nationalized banks, the State Bank of India and its group banks, regional rural banks and private sector banks (the old/ new domestic and foreign). These banks have over 67,000 branches spread across the country. The first phase of financial reforms resulted in the nationalization of 14 major banks in 1969 and resulted in a shift from Class banking to Mass banking. This in turn resulted in a significant growth in the geographical coverage of banks. Every bank had to earmark a minimum percentage of their loan portfolio to sectors identified as “priority sectors”. The manufacturing sector also grew during the 1970s in protected environs and the banking sector was a critical source. The next wave of reforms saw the nationalization of 6 more commercial banks in 1980. Since then the number of scheduled commercial banks increased four-fold and the number of bank branches increased eight-fold. After the second phase of financial sector reforms and liberalization of the sector in the early nineties, the Public Sector Banks (PSB) s found it extremely difficult to compete with the new private sector banks and the foreign banks. The new private sector banks first made their appearance after the guidelines permitting them were issued in January 1993. Eight new private sector banks are presently in operation. These banks due to their late start have access to state-of-the-art technology, which in turn helps them to save on manpower costs and provide better services.
During the year 2000, the State Bank Of India (SBI) and its 7 associates accounted for a 25 percent share in deposits and 28.1 percent share in credit. The 20 nationalized banks accounted for 53.2 percent of the deposits and 47.5 percent of credit during the same period. The share of foreign banks (numbering 42), regional rural banks and other scheduled commercial banks accounted for 5.7 percent, 3.9 percent and 12.2 percent respectively in deposits and 8.41 percent, 3.14 percent and 12.85 percent respectively in credit during the year 2000.
Current Scenario: The industry is currently in a transition phase. On the one hand, the PSBs, which are the mainstay of the Indian Banking system are in the process of shedding their flab in terms of excessive manpower, excessive non Performing Assets (Npas) and excessive governmental equity, while on the other hand the private sector banks are consolidating themselves through mergers and acquisitions. PSBs, which currently account for more than 78 percent of total banking industry assets are saddled with NPAs (a mind-boggling Rs 830 billion in 2000), falling revenues from traditional sources, lack of modern technology and a massive workforce while the new private sector banks are forging ahead and rewriting the traditional banking business model by way of their sheer innovation and service. The PSBs are of course currently working out challenging strategies even as 20 percent of their massive employee strength has dwindled in the wake of the successful Voluntary Retirement Schemes (VRS) schemes. The private players however cannot match the PSB’s great reach, great size and access to low cost deposits. Therefore one of the means for them to combat the PSBs has been through the merger and acquisition (M& A) route. Over the last 9
two years, the industry has witnessed several such instances. For instance, Hdfc Bank’s merger with Times Bank Icici Bank’s acquisition of ITC Classic, Anagram Finance and Bank of Madura. Centurion Bank, Indusind Bank, Bank of Punjab, Vysya Bank are said to be on the lookout. The UTI bank- Global Trust Bank merger however opened a pandora’s box and brought about the realization that all was not well in the functioning of many of the private sector banks. Private sector Banks have pioneered internet banking, phone banking, anywhere banking, mobile banking, debit cards, Automatic Teller Machines (ATMs) and combined various other services and integrated them into the mainstream banking arena, while the PSBs are still grappling with disgruntled employees in the aftermath of successful VRS schemes. Also, following India’s commitment to the W To agreement in respect of the services sector, foreign banks, including both new and the existing ones, have been permitted to open up to 12 branches a year with effect from 1998-99 as against the earlier stipulation of 8 branches. Talks of government diluting their equity from 51 percent to 33 percent in November 2000 has also opened up a opportunity for the takeover of even the PSBs. The FDI rules being more rationalized in Q1FY02 may also pave the way for foreign banks taking the M& A route to acquire willing Indian partners. Meanwhile the economic and corporate sector slowdown has led to an increasing number of banks focusing on the retail segment. Many of them are also entering the new vistas of Insurance. Banks with their phenomenal reach and a regular interface with the retail investor are the best placed to enter into the insurance sector. Banks in India have been allowed to provide fee-based insurance services without risk participation, invest in an insurance company for providing infrastructure and services support and set up of a separate joint-venture insurance company with risk participation.
Aggregate Performance of the Banking Industry: Aggregate deposits of scheduled commercial banks increased at a compounded annual average growth rate (Cagr) of 17.8 percent during 1969-99, while bank credit expanded at a Cagr of 16.3 percent per annum. Banks’ investments in government and other approved securities recorded a Cagr of 18.8 percent per annum during the same period. In FY01 the economic slowdown resulted in a Gross Domestic Product (GDP) growth of only 6.0 percent as against the previous year’s 6.4 percent. The WPI Index (a measure of inflation) increased by 7.1 percent as against 3.3 percent in FY00. Similarly, money supply (M3) grew by around 16.2 percent as against 14.6 percent a year ago. The growth in aggregate deposits of the schedule commercial banks at 15.4 percent in FY01 percent was lower than that of 19.3 percent in the previous year, while the growth in credit by SCBs slowed down to 15.6 percent in FY01 against 23 percent a year ago. The industrial slowdown also affected the earnings of listed banks. The net profits of 20 listed banks dropped by 34.43 percent in the quarter ended March 2001. Net profits grew by 40.75 percent in the first quarter of 2000-2001, but dropped to 4.56 percent in the fourth quarter of 2000-2001.
On the Capital Adequacy Ratio (CAR) front while most banks managed to fulfill the norms, it was a feat achieved with its own share of difficulties. The CAR, which at present is 9.0 percent, is likely to be hiked to 12.0 percent by the year 2004 based on the Basle Committee recommendations. Any bank that wishes to grow its assets needs to also shore up its capital at the same time so that its capital as a percentage of the risk-weighted assets is maintained at the stipulated 11
rate. While the IPO route was a much-fancied one in the early ‘90s, the current scenario doesn’t look too attractive for bank majors. Consequently, banks have been forced to explore other avenues to shore up their capital base. While some are wooing foreign partners to add to the capital others are employing the M& A route. Many are also going in for right issues at prices considerably lower than the market prices to woo the investors. Interest Rate Scene: The two years, post the East Asian crises in 1997-98 saw a climb in the global interest rates. It was only in the later half of FY01 that the US Fed cut interest rates. India has however remained more or less insulated. The past 2 years in our country was characterized by a mounting intention of the Reserve Bank Of India (RBI) to steadily reduce interest rates resulting in a narrowing differential between global and domestic rates. The RBI has been affecting bank rate and CRR cuts at regular intervals to improve liquidity and reduce rates. The only exception was in July 2000 when the RBI increased the Cash Reserve Ratio (CRR) to stem the fall in the rupee against the dollar. The steady fall in the interest rates resulted in squeezed margins for the banks in general. Governmental Policy: After the first phase and second phase of financial reforms, in the 1980s commercial banks began to function in a highly regulated environment, with administered interest rate structure, quantitative restrictions on credit flows, high reserve requirements and reservation of a significant proportion of lendable resources for the priority and the government sectors. The restrictive regulatory norms led to the credit rationing for the private sector and the interest rate controls led to the unproductive use of credit and low levels of investment and growth. The resultant ‘financial 12 repression’ led to decline in
productivity and efficiency and erosion of profitability of the banking sector in general. This was when the need to develop a sound commercial banking system was felt. This was worked out mainly with the help of the recommendations of the Committee on the Financial System (Chairman: Shri M. Narasimham), 1991. The resultant financial sector reforms called for interest rate flexibility for banks, reduction in reserve requirements, and a number of structural measures. Interest rates have thus been steadily deregulated in the past few years with banks being free to fix their Prime Lending Rates(PLRs) and deposit rates for most banking products. Credit market reforms included introduction of new instruments of credit, changes in the credit delivery system and integration of functional roles of diverse players, such as, banks, financial institutions and non-banking financial companies (Nbfcs). Domestic Private Sector Banks were allowed to be set up, PSBs were allowed to access the markets to shore up their Cars. Implications Of Some Recent Policy Measures: The allowing of PSBs to shed manpower and dilution of equity are moves that will lend greater autonomy to the industry. In order to lend more depth to the capital markets the RBI had in November 2000 also changed the capital market exposure norms from 5 percent of bank’s incremental deposits of the previous year to 5 percent of the bank’s total domestic credit in the previous year. But this move did not have the desired effect, as in, while most banks kept away almost completely from the capital markets, a few private sector banks went overboard and exceeded limits and indulged in dubious stock market deals. The chances of seeing banks making a comeback to the stock markets are therefore quite unlikely in the near future.
The move to increase Foreign Direct Investment FDI limits to 49 percent from 20 percent during the first quarter of this fiscal came as a welcome announcement to foreign players wanting to get a foot hold in the Indian Markets by investing in willing Indian partners who are starved of net worth to meet CAR norms. Ceiling for FII investment in companies was also increased from 24.0 percent to 49.0 percent and have been included within the ambit of FDI investment. The abolishment of interest tax of 2.0 percent in budget 2001-02 will help banks pass on the benefit to the borrowers on new loans leading to reduced costs and easier lending rates. Banks will also benefit on the existing loans wherever the interest tax cost element has already been built into the terms of the loan. The reduction of interest rates on various small savings schemes from 11 percent to 9.5 percent in Budget 2001-02 was a much awaited move for the banking industry and in keeping with the reducing interest rate scenario; however the small investor is not very happy with the move. Some
of the not so good measures however like reducing the limit for tax deducted at source (TDS) on interest income from deposits to Rs 2,500 from the earlier level of Rs 10,000, in Budget 2001-02, had met with disapproval from the banking fraternity who feared that the move would prove counterproductive and lead to increased fragmentation of deposits, increased volumes and transaction costs. The limit was thankfully partially restored to Rs 5000 at the time of passing the Finance Bill in the Parliament. April 2001-Credit Policy Implications: The rationalization of export credit norms in will bestow greater operational flexibility on banks, and also reduce the borrowing costs for exporters. Thus this move could trigger exports growth in the future. Banks can also hope to earn 14
increased revenue with the interest paid by RBI on CRR balances being increased from 4.0 percent to 6.0 percent. The stock market scam brought out the unholy nexus between the Cooperative banks and stockbrokers. In order to usher in greater prudence in their operations, the RBI has barred Urban Cooperative Banks from financing the stock market operations and is also in the process of setting up of a new apex supervisory body for them. Meanwhile the foreign banks have a bone to pick with the RBI. The RBI had announced that forex loans are not to be calculated as a part of Tier-1 Capital for drawing up exposure limits to companies effective 1 April 2002. This will force foreign banks either to infuse fresh capital to maintain the capital adequacy ratio (CAR) or pare their asset base. Further, the RBI has also sought to keep foreign competition away from the nascent net banking segment in India by allowing only Indian banks with a local physical presence, to offer Internet banking Crystal Gazing On the macro economic front, GDP is expected to grow by 6.0 to 6.5 percent while the projected expansion in broad money (M3) for 2001-02 is about 14.5 percent. Credit and deposits are both expected to grow by 15-16 percent in FY02. India's foreign exchange reserves should reach US$50.0 billion in FY02 and the Indian rupee should hold steady. The interest rates are likely to remain stable this fiscal based on an expected downward trend in inflation rate, sluggish pace of non-oil imports and likelihood of declining global interest rates. The domestic banking industry is forecasted to witness a higher degree of mergers and acquisitions in the future. Banks are likely to opt for the universal banking approach with a stronger retail approach. Technology and superior customer service will continue to be the imperatives for success in this industry. Public Sector banks that imbibe new concepts in banking, turn tech savvy, leaner and meaner post VRS and obtain more autonomy by keeping governmental 15
stake to the minimum can succeed in effectively taking on the private sector banks by virtue of their sheer size. Weaker PSU banks are unlikely to survive in the long run. Consequently, they are likely to be either acquired by stronger players or will be forced to look out for other strategies to infuse greater capital and optimize their operations. Foreign banks are likely to succeed in their niche markets and be the innovators in terms of technology introduction in the domestic scenario. The outlook for the private sector banks indeed looks to be more promising vis-à-vis other banks. While their focused operations, lower but more productive employee force etc will stand them good, possible acquisitions of PSU banks will definitely give them the much needed scale of operations and access to lower cost of funds. These banks will continue to be the early technology adopters in the industry, thus increasing their efficiencies. Also, they have been amongst the first movers in the lucrative insurance segment. Already, banks such as Icici Bank and Hdfc Bank have forged alliances with Prudential Life and Standard Life respectively. This is one segment that is likely to witness a greater deal of action in the future. In the near term, the low interest rate scenario is likely to affect the spreads of majors. This is likely to result in a greater focus on better asset-liability management procedures. Consequently, only banks that strive hard to increase their share of fee-based revenues are likely to do better in the future.
INTRODUCTION TO ICICI BANK
ICICI Bank is India's second-largest bank. The Bank has a network of about 573 branches and extension counters and over 2,000 ATMs. ICICI Bank was originally promoted in 1994 by ICICI Limited, an Indian financial institution, and was its wholly-owned subsidiary. ICICI was formed in 1955 at the initiative of the World Bank, the Government of India and representatives of Indian industry. The 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. In 2001, ICICI bank acquired Bank of Madura Limited. ICICI Bank set up its international banking group in fiscal 2002 to cater to the cross border needs of clients and leverage on its domestic banking strengths to offer products internationally. ICICI Bank currently has subsidiaries in the United Kingdom, Canada and Russia, branches in Singapore and Bahrain and representative offices in the United States, China, United Arab Emirates, and Bangladesh and South Africa. Today, ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and 18
through its specialized subsidiaries and affiliates in the areas of investment banking, life and non-life insurance, venture capital and asset management.
ICICI Bank is India's second-largest bank with total assets of Rs. 3,446.58 billion (US$ 79 billion) at March 31, 2007 and profit after tax of Rs. 31.10 billion for fiscal 2007. ICICI Bank is the most valuable bank in India in terms of market capitalization and is ranked third amongst all the companies listed on the Indian stock exchanges in terms of free float market capitalization*. The Bank has a network of about 950 branches and 3,300 ATMs in India and presence in 17 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 Singapore, Bahrain, Hong Kong, Sri Lanka and Dubai International Finance Centre and representative offices in the United States, United Arab Emirates, China, South Africa, Bangladesh, Thailand, Malaysia and Indonesia. Our UK subsidiary has established a branch in Belgium.
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).
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 21
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.
AN ANALYSIS OF INDIAN BANKING SECTOR
An analysis of Indian Banking sector including Growth in advances and deposits, Market share, NPAs, CAR, Exposure norms, Retail Banking Initiatives and Major Players. The Reserve Bank of India (RBI), as the central bank of the country, closely monitors developments in the whole financial sector. The banking sector is dominated by Scheduled Commercial Banks (SCBs). As at end-March 2002, there were 296 Commercial banks operating in India. This included 27 Public Sector Banks (PSBs), 31 Private, 42 Foreign and 196 Regional Rural Banks. Also, there were 67 scheduled co-operative banks consisting of 51 scheduled urban co-operative banks and 16 scheduled state cooperative banks. Scheduled commercial banks touched, on the deposit front, a growth of 14% as against 18% registered in the previous year. And on advances, the growth was 14.5%against 17.3 % of the earlier year. State Bank of India is still the largest bank in India with the market share of 20%. Icici and its two subsidiaries merged with Icici Bank, leading creating the second largest bank in India with a balance sheet size of Rs1040bn.
Higher provisioning norms, tighter asset classification norms, dispensing with the concept of ‘past due’ for recognition of NPAs, lowering of ceiling on exposure to a single borrower and group exposure etc., are among the important measures in order to improve the banking Sector. A minimum stipulated Capital Adequacy Ratio (CAR) was introduced to strengthen the ability of banks to absorb losses and the ratio has subsequently
been raised from 8% to 9%. It is proposed to hike the CAR to 12% by 2004 based on the Basle Committee recommendations. Retail Banking is the new mantra in the banking sector. The home loans alone account for nearly two-third of the total retail portfolio of the bank. According to one estimate, the retail segment is expected to grow at 30-40% in the coming years. Net banking, phone banking, mobile banking, ATMs and bill payments are the new buzz words that banks are using to lure customers. With a view to provide an institutional mechanism for sharing of information on borrowers/ potential borrowers by banks and Financial Institutions, the Credit Information Bureau (India) Ltd. (Cibil) was set up in August 2000. The Bureau provides a framework for collecting, processing and sharing credit information on borrowers of credit institutions. SBI and Hdfc are the promoters of the Cibil. The RBI is now planning to transfer of its stakes in the SBI, NHB and National Bank for Agricultural and Rural Development to the private players. Also, the Government has sought to lower its holding in PSBs to a minimum of 33 per cent of total capital by allowing them to raise capital from the market. Banks are free to acquire shares, convertible debentures of corporates and units of equity-oriented mutual funds, subject to a ceiling of 5% of the total outstanding advances (including Commercial Paper) as on March 31 of the previous year. The finance ministry spelt out structure of the government-sponsored ARC called the Asset Reconstruction Company (India) Limited (Arcil), this pilot project of the ministry would pave way for smoother functioning of the credit market in the country. The Government will hold 49% stake and private players will hold the rest 51% - the majority being held by Icici Bank (24.5%). 24
FACILITIES OFFERED BY ICICI BANK
ICICI Bank offers wide variety of Deposit Products to suit your requirements. Coupled with convenience of networked branches/ ATMs and facility of Echannels like Internet and Mobile Banking, ICICI Bank brings banking at your doorstep. Select any of our deposit products and provide your details online and our representative will contact you for Account Opening. ICICI Bank offers its customer a power packed Savings Account with a host of convenient features and banking channels to transact through. So now one can bank at his convenience, without the stress of waiting in queues. Bank understand that as one reaches the age to retire, one has certain concerns whether his hard earned money is safe and secure … whether his investments gives him the kind of returns that he need. That's why ICICI Bank has an ideal Banking Service for those who are 60 years and above. The Senior Citizen Services from ICICI Bank has several advantages that are tailored to bring more convenience and enjoyment in your life. It's really important to help children learn the value of finances and money management at an early age. Banking is a serious business, but ICICI Bank make banking a pleasure and at the same time children learn how to manage their personal finances. Safety, Flexibility, Liquidity and Returns!!!! A combination of unbeatable features of the Fixed Deposit from ICICI Bank. When expenses are high, you may not have adequate funds to make big investments. But simply going ahead without saving for the future is not an option for you. ThroughICICI Bank Recurring Deposit you can invest small amounts of 25
money every month that ends up with a large saving on maturity. So you enjoy twin advantages- affordability and higher earnings. Easy receive account is a unique account that caters to the domestic banking needs while offering additional benefits for remittances received in the account. ICICI Bank offers a power packed Savings Account with a host of convenient features and banking channels to transact through. So one can now bank at own convenience, without the stress of waiting in queues.
PROCESS MAPPING OF HOUSEHOLD SEGMENT UNDER RETAIL LIABILITY GROUP OF ICICI BANK
CONTENTS: A: Hierarchy of HH segment B: Working of HH segment C: Reporting D: Products E: Findings F: Recommendations G: Suggestions
HIERARCHY OF HH SEGMENT
Regional Sales Manager Regional Head
Regional Head (Sales)
Area Sales Manager
Marketing Research Executives & Feet On Street
B: WORKING OF HH SEGMENT
Starting from the very base of the ladder. MRE’s &FOS’s.They generate leads through various activities under Lead Acquisition Programme. They go to public places such as malls, parks ,cinema halls ,markets, door to door, through canopies, at bank premises and ATM’s.They interact with people and explain them the facilities offered by ICICI Bank and convince them to open their savings account and fix their deposits with ICICI Bank. After convincing people they proceed with documentation work. Under documentation process they ask the customer to give their identity and address proofs, a photograph, a checque of any other bank of value Rs.10,000 or Rs.10,000 in cash. An instant kit is issued to the customer carrying an ATM-cumDebit Card, its password, net banking password and a checque book. After this the form goes through various steps and then the account is activated within a period of 4 to 7 working days. The various steps through which the form undergoes are as follows:
Account Opening Procedure:
BACK OFFICE ASM REGIONAL OFFICE REGIONAL PROCESSING CENTRE DOCUMENTATION VERIFICATION UNIT
RISK CONTROL UNIT MODIFICATION DEPARTMENT SCANNING ACCOUNT OPENING
The sales executive collects the filled form from the customer & sends it to the back office. There the ASM approves the form with his signature and then the form is sent to the Regional office. From here it is sent to the Regional Processing Centre. After this the form is sent for final verification at DVU i.e. Document Verification Unit. If every thing is found in order then the form is sent to the Modification Department and if in case of doubt it is sent to RCU i.e. Risk Control Unit.
At RCU the form is verified and if found any discrepancy the form is rejected and if every thing is found in order it is sent to Modification Department. From Modification Department the form is sent for scanning and then the account is activated within a period of 4 to 7 working days.
In HH Segment every one reports to their immediate bosses, MRE’s to SE’s, SE’s to ASM, ASM to RSM & so on. Sales Executive: Executives are the team leaders who have minimum 5 & maximum 10 MRE’s in their team & responsible for handling team & working. They allocate the work to MRE’s. Only SE’s are authorized to issue instant kits to the customers. The target assigned lies on the shoulders of SE’s which they achieve with their MRE’s. Area Sales Manager: Area Sales Manager is the head of all SE’s in their respected arias. Allocate the work & target to SE’s &they are responsible to manage the sales work of their area. Regional Sales Manager: Regional Sales Manager is the head of HH Segment of a region. He has the complete authority & responsibility of handling sales work of HH Segment in a particular region.
SAVINGS ACCOUNTS DEPOSITS
HHB YOUNG STAR ACCOUNT TAX SAVING FD’s NORMAL FD’s
HNI (HIGH NETWORK INDIVIDUALS) A/C’s Features: 1. Account is opened with an initial amount of Rs.5, 00,000. 2. It’s a non-maintenance account. 3. It’s a status account in which customer gets personnel banking facility. (The customer need not to wait in a queue for his work. The personnel banking staff attends the customer. ) 4. Customer is provided with at par checque book. 5. ATM card with a photo. 6. Gold debit card which is internationally valid. 7. If the customer is maintaining high balance in his account, he can withdraw foreign currency if he is abroad. 8. Withdrawal limit of one lakh Rs. Per day. 9. He can use any banks atm free of cost. 10. Locker facility with only 50% of fee. 11. Mobile identification. 33
12. No commission on foreign exchange. HH-1(GOLD PREVILAGE)A/C:Features: 1. Account is opened with an initial amount of Rs.1,00,000. 2. We can avail zero balance account for 1 year. 3. Customer is provided with at par checque book. 4. Gold ATM-cum-Debit card. 5. Withdrawal limit of Rs.50, 000. 6. Gold bank ID card. HH-2(SILVER PREVILAGE)A/C:Features:1. Account is opened with an initial amount of Rs.50,000. 2. We can avail zero balance account for 1 year. 3. Customer is provided with at par checque book. 4. Silver ATM-cum-Debit card. 5. Withdrawal limit of Rs.50,000. 6. Silver bank ID card.
HHB (HOUSE HOLD BLUE)A/C:This account can be availed by fixing deposits of minimum Rs.25,000 and a checque of Rs.2200 or Rs. 2200 in cash. This is a zero balance account and is valid only till period of fix deposit.
GAA05 (GENERAL ACCOUNT WITH AN AVERAGE OF 5,000):Features:1. Account is opened with an initial amount of Rs.10,000. 2. Customer is provided on spot with an instant kit. 3. Withdrawal limit is of Rs.35, 000. YOUNG STAR ACCOUNT:This account is opened for a minor child. This requires a checque of Rs.2500 of the guardian of the child, birth certificate issued by any hospital. The withdrawal limit is of Rs. 1000 per day.
E: FINDINGS 1. Each MRE is given a period of two months to understand the working and for these two months they are given a fix subsidy. 2. ICICI Bank have most active channel in whole banking sector in Jaipur territory. 3. The target set for each SE is sometimes difficult to achieve because it is not set in accordance with the number of team members. 4. Lack of information available with MRE’s which hampers the lead conversion rate. 5. Inadequate supervision and motivation by the bosses of MRE’s. 35
6. Breakdown in communication in the whole channel working for the HH segment. 7. Absence of impressive personality of MRE’s does hampers the bank image. 8. There are complaints by the people on unwanted calls form ICICI Bank, which irritate them and thus hamper the lead acquisition programmed.
Today it is not just the sales force or staff; it is the sales team working together to achieve those important goals of the company. Yes, goal setting is one of the secrets but many sales people needs to improve their skills in achieving set goals and objectives.
Communication gap between the channel of HH segment should be reduced so that the heads can personally motivate their subordinates and can solve their problems.
There should be equal number of MRE’s under each team. Recruitment of MRE’s should be revived at regular interval of time.
G: SUGGESTIONS:1. The bank can improve its lead acquisition programme by introducing an offer that if an existing customer brings in an account of any of the referent the existing customer will be benefited in the either ways:a. The incentive which is given to MRE’s will be credited in the customer’s account, OR
b. The depositing limit of out of state could be increased in respect to the account opening amount, OR
c. The facility of withdrawing from any other’s bank ATM without any charges could be given for a limited number of time. 2. MRE’s should be recruited after a proper interview & personality test.
3. Training to the MRE’s should be given on a real life situation basis so that they don’t face problems in field. 4. MRE’s should always meet the customer with a warm smile to impress them and not under any pressure of getting an account as the MRE’s of international banks do.
OBJECTIVES OF STUDY
Broad objective To find out the sales potential for HH segment of ICICI Bank in Jaipur city.
Specific objectives 1. To understand the working of Household segment. 2. To enhance the efficiency of reporting system of house hold segment. 3. To suggest appropriate strategies to bring accounts & FD’s for the bank which can boost up their sales. 4. To identify strength and weaknesses of ICICI Bank.
STUDY DESIGN The proposed research is a Survey, as it covered some part of the city, under which various classes (occupation, income & savings) of the people were discussed. Five areas of the city have been covered. SAMPLE SIZE 500 people AREAS COVERED Mansarovar, Shyam Nagar, Jawahar Nagar, M.I. Road, Raja Park.
DATA SOURCE Secondary Data: Data was collected through company’s website, Magazines and Internet. Sampling Technique: Convenient sampling which represented the population. Tools used: Percentage method Data representation through pie charts.
A STUDY ON SAVINGS & INVESTMENT PATTERNS OF PEOPLE IN JAIPUR CITY
The areas that form the part of the study were:SHYAM NAGAR MANSAROVAR JAWAHAR NAGAR RAJAPARK M.I. ROAD Under our survey we have tried to analyse the savings and investment patterns of people in these areas, which constituted the part of our study. We have studied the various income group people and their saving and investment behaviors. The benefit of our study will be that we will be able to find the people who could be the future customer of ICICI Bank as they fulfill the criteria account opening in the bank. Moreover we could analyse the opinion of people about ICICI Bank and their inclination towards their association with the brand ICICI. The tenure of our survey was of 15 days and during this period we came to know about the comments and commends of customers of ICICI and other people about the bank.
Some of the facts we came through, during our study are as follows:1. Occupational pattern of people in the Jaipur city
BUSINESS SERVICE HOUSEWIVES RETIRED PERSONNELS OTHERS
The above chart shows that the major population in the surveyed areas comprises of service class people followed by business class, housewives, retired personals, others (including students).
2. Monthly income in Rs. 000(approximate) of people in the city 43
0 to 5
5 to 10
10 to 20
20 to 50
50 and above
The chart clearly depicts that maximum number of people in the city earn between 10,000 to 20,000, followed by the income group of 5,000 to 10,000 , 0 to 5,000 , 20,000 to 50,000 and more than 50,000 of monthly income. These figures have been derived from the people who own accounts in any bank excluding the category others which do include students too.
3. Monthly savings in RS.000 (approximate) of people in the city 44
0 to 1.5 1.5 to 5 5 to 10 10 to 20
20 and above
From the chart we analyze that the majority of population saves between Rs.5, 000 to 10,000 monthly. The other categories follow as Rs. 1500 to 5,000, Rs. 0 to 1500, and Rs. 10,000 to 20,000 and finally Rs. 20,000 and above. This indicates that nearly 52% people have the status of maintaining a handsome amount in their account, so these people might be the customer or potential customers for the ICICI Bank.
4. The preferred mode of investment of the people in the city
FD's Share Market Own Business
11% 9.50% 18%
Mutual Funds Real Estate Commodity exchange
From the above chart one can easily analyse that maximum number of people preferred to invest in savings account, the second choice of the people is fixed deposits followed by investment in mutual funds, own business, real estate, share market and none chose to invest in the commodity exchange.
5. Market share of various banks under HH segment in Jaipur city
16% 31% 11%
SBI ICICI HDFC PNB
9.50% 8.50% 24%
Above diagram shows that SBI group is the market leader in HH segment reason being the oldest bank and have good customer base and its working is better than other government banks. It has core banking facility in every branch and providing largest number of branches and ATMs. Then it is followed by ICICI Bank, then comes other banks excluding above mentioned banks, then UTI, PNB and finally HDFC Bank.
6. The preferred bank of people in Jaipur city while fixing their deposits
SBI ICICI PNB UTI HDFC
3.50% 6% 9% 18.50%
In Jaipur city people prefer to fix their deposits in government bank like SBI, BOB, CO-OPERATIVE, SOCIETIES, and POST OFFICES because of their conception of security of their funds in government banks. In Jaipur SBI is leading the race, second stands ICICI because of its brand name and facilities followed by PNB, UTI, and HDFC.
7. The consideration of people while fixing deposits
interest rates 11.50% brand name schemes & offers
pvt. OR govt. bank
The above chart clearly represents that interest rate is the main criterion that the people in the city considers while fixing deposits. The next preferred criteria the schemes & offers that the bank provides followed by the criteria that whether the bank is the private or government. The last criterion which comes under the consideration of the people is the brand name of the bank.
8. The source of information about the schemes, new plans, policies offered by the bank.
45% new spaper bank premises personnel prom otion 2.50% 4% 6% 15% 27.50% television FM w ord of mouth
The newspaper is the major source of information for the people about the schemes, new plans, policies offered by the bank. The next source from where people derive the information is from the bank premises followed by the personnel promotions, televisions, FM and word of mouth.
1. Majority of people surveyed complained about the minimum balance they need to maintain in general account at ICICI Bank is high as compared to other banks. 2. The initial amount required for account opening is also high when compared with other banks. 3. Some of the people commented at the rush which they face at ICICI Bank. 4. Many people commended the unique facility of 8 to 8 banking offered by ICICI Bank. 5. People also appreciate the facility of ANYWHERE banking provided by ICICI Bank. 6. Second largest number of ATM’s in the Jaipur city. 7. No other bank other than ICICI bank has the provision of opening an account with cash. All banks require a checque of other bank for account opening. 8. “ICICI Bank does not has any provision for Students account”, it was a complaint of many students who were surveyed 9. ICICI Bank has more satisfied customer as compared to other banks in context of facilities offered by the banks in Jaipur city.
1. Make the criteria of minimum balance maintenance flexible if the bank has to increase the penetration in the market. 2. Ensure proper handling of rush in the bank because people complain about the bank that bank don’t have the counters in accordance to the rush. 3. Reduce the minimum account opening amount in comparison to other private bank which are providing same level of facilities. 4. Make your customer aware of the charges at the time of account opening because the later person blames the bank for the so called HIDDEN charges which spoils its brand name. 5. Make people aware about the cumulative interest policy on FD’s of ICICI bank.
No matter how much perfect a product or an institution can be but there is always a place for innovation and suggestions. Thus we have tried to suggest some ways by which ICICI bank can be benefited in occupying a central position in the minds of people in Jaipur city. Some of our suggestions are:-
1. ICICI bank can innovate its silver account by introduces an account with an account opening amount of Rs. 50,000 and minimum balance maintaining criteria of Rs. 10,000 to those customer who frequently withdraw money. There should be no withdrawal limit or increased limit, say Rs. 1, 00,000 per day. It will benefit the bank to tap those people who invest in share market, mutual funds, real estates. 2. Convert silver account in the above mentioned account because it diverts the mind of people from opening Gold account as all the facilities offered by Silver account are same as that of Gold account except the status. 3. Increase the number of branches and extension counters operating in the Jaipur city. 4. Introduce SUNDAY BANKING. 5. Introduce a provision for the students account as Jaipur is turning to an education hub. 6. The bank can introduce a scheme that if a customer fixes deposit of more than Rs. 5, 00,000 he will be given permanent general account. 7. The bank can contact those service class people whose company or employer are not providing salary account of ICICI Bank to open savings account. 8. Target the housewives for savings account ( It is so because business class people are more inclined towards current account and service class people towards salary account) by increasing advertisement on FM.
9. If any general account holder is doing good transaction in his account regularly then he should be provided with some extra facility or his account should be converted in any status account. 10. Increase the promotional activities by placing hoardings, LED’s
advertisement boards at traffic signals and public places. 11. Introduce an account for students with amount of Rs. 1,500 with minimum maintaining balance of Rs.1000 and do not provide them checque book, and provide the withdrawal facility of Rs. 5,000 per day from ATM.
LIMITATION OF THE STUDY
Every report has its own limitations, due to which degree of accuracy gets disturbed. Study done by us also barred these limitations; 1. Time was a great constraint due to which limited sample size could be surveyed. 2. People’s opinion sometime may be biased. 3. Few respondents did not understand the importance of the overall study and thereby provided vague and not well thought answers. Limitation on number of areas to be covered had to be made due to time limitations.
1. Excellent facilities, offers and schemes to its customers in comparison to its competitors. 2. Employees possess good communication skills. 3. In ICICI Bank the working process is faster than any other bank. 4. Only ICICI Bank provides the TOKEN facility, which facilitates the customers in the way, that they need not to stand in the queue to wait for their chance. 5. 8 to 8 banking facility a unique feature. 6. Anywhere banking facility. 7. Second largest number of ATM’s in Jaipur city after SBI Bank
WEAKNESSES:1. Lots of charges of which the customers are unaware. 2. No separate counter of cash deposits. 3. Less number of branches operating in the city. 61
1. Target housewives & ladies of high earning class running their beauty parlours and boutiques. 2. Nearly 55% people are having their approximately monthly income above Rs.10, 000 who can be targeted for opening savings accounts with ICICI Bank. 3. Target the students who can be potential customers as the students account could be converted into general account after the completion of their studies.
THREATS:1. Entrance of some international, MNC Banks such as DCB and YES Bank in Jaipur region. 2. Other private banks and some government bank s are also providing almost the same level of facilities with lower investment.
1. ICICI Bank is not only a bank, but it is a brand, which is the second player in Jaipur city. 2. Under the project entitled “ The study of HH segment under RLG of ICICI Bank” & “ The analysis of savings & investment patterns of people in Jaipur” 3. Segment we have studied that how a saving account is opened in ICICI Bank, its processes, loopholes and thus suggested the ways by which the bank can improve the working of HH segment. 4. Under the second heading we studied the savings and investment patterns of people in Jaipur city, through survey we got an idea of how many people fulfills the criteria of opening a saving account in the city and still are untapped. 5. We suggested various suggestions and recommendations by which the bank will be benefited 6. Strengthening the bonding between the bank and customers, & establishing new relationship with the potential customers.
7. We also analysed strength, weaknesses, opportunities, and threats for the bank, which will benefit bank to overcome its competitors and the to become the market leader.
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