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The business of banking around the globe is changing due to integration of global financial markets, development of new technologies, universalization of banking operations and diversification in non-banking activities. Due to all these movements, the boundaries that have kept various financial services separate from each other have vanished. The coming together of different financial services has provided synergies in operations and development of new concepts. One of these is bancassurance. Bancassurance simply means selling of insurance products by banks. In this arrangement, insurance companies and banks undergo a tie-up, thereby allowing banks to sell the insurance products to its customers. This is a system in which a bank has a corporate agency with one insurance company to sell its products. By selling insurance policies bank earns a revenue stream apart from interest. It is called as fee-based income. This income is purely risk free for the bank since the bank simply plays the role of an intermediary for sourcing business to the insurance company. It has its genesis decades ago in France, where this channel today is the predominant source of insurance business. It has grown at different places and taken shapes and forms in different countries depending upon demography, economic and legislative prescription in that country. In some countries, bancassurance is still largely prohibited, but it was recently legalized in countries such as the United States, when the Glass-Steagall Act was repealed after the passage of the Gramm-Leach-Bliley Act. Bancassurance is a new buzzword. It originated in India in the year 2000. Following the recommendations of First Narasimham Committee, the contemporary financial landscape has been reshaped. Thus, present-day banks have become far more diversified than ever before. Therefore, their entering into insurance business is only a natural corollary and is fully justified too as ‘insurance’ is another financial product required by the bank customers.
From the view point of insurance industry also the importance of bancassurance was felt necessary. With the increased pressures in combating competition, companies are forced to come up with innovative techniques to market their products and services. At this juncture, banking sector with it's far and wide reach, was thought of as a potential distribution channel, useful for the insurance companies. That’s where the bancassurance came into existence. Thus, bancassurance is poised to become a key determinator / differentiating factor in the Insurance industry as well. Given India’s size as a continent it has, however, a very low insurance penetration and low insurance density. The penetration level of life insurance in the Indian market is abysmally low at 2.3% of GDP with only 8% of the total population currently insured. As opposed to this, India has a well-entrenched wide branch network of banking system, which only few countries in the world could match with. It is predicted by experts also that in future 90% of share of premium will come from Bancassurance business only. And almost half of the population likely to be in the 'wage earner' bracket by 2010 that there is every reason to be optimistic that bancassurance in India will play a long inning. Currently there are more and more exchange of wedding rings between banks and Insurance Company for better business prospect in future. With the enoromous benefits for banks like increase in revenue, return on asset, customer retention, better reputation etc., the bancassurance is going to be a big revolution in the banking industry. It is against this backdrop an attempt is made to analyse the financial performance of the AXIS bank in bancassurance so far and to find out the areas where they can make use of and still need to focus in order to make AXIS bank to play a vital role in the bancassurance industry.
MEANING, DEFINITION AND CONCEPT
MEANING: Bancassurance is a combination of two words ‘Banc’ and ‘assurance’ signifying that both banking and insurance products and service are provided by one common corporate entity or by banking company with collaboration with any particular Insurance company. In concrete terms bancassurance, which is also known as Allfinanz describes a package of financial services that can fulfill both banking and insurance needs at the same time. It is the provision of insurance (assurance) products by a bank. The usage of the word picked up as banks and insurance companies merged and banks sought to provide insurance, especially in markets that have been liberalized recently. In its simplest form, Bancassurance is the distribution of insurance products through the Bank’s distribution network.. It is a phenomenon wherein insurance products are offered through the distribution channels of the banking services along with a complete range of banking and investment products and services. Bancassurance tries to exploit synergies between both the insurance companies and banks. DEFINITION: The term first appeared in France in 1980, to define the sale of insurance products through banks’distribution channels (SCOR 2003). The Life Insurance Marketing and Research Association’s (LIMRA’s) insurance dictionary defines bancassurance as “the provision of Life insurance services and building societies”. According to IRDA, ‘bancassurance’ refers to banks acting as corporate agents for insurers to distribute insurance products.” Literature on bancassurance does not differentiate if the bancassurance refers to selling of life insurance products or non-life insurance products.Accordingly, ‘bancassurance’ is defined to mean banks dealing in by banks
Other features. Bancassurance is a relatively new concept in the global stage. As the governments can no longer maintain the funding that people have begun to take a more active role in their future entitlements by looking at alternatives to pensions. However. such as legal. There are many definitions of bancassurance and.But in this research the focus is entirely concentrated towards life insurance. as the pioneer of bancassurance. It has reared its head in France in the late 1970’s. which is no longer satisfied by the traditional products offered 4 . the definition of a fully developed model that is most commonly used is: “'Manufacturing and distributing cost effectively banking and insurance products to a common customer base”. the evolution of bancassurance as a concept and its practical implementation in various parts of the world. But the term bancassurance came into existence in France after 1980 to define the sale of insurance through an intermediary bank. in essence it does depend upon the model used.motivated by among other things changing customer needs due to an inadequate pension scheme that existed at that time. many regard Barclay’s Life. have thrown up a number of opportunities and challenges. It is also important to clarify that the term bancassurance does not just refer specifically to distribution alone.However. Unlike banks and insurers which have been around in one form or another for centuries.insurance products of both life and non-life type in any forms. set up in 1965 in the UK as an insurance subsidiary of the eponymous bank. cultural and/or behavioural aspects also form an integral part of the concept of bancassurance (SCOR 2003). Bancassurance provides not only provides an alternative to pensions but also caters to the current taste of customers. CONCEPT: This concept gained importance in the growing global insurance industry and its search for new channels of distribution. and the stage of development. From a purely historical perspective. The concept of bancassurance was emerged in the western world when banks began to get involved in marketing of insurance business. fiscal. bancassurance has only been around for a few decades.
With the success of bancassurance model in Europe. RELEVANCE OF BANCASSURANCE IN THE INDIAN FINANCIAL SECTOR i)) Integration of the financial service industry in terms of banking. securities business and insurance is a growing worldwide phenomenon. Hardly 20 % of the United states banks are selling insurance products as only recently the Glass steagell act was repealed which has prohibited the banks from entering into the financial services. Thus lackluster pension schemes. which was only a European phenomenon. increasing importance of strategic alliance has all led to the growth of bancassurance in Europe. 5 . Almost 100% of the banks in France are selling insurance products.by the insurers. In Portugal and Spain it was over 70%. ii) Banks are the key pillars of India’s financial system. the bancassurance. It is claimed that the 55% to 60% of the life insurance business in France had come through banks.K it is about 30%. In Argentina. The Universal Banking concept is evolving on these lines in India. Colombia and Mexico also the bancassurance is becoming popular. In Middle East. In U. Brazil. the need for one stop shop delivery for all financial services among the consumers. As bancassurance allowed the banks to move away from income generated by the interest spreads it is viewed as a solution to alleviate the problem of poor consumer savings. squeezed margins. Public have immense faith in banks. Taiwan and Hong Kong have surged ahead in Bancassurance then that with India and China taking tentative step forward towards it. is becoming popular in other continents also Bancassurance seems to have made the greatest impact in France. squeezed margins. poor consumer savings. Chile. only Saudi Arabia has made some feeble attempts that even failed to really take off or make any change in the system. In Asia: Singapore.
Insurance distribution can also help the bank to increase the fee-based earnings to a large extent. This helps to popularize insurance as an important financial protection product.Share of ‘individuals’ as a category in bank accounts is steadily increasing.There are 32600 branches in rural India (about 50% of total). Banks’ entry in distribution can help to enlarge the insurance customer base rapidly. Acquisition cost of insurance customer through bank is low. helps to meet client expectations. Competition in the Personal Financial Services area is getting `hot’ in India that Banks can retain customer loyalty by offering them a vastly expanded and more sophisticated range of products. This is vitally important to bring higher motivation levels in banks in India. ix) Banks can put their energies into the small-commission customers’ that insurance agents would tend to avoid. v) Banks enjoy considerable goodwill and access in the rural regions. where insurance growth has been most buoyant. viii) Fee-based selling helps to enhance the levels of staff productivity in banks.iii) Share of bank deposits in the total financial assets of households has been steadily rising.000 people. vi) Banks have enormous retail customer base. iv) Indian Banks have immense reach to households.Rural and semi urban bank accounts constitiute close to 60% in terms of number of accounts.indicating the number of potential lives that could be covered by insurance with the upfront involvement of banks. 6 . Selling insurance to existing mass market banking customers is far less expensive than selling to a group of unknown customers.196 exclusive Regional Rural Banks in deep hinterland. x) Bancassurance helps to lower the distribution costs of insurers. each branch serving an average of 15. vii) Banks world over have realized that offering value-added services such as insurance. and 14400 semi-urban branches. Total of 65700 branches of commercial banks.
Financial benefits to a bank performance can flow in a number of ways. as they are Opportunity to increase the productivity of staff. This benefit could go to the insured public by way of lower premiums. REASONS FOR BANKS TO ENTER INTO BANCASSURANCE The main reasons why banks have decided to enter the insurance industry area are the following: Intense competition between banks.Low cost of collecting pension contributions is the key element in the success of developing the pension sector. For medium-term and long-term investments there is a trend away from deposits and toward insurance products and mutual funds where the return is usually higher than the return on traditional deposit accounts. as they now and/or profits from the business (depending upon the relationship) now also spread over the life insurance relationship. Banks have sought to offset some 7 . Money transfer costs in Indian banking is low by international standards. as briefly outlined below: Increased income generated. in the form of commissions Reduction of the effect of the bank fixed costs.Portability of pension accounts is a vital requirement which banks can fulfill.This shift in investment preferences has led to a reduction in the share of personal savings held as deposits. in a credible framework. New products could substantially enhance the profitability andincrease productivity. have the chance to offer a wider range of services to clients Customer preferences regarding investments are changing. xi) Banks have an important role to play in the pension sector when deregulated. traditionally the core element of profitability for a bank which manages clients money. has led to an increase in the administrative and marketing costs and limited the profit margins of the traditional banking products. against a background of shrinking interest margins.Experience in Europe has shown that bancassurance firms have a lower expense ratio.
This preferential treatment makes insurance products more attractive to customers and banks see an opportunity for profitable sales of such products. To build and maintain client relationships. Client relationship management has become a key strategy. compared with other distributors (e. 8 . insurance companies). It is believed that as the number of products that a customer purchases from an organization increases the chance of losing that specific customer to a competitor decreases. much fewer non-life insurance products are distributed through bancassurance than life insurance products. Analysis of available information on the customer financial and social situation can be of great help in discovering customer needs and promoting or manufacturing new products or services. who to a great extent tend to have accounts with more than one bank.g.banks and insurers are forming partnerships to provide their clients with a wide range of bank and insurance products from one source.Banks believe that the quality of their client information gives them an advantage in distributing products profitably. The realization that joint bank and insurance products can be better for the customer as they provide more complete solutions than traditional standalone banking or insurance products. Banks are experiencing the increased mobility of their customers.Life insurance is also frequently supported by favourable tax treatment to encourage private provision for protection or retirement planning. There are several reasons for this: ✔ The main reason may be the complementary nature of life insurance and banking products: bank employees are already familiar with financial products and quickly adapt to selling insurance-based savings or pension products. WHY IS BANCASSURANCE MORE SUITED TO LIFE INSURANCE PRODUCTS? Traditionally. Therefore there is a strong need for customer loyalty to an organization to be enhanced.of the losses by entering life insurance business.
In addition. To the bankers: In a situation of constant asset base the bank can increases Return on Assets (ROA)by increasing their income. ✔ Some professionals also refer to the claims management aspect of personal injury insurance. for insurance company it acts as a tool for increasing their market penetration and premium turnover and for customer it acts as a bonanza in terms of reduced price. which are not necessarily prevalent in bancassurance. and therefore additional costs. by selling insurance products through their own channel. And we now know that. the non-life market requires special management and selling skills. It can cover operating expenses and make operating expenses profitable by leveraging their distribution and processing capabilities 9 . For banks it mainly acts as a means of product diversification and additional fee income. ✔ Life insurance products are generally long-term products. high quality products and delivery to doorsteps. This would seem to explain why for a long time bancassurance operators hesitated to offer these types of product. ADVANTAGES OF BANCASSURANCE: Everybody is a winner in bancassurance. banks have a better image and are more trusted than insurance companies. which could have a negative impact on brand image. Hence it is a win-win solution for everyone who involved. such competencies require significant investment in training and motivation. in many countries.✔ On the other hand. This is a major advantage in life insurance and less important in personal injury insurance. which require customers to have complete confidence in the institution that invests their money. ✔ Bank advisers can use their knowledge of their customers’ finances to target their advice towards specific needs.
e. conversion ratio of leads to sales is likely to be high. services along with other financial services such as banking. i. The penetration of banks' branches into the rural areas can be utilized to sell products in those areas. mutual funds. personal Enhanced convenience on the part of the insured Easy access for claims. investment and purchase capability can be used to customize products and sell accordingly.. Since banks have already established relationship with customers. Customer database like customers' financial standing. 10 . The advantage of a bank over traditional distributors is the lower cost per sales lead made possible by their sizeable loyal customer base. Can establish sales oriented culture among the employees To the customers: Comprehensive financial advisory services under one roof. improve overall customer satisfaction resulting in higher customer retention levels providing for a lower per lead cost when advertising through print. radio and television. insurance loans etc. they can Banks enjoy significant brand awareness within their geographical region conditions of customers to sell insurance products. spending habits. Innovative and better product ranges To the insurers: Insurers can exploit the banks' wide network of branches for distribution of products. Can leverage on face-to-face contacts and awareness about the financial By acting as a one stop shop for all financial services. as banks is a regular go. Further service aspect can also be tackled easily.
they are demanding greater convenience in financial services. simple yet complete product offerings.Factors that appear to be critical for the success of bancassurance are Strategies consistent with the bank's vision. Internet-banking. Bancassurance training for bank employees: The bank employees will need to be trained in the following aspects of the insurance business: Features of the insurance products sold How to identify and approach a potential customer Basic insurance needs Handling basic objections Other distribution channels and products Expected roles Procedures Remuneration and incentive schemes Cultures Customer service Continuous training and supervision: Apart from initial training. such as PC-banking and The emergence of newer distribution channels seeking a market share in the increasing. quality administration. there should be further training to support the development of the agent or employee. With customer awareness levels The emergence of remote distribution channels. complete integration of insurance with other bank products and services Another point is the handling of customers. would hamper the distribution of insurance products through banks. synchronized planning across all business lines and subsidiaries. network. Some ways in which this can be done are: 11 . defined sales process for introducing insurance services. strong service delivery mechanism. knowledge of target customers' needs.
Warm leads: In return for providing warm leads. A basis is needed for allocating this amount between branch staff (who provide the warm leads) and the bank owners. The structure shown above generates benefits as follows: Financial rewards for employees who generate warm leads 12 . Selling in the bank branches (by employees or by financial advisers): For simple packaged products: employees could be rewarded with gifts and/or salary increments based on their selling performance in promoting both banking and insurance products. of the normal first year commissions. the bank will get a share. Agency meetings Bank branch meetings Area banking meetings In-house magazine Training circulars Area sales seminars Company library Video tapes Certified courses Lectures Training material booklets Remuneration of bank employees: Any commission payable by the insurance company is. A possible basis would be: 25% 25% 50%. to be credited to the bank profit center for the bancassurance operation. The bank management sets the commission level for each manager and employee engaged in the bancassurance operation. say 50%. Such performance could be quantified via the use of a points system where by the various products are allocated as a number of points. as a principle.
is required. 13 .. As bancassurance provides the best possible solution to all these. AXIS bank is also having a tie up with Bajaj Allianz Life Insurance for selling Life insurance products to its retail customers. With the shift in the customer preferences from deposits to investments. It has become much more diversified. most of the banks nowadays have started selling insurance products to its customers. 1. the banks saw their profit margin declining. Financial rewards for managers and other staff of the bank branch who Group awards or bonuses are more desirable when the contribution of the have supported bank activities while the assurance business was being generated.2 B) STATEMENT OF THE PROBLEM To understand the financial impact of bancassurance in AXIS bank and to suggest the ways and means to improve the existing performance by way of collecting responses from the customers. intense competition etc. A) NEED FOR THE STUDY Today’s banking business is not the one we have seen in the past. Thus it has become imperative for the banks to retain the customer by providing more value added services under one roof as well as to find alternative ways to generate more income. Hence there is a need for the study to know whether AXIS bank has been benefited out of bancassurance by way of financial analysis and to suggest the areas where they can make use of and converge the attention of the bank if any. individual employee is either difficult to distinguish or depends on group cooperation.
take a life insurance policy in their near future so that it can take the advantage of the 14 . customers about insurance and bancassurance so as to know whether any awareness need to be created about the same. • • • same. • Finally. • The bank can also know the willingness of the customers in accepting AXIS bank as their distribution channel in case of obtaining Bajaj Allianz Life Insurance policy in future. relationship with the customers. it provides the opportunity for the bank to know the areas where they need to give much emphasis and uplift themselves in order to occupy a key role in the area of bancassurance. as it is important for bancassurance.C) BENEFITS TO THE ORGANIZATION • • Through the study the bank can know its financial performance in The study would enable AXIS bank to know the general opinion of bancassurance and whether it is contributing to the overall progress of the bank or not. The study would enable AXIS bank to know how far their initiatives in promoting It would also enable the bank to know whether they have established a strong It would also enable the bank to know the number of persons who are planning to Bajaj Allianz life Insurance products have reached its customers.
in case of their choice is Bajaj Allianz Life Insurance for obtaining a policy 15 . The study also measures the initiatives taken by AXIS bank in endorsing Bajaj Allianz Life insurance products. as their distribution channel.2 D) SCOPE OF THE STUDY The study focuses on the financial performance of AXIS bank in bancassurance and its contribution to the overall progress of the bank with respect to life insurance alone. as it is the deciding factor for considering the bank as a one-stop shop for all their financial solutions. The study analyses the awareness of the customer and the viewpoints of the customer about insurance as well as bancassurance. The study also throws light on the relationship building by AXIS bank with its customers.1. It also indicates the persons who are willing to take life insurance policy in the immediate future and the reasons for taking the same. It also pinpoints the willingness of the customer in accepting AXIS Bank.
which is significant for To know the customer preferences in selecting AXIS bank as a distribution bancassurance.1.2 OBJECTIVES OF THE STUDY Primary objective: It is to make an analysis on the financial performance of AXIS bank in bancassurance with specific reference to life insurance and to suggest the ways and means to improve the existing performance by way of collecting responses from the customers. channel in case of their willingness to obtain Bajaj Allianz Life Insurance policy in future. 16 . To assess the relationship building factors of AXIS bank. To analyze the initiatives taken by the AXIS bank in endorsing the Bajaj Allianz Life Insurance products. To analyze the financial performance of AXIS bank in bancassurance and its contribution to the overall progress of the bank using ratio analysis. Secondary Objectives: .
Personal biases and prejudices of the customers may also affect the study.4 LIMITATIONS OF THE STUDY Time has played a biggest constraint that the research could not be carried out comprehensively as the duration of the study was only 3 months. hence the conclusion would not be a universal one. The sample size for collecting the primary data was meager as it includes only 100 respondents. As the research contains the Secondary data for making a financial analysis the accuracy and reliability of the analysis depends on reliability of figures derived from financial statements.1 . Inspite of the limitations. 17 . the study was effective in analyzing the performance of AXIS bank in bancassurance with specific reference to life insurance.
which has seen rapid growth with strong contribution from private banks and foreign banks. commercial banks can be further grouped into nationalized banks. India has 88 scheduled commercial banks (SCBs) . with the private and foreign banks holding 18. This crucial step led to a shift from Class banking to Mass banking.2% and 6. It has become an important tool to facilitate the development of the Indian economy. According to a report by ICRA Limited. They have a combined network of over 53. they may be publicly listed and traded on stock exchanges) and 31 foreign banks.28 public sector banks (that is with the Government of India holding a stake). which included banks such as UTI Bank(now re-named as Axis Bank) (the first of such new generation banks to be set up). regional rural banks and private sector banks (the old/ new domestic and foreign). a rating agency. there was a nationalization of 14 major banks in 1969. the State Bank of India and its group banks. along with the rapid growth in the economy of India. Currently. There are 70324 bank offices in India and 18 .000 ATMs. kickstarted the banking sector in India.5% respectively. Scheduled banks constitute of commercial banks and co-operative banks. 29 private banks (these do not have government stake. in the early 1990s. This move.1. which came to be known as New Generation tech-savvy banks. During the first phase of financial reforms.5 A) INDUSTRY PROFILE Banks are among the main participants of the financial system in India. AXIS Bank andICICI Bank. In terms of ownership. Banks in India can be categorized into non-scheduled banks and scheduled banks.000 branches and 17. the public sector banks hold over 75 percent of total assets of the banking industry. Since then the growth of the banking industry in India has been a continuous process. the then Narasimha Rao government embarked on a policy of liberalisation and gave licences to a small number of private banks. During the second phase of reforms.
while on the other hand the private sector banks are consolidating themselves through mergers and acquisitions.each bank office serves around 16000 people. There has been an increase in the bank focus on retail segment with the economic slow down. The top concern in the mind of every bank's CEO is increasing or at least maintaining the market share in every line of business against the backdrop of heightened competition. On the other hand the Private Sector Banks in India are witnessing immense progress They have pioneered Internet banking.. customers have become more discerning and less "loyal" to banks. Current scenario: As far as the present scenario is concerned the banking industry is in a transition phase. The banks today are more market driven and market responsive. are unfortunately burdened with excessive Non Performing assets massive manpower and lack of modern technology. etc. mobile banking. They are forging ahead and rewriting the traditional banking business model by way of their sheer innovation and service. With the entry of new players and multiple channels. phone banking. Banks are now realizing that one of their best assets for building profitable customer relationships especially in a developing country like India is the branch. This makes it imperative that banks provide best possible products and services to ensure customer satisfaction. To address the challenge of retention of customers. Branches are in fact a key channel for customer retention and profit growth in rural and semi-urban set up. which are the mainstay of the Indian Banking system account. The Public Sector Banks. The success of such a model depends upon the approach adopted by banks with respect to customer data management and customer relationship management. 19 .. there have been active efforts in the banking circles to switch over to customer-centric business model. It’s a huge banking infrastructure and among best banking network in world. ATMs. Retail banking has become the new mantra for banking industry.
The Reserve Bank of India being the regulatory authority of the banking system. more efficient channels. option of up to 10% of the net worth of the bank or Rs. This will be on a fee basis with no-risk participation. whichever is lower. with the reorganization of the need for banks to diversify their activities at the right time. It has issued a set of detailed guidelines setting out various ways for a bank in India to enter into insurance sector. Thus. all the above led to the practice of bancassurance. insurance products. Finally. 20 . any commercial bank will be allowed to undertake insurance business as agent of insurance companies. Highlights of the guidelines are reproduced below: RBI guideline for banks entering into insurance sector provides three options for banks. etc. an investment insurance business with risk participation. Legal Requirements: In India. which is the Bancassurance to reach out more people. is available. permitted them to enter into insurance sector as well. It started picking up after Insurance Regulatory and Development Authority (IRDA) passed a notification in October 2002 on 'Corporate Agency' regulations. mutual fund products. Each of the regulators has given out detailed guidelines for banks getting into insurance sector.50 crores. to advise on and sell new financial instruments like consumer loans.Branches could also be used to inform and educate customers about other. IRDA has also felt the necessity of introducing an additional channel of distribution. the banking and insurance sectors are regulated by two different entities (banking by RBI and insurance by IRDA) and bancassurance being the combinations of two sectors comes under the purview of both the regulators. They are: Joint ventures will be allowed for financially strong banks wishing to undertake For banks which are not eligible for this joint-venture option.
Deutsche Bank and Catholic Syrian Bank Dabur CGU Life Insurance Company Canara Bank. Currently there has been an increase in the number of tie-ups with banks and insurance companies. Development Credit Bank. Some of the Bancassurance tie-ups in India are as follows: TABLE 1. the insurance activities. become corporate agents for one insurance company. Ltd Bank and ABN AMRO Bank HDFC Standard Life Insurance Co. including cooperative banks and regional rural banks. saraswat bank. Ltd. Lakshmi Vilas Bank.1: SOME OF THE BANCASSURANCE TIE-UPS IN INDIA Insurance Company Birla Sun Life Insurance Co. 21 . Ltd.The Insurance Regulatory and Development Authority (IRDA) guidelines for the bancassurance are: Each bank that sells insurance must have a chief insurance executive to handle all All the people involved in selling should under-go mandatory training at an Commercial banks. Andhra Bank. may Banks cannot become insurance brokers. HDFC bank. institute accredited by IRDA and pass the examination conducted by the authority. American Express Pvt. Some of the models practiced by the banks in India are I) Referral model ii) Corporate agency model iii) Insurance as a fully integrated model etc.. Union Bank of India. Bank of Muscat. Bank Bank of Rajasthan.
Indian Overseas Bank. Karur Vysya Bank and Lord Krishna Bank Ltd. Corporation Bank. Life Insurance corporation of India (LIC). National Insurance Company and United Insurance Company. Satara District Central Co-operative Bank. Yeotmal Mahila Sahkari Bank. South Indian Bank Thus. Vijaya Bank. Met Life India Insurance Co. Dhanalakshmi Bank and J&K Bank State Bank of India Bajaj Allianz General Insurance Co. Axis Bank was promoted by Unit Trust of India (UTI-I). ICICI Bank. SBI Life Insurance Company Ltd. Janata Urban Co-operative Bank.Lord Krishna Bank. South Indian Bank. the present day banks are more diversified than ever before. General Insurance Corporation (GIC) and its four subsidiaries. Company United India Insurance Co. Previously called UTI Bank. They cannot restrict themselves to traditional banking. Oriental Insurance Corporation. Centurion Life Insurance Corporation of India Bank. in India are brighter that banks in India can make use of the situation to gain profitable business 1. Citibank.5 (B) COMPANY PROFILE About AXIS BANK: Axis Bank was established in 1993 and was the first private sector bank to start operations after the Government of India allowed entry of private banks. New India Assurance Company. UTI Technological Service and UTI Investor Services were also sharing the 22 . Ltd. Bank of India. Royal Sundaram General Insurance Standard Chartered Bank. Punjab and Maharashtra Co-operative Bank. Citibank. Ltd. ICICI Prudential Life Insurance Co Allahabad Bank. As bancassurance prospects venture. Karnataka Bank. The name of the Bank was changed in 2007 as there was brand confusion because many unrelated shareholder entities such as UTI Securities. Amex and Repco Bank. Federal Bank. ABN AMRO Bank. Oriental Bank of commerce. and Ltd.
Housing loans accounted for 57 per cent of total retail assets. Subsidiaries Axis Bank Ltd. mid--corporate and SMEs.11. SMEs. The net profit has grown by over 60% YoY in each of the last eight quarters. The bank's retail assets constituted 23 per cent of total advances at the end of March 2008. retail loans. corporate banking.36 per cent by end of 2007--08. the bank's agricultural advances grew by 35 per cent to Rs.536 crore.5. The bank's broad products and services include consumer banking. The bank maintains a healthy asset quality with 81 per cent of its corporate advances having a rating of at least `A' as at the end of March 2008.507 crore.UTI brand. agri-business. Its advances to SMEs reported a whopping 74 per cent growth to Rs. capital markets and financial advisory services. the bank now has 835 branches including extension networks (31st March 2009) across 30 States and 4 Union Territories. It divides its business into five segments viz. treasury. Axis Sales Ltd. Consistent growth: The bank’s net profit has grown by over 30% YoY in 36 out of the last 38 quarters. During 2007--08. The bank also has overseas offices in Singapore. large corporates. NRI business. The bank pruned its net stressed assets consistently from 1. Also the two quarters in which the profit did not grow was on account of write-off of extraordinary items (G-Sec valued on mark to market basis). the name was changed to connote stability and solidarity as well as was in line with the bank’s expanding operations across geographical boundaries.92 per cent in 2002--03 to 0. The important performance indicators such as ROA.e. Hongkong and Dubai. Axis Private Equity Ltd. China. channel financing and structured products. Moreover. NPA and NIM have remained strong over the last five 23 . agricultural. Auto loans constituted 7 per cent of its retail loans The bank divides its advances into three focus areas i. Axis Trustee Services Ltd. Staring with one branch in Ahmedabad in 1994. CAR.
Over the last five years.9 million customer accounts The above business groups are supported by the following groups: 24 . looking at the returns generated on networth (ROE) and the growth in advances and deposits.599 to 3. the share of current account saving account deposits in the total deposits (CASA) is higher in case of HDFC Bank. This has helped the bank particularly in the acquisition of low cost retail deposits. the bank added 26 new branches including extension centers and 128 ATMs. retail assets. lending to agriculture. In fact in FY2008 it saw its customer acquisition grow at a robust rate of 67% over the last year to over 9. expanding balance sheet: The bank has continued to expand its geographical coverage across the country. December 2008 • • Post its rebranding exercise in 2007 the bank has continued to do well and the change in name has not affected the bank’s business. Expanding footprint.595. Axis Bank appears to be gearing up well to reduce the gap existing in the margins as well as the total balance sheet size.65% over the last five years Key Positives • • • • Market leadership position in the travel card segment Market leader in the prepaid cards segment Second largest merchant acquirer in the country Leadership position in private placement of bonds and debentures till 31st High quality of its assets The Bank’s Non-Performing Assets (NPAs) are among the lowest in the industry. As can be from the table above. Axis Bank comes very near to HDFC Bank in terms of important efficiency parameters.years. the total number of branches including extension centers of the bank has increased from 339 in FY05 to 835 in FY09 whereas ATMs have increased from 1. SME and mid-corporates as also the sale of third-party products. Also HDFC Bank scores higher in terms of margins (NIM). However. Also during Q1FY10. The bank’s balance sheet has increased at a CAGR of 43.
Audit & Compliance Credit & Market Risk Finance. Administration & Legal Human Resources Information Technology Operations 25 .
2.0 REVIEW OF LITERATURE 2.1 Bancassurance - A Global Breakdown:
It is important to outline the impact that bancassurance has had on differing regions around the world, as well as looking at the major regulations that impact the further growth of bancassurance. Below, is provided with a brief synopsis of bancassurance markets in certain key areas. EUROPE: Bancassurance is a construct of Europe (France in particular) and this perhaps helps explain why it is such a phenomenal success within certain European markets. Largely the 1989 Second Banking Coordination Directive motivated the large influx of banks into insurance within Europe in recent years. Currently, the penetration levels are fairly stable in Europe, since bancassurance in the majority of Western European countries (France, Netherlands, Portugal and Spain) has reached what studies such as Swiss Re. (2002) argue to be maturity. These penetration levels will only pick up once bancassurance manages to fully infiltrate Central and Eastern European countries such as Hungary and Poland, and the Baltic nations. Currently, the final major hurdle for bancassurance in Western Europe seems to lie in the U.K. where a predominantly strong insurance board still attempts to resist the bancassurance trend even in the face of widespread deregulations. FRANCE: In France, the success of bancassurance is mitigated by a favorable tax treatment on life insurance products, lack of competition within the insurance industry, and an inadequate pension scheme (Bonnet and Arnal (2000). The pioneer of bancassurance in France is argued to be Credit Mutual, which created its own life and non-life subsidiaries in the early 1970’s (Sakr (2001)).
Bancassurance has seen the most success in the life insurance market, something that is true for every nation, increasing from 52% in 1995 to account for 69% of life insurance business n 2000 (Durand (2003), and Turner (1998)). However, as of late, the banking networks market share of the life insurance market has remained fairly stagnant, actually dropping over the years to 66% market share in 2001 and 61% in 2003 (Falautona and Marsiglia (2003), Datamonitor (2003)). This resulted from a combination of falling stock market prices and the banking network bearing the brunt of lower transfer prices according to Benoist (2002). This means that banking and insurance companies are overseen separately within the country. For a conglomerate, the regulator will depend on who is the parent of the two. UNITED KINGDOM: Bancassurers have faced a tougher time in trying to penetrate the U.K. market, thanks in large to a combination of restrictive regulations and a powerful insurance governing body. The first move for bancassurers came in 1985 when Standard Life purchased a stake in the Bank of Scotland. Changes in legislation soon followed in 1986 and 1988, which made it legal for banks to market insurance products and set up their own insurance subsidiaries (Sakr (2001)). Even then, the main type of union between the two was a joint venture, since the banks placed an emphasis on maintaining the knowledge of the insurer. Twenty years later, researchers argue that bancassurance is still in its infancy within the U.K., currently accounting for 15% of new insurance premiums issued (Benoist (2002), It is argued that restrictive regulations were detrimental to the growth of bancassurance within the country and that due to the lack of experience the correct model for the U.K. is still to be found (Hubbard (spring 2001)). Two benefits of the regulatory system in the U.K. are firstly, that it is based on one almighty regulator that overseas the different factors of the financial services industry (the financial Services Authority). This leads to more streamlined regulations than in other countries that employ functional form regulatory systems.
SPAIN: Spain has one of the most developed markets in bancassurance (Datamonitor (2003)). Current penetration of bancassurers is over 75% of life insurance business and an ever-increasing proportion of the non-life business. In Spain, the evolution of the bancassurance market is fostered by the phenomenal growth within the insurance services industry (life insurance alone has seen 30% growth per annum over the past 15 years (Durand (2003)). The development of bancassurance in the Spanish market was facilitated by the well-established network of regional building societies, and also the cultural mentality that it is correct to take on risks (Goddard (1999)). BRAZIL: In Brazil the laws are in the bancassurers favor, and the banks within the country control more than 65% of the insurance market (Nigh and Saunders (2003)), a size that rivals the leading bancassurers in Europe. Furthermore, in Brazil, bancassurers are assisted by regulations that ban the development of agent networks (Benoist (2002)). NORTH AMERICA: The North American financial services market is the largest in the world and bancassurance has developed in a differing manner in this region depending on the country in question. In Canada, there has been consolidated regulation for more than 15 years and banks are legally allowed to own insurance companies, but limitations are placed on the products that can be provided (Dorval (2002)). While in Mexico, bancassurance has been a flourishing industry due largely to the role played by banks in the creation of pension funds since the 1997 pension reforms. Bancassurance in the U.S. has, in contrast, faced a very tight regulatory and legislative environment for many decades. The formation of financial conglomerates was greatly hindered by the Banking Act of 1933 (Glass-Stegall Act) and the Bank Holding Company Act of 1956. Only in 1999 did laws become more favorable to banks offering insurance products, with the passing of the Gramm-Leach Bliely Act. However, due to the divergence between the state and federal laws regarding banks offering insurance
Currently. only around 7% of Americans purchase their insurance products through bank branches (Thomson (summer 2002b)). ASIA AND THE PACIFIC: Bancassurance in the Asian region has been relatively slow to take off. it is very susceptible to global changes Most countries within Asia have only recently begun allowing the formation of bancassurance operations with the main players listed below. there is only a limited amount of empirical studies conducted on the effects that bancassurance actually has on the company once implemented. Vietnam still restricts banks from offering life insurance products.products. As these problems are being rectified. Since bancassurance is still in its infancy in most Asian countries. Hong Kong and Singapore where regulations have been considerable lenient (Swiss Re. Certain countries within the region are still holding out against the onslaught of the bancassurance trend. However. This was largely due to the lack of information that resulted from poor company disclosure statements and inadequate collections of national statistics. bancassurers still face a hard time ahead in relation to regulations and attempting to overcome powerful lobbies that aim to maintain existing hierarchies (Boot (2003)). with the exception of countries such as Australia. it is widely believed that there will be strong growth potentials for bancassurers in a mature market such as the U. nevertheless. The trend in the majority of mainland Asian countries has been for a bank to form ties with a foreign insurer in order to begin bancassurance operations with around 80% of these being life insurers. while South Korea has made certain rules that make it difficult to begin a bancassurance operation within the country 2.S. and the financial structure of the operation tends to be in the form of a distributional agreement. with the ever-continuing regulatory changes such as the demutualization of insurance companies coupled with an ageing population. researchers into the bancassurance practice are making more and more empirical research. (2002)). it is still in its early stages. The following aims at highlighting the 42 .2 Quantitative works of major Researchers related to bancassurance Compared to the vast amount of descriptive work that has been published in the field of bancassurance.
They conducted a riskof-failure analysis and looked at two periods around a new Federal Reserve policy (1974s go-slow policy). whereas those with securities or real-estate firms will not. whereby they simulated possible mergers between banking and non-banking companies which were then compared to existing BHCs in order to determine whether the risk of bankruptcy will increase of decrease should expansion be allowed in to the non-banking industry. The majority of past studies have focused mainly on the risk and profitability effects resulting from the union of a banking and non-banking firm. Boyd and Graham (1988) followed their 1986 study with a paper that used a simulation approach. Their main finding was that the risk of bankruptcy only declined should the BHC expand into the life insurance practice. One of the earliest studies in this area was performed by Boyd and Graham (1986). Brewers (1989) study finds similar risk reduction benefits existing however cannot specify whether they originate as a result of diversification. Graham and Hewitt (1993) build on Boyd et al. (1988) by conducting a simulation study. Saunders and Walter (1994) and Lown.major quantitative findings of certain researchers that have performed research into the union of banks and insurers. the findings indicate that banking and insurance companies are likely to experience gains on both sides in the majority of the cases. In contrast to previous studies that incorporate accounting data. thus indicating that the new policy had a considerable impact on bank holding company (BHC) expansion into non-banking activities. and also to determine the concurrent effect on company profitability. Osler. they found that bank holding companies (BHCs) involvement in non-banking activities is significantly positively correlated with the risk of failure over the period 1971-1977. Strahan and Sufi (2000) use a similar method to Boyd and Graham (1988) and obtain similar results with more current data. They once again conclude that mergers of BHCs with insurance companies may reduce risk. Boyd. Estrella uses market data and a measure of the likelihood of failure that is derived through the application of option pricing theory to the valuation of the firm. Estrella (2001) examines diversification benefits for banks by using proforma mergers. regulation or efficiency gains. 43 . while the period 1978-1983 showed no significance.
As always. 44 . They further deduced that scale and scope economies were a contributing factor in these results. Panetta and Salleo (2004) and Strioh (2004) found that consolidation in the financial sector is beneficial up to a relatively small size in order to reap economies of sale. Fraser and Kolari (2005) find that bancassurance mergers are positive wealth creating events by examining abnormal return data. the opponents are there. they found that country effects do not significantly affect their overall results.S. Howell and Power (2002) conducted a similar event study surrounding four separate court rulings and discovered that on average only larger. Carow (2001) looked at the abnormal returns of bank and insurance companies following the changing legislation brought about as a result of the Citicorp-Travelers Group merger.The other major series of studies on banks expansion into non-banking activities focus on the wealth effects of such a move. and discovered that investors expect large banks and insurance companies to gain significantly from the legislation removing barriers to bancassurance. Carow (Mar 2001) found in support the contestable market theory that insurance companies became worse off and banks had no long-term gains following legislations further supporting bancassurance within the U. But. Cybo-Ottone and Murgia (2000) analyzed the stock market valuations of mergers and acquisitions in the European banking industry over the period 1988-1997. Fields. while smaller. and found the existence of significant positive abnormal returns associated with the announcement of product diversification of banks into insurance. suggesting a homogeneous stock market valuation and institutional framework across Europe. riskier BHCs with fee-based income gain the most. riskier insurers sustain the highest wealth losses. In an event study released later in the same year. Strioh (2004) finds non-banking income volatile and that there is little evidence of diversification benefits existing. the majority of the past studies have found risk reduction and wealth creating benefits associated with the expansion of banks into the insurance industry. Furthermore.Cowan. and that there is no clear evidence supporting cost reductions stemming from improvements in managerial efficiencies. Amel. Barnes.
Graham Morris. Watson Wyatt has analyzed the bancassurance channel from the perspective of banks.2006/7’ is the first of its kind survey in the Indian market. a leading global insurance consulting firm. Director. Watson Wyatt Worldwide said: “the purpose of the survey was to focus and understand how banks and insurers develop strategies for selling life and non-life insurance products through the vast network of bank branches in India and the practical issues they face in implementing the sales process”. It sets out to define bancassurance performance standards and benchmarks against a cross section of industry practices. The lack of a clear bancassurance vision on the part of the bank partner is the most visible reason for the slow progress in cross selling of insurance. life insurers and non-life insurers separately in the report. A total of 25 banks covering PSU. despite the bank partners having impressive branch networks or large customer bases.Article 2. processes and productivity indicators. Mr. despite the fact that they consider lack of sales culture on the part of bank’s branch staff as a key issue in the success of bancassurance. Watson Wyatt had chosen India as the first country in Asia to do the Benchmarking Survey considering the vibrant growth of this alternative channel in the country compared to the other Asian markets. and part of an Asia-wide analysis focused on bancassurance distribution. along with almost all private life and general insurers licensed in the country. 45 . according to an analysis of India’s bancassurance sector by Watson Wyatt Worldwide. and Foreign banks had participated in the Survey.3 Title: INSURERS UPBEAT ON BANCASSURANCE CHANNEL Bancassurance is likely to generate approximately 35% of private insurers’ premium income by 2008. Nearly 90% of interviewed life insurers are expecting an increase of over 75% in new business premium income for the current financial year from the bancassurance channel. Private. ‘India Bancassurance Benchmarking Study.
The quality of bank customer data is frequently poor and the absence of simple CRM tools in most banks makes it difficult to launch specific initiatives to cross sell insurance products. While developing their bancassurance strategy. Life insurers have also expressed overwhelming support to innovative changes in the bancassurance channel. such as banks having multiple insurer relationships. are seem to be inefficient in recording basic data about customers and managing available information. About 30% of the life insurers have indicated that by the year 2010. An understanding of theses differences will facilitate the mutual goal of increasing bancassurance as the leading channel in insurance distribution in India. general insurers consider increasing new business and tapping new markets as the key factors. “Growth in bancassurance in India will fall short of its potential unless the perceived lack of sales culture and vision begin to get addressed by the banks. Distribution Practice. Watson Wyatt Insurance Consulting of the India office. exclusive 46 . its willingness to bring about a cultural change and involving the entire branch network are the vital factors that life insurers consider when entering into a bancassurance tie-up. 100% of respondents ranked gaining support and commitment from the bank’s management as the critical factor in building successful bancassurance operations. rural insurance business would constitute between 16-20% of their total bancassurance new business premium. which control more than 90% of the total customers. Both bankers and insurers are bullish about the future outlook of bancassurance with nearly a quarter of respondents predicting that the overall share of bancassurance would be about 50% or more in the life segment in the year 2010. R. The brand image of the bank partner. Public sector banks in the country.Krishnamurthy.” said Mr. they seem to demand more attention from insurers to involve the bank management team. Managing Director. Banks’ have overwhelmingly expressed a leaning towards insurers with bancassurance expertise and showing evidence of their commitment. On product design and development.
bancassurance products for deepening insurance penetration and simpler training requirements for the bank staff to qualify as insurance salespersons. 47 . the insurance selling opportunities would get widely tapped at bank branches in the years ahead. India has the unique experience of drawing strong regulatory support for this channel. There is no doubt that bancassurance in India will play a major role as the insurance sector develops. Coupled with the growing awareness of banks to leverage on their branch network and customer strengths.
is exploratory and analytical in nature. It is a blue print specifying every stage of action in the course of research. situation or RESEARCH DESIGN: Research design is the arrangement of conditions for collection and analysis of data in manner that aims to combine relevance to the research purpose with economy in procedure of data. and at last care fully testing the conclusions to determine whether they fit the formulating hypothesis. making deduction and reaching conclusion. 4. organizing and evaluating data. To determine the frequency with which something occurs or with which it is associated with something else To test a hypothesis of a casual relationship between variables To gain familiarity with a phenomenon or to achieve new insights into it. OBJECTIVES OF RESEARCH: 1. collecting. group 3. Exploratory research aims to gain familiarity and new insights into any phenomenon while analytical research aims at analyzing the current scenario and thereby using that to project the future 48 . formulating hypothesis or suggested solutions.3. The research design adopted in this study for secondary data. According to Clifford Woody research comprises defining and redefining problems. 2. The main aim of the research is to find out the truth which is hidden and which has not been discovered as yet.0 RESEARCH METHODOLOGY INTRODUCTION: Research is an academic activity and as such the term should be used in technical sense. To portray accurately the characteristics of a particular individual.
SAMPLING DESIGN: A sampling design is a definite plan for obtaining a sample given population. chennai. There are different methods of sampling. It is concerned with the research studies with a focus on the portrayal of the characteristics of a group or individual or a situation. CONVENIENCE SAMPLING: This method of sampling involves selecting the sample elements using some convenient method without going through the rigor of sampling method.RESEARCH METHODLOGY performance. The total sample size was taken to be 100. The researcher may make use of any convenient base to select the required number of samples. The major purpose of Descriptive research is description of the state of affairs. SAMPLING: Sampling may be defined as a selection of some part of an aggregate or totality on the basis of which a judgment or inference about the aggregate or totality is made. as it exists at present. SAMPLE SIZE: Sample size refers to the number of items to be selected for the universe to constitute a sample. This research aims at studying the historical performance of the company in bancassurance and it also evaluates the future prospects of the company Descriptive research design is used for collecting primary data. the area selected for the study was kilpauk. The main objective of such studies is to acquire knowledge. 49 . Here Convenience sampling technique has been used.Accordingly.
re-sequencing the questions. This has been used to collect the data for the purpose of this study. That is after the questionnaire was drafted. As such. to decide whether it is comprehensive or not. SECONDARY DATA: It refers to the information or facts already collected.. it is used with a few (10) respondents Their responses are studied and it has been helpful in changing the questionnaire like giving more instructions to the respondents for filling up. Here a well-structured questionnaire has been prepared with all the important details regarding bancassurance. Such data are collected with the objective of understanding the past status of any variable. PRIMARY DATA: Primary data is the data collected for the first time through field survey.RESEARCH METHODLOGY METHODS OF DATA COLLECTION: NATURE OF DATA: There are two types of data namely primary and secondary data. The researcher had used a Questionnaire for obtaining the primary data for analysis. A questionnaire is a form prepared and distributed to secure responses to certain questions. pilot study has been done. It has both open ended and close-ended questions. 50 . PILOT STUDY: Before a questionnaire is finalized it should be field-tested. secondary data has been used for making a financial analysis. addition and deletion of questions etc. Here. METHOD OF PRIMARY DATA COLLECTION The method followed in obtaining the primary data was through the structured questionnaire.
previous researches. financial statements like annual reports of AXIS bank from the year 2003-2006 has been used for making an analysis on the financial performance of AXIS bank in bancassurance and its contribution to the overall progress of the bank.18. analysis and decision-making is the financial information. 1. The basis for financial planning. the attitude of the respondents is determined. In this research. The respondents to questions indicate the degree of agreement or disagreement through their response. compare and evaluate the firm’s earnings ability.15. They are useful only when they are analyzed and interpreted.. has been collected from journals & magazines as well as Internet. the attitude of people is classified into specific points with approximately equal attitude value. And the data pertinent to bancassurance like articles. FINANCIAL STATEMENT ANALYSIS: Financial statements refer to the formal and original statements prepared by a business concern to disclose its financial information.RESEARCH METHODLOGY METHOD OF SECONDARY DATA COLLECTION: Annual reports Journals and Magazines Internet Annual reports of AXIS bank have been used for making an analysis on the financial performance of AXIS bank in bancassurance.21. This scale has been used for the following question no: 10. 51 .17. TOOLS USED: As the research contains both primary and secondary data it includes both financial statement analysis and statistical analysis. Financial information is needed to predict. RATING SCALES: Summated rating scale: In this method. Based on the response of all the questions. etc.
the ROA ratio reveals how much income management has been able to squeeze from each rupee’s worth of a company's assets 52 .It can be find out by using the formula: Non-interest income Operating profit Non-interest income as a percentage of working funds: This would indicate the percentage of non-interest income contribution to the working funds. Some of the ratios used in this study are: Non-interest income as a percentage of total revenue: Non interest income is the revenue earned by the bank apart from the interest income. Some of the ratios used in this research are: Business ratios: They are used for comparing changes in the business from period to period. determining and presenting the relationship of items. one of the most important techniques of financial statement analysis has been used in this research. A comparison of net income and average total assets.RESEARCH METHODLOGY Ratio analysis. calculation of this ratio would reveal the contribution of non-interest income to the total revenue of the bank. Hence. one can pinpoint improvements in performance or developing business areas. With the help of this. It can be calculated by using the formula: Non-interest income Working funds Return On Assets (Average): This ratio is calculated to measure the productivity of assets. RATIO ANALYSIS: An analysis of financial statements based on ratios is known as ratio analysis. It can be find out by using the formula: Non-interest income Total revenue Non-interest income as a percentage of operating profit: This would reveal the percentage of non-interest income contribution to the operating profit. Ratio analysis is the process of computing.
RESEARCH METHODLOGY Return On Assets (Average) = Net Income Average total assets Business per employee: This is used to find out the productivity of the employees. It is also called as Capital to Risk Weighted Assets Ratio (CRAR) . This is calculated based on the average employee numbers. etc. a bank's capital is the "cushion" for potential losses. (Net of inter bank deposits) Business per employee = Total of net advances and deposits Average employee numbers Profit per employee: This is also used to find out the productivity of numbers. the employees in terms of profit.. Capital Adequacy Ratio = Total capital funds 53 . In the most simple formulation. This is also calculated based on the average employee Percentage of net non-performing assets to customer assets: This is used to find out the percentage of net non-performing assets to customer assets. And business is the total of net advances and deposits. operational risk. This can be obtained by using the formula: Net Non Performing Assets Customer Assets Percentage of net non-performing assets to gross advances: This is used to find out the percentage of net NPA’s to gross advances. This can be obtained by using the formula: Net Non Performing Assets Gross advances Capital Adequacy Ratio: Capital adequacy ratios are a measure of the amount of a bank's capital expressed as a percentage of its risk weighted credit exposures. which protect the bank's depositors or other lenders.It determines the capacity of the bank in terms of meeting the time liabilities and other risk such as credit risk.
correlation is said to be negative. ∑xy/n .E) 2 E Where Oi = observed frequency Ei = Expected frequency For more accuracy. Ψ² = (O . Yates correction is used and the formula used is given below: Ψ² = (O .e. if increase (or decrease in one results in corresponding decrease (or increase) in the other. If the two variables deviate in the same direction i. Hence any analysis of data compiled should be subjected to relevant analysis so that meaningful conclusions could be arrived at. If the change in one variable affects a change in the other variable.(∑x/n) (∑y/n) Correlation coefficient = …………………………………….e. CORRELATION COEFFICIENT In a bivariate study distribution we may be interested to find out if there is any correlation or co-variance between the two variables under study. The statistical tools applied in this research are: Correlation co-efficient Chi-square test Percentage analysis..RESEARCH METHODLOGY Risk weighted assets and contingents STATISTICAL TOOLS USED: This constitutes an integral part of research analysis. correlation is said to be direct or positive. if the increase (or decrease) in one results in a corresponding increase (or decrease) in the other.E) 2 54 . √∑x²/n-(∑x/n)² √∑y²/n-(∑y/n)² CHI-SQUARE TEST: When certain observed values of a variable are to be compared with the expected value the test static. the variables are said to be correlated. But if they constantly deviate in opposite directions i..
where N = sample size. we accept the alternative hypothesis Hi. the distribution of 2 or more series of data.RESEARCH METHODLOGY E Power of association test: When the calculated value in the test is greater than the tabulated value. It is used to describe relationships. PERCENTAGE ANALYSIS: These are the measures of central tendency. In this case. Of respondents 55 . since the percentage reduces everything to a common base and thereby to allow meaningful comparison to be made. Based on the power of Association Test. Of respondents * 100 Total No. the value indicates the fair relationship between the variable. power of association test is applied in order to show the strength of association. Percentage Analysis = No. It can be used to compare the relative terms.
1. using ratio analysis.99 lacs of 2006 -07 88.DATA ANALYSIS AND INTERPRETATION 4. the imperative part of this study has been undertaken to analyse the performance of AXIS bank in bancassurance so far and the contribution of bancassurance to the progress of the bank in the form of increase in ROA.14 lacs 2007. TABLE 4.1.08 112.0 DATAANALYSIS AND INTERPRETATION 4.09 lacs 112. Since AXIS bank has started earning revenue for the sale of insurance policies from 2005 that the analysis includes from the year 2005-2008. it can be seen that there has been an impressive growth in the revenue over the years for the sale of Bajaj Allianz life insurance policies by AXIS bank.14 16. revenue etc.1 AXIS BANK’S EARNINGS FOR THE SALE OF BAJAJ ALLIANZ LIFE INSURANCE POLICIES FROM 2005-2008 Year Revenue earned for the sale insurance policies CHART 4.1 Revenue earned for the sale of insurance policies 120 100 80 60 40 20 0 2004-05 2005-06 2006-07 Revenue (in lacs) 2005 –06 16.99 INFERENCE: From the above.09 88.1. TABLE 4.1 Secondary data analysis: Secondary data analysis..2 RETAIL SEGMENT PROFIT FROM THE YEAR 2007 TO 2008: 56 .
1. 57 . Thus a glimpse at its profit would be imperative.DATA ANALYSIS AND INTERPRETATION Retail banking segment is undertaking bancassurance. TABLE 4.2: INFERENCE: From the above. One of the reasons being the bank’s dealing with the sale of insurance policies to its retail customers. It has been mentioned even in the director report of AXIS bank.67 lacs 2007-08 875.64 lacs 2006-07 701. which symbolizes the bancassurance contribution.1. Year Profit earned by the retail segment of AXIS bank 2005-06 520.3 RETAIL SEGMENT ASSETS FROM THE YEAR 2005 TO 2008: Retail segment asset can also be increased by way of bancassurance operation. it can be observed that there has been a phenomenal increase in the profit of retail segment from 2005-2008.71 lacs CHART 4. Let us take a look at its asset position from the year 2005-06 to 2007-08. And it is the fastest growing banking business segment.
DATA ANALYSIS AND INTERPRETATION
Year Retail assets
2005 –06 24,469,93
2006 -07 38,571,09
2007- 08 50,100,34
INFERENCE: From the above, we can infer that there has been a phenomenal increase in the growth of retail assets over the years that it indicates the contribution of bancassurance to it. TABLE 4.1.4: OPERATING EXPENSES FROM THE YEAR 2005 TO 2008: Bancassurance will lead to a reduction in the operating expenses of the bank as it can have the opportunity of economies of scale. Thus let us took a look at the operating expenses of AXIS bank from the year 2005-06 to 2007-08. Year Operating expenses 2005 –06 1,085,40 2006 -07 1,691,09 2007- 08 2,420,80
DATA ANALYSIS AND INTERPRETATION
INFERENCE: From the chart, we can observe that there has been an increase in the operating expenses of the bank. Since, AXIS bank is only in its infant stage in bancassurance, it can perform more to reduce the same in the long run.
TABLE 4.1.5: NON-INTEREST INCOME AS A PERCENTAGE OF TOTAL REVENUE: As bancassurance revenue leads to an increase in the non-interest income, the non-interest income as a % of total revenue from the year 2005-2007 is as follows: Year Non 2005-06 interest651,34 2006-07 1,123,98 5,599,32 20.07 2007-08 1,516,23 8,405,25 18.03
income Total revenue 3,744,83 Ratio 17.39
DATA ANALYSIS AND INTERPRETATION
INFERENCE: From the above, it can be observed that non-interest income as a% of total revenue though increased in the year 2005,it has been decreased in the year 2006. TABLE 4.1.6: NON-INTEREST INCOME AS A % OF OPERATING PROFIT: Non-interest income as a contribution to the % of operating profit from the year 2005-2008 is shown as below: Year Non-interest income Operating profit Ratio 2005-06 651,34 1,156,02 56.34% 2006-07 1,123,98 1,733,84 64.82% 2007-08 1,516,23 2,562,86 59.16%
Business ratios (As per the director’s report of AXIS bank) TABLE 4.76% 61 .profit/(loss) on sale of fixed assets).But it has been decreased in the year 2007-08.7: NON – INTEREST INCOME AS A % OF WORKING FUNDS: Non-interest income as a % of working funds is shown as below: Year 2005-06 Non interest income1.79% 1.1. Note: Operating profit = (interest income + other income – interest expense – operating expense –amortization of premia on investments .44% as a % of working funds Chart 4.DATA ANALYSIS AND INTERPRETATION INFERENCE: From the above.1. it can be observed that non-interest income as a% percentage of operating profit has been increasing from 2005 to 2006.7: 2006-07 2007-08 1.
47% 2006-07 1.38% 2007-08 1.8: RETURN ON ASSETS (AVERAGE): The best opportunity for the banks. which undertakes bancassurance operation is that. the return on assets of the bank from 20052008 is as follows: Year Return on (Average) 2005-06 Assets1.DATA ANALYSIS AND INTERPRETATION INFERENCE: From the chart it can be observed that non-interest income as a% percentage of working funds though increased in the year 2006.1.1.8: 62 . Hence. it can increase its return on assets.33% Chart 4. TABLE 4.it has been decreased in the year 2008.
1. it can be observed that the return on assets of the bank has been decreased from the year 2005 – 2008. TABLE 4. 63 . it is clear that the business per employee of the bank over the years has been on the decreasing trend.1.DATA ANALYSIS AND INTERPRETATION INFERENCE: From the above.9.9: INFERENCE: From the above. BUSINESS PER EMPLOYEE: The business per employee from 2005-2008 is as follows: Year Business Per Employee 2005-06 806 2006-07 758 2007-08 607 Chart 4.
RBI guidelines: As per the RBI guidelines for the banks to enter into the insurance sector.39 2007-08 6.) 64 . and the level of Non Performing Assets (NPAs) should be reasonable.80 Chart 4.10: 2006-07 7. Hence.1.10 PROFIT PER EMPLOYEE: Profit per employee from 2005-2008 is as follows: Year 2005-06 Profit per employee 8.13 INFERENCE: From the above.1. analysis of such ratios is also important. it can be viewed separately.DATA ANALYSIS AND INTERPRETATION TABLE 4. Capital adequacy ratio: Capital adequacy ratio from the year 2005-2008 can be shown as follows: (As the total capital includes tier-1 and tier-2. The CRAR of the bank should not be less than 10 per cent. it can be observed that profit per employee of the bank over the years has been on the decreasing trend.
62 2.56% 60.1.91 2007-08 6.217.92 65 .51% TABLE 4.62 2007-08 9.054.081. if any.692.103 2.86% 74.081.60% Tier 2 capital: 2005-06 1.081.216 2006-07 5.27. Tier– 2 capital includes general loan loss reserves.71 2007-08 3. balance in profit and loss account and amalgamation reserve.870.217.92 8.62 74.DATA ANALYSIS AND INTERPRETATION TABLE 18.104.22.1682.103 60.99 60. general reserve.73 2006-07 1. investment fluctuation reserve and subordinated debt.13 Year Total capital Total Capital: 2005-06 5.92 4. outstanding deferred tax asset.11 Year Tier 1 capital Tier 1 capital: 2005-06 3.70 Risk weighted assets and contingents 41.149. Tier –1 capital includes paid up capital.55% 74. statutory reserve.96.57% Risk weighted assets and contingents Ratio Where.12 Year Tier 2 capital 41. is deducted.71 Risk weighted assets and contingents Ratio TABLE 4.720.339. 41.89 2006-07 22.214.171.124 8. From this.217.103 9.016.
1.11: INFERENCE: From the above.it has been increased in the year 2007-08.41% 13.12: 2006-07 0.1. it can be seen that the capital adequacy ratio though decreased in the year 2006.20% assets to customer assets Chart 4.DATA ANALYSIS AND INTERPRETATION Ratio 12.16% 11.1.14: PERCENTAGE OF NET NON PERFORMING ASSETS TO CUSTOMER ASSETS: The percentage of net non-performing assets to customer assets is shown as below from the year 2005-2008: Year 2005-06 Percentage of net non performing0.08% Chart 4. TABLE 4.36% 2007-08 0.38% 66 .
1.15 PERCENTAGE OF NET NON-PERFORMING ASSETS TO NET ADVANCES: The percentage of net non-performing assets to net advances from the year 2005-2008 are shown as follows: Year Percentage performing advances Chart 4. it is clear that the percentage of net non-performing assets to customer assets has been increasing from the year 2005-2008 TABLE 4.24% 2006-07 0.44% 2007-08 0.DATA ANALYSIS AND INTERPRETATION INFERENCE: From the above.13: of net 2005-06 non0.43% assets to net 67 .1.
68 .14: performing to gross 1. TABLE 4. it can be observed that the percentage of net nonperforming assets to net advances has been increased from the year 2005 to 2006 and it has been decreased in the year 2008.16 PERCENTAGE OF GROSS NON-PERFORMING ASSETS TO GROSS ADVANCES: The percentage of gross non-performing assets to gross advances from the year 2004.69% non assets advances Chart 4.32% 1.32% INFERENCE: From the above.1.1.2006 are shown as follows: Year 2005-06 2006-07 2007-08 Percentage of gross1.DATA ANALYSIS AND INTERPRETATION INFERENCE: From the above. it can be observed that the percentage of gross nonperforming assets to gross advances has been decreasing from the year 2005 –2008.
a well-structured questionnaire was framed and the following clearly represents all the related data and their interpretations in a detailed form with statistically proven inferences.1 AGE FACTOR: AGE LIMIT 20-25 25-30 30-35 35-40 Above 40 TOTAL INFERENCE: From the above table it can be inferred that 12% of the respondents belongs to 20-25 Age limit. RESPONDENTS OF PERCENTAGE NO.2 PRIMARY DATA ANALYSIS: Based on the objective. 26% of the respondents belong to 35-40 Age limit and the remaining 18% of the respondents belongs to above age 40. TABLE 4. TABLE 4.2 GENDER: GENDER Male Female TOTAL INFERENCE : From the above table it can be observed that 76% of the respondents are Male and 24% of the respondents are female.2. 24% of the respondents belongs to 30-35 Age limit. Hence the majority of the respondents are Male. RESPONDENTS OF PERCENTAGE 12 20 24 26 18 100 12 20 24 26 18 100 76 24 100 76 24 100 69 . NO.2. Hence the majority of the respondents fall in to the category of 35-40 Age limit. 20% of the respondents belongs to 25-30 Age limit.4.
3 OCCUPATION: OCCUPATION Salaried Businessman Retired Others TOTAL NO. NO.TABLE 4. it can be seen that 28% of the respondents are single and 72% of the respondents are married. OF RESPONDENTS PERCENTAGE 49 34 15 2 100 49 34 15 2 100 INFERENCE: From the above table it is observed that 49% of the respondents are salaried. majority of the respondents are Salaried. 34% of the respondents are involved in business. RESPONDENTS OF PERCENTAGE 28 72 100 28 72 100 TABLE 4. TABLE 4.4 MARITAL STATUS: MARITAL STATUS Single Married TOTAL INFERENCE: From the above table.2. Hence the majority of the respondents are married. Thus.5 70 .2.2. and 14% of the respondents retired and a less percentage of 2 have fallen into the category of others includes professionals.
6 ANNUAL INCOME: ANNUAL INCOME <2 LAKHS 2-4 LAKHS 4-6 LAKHS Above 6 LAKHS TOTAL INFERENCE: From the above table it can be seen that 22% of the respondents are earning less than 2 lakhs p.2.7 ACCOUNT HOLDER OF AXIS BANK: ACCOUNT HOLDER OF AXIS BANK Yes No TOTAL NO. NO..a. 43% of the respondents are earning 2-4 lakhs p.. OF RESPONDENTS PERCENTAGE 22 43 27 8 100 22 43 27 8 100 TABLE 4.. OF RESPONDENTS PERCENTAGE Yes No N/A TOTAL INFERENCE: 68 4 28 100 68 4 28 100 From the above table it can be seen that 68% of the respondents who have got married are having children and 4% of the respondents are not having so far . 27% of the respondents are earning 4-6 lakhs and the remaining respondents are earning above 6 lakhs p.a.a. OF RESPONDENTS PERCENTAGE 86 14 100 71 86 14 100 . OF CHILDREN NO.NO.2. TABLE 4. OF CHILDREN: NO. which is the major percentage.
which is a majority. OF RESPONDENTS PERCENTAGE 57 11 18 14 100 57 11 18 14 100 INFERENCE: From the above table it can be seen that 57% of the respondents are Saving A/C holders and 11 % of the respondents are Current A/C holders.9: 72 . And for 14% of the people this question is not applicable as they are not the account holders of AXIS bank. Non-a/c holders include borrowers.2.INFERENCE : From the above table it is found that 86% of the respondents.8 TYPE OF ACCOUNT: TYPE OF ACCOUNT Savings A/C Current A/C Both N/A TOTAL NO. TABLE 4. TABLE 4. credit card holders and the persons dealing with investments.2. are holding Account in AXIS Bank and 14% of the respondents are NonAccount Holders of AXIS bank. And 18% people own both the type of accounts.
TABLE 4. OF YEARS ASSOCIATIED WITH AXIS BANK: NO.2. 1-3 Yrs 3-5 Yrs 5-7 Yrs > 7 Yrs TOTAL NO.NO. it is found that 24% of the respondents are having less than 1 year associability with AXIS Bank where as a major 39% of the customers have 13 years of relationship. 33% of the respondents are having 3-5 years relationship 4% of the respondents are having greater than 5 but less than 7 years of relationship. OF YEARS <1 Yr.10 PERSONAL VIEWS ABOUT INSURANCE: 73 . No customer among the respondents is having greater than 7 years relationship with AXIS Bank. OF RESPONDENTS PERCENTAGE 24 39 33 4 0 100 24 39 33 4 0 100 INFERENCE: From the above.
2.1 Strongly Agree Agree Neutral Disagree Strongly Disagree Total 32 37 19 12 0 100 10 30 38 19 3 100 9 20 42 21 8 100 PERSONAL VIEWS No. agree to the same. 74 .of respondents(in %) 100 80 60 40 20 0 A B C PERSONAL VIEWS ABOUT INSURANCE Strongly Agree Agree Neutral Disagree Strongly Disagree INFERENCE: From the above. it can be observed that (A) 32% of the respondents Strongly agree that Insurance provides protection to their family and 37%.PERSONAL VIEWS ABOUT INSURANCE A) Insurance provides protection to you and your family B) Insurance is an absolute necessity for an individual/family C) Insurance is one of the best Investment options CHART 4. which is a majority. No one Strongly disagreed the view. But 19% of the respondents remained Neutral and 12% disagree the same.
42%. 38% stayed Neutral and 19% of the respondents disagreed the view. Also 8% of the respondents Strongly disagreed.11 LIFE INSURANCE POLICY HOLDER LIFE INSURANCE POLICY HOLDER Yes No TOTAL NO. TABLE 4. OF RESPONDENTS PERCENTAGE 47 53 100 47 53 100 CHART 4. that is a majority. (C) 9% of the respondents Strongly agree that Insurance is one of the best investment options and 20% agree to this. A less percentage of 3 strongly disagreed the view.(B) 10% of the respondents Strongly agree that Insurance is an absolute necessity for an Individual/family and 30% agree to this.2: 75 .2. remained neutral whereas 21% disagreed the point.2.
3 76 .LIFE INSURANCE POLICY HOLDER 53% 47% YES NO INFERENCE: From the above.2. it can be noticed that 47% of the respondents are holding a Life Insurance policy currently and the big rest 53% are not holding any Life Insurance policy.2. TABLE 4. OF RESPONDENTS PERCENTAGE 72 28 100 72 28 100 CHART 4.12 AWARENESS ABOUT BAJAJ ALLIANZ LIFE INSURANCE AWARE OF ALLIANZ INSURANCE Yes No TOTAL BAJAJ LIFE NO.
it can be observed that a vital part of the respondents.13 SOURCE TO KNOW ABOUT AXIS LIFE INSURANCE SOURCE AXIS Bank Advertisement Friends & Relatives Others N/A Total CHART 4. TABLE 4. which is 72% are aware about AXIS Life insurance and 28% do not have the same. of respondents 28 44 0 0 28 100 Percentage 39 61 Nil Nil 28 100 77 .INFERENCE: From the above table.2.4: No.2.
14 AWARE OF BANKS CROSS-SELL INSURANCE PRODUCTS (in %) AWARE OF BANKS CROSS-SELL INSURANCE PRODUCTS Yes No TOTAL NO. which is conveyed by 61% of the respondents. RESPONDENTS OF PERCENTAGE 48 52 100 48 52 100 78 .2. TABLE 4.INFERENCE: From the above we can understand that the major Source to Know about AXIS Life Insurance is Advertisement. Whereas AXIS Bank owns 39%.
CHART 4.15 ADVANTAGES IN BUYING THE INSURANCE POLICIES THROUGH BANKS ADVANTAGES Strongly Agree Agre e Neutral Disagree Strongly Disagree Total 79 .5 AWARE OF BANKS CROSS SELLING INSURANCE PRODUCTS YES 52% 48% NO INFERENCE: From the above.2.2. TABLE 4. it can be noticed that 48% of the respondents are aware of Banks cross-selling Insurance products but 52% of the respondents which is a majority are not aware of the same.
A) 17% of the respondents strongly agree with the advantage of expert advice in buying through banks and the same is agreed by 28 %.2. But 24% stayed neutral whereas 12% disagreed this point. majority of the respondents agree with the advantages in buying the insurance policies through banks.6: 17 20 12 28 44 41 26 24 35 22 12 8 7 0 4 100 100 100 ADVANTAGE IN BUYING INSURANCE POLICIES THROUGH BANKS No. No one strongly disagreed the same. B) 20% of the respondents felt convenience in buying insurance policies through banks and they strongly agree to that. Thus.35% remains neutral. 26% of the respondents remained neutral and 22%. 7% of the respondents strongly disagree and disagree respectively. TABLE 4. Only 8% disagree and 4% strongly disagree to this view.2. Also 44% agree the same. C) 12% of the respondents strongly agree and 41% agree with the advantage of easy accessibility. it can be observed that.16 80 .A) Expert advice B) Convenience C) Easy accessibility CHART 4. of Respondents (in %) 100 80 60 40 20 0 A B C Strongly Agree Agree Neutral Disagree Strongly Disagree INFERENCE: From the above.
2. But 54% of the respondents. of respondents Percentage Strongly Agree Agree Neutral 11 26 14 81 11 26 14 . it can be noticed that 46% of the respondents know well that Bajaj Allianz life insurance policy can be bought from AXIS bank branches. don’t know the same.17 FAMILIARITY WITH THE POLICIES OFFERED BY BAJAJ ALLIANZ LIFE INSURANCE FAMILIAR WIH THE TYPES OF POLICIES OFFERED BY BAJAJ ALLIANZ LIFE INSURANCE No. RESPONDENTS 46 54 OF PERCENTAGE 46 54 100 100 CHART 4.AWARE OF OBTAINING BAJAJ ALLIANZ LIFE POLICY FROM AXIS BANK AWARE OF OBTAINING POLICY FROM AXIS BANK Yes No TOTAL NO.7 INFERENCE: From the above. TABLE 4.2. which is a majority.
majority of the respondents are not familiar with the different types of policies offered by Bajaj Allianz Life Insurance.Disagree Strongly Disagree Total 37 12 100 37 12 100 CHART 4. Thus. Whereas 14% remained neutral.18 INITIATIVES TAKEN BY AXIS BANK TO PROMOTE BAJAJ ALLAINZ LIFE INSURANCE PRODUCTS INITIATIVES TAKEN BY BANK AXIS Strongly Agree Agree Neutra l Disagree Strongly Disagree Total 82 .2. it can be seen that 11% of the respondents are familiar with the different types of policies offered by Bajaj Allianz Life insurance which they have strongly agree and 26% agree to it. TABLE 4.8 INFERENCE: From the above.2. 37% disagreed and 12% of the respondents strongly disagreed the view.
it can be observed that (a) 12% of the respondents strongly agree that they have noticed the displays of Bajaj Allianz life Insurance in AXIS Bank. regarding Bajaj Allianz Life Insurance in AXIS Bank Web Site AXIS Bank Employees have explained you about the policies of Bajaj Allianz life insurance (through phone calls/direct contact) 12 22 18 33 15 100 10 22 13 34 21 100 14 27 12 35 12 100 CHART 4. And 15% of the respondents have strongly disagreed the same..You have often noticed the displays regarding Bajaj Allianz Life Insurance in AXIS Bank You have come across advertisements/links etc.9: INFERENCE: From the above. 83 .2. 18% remain unbiased and 33% disagree the statement. Also 22% support them by agreeing to it.
(b) 10% of the respondents strongly agree that they have come across the links/ads concerning Bajaj Allianz life insurance in the web site of AXIS Bank.19 SATISFACTION OF CUSTOMER SERVICES CUSTOMER SERIVICE Highly Satisfied Satisfied Moderately satisfied Dissatisfied Highly dissatisfied Total No. (c) 14% of the respondents strongly agree that the Employees of AXIS bank has explained them about Bajaj Allianz life insurance products. of respondents 13 43 28 13 3 100 Percentage 13 43 28 13 3 100 CHART 4. 22% agree to this point and 13% replied neutral. Whereas 35% disagree the statement and 12% of the respondent’s have strongly disagreed.2. TABLE 4.10: 84 . 12% of the respondents didn’t take either side.2. But 34% disagree to this and 21% strongly disagree the same. And the same has been agreed by 27% of the respondents.
most of the respondents are satisfied with the customer services. 28% of the respondents say that they are moderately satisfied but 18% declared that they are dissatisfied with the customer service.S ATIS FACTION OF CUS TOMER S ERVICES 13% 3% 13% Highly S atisfied S atisfied Moderately satisfied 28% 43% Dissatisfied Highly dissatisfied INFERENCE: From the above.2. And good percentage of 43 answered that they are satisfied with the customer service.11: 42 21 24 23 12 24 32 33 7 36 28 26 100 100 100 100 85 . Overall.20 FACTORS THAT BUILD A STRONG RELATIONSHIP WITH CUSTOMERS RELATIONSHIP BUILDING FACTORS Strongly Agree Agree Neutral Disagree Strongly Disagree 2 4 3 3 Total Reliability 37 Easy and advantageous 15 banking over other banks Wide range of 13 Products and Schemes Better understanding 15 of customer needs and provide expert advice CHART 4. Also. A less number of 3% also claim that they are highly dissatisfied with the same. it can be observed that 13% of the respondents replied that they are highly satisfied with the customer service provided by AXIS bank. TABLE 4.2.
28% of the respondents disagreed this view and a less percentage of 3 also strongly disagree to this. 12% stayed neutral. Whereas 26% of the respondents have disagreed and 34% have strongly disagreed. (d) 15% of the respondents strongly agree to the factor of better understanding of customer needs and Expert advice and 22% agree to the view. The same is also agreed by 24%. TABLE 4.33% stayed neutral. (c) 13% of the respondents strongly agree to the factor of wide range of products and schemes.RELATIONSHIP BUILDING FACTORS 100 80 Strongly Agree Agree Neutral Disagree A B C D No of 60 respondents 40 (in %) 20 0 Factors Strongly Disagree INFERENCE: From the above. it can be observed that (a) 37% of the respondents strongly agree with the Reliability factor.21 AXIS BANK AS A ONE-SHOP STOP FOR ALL FINANCIAL NEEDS 86 .2. (b) 15% of the respondents strongly agree to the fact that there exists an easy and advantageous banking over other banks. 32% of the respondents remained neutral.7% of the respondents have disagreed and 2% strongly disagreed to it. Also 21% of the respondents agreed the same. 24% stayed neutral. A typical 36% of the respondents disagree the view and 4% strongly disagree the same. Also 42% of the respondents agree to it.
2.AXIS Bank as a one stop Shop Strongly Agree Agree Neutral Disagree Strongly Disagree Total CHART 4.22 PLAN TO TAKE ANY LIFE INSURANCE POLICY IN THE NEAR FUTURE PLANNING TO TAKE ANY NO. OF PERCENTAGE LIFE INSURANCE POLICY RESPONDENTS Yes 42 42 No 58 58 TOTAL CHART 4. which is a majority. of respondents 12 22 36 22 8 100 Percentage 12 22 36 22 8 100 INFERENCE: From the above.12 No.2.2. remain neutral about this. TABLE: 4. 22% of the respondents replied that they agreed and 36% of the respondents. it can be seen that 12% of the respondents strongly agree that they will prefer AXIS Bank as a one-stop shop for all their financial needs. But 22%have denied the same.13 100 100 87 . And 8% have strongly disagreed to it.
FUTURE PLAN TO TAKE ANY LIFE INSURANC E PO LIC Y 42% 58% YES NO INFERENCE: From the above table it can be observed that 42% of the respondents have a plan to take a life insurance policy in the near future but 58% of the respondents. have no such idea.2.23 REASONS FOR TAKING A LIFE INSURANCE POLICY IN THE NEAR FUTURE REASONS TAKING A INSURANCE POLICY FOR LIFE Highly Essential Essential 4 5 3 4 8 3 Least Essential 10 12 11 Not Essential 13 8 12 Post retirement income Invest in child’s dreams Give Protection and safety to the family in case of unfortunate occurrences Tax Benefits Better returns in terms of investment Not Essential At All 11 9 13 N/A Total 58 58 58 100 100 100 19 11 11 16 3 6 6 3 3 6 58 58 100 100 CHART 4. TABLE: 4.2. which is a majority.14 88 .
45% ranked Tax Benefits as a Highly Essential one for taking a policy in the near future. TABLE: 4. 28% ranked Invest in Child dreams as Least Essential.e. of respondents LIFE 47 53 100 NOT ESSENTIAL AT ALL Percentage 47 53 100 INFERENCE: From the above table it can be seen that 47% of the respondents replied that their choice will be Bajaj Allianz Life Insurance and 53% denied the same.2...e.15 BAJAJ No.of respondents(in %) 100 80 60 40 20 0 REAS ONS FOR TAKING A LIFE INS URANCE POLICY HIGHLY ESSENTIAL ESSENTIAL LEAST ESSENTIAL NOT ESSENTIAL A B C D E REASO NS IN FERENCE: From the above. 38% ranked Better returns as an essential one. 12 respondents i.24 CHOOSING BAJAJ ALLIANZ LIFE INSURANCE TO TAKE A POLICY IN FUTURE CHOOSING ALLIANZ INSURANCE Yes No Total CHART 4. out of 42 respondents.No.e.2. 31%.e. it can be observed that.i. 19 respondents i. 31% ranked Post retirement income as Not Essential..e. Note that 58 89 . The reason for taking the policy to protect the family in case of unexpected occurrences has been ranked as Not Essential at all by 13 respondents... And 16 respondents i.13 respondents i.
2. STATISTICAL ANALYSIS 90 .. RESPONDENTS 40 7 0 53 100 OF PERCENTAGE 40 7 0 53 100 INFERENCE: From the above.respondents who are not having the idea of taking any life insurance policy in the near future have been told to assume if they take a life insurance policy in distant future to respond to this question.25 CHANNEL TO OBTAIN BAJAJ ALLIANZ LIFE INSURANCE POLICY CHANNEL TO OBTAIN BAJAJ ALLIANZ LIFE INSURANCE AXIS Bank Financial Consultants /Agents Others N/A Total CHART 4.16 NO. 40 are willing to obtain Bajaj Allianz Life Insurance policy from AXIS bank itself.2.e. And 7 respondents want to buy from financial consultants/Agents. it can be inferred that a majority of the respondents i. And for the remaining 53% of the respondents this question is not applicable. TABLE: 4.
13) (3.33-9.Disagree =37.0489 = 11.Neutral =18. The tests had been used on selected question as they prove in-depth significance of the research brought out. ∑X = 313 ∑ x2 = 1133 ∑y = 317 ∑y2 = 1165 ∑xy = 1142 n(Sample Size) =100 Where Correlation Co-efficient (r) = ∑xy/n . Co-efficient of correlation: Correlation is used to find out if there is any correlation or co-variance between the two variables under the study.(∑x/n)√∑y²/n-(∑y/n)² r = 11.Neutral =14. Q.42 – 9. Q.Strongly Disagree=12.Strongly Disagree=15.65– 10.4979 91 .17 Strongly Agree =11.17 Familiarity of the different types of Bajaj Allianz life policies (X) Q.Disagree =33.(∑x/n) (∑y/n) ___________ ____________ √∑x²/n.17) √11.42 – (3.18 a) Strongly Agree =12.7969 √11.In this section the researcher has used statistical tools in order to analytically prove the study that has been undertaken.18 a) Frequent Notice of displays regarding Bajaj Allianz life products inside AXIS bank(Y) Q. Agree = 22.9221 1. It has been used here to analyze the relationship between familiarity among the customers about different types of Bajaj Allianz life insurance policies and the various initiatives taken by AXIS bank to promote Bajaj Allianz life products. Agree = 26.2653 = 1.2381*1.
Disagree =34.Strongly Disagree=21 ∑X = 313 ∑ x2= 1133 ∑y = 334 ∑y2= 1284 ∑xy = 1178 n =100 Where Correlation Co-efficient (r) = ∑xy/n .5554 = r 0.18 b) Strongly Agree =10.Neutral =13.10.34 = 11. Agree = 22.4542 1.(∑x/n) (∑y/n) ___________ ____________ √∑x²/n.3258 1. Q. Q.78 .18 b) Come across Bajaj Allianz life insurance most of the times in AXIS bank website.(Y) Q.17 Familiarity of the different types of Bajaj Allianz life policies (X) Q.2381*1. Strongly Disagree=12.3%) between the familiarity of different types of Bajaj Allianz Life policies and the frequent notice of displays regarding the Bajaj Allianz Life policies inside AXIS bank.7969 √12.6068 = 92 . Agree = 26.963 : 96.34) √11.(∑x/n)² √∑y²/n-(∑y/n)² r – 11.1. Disagree =37.17 Strongly Agree =11.33-9.78 – (3.13) (3.1556 = 11. Neutral =14.2978 1.3% INFERENCE: Hence it can be inferred from the above that there is a very strong relationship (96.
868 93 ∑xy/n .Strongly Disagree=12 ∑X = 313 ∑ x2= 1133 ∑y = 304 ∑y2= 1090 ∑xy = 1090 n =100 Where Correlation Co-efficient (r) = ____________ √∑x²/n.04) √11.17 Familiarity of the different types of Bajaj Allianz life policies (X) Q.238 * 1.Neutral =14.5152 1. Agree = 27.13) (3.(∑x/n) (∑y/n) ___________ .= r 0.5% INFERENCE: Thus it can be observed that there is a strong (82. Q.17 Strongly Agree =11.9 – (3.18 c)Strongly Agree =14. Agree = 26.Strongly Disagree=12.9.9. Q.5942 = 0.33-9.825 : 82.Disagree =35.9 – 9.2877 = 1.7969 √10.3848 1.Disagree =37.Neutral =12.2416 10.18 c)Explanation of Bajaj Allianz life policies by AXIS bank employees through phone calls/direct contact (Y) Q.5%) of correlation between the familiarity of different types of Bajaj Allianz life policies among customers and come across Bajaj Allianz life products in AXIS bank website.(∑x/n)² √∑y²/n-(∑y/n)² r = = 10.
4864 √17. 2.21 Strongly Agree =12.r : 86.082 0.Disagree =7.Strongly Disagree=2 ∑X = 308 ∑ x2= 1072 ∑y = 405 ∑y2= 1735 ∑xy = 1323 n =100 Where Correlation Co-efficient (r) ____________ √∑x²/n.21 Prefer AXIS bank as a one shop for all the financial needs (X) Q. Strongly Disagree=8 Q. Agree = 22.35 -16.20 a) Reliability factor in AXIS bank (Y) Q.40 13. Neutral =36. Agree = 42. Q.Co-efficient of correlation: It has been used here to analyze the relationship between considering AXIS Bank as a one-stop shop for all the financial needs of a customer and the factors that builds a strong relationship with customers.756 1.9% = ∑xy/n .11067 * 0.Neutral =12.474 1.699% 69. Disagree =22.(∑x/n)² √∑y²/n-(∑y/n)² r = = 13.20 a) Strongly Agree =37.08) (4.72-9.(∑x/n) (∑y/n) ___________ 94 .9745 = = r : 0.8% INFERENCE: Thus there is a strong (87 %) correlation between the familiarity among the customers about different types of Bajaj Allianz life policies and the explanation of AXIS bank employees about Bajaj Allianz life insurance through phone calls or direct contact.05) √10.23 – (3.23 – 12.
15113 = 1.895% : 89. Q.278532 = r 0.21.424 10.9.Prefer AXIS bank as a one shop for all the financial needs (X) Q.20 b) Strongly Agree =15.4556 1.Neutral =24.08) (3.20 c) Wide range of products and schemes (Y) 95 .Strongly Disagree=8 Q. Agree = 21.5% INFERENCE: Thus there is a strong (90%) = ∑xy/n .(∑x/n)² √∑y²/n-(∑y/n)² r = = 10.Strongly Disagree=4 ∑X = 308 ∑ x2= 1072 ∑y = 307 ∑y2= 1075 ∑xy = 1060 n =100 Where Correlation Co-efficient (r) ____________ √∑x²/n.72-9.11067 * 1.INFERENCE: Thus there is a 70% of correlation between the existence of the factor reliability in AXIS bank and acceptance of AXIS bank as a one-stop for all the financial needs.07) √10.Disagree =36.60 – (3.486 √10.1444 1.(∑x/n) (∑y/n) ___________ correlation between existence of the factor easy and advantageous banking over other banks and acceptance of AXIS bank as a one-stop for all the financial needs.20 b) Easy and advantageous banking over other banks in AXIS bank (Y) Q. Agree = 22. Q.21 Strongly Agree =12.Neutral =36.21.Prefer AXIS bank as a one shop for all the financial needs (X) Q.60 – 9.Disagree =22.75.
Disagree =28. Agree = 22.Prefer AXIS bank as a one shop for all the financial needs (X) Q.Disagree =26.0650 = 0. Q.72-9.Strongly Disagree=8 Q.8172 1.Neutral =33.21.20 c) Strongly Agree =13. n =100 Where Correlation Co-efficient (r) = ∑xy/n .60 – 9.12.985 10.55 – (3.(∑x/n) (∑y/n) ___________ correlation between existence of the factor wide range of products & schemes and acceptance of AXIS bank as a one-stop for all the financial needs.(∑x/n)² √∑y²/n-(∑y/n)² r = = 10. ∑ x2= 1072 .Q.16) √10.Disagree =22.Neutral =36.Strongly Disagree=3 ∑X = 308 ∑ x2= 1072 ∑y = 316 ∑y2= 1112 ∑xy = 1055 n =100 Where Correlation Co-efficient (r) ____________ √∑x²/n.21 Strongly Agree =12.182961 = r 0.Disagree =22.691% : 69. Agree = 22.Neutral =36. ∑y = 321 . ∑y2= 1147 .(∑x/n) (∑y/n) 96 .486 √11.Strongly Disagree=3 ∑X = 308 .20 d) Better understanding of customer needs and provide expert advice.7328 1.1% INFERENCE: Thus there is a 69% of = ∑xy/n .08) (3. Agree = 23.Neutral =32.(Y) Q. Agree = 24.11067 * 1.21 Strongly Agree =12. ∑xy = 1093 .Strongly Disagree=8 Q.20 d) Strongly Agree =15.9.
08) (3.8868 1.11067 * 1.21) 10. which is very strong. in order to know the association between the persons who are planning to take insurance policy in the future and the persons who prefer Bajaj Allianz life for obtaining a policy in the future.93 – (3.___________ _________ √∑x²/n.93 – 9.47.0432 1. Yates correction is used and the formula used is given below: Ψ² = (O . Null hypothesis: 97 .486 √11.30 3.199272 = r 0. the test static Ψ² = (O .Chi-square test: When certain observed values of a variable are to be compared with the expected value.869% : 86.10.E) 2 E Here.(∑x/n)² √∑y²/n-(∑y/n)² r = = 10. Chi-square test has been applied as a goodness of fit. between acceptance of AXIS bank as a one-stop for all the financial needs and existence of the factor better understanding of customer needs and provide expert advice in AXIS bank √10.72-9.0797 = 1.9% INFERENCE: Thus there is an 87% of correlation.E) 2 E Where Oi = observed frequency Ei = Expected frequency For more accuracy.
Yes Will Bajaj Allianz Life insurance be your choice future.26 105.There is no association between the persons who are planning to take an insurance policy in future and the persons who prefer Bajaj Allianz life insurance to buy an insurance policy in the future. Alternative hypothesis: There is an association between the persons who are planning to take an insurance policy in future and the persons who prefer Bajaj Allianz life insurance to buy an insurance policy in the future.26 22. Column Total 42 42% No 17 41 58 58% 47 53 Row Total Yes 30 12 for obtaining the policy in No 100 100% Expected frequencies are given in the table: 42 *47 /100 = 19.26 105.74 42 * 53/100= 22.26 105.26 42 Calculation of Ψ²: Observed (O) 30 17 12 41 Frequency Expected Frequency (E) 19. Calculation: Planning to take any life insurance policy in future.74 27.26 (O – E) ² E 5.26 58 * 53/100 = 30.33 3.74 (O – E) ² 105.26 30.72 3.74 58 47 53 100 98 .86 4.42 58* 47/100 = 27.
Tabulated Ψ² value for 1 degrees of freedom at 5% level of significance is = 3.f.33 E Calculated chi-square value is 17. INFERENCE: Thus.17. Out of which. 4.1) (c – 1) = (2 – 1) (2 – 1) = 1 Where r= No. there is an association between the persons who are planning to take an insurance policy in future and the persons who prefer Bajaj Allianz Life Insurance to buy an insurance policy in the future. Percentage Analysis: No. 40 respondents are preferring to buy from AXIS bank itself. And alternative hypothesis has been accepted.33 Tabulated value: Degrees of freedom: d.841 Since calculated Ψ² > tabulated Ψ² null hypothesis (Ho) is rejected. 47 respondents choice would be Bajaj Allianz Life Insurance. of respondents Out of 100 respondents. of rows and c= No.33 Ψ² calculated value = ∑ (O – E) ² = 17. = (r . of respondents Total no.PERCENTAGE ANALYSIS: This has been used here to calculate the number of persons who wants AXIS bank to be their distribution channel in case of their willingness to buy Bajaj Allianz Life Insurance. The percentage can be thus calculated as follows: Percentage Analysis: 40 * 100 = 85% 47 99 .of columns.
for obtaining a policy in the future.INFERENCE: Thus it can be observed that 85% of the respondents are willing to buy from AXIS bank in case of their choice will be Bajaj Allianz life insurance. 100 .
Following are the justifications from the primary data: . as its % to customer assets has been increasing over the years.With the increase in performance in bancassurance. Business per employee and profit per employee of the bank are decreasing over the years that it can affect the sale of insurance policies that the bank’s immediate attention is required. as it has been above the prescribed norms of RBI that it reveals the potentiality of AXIS Bank to perform bancassurance operations.it has been decreased in the year 2006-07.e. after the year they started earning revenue from bancassurance.. it is quite clear that AXIS Bank is expected to take still more initiatives to improve its existing performance in bancassurance. RECOMMENDATIONS AND CONCLUSION 5. To analyse the ways and means for it. Though non-interest income as a % to operating profit. which is NPA.the same can be overcome.i. responses are collected from the customers. It also indicates the necessity of further initiatives and the areas where they need to focus and can cash in on the situation for better prospects.FINDINGS. It is desirable also that the bank can improve its existing performance to increase its return on assets and to reduce the operating expenses of the bank. steps can be taken to reduce the same. The other prescribed norm. But. Thus. Capital adequacy ratio has been found satisfactory. also looks reasonable.total revenue and working funds were increased from 2004 to 2005.1 FINDINGS The increase in the revenue for the sale of insurance policies by AXIS bank and the increase in the retail segment’s profit and assets indicates that the financial performance of the AXIS bank in bancassurance has been good and the bancassurance has also contributed well to the retail segment.
post retirement income. especially the easy and advantageous banking determines the mindset of the customer in considering the bank as an integrated financial solutions. better returns. this requires immense attention by AXIS bank. Out of which. Tax benefits. RECOMMENDATIONS AND CONCLUSION Though general opinion about insurance is pretty good among the people. most of the respondents are uncertain about insurance as an investment option. invest in child dreams. This is also proved statistically through correlation analysis. 47% of the respondents choice would be Bajaj Allianz life insurance for obtaining a policy. The same is also proved statistically through correlation analysis. emphasis is needed in the area of Easy and advantageous banking over other banks since it is denied by majority of the respondents. Though most of the respondents are aware of Bajaj Allianz life.FINDINGS. 30 respondents are planning to take an insurance policy in the immediate future . Though the other relationship building factors are found satisfactory among most of the customers. protecting the family in case of unfortunate occurrences are the increasing order of preference in terms of essentiality among most of the respondents in the near future for taking a policy 102 . As these factors. 53% of the respondents are not holding any life insurance policy so far that it is clear that there are still lot of untapped source which the bank can explore and reap the harvest. Most of the respondents are not cognizant enough with the Bajaj Allianz Life Insurance policies as the initiatives taken by AXIS Bank have been inadequate. awareness needs to be created about the fact that AXIS bank is cross-selling Bajaj Allianz Life Policies.The association between this two is also proved through Chi-square test. Majority of the respondents are satisfied with the customer services provided by AXIS bank that it is a positive sign for bancassurance.
. entrance etc.e. RECOMMENDATIONS AND CONCLUSION And out of 47 respondents who are in favour of Bajaj Allianz Life 40 respondents i. 85% of the respondents prefer AXIS bank to be their distribution channel.2 RECOMMENDATIONS To strengthen the initiatives that are much needed to reach out more public and to improve its existing performance. The display case can be located on the place where the customers can have a 100% chance of looking into it like cash counters. 103 .. 5. This clearly indicates the advantage the bank can make use of and if taken more initiatives it can even make more customers to buy Bajaj Allianz life insurance policies from AXIS bank . the following can be done.FINDINGS. The number of display cases can also be increased and catchy slogans can be given.
FINDINGS. 104 . immediate rewards and better incentive packages can also help them to do better. Emphasis can also be given to promote insurance as an investment option as most of the respondents are uncertain about it. since customer satisfaction is no customer loyalty. More pop-ups window. As most of the customers denied the easy and advantageous banking in AXIS over other banks. This will also help them to reach more customers. as this will help them to explain and guide the customers better. it is important for the bank to find out more ways to promote the same. can also attract more customers who are visiting AXIS bank website. RECOMMENDATIONS AND CONCLUSION To reach out more customers via website. Consequently the business per employee and profit per employee can also be increased which is currently decreasing over the years. frequent playing of graphical displays. This type of enabling sales oriented culture among the employees is the best possible way to increase the productivity among the employees that it assumes greater significance. Motivation. they will prefer to accept more products with the same bank only if they find it advantageous. Most of the respondents are satisfied with the customer services that it is a positive sign. But. AXIS bank can educate the customer by sending frequent e-mails with attractive synopsis to the e-mail ids of the customer about Bajaj Allianz life insurance policies with the link carrying them to the AXIS bank website. Employees of the AXIS bank can also be given more training about Bajaj Allianz Life policies. Most of the customers prefer to buy insurance policy for tax benefits and better returns that the target customers can be identified. This will definitely help the bank to convince more customers to prefer AXIS bank as their one stop shop for all their financial solutions.
RECOMMENDATIONS AND CONCLUSION As many of the respondents who wish to buy Bajaj Allianz Life Insurance Policy also have opted AXIS bank as their channel.FINDINGS. The prospect for bancassurance is also bright as AXIS bank is found to be a preferable distribution channel among the customers who wish to buy Bajaj Allianz life policy. With the merger of centurion bank. the bank can make use of it and retain its customers. Thus with its increase in the existing performance. the bank can increase its fee-based income. Return on assets as well as the non-interest income. . it can also take the advantage of more customer base and can become more competitive. With more initiatives and focus in the specified areas the bank can even have the potentially of making more customers to buy Bajaj Allianz Life policy from AXIS bank. 5. which leads to much progress of the bank. in 105 . Thus by doing all this.3 CONCLUSION The study thus points out that the financial performance of AXIS bank in bancassurance has been good and it also provides a helping hand to the overall progress of the bank.
106 .FINDINGS. RECOMMENDATIONS AND CONCLUSION the upcoming years. AXIS bank will definitely play a predominant role in the bancassurance industry and there by can contribute more to the upliftment of the bank.
SCOPE FOR FURTHER RESEARCH As this study focuses only on the limited areas of chennai. . Comparative analysis can also be done among the performance of banks. . This study concentrates only on the life insurance segment that it can be broaden by including non life insurance. it can be extended to other areas for an in-depth analysis. which undertakes bancassurance as this study focuses on the performance of AXIS bank alone .
BIBLIOGRAPHY & WEBLIOGRAPHY BIBLIOGRAPHY: BOOKS: • • Reddy.Page numbers: 2493-2519 • • Browne M. 2005. & Hariprasad Reddy.S.watsonwyatt. Panetta Fabio & Sallen Carmelo “Consolidation and Efficiency in the financial sector: A review of the international evidence”.January 1993.co. Chennai. Chennai.April 2001. Publications. Journal of Risk and Insurance Volume No:60.com . T.K.P “ Research Methodology” Margham Publications. 2003. Journal of banking and Finance Volume No: 28. Second Edition.google.com www. March 2000.insuremagic.J & Kim.“Management Accounting” Margham Lochanan Ravi . Journal of Banking and Finance Volume No: 25.com www.Axisbank.com www.Y.in www.com www.Page numbers: 616-634 Carow Kenneth.Page numbers: 1553-1571 WEBLIOGRAPHY: www.insureegypt.“An international analysis of Life insurance Demand”. JOURNALS: • Amel Dean Barnes colleen. A “Challenging Barriers between banking and Insurance”.Axisinsurance.