EXECUTIVE SUMMARY

The Project report is prepared on

Retail Banking
at
HDFC Bank
. I t i s o n a research to find out weather people of Rajkot city
prefer to deal with private sector banks or nationalized banks. It
is also to find out the reasons why they deal with their bank and
the most frequently services by themThis was basically to find out
for what reason they deal with particular bank and to know their
level of satisfaction with the services of their bank.I have collected the
research by collecting the primary data. This research
wasc o n d u c t e d wi t h t h e e mp l o y e e s o f p r i v a t e a n d
g o v e r n me n t s e c t o r , b u s i n e s s ma n , professionals and
students in equal numbers.Th i s r e p o r t g i v e s a b r i e f i d e a
a b o u t t h e b a n k i n g i n d u s t r y a n d t h e t o u g h competition
faced by the banks. Secondly it gives an overview of the
company, itshistory, its products, its various marketing strategy and
much more.Then the main part of the project comes wherein the
research and the analysisi s i ncl uded. St r at i f i ed r andom
sampl i ng was adopt ed wher e t he peopl e of
var i ousoccupations were selected at random from different part of the
city. The sampling sizeselected was 50.Data analysis was done as
per the questions through various techniques as
per requirement. Finall y findings and the data collected
concluded that the most preferredbank was HDFC Bank, and the
most people were highly satisfied with the services of HDFC Bank
where ATM was the most frequently used services. It was found
that for what reason private and government employees, students,
professionals andbusinessman deal with the bank and how
frequently they vi sit the bank. Through thisresearch the
company can know the choice of different occupational groups
and theresearch for how satisfied they are with the bank they
deal with. They can also knowt he most f r equent l y used
ser vi ces so t hat t hey can i mpr ove f ur t her i mpr ove i t
or encourage the use of their services.
RETAIL BANKING
DEFINITION:
R e t a i l b a n k i n g i s t y p i c a l ma s s - ma r k e t b a n k i n g
w h e r e individual customers use local branches of larger
commercial banks. Services offered include: savings and checking
accounts,mortgages, personal loans, debit cards, credit cards, and so
T
he
Ret ai l Banki ng envi r onment t oday i s changi ng f ast . T h e
c h a n g i n g c u s t o me r d e mo g r a p h i c s d e ma n d s t o
c r e a t e a differentiated application based on scalable
technology, improveds e r v i c e a n d b a n k i n g
c o n v e n i e n c e . H i g h e r p e n e t r a t i o n
o f t echnol ogy and i ncr ease i n gl obal l i t er acy l evel s has
set up t heexpectations of the customer higher than never before.
Increasingu s e o f mo d e r n t e c h n o l o g y h a s f u r t h e r
e n h a n c e d r e a c h a n d accessibility.The mar ket t oday gi ves
us a chal l enge t o pr ovi de mul t i pl eand innovati ve
contemporary services to the customer through aconsol i dat ed
wi ndow as so t o ensur e t hat t he bank s cust omer gets
Uniformity and Consistency of service deli very across
timea n d a t e v e r y t o u c h p o i n t a c r o s s a l l
c h a n n e l s . T h e p a c e o f innovation is accelerating and
security threat has become prime of al l el ect r oni c t r ansact i ons.
Hi gh cost st r uct ur e r ender i ng mass -
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RETAIL BANKING IN INDIA
market servicing is prohibitively expensive.Present day tech-savvy
bankers are now more looking at reductioni n t h e i r
o p e r a t i n g c o s t s b y a d o p t i n g s c a l a b l e
a n d s e c u r e technology thereby reducing the response time
to their customersso as to improve their client base and economies of
scale.T h e s o l u t i o n l i e s t o ma r k e t d e ma n d s a n d
c h a l l e n g e s l i e s i n innovation of new offering with minimum
dependence on branches a mul t i - channel bank and t o
el i mi nat e t he di sadvant age of aninadequate branch network.
Generation of leads to cross sell andcreating additional revenues
with utmost customer satisfaction hasbecome focal point worldwide for
the success of a Bank.
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RETAIL BANKING IN INDIA
RETAIL BANKING AN INTRODUCTION
R
etail banking is, however, quite broad in nature - it refersto the
dealing of commercial banks with individual customers, bothon liabilities
and assets sides of the balance sheet. Fixed, current /savings accounts
on the liabilities side; and mortgages, loans (e.g.,personal, housing,
auto, and educational) on the assets side, aret h e mo r e
i mp o r t a n t o f t h e p r o d u c t s o f f e r e d b y b a n k s .
Re l a t e d anci l l ar y ser vi ces i ncl ude cr edi t car ds, or
deposi t or y ser vi ces. Retail banking refers to provision of banking
services to individualsand small business where the financial institutions
are dealing withl a r g e n u mb e r o f l o w v a l u e t r a n s a c t i o n s .
Th i s i s i n c o n t r a s t t o w h o l e s a l e b a n k i n g w h e r e
t h e c u s t o m e r s a r e l a r g e , o f t e n multinational
companies, governments and government enterprise,and t he
f i nanci al i nst i t ut i on deal i n smal l number s of hi gh
val uetransactions.The concept is not new to banks but is now
viewed as animportant and attractive market segment that
offers opportunities
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RETAIL BANKING IN INDIA
for growth and profits. Retail banking and retail lending are
oftenused as synonyms but i n f act , t he l at er i s j ust t he
par t of r et ai l banking. In retail banking all the needs of individual
customers aretaken care of in a well-integrated manner.
Todays retail banking sector is characterized by three
basiccharacteristics:
o
Multiple products (deposits, credit cards, insurance,investments and
securities)
o
Multiple channels of distribution (call center, branch, internet)
o
Mul t i pl e cust omer gr oups ( consumer , smal l busi ness,
andcorporate).
ORIGIN OF BANKING
B
a n k s a r e a mo n g t h e ma i n p a r t i c i p a n t s o f t h e
f i n a n c i a l system in India. Banking offers several facilities and
opportunities.
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RETAIL BANKING IN INDIA
Banks in India were started on the British pattern in the
beginningof the 19
th
century. The first half of the 19
th
century, The East IndiaCompany established 3 banks The Bank of
Bengal, The Bank of Bombay and The Bank of Madras. These three
banks were knowna s P r e s i d e n c y B a n k s . I n 1 9 2 0
t h e s e t h r e e b a n k s w e r e amal gamat ed and The
I mper i al Bank of I ndi a was f or med. I nt h o s e d a y s , a l l
t h e b a n k s we r e j o i n t s t o c k b a n k s a n d a l a r g e number of
them were small and weak. At the time of the 2
nd
worldwar about 1500 j oi nt st ock banks wer e oper at i ng i n
I ndi a out of w h i c h 1 4 0 0 w e r e n o n - s c h e d u l e d
b a n k s . B a d a n d d i s h o n e s t management managed quiet a
quiet a few of them and there werea number of bank failures. Hence
the government had to step ina n d t h e Ba n k i n g Co mp a n y s
Ac t ( s u b s e q u e n t l y n a me d a s t h e Banking Regulation Act)
was enacted which led to the eliminationof the weak banks that
were not in a position to fulfil the variousrequirements of the
Act. In order to strengthen their weak unitsand review public
confidence in the banking system, a new section45 was enact ed i n
t he Banki ng Regul at i on Act i n t he year 1960, empowering
the Government of India to compulsory amalgamateweak units
with the stronger ones on the recommendati on of theRBI. Today
banks are broadly classified into 2 groups namely
(a) Scheduled banks.(b) Non-Scheduled banks.
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RETAIL BANKING IN INDIA
BENEFITS OF RETAIL BANKING
T
raditional lending to the corporate are slow moving alongwi t h
hi gh NPA r i sk, t r easur e pr of i t s ar e now l oosi ng
i mpor t ancehence Retail Banking is now an alternative available for
the banksf o r i n c r e a s i n g t h e i r e a r n i n g s . Re t a i l Ba n k i n g
i s a n a t t r a c t i v e ma r k e t s e g me n t h a v i n g a l a r g e
n u mb e r o f v a r i e d c l a s s e s o f customers. Retail
Banking focuses on individual and small units.Customize and
wide ranging products are available. The risk isspread and the
recovery is good. Surplus deployable funds can beput into use by the
banks. Products can be designed, developedand marketed as per
individual needs.
SCOPE FOR RETAIL BANKING IN INDIA
o
All round increase in economic activity
o
I ncr ease i n t he pur chasi ng power . The r ur al ar eas have
t hel a r g e p u r c h a s i n g p o w e r a t t h e i r d i s p o s a l
a n d t h i s i s a n opportunity to market Retail Banking.
o
India has 200 million households and 400 million
middleclasspopulation more than 90% of the savings come from
the household sector. Falling interest rates have resulted in a shift.
NowPeople Want To Save Less And Spend More.
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OPPORTUNITIES
R
e t a i l b a n k i n g h a s i mme n s e o p p o r t u n i t i e s i n a
g r o wi n g economy l i ke I ndi a. As t he gr owt h st or y get s
unf ol ded i n I ndi a, retail banking is going to emerge a major
driver.The rise of Indian middle class is an important contributory
factor in this regard. The percentage of middle to high-income
Indianhouseholds is expected to continue rising. The younger
populationnot only wields increasing purchasing power, but as far
asacquiring personal debt is concerned, they are perhaps
morecomfortable than previous generations. Improving
consumer purchasing power, coupled with more liberal attitudes
towardspersonal debt, is contributing to Indias retail banking
segment.The combination of above factors promises substantial
growth inr e t a i l s e c t o r , wh i c h a t p r e s e n t i s i n t h e
n a s c e n t s t a g e . Du e t o bundling of services and delivery
channels, the areas of potential c o n f l i c t s o f i n t e r e s t
t e n d t o i n c r e a s e i n u n i v e r s a l b a n k s a n d financial
conglomerates. Some of the key policy issues relevant tot h e r e t a i l -
b a n k i n g s e c t o r a r e : f i n a n c i a l i n c l u s i o n ,
r e s p o n s i b l e l e n d i n g , a n d a c c e s s t o f i n a n c e , l o n g -
t e r m s a v i n g s , f i n a n c i a l capabi l i t y, consumer pr ot ect i on,
r egul at i on and f i nanci al cr i meprevention.
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RETAIL BANKING IN INDIA
CHALLENGES TO RETAIL BANKING IN INDIA
o
The i ssue of money l aunder i ng i s ver y i mpor t ant i n
r et ai l banking. This compels all the banks to consider seriously allthe
documents which they accept while approving the loans.
o
Th e i s s u e o f o u t s o u r c i n g h a s b e c o me v e r y i mp o r t a n t
i n recent past because various core activities such as hardwareand
software maintenance, entire ATM set up and operation(including cash,
refilling) etc., are being outsourced by Indianbanks.
o
Banks are expected to take utmost care to retain the ongoingtrust of the
public.
o
Customer service should be at the end all in retail
banking.Someone has r i ght l y sai d, I t t akes mont hs t o f i nd
a goodcustomer but only seconds to lose one. Thus, strategy
of Knowing Your Customer (KYC) is important. So the
banksa r e r e q u i r e d t o a d o p t i n n o v a t i v e
s t r a t e g i e s t o m e e t c u s t o m e r s n e e d s
a n d r e q u i r e m e n t s i n t e r m s
o f services/products etc.
o
The dependency on technology has brought IT
departmentsa d d i t i o n a l r e s p o n s i b i l i t i e s a n d c h a l l e n g e s
i n ma n a g i n g , maintaining and optimizing the performance of retail
bankingnetworks. It is equally important that banks should maintain
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RETAIL BANKING IN INDIA
s e c u r i t y t o t h e a d v a n c e l e v e l t o k e e p t h e
f a i t h o f t h e customer.
o
The efficiency of operations would provide the competitiveedge
for the success in retail banking in coming years.
o
The cust omer r et ent i on i s of par amount i mpor t ant f or
t heprofitability if retail banking business, so banks need to retaintheir
customer in order to increase the market share.
o
One of the crucial impediments for the growth of this sector i s
t h e a c u t e s h o r t a g e o f ma n p o we r t a l e n t o f t h i s
s p e c i f i c nature, a modern banking professional, for a modern
bankingsector.If all these challenges are faced by the banks with utmost
care anddeliberation, the retail banking is expected to play a very
importantrole in coming years, as in case of other nations.





Literature Review
Investopedia explains 'Retail Banking'
Retail banking aims to be the one-stop shop for as many financial
services as possible on behalf of retail clients. Some retail banks have
even made a push into investment services such aswealth management,
brokerage accounts, private banking and retirement planning.
Whilesome of these ancillary services are outsourced to third parties
(often for regulatory reasons),they often intertwine with core retail
banking accounts like checking and savings to allow foreasier transfers
and maintenance.

1.)

Dr.Chaisomphol Chaoprasert

LITERATURE REVIEW OF SERVICE QUALITYIMPROVEMENT IN
THE RETAIL BANKING INDUSTRY



The paper analyzes past studies regarding service quality
improvementin the retail banking industry. The continuing trend to a
model of service quality improvement,from personnel counter services to
electronic services, is demonstrated. Improved servicequality should be
adopted to maintain the core competence and this paper
contributesknowledge and background for banks to apply these findings
to better shape and focus theirpositions in the market and also to
provide service quality to customers.
2


Innovation in Retail Banking

by
F
rances X.
F
rei Patrick T. Harker Larry W. Hunter
Reviews about, how does a retail bank innovate? Traditional innovation
literature would suggest thatorganizations innovate by getting new
and/or improved products to market. However, in a service, theproduct is
the process. Thus, innovation in banking lies more in process and
organizational changes thanin new product development in a traditional
sense. This paper reviews a multi-year research effort oninnovation and
efficiency in retail banking, and discusses both the means by which
innovation occursalong with the factors that make one institution better
than another in innovation. Implications of theseresults to the study of
the broader service sector will be drawn as well.