SERVICE QUALITY ANALYSIS IN BANKING SECTOR WITH SPECIAL REFERENCE TO SBI AND AXIS BANK

A Major Project

Submitted in partial Fulfilment of the requirements for MBA (WEEKEND) Semester IVth Programme of G.G.S. Indraprastha University, Delhi.

(SESSION 2010--2012)

SUBMITTED BY:AMAR LIKHYANI MBA (WEEKEND) B&I Semester- IVth Enrol No.: 01116633510

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PROJECT REPORT ON

SERVICE QUALITY ANALYSIS IN BANKING SECTOR WITH SPECIAL REFERENCE TO SBI AND AXIS BANK
A project report submitted in the partial fulfillment of the requirements for the award of the degree of MASTER OF BUSINESS ADMINISTRATION
By

AMAR LIKHYANI
Enroll No.: 01116633510

Under the guidance of

Dr. DEEPAK TANDON

University School of Management Sciences Guru Gobind Singh Indrarprastha University 2010-2012
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DECLARATION
Hereby I declare that the project report entitled “SERVICE QUALITY ANALYSIS IN BANKING SECTOR WITH SPECIAL REFERENCE TO SBI AND AXIS BANK” submitted for the degree of Master of Business Administration, is my original work and the project report has not formed the basis for the award of any diploma, degree, associate ship, fellowship or similar other titles. It has not been submitted to any other university or institution for the award of any degree or diploma.

AMAR LIKHYANI

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CERTIFICATE

This is to certify that I Amar Likhyani, Enrolment No. 01116633510, MBA (Banking and Insurance) student of University School of Management Sciences, Guru Gobind Singh Indraprastha University has done project work on “SERVICE QUALITY ANALYSIS IN BANKING SECTOR WITH SPECIAL REFERENCE TO SBI AND AXIS BANK” under the guidance of Dr. Deepak Tandon.

Dr. Deepak Tendon

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MBA (Weekend) Programme
PROJECT ASSESSMENT PROFORMA

1. 2. 3. 4.

Name of the Student : Programme: MBA (B&I) Session : Supervisor : Contact No. Email: Project Type :

5.

Project Title:

Sign. of the Student S.No. Details of the interaction with the supervisor (s) with date

Sign. of the Supervisor

Sign. of the Coordinator Supervisor Signature

Remarks of the Supervisor

1. 2. 3. 4. Internal evaluation of 40 marks (in figure and words) Note: Supervisor is requested to provide the remarks of each interaction to the candidate in above proforma.

Signature of the Supervisor 5

ACKNOWLEDGEMENT

Life is so short that we forget to thank those people who help us in tackling various hurdles in our life. But I take my privilege in conveying heartiest gratitude to all those people, whose help enabled me to complete the project.

It gives me pleasure and satisfaction to categorily state that this presentation is not a solo effort; so many people have contributed their bit to it. It is very difficult to individualize their gratefulness here, to all whose contributions have blossomed into this presentation. My foremost gratitude and thanks exist for Dr. Deepak Tandon (Professor) who has guided, assisted or provided me with information or otherwise helped me obtain statistics & facts.

I also express my grateful thanks to respondents for giving their valuable time to make this project to success.

Thanks to all those who have been inadvertently left out above.

AMAR LIKHYANI

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2.2 2.3 PESTAL ANALYSIS RECENT TRENDS 3.1 PORTER’S FIVE FORCE ANALYSIS FOR INDIAN BANKING SECTOR 2.1 1.3 2.1 SERVICE AND ITS CHARECTERISTICS 7 .5 STATE BANK OF INDIA AXIS BANK ABOUT AXIS BANK’S PROFILE GOAL AND OBJECTIVES 4.4 1.2 2. RESEARCH DESIGN ANALYSIS OF DATA LIMITATION OF STUDY BENIFICIARIES OF PROJECT THE RESEARCHER INTRODUCTION TO THE BANKING INDUSTRY 2.5 2.1 3.4 2.1 A SNAPSHOT OF THE BANKING INDUSTRY 2. SERVICE QUALITY 4.4 3.2. RESEARCH METHODOLOGY 1.5.TABLE OF CONTENTS 1.3 1.5. INRODUCTION TO SBI AND AXIS 3.2 2.2 3.5.5 REFORMS IN THE BANKING SECTOR CLASSIFICATION OF BANKS BANKING SCENARIO OF INDIA BANKING REVIEW BANKING SECTOR SWOT ANALISIS: BANKING SECTOR 2.2 1.1 2.

7.2 4. 9. 10.3 5.4. 8. GAP ANALYSIS SERVICE QUALITY MEASUREMENT ANALYSIS AND INTERPRETATION KEY FINDINGS CONCLUSION RECOMMENDATION BIBLIOGRAPHY QUESTIONNAIRE 8 . 6.

CHAPTER 1 RESEARCH METHODOLOGY 9 .

Sampling: Following sampling is designed in order to execute the survey. 10 .1.1 RESEARCH DESIGN: The methodology for the research study is descriptive and is as follows: Research Approach: Quantitative research Objectives: The main objective of our project is:  To assess and compare the overall service performance of SBI and AXIS bank.  To know in which service quality dimension the bank is performing well and in which dimension it needs improvement.  Sample Area: : Delhi  Sample size: 100 AXIS customers 100 SBI customers Sample Design: Samples selected in the survey are those who are the customers of either AXIS or SBI or both.  To know customers requirements or expectation for service.

articles from magazines and news papers. 1. and overall dimension score and is compared with other service. Also data is analyzed through performance matrix.Data Collection Method:  Data Collection Tool Secondary data: Various websites. 1. score of various factors on the particular dimensions. so the competitive scenario could not be studied. books were used for collecting secondary data. Type of questionnaire: Structured questionnaire.3 LIMITAION OF STUDY:  The study was restricted to two banks.2 ANALYSIS OF DATA: The collected data in the study has been presented and analyzed using the various graphs for satisfaction level. Primary data: The primary data has been collected by the researchers by designing structured questionnaire with the relevant question to the project study and research.  Inadequate time was the major constraint during the whole project.  All the answers given by the respondents have been assumed true. 11 .

I have selected this topic because I am interested in banking sector. to know the competitive advantage of both the banks and their services. Key findings and analysis will helpful to them for provide better services to customers.5 THE RESEARCHERS: Viral Shrimali is final year MBA-marketing student of NRIBM.1. • • • 1. 12 . He has completed his Bachelor in Commerce from Gujarat University.4 BENEFICIARIES OF PROJECT: Beneficiary of this project is to the bank. to improve the customer satisfaction in the dimension in which they are lagging. Knowledge through this project can help me to identify more about the practices that will add value in an organization. For researchers. Gujarat University..

CHAPTER-2 INTRODUCTION TO THE BANKING INDUSTRY 13 .

14 . A minimum stipulated Capital Adequacy Ratio (CAR) was introduced to strengthen the ability of banks to absorb losses and the ratio has subsequently been raised from 8% to 9%. on the deposit front. It is proposed to hike the CAR to 12% by 2004 based on the Basle Committee recommendations. are among the measures in order to improve the banking sector. Higher provisioning norms. leading creating the second largest bank in India with a balance sheet size of Rs. Also. closely monitors developments in the whole financial sector. there were 296 Commercial banks operating in India. 1040bn. And on advances. Scheduled commercial banks touched.5% against 17.. dispensing with the concept of ‘past due’ for recognition of NPAs. there were 67 scheduled co-operative banks consisting of 51 scheduled urban co-operative banks and 16 scheduled state co-operative banks. lowering of ceiling on exposure to a single borrower and group exposure etc. This included 27 Public Sector Banks (PSBs). As at end-March 2002. as the central bank of the country. State Bank of India is still the largest bank in India with the market share of 20% ICICI and its two subsidiaries merged with ICICI Bank. 42 Foreign and 196 Regional Rural Banks.1 A SNAPSHOT OF THE BANKING INDUSTRY: The Reserve Bank of India (RBI). 31 Private. a growth of 14% as against 18% registered in the previous year. The banking sector is dominated by Scheduled Commercial Banks (SCBs). the growth was 14.2. tighter asset classification norms.3% of the earlier year.

(CIBIL) was set up in August 2000.5%). convertible debentures of corporate and units of equityoriented mutual funds. NHB and National bank for Agricultural and Rural Development to the private players. The RBI is now planning to transfer of its stakes in the SBI. Banks are free to acquire shares. Every bank has to earmark a 15 . subject to a ceiling of 5% of the total outstanding advances (including commercial paper) as on March 31 of the previous year. 2. The government will hold 49% stake and private players will hold the rest 51%. SBI and AXIS are the promoters of the CIBIL. this pilot project of the ministry would pave way for smoother functioning of the credit market in the country. the Government has sought to lower its holding in PSBs to a minimum of 33% of total capital by allowing them to raise capital from the market. the Credit Information Bureau (India) Ltd. the retail segment is expected to grow at 30-40% in the coming years. Also. This in turn resulted in a significant growth in the geographical coverage of banks.the majority being held by ICICI Bank (24. Net banking. ATMs and bill payments are the new buzz words that banks are using to lure customers. phone banking. With a view to provide an institutional mechanism for sharing of information on borrowers / potential borrowers by banks and Financial Institutions. The home loans alone account for nearly two-third of the total retail portfolio of the bank.Retail Banking is the new mantra in the banking sector. The Bureau provides a framework for collecting. processing and sharing credit information on borrowers of credit institutions. mobile banking. The finance ministry spelt out structure of the government-sponsored ARC called the Asset Reconstruction Company (India) Limited (ARCIL). According to one estimate.1 REFORMS IN THE BANKING SECTOR: The first phase of financial reforms resulted in the nationalization of 14 major banks in 1969 and resulted in a shift from Class banking to Mass banking.1.

which is governed by the Banking Regulation Act of India. Scheduled banks comprise commercial banks and the co-operative banks. During the year 2000. 3. non-scheduled banks and scheduled banks. In terms of ownership.2 CLASSIFICATION OF BANKS: The Indian banking industry.2% respectively in deposits and 8.5% of credit during the same period. 1949 can be broadly classified into two major categories.5% of the deposits and 47. private sector and foreign banks.000 branches spread across the country.9% and 12.7%. The new private sector banks first made their appearance after the guidelines permitting them were issued in January 1993. 16 . 3.14% and 12. The next wave of reforms saw the nationalization of four-fold and the number of banks branches increased eight-fold. the Public Sector Banks (PSB) s found it extremely difficult to complete with the new private sector banks and the foreign banks.1. These banks due to their late start have access to state-of-the-art technology. Eight new private sector banks are presently in operation. The private sector banks are again spilt into old banks and new banks. regional rural banks and other scheduled commercial banks accounted for 5. The manufacturing sector also grew during the 1970s in protected environs and the banking sector was a critical source. which in turn helps them to save on manpower costs and provide better services. The share of foreign banks ( numbering 42 ). commercial banks can be further grouped into nationalized banks. regional rural banks and private sector banks (the old / new domestic and foreign). the State Bank of India (SBI) and its 7 associates accounted for a 25% share in deposits and 28.minimum percentage of their loan portfolio to sectors identified as “priority sectors”.1% share in credit. the State Bank of India and its group banks. The 20 nationalized banks accounted for 53.41%. After the second phase of financial sector reforms and liberalization of the sector in the early nineties. The Indian banking industry is a mix of the public sector.85% respectively in credit during the year 2000. Since then the number scheduled commercial banks increased 2. These banks have over 67. 6 more commercial banks in 1980.

6%.6% respectively in 2008-09. 4. In the quick estimates for 17 .4% in the last quarter.Banking System in India Reserve bank of India (Controlling Authority) Development Financial institutions Banks IFCI IDBI ICICI Commercial Banks NABARD NHB IRBI EXIM Bank ISIDBI Co-operative Banks Regional Rural Banks Land Development Banks Private Sector Banks Public Sector Banks SBI Groups Nationalized Banks Indian Banks Foreign Banks 2.1% during the year.25% in the following year. The growth of GDP during 2007-08 (Quick estimates) was 9. The International Monetary Fund (IMF) has forecast that India’s gross domestic product (GDP) growth will slow dramatically to 6. This is well below the 9% growth in the year to March 2008 and even lower than the government’s prediction of 7. and to 5. The average growth in the first three quarters of the fiscal year was 6. As per the above estimates. 2009. This effectively means IMF expects the economy to grow only 4.9%.0%.25% in the fiscal year to March.1% growth in 2008-09.2 BANKING SCENARIO OF INDIA: As per the Advance Estimates of GDP for 2008-09 released by the Central Statistical Organization on 9. Industry and Services is estimated to be 2.8% and 9. the growth of GDP at factor cost (at constant 99-2000 prices) is estimated to grow at 7. February. the growth rate for Agriculture.

1% by mid-October 2007. IMF estimates global GDP growth to decelerate to 3.3 million tones. Within services. Trade and hotels showed higher growth of 12.6% during 2007-08.7% in the five year period 2003-04 to 2007-08.6% in the previous year. During 2007-08. surpassing the target of 221. transport and communications and financial services recorded double-digit growth for the last two years and are expected to maintain the growth momentum.9% (2000-01 to 2007-08). Continuing inflationary pressures from food and commodity prices as well as high and volatile crude oil prices are other risks being faced by the global economy. metals and crude oil. After growing at 5.1 and 10.9% respectively in 2006-07.2007-08. lowered credit availability and negative wealth effects have emerged as risks to consumption and growth in advanced economies. The financial market turbulence in developed economies following the US sub-prime mortgage crisis has reduced financial leverage.1% in 2007-08 against 11.6% per annum during 2000. India continued to be one of the fastest growing economies of the world. higher inflation rate was noticed due to rise in global prices of food. especially in the US.6% over the previous year. Industrial growth at 8. Inflation based on WPI declined from 6. The services sector maintained its double-digit growth at 10. the corresponding growth rates for these three sectors were 4.9% respectively. estimated at 8.7% in 2007-08. Agriculture and allied activities are estimated to grow by 2.7% in 2008 in the wake of the current financial crisis. Real GDP growth.01 to 2007-08. Towards the close of the fiscal year.6% during 2007-08 has moderated somewhat against 10.8% and 35. partly reflecting moderation in the prices of some primary food articles and manufactured products.9.6% in 2007-08. higher than the long term average of 8. with total food grains production placed at 227.4% at the beginning of the fiscal year to a low of 3. 18 . which is in line with the average growth of 2. 8. which rose to 34. Another positive feature underpinning growth is the sharp rise in the rate of savings and investment in recent years.5 million tones and recording an increase of 4. Food grains production touched a record high in FY08.8% growth in 2006-07.0% in 2006 and 4.9% in 2007. the Indian economy grew at a robust pace for the fifth consecutive year. is in tune with the average annual GDP growth of 8.

partly due to international commodity price pressures. gems and jewellery. During 2007-08.25. silver and pearls. 19 . its single largest trading partner. rising by 23% in dollar terms during 2007-08 against 22. etc.20 lakh. mainly reflecting hardening in prices of primary articles such as fruits and vegetables.12. imports increased by 27. emphasis on credit quality and credit delivery including financial inclusion.0% from 7. gold.4 bn during 2007-08 from US$ 59. August and November 2007 from 6% to 7.3 bn in the previous year. mainly due to higher oil imports. exports continued to show a healthy growth. non-basmati rice. precious and semiprecious stones. Despite Rupee appreciation.6% in 2007-08 against 28. While lending rates rose to 12. which increased by 21. raw cotton and iron ore.5% to US$ 80. some banks announced cuts in their PLR and interest rate on housing loans below Rs.0% against 24. PLRs and deposit rates of major banks were hiked during the year. showed deceleration. inflation began to edge up from early December 2007 to touch 7. To manage the liquidity in the economy. Overall exports growth was driven by petroleum and crude products. non-oil imports were led by capital goods. Due to higher growth in imports than exports. exports to UAE and China remained robust.2% in 2007-08 from 23. to keep up the growth momentum in the economy. The overall stance of RBI’s monetary and credit policy during the year was to ensure price stability and financial system stability along with continuation of the growth momentum.50%.50%.5%. In line with liquidity tightening. Repo and Reverse Repo rates were kept unchanged.1% in 2006-07.4% by 29 March 2008. cotton.59. RBI raised the Cash Reserve Ratio four times: in April.After hovering around 3% during November 2007. While India’s exports to USA.25-9.8% in 2006-07. However. In the same period.6% in the previous year. the trade deficit widened by 35. The tight monetary policy followed by RBI to control inflation and money supply had a Moderating impact on credit growth. the Bank Rate.0% in the previous financial year.75% from 12. as well as fuel and manufactured products such as edible oil/oil cakes and basic metals. edible oils.25-12. fiscal and monetary measures are being taken to contain inflation and maintain high growth. deposit rates (for more than one year maturity) rose to 8. transport equipment. oilseeds. chemicals and related products. in the month of February 2008. Deposit growth also moderated to 22. However. iron ore.

SBI.22. The government mopped up around 93% of the equity.000 crores. This. are banking behemoths of India. SBI mobilized $4. They have branches spread over the entire length and breadth of the country.30. 20 . SBI in particular is all-pervasive enjoying a sprawling network of 9000 branches. it is believed. it has real estate properties some of which are heritage sites all over the country.2 billion through the Resurgent India Bonds (RIB) issue in just 3 months down the post-Pokhran sanction period. SBI enjoys a monopoly of the government business.5% driven by investment. Due to a number of fiscal and monetary measures taken by the Government and RBI to put a check on prices.5% by March 2009. By this act the equity of RBI cannot be diluted below 55%. does not get reflected in its book of accounts. This was the difficult time when the international credit rating agencies had downgraded the country. and Bank of Madras. does a rescue act in the forex market to contain any volatility of the rupee. despite slowdown in the major economies of the world. the Indian economy will continue to grow at 8-8. SBI has a very conservative approach to accounting particularly when it comes to declaration of its assets. Bank of Bombay. time and again. It has assets understood to be worth about Rs2. SBI was formed under the SBI Act in 1955 with the takeover of Imperial Bank and amalgamation of Bank of Bengal. In particular. inflation is expected to come down to 5-5. These are estimated to collectively command a value of Rs. Need for a revolutionary approach towards privatization Nationalized banks such as State Bank Of India (SBI). Its blue and white shingle is visible to the smallest hamlet. a countrywide network of branches and strong brand credibility in the Indian market. Probably modesty does not permit the bank to exhibit its strengths. leaving 7% to private ownership.500 crore ($52 billion). The Reserve Bank of India owns about 60% of the bank’s equity. To its credit.For the current year. SBI enjoys a pool of best managerial talent. though pygmies in the international banking market. assured government business.

With competition from private and foreign banks knocking at the door. They should evolve service-intensive products and make their employees customer-friendly. that numero uno position is sliding with the entry of sleeker private and foreign banks into the Indian Banking scene. nationalized banks and State Bank of India in particular should not take a complacent view. With the government offering an assured business. ATMs. the banks should realize. they even hire the services of foreign consultants but the pace has to be hastened. A revolutionary approach to privatize ownership is the need of the hour. Privatization and Credit disbursement: Talks about privatization of the bank’s ownership have been initiated but the SBI act of 1955 does not permit RBI’s ownership to be diluted to below 55%.But. SBI Gilts. telecom sector will soon be revolutionized. This act is outdated and needs to be re-addressed. With the New Telecom Policy (NTP) almost in place. Virtual Banking: SBI has yet to computerize its operations and network all its branches. telephone banking. AnytimeAnywhere. However. E-commerce. SBI Funds Management. Internet banking. efforts have been initiated by SBI to privatize its non – banking subsidiaries like SBI Caps. But the pace has to be hastened so that investments thus released can migrate to more important areas like development of new technologies and products in customer service and service intensive areas. insurance et al are waiting just around the corner. where SBI’s holding is about 85% of the equity. consumer banking. Privatization also helps to professionalize the banks’ day-to-day operation. At least in major metros. These computers at the best remain only as desk ornaments. The computers currently available serve only to relieve the burden of the clerical staff of maintaining manual ledgers and not to penetrate into areas of customer service. 21 . size is no more an insurance against the onslaught of competition from sleek private and foreign banks. round the clock and telephone banking is still a far cry. The bank is continuously restructuring itself and for this. which will allow the management more freedom in decision making during credit disbursement. virtual banking will soon take-over from the brick-mortar banks.

as it is known that US market is by far the undisputed biggest market and can offer the best price. one should also take note of the flight of talent from these nationalized banks to newly set-up private and foreign banks. At the moment. At the same time. the bank is attempting to change – over its accounting and reporting procedures to comply with US – GAAP norms. talent also takes an exit. while making money is secondary. Instead. This will soon become a problem of serious proportion unless the banks initiate steps to stem the flow. All banks must invest in re-training the manpower so that they can migrate from the areas that will be vacated by computerization. It is the semi skilled manpower having outdated skills. which has been the mainstay of the nationalized banks. And. Retraining and Rationalization of manpower commands higher priority over Retrenchment of manpower. the banks should involve the services of international consultants specialized in this field and take a holistic view of the problem. it is everyone’s worry to look at business as a source of employment. Many industries have faced this problem. all the nationalized banks have excess workforce.300 would be a more realistic value. Action on this front at blitzkrieg pace is the need of the hour. In this ocean of manpower. The level of NonPerforming-Assets (NPAs) is still at very high levels and to start with. which form the excess baggage. In India. Also it will be over simplicity to state that the salaries should be raised because that will only start a wage war. to exclusively address the problem of excess manpower by schemes such as voluntary retrenchment scheme (VRS) because while attempting to remove dead wood.240 whereas experts expect Rs. it is these new banks’ top officials after migrating from the government banks are targeting at the top corporate clients and thus poaching into the corporate business. every institution does have its share of highly skilled and talented manpower.To aid privatization and effect a better price realization. which contribute to asset building. the SBI stock is undervalued at Rs. 22 . some of this excess manpower can cover areas of debt recovery. This is a prerequisite for trying out the ADR route. Manpower Retraining and not Retrenchment: As a hangover of the past socialistic mindset. This is indeed a hot potato for the management of many enterprises and is therefore being handled with kid gloves. It is difficult.

acquisitions. The approach to such reforms in India has been one of gradual and non-disruptive progress through a consultative process.flow can only generated by privatization. consumer durable finance. diversification of lines of business. The emphasis has been on deregulation and opening up the banking sector to market forces. In this milieu. telephone banking et al.New Products and New technologies: Nationalized banks have generally been preoccupied with treasury business. Development of these new areas call for heavy investments and this cash . While certain changes in the 23 . Mergers. The Reserve Bank has been consistently working towards the establishment of an enabling regulatory framework with prompt and effective supervision as well as the development of technological and institutional infrastructure. shifting customer orientation and the changing regulatory environment are building up the pressure for banks to explore new possibilities by abandoning the familiar and embracing the unconventional. housing finance. insurance. what really enables banks to build a lasting competitive advantage is the ability to continuously innovate. All nationalized banks and SBI in particular has the advantage of vast network of branches and can therefore carry the new business to the remotest corner. auto-finance. Competition is compelling banks to be agile and innovate everyday. In addition. internet banking. achieve differentiation and respond quickly to dynamic business challenges.1 BANKING IN THE NEW MILLENIUM The banking environment has suddenly become quite challenging after the sub prime crisis that surfaced last year and which has resulted in an unprecedented global liquidity crunch. 2. surplus manpower once retrained can be absorbed in the new ventures.2. consolidation. The new product areas that require greater penetration are personal banking. Persistent efforts have been made towards adoption of international benchmarks as appropriate to Indian conditions. The banking sector has witnessed wide ranging changes under the influence of the financial Sector reforms initiated during 2008. expansion. The flattening of the world has dramatically impacted both the dynamics and the pace of global banking business. but to make this presence felt the banks have to move at blitzkrieg pace.

there would be no physical identity for any branch. banks are also adding services to their customers. private banking. 2. relates to helping customers raise funds in the Capital Markets and advising on mergers and acquisitions.3 TECHNOLOGICAL DEVELOPMENTS: Technology has brought about strategic transformation in the working of banks.2 BANKING ACTIVITIES: Banks' activities can be divided into retail banking. With stiff competition and advancement of technology. which is a combination of commercial banking. The traditional branch model of bank is now giving place to an alternative delivery channels with ATM network. All the services that the bank has permitted on the internet are displayed in menu. 2. providing wealth management services to High Net Worth Individuals. Internet Banking (E-Banking) Internet banking (or E-banking) means any user with a personal computer and a browser can get connected to his banks website to perform any of the virtual banking functions. 24 . investment banking and various other activities including insurance. Banks are now moving towards Universal Banking. the developments so far have brought the Indian financial system closer to global standards. providing services to mid-size business. In internet banking system the bank has a centralized database that is web-enabled. business banking. The customers have more choices in choosing their banks. dealing directly with individuals. With years.2.legal infrastructure are yet to be effected. corporate banking dealing with large business entities. Any service can be selected and further interaction is dictated by the nature of service. the service provided by banks has become more easy and convenient. The Indian banking industry is passing through a phase of customers market. and investment banking.2. Once the branch offices of bank are interconnected through terrestrial or satellite links.

Smart Card: Banks are adding chips to their current magnetic stripe cards to enhance security and offer new service. banking hour’s restrictions and paper based verification. They are:  Information Only System: General purpose information like interest rates. transaction details. loan and deposit calculations are provided in the banks website. Electronic Information Transfer System: The system provides customer. Transactions can be submitted by the customer for online update. personal attendance of the customer.Internet banking in India The Reserve Bank of India constituted a working group on Internet Banking. Debit Card. It is operated by plastic card with its special features.specific information in the form of account balances. The platform where communication technology and information technology are merged to suit core needs of banking is known as Core Banking Solutions. Credit Card is a post paid card. The advancement in technology especially internet and information technology has led to new way of doing business in banking. bank products and their features. Credit Cards/Debit Cards: The Credit Card holder is empowered to spend wherever and whenever he wants with his Credit Card within the limits fixed by his bank. The group divided the internet banking products in India into 3 types based on the levels of access granted. working simultaneously on different issues and increased efficiency. on the other hand. Fully Electronic Transactional System: This system allows bi-directional capabilities. branch location. The plastic card is replacing cheque. called Smart Cards. and statement of accounts. Smart Cards allow thousands of times of information storable on magnetic stripe cards. Here computer software is developed to perform core operations of banking like 25 . is a prepaid card with some stored value.      Core Banking Solutions Core Banking Solutions is new jargon frequently used in banking circles. This system requires high degree of security and control Automated Teller Machine (ATM): ATM is designed to perform the most important function of bank. The technologies have cut down time.

account transactions. as mandated by the RBI. Mobile banking Mobile banking (also known as M-Banking. via a mobile device such as a mobile phone. Real Time Gross Settlement (RTGS) RTGS is an electronic settlement system of Reserve Bank of India without involvement of papers.2. The customer willing to use this facility is required to fill in the mandate form from the corporate/any utility service institution for ECS mode of credit and debit. Electronic Clearing Service Electronic Clearing Service is another technology enhancement happened in the banking industry. To facilitate an Efficient. SMS Banking etc. mbanking. passbook maintenance.4 BASEL II: HOW GEARED ARE BANKS?? BASEL II is a new capital adequacy frame work applicable to scheduled commercial banks in India. Secure. 2. In a nut-shell. BASEL II – 26 . Reliable and Expeditious System of Fund transfer and clearing in the Banking sector throughout India. customer records. The customer needs to prepare the payment date and submit it to the “sponsor Bank” and after that everything happened electronically.recording of transactions. payments etc. balance of payments and withdrawal are done. So customers can there by make payments as well as receive all incomes electronically. Real time gross settlement systems (RTGS) are a funds transfer mechanism where transfer of money takes place from one bank to another on a "real time" and on "gross" basis. Economical. The Basel capital accord (BASEL II) guideline promulgated by the BIS to establish Capital adequacy requirements and supervisory standards for banks and structured by three pillars.) is a term used for performing balance checks. interest calculations on loans and deposits.

 Makes better business standards  Reduce losses to the banks The 3-Pillar Approach of BASEL II The BASELII is designed to facilitate a more comprehensive. sophisticated and risk sensitive approach for banks to calculate regulatory capital.2. Provide effective assessment method  Incorporates Sensitivity to banks.5 CAMEL: TOOL FOR MEASURING THE PERFORMANCE OF BANKS 27 . The basic objective of BASEL II is to create an international standard 2.

Management quality : To measure the efficiency of the management E ." The six factors examined are as follows: C .Asset quality a : To ascertain the component of non performing assets as percentage of the total asset M .An international bank-rating system where bank supervisory authorities rate institutions according to six factors.Earnings activity : To assess the quality of income generated by core L . The six factors are represented by the acronym "CAMELS. A .Capital adequacy the additional : Reflects the overall financial condition of a bank & also ability of the management to meet the need for capital.Liquidity from : To measure the ability of a bank to meet the demand demand deposits in a particular year 28 .

stable for PSBs 29 . State Bank of Mauritius Bank of America National Trust Mizutto Corporate Bank 2.On the Basis of CAMEL rating Top Ten Banks in Performance During 2008-2009 Public sector Banks Bank of India Corporation Bank Union Bank of India Andhra bank State bank of Patiala Private sector Banks Karur vysya bank Yes bank City Union Bank Tamil Nadu Mercantile Bank South Indian bank Foreign Banks Shinhan bank Abu Dhabi commercial bank Mashreqbank P S C Antwerp Diamond bank N V Bank of Tokyo-Mitsubishi UFJ Bank of Baroda Indian Overseas Bank State Bank of Hyderabad Punjab & Sind Bank Indian Bank Federal Bank Jammu & Kashmir Bank Dhanalakshmi Bank Karnataka Bank Kotak Mahindra Bank Calyon Bank Krung Thai Bank Public Co.3 BankingReview-2009 NPAs rise for Private Banks.

Credit spreads saw a decline after a long time After a long time.Gross NPAs movement of banks in Q1 has shown an interesting trend Gross NPAs of all Private Banks that we have covered have seen a sequential rise However. with flat to lower Gross NPAs NIMs of most banks saw a sequential decline Decline was largely due to PLR cuts by banks towards the end of Q4FY08 Most banks have. NIMs may again come under pressure. raised their PLRs and deposit rates by 100-150bps in June’08 and Q1FY09 NIMs should see a marginal improvement in Q2 on account of PLR hikes However. however. asset quality of most PSBs remained stable. the sector saw a decline in credit spreads (Yield on advances – Cost 30 . as deposit re-pricing kicks in with a lag effect.

most showed above 40+% growth Even for ICICI. AXIS bank lost out due to CBOP merger. Canara and Union saw marginal improvement in CASA on YoY basis Others like BOB. Union Bank saw sequential improvement in credit spreads in Q1 CASA saw a mixed trend Among Public Sector Banks (PSBs). BOI. Canbank. BOI and SBI among PSBs SBI showed a robust growth across all segments. consolidated book (including overseas book) grew 20% YoY Credit growth has been very robust at 26% in Q1 against 24. resulting in compression of credit spreads Canbank.of deposits) Decline in credit spreads was largely due to inability of most banks to raise PLR in Q1 even as interest rates were rising BOB. Union and PNB were more moderate at 16-20% Among Private banks. SBI and IOB saw above 30% growth. ICICI Bank saw improvement both on YoY and sequential basis Overall credit growth was robust Among PSBs BOI. PNB.6% last year Banks which witnessed high credit growth Axis. SBI. except for ICICI. OBC saw a decline on YoY basis Among private banks. IOB. AXIS Bank and Yes Bank among private BOB. Corpbank and BOI saw substantial fall in yields on credit book. except for mortgages International credit grew 46% YoY SME credit grew 23% YoY Mid Corporate credit grew 31% YoY 31 . BOB.

OBC was lower than the average 2. Union. Canara.4 • • • • • • • • • • • IN BANKING SECTOR Non Performing Assets Capital Adequacy Ratio Q Ratio Z Score Shareholding Pattern of the Banks EPS Growth Rate Reserves with RBI to Total Assets Ratio Business per Employee & Profit Per Employee Total Liability to Net Worth Ratio Dividend Payout Ratio Return on Assets 32 .Home Loans grew 17% YoY Axis among the private banks and BoI amongst PSBs continues to deliver high NII growth Credit growth of ICICI. PNB.

Presence of more number of smaller banks that would likely to be Impacted adversely. Threats Inability to meet the additional Capital Requirements. Strong Asset Base would help in bigger growth. business Credit & risk management and Information Technology.2. Presence of intellectual capital to face the change in implementation with good quality. Ineffective risk measures. Huge investment in technology.5 SWOT ANALYSIS: Strength Banking Sector Weakness Poor Technology infrastructure. Aggression towards development the existing standards by banks. banking system 33 . Loss of Capital to the entire due to merger and acquisitions. Need significant Connection among. Strong regulatory impact by central Bank to all the banks. Opportunities Increasing Risk management Expertise. Advancement of technologies.

THREAT OF SUBSTITU TES High threat from substitutes BARGAINING POWER OF CUSTOMERS -High bargaining power -Low switching cost -Large no.2.5. public. of alternatives 34 .1 Porter’s FIVE-FORCE analysis for Indian banking industry BARGAINING POWER OF SUPPLIERS -Low supplier bargaining power -Few alternatives available -Subject to Regulations RBI Rules and THREAT OF NEW ENTRANT -Low barriers to entry -Government policies are supportive INDUSTRY RIVARLY Intense competition Many private.

High There are public sector banks. private sector and foreign banks along with non banking finance companies competing in similar business lines. Barriers to entry Licensing requirement. 35 . Trade unions in public sector banks can be anti reforms. Bargaining power of suppliers High during periods of tight liquidity. Bargaining power of customers For good creditworthy borrowers bargaining power is high due to the availability of large number of banks Competition . investment in technology and branch network. Demand India is a growing economy and demand for credit is high though it could be cyclical.Key Points: Supply Liquidity is controlled by the Reserve Bank of India (RBI). Depositors may invest elsewhere if interest rates fall.

5. Consumer confidence in the economy and in job security also has a major impact. via tax benefits) • Regulatory control and protection (to prevent the collapse of financial institutions and protect investors money) Economic Economic factors are key variables which have an impact on the activity in the banking services sector.g. The level of consumer activity is governed by income levels and personal wealth. savings will take priority over loans and other forms of expenditure.2 PESTAL ANALYSIS: PEST Analysis for Banking Services Political/ Legal Influences which have an impact on banking services and consumer confidence include the following: • State provision of pensions • Government encouragement of savings and investment (for e. more discretionary income is available to spend on banking services. As income levels grow.2. Consumers may also seek easy access savings and be willing to tie up their money for longer periods with potentially more attractive investments. The main economic factors that should be monitored with regard to banking services marketing are as follows: 36 . if lean times are foreseen ahead.

• Changing attitude towards consumer credit and debt • Changing employment patterns • Numbers of working women • The ageing population • Marriage/divorce/birth rates • Consumption trends Technological Technology has a major impact on many industries including financial services and banking in particular. From the customers’ viewpoint. technology has played a major role in the development of 37 . ATM services which not only provide cash but also allow for bill payments.• Personal and household disposable income • Discretionary income levels • Employment levels • The rate of inflation • Income tax levels and taxation structures • Savings and investment levels and trends • Stock market performance • Consumer spending & Consumer credit Socio-cultural Many demographic factors have an important bearing on banking services markets. deposits and instant statements are widely used.

the Development Financial Institutions will be able to borrow/lend for the short-term as well. Automated queuing systems have made visits to the bank easier and more convenient. IndianScenario: In India the five FDIs that are frontrunners in the race to convert to Universal Bank are: 38 . bringing about far greater efficiency through computerized records and transaction systems and also in business development. • Process developments • Information storage and handling • Database system 2. Impact on FDI: Two key aspects of the business are affected. through the setting up of detailed customer databases for effective segmentation and targeting. Telephone Banking and insurance services are now being used in place of the traditional branch-based service process. The institution can have access to cheap retail deposits and the breadth of its advances increase to include short-term working capital loans to corporates. for example.3 I. Thus. RECENT TRENDS Universal Banking Universal banking refers to Financial Institution offering all types of financial services under one roof. Also they can now effectively compete with the commercial banks.5.the process whereby the service is delivered. Technology has also played a major role within organizations. The Institution has greater operational flexibility. besides borrowing and lending for the long term. The main technological developments fall within these categories.

2.1. Thus with clearing of legal hurdles it just has to work out the modalities to formally call itself a universal bank. Industrial Credit and Investment Corporation of India (ICICI) Industrial Development Bank of India (IDBI) Export Import Bank (EXIM Bank) Industrial Finance Corporation of India (IFCI) Industrial Investment Bank of India (IIBI) ICICI is already a virtual bank with subsidiaries like ICICI Bank engaged in banking business. Also they have to fulfill the priority sector lending norms applicable to the commercial banks. RBI Norms: The norms stipulated by RBI treat FDIs at par with the existing commercial banks. 4. as it is very difficult to fulfill such norms without hurting the bottomline Effect on the Banking Sector: However. Mergers & Acquisition The Indian Banking Sector is more overcrowded then ever. irrespective to the size. Similarly other FDIs are charting out aggressive plans to stay ahead in this race. the existing players in the industry are likely to face stiff competition. II. lower bottom line ultimately leading to a shakeout in the industry with only the operationally efficient banks will stay into the business. 3. Thus all Universal banks have to maintain the CRR and the SLR requirement on the same lines as the commercial banks. Also recently Bank of Baroda. a commercial bank has indicated its intention to convert to a Universal Bank. III. Ever since the RBI opened up the sector to 39 . 5. with large Term lenders converting into Commercial banks. There are 96 commercial banks reporting to the RBI. These are the major hurdles as perceived by the institutions.

there have been nine new entrants. Anagram Finance and Bank of Madura within a period of two years. Thus they are unable to make a significant dent in the market share of the old players. This has led to using multiple channels of delivery of their products. ICICI Bank has acquired ITC Classic. The only route available for these banks is to grow inorganically via the M & A route.. All of them are growing at a scorching pace and redefining the rules of the business. delivering money on demand. Standard & Chartered Bank has acquired ANZ Grindlays Bank’s Asian and Middle East operations The above happenings clearly indicate that the M & A scenario in the Indian banking sector is far from over. An ATM does the basic function of a bank’s branch. i. nowadays we have ATMs that are used to vend different FMCG products also. Also it is impossible to exponentially increase the number of branches. Currently most of the institutionally promoted banks have already gobbled smaller banks. 40 . Hence setting of newer branches is not required thereby significantly lowering infrastructure costs. 1.private players. ATM (Automatic Teller Machine): An ATM is basically a machine that can deliver cash to the customers on demand after authentication. Also Nationalised Banks like Bank of Punjab. AXIS Bank has merged Times Bank with itself. IV. Among foreign banks.e. However they are dwarfed by many large public and old private sector banks with a large network of branches spread over a diverse geographical area. UTI bank had almost completed its merger with Global Trust Bank before it ran into rough weather. Vyasa Bank are wooing IDBI Bank for a merger. Strong banks will continue to takeover weak and inefficient banks to increase their size. Hence the new banks are under a tremendous pressure to acquire older banks and thus increase their business. However. Multiple Delivery Channels Today the technology driven banks are finding various means to reduce costs and reach out to as many customers as possible spread over a diverse area.

Mobile Banking: Banks can now help a customer conduct certain transactions through the Mobile Phone with the help of technologies like WAP. 3. Also. Net Banking: Net banking means carrying out banking transactions via the Internet.. check his account position and electronically communicate with the bank through the Internet for which he may have wanted to visit the bank branch. SMS. etc. These machines also hold the keys to future operational efficiency. there are many dormant cardholders who do not use the ATMs and prefer the teller counters. Net banking helps a bank spread its reach to the entire world at a fraction of the cost. Indian banks are increasing the number of ATMs at a feverish pace. Thus the need for a branch is completely eliminated by technology. Also this helps in serving the customer better and tailoring products better suited for the customer A customer can view his account details. Though the number of ATMs has increased since last year.. This helps a 41 . it is not in sync with the number of cards issued. 4. This also eliminates the customer of the need to visit the bank’s branch. checking of account balance. ordering cheques. In India.Cost reduction is however possible only when these machines are used. making payments. transaction history. electronically make payments. Phone Banking: This means carrying out of banking transaction through the telephone. 2. Inspite of these odds. etc. A customer can call up the banks helpline or phone banking number to conduct transactions like transfer of funds. order drafts. the average cash withdrawal per ATM per day has fallen from 100 last year to 70 this year. transfer funds.

have played a crucial role in the socio-economic progress of the country after independence. CHALLNGES: Liberalisation process has increasingly exposed Indian Industry to international competition and banking being a service industry is also not an exception. V. Indian Banks. Thus it can be seen that tech savvy banks are tapping all the above alternative channels to cut costs improve customer satisfaction. This could have had an adverse impact on the Capital Adequacy Ratio (CAR). VRS (Voluntary Retirement Scheme): VRS or the ‘Golden Handshake’ is picking up very fast in the recent times due to the serious attention of the government towards overstaffing in the banks. functionally diverse and geographically widespread. The government had also cleared a uniform VRS framework for the sector giving the banks a seven months time frame to cut flab. Banks face increasing pressure to stand out from the crowd. Hence the RBI allowed the banks to write off the VRS expenses over a period of 5 years. On the Internet.bank to combine the Internet and telephone and leverage it to cut costs and at the same time provide its customer the convenience. The scheme was open till 31st march. Though many banks had announced different VRS schemes it involved an outflow of huge sums of money. 2001. challenges at local. the growth led to strains in the operational efficiency of banks and the accumulation of non-performing assets (NPA’s) in their loan portfolios. However. 42 . especially among the public sector banks. this means offering your target customers an increasingly broader range of services than your competitors and that too in unique way. Banking Sector in India too faces same national and international level.

Banking sector reforms and liberalisation process raised many challenges before Indian Banks and for sustainable development it has become necessary to face these challenges effectively:  Intense Competition: The RBI and Government of India kept banking industry open for the participants of private sector banks and foreign banks. which calls for appropriate customer centric policies and customer friendly procedures.  Privacy and Safety: Among the most important aspects. settlements have reduced translation times.. safety liquidity and profitability. The foreign banks and new private sector banks have spearheaded the hi-tech revolution. poor and even illiterate mans in the lurch to which the level of automation and efficiency of services are immaterial. The foreign banks were also permitted to set up shop on India either as branches or as subsidiaries. The safety aspect assumes more significance in the emerging scenario as the economic loss caused internationally by these types of crimes might risk area and any lacunae is safety would result in erosion of confidence and the same might possibly paralyse the 43 . non-banking finance companies. To face competition it is necessary for banks to absorb the technology and upgrade their services.All this has resulted in a challenge to managers of banks to develop the right mix of acquired and internally grown IT applications which suits customer’s expectations. For survival and growth in highly competitive environment banks have to follow the new “Guru Mantra” of prompt and efficient customer service.  Technological Up gradation: Already electronic transfers. etc.e. of savings. clearings. i. safety has to be accorded top most priority. latest technology innovative and globally tested products are spreading their wings and wooing away customers form other banks. foreign banks. Due to this lowered entry barriers many new players have entered the market such as private banks. Heavy weight foreign banks with huge base. However use of High-Tech sophisticated technology leaves the predominantly rural.

In this case. Therefore it becomes necessary for banks to 44 . The areas among other things. In today’s fast-changing world of employee mobility both horizontally and vertically and value systems.  Human Resources Management: In the recent past the human resource Policies in banks were mainly guided by the comcept of permanent employment and its necessary concomitants of creating career paths. In this the entire software could be stolen. If this is done.  Computer forgery could be committed by way of gaining access to other account. etc. Thus many banks are going for URS schemes to reduce the burden of excessive staff.  Use of stolen or falsified cards in ATM machines. Therefore. deliberate damage through viruses on data stored in computers. Banks must believe in people. if the password is stolen money could be transferred from one account to another. If a hacker has found out the password. for the employees. he can cause havoc to the entire network. and continuous improvement of excellence. same criminals might gain entry into the computers and cause damage to the system.  Software privacy is another area of potential danger faced by the banking industry.entire network. terminal benfits. the hackers could operate a parallel network. banks must understand how to retain knowledge based employees and prevent them to migrating to some other organisation. customer orientation. The key elements that shall provide a competitive edge to banking sector will not be physical assets but knowledge assets and information. Schemes like VRS are going to change the nature of workforce with many senior and experienced persons opting for it. prevention is a major problem with these types of crimes. increasing the limits in accounts or face value of cheaques. another through which security and privacy are maintained. Though these trends could be detected consequently. Also. the public sector banks need to hire the right talent at market related compensation and to shed surplus manpower/staff. which might endanger security in ebanking can be:  Changes in input data such as changing the amount in ledges. This apart.

I would like to highlight the main issues in this respect: It also needs to be recognised that in recent times. so to speak. internationalisation and dollarisation in the financial systems of many of the countries notably the EMEs. possibly at the cost of efficiency. 3 Emerging Issues in International Scenario: Banking and Financial Sector Reform With the evolving global scenario at the background. the structure of the industry. the pursuit of financial stability in India. When we talk of the major features of international banking scenario. especially with respect to the EMEs has resulted in a overall trend towards conglomeration. has sought to (a) ensure uninterrupted financial transactions and (b) maintain confidence in the financial system amongst all stakeholders. First. let us now discuss the challenges and opportunities facing the financial sector around the globe. Successful banks overcoming the challenges will be those that harness technology in a customer friendly yet cost effective way. there are many more large and medium-sized domestic banks from 45 . This is true in the Indian context as well where the erstwhile Governmentdominated financial system was. imparting stability under rigid regulation. the following observations come immediately to mind. In this context. viewed from the standpoint of banking system. Such trends have important implications for financial sector regulation. The present trend towards financial sector liberalization and globalisation. there has been growing concern worldwide about the need for preserving financial stability.encourage all employees to take risks and work towards continuous improvements and breakthroughs. This requires enormous internal and external management and the crux of the solution lies in blending human resources with information technology. In the world’s top 1000 banks.

These figures tend to be much lower in developed economies. as many as 14 are in the top 500. The polarized phenomenon to of internationalisation has primarily been high-income countries. on the other hand. just above 100 in Japan. Thus. Even China has as many as 16 banks within the top 1000. The f o u r t h factor is the growing internationalization of banking operations. This is perhaps in size of economies and of the financial attractive risk-return investment opportunities for foreign banks in such countries. over 80 in Germany. However. Illustratively. Internationalization. according to The Banker 2004. Third. Banking Sector reforms are of paramount importance in many emerging markets. Additionally. industry concentration.the developed countries than from the emerging economies. In most emerging markets. over 40 in Spain and around 40 in the UK. India. over 200 are located in USA. the five largest banks (usually domestic) accou nt for over two-thirds of bank assets. 46 . banking sector assets comprise well over 80 per cent of total financial sector assets. out of which. increasing the overall risk of domestic bank portfolios. leaving domestic banks with less creditworthy customers. foreign banks are often viewed to be ‘cherry-picking’ host country corporations. whereas these figures are much lower in developed economies. is increasing fast in emerging economies from very low levels not too long ago. had 20 banks within the top 1000 out of which only 6 were within the reflective sectors. measured by the percentage of a country’s banking sector assets controlled by the largest banks. increased competition arising out of foreign bank entry could prompt domestic state-owned banks to venture into high-risk areas in an attempt to maintain their franchise value. Second. In most emerging market economies. likely owing to on mediumof differences top 500 banks. the share of bank asset in total financial sector assets. defined as the share of foreignowned banks in total bank assets. out of the top 1000 banks globally.

salient among them being (a) diminished role of central banks to act as lenders of last resort. in turn. Pillar III aims at encouraging banks to disclose information in order to enhance the role of market participants in monitoring banks 47 . which focuses on the supervisory review process. The growth of such conglomeration has raised the possibility of vulnerabilities including systemic risk due to contagion and the possibility of opportunities for regulatory and supervisory arbitrage. such as interest rate risk in the banking book. especially in Latin America and transition economies raises several vulnerabilities in the financial system. While the Pillar I of the New Accord signifies a refinement of existing capital charge by making it more correlated with the credit risk of the banks’ assets and an extension of the capital charges for risks not considered in the current Accord. the growing dollarisation. The global banking scenario is going to be influenced by implementation of the Basel II Accord. (b) possibility of dollar deposits being subject to ‘runs’ since such deposits are usually close substitutes for deposits abroad or dollars cash and (c) limited ability of central banks to raise the interest rate on dollar deposits to act as ‘interest rate defenses’ against deposit withdrawals. financial sectors across the globe has witnessed increased conglomeration to survive in a milieu of financial liberalization and technological improvements. aims to ensure that a bank’s capital position is consistent with its overall risk profile. demand global access to services and a wide product mix has also been a contributory factor. Finally.Fifthly. Further. Pillar II. It seems at this point that Basel II may be beneficial to many of the EMEs including India. and operational risk. Globalization of clients of major financial instruments who.

protection of minority shareholders. (ii) Deficiencies have been observed in the oversight of country risk4. (iv) With regard to financial integrity and development of safety net. recent evidences point out to a number of deficiencies including. issues of connected lending and corporate governance practices.The recent survey by the IMF on the implementation of financial sector regulation in 36 Fund member countries3 based on the Financial Sector Assessment Programmes (FSAPs) completed over the period 2000-03 reveals the following interesting points about the global financial system. (i) The problems associated with regulatory forbearance. rationalisation of the licensing process and minimum entry standards in most countries. accounting and auditing procedures and procedures for orderly winding up of failed insurers and securities firms. the observed deficiencies mainly relate to timeliness of disclosure. 48 . On the positive side. (iii) deficiencies have been observed in respect of the design/implementation of consolidated supervision. there has been relatively high level of implementation with respect to legal foundations . In terms of regulatory weaknesses.

CHAPTER 3 INTRODUCTION TO SBI AND AXIS 49 .

38% for H1’08 to 14.71% over the same period. Mobile Banking. the bank’s deposits grew by 10.45% to 39.5% and 40.8% this quarter. market capitalization and profits is today going through a momentous phase of Change and Transformation – the two hundred year old Public sector behemoth is today stirring out of its Public Sector legacy and moving with an agility to give the Private and Foreign Banks a run for their money. however.13% in Q2’09. Custodial Services. The return on assets (annualized). On a quarterly basis. General Insurance. respectively.3. the country’s oldest Bank and a premier in terms of balance sheet size. Private Equity. Advances growth to slow down: SBI recorded a handsome 37% yoy growth in advances. number of branches.63% for H1’09.2% yoy. translating into an 18% sequential growth in the first half. The bank is entering into many new businesses with strategic tie ups – Pension Funds. Profitability: The Bank’s ROE declined from 17. 54.3%. Improvement in the credit-deposit ratio: The Bank’s credit-deposit ratio increased from 68. This was following a robust 37% yoy increase in advances. 50 . Robust rise in deposits: State Bank of India’s deposit base surged 28% yoy and its CASA ratio improved from 39.1 STATE BANK OF INDIA State Bank of India’s operating profit and net profit for Q2’09 surged 54. The State Bank of India. However. exhibiting a strong performance. which exceeded the 28% growth in deposits over the same period.6 bn. Advisory Services. this momentum is likely to decelerate considerably in the second half of 2008-09. Point of Sale Merchant Acquisition.99% in Q2’08 to 1. structured products etc – each one of these initiatives having a huge potential for growth. Increase in the NII and NIM: SBI’s net interest income (NII) increased by 45% yoy to reach Rs. increased from 0.9% in Q2’08 to 73.

It is also focusing at the top end of the market. etc. The bank is also looking at opportunities to grow in size in India as well as internationally. Some of the training programs are attended by bankers from banks in other countries. on whole sale banking capabilities to provide India’s growing mid / large Corporate with a complete array of products and services. SBI Factors. Throughout all this change. mobile banking. debit cards. and other electronic channels such as Internet banking. the Bank is the largest provider of infrastructure debt and the largest arranger of external commercial borrowings in the country. It is the only Indian bank to feature in the Fortune 500 list.000 villages in the next two years. It has also 7 Subsidiaries in India – SBI Capital Markets. Today.forming a formidable group in the Indian Banking scenario.The Bank is forging ahead with cutting edge technology and innovative new banking models. The Bank is also in the process of providing complete payment solution to its clientele with its over 8500 ATMs. It is in the process of raising capital for its growth and also consolidating its various holdings. today it offers the largest banking network to the Indian customer. It presently has 82 foreign offices in 32 countries across the globe. attitudes and take all employees together on this exciting road to Transformation. the Bank is also attempting to change old mindsets. With four national level Apex Training Colleges and 54 learning Centres spread all over the country the Bank is continuously engaged in skill enhancement of its employees. SBI DFHI. The Bank is changing outdated front and back end processes to modern customer friendly processes to help improve the total customer experience. With about 8500 of its own 10000 branches and another 5100 branches of its Associate Banks already networked. looking at the vast untapped potential in the hinterland and proposes to cover 100. In a recently 51 . SBICAP Securities. to expand its Rural Banking base. SBI Life and SBI Cards . It is consolidating its global treasury operations and entering into structured products and derivative instruments.

000 employees in a period of 100 days using about 400 Trainers.concluded mass internal communication programme termed ‘Parivartan’ the Bank rolled out over 3300 two day workshops across the country and covered over 130. looking at the vast untapped potential in the hinterland and proposes to cover 100. the Bank is the largest provider of 52 . to drive home the message of Change and inclusiveness. number of branches. It is also focusing at the top end of the market. the country’s oldest Bank and a premier in terms of balance sheet size. The Bank is forging ahead with cutting edge technology and innovative new banking models. It is consolidating its global treasury operations and entering into structured products and derivative instruments. The workshops fired the imagination of the employees with some other banks in India as well as other Public Sector Organizations seeking to emulate the programme.1 ABOUT SBI: The State Bank of India.000 villages in the next two years.1. market capitalization and profits is today going through a momentous phase of Change and Transformation – the two hundred year old Public sector behemoth is today stirring out of its Public Sector legacy and moving with an agility to give the Private and Foreign Banks a run for their money. Today. 3. to expand its Rural Banking base. on whole sale banking capabilities to provide India’s growing mid / large Corporate with a complete array of products and services.

SBI DFHI. Some of the training programes are attended by bankers from banks in other countries. It is in the process of raising capital for its growth and also consolidating its various holdings. today it offers the largest banking network to the Indian customer. With four national level Apex Training Colleges and 54 learning Centres spread all over the country the Bank is continuously engaged in skill enhancement of its employees. It is the only Indian bank to feature in the Fortune 500 list.infrastructure debt and the largest arranger of external commercial borrowings in the country.forming a formidable group in the Indian Banking scenario. 53 . etc. SBICAP Securities. SBI Life and SBI Cards . With about 8500 of its own 10000 branches and another 5100 branches of its Associate Banks already networked. It has also 7 Subsidiaries in India – SBI Capital Markets. The Bank is also in the process of providing complete payment solution to its clientele with its over 8500 ATMs. It presently has 82 foreign offices in 32 countries across the globe. The bank is also looking at opportunities to grow in size in India as well as internationally. debit cards. mobile banking. The Bank is changing outdated front and back end processes to modern customer friendly processes to help improve the total customer experience. SBI Factors. and other electronic channels such as Internet banking.

Out of the total branches.3. Corporate Banking. 12 exchange bureaus. 54 .2 KEY AREAS OF OPERATION: The business operations of SBI can be broadly classified into the key income generating areas such as National Banking.177 branches. even in the remotest corners of the country. These SBUs are as follows: Corporate Accounts Leasing Project Finance Mid Corporate Group Stressed Assets Management b) NATIONAL BANKING The national banking group has 14 administrative circles encompassing a vast network of 9. SBI has created various Strategic Business Units (SBU) in order to streamline its operations. & Treasury operations. 809 are specialized branches. to reach out to customers.193bn. 104 satellite offices and 679 extension counters. 4 sub-offices. International Banking. The functioning of some of the key divisions is enumerated below: a) CORPORATE BANKING The corporate banking segment of the bank has total business of around Rs1.1.

The bank is keen to implement core banking solution to its international branches also. in Indonesia. at Gaborone. The bank diversified its operations more actively into alternative assets classes with a view to diversify the portfolio and build alternative revenue streams in order to offset the losses in fixed income portfolio. robust credit growth and liquidity constraints. SBI has installed ATMs at Male. 25 foreign offices were successfully switched over to Finacle software.This group consists of four business group which are enumerated below: Personal Banking SBU Small & Medium Enterprises Agricultural Banking Government Banking c) INTERNATIONAL BANKING SBI has a network of 73 overseas offices in 30 countries in all time zones and correspondent relationship with 520 international banks in 123 countries. During FY06. 55 . Muscat and Colombo Offices. d) TREASURY The bank manages an integrated treasury covering both domestic and foreign exchange markets. SBI acquired 76% shareholding in Giro Commercial Bank Limited in Kenya and PT Indomonex Bank Ltd. In recent years. The reorganization seeks to enhance the efficiencies in use of manpower resources and increase maneuverability of banks operations in the markets both domestic as well as international. the treasury operation of the bank has become more active amidst rising interest rate scenario. In recent years. Reorganization of the treasury processes at domestic and global levels is also being undertaken to leverage on the operational synergy between business units and network. The bank incorporated a company SBI Botswana Ltd.

56 .755 branches of its seven Associate Banks dominates the banking industry in India.e) ASSOCIATES & SUBSIDIARIES The State Bank Group with a network of 14. e. Mutual Funds. provides a whole range of financial services which includes Life Insurance. Single window delivery system has been introduced in all associate banks. through its various subsidiaries. the Group. Merchant Banking. Factoring. Credit Card. Security trading and primary dealership in the Money Market.061 branches including 4. In addition to banking.1) Associates Banks: SBI has seven associate banks namely • State Bank of Indore • State Bank of Travancore • State Bank of Bikaner and Jaipur • State Bank of Mysore • State Bank of Patiala • State Bank of Hyderabad • State Bank of Saurashtra All associate banks have migrated to Core Banking (CBS) platform. providing anytime-anywhere banking to its customers to facilitate a bouquet of innovative customer offerings. SBI’s seven associate banks are the first amongst the public sector banks in India to get fully networked through CBS.

Ltd. (SBICSPL) v) SBI Funds Management (P) Ltd.e. (SBIFMPL) f) Human Resources NON BANKING SUBSIDIARIES: The Bank has the following Non-Banking Subsidiaries in India : SBI Capital Markets Ltd SBI Funds Management Pvt Ltd SBI Factors & Commercial Services Pvt Ltd 57 .2) Non-Banking Subsidiaries/Joint Ventures i) SBI Life: ii) SBI Capital Markets Limited (SBICAP) iii) SBI DFHI LTD iv) SBI Cards & Payments Services Pvt.

72%.5 crore and GIC and its four subsidiaries contributing Rs. 115 crore. 403. The Bank was promoted jointly by the Administrator of the specified undertaking of the Unit Trust of India (UTI . The New India Assurance Company Ltd. The Bank has a very wide network of more than 896 branches and Extension Counters (as on 31st December 2009). 1.2 A X ISB A N K A X IS Bank: Axis Bank was the first of the new private banks to have begun operations in 1994. The Bank today is capitalized to the extent of Rs. and United India Insurance Company Ltd.I). The Bank has a network of over 4055 ATMs (as on 31st December 2009) providing 24 hrs a day banking convenience to its customers.63 crores with the public holding (other than promoters and GDRs) at 53.e. LIC . The Bank's Registered Office is at Ahmedabad and its Central Office is located at Mumbai. The Oriental Insurance Company Ltd.. This is one of the largest ATM networks in the country..5 crore each. The Bank has strengths in both retail and corporate banking and is committed to adopting the best industry practices internationally in order to achieve excellence. has been promoted by the largest and the best Financial Institution of the country. i. National Insurance Company Ltd. 58 . with UTI contributing Rs. The Bank was set up with a capital of Rs. after the Government of India allowed new private banks to be established.Rs.3. UTI. Life Insurance Corporation of India (LIC) and General Insurance Corporation of India (GIC) and other four PSU insurance companies. Promoters Axis Bank Ltd. 100 crore. 7.

with a view to encourage savings and investment. 2002 by the Parliament. This will allow you to conduct your financial transactions in utmost comfort and confidentiality through an exclusive Relationship Manager.59 crores. which it will uphold. the UTI Act. paving the way for the bifurcation of UTI into 2 entities. 6. In December 2002. In accordance with the Act. 14167.75% US64 Bonds. the Undertaking specified as UTI I has been transferred and vested in the Administrator of the Specified Undertaking of the Unit Trust of India (SUUTI).09% Erstwhile Unit Trust of India was set up as a body corporate under the UTI Act.I. Prithviraj as the Administrator of the Specified undertaking of UTI. Dedicated Relationship Manager: You will enjoy access to a dedicated Relationship Manager who will be your one point contact at branch for all your banking transactions thus ensuring that you would neither have to move from one counter to the other nor stand in queues to await your turn. who manages assured return schemes along with 6.Shareholding 24. Home Banking: 59 . where Government has continuing obligations and commitments to the investors. N. UTI-I and UTI-II with effect from 1st February 2011. 1963 was repealed with the passage of Unit Trust of India (Transfer of Undertaking and Repeal) Act. The Government of India has currently appointed Shri K. Banking Privileges Priority Banking Lounge: As a Priority banking customer you will have access to an exclusive 'Priority Banking Lounge' at branches. 1963.60% ARS Bonds with a Unit Capital of over Rs. to look after and administer the schemes under UTI .

Investment advice. one free outward remittance per quarter and free Mobile banking. enhanced insurance cover and a host of special discounts and offers. and invitations to investor meets are offered complimentary to you. market information reports. free passbook updates and monthly statements. You would also be entitled to two free minor accounts. We aim to provide a different Lifestyle experience through special offers on premium brands. Other Banking Privileges: Enjoy a host of banking privileges like free at-par cheques. You also get Preferential Interest Rates and lowered Processing Fees on select Retail Loans. there would be no issuance charges on Axis Bank's Travel Currency Card. higher POS transaction limits at merchant establishments. Investment Privileges Avail of assistance in financial planning. demand drafts and pay orders.especially for our Priority Banking customers Gold Credit Card 60 . Avail of free cash and cheque pick-up and delivery at your office or residence. it's not all about just financial services. As a Priority Banking customer.Experience the convenience of our home banking facilities. Lifestyle Privileges However. special events and lots more . The card also comes with higher ATM withdrawal limits. Exclusive Priority Banking International Debit card: This card allows you free access to all VISA ATMs in India. movie privileges.

It mobilizes the savings of the community through the sale of its units under its various unit schemes. The Unit Trust Of India has introduced a number of Unit schemes so far. 3. Income received from this investment. subject to the applicable terms and conditions. after meeting the expenses of the Trust. Unit Scheme for Charitable and Religious Trusts and Registered Societies. subject to the applicable terms and conditions.resources thus mobilized are invested by the UTI mainly in the shares and debentures of the companies. Rs. 1982..As an added privilege. is distributed to unit holders annually as dividend. the Income Unit Scheme. Priority Banking customers would also be eligible for a 50% reduction on the Issuance Fee of Gold Plus Credit Card and Gold Plus Secured Credit Card. Priority Banking customers may also apply for a Gold Standard Credit Card and Gold Standard Secured Credit Card without any additional fee. 1981. Monthly Income Unit Scheme. 1983 and Growth and Income Unit Scheme. 500 will be charged as the annual maintenance charge for Priority Banking customers.the Unit Linked Insurance Plan. the Unit scheme. 1971.1964. 1983.2. ABOUT AXIS BANK’S PROFILE About AXIS Bank The Unit Trust Of India (UTI) is a statutory public sector investment institution set up in 1964.1 GOAL AND OBJECTIVES 61 .The.

Another objective is to increase the flow of resources to the housing sector by integrating the housing finance sector with the overall domestic financial markets. and to promote home ownership. and  To grow through diversification by leveraging off the existing client base.  Provide consistently high returns to shareholders.  Maintain its position as the premier housing finance institution in the country. Organizational Goals AXIS’s main goals are as follows:  Develop close relationships with individual households.Business Objectives The primary objective of AXIS is to enhance residential housing stock in the country through the provision of housing finance in a systematic and professional manner.  Transform ideas into viable and creative solutions. 62 .

CHAPTER 4 SERVICE QUALITY 63 .

” Both managers and academic researchers have in recent years given a great deal of interest in measurement of customer satisfaction and perceived service quality. Therefore companies need to offer other visible indicators where customers could evaluate the delivered service quality. Services are perishable which means that they are consumed when they are provided and can not be stored. but which you cannot drop on your foot. Because services are intangible they can not be felt.centered businesses is to deliver high service quality. The intensifying competition on today’s market has forced banks to seek profitable ways to differentiate themselves. Service has many definitions. Already in the end of the 1980’s researchers were determined that if the companies wanted to succeed they needed to give the development of service quality the highest priority. Because of factors that are unique to services. Spreng et al (1996) discuss the difference between customer satisfaction and perceived service quality and suggest that these are not the same and that companies need to take 64 The delivery of high service is a challenging task and to provide their customers with high . smelled or tasted which makes it hard for customers to evaluate the service quality. service quality companies must know what their customers want and need. one definition has been chosen that describe it in summary: “A service is something that can be bought and sold. This means that the quality of services varies depending on who provides them as well as when. Here the focus is on the employee and the way in which the service is delivered and perceived by the customer will depend on the employee. heterogeneity. Companies have moved their focus from products and services toward a customer-centered focus as a tool to gain competitive advantages and a great return on already made investments. services are not possible to store for later use. where and how services are provided.4. companies face difficulties while delivering service quality: intangibility. The success in these customer. they are consumed immediately. inseparability and perishability. Furthermore. Services heterogeneity means that services are not produced by single unit and then distributed to customers.1 SERVICE AND ITS CHARACTERISTICS Banks are investing a lot of money on web technologies and are therefore expecting numerous benefits on their investments.

because of wrong information from customers surveys. This may arise due to lacking communication inside the organization and lack of clear organizational goals. The analysis simply describes how the gap between expected and perceived service quality arise from these four gaps while the difference between the delivered and perceived service by customers is the fifth gap.” 4. attitude relating to the superiority of the service” and this definition can be found in other service literature. The first gap in the analyses is due to the lack of managers understandings about the perceived service quality.g. The definition of the customer satisfaction has not the same clear definition but Spreng et al use the definition “an evaluative. e. Perceived service quality is according to Parasuraman et al “a global judgment of. This gap usually occurs when the employee and customer interact.2 GAPS ANALYSIS The knowledge of how to measure service quality is of great importance for the companies if they want to succeed on the today’s competitive market. affective or emotional response. The second gap is about service characteristics not complying with management understanding and customers’ expectations. Because of the Gap analyses Parasuraman et al designed SERVQUAL. It is due to the fact that the specific quality is not fulfilled during the production and deliverance of the service. 65 . which was originally conducted during the end of the 1980’s. This because companies need to know whether they should focus on having satisfied customers or to deliver the maximum service quality. This means that the perceived service quality will be low and companies could fail in delivering high service quality. The fourth gap deals with problems within the marketing communication. or. the bigger the fifth gap will be. The Gap analysis was developed to help managers analyze the sources for quality problems but also to help them in understanding how to improve the service quality. The bigger the first four gaps are. The measurement of perceived service quality derives from the Gap analysis. It occurs because employees are not ready to deliver the good service quality or that the quality characteristics are not agreed upon within the organizational culture.both into consideration. The goal for companies should be to minimize all the gaps as much as possible. It states that managers have incorrect understanding of what their customers want and need. Therefore it is important to always give customers appropriate and correct information.

Reliability shows that the employees show that they can dependably perform their service and customer attain and sustain their trusts in the company. SERVQUAL is a good service quality instrument when measuring and studying an organization which is not providing 66 .SERVICE QUALITY MEASUREMENT As mentioned earlier the main difficulty with service quality is that it is hard to measure. The last dimension is Empathy and this shows that the company is giving the customer attention and caring. When considering the last dimension Empathy and then studying the interaction between the customer and the computer there is no Empathy and therefore companies’ can´t really take this dimension into account when measuring the perceived service quality online. Responsibility is when the company is willing to help customers and provide them with the best service. The SERVQUAL measurement can be accepted as a traditional way of measuring the perceived service quality and is a basic skeleton of underlying service quality. This has received a lot of critics and many researches within the service quality field have concluded that the instrument can not directly be applied to studies of the online service quality. According to the Finnish author Christian Grönroos. The instrument has been used a lot within the service literature and as a basic tool for companies in measuring the perceived service quality. Parasuraman et al concur that SERVQUAL is universal and can be used across all services. Assurance and Empathy Tangibles are about the physical facilities that companies have. Reliability. SERVQUAL is conducted from Gaps analysis and a study of five different business and four dimensions form this instrument: Tangibles. 4.3 SERVQUAL. Responsibility.a multiple-item scale for measuring service quality. many of these studies derive from the same point that service quality is experienced from a comparison between anticipation and experience with consideration to a couple of quality attributes. therefore it needs to be used in its entirety as much as possible. Assurance is when company’s employees are containing knowledge and with their ability inspire trust and confidence to customers. including the appearance of the employees.

Technology.banking. Within the e. Many of the dimensions that construct the instrument are adapted to the other instruments of measurements. It is important to note that much of the research that has been performed about service quality is deriving from SERVQUAL. which is the major force in shaping the buyer-seller interaction. In this study e-banking is merely about online services and therefore this instrument is not an appropriate instrument of measurement.services online. 67 . banks need to focus their attention on customers and to understand customer’s attributes which they are using to judge service quality. is having an impact on the service quality.

CHAPTER 5 ANALYSIS AND INTERPRETATION 68 .

1) Modern looking equipment  From the graph it is clearly seen that for AXIS and SBI most of the respondents are fall in satisfaction range. for modern looking equipment AXIS bank has more number of satisfied responses as compared to SBI.  So. 69 . whereas for SBI highest frequency is observed in neither satisfied nor dissatisfied range.  For AXIS highest frequency is observed in satisfactory level.

so for visually appealing physical facilities AXIS bank has good response as compared to SBI.e.  And most of the respondents for both the banks are less satisfied as far as visually appealing physical facilities concerned. as in level 3 i. 70 . dissatisfied more numbers of respondents are there for both the banks.2) Visually appealing physical facilities  For both the banks highest frequency is observed in neither satisfied nor dissatisfied range.  AXIS bank has more satisfied customers.

SBI respondents are showing more positive response then that of AXIS respondents.3) Neat appearing employees  From the graph.4 and 5 level of satisfaction. and also respondents fall in satisfied range is more in case of SBI then that of AXIS. so respondents are not satisfied for AXIS. And for AXIS most of the respondents are present in 3. 71 .  Also there are more numbers of respondents in moderate and strongly agreed zone for SBI as compared to AXIS.  So for neat appearing employees SBI respondents has more satisfaction level.

 Here it is difficult to say that which bank is performing better in visually appealing materials associated with the services. 72 . Also most of the respondents fall in neither dissatisfied nor satisfied and satisfied area for both the banks.4) Visually appealing materials associated with the services  Here. for AXIS bank there are slightly more numbers of respondents which are fall in satisfied range then from SBI.

5) Keeping promise to do something by certain time  Here from the graph it is clearly seen that respondents of SBI are having more satisfaction than that of AXIS. 73 .  Overall for this question SBI respondents are showing more satisfaction than that of AXIS. So for this factor both the banks are relatively not performing well as per resondents.  For both the banks most of the respondents are fall in neither satisfied nor dissatisfied level and satisfied level. as more numbers of respondents are fall in satisfaction level.

6) Showing sincere interest in solving a customer’s problem  Here from the graph. neither satisfied nor dissatisfied so both the banks can improve the level of satisfaction by improving on this variable. so for this factor AXIS is performing slightly well over SBI. 74 .e. SBI and AXIS have nearly the same kind of responses.  Here both the banks have more numbers of respondents who are fall in level 4 i. but AXIS has slightly more numbers of satisfied repondents as compared to SBI for showing sincere interest in solving a customer’s problem.

 Also for this factor AXIS is underperforming compared to SBI. whereas for AXIS most of the respondents are fall in dissatisfied and neither dissatisfied nor satisfied level. 75 .7) Performing the service correctly the first time  Here for SBI highest frequency is observed in satisfied level. whereas for AXIS it is in neither dissatisfied nor satisfied level.  Total number of respondents for SBI are more in satisfaction level.  So for performing the service correctly the first time SBI respondents are agreed compared to AXIS respondents.

8) Providing the service at the time the service was promised  From the graph. so both the banks need to improve satisfaction level on this factor. Hence there is not so much difference in providing the service at the time the service was performed. 76 . so satisfaction level of their customers will improve.  So for providing the service at the time the service was performed both the bank has similar kind of responses.  Also there are very few respondents for both the banks which are highly or moderatley satisfied. the responses are nearly similar for both AXIS as well as SBI.

77 .9) Insisting on error free records  There is quite large difference among the respondents for insisting on error free records. SBI respondents are showing more positive response as compared to AXIS respondents. whereas for SBI they are performing well.  So respondents of SBI are agree with the statement as compared to AXIS respondents.  Also AXIS respondents are more on dissatisfaction level than SBI respondents.  For this factor AXIS need improvement so satisfaction level of their customer will improve.

78 .10) Employees telling customers exactly what services will be performed  Here from the graph it is clearly seen that almost all the respondents for both the banks are falling in satisfied and neither dissatisfied nor satisfied level.  Also there are very few respondents which are moderately and highly agreed with the statements for both the banks.  But number of respondents for SBI are more satisfied for employees telling customers exactly what services will be performed.

 So for both the banks there is a scope of improvement on this factor so satisfaction level of customers can be improved.  So for employees giving prompt service to customers SBI respondents are more agreed over AXIS respondents. 11) Employees giving prompt service to customers  Here for SBI highest frequency is observed in satisfaction level. whereas for AXIS it is in neither dissatisfied nor satisfied level.  Here AXIS need improvement as there are less numbers of satisfied respondents. 79 .

80 .

12) Employees always being willing to help customers  Here.  SBI respondents are mainly falling in lower side of satisfaction level. for the statement employees always being willing to help customers AXIS respondents are more agreed than of SBI respondents. more number of the respondents of AXIS is falling in satisfaction level as compared to SBI respondents.  So. 81 .

 Also there are quite more numbers of respondents for both the banks which are dissatisfied.  So. 82 . SBI respondents are more in number in satisfaction level as compared to AXIS respondents. for the statement that employees are never too busy to respond to customer’s request SBI respondents are more agreed as compared to AXIS respondents.  Highest frequency of respondents for both AXIS and SBI is fall in neither dissatisfied nor satisfied level. the satisfaction level is slightly low for both the banks.13) Employees are never too busy to respond to customers’ requests  From the graph.

 So for the statement that the behavior of employees instilling confidence in their customers.14) The behavior of employees instilling confidence in their customers  From the graph it is seen that.  Also most of the respondents for both the banks are falling in neither dissatisfied nor satisfied and satisfied level. 83 . SBI respondents are more agreed as compared to AXIS respondents. there are more number of respondents for SBI who are satisfied as compared to AXIS respondents.

84 . but due to large number of respondents in satisfied level for SBI lead them to more stronger position.15) Customers feeling safe in their transactions  Here.  So for the staement customer feeling safe in there transactions AXIS has more number of respondents which are moderate to highly satisfied level and for SBI respondents in satisfied zone are more.  Also here for AXIS numbers of respondents in moderate and highly satisfied are more compared to SBI. whereas for AXIS it is in moderately satisfied level. for SBI highest frequency of respondents is observed in satisfied level.  But for AXIS respondents they are nearly equally distributed in neither dissatisfied nor satisfied to highly satisfied level. whereas for SBI in satisfied level there is quite large peak of respondents.

85 . there are more numbers of satisfied respondents so both the banks are performing well on this criteria.16) Employees being consistently courteous with their customers  Here from the graph. respondents of both the banks have nearly the same type of responses.e. except in level 5 i. AXIS has slightly more number of satisfied respondents.  So here for the statement employees being consistently courteous with their customers.  For both the banks. satisfied where more noumber of AXIS respondents are fall.

 So here there are more number of dissatisfied respondents as well as more number of satisfied respondents for both the banks. 86 .e.  Highest frequency is observed in level 5 i.17) Employees having the knowledge to answer customers’ questions  For this question the respondents are distributed all over the satisfaction scale for both the banks. satisfied respondents.

 So level of satisfaction of respondents for both the banks is almost same for this question.  But here there is minor difference in the responses of respondents for both the banks. But there are more number of respondents for SBI who are agreed with statement hence for employees having the knowledge to answer customers’ question SBI is ahead of AXIS. 18) Giving customers indivdual attention  Here for AXIS there are more numbers of respondents who are agreed with the question as compared to SBI respondents. 87 .

 Both the banks need to convert low satisfied customers to more satisfied customers by improving the performance of this factor. 88 .

neither dissatisfied nor satisfied.  Highest frequency of respondents for both the banks is at level 4 i.  Also there are slightly more numbers of respondents on dissatisfied level for both the banks. so they have to improve in this factor. 89 .e.19) Operating hours convenient to all their customer  There are more numbers of satisfied respondents for AXIS as compared to SBI.

 So for employees giving customers personal attention AXIS has better response as compared to SBI. dissatisfied. whereas for SBI it is at level 3 i.  Also highest frequency of respondents for AXIS is at level 4 i. we can say that SBI has more number of respondents who are dissatisfied as compared to AXIS respondents. neither dissatisfied nor satisfied. 90 .20) Employees giving customers personal attention  Here from the graph. Also for both the banks there are quite large numbers of repondents who are not agreed with statement.e.e.

 Also highest frequency is observed in level 3 i.e. dissatisfied for both the banks. 91 .  So as far as for this question both the banks have negative response and they need to improve it.21) Having the customers’ best interest at heart  Here most of the respondents for both the banks are fall in dissatisfaction zone.

92 .  But for SBI there are more numbers of repondents which are falling in level 4 and for AXIS more numbers of respondents are falling in level 5.22) The employees understanding the specific needs of customers  From the graph. there are more numbers of respondents who are disagree with this statement for both the banks.  So for this question AXIS has comparatively good response. But both the banks have below average response.

CHAPTER 6 KEY FINDINGS 93 .

 For these three factors keeping promise to do something by certain time. 94 . Also there is moderate difference in score for performing the service correctly the first time for SBI over AXIS. AXIS has more satisfaction level of respondents for dimensions tangibility and empathy. Hence AXIS needs to improve on these two factors as far as reliability dimension is concerned.  The difference in score was more for SBI. but they need improvement on employees always being willing to help customers.  Whereas for SBI they are almost performing well on responsiveness dimension.  Most of the respondents for both the banks are less satisfied as far as visually appealing physical facilities concerned and neat appearing employees are concerned. providing the service at the time the service was promised and.e. so AXIS was lagging more on reliability dimension. and assurance.  For employees telling customers exactly what services will be performed difference is so large for SBI over AXIS so AXIS has to focus on this factor to improve score on responsiveness dimension. whereas SBI has more satisfaction level of respondents for remaining three dimensions i. responsiveness. performing the service correctly the first time both the banks can improve the level of satisfaction as there were less number of respondents who were satisfied. reliability.  Insisting on error-free records the difference in score was huge for SBI in comparison to AXIS.

score of SBI is more. AXIS has more number of respondents which were moderate to highly satisfied level and for SBI respondents in satisfied zone were more but there were less number of respondents in moderate to highly satisfied level so due to more numbers of respondents in satisfied level. 95 . operating hours convenient to all their customers.  Customers feeling safe in their transaction for this question. as there was slight difference in the score. here both the banks need to improve on this factor as there were more numbers of respondents in level 3 and level 4 for both the banks.  SBI has to improve in all the aspects for the dimension empathy as AXIS is performing well on this dimension.  Both the banks need to improve its service for employees giving customers personal attention. having the customers’ best interest at heart and the employees understanding the specific needs of customers as there were more numbers of respondents who were either not satisfied or less satisfied. so by focusing on this they can improve satisfaction level of their customers.  Both the banks are performing nearly same on dimension assurance. Mainly they have to focus on giving customers individual attention and employees giving customers personal attention as they were more lagging behind in these factors in comparison of AXIS. Employees telling customers exactly what services will be performed and employees are never to busy to respond to customers’ request for these two questions both the banks had less satisfaction of customers so by focusing on this to factors they can improve satisfaction level.  Employees having enough knowledge to answer customers’ questions.

CHAPTER 7 CONCLUSION 96 .

employees telling customers exactly what service will be performed and employees are never too busy to respond to customers’. AXIS is doing well on the tangibility and empathy dimension. responsiveness and assurance dimensions. 97 .  Mainly SBI is doing well on insisting on error free record.  Both the banks need to improve on empathy dimension.  Whereas AXIS is performing well on giving customers individual customers and employees always being willing to help customers. whereas SBI performing well on reliability.

CHAPTER 8 RECOMMENDATIONS 98 .

Willingness. Promise.e. Promptness. 99 . on performing the service correctly the first time and employees telling customers exactly what services will be performed. Competency and Understanding as in these factors either AXIS is performing well or doing up to the mark and these four factors are important for banking industry.AXIS:  AXIS needs to improve on mainly these three factors i. SBI:  SBI should improve its performance on Understanding and Credibility as these factors are important for banking industry and they are lagging in these two factors.  AXIS should concentrate on insisting on error free records.  AXIS should maintain these four factors i.  AXIS should deemphasize on factor Appearance and Approachable as in these factors they are performing well. Doing it right and Competency as these factors are more important for banking industry and they are lagging on these factors as compared to SBI.e. but these factors have less importance as compared to other factors.

on giving customers individual attention.  As on above factor. on employees giving customers personal attention. SBI should concentrate on employees always being willing to help customers. but these factors have less importance as compared to other factors.  Performing the services correctly the first time.  SBI should maintain these five factors i. BOTH AXIS AND SBI:  Both the banks should increase satisfaction level of their customers by mainly focusing on following factors:  Keeping promise to do something by certain time. Promises. 100 .  Providing services at the time the service was promised. Doing it right.  SBI should deemphasize on factor Promptness as in this factor they are performing well.  As SBI is performing poorly in all the aspect of empathy dimension. Competency. Appearance. so SBI should concentrate on this dimension more. most of the respondents shows neither satisfied nor dissatisfied. so by improving this factors satisfaction level can be improve.e. and Approachable in these factors either SBI is performing well or doing up to the mark and these four factors are important for banking industry.

CHAPTER 9 BIBLIOGRAPHY 101 .

2009.REFERENCE BOOKS: 1) Zeithamal V.repec. and Pandit A. A.unc.. Fourth Edition. 156-172. pp 37-50.kenan-flagler.D... 2) Zillur Rahman. WEBSITES: 1) ideas. Feb. “Service Quality: Gap in the Indian Bank Industry” The ICFAI Journal of Marketing Management.: “Service Marketing Integrated Customer Focus Across The Firm”.org/a/ipf/finteo/v31y2011i2p185-201 2) marketing.J. pp.pdf 102 . Gremler D.edu/download/measurementanalysis/servqual 3) http://areas.byu.edu/Marketing/FacultyStaff/zeithaml/Selected %20Publications/SERVQUAL-%20A%20Multiple-Item%20Scale%20for %20Measuring%20Consumer%20Perceptions%20of%20Service%20Quality. Bitner M.

4) business.mapsofindia.com/banks-in-india 5) rbidocs.rbi.org.in/rdocs/Speeches/PDFs/86160.pdf 6) www.researchandmarkets.com/reports/4020/indian_banking_industry 7) www.mckinsey.com/locations/india/mckinseyonindia/pdf/india_banking_ 2010.pdf 8) media.wiley.com/product_data/excerpt/34/04713931/0471393134.pdf 9) www.marketresearch.com/product/display.asp?productid=2156584&g=1 10) www.sbi.co.in/ 11) www.AXISbank.com/
12) 13)

www.experiencefestival.com/banking_in_india_-_current_scenario
http://pmindia.nic.in/eac_report_09.pdf

103

CHAPTER 10 QUESTIONNAIRE

Sr. no.____

Questionnaire
104

The data/information gathered through this questionnaire would be strictly used for academic purpose only. All the responses and data will be kept CONFIDENTIAL.

Dear Sir/Madam, I am the student of GLS-MBA conducting a study on SERVQUAL analysis of banking sector with emphasis on State Bank of India and AXIS Bank. SERVQUAL for AXIS Please rate the following 22 SERVQUAL instruments by circling the number from “strongly disagree=1” to “strongly agree=7” accordingly to your perception.
1 Modern looking equipment 2 Visually appealing physical facilities 3 Neat-appearing employees 4 Visually appealing materials associated with the service 5 Keeping promise to do something by a certain time 6 Showing sincere interest in solving a customer’s problems 7 Performing the service correctly the first time 8 Providing the service at the time the service was promised 9 Insisting on error-free records 10 Employees telling customers exactly what services will be performed 11 Employees giving prompt service to customers 12 Employees always being willing to help customers 13 Employees are never too busy to respond to customers’ requests 14 The behavior of employees instilling confidence in their customers 15 Customers feeling safe in their transactions 16 Employees being consistently courteous with their customers 17 Employee having the knowledge to answer customers’ questions 18 Giving customers individual attention 19 Operating hours convenient to all their customers 20 Employees giving customers personal attention 1 2 3 4 5 6 7 1 2 3 4 5 6 7 1 2 3 4 5 6 7 1 2 3 4 5 6 7 1 2 3 4 5 6 7 1 2 3 4 5 6 7 1 2 3 4 5 6 7 1 2 3 4 5 6 7 1 2 3 4 5 6 7 1 2 3 4 5 6 7 1 2 3 4 5 6 7 1 2 3 4 5 6 7 1 2 3 4 5 6 7 1 2 3 4 5 6 7 1 2 3 4 5 6 7 1 2 3 4 5 6 7 1 2 3 4 5 6 7 1 2 3 4 5 6 7 1 2 3 4 5 6 7 1 2 3 4 5 6 7

105

106 . 3-5 lakh p. Income Less than 1 lakh p.a. Gender Male Female 2.21 Having the customers’ best interests at heart 22 The employees understanding the specific needs of customers 1 2 3 4 5 6 7 1 2 3 4 5 6 7 Personal Information 1.a. Occupation Own business Professional Housewife Government employee Student Other 5. Graduate Completed school education Post Graduate 4. 1-3 lakh p. Age 25 years and below 36-45 years 26-35 years Above 45 years 3.a. More than 5 lakh p.a.Sc. Education Below H.

107 .

SERVQUAL for SBI Please rate the following 22 SERVQUAL instruments by circling the number from “strongly disagree=1” to “strongly agree=7” accordingly to your perception.Sr. Dear Sir/Madam. no. I am the student of GLS-MBA conducting a study on SERVQUAL analysis of banking sector with emphasis on State Bank of India and AXIS Bank.____ Questionnaire The data/information gathered through this questionnaire would be strictly used for academic purpose only. 1 Modern looking equipment 2 Visually appealing physical facilities 3 Neat-appearing employees 4 Visually appealing materials associated with the service 5 Keeping promise to do something by a certain time 6 Showing sincere interest in solving a customer’s problems 7 Performing the service correctly the first time 8 Providing the service at the time the service was promised 9 Insisting on error-free records 10 Employees telling customers exactly what services will be performed 11 Employees giving prompt service to customers 12 Employees always being willing to help customers 13 Employees are never too busy to respond to customers’ requests 14 The behavior of employees instilling confidence in their customers 15 Customers feeling safe in their transactions 16 Employees being consistently courteous with their customers 17 Employee having the knowledge to answer customers’ questions 1 2 3 4 5 6 7 1 2 3 4 5 6 7 1 2 3 4 5 6 7 1 2 3 4 5 6 7 1 2 3 4 5 6 7 1 2 3 4 5 6 7 1 2 3 4 5 6 7 1 2 3 4 5 6 7 1 2 3 4 5 6 7 1 2 3 4 5 6 7 1 2 3 4 5 6 7 1 2 3 4 5 6 7 1 2 3 4 5 6 7 1 2 3 4 5 6 7 1 2 3 4 5 6 7 1 2 3 4 5 6 7 1 2 3 4 5 6 7 108 . All the responses and data will be kept CONFIDENTIAL.

Education Below H. Income 109 .Sc. Age 25 years and below 36-45 years 26-35 years Above 45 years 3. Occupation Own business Professional Housewife Government employee Student Other 5. Graduate Completed school education Post Graduate 4.18 Giving customers individual attention 19 Operating hours convenient to all their customers 20 Employees giving customers personal attention 21 Having the customers’ best interests at heart 22 The employees understanding the specific needs of customers 1 2 3 4 5 6 7 1 2 3 4 5 6 7 1 2 3 4 5 6 7 1 2 3 4 5 6 7 1 2 3 4 5 6 7 Personal Information 1. Gender Male Female 2.

Less than 1 lakh p. More than 5 lakh p.a.a. 1-3 lakh p.a. 110 .a. 3-5 lakh p.

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