CHAPTER 1

INTRODUCTION
Private Banks are banks owned by either an individual or a general partner (s) with limited partner(s).
Private Banks are not incorporated. In any such case the creditors can looks to both the entirely of the
banks assets as well as the entirely of the sole proprietors general-partners assets.
Private Banks can also refers to non government owned banks in general, In contrast to government
owned (or nationalized) banks, which were prevalent in communist, socialist and some social democratic
states in the 20th century.
A public bank is a bank a financial institution in which state or public actors are the owners. It is a
company under state control. Higher spending on infrastructure, speedy implementation of projects and
continuation of reforms will provide further impetus to growth. All these translates into a strong growth
for banking sector too, as rapidly growing business turn to banks for their credit needs, thus helping them
grow very fast. Also, with the advancements in technology, mobile and internet banking services have
come to the fore. Banks are focusing more and more to provide better services to their clients and have
also started upgrading their technology infrastructure, which can help improve customer experience as
well as give banks a competitive edge. The operations of all the banks in India are controlled by the RBI.
All the Indian banks are governed by the RBI. This governing body took over the reasonability of
formally regulating the Indian banks in 1935. Banks in India are classified into 2 broad categories namely,
Public sector banks and Private sector banks. Public sector banks are controlled and managed by the
government of India. Public sector banks have been serving the nation for over centuries and well known
for their affordable and quality services. The banking sector in India is mostly dominated by the public
sector banks. The concept of private banking was introduced about twenty years ago. These are the banks
that do not have any government stakes. Private Banks have gained quite a strong foothold in the Indian
banking industry over the last few years especially because of optimum use of technology.

Scheduled commercial banks in India are categorized into five different groups according to their
ownership and/or nature of operation. These bank groups are

state bank of India and its associates

other nationalized banks

regional rural banks
foreign banks and
other Indian SCBs (in the private sector)
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scheduled commercial banks are considered of 28 public sector banks (state bank of India and its
seven associates nationalized banks and other public sector bank). 9 new private sector banks ,20
old private sector banks and 31 foreign banks 1.public sector bans are the ones in which the
government has a major holding. They are divided into two groups i.e. nationalized banks of india
and its associates.
Private sector banks came into existence to supplement the performance of public sector banks
and serve the needs of the economy better. As the public sector banks where merely in the hands
of the government, bank had no incentive to make profits and improve the financial health.
Nationalization killed competition and stifled competition in banking. Banks operated in
regulatory environment with administered rate of interest structure, quantitative restrictions on
credit, high receive requirements and significant proportion of the bendable resources going to the
priority and government sectors. This resulted in low levels of investment and growth, decline in
productivity and erosion of profitability of banking sector. Thus, Narasimham committee (1991)
which recommended the free entry of new banks in the financial market provided they confirm the
minimum startup capital and other requirements by the permissions of reserve of India.
As on march 2016, the number schedule commercial banks india stood at 2182. As on june 2006
the number of banked centers served by scheduled commercial banks stood at 34, 513. Of these
centers 29,039 were single office centers and 45 centers had 100 and more bank office. The top
hundred center, out of 34,513 banked centers, arranged according to the size of deposit accounted
for 67.7percent of the total deposit and the top hundred centers arranged according to the size of
bank credit accounted 76.6 percent in June 2006 over June 2005, compared to 18.0 percent growth
recorded a year 2006 over June, compared to 32.9 percent growth in June 2005.
Nationalized banks, as a group, accounted for 48.5 percent of the aggregate deposits, while state
bank of India and its associates accounted for 22.9 percent. The shares of others scheduled
commercial banks, foreign banks and regional rural banks in aggregate deposits were 20.0 percent
5.4 percent and 3.2 percent respectively. As regards gross bank credit. Nationalized banks held the
maximum share of 47.6 percent in the total bank credit followed by state bank of India and its
associates at 22.6 percent and other scheduled commercial banks at 20.3 percent forcing bank and
regional rural banks had relatively lower shares in the bank credit at 6.9 percent and 2.6 percent
respectively3.
With assets of around Rs. 4,93,000 crores, state bank of India (SBI) is the countrys largest bank,
yet it ranks 84th in the world according to the Banker, the next biggest is ICICI bank, which is half
the size of SBI and ranked around 200 globally4. The top 25 banks- of which, 18 are owned by the

government- account for about 85 percent of banking assets. Thus there seems to be concentration
as well as fragmentation in the Indian banking sector.

DEFINITION OF BANK
The Oxford dictionary defines the Bank as , An establishment for the custody of money, which
it pays out, on a customers order.

According to Whitehead,
A Bank is defined as an institution which collects surplus funds from the public, safeguards
them, and makes them available to the true owner when required and also lends sums be their true
owners to those who are in need of funds and can provide security.
Banking Company in India has been defined in the Banking Companies act 1949,
One which transacts the business of banking which means the accepting, for the purpose of lending
or investment of the deposits of money from the public, repayable on demand, or otherwise and withdraw
able be cheque, draft, order or otherwise.
The banking system is an integral subsystem of the financial system. It represents an important channel of
collecting small savings from the households and lending it to the corporate sector.
The Indian banking system has Reserve Bank of India (RBI) as the apex body for all matters relating to
the banking system. It is the central Bank of India. It is also known as the Banker To All Other Banks.

EVOLUTION OF INDIAN BANKING

Ancient banking system of India constituted of indigenous bankers. They have been carrying on their ageold banking operations in different parts of the country under different names. The modern age of banking
constitutes the fundamental basis of economic growth. The term Bank is being used since long time but
there is no clear conception regarding its beginning. According to the viewpoint, in good old days. Italian
money leaders were known as Banchi because they kept a special type of table to transact their
business.

IMPORTANCE OF BANKS
Today banks have become a part and parcel of Kotak Bank's life. There was a time when dwellers of the
city alone could enjoy their services. Now banks offer access to even a common man and their activities
extend to areas hitherto untouched. Banks cater to the needs of agriculturalists, industrialists, traders and
to all the other sections of the society. In modern age, the banking constitutes the fundamental basis of
economic growth. Thus, they accelerate the economic growth of a country and steer the wheels of the
economy towards its goals of self reliance in all fields. It naturally arouses Kotak Bank's interest in
knowing more about the Bank and the various men and the activities connected with it.

Indian Banking System

Banking in India has its origin as early as the Vedic period. It was believed that transition from money
lending to banking must have occurred even before Manu, The great Hindu Jurist, who has devoted a
section of his work to deposit advance and laid down rules relating to rates of interest. During the Mogul
period, the indigenous Bankers played a very important role in lending money financing foreign trade and
commerce. During the days of East India Company, it was turn over the agency houses to carry on the
business. The General Bank of India was the first to join sector in the year 1786.The others that
followed were the Bank of Hindustan and the Bengal bank. The bank of Hindustan is reported to have
continued till 1906 while the other two failed in the meantime.
In the first half of the 19th century the East India Company established three banks:
1

Bank of Bengal (1809)

Bank of Bombay (1840)

Bank of Madras (1843)

These three banks are also known as Presidency Banks were independent units and functioned well.
These three banks were amalgamated in 1920 and Imperial Bank of India was established on 27 th
january1921, which started as private shareholders banks, mostly Europeans shareholders, with the
passing of time Imperial bank was taken over by the newly constituted State bank of India act in1955.In
1865 Allahabad Bank was established and first time exclusively by Indians, Punjab National Bank Ltd.
was set up in 1894 with headquarters at Lahore. Between 1906 and 1913, Bank of India, Central Bank of
India, Bank of Baroda, Canara Bank, Indian Bank, and Bank of Mysore were set up. Reserve Bank of
India came in 1935. On July, 1969, 14 major Research and development in the banking sector. Banks of
India were nationalized and on 15th April, 1980 six more commercial private banks were also taken over
by the government.
4

PUBLIC SECTOR BANKS

Definition of Public Sector Bank

Public Sector Banks (PSBs) are banks where a majority stake (i.e. more than 50%) is held by a
government. The shares of these banks are listed on stock exchanges. There are a total of 21
PSBs in India.

Emergence of Public Sector Banks

The Central Government entered the banking business with the nationalization of the Imperial
Bank of India in 1955. A 60% stake was taken by the Reserve Bank of India and the new bank
was named as the State Bank of India. The seven other state banks became the subsidiaries of
the new bank when nationalized on 19 July 1960.The next major nationalization of banks took
place in 1969 when the government of India, under prime minister India Gandhi, nationalized
an additional 14 major banks. The total deposits in the banks nationalized in 1969 amounted to
50 crores. This move increased the presence of nationalized banks in India, with 84% of the
total branches coming under government control
The next round of nationalization took place in April 1980. The government nationalized six
banks. The total deposits of these banks amounted to around 200 crores. This move led to a
further increase in the number of branches in the market, increasing to 91% of the total branch
network of the country. The objectives behind nationalization where:

o
o
o
o

To break the ownership and control of banks by a few business families,

To prevent the concentration of wealth and economic power,
To mobilize savings from masses from all parts of the country,
To cater to the needs of the priority sectors.....

List of Public Sector Banks

5

State Bank of Bikaner & Jaipur

State Bank of Hyderabad

State Bank of Indore

State Bank of Mysore

State Bank of Saurastra

State Bank of Travancore

Other Nationalised banks are:

Allahabad Bank

Andhra Bank

Bank of Baroda

Bank of India

Bank of Maharastra

Canara Bank

Central Bank of India

Corporation Bank

Dena Bank

Indian Bank

Indian Overseas Bank

Oriental Bank of Commerce

Punjab & Sind Bank

Punjab National Bank

Syndicate Bank

UCO Bank

Union Bank of India

United Bank of India

Vijaya Bank

PRIVATE SECTOR BANKS

The private-sector banks in India represent part of the Indian banking sector that is made up of both
private and public sector banks. The " private-sector banks" are banks where greater parts of stake
or equity are held by the private shareholders and not by government.
Banking in India has been dominated by public sector banks since the 1969 when all major banks
were nationalized by the Indian government. However since liberalization in government banking
policy in 1990s, old and new private sector banks have re-emerged. They have grown faster and
7

bigger over the two decades since liberalization using the latest technology, providing
contemporary innovations and monetary tools and techniques
The private sector banks are split into two groups by financial regulators in India, old and new.
The old private sector banks existed prior to the nationalization in 1969 and kept their
independence because they were either too small or specialist to be included in nationalization.
The new private sector banks are those that have gained their banking license since the
liberalization in the 1990s.

List of Private Sector Bank

Bank of Punjab
Bank of Rajasthan
Catholic Syrian Bank
Centurion Bank
City Union Bank
Dhanalakshmi Bank
Development Credit Bank
Federal Bank
HDFC Bank
ICICI Bank
IDBI Bank
IndusInd Bank
ING Vysya Bank
Jammu & Kashmir Bank
8

 Karnataka Bank
Karur Vysya Bank
Laxmi Vilas Bank
South Indian Bank
United Western Bank
UTI Bank

COMPARISON BETWEEN SBI BANK AND ICICI BANK

HISTORY OF SBI BANK
9

The

State Bank of India traces its roots to the first decade of 19th century, when the

Bank of Calcutta, later renamed the Bank of Bengal, was established on 2 June 1806.
The government amalgamated Bank of Bengal and two other Presidency banks, namely, the Bank of
Bombay (incorporated on 15 April 1840) and the Bank of Madras on 27 January 1921, and named the
reorganized banking entity the Imperial Bank of India. All these Presidency banks had been incorporated
as joint stock companies, and were the result of the royal charters. The Imperial Bank of India continued
as a joint stock company. Until the establishment of a central bank in India the Imperial Bank and its early
predecessors served as India's central bank, at least in terms of issuing the currency. The State Bank of
India Act 1955, enacted by the Parliament of India, authorized the Reserve Bank of India, which is the
central banking organization of India, to acquire a controlling interest in the Imperial Bank of India,
which was renamed the

State Bank of India on 30 April 1955.

June 2, 1806: The Bank of Calcutta established.

January 2, 1809: This became the Bank of Bengal.
April 15, 1840: Bank of Bombay established.
July 1, 1843: Bank of Madras established.
1861: Paper Currency Act passed.
January 27, 1921: all three banks amalgamated to form Imperial Bank of India.
July 1, 1955:

State Bank of India formed; becomes the first

Indian bank to be nationalized.

1959:

enabling the

State Bank of India (Subsidiary Banks) Act passed,

State Bank of India to take over eight former

State-associated banks as its subsidiaries.

10

1980s When Bank of Cochin in Kerala faced a financial crisis,

the government merged it with

State Bank of India.

June 29, 2007: The Government of India today acquired the entire Reserve Bank of
India (RBI) shareholding in

State Bank of India (SBI), consisting of

over 314 million equity shares at a total amount of over 355 billion rupees.

SBI PROFILE

COMPANY OVERVIEW:State Bank of India (SBI) is a multinational banking and financial services company based in India. It is
a government-owned corporation with its headquarters in Mumbai, Maharashtra. As of December 2013, it
had assets of US$388 billion and 17,000 branches, including 190 foreign offices, making it the largest
banking and financial services company in India by assets.
State Bank of India is one of the Big Four banks of India, along with ICICI Bank, Punjab National
Bank and Bank of Baroda.
The bank traces its ancestry to British India, through the Imperial Bank of India, to the founding in 1806
of the Bank of Calcutta, making it the oldest commercial bank in the Indian Subcontinent. Bank of
11

Madras merged into the other two presidencies banksBank of Calcutta and Bank of Bombayto form
the Imperial Bank of India, which in turn became the State Bank of India. Government of India owned the
Imperial Bank of India in 1955, with Reserve Bank of India taking a 60% stake, and renamed it the State
Bank of India. In 2008, the government took over the stake held by the Reserve Bank of India.
The eight banking subsidiaries are:
1-State Bank of Bikaner and Jaipur (SBBJ)
2-State Bank of Hyderabad (SBH)
3-State Bank of India (SBI)
4-State Bank of Indore (SBIR)
5-State Bank of Mysore (SBM)
6-State Bank of Patiala (SBP)
7-State Bank of Saurashtra (SBS)
8-State Bank of Travancore (SBT)

INTRODUCTION OF SBI (state bank of india)

The State Bank of India, the countrys oldest Bank and a premier in terms of balance sheet size, number
of branches, 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 ability to give the Private and Foreign Banks a run for their money. The
origin of the state bank of India goes back to the first decade of the nineteenth century with the
establishment of the Bank of Calcutta in Calcutta on2 June 1806.
The bank is operating into many businesses with strategic tie ups Pension Funds, General Insurance,
Custodial Services, Private Equity, Mobile Banking, Point of Sale Merchant Acquisition, Advisory
Services, structured products etc each one of these initiatives having a huge potential for growth.
It is also focusing at the top end of the market, on whole sale banking capabilities to provide Indias
growing mid / large Corporate with a complete array of products and services. It is consolidating its
global treasury operations and entering into structured products and derivative instruments. Today, 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.
SBI have about 8500 of its own 10000 branches and another 5100 branches of its Associate Banks, today
it offers the largest banking network to the Indian customer. The Bank is also in the process of providing
complete payment solution to its clientele with its over 8500 ATMs.
It presently has 52 foreign offices in 34 countries across the globe. It has also 5 Subsidiaries in India
12

SBI Capital Markets- SBICAP Securities, SBI DFHI, SBI Factors and Commercial Services Pvt Ltd (SBI
FACTORS), SBI Funds Management Pvt Ltd (SBI FUNDS) and SBI Cards & Payments Services Pvt.
Ltd. SBICPSL) - forming a formidable group in the Indian Banking scenario. It is in the process of raising
capital for its growth and also consolidating its various holdings.

HISTORY OF ICICI BANK

ICICI Bank was originally promoted in 1994 by ICICI Limited, an Indian financial institution, and
was its wholly-owned subsidiary. ICICI's shareholding in ICICI Bank was reduced to 46% through
a public offering of shares in India in fiscal 1998, an equity offering in the form of ADRs listed on
the NYSE in fiscal 2000, ICICI Bank's acquisition of Bank of Madura Limited in an all-stock
amalgamation in fiscal 2001, and secondary market sales by ICICI to institutional investors in fiscal
2001 and fiscal 2002. ICICI was formed in 1955 at the initiative of the World Bank, the
Government of India and representatives of Indian industry. The principal objective was to create a
development financial institution for providing medium-term and long-term project financing to
Indian businesses.
In the 1990s, ICICI transformed its business from a development financial institution offering only
project finance to a diversified financial services group offering a wide variety of products and
services, both directly and through a number of subsidiaries and affiliates like ICICI Bank. In 1999,
ICICI become the first Indian company and the first bank or financial institution from non-Japan
Asia to be listed on the NYS
After consideration of various corporate structuring alternatives in the context of the emerging
competitive scenario in the Indian banking industry, and the move towards universal banking, the
managements of ICICI and ICICI Bank formed the view that the merger of ICICI with ICICI Bank
would be the optimal strategic alternative for both entities, and would create the optimal legal
structure for the ICICI group's universal banking strategy. The merger would enhance value for
13

ICICI shareholders through the merged entity's access to low-cost deposits, greater opportunities for
earning fee-based income and the ability to participate in the payments system and provide
transaction-banking services. The merger would enhance value for ICICI Bank shareholders
through a large capital base and scale of operations, seamless access to ICICI's strong corporate
relationships built up over five decades, entry into new business segments, higher market share in
various business segments, particularly fee-based services, and access to the vast talent pool of
ICICI and its subsidiaries.
In October 2001, the Boards of Directors of ICICI and ICICI Bank approved the merger of ICICI
and two of its wholly-owned retail finance subsidiaries, ICICI Personal Financial Services Limited
and ICICI Capital Services Limited, with ICICI Bank. The merger was approved by shareholders of
ICICI and ICICI Bank in January 2002, by the High Court of Gujarat at Ahmadabad in March 2002,
and by the High Court of Judicature at Mumbai and the Reserve Bank of India in April 2002.
Consequent to the merger, the ICICI group's financing and banking operations, both wholesale and
retail, have been integrated in a single entity.

ICICI BANK PROFILE

ICICI Bank is Indias second-largest bank with total assets of 3,997.95 billion (US$ 100 billion) at March
31, 2008and profit after tax of Rs. 41.58 billion for the year ended March 31, 2008. ICICI Bank is the
most valuable bank in India in terms of market capitalization and is ranked second amongst all the companies
listed on the Indian stock exchanges .In terms of free float market capitalization*.The Bank has a
network of about 130 branchesand3,950 ATMs in India and presence in 18 countries. ICICI Bank offers a
wide range of banking products and financial services to corporate and retail customer through
a variety of delivery channels and through its specialized subsidiaries and affiliates in the areas of
14

investment banking, life and non-life insurance, venture capital and asset management. The
Bank currently has subsidiaries in the United Kingdom, Russia and Canada, branches in Singapore, Bahrain,
Hong Kong, Sri Lanka and Dubai International Finance Center and representative offices in the
United States, United Arab Emirates, China, South Africa, Bangladesh, Thailand, Malaysia and
Indonesia. UK subsidiary has established a branch in Belgium. ICICI Bank's equity shares are listed in
India on Bombay Stock Exchange( B S E ) a n d t h e N a t i o n a l S t o c k E x c h a n g e ( N S E )
o f I n d i a L i m i t e d a n d i t s American Depositary Receipts (ADRs) are listed on the
New York Stock Exchange (NYSE).

INTRODUCTION TO ICICI BANK

ICICI Bank is India's second-largest bank with total assets of about Rs.1,67,659 crore at March 31,
2005 and profit after tax of Rs. 2,005 crore for the year ended March 31, 2005 (Rs. 1,637 crore in
fiscal 2004). ICICI Bank has a network of about 560 branches and extension counters and over
1,900 ATMs. ICICI Bank offers a wide range of banking products and financial services to
corporate and retail customers through a variety of delivery channels and through its specialized
subsidiaries and affiliates in the areas of investment banking, life and non-life insurance, venture
capital and asset management
ICICI Bank set up its international banking group in fiscal 2002 to cater to the cross border needs of
clients and leverage on its domestic banking strengths to offer products internationally. ICICI Bank
currently has subsidiaries in the United Kingdom and Canada, branches in Singapore and Bahrain
and representative offices in the United States, China, United Arab Emirates, Bangladesh and South
Africa.
ICICI Bank's equity shares are listed in India on the Stock Exchange, Mumbai and the National
Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the
New York Stock Exchange (NYSE).
As required by the stock exchanges, ICICI Bank has formulated a Code of Business Conduct and
Ethics for its directors and employees.
At April 4, 2005, ICICI Bank, with free float market capitalization of about Rs. 308.00 billion (US$
7.00 billion) ranked third amongst all the companies listed on the Indian stock exchanges.
15

ICICI Bank was originally promoted in 1994 by ICICI Limited, an Indian financial institution, and
was its wholly-owned subsidiary. ICICI's shareholding in ICICI Bank was reduced to 46% through
a public offering of shares in India in fiscal 1998, an equity offering in the form of ADRs listed on
the NYSE in fiscal 2000, ICICI Bank's acquisition of Bank of Madura Limited in an all-stock
amalgamation in fiscal 2001, and secondary market sales by ICICI to institutional investors in fiscal
2001 and fiscal 2002. ICICI was formed in 1955 at the initiative of the World Bank, the
Government of India and representatives of Indian industry.
The principal objective was to create a development financial institution for providing mediumterm and long-term project financing to Indian businesses. In the 1990s, ICICI transformed its
business from a development financial institution offering only project finance to a diversified
financial services group offering a wide variety of products and services, both directly and through
a number of subsidiaries and affiliates like ICICI Bank. In 1999, ICICI become the first Indian
company and the first bank or financial institution from non-Japan Asia to be listed on the NYSE.
After consideration of various corporate structuring alternatives in the context of the emerging
competitive scenario in the Indian banking industry, and the move towards universal banking, the
managements of ICICI and ICICI Bank formed the view that the merger of ICICI with ICICI Bank
would be the optimal strategic alternative for both entities, and would create the optimal legal
structure for the ICICI group's universal banking strategy.
The merger would enhance value for ICICI shareholders through the merged entity's access to lowcost deposits, greater opportunities for earning fee-based income and the ability to participate in the
payments system and provide transaction-banking services.
The merger would enhance value for ICICI Bank shareholders through a large capital base and
scale of operations, seamless access to ICICI's strong corporate relationships built up over five
decades, entry into new business segments, higher market share in various business segments,
particularly fee-based services, and access to the vast talent pool of ICICI and its subsidiaries.
In October 2001, the Boards of Directors of ICICI and ICICI Bank approved the merger of ICICI
and two of its wholly-owned retail finance subsidiaries, ICICI Personal Financial Services Limited
and ICICI Capital Services Limited, with ICICI Bank.
The merger was approved by shareholders of ICICI and ICICI Bank in January 2002, by the High
Court of Gujarat at Ahmadabad in March 2002, and by the High Court of Judicature at Mumbai and
the Reserve Bank of India in April 2002. Consequent to the merger, the ICICI group's financing and
banking operations, both wholesale and retail, have been integrated in a single entity.

16

SBI v/s ICICI

SBI stands for State Bank of India. It is a public sector institution (government owned), with a
huge customer base all over India. It has seven associate banks operating under its SBI name. It has over
thirteen thousand branches across India and in some selected international countries and a 56,000 ATM
network across India. The
Standard Bank of India inherited the Bank of Calcutta, which was founded in 1806, and has been in
existence for over two hundred years.
On the other hand, the ICICI is a private sector bank (privately owned), with a relatively smaller
clientele base. It is one of the major banks in India (precisely the second largest), but much smaller than
the SBI. It has 950 branches, with 3,500 branches across India. The bank has deposits of Rs 1.65 lakh
crore compared to SBIs Rs 3.8 lakh crore (accumulated in a period of twelve years), racking up a net
worth of Rs 22,000 against Rs 27,000 for the State Bank of India. This represents Rs 9 crore business
generated by each ICICI employee per year, compared to Rs 3 crore worth of business per employee of
the ICICI.
While the State Bank pays 4.7 percent on deposits, and earns less on advances, the ICICI pays
0.7 less (4 percent), while earning more on advances, and thus earns
0.4 percent more on assets than the SBI. This is no surprise, as theres seemingly limitless access to
funds from the government for the state owned SBI.
On money transfers from overseas accounts, with the SBI, once a transfer transaction is
completed, you will be able to know the exchange rate used, and there are no restrictions on the amounts
you can transfer a day. However, the ICICI transfer is somewhat different. After completion of a money
transfer transaction, the exchange rate can only be known after five days, and there is a daily limit of
$5000 that can be transferred a day.
Although the SBI has generally performed well in the past, in recent years, the ICICI has seen
very good performance, almost edging out the SBI in every aspect, especially financially. The financial
years between 2001-2002 and 2005, and 2006, saw very strong gains for the ICICI bank. Its deposits
17

grew by 200 percent, five times more than the SBIs, and while SBIs revenue grew by 30 percent and
the ICICI banks revenue grew by seven times that percentage. This trend means that ICICIs growth
will eventually overtake SBIs in the future, in terms of deposits.

The SBI is a government owned bank (public sector), while ICICI is a privately owned bank
(private sector).

The SBI is much older (more than 200 years old) and more established than the ICICI, which is
less than 25 years old.

The SBI does not limit daily international transfer amounts, while the ICICI limits daily transfers
to $5000 a day.

The SBI bank pays a higher percentage on deposits than the ICICI bank.

MISSION AND VISION OF SBI BANK

MISSION STATEMENT:
To retain the Banks position as premiere Indian Financial Service Group, with world class standards and
significant global committed to excellence in customer, shareholder and employee satisfaction and to play
a leading role in expanding and diversifying financial service sectors while containing emphasis on its
development banking rule.

VISION STATEMENT:
Premier Indian Financial Service Group with prospective world-class Standards of efficiency and
professionalism and institutional values.
Retain its position in the country as pioneers in Development banking.
Maximize the shareholders value through high-sustained earnings per Share.
An institution with cultural mutual care and commitment, satisfying and
Good work environment and continues learning opportunities.

MISSION AND VISION OF ICICI BANK

MISSION
We will leverage our people, technology, speed and financial capital to:

Be the banker of first choice for our customers by delivering high quality, world-class products
and services.
18

Expand the frontiers of our business globally.

Play a proactive role in the full realisation of Indias potential.

Maintain a healthy financial profile and diversify our earnings across businesses and geographies.

Maintain high standards of governance and ethics.

Contribute positively to the various countries and markets in which we operate.

create value for our stakeholders

Provide the social facilities to the society

IN order to build some brand equity by doing social service, ICICI Bank has decided to undertake a
MISSION for reducing low birth weight incidence at the village level.
VISION
To be the leading provider of financial services in India and a major global bank.
To be the preferred brand for total financial and banking solutions for both corporates and individuals
To be the dominant Life, Health and Pensions player built on trust by world-class people and service.
This we hope to achieve by:

Understanding the needs of customers and offering them superior products and service

Leveraging technology to service customers quickly, efficiently and conveniently

Developing and implementing superior risk management and investment strategies to offer
sustainable and stable returns to our policyholders

Providing an enabling environment to foster growth and learning for our employees

And above all, building transparency in all our dealings

The success of the company will be founded in its unflinching commitment to 5 core values -- Integrity,
Customer First, Boundary less, Ownership and Passion. Each of the values describes what the company
stands for, the qualities of our people and the way we work.
19

We do believe that we are on the threshold of an exciting new opportunity, where we can play a
significant role in redefining and reshaping the sector. Given the quality of our parentage and the
commitment of our team, there are no limits to our growth.

PRODUCTS AND SERVICES OF SBI

Terms deposit scheme

Recurring deposits scheme
E- Pays
Atm service
Safe deposit locker
Working capital finance
Project finance
Deferred payment guarantees
Corporate term loan
Equipment leasing
Loan syndication
Fund transfer
Loans
I.
II.
III.
IV.

V.

Car loan
Home loan
Business loan
Personal loan
Loan against property

1. Term deposit

Provide security, trust and competitive rate of interest.

Flexibility in period of term deposit from 15 days to 10 years
Affordable Low Minimum Deposit Amount:
.One can open a term deposit with SBI for a nominal amount of Rs.1000/- only.
Flexibility in choosing the amount one wish to invest and the maturity period.

2. Recurring deposit
Recurring deposit refers to a little investment by an investor to meet his financial goals of future
(Childrens education or marriage, buy a car etc.) Recurring deposit provides the element of
compulsion to save at high rates of interest, wide choice in period of deposit.
Features: Flexibility in period of deposit with maturity ranging from 12 months to 120 months.
Low minimum monthly deposit amount.
One can start a Recurring Deposit with SBI for a monthly installment of Rs.100/- only.
20

3. E- pays
Bill Payment at Online SBI (e-Pay) will let you to pay your Telephone, Mobile, Electricity, Insurance
and Credit Card bills electronically over our Online SBI website
Book your Railways Ticket Online.
The facility has been launched wef Ist September 2003 in association with IRCTC. The scheme
facilitates Booking of Railways Ticket Online

4. Atm services
State Bank offers you the convenience of over 8000 ATMs in India, the largest network in the country
and continuing to expand fast! This means that you can transact free of cost at the ATMs of State
Bank Group (This includes the ATMs of State Bank of India as well as the Associate Banks namely,
State Bank of Bikaner & Jaipur, State Bank of Hyderabad, State Bank of Indore, State Bank of
Mysore, State Bank of Patiala, State Bank of Saurashtra, and State Bank of Travancore) and wholly
owned subsidiary viz. SBI Commercial and International Bank Ltd., using the State Bank ATM-cumDebit (Cash Plus) card.

5. Safe deposit locker

For the safety of your valuables we offer our customers safe deposit vault or locker facilities at a large
number of our branches. There is a nominal annual charge, which depends on the size of the locker
and the centre in which the branch is located.
6.

Working Capital Finance

SBI offers working capital finance to meet the entire range of short-term fund requirements that arise
within a corporate day-to-day operational cycle. The SBI working capital loans can help your company in
financing inventories, managing internal cash flows, supporting supply chains, funding production and
marketing operations, providing cash support to business expansion and carrying current assets.

7. Project Finance
The SBI has formed a dedicated Project Finance Strategic Business Unit to assess credit proposals from and extend term loans
for large industrial and infrastructure projects. Apart from this, project term loans for medium sized projects and smaller clients
are delivered through the CAG and the NBG.

21

8. Deffered Payment Guarantees

SBI can extend deferred payment guarantees to industrial projects for obtaining imported equipment. The
DPG is a standby credit guaranteeing deferred payments, usually for payments for capital goods, turnkey
contracts etc.

9. Corporate Term Loan

The SBI corporate term loans can support your company in funding ongoing business expansion,
repaying high cost debt, technology upgradation, R&D expenditure, leveraging specific cash streams that
accrue into your company, implementing early retirement schemes and supplementing working capital.

10. Equipment Leasing

The SBI's has deployed a dedicated Strategic Business Unit for lease financing that is richly experienced
in arranging lease contracts for procuring expensive equipment for your project or plant. At SBI, we
arrange lease agreements as stand alone contracts or as part of a structured package.

11. Loan Syndication

The SBI leverages its vast network of relationships to arrange syndicated credit products for corporate
clients and industrial projects.
With its rich experience and strong reputation, SBI's syndication desk can assemble large loan packages
involving a ring of reputed financial entities, domestic and international, that match the large credit
requirements of infrastructure projects.

12. Funds Transfer

You can now avail a bouquet of funds transfer services through Internet banking
Transfer funds within your own accounts
Transfer funds to third party account held in the same bank
Make an Inter bank funds transfer to any account held in any bank including State Bank Group
Pay any VISA credit card bill
Transfer funds to religious and Charitable institutions

22

 Record standing instructions to transfer a fixed amount at a scheduled frequency for a period not
exceeding one year
Transfer funds to NRE PIS accounts to facilitate online trading
13. Loans
I.

Car loan
Move ahead in life with SBI Car Loans with more than 6000 Branches offering Car Loans. If you
have been putting off purchasing that Car, SBI invites you to an attractive Car Loan Scheme with
low interest rates, free accidental insurance, easy repayment options, optional SBI life cover, total
transparency. Loan finance will include vehicle registration charges, insurance, one-time road tax
and accessories worth Rs.25000/-.

II.

Home loan
"The Most Preferred Home Loan Provider" voted in Awaaz Consumer Awards along with the
Most Preferred Bank Award in a survey conducted by TV 18 in association with AC Nielsen-ORG
Marg in 21 cities across India. SBI HOME LOANS now offers Interest Rates concessions on
GREEN HOMES in accordance with SBI's commitment to Environment protection. SBI Home
Loans come to you on the solid foundation of trust and transparency built in the tradition of State
Bank of India.

III.

Business loan
Traders Easy Loan scheme is launched by SBI to provide hassle free loan to Traders. Any
businessman/ entrepreneur/ professional and self employed person can avail this loan. Loan under
the scheme can be availed to meet normal business requirements and is sanctioned against
equitable mortgage of property.

IV.

Personal loan
SBI Saral - Personal Loan makes funds readily available to you whenever you desire or need.
Access this facility from over 3000 branches across the country and confidently face the challenge
of meeting any kind of personal expenses

V.

Loan against property

A dream come true! An all purpose loan for anything that life throws up at you!! Do you need
funds for a marriage ceremony, want to take your family to a well-deserved holiday or for a
sudden medical emergency? you have some property, but would rather not sell it? Then why not
23

avail of this all purpose loan from SBI? SBI now makes it very much possible for you to not only
keep your property but also have liquid funds.

Types of loans

Interest rates

Car loan
Home loan
Business loan
Personal loan
Loan against property

10.75% per annum

9.25%-9.30%
12.50%-13%
12.55%-17.65%
15.25%-15.50%

PRODUCTS AND SERVICES OF ICICI BANK

Special saving account

Life plus senior citizens account
Fixed deposit
Recurring account
Salary account
Child education planning
Tax saver fixed deposit
Cards
I.
II.
III.
IV.

Credit cards
Debit cards
Pre-paid cards
Business cards

E-instructions
Consolidation demat account
NRI banking
Investments
Property solutions
Insurance
Corporate banking
Trade services
Foreign exchange services
Loans
I.
II.
III.
IV.
V.

Car loan
Home loan
Business loan
Personal loan
Loan against property

1. Special Savings Account

24

ICICI Banks Special Savings Account provides comprehensive banking services to non profit motive
organizations like Trusts, Associations, Societies, Clubs, NGOs, Hospitals, Educational and Research
Institutes and section 25 companies and entities eligible for a Savings Account as per RBI Guidelines.

2. Life plus Senior Citizens Account

Carry out your day-to-day banking transactions independently with ICICI Banks Life Plus Senior
Citizens Savings Account, a saving account designed for our customers above 60 years of age.
We have special Senior Citizen desks at all our branches, where you can carry out all your banking
transactions, without having to wait in queues.

3. Fixed deposit
A sum of money given to a bank, financial institution or company whereby the receiving entity pays
interest at a specified percentage for the time duration of the deposit. At the end of the time period
of the deposit the amount that is originally given is returned to the investor. Fixed deposits are also
known as term deposits. Fixed deposits are operated by ideal money. the interest is charge 9 to10%
per annum. the facilities are provided by fixed deposit receipt.

4. Recurring Deposit
Recurring deposit are a good investment option for small investors if they do not have a
lump sum amount to invest at one go, but wish to save a smaller sum of money on a
regular basis. As one of the leading private sector banks in India, ICICI Bank offers its
customers highly flexible RD options at competitive interest rates.
5. Salary Account
ICICI Bank Salary Account is a benefit-rich payroll account for Employers and Employees.As an
organization, you can opt for our Salary Accounts to enable easy disbursements of salaries and enjoy
numerous other benefits. Additionally, ICICI Bank offers a host of advantages for your employees like
instant credit of salaries, offers on bill payments, Phone Banking, Free Internet Banking and much more.
To know more about the ICICI Bank Salary Accoun

6. Child Education Planning

Planning for your childs special education needs isnt an easy task, but its not insurmountable either.
While support services vary from state to state, all states are required to assist your child in receiving the
same education they provide every other child in school. The resources in this section can help you
develop a plan to address your childs education needs
25

7.Tax saver fixed deposit

Tax saver fixed deposit is a type of fixed deposit by investing in which you can get tax deduction under
section 80C of the Indian Income Tax Act, 1961. Normally, tax saver deposits are of two types - Single
holder Type Deposits" and Joint holder Type Deposits. Such deposits are offered for a lock-in period of
5 years. Any investor can claim a deduction of maximum Rs.1, 50,000 by investing in tax saver fixed
deposit.

8. Cards
I.

Credit cards
ICICI Bank Credit Cards give the customers the facility of cash, convenience and a range of
benefits, anywhere in the world. These benefits range from life time free cards, Insurance
benefits, global emergency assistance service, discounts, utility payments, travel discounts and
much more.

II.

Pre-paid cards
ICICI Bank brings to the customers a complete bouquet of pre-paid cards providing payment
solutions at their fingertips. ICICI Bank pre-paid cards are a safe & convenient way for
associate payments, disbursements, gifting & small ticket transactions. Pre-paid cards are
available on a VISA platform thus providing accessibility to over 3.5 Lakh merchant
establishments & cash withdrawal from all VISA ATMs in India.

III.

Debit cards
The ICICI Bank Debit Card is a revolutionary form of cash that allows customers to access
their bank account around the clock, around the world. The ICICI Bank Debit Card can be
used for shopping at more than 3.5 Lakh merchants in India and 24 million.

IV.

Business cards
The ICICI Bank Business Card is aimed at SMEs as an enabler for their business. The
Business card is a smart alternative to cheques, cash, and personal credit cards. With its
purchasing convenience, cost savings, available credit, and detailed reporting facilities, the
ICICI Bank Business Credit offers what their business needs to stay on top.

9. E-instructions
Through this anyone can transfer securities 24 hours a day and 7 days a week through internet at a
lower cost. It can also be done through customer care officer.
26

10. Consolidation demat account

Through this anyone can dematerialize their physical shares in various holding patterns and
consolidate all such scattered holdings into their primary demat accounts at reduced costs.

11. NRI banking

Under NRI Banking ICICI Bank provides a variety of services
Money Transfer
Bank Accounts
Investments
Property Solutions
Insurance
Loans

12. Investments
Under investments it provides various services. Some of they are as follows International deposit
Mutual fund
Online share trading
Structured deposit
Private equity
Commercial real state

13. Property solutions

Under property solutions it provides some services to the customers. Like it provides home loan to
the customers. It also provides help to the customers in searching houses.

14. Insurance
Under insurance ICICI Bank provides both general as well as life insurance services to its
customers.

15.Corporate banking
ICICI BANK gives a number of facilities under corporate banking services.

Corporate Net Banking

Cash Management Trade Services
Tradeway
Forex Online
Sme Services
Online Taxes
27

16. Trade services

ICICI Bank offers a wide range of Trade Services designed to assist you in building on your
strengths, so that your company can size business opportunities across the world. ICICI Bank has in
place a Centralized Trade-Services Unit, which adheres to six sigma standards. As a result, ICICI
Bank customers experience fewer delays in receiving payment, require less effort in locating
collection information, gain increased control over foreign receivables and experience improved
cash flows.

17. Foreign Exchange Services

Competitive rates

Free Replacement Card along with ICICI Bank Travel Card on purchase

Online purchase of Foreign Exchange and delivery at doorstep in select cities.

24x7 international toll free numbers for ICICI Bank Travel Card holders in select countries

Wide network of 1600+ Foreign Exchange serving branches in India .Located your nearest branch

18. LOANS
I

Car loan
Turn your dream into reality. Own that new car you have always desired, with a little help from

ICICI.
The bank offer cars loans up to 90% of the ex-showroom price of the car. Its interest rates would
Pleasantly. surprise you. What's more, you can take up to 5 years to repay the loan. ICICI Bank
offers new car loans with fixed rate option only.
II

. Home loan
We, at ICICI Bank Home Loans, offer unbeatable benefits to ensure that you get the best deal
without any hassles. As one of the leading home loan provider, ICICI Bank understands how
special building a new home is for you and our Home Loan help you lay the foundation for your
dream home. ICICI offers you the most convenient home loan plans to suit your needs. With so
many attractive features in every type of home loan we offer, creating the home you always
wanted is no longer a distant dream.

III

Business loan

28

ICICI Bank's Dealer Financing schemes offer short-term unsecured finance at reasonable cost to
selected dealers of large corporates, extended for procurement of goods from corporates. These
are commonly available on a non-recourse basis, with corporate recourse available by way of First
Loss Deficiency Guarantee in some cases.
IV

Personal loan
ICICI Personal Loans is provided only to an existing ICICI Bank customer. It is possible to secure
a loan even without having to visit your bank branch. If you have been an ICICI Bank customer

for the past 9 months, you might have a pre-approved loan offer waiting for you.
Loan against property
Loan Against Property is the perfect way to unlock the hidden value of your property. With this
loan,You can fully benefit from lifes little surprises you may have earlier passed over due to lack
of funds. Live your dreams with a Loan Against Property! This multi-purpose loan puts funds at
your disposal to use as you wish. Whats more, this loan is available at a reasonable rate and can
be repaid comfortably over as many as 10 years.The ICICI Banks Loan Against Property can be
used for any purpose.

Types of loans

Interest rates

Car loan

11.5%-16.5%

Home loan

9.40%-9.45%

Business loan

15.00%-19.00%

Personal loan

11.49%-17.50%

Loan against property

12% per annum

ANALYSIS AND INTERPRETATION OF SERVICES

Case 1 Sale of Gold during Akshya Tritiya (2012) SBI

29

ICICI

We can see here that SBI advertises sale of mutual fund units in their Gold Fund scheme during
the festival of Akshaya Tritiya. Investors who have knowledge about the market will know very well
that gold as a commodity yields an average 20% Yon and has since never saw a negative rate of return.
SBI also had a scheme that offered 1% discount on all denominations of Gold coins except those above
100gms during their campaign. The drawback of advertising like this is, many do not know the benefits
of investing in paper gold. Which means, gold mutual funds or gold exchange traded funds; this form
of investment has superior

advantages than investing in gold as a physical commodity. ICICI

however had decorated all its branches during the festival and even offered a larger discount, 8% on
gold coins being purchased online. Many Indians today still choose gold as a physical commodity and it
is possible that ICICI had better sales than SBI in comparison to gold coins.
SBI could simply mention the rate of return on its gold mutual funds or offer the advantages of
paper gold over

physical gold in its advertisements during Akshaya Tritiya. The advantages of

investing in paper gold are not even mentioned on their mutual funds website by means of a flash
advertisement.

Case 2-ATM Services

SBI

ICICI

Cash Withdrawal
Fund Transfers
Mobile Recharge
Mini Statement
Balance Enquiry
Pay SBI Credit Card Bills
Pay Utility Bills (MTNL and Besom only)
Donate to relief funds
Pay SBI Life Insurance premium

Cash Withdrawal
Fund Transfers
Mobile Recharge
Mini Statement
Balance Enquiry
Pay ICICI credit card bills
Pay Utility Bills (All)
Request cheque book
Pay ICICI Prudential Insurance premium

Donate to temple trusts

Pay fees of certain colleges

30

SBI ATMs do have more services than what ICICI ATMs offer. But there is a small glitch in their
service delivery and marketing. SBI offers the basic services (highlighted purple) in all the ATMs.
However, the rest are available only in a select few. The data for which is unavailable.
Only on their website in a link that shows up when you type ATM in the search bar. Poor advertising
of its ATM functionality has resulted in lack of awareness among consumers regarding the services
available. In fact, the SBI website also does not advise any details on what services their ATMs offer.
The irony is, SBI keeps advertising on the number of ATMs and cash withdrawals made by
consumers over the years in these ATMs. This advertising is irrelevant. As a customer of SBI, it makes
no difference on the number of ATMs added over the years since the data is irrelevant. ICICI however
offers all the services in all of its ATMs. And the advertising of its services has been clearly seen on all
its branches. There is even a flash demo on the banks website that provides details on the services
available at its ATMs. Their current marketing

campaign, suggests Our

ATM is almost a bank branch indicating customers the improvised convenience offered to them.

Figure 6.1. Innovative Banking Services

Banks
17

ICICI
SBI

83

On being asked about the innovative nature of banking services, 83.2 % of the customers of
ICICI bank said that the banking schemes offered by ICICI bank are very much innovative.

The SBI customer were asked about the innovative nature of SBI services, around 77.5 %
customers out of 100 said that the schemes are very much innovative.
31

Figure 6.2.

Innovative Banking Services

Banks

48.5
51.5

ICICI
SBI

As far as the comparisons of innovative scheme of both the banks are concerned; it is found that
ICICI bank offers more innovative schemes than SBI.

About the dynamic nature of banking services offered by ICICI bank only 51.5% of the
customers out of 100 said that the services are very much dynamic in nature whereas 33.3% SBI
customers fell that the services provided by SBI are dynamic. In comparison with SBI about
dynamic services, ICICI bank stands first.

Banks

43.6

ICICI
56.4

SBI

32

Figure 6.3
5

Dynamic Services

In terms of competitiveness of banking schemes ICICI bank has only 56.4% customer saying its
services are very much competitive.

SBI customers are negative about the competitiveness of banking schemes of SBI. Around
37.3% customers feel that the services are very much competitive whereas majority of customers
i.e. 50% have the opinion that the schemes offered by SBI are very less competitive.

The customers of ICICI bank are satisfied with the services offered by ICICI bank. Since 83.2 %
of the, customers responded yes to the question whether they are satisfied with the services of
ICICI bank.

Figure 6.5.

Service Satisfaction

Banks
17

ICICI
SBI

83

8.SBI customers are also satisfied with the banking services offered by SBI. The customers who are
satisfied with ICICI bank services stand at 76.5%.

33

Figure 6.6.

Banking Services

Banks

23.5

SBI
ICICI
76.5

9.It was obvious that ICICI bank customers are more satisfied with 83.2% out of total 100 respondents
when compared with SBI bank in terms of satisfaction.
Figure 6.7

Customer Satisfaction

Banks
17

ICICI
SBI

83

10.Private sector banks give more importance to customer satisfaction. For private sector banks, not
only the product and services are important, but also the way they communicate about their new
services, opening of new branches, changes in interest rates etc. to their customers. It shows that
80.2 % out of total respondents are satisfied with the communication from ICICI bank.

34

Figure 6.8

Product Satisfaction

Banks

20

ICICI
SBI

80

11. SBI customers are more satisfied at 85.3 % about communication from SBI about new services,
changes in interest rates opening of new branches, etc.

Figure 6.9

Communication Satisfaction

Banks

14.7

SBI
ICICI

85.3

35

12

When ICICI bank and SBI are compared on satisfaction with the communication from banks it is
found that SBI is more prompt and efficient in communication with the customers.

13

It is found that 34.6 % customers of ICICI bank are always satisfied with the way ICICI bank
markets it banking services. And 61.4% of the ICICI bank customers are sometimes satisfied
with marketing of ICICI bank services.

14

it is found that 50% customers of SBI are sometimes satisfied with the SBI markets its products,
47.1% customers of SBI are always satisfied with the way bank markets its services.

15

ICICI bank has 11.9% customers who are not satisfied with the service of ICICI bank. The study
also attempts to find out the reasons for dissatisfaction of services of ICICI bank, it is found that;

8.9% customers are not satisfied because of services

1.0% customers are not satisfied because of schemes offered by ICICI bank.

7.9% customers are not satisfied with the staff of ICICI bank.

7.0% customers of ICICI bank are not satisfied because of banking charges.

4.0% percent customers of ICICI bank are not satisfied because of the time taken for transaction

36

. Figure 6.10

Staff and Scheme Satisfaction of ICICI Bank

Banks
19.8

14.8

166
13.2
12
7

ICICI
ICICI
ICICI
ICICI
ICICI
ICICI

767.2

SBI

16. SBI has 7.9% out of the total respondents who are not satisfied with the services of SBI. The Study
also attempts to find out the reasons for dissatisfaction of services of SBI It is found that:

6.9% of the customers of SBI are not satisfied because of services.

3.9% customers of SBI are not satisfied with the schemes offered by SBI

13.7% of the customers are not satisfied with the staff SBI
10.8% Customers of SBI are not satisfied with service charges charged by SBI

3.9% of the customers of SBI are not satisfied because of the time taken for transaction.

37

Figure 6.11

Staff and Scheme satisfaction of SBI

Banks
11.5 6.5
13.2

22.8
18
6.5

SBI
SBI
SBI
SBI
SBI
SBI
ICICI
922.5

17

It is found out from the above study that the major reason for dissatisfaction of ICICI bank customers is
banking staff and charges by ICICI bank.

18

It is found out from the above study that the major reason for dissatisfaction of SBI customers is banking
staff with 13.7% and service charges with 10.8%.

19

When Customers of ICICI bank asked to rate ICICI bank on the basis of customer services the customer
of ICICI bank have rated ICICI bank as follows:

32.7% of the total respondents said ICICI bank is excellent in terms of customer services.
28.7% of the total respondents said ICICI bank is very good in terms of customer service.
30.7% of the total respondents said ICICI bank is good in terms of customer service.
7.9% of the total respondents said ICICI bank is poor in terms of customer service.

38

Figure 6.12

ICICI Customer Service

Banks
7.9

32.7

ICICI
ICICI

30.7

ICICI
ICICI
SBI

28.7

20

When customers of SBI asked to rate SBI on the basis of customer services the customers of SBI have
rated SBI as follows:

25.5% of the total respondents said SBI is excellent in terms of customer services.
34.4% of the total respondents said SBI is very good in terms of customer services.
37.3% of the total respondents said SBI is good in terms of customer services.
4.9% of the total respondents said SBI is poor in terms of customer services.
21.
When asked about the Redresses of complaints most of the marketing staff of ICICI bank replied in
negative terms. Around 32% said it is satisfactory, 26% said it is poor. And 6% said the Redresses of
complaints at ICICI bank is excellent, 10% said it is very good and 26% said it is

39

Figure 6.14

Complaint Redresses

Banks
4
32

26

ICICI
ICICI
ICICI
ICICI
ICICI

10

SBI
6

22

26

The question regarding customer complaints when asked to marketing staff of SBI they
replied in following way: reply to customer complaints at SBI is excellent 12%, very good
6%, good 45% and 16% satisfactory around 21% said it is poor.
Figure 6.15 Customer complaints

Banks

4
21

12

SBI
6

SBI
SBI
SBI

16

SBI
45

ICICI

43

23

IT is found that the marketing problems faced by marketing staff of SBI is related to
banking products 8%, marketing strategies 12%, service charges 55% banking staff 20% and
other 5%.

Figure 6.16

Marketing Staff

Banks
5 4

8
12

SBI
SBI

20

SBI
SBI
SBI
55

ICICI

In case of ICICI bank it is found that the marketing problems faced by marketing staff is
related to banking products 9% marketing strategies 10% service charges 63% banking staff
10 and other 8%.

It is found that most of the time ICICI bank marketing staff faces problems in convincing
the customers because of reasons such as service charges, banking staff, etc. at 79% where
SBI staff faces problems at 51%.

The major question remains whether all these problems affect the marketing staff in
convincing the customer about other products. Only 2% of ICICI bank marketing staff feels
that they have problem in convincing the customers all the times because of all these
problems stated above, 9% have problems most of the time. 79% have problems some times,
and 10% never have problems because of all these reason to convince the customers.

SWOT ANALYSIS OF SBI

Strength:
SBI is the largest bank in India in terms of market share, revenue and assets.
The bank has its presence in 32 countries engaging currency trade all over the world.
44

 SBI has the first mover advantage in commercial banking service.

Weakness:
Lack of proper technology driven services when compared to private banks
The banks spends a huge amount on its rented buildings
SBI has the largest number of employees in banking sector, hence the bank spends a considerable
amount of its income in employees salary compensation
In spite of modernization, the bank still carries the perception of traditional bank to new age
customers

Opportunities:
Merger of associate banks with SBI ,as it will expand the market share and increase4 the revenues
Opening up of new branches And ATMs.
Pool in talent to replace the going top management to serve the next generation

Threats:
Customer prefer to switch to private banks and financial service providers for loans and
mortgages, as SBI involves stringent verification procedures and take long time for processing.
More private banks are venturing into rural areas.
SBI is currently operating at lowest CAR. Insufficient capital may restrict the growth prospects of
the
Banks going forward.
Delay in technology upgradation could result in loss of market shares.

SWOT ANALYSIS OF ICICI BANK

Strength:
Online Services: ICICI Bank provides online services of all its banking facilities. It also
provides D Mart account facilitates on-line, so a person can access his account from anywhere he
is.

45

 Advanced infrastructure: Branches of ICICI Bank are well equipped with advanced technology to
provide the customers with taster banking services. All the computerized machines are located in
suitable manner & are very useful to the customers & staff of the bank.
Friendly Staff: The staff of ICICI Bank in all branches is very friendly & help the customers in all
cases They provide faster services along with bonding & personal relationship with the customers
24 hrs. Banking services: Compared to other bank ICICI bank provides long hours of services i.e.
8-8 services to the customers. This service is one of its kinds & is very helpful for the customers
who are in urgent need of money.

Weakness:
High bank service charges: ICICI bank charges highly to customers for the services provided by
them when compared to other bank & that are why it is only in the reach of higher class of society.
Less Credit Period: ICICI bank provides credit facilities but only up to limited period. Even when
the credit period is not over it sends reminder letters to the customers which may annoy them.

Opportunities:
Bank Insurance services: The bank should also provide insurance services. That means the bank can
have a tie-up with a insurance company. The bank will advertise & promote the different policies
introduced by the insurance company & convince their customers to buy insurance policies.
Increase in percentage of Returns on increase: The bank should provide higher returns on deposits in
comparison of the present situation. This will also up to large extent help the bank cam profits &
popularity
Recruit professionally guided students: Bank & Insurance is a special non-aid course where the
students specialize in the functioning & services of the bank & so are knowledge about various tax
policies. The bank can recruit these students through tie-ups with colleges. Such students will surely
prove as an asset to the bank.

46

 Associate with social cause: The bank can also associate itself with social cases like providing relief
aid patients funding towards natural calamities. But this falls in the 4 quadrant so the bank should
neglect it.

Threats:
Competition: lClCl Bank is facing tight competition locally as well as internationally. Bank like
CITI Bank. HSBC, ABM, Standard Chartered. HDFC so provide equivalent facilities like ICICI
do.
Net Services: ICICI Bank provides all kind of services on-line. There can be easy access to the e-mail
ids of the customers through wrong people. The confidential information of the customers can be
leaked easily through the e-mail ids.
No Proper Facilities To Uneducated customers: ICICI Bank provides l services through electronic
computerized machines. This creates problems to the less educated people. But this threat falls in the
4 quadrant so its negligible. The company can avoid this threat.

ADVANTAGES OF ICICI OVER SBI:

ICICI is growing at a very fast rate with a totalasset of Rs. 3,744.10 billion.In the area of human relations, the two
are takingdivergent paths. SBI, which had over 1 lacksemployees, has reduced headcount through
avoluntary retirement scheme and is cautious aboutadding headcount.ICICI Bank, on the other hand,
is setting upregional hubs where its workforce would be
concentrated and plans to add 20,000 to itsheadcount every year. The group plans to addbetween 75,000 and 1,
00,000 employees in thenext few years. ICICI Bank is also set to outdo SBI is in itsinternational bookAn area where it has been very aggressive.

ADVANTAGES OF SBI OVER ICICI:

SBI is the largest and oldest bank of India. Itsmajor stocks are held by government of India. Sothis bank enjoys
the trust of its Customers a lot.
SBI offers flexible tenures of loan repayment.
State bank of India has vast experience in thefield of SME(Small and Medium Enterprises) Financing.
As it is the oldest name so it enjoys public trust alot.SBI have four national level Apex
TrainingColleges and 54Learning Centers spread all over the countrythe Bank isContinuously engaged
47

in skill enhancement of its employees.Some of the training programs are attended bybankers frombanks in
other countries.
SBI group, which has over 10,000 branches, isplanning to add another 3,000 branches.
It is also set to become the largest issuer of debit cards and is the second largest credit card issuer

CHAPTER - 2
LITERATURE REVIEW
A study on public and private sector banks and their study shows that quality gap between expectations of
consumers and perceptions of service delivered is highest in public sector banks and lowest in private
sector banks(using gap 5). Another study found out that public sector banks are better than private sector
banks. Other studies and their findings are given below
Jamal, A., Naser, K., 2002-The study examined key drivers of customer satisfaction using 167 customers and
it was found that core and relational performances had impact on customer satisfaction and there was negative
relationship between customer expertise and customer satisfaction
Navdeep Aggarwal and Mohit Gupta (2003)- This study basically finds out the primary dimensions and sub
dimensions of service quality. Informal structured interviews are conducted with branch managers and
academicians to formulate a banking service quality model. The study found out that service time and personal
interactions are very important along with ambience for service quality
Zhou, L( 2004)- The study analysed impact of service quality in banks on customer satisfaction in chinas
retail banking and it was found out that reliability and assurance were the primary drivers of customer
satisfaction. It was also found out that there were significant variations in expectations and perceptions in
customers
Arora S (2005)- This study analysed factors influencing customer satisfaction in public sector, private sector
and foreign banks in northern India. 300 customers were given questionnaires which revealed that significant
differences exist in customer satisfaction level of customers in each group of banks regarding routine
operation and situational and interactive factors. Foreign banks were found to be the leaders in mechanization
and automation
Mushtaq M Bhat (2005)- This study finds out service quality parameters in bank through SERVQUAL and
influence of demographic variables . The study was limited to SBI,PNB ,Jammu and Kashmir bank Citi bank
and Standard Chartered Grind lays bank. Sample size was 800 and study found out that foreign banks are
48

better than Indian banks. SBI was found to be relatively poor on reliability and responsiveness. Banks in Delhi
were comparatively better in service quality
Alka Sharma,Varsha Mehta(2005)-The study focuses on service quality of four leading banks and their
comparison.
Joshua A J, V Moli, P. Koshi (2005)- The study evaluated and compared service quality in old and new banks
using sample size of 480. The study found out that customers were satisfied in reliability, empathy and price
and for other parameters the difference between expectations and perceptions were smaller than public sector
banks
Mohammad et al(2005)- The study tries to develop a comprehensive model of banking automated service
quality taking into consideration unique attributes of each delivery channel and other dimensions which
influence service quality
Raul and Ahmed(2005)-The study investigated customer service in public sector banks in 3 districts in
Assam and it was found that customers were dissatisfied with the management, technology and interactive
factors along with high service charges. Communication gap was the root cause of poor service and service
was different in rural and urban sectors
Sharma and Sharma( 2006)-The study analysed customer delight in urban consumer banking. The study

found out that customers were satisfied with loan facilities, bank environment, routine work procedures,
location ,interest rates etc and were dissatisfied with loan formalities and promotion through media.
Dash et al(2007)- The study measured customer satisfaction through 5 service quality dimensions in
Noida and Ghaziabad and findings revealed that assurance was the most important dimension of service
quality followed by reliability and responsiveness. Tangibles was found to be least important
Sharma S, et al (2007)-The study did a comparison of public and private banks with respect to
perceptions of customers regarding service quality. It was found out that service quality is associated with
satisfaction and there was significant difference between quality of services provided by banks. Banks in
smaller cities are far behind big cities in this regard
Tracey Dagger ,Jillian Sweeney (2007)- The study consists of qualitative research to investigate the
effect of consumption stage on service quality perceptions and then development of hypothesis. The
findings indicate the evidence that customers rely more heavily on attributes that are search based in the
initial stages of service experience and in later stages consumption becomes important
Dr.Vannirajan&B.Anbazagan(2007)- The study tries to make an assessment of SERVPERF scale in the
Indian Retail banking sector by doing a survey in banks at Madhurai. The study found that in public
sector banks tangibles and assurance are most important and in private sector banks reliability
,,responsiveness and tangibles are most important.
P K Gupta(2008)-Objective of this study was to find out the behavior of customers with respect to
internet banking vis--vis conventional banking. The study found out that internet banking was found to
be easier and speedier than conventional banking and trust, accuracy and confidentiality were the most
important factors here.
Ellaine Wallce&Leslie De Cheratatony(2009)-Study finds out the importance of ,assurance and
reliability, customer orientation teamwork etc in performance of . Also the study highlights criticality of
branch& employee teamwork for performance. Continuous commitment and service recovery were also
found important
49

Mohammed Siddique Khan,Siba Sankar Mahapatra(2009)-The study was to identify

important parameters affecting service quality in internet banking. Factor analysis of the
data collected finds 7 factors which included factors like reliability, access, user friendliness
privacy etc. Correlation analysis shows that a significant positive correlation exists between
factors..Also it was found out that business class differs from other classes in perception

Padhy P K and B N Swar(2009)- the paper investigated role of technology in banking and its impact on
perceived service quality in public, private and foreign banks in Orissa using a s ample size of 300
customers. Foreign bank was found to be very close to expectations of customers followed by ICICI and
AXIS. Service quality in public sector banks was found to be very low
Rod et al(2009)-The study focused on relationship between service quality, overall internet banking
service quality and customer satisfaction in New Zealand. The study found out that online customer
service quality and online information systems were significantly and positively related to overall
customer internet banking service quality. Overall internet banking service quality and customer
satisfaction were positively correlated
Sandip Khosh Hazra, Dr.Kailash Srivatava (2010)-The study was done to find out the association
between service quality, customer satisfaction ,loyalty and commitment. SERVQUAL is used and the
study finds out that in private banks dimensions of service quality, assurance and reliability are significant
for satisfaction of customers, loyalty and commitment. The banks taken differed in these parameters.
Akiko Ueno(2010)- The paper talks about the importance of quality. The study finds out the features that
are fundamental in supporting service quality. The secondary research finds out the human resource
functions like recruitment, teamwork etc in maintain service quality
Monica Bedi(2010)-The study investigates relationship between service quality, customer satisfaction
and behavioral intentions. The findings also indicated the importance of service quality. The study also
found out that banks differed in the service quality parameters.
Fulbag Singh, Davinder Kaur(2010-11)- The study combines all literature review done in service
quality And related areas in banking till 2010. It contains the works of Cronin& Taylor, Bahia and Nantel
and others on this area
Dr Ravichandran et al(2010)- The paper analyses existing study and tries to understand socio
demographic and rational profile of public retail banking consumers. It also finds out the importance of
service quality dimensions to predict the multidimensional model of behavioral intentions among public
sector consumers in India. Loyalty was found to be influenced by operating hours, modern equipments,
error free records etc. Service quality parameters like tangibility, responsiveness and empathy dimensions
were also found to be very important.
Davood Feiz et al(2010)-The study uses hypothesis to find out service quality in Iran railways. It was
found out that perceived service was found to be within zone of tolerance and service was satisfactory.
The difference between ideal level and current level was significant. There was significant relationship
50

between service adequacy variables and perceived value. The study in nutshell gives an image of service
quality
Sachin Mittal&Rajnish Jain(2010)-This paper is basically a literature review of banking industry and
effect of IT based services on customer satisfaction. The study highlights customer satisfaction levels
among young customers in banking industry. A survey indicates the gaps between customers
expectations and perception with respect to IT based banking services. Findings indicated need to
improve the IT based services for enhancing customer satisfaction
H.Emari et al(2011)- The main objective of this research was to determine the dimensions of service

quality in the banking industry of Iran. For this the study empirically examined the European perspective
(i.e., Gronrooss model) suggesting that service quality consists of three dimensions, technical, functional
and image. The results from a banking service sample revealed that the overall service quality is
identified more by a consumers perception of technical quality than functional quality
Kumbhar, Vijay (2011)- It examined the relationship between the demographics and customers
satisfaction in internet banking,. It also found out relationship between service quality and customers
satisfaction as well as satisfaction in internet banking service provided by the public sector bank and
private sector banks. The study found out that overall satisfaction of employees, businessmen and
professionals are higher in internet banking service. Also it was found that there is significant difference
in the customers perception in internet banking services provided by the public and privates sector banks.
Kailash M (2012)- The paper compares public and private sector banks in Vijayawada city using
SERVQUAL model. The findings revealed that private sector banks have good services to customers and
they retained customers by providing better facilities. The study finds out importance of new products and
services for banks for retaining customers.

The studies mentioned above clearly points out to the importance of having a structured study on this
where banks in different categories are compared with respect to the service quality aspect which will
help them to find out their core competencies and to capitalize on them and at the same time find out the
areas where they can improve. This is the major aim of my thesis

51

RESEARCH METHODOLOGY
Data collection: Banking Customers are the base for study.
Data Sources:
Primary data- Collected from banking employees.
Secondary data

News papers

Annual reports

Internet

Objectives:

find the bank sector that is largely availed by the customer.

To study the factors the factors influencing the choice of a bank for 3.availing services.
find and compare the satisfaction level of customers in public sector 5.as well as in private sectors

bank.
To study the problem faced by customer.
get suggestions for improvement or change in the services of public and private sector banks.
To study what do people expect in the new era of banking.

52

CHAPTER - 3
LIMITATIONS OF THE STUDY
Due to constraints of time and resources, the study is likely to suffer from certain limitations. Some of
these are mentioned here under so that the findings of the study may be understood in a proper
perspective.
The limitations of the study are:
Some of the respondents of the survey were unwilling to share information.
The research was carried out in a short period of 6 weeks. Therefore

the

sample

size

and

other parameters were selected accordingly so as to finish the work within the given time frame.
The information given by the respondents might be biased because some of them might not be
interested to give correct information.
The officials of the bank supported me a lot, but did not have sufficient time to make the points
more clear.

53

CHAPTER 4
DATA ANALYSIS AND INTERPRETATION
Analysis of Data collected
1.The respondents were asked about which banking sectors services do their avail.
Table1: banking sectors services which the respondents avail.
Banking sector

Number of respondents

Public

03

Private

05

Both

02

6
5
4
Public

Private
Both

2
1
0
No of respondents

54

Graph 1: Banking Sectors services which the respondents avails

Interpretation:-It was found that most of the respondents were availing services of private sectors banks
while those of the public sector banks were less as compare to public sector

2. The respondents were asked about the type of account they have in the public sector as well as
Private sector banks

Table 2.1 Number of type of account held in Public sectors banks

Type of Accounts
Name

of Savings

Current

Demat

Account
Total no of 04

Fixed

Salary

deposits
02

01

02

01

respondents

55

Total no of respondents
4.5
4
3.5
3
Total no of respondents

2.5
2
1.5
1
0.5
0
Saving

Current

Demat Fixed deposits Salary

Graph 2.1:-Number of type of accounts held in Public sector banks

Analysis: 40% people own Saving Account, 20% own Current account, 10% demat,20% fixed deposits
account and 10% salary Account
Interpretation: It was found that in case of public sector banks, maximum number of account holders
owns Saving Account. After Saving account most prefer account is salary account prefer by people and
the next priority goes to fixed deposits Accounts.

3. The aim to ask this question was to know he reasons for their preference in different banks:-

Reasons

No of respondents

Friendly Behavior of the Staff

03

Reliability/trust

02

Quick and fast services

04

Location

01

56

Table 3:- Reason for account in different banks

4
3.5
3
2.5
2
1.5
1
0.5
0

Column2

Graph 3:-Reasons for account in different banks

Inpretation: By analyzing this graph, we can conclude that most of the people is influenced by the quick
and speedy services provided by the bank and location is given less preference than others

4.The respondents were asked about the facilities they were availing in public as well as private
sector banks :-

Table 4.1 Number of people availing different facilities at public sector banks:

Facilities Availed

No of respondents

ATM/Debit card

04

Demat

1
57

Internet/Mobile/Phone Banking

Insurance

03

4
3.5
3
ATM/Debit card

2.5

Demat
Internet/Mobile/Phone
banking

2
1.5

Insurance

1
0.5
0
No of Respondents

Graph 4.1: Number of people availing different facilities at public sector banks
Interpretation: From the above graph, it was found that was availed by most of the people at public sector
banks was that of ATM/Debit cards . It is clearly observed by the graph that Insurance are neck to neck
holding 20% of respondent each

5. The purpose of this question is to know the satisfaction level they were having with their banks
overall performance:Public sector banks
Table 5.1 Satisfaction level of the customers regarding the facilities availed from the public sector
banks
Level of Satisfaction

No.of respondents

%age

Excellent

02

20%

Good

03

30%

Very Good

05

50%
58

60%
50%

50%
40%
30%

30%
20%

20%

10%
0%

Excellent

Good

Very Good

Graph 5.1 Satisfaction level of Customers regarding the facilities availed from the public sector
banks.
Analysis: It was found that in case of public sectors banks, 20% of the respondents were highly satisfied
ranked excellent from the products and services availed by them. 30% were just satisfied given very good
and 50% have moderate view.
Interpretation: People have mixed type of view regarding public sector banks.

59

6. The aim to ask this question was to know whether the respondents faces any problem regarding
the services provided them by their preferred bank :Table 6. Problem faced by customers.

Types of problem

No of respondents

Time consuming

02

Introduction

01

Reference

03

Too many formalities

01

No facility of photograph instantly

01

No problem

02

20%

Time Consuming

20%

10%

Introduction
10%

10%
30%

Reference
Too many Formalities
No facilities of photograph
instantly
No problem

Interpretation: It was found that most of the respondents are facing problem of reference. Respondents
also find that the time and too much formalities also cause problem in banks

The basic purpose of this question was to know the most preferred bank.
60

Table 8. Number of respondents preferring different banks

Names of Banks

Number of respondents

ICICI Bank

02

HDFC Bank

02

State Bank Group

02

Punjab National Bank

03

Punjab And Sind Bank

01

3.5
3
2.5
ICICI bank

HDFC Bank
State Bank Group

1.5

P.N.B
Punjab and sind Bank

1
0.5
0
Number of respondents

61

Analysis: From above graph, it is seen that 30% stake of the respondents follows to Punjab National bank
followed by ICICI bank. It is the bank which provide 12-hour banking also the ATM machine is more as
compared to the other private sector banks.
Interpretation : From the above graph, it is seen that Punjab national is the most preferred bank as
compared to other Public and Private sector Banks. The reason for preference of public sector bank is the
minimum amount of deposit for saving account.

CLASSIFICATION OF BANKS

On the basis of Ownership

62

PUBLIC SECTOR BANKS

Public sector banks are those banks that are owned by the government. The government owns these
banks. In India 20 banks were nationalized in 1969 and 1980 respectively. Social welfare is there main
objective.
PRIVATE SECTOR BANKS
These banks are those banks that are owned and run by private sector. An individual has control over
these banks in proportion to the shares of the banks held by him.
CO-OPERATIVE BANKS
These are those banks that are jointly run by a group of individuals. Each individual has an equal share in
these banks. Its shareholders manage the affairs of the bank.
.According to the Law
SCHEDULED BANK
Schedule banks are the banks, which are included in the second schedule of the banking regulation act
1965. According to this schedule bank:
1. Must have paid-up capital and reserve of not less than Rs500, 000.
2. Must also satisfy the RBI that its affairs are not conducted in a manner
Determinate to the interest of its depositors.
Schedule banks are sub-divided as:a) State co-operative banks
b) Commercial banks
NON-SCHEDULED BANKS
Non -schedule banks are the banks, which are not included in the second schedule of the banking
regulation act 1965. It means they do not satisfy the conditions lay down by that schedule. These are the
banks having paid up capital, less than Rs.5Lakhs. They are further classified as follows:A. Central Co-operative banks and Primary Credit Societies.
B. Commercial banks

According to Function
63

COMMERCIAL BANKS
These are the banks that do banking business to earn profit. These banks make loans for short to business
and in the process create money. Credit creation is the main function of these banks.
FOREIGN BANKS
These are those banks that are incorporated by foreign company. They have set up their branches in India.
These banks have their head offices in foreign countries. Their principle function is to make credit
arrangement or the export and the import of the country and these banks deals in foreign exchange.
INDUSTRIAL BANKS
Industrial banks are those banks that offer long term and medium term loan to the industries and also
work for their development. These banks help industries in sale of their shares, debentures and bonds.
They give loan to the industries for the purchase of land and machinery.
AGRICULTURAL BANKS
Agricultural banks are those banks that give credit to agricultural sector of the economy.
SAVING BANKS
The principle function of these banks is to collect small savings across the country and put them to the
productive use. In India department of post office functions a savings banks.
CENTRAL BANK
Central Bank is the apex bank of the banking system of the country. It issues currency notes and acts a
banker's bank. Economic stability is the principle function of this bank. In short, it regulates and controls
the banking system of the country. RBI is the Central Bank of India.

PRIVATIZATION OF INDIAN BANKING

For the public sector banks, the era of bumper profit is over. For much of the last decade the process of
collaborated financial liberalization had cleared up the Banks balance sheet enabling them to with stand
increased competition, global financing, turmoil and even unprotected industrial slow down. But the cycle
of liberalization has run its full course. Now it is the time for the big structural leap, rationalization,
mergers, and privatization. Unless the banks undertake these fundamental changes, their profit will stay
under pressure.

There are two areas of competitions which banking industry is facing internationally and nationally. In the
pre-liberalization era, Indian banks could grow in a closed economy but the banking sector opened up for
64

private competition. It is possible that private banks could become dominant players even within India. It
has been recorded a rapid rise of the new private sector banks and it has tracked the transformation of the
public sector banks as they grapple with the changes of financial deregulation.
Use of ATM cards, Internet Banking, Phone Banking, Mobile Banking are the new innovative channels of
banking which are being widely used as they result in saving both time and money which are two
essential things that everyone is short of and is running to catch hold of them. Moreover private sector
banks are aligning its infrastructures, marketing quality and technology to build deep commitment in
building consumer and retail banking. The main focus of these banks is on innovative range of services or
products.

1.10 Business of Banking

Money

Money Surplus Units Money deficit Units

(SAVERS)

INTERMEDIARIES

( Banks)

(INVESTORS)

(BANKS)
COMMERCIAL BANKS

65

PRIMARY FUNCTIONS :
1

Accepting of Deposits: A bank accepts deposits from the public. People can deposit their cash
balances in either of the following accounts to their convenience:-

Fixed or Time Deposit Account: Cash is deposited in this account for a fixed period. The depositor
gets receipts for the amount deposited. It is called Fixed Deposit Receipt. The receipt indicates the
name of the depositor, amount of deposit, rate of interest and the period of deposit. This receipt is not
transferable. If the depositor stands in need of the amount before the expiry of fixed period, he can
withdraw the same after paying the discount to the bank.

Savings Account: This type of deposit suits to those who just want to keep their small savings in a
bank and might need to withdraw them occasionally. Banks provide a certain rate of interest on the
minimum balance kept by the depositor during the month.

Current Account : This type of account is kept by the businessman who are required to withdraw
money every new and then. Banks do not pay any interest on this account. Any sum or any number of
withdrawals can be presented by such an account holder.

Advancing of Loans : The bank advances money in any one of the following ways.

i Overdraft Facilities: Customers of good trading are allowed to overdraw from their current account. But
they have to pay interest on extra amount they have withdrawn. Overdrafts are allowed to provide
temporary accommodation since the extra amount withdrawn is payable within a short period.

66

ii Money at Call: It is the money lent for a very short period varying from 1 to 14 days. Such advances are
usually made to other banks and financial institutions only. Money at call ensures liquidity. In the
Interbank market it enables bank to make adjustment according to their liquidity requirements.
iii Loans: Loans are granted by the banks on securities which can be easily disposed off in the market.
When the bank has satisfied itself regarding the soundness of the party, a loan is advanced.
iv Cash Credit: The Debtor is allowed to withdraw a certain amount on a given security. The debtor
withdraws the amount within this limit, interest is charged by the bank on the amount actually
withdrawn.
v Discounting Bill of Exchange : It is another method of making advances by the banks. Under this
method, bank give advance to their clients on the basis of their bills of exchange before the maturity of
such bills.
vi Investment in Government Securities : Purchasing of government securities by the banks tantamount to
advancing loans by them to the Government. Banks prefer to buy government securities as these are
considered to be the safest investment. For example : Indira Vikas Patra : It enables the banks to meet
requirement of statutory liquidity ratio (SLR)
3

Credit Creation: One of the main functions of banks these days is to create credit. Banks create
credit by giving more loans than their cash reserves. Banks are able to create credit because the
demand deposits i.e. a claim against the bank is accepted by the public in settlement of their debts. In
this process the bank creates money. For this reason Prof. Sayers has called bank the manufactures of
money.

4) Cheque system of Payment of Funds

A cheque, a negotiable instrument, which in fact is a bill of exchange, drawn upon a banker, is the most
popular credit instrument used by the client to make payments. Cheque system is the main credit
instrument in the banking world.
Although a cheque is not a legal tender money, the serves as a medium of exchange in a limited way as it
is a negotiable instrument.
Because of clearing houses and clearing operations of the banks, cheques can be and are used for
transferring funds from one centre to another. In the modern days they can also be used for transferring
funds from one country to another.

SECONDARY FUNCTIONS
Besides the above primary functions, banks also perform may secondary functions such as agency
functions, general utility and social functions.
1) Agency Functions
67

Banks act as agents to their customers in different ways:

I

Collection and Payment of Credit and Other Instruments: The Commercial banks

collect

and pay cheques, bills of exchange, promissory notes, hundies, rent, interest etc. On behalf of their
customers and also make payments of income tax, fees, insurance

premium etc. on behalf of the

customers. Customers can leave standing instructions with the banker for various periodic payments
ensuring the regular payments and avoiding the trouble of performing it themselves
. Purchase and Sale of Securities: The modern commercial banks also undertake the purchase and

II

sale of various securities like shares, stocks, bonds units and debentures etc. On behalf of the
customers, banks do not give any advice regarding the suitability or otherwise of a security but simply
III

perform the functions of a broker.

Trustee and Executor: Banks also acts as trustees and executors of the property of their customers on

IV

their advice. Sometimes banks also undertake income tax services on behalf of the customers.
Remittance of Funds: The Commercial banks remit funds on behalf of clients from one place to

another through cheques, drafts, mail transfers etc.

Representation and Correspondence : Sometimes commercial banks acts as representatives or
correspondents of the clients especially in handling various applications. For instance, passports and

VI

travel tickets, booking of vehicles, plots etc.

Billion Trading: In many countries, the commercial banks trade is billions like gold and silver. In Oct
1997, 8 banks including SBI, IOB, Canara Bank and Allahabad Bank have been allowed import of

VII

gold which has been put under open general licensed category.
Purchase and Sale of Foreign Exchange: Banks buy and sell foreign exchange, promoting

VIII

international trade. This function is mainly discharged by foreign Exchange Banks.

Letter of References: Banks also give information about economic position of their customers to
domestic and foreign traders and vice versa.
2) GENERAL UTILITY SERVICES
In addition to agency services, banks render many more utility services to the public. These services are :-

i Locker Facilities: Banks provide locker facilities to their customers. People can keep their valuables or
important documents in these lockers. Their annual rent is very nominal.
ii Acting as a referee: It desired by the customers, the bank can be a referee i.e. who could be referred by
the third parties for seeking information regarding the financial position of the customers. The bank will
acts as referee only and only if it is desired by the customer, otherwise the secrecy of a customers is
account is maintained very carefully.
iii Issuing letters of credit: Bankers in a way by issuing letters of credit certify the credit worthiness of the
customers. Letters of credit are very popular in foreign trade.
iv Acting as Underwriters: Banks also underwrite the securities issued by the Government and Corporate
bodies for a commission. The name of bank as an underwriter encouraged investors to have faith in the
security.
68

v Acting as information banks: Commercial banks also acts as information bureau as they collect the
financial, economic and statistical data relating to industry, trade and commerce. HDFC Bank is
providing information relating to NRI Schemes and commentaries of experts on development in the
areas of finance through Internet.
vi Issuing Travelers cheques and credit cards: Banks have been rendering great service by issuing
travelers cheques, which enable a person to travel without fear of theft or loss of money. Now, some
banks have started credit card system under which a credit card holder is allowed to avail credit from the
listed outlets without any additional cost or effort. Thus, credit card holder need not carry or handle cash
all the time. Now, international credit cards are joining hands with Indian Banks.
vii Issuing of gift cheques: Certain banks issue gift cheques of various denominations, e.g. Some Indian
banks issue gift cheques f the denominations of Rs. 21, 31, 51 and 101 etc. They are generally issued
free of charge.
viii Dealing in Foreign Exchange: Major branches of commercial banks also transact business of foreign
exchange. Commercial banks are the main authorized dealers of foreign exchange in India.
ix Merchant banking Services: Commercial banks also render merchant banking services to the
customers. They help in availing loans from non-banking financial institutions.
x Help in Transportation of Goods: Big businessmen or industrialists after consigning goods to their
retailers send the Railway Receipt (Consignment Note) to the bank.

CHAPTER - 5
CONCLUSION
The customers now days are not only exposed of what type of service is being provided by banks in India
but in the world as a whole. They expect much more than what is actually being provided. So the new
coming banking sector has to provide and cater to all the needs of the customers otherwise it is difficult to
survive in the competition coming up.
They not only expect the safety of money but also best ways to invest that money which needs to be
fulfilled. Banks need to have a better outlook towards to actually what customers are requiring. Entries of
the private sector banks have made the competition tougher. If a bank is not functioning properly it is
being closed. So it is difficult to face these types of conditions. Here a simple philosophy can work that
customers are God and we need to follow this to survive and serve better.
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The banking sector is poised for explosive growth. In this, scenario, it is imperative that banks adopt
technology at an aggressive Pace, if they wish to remain competitive.
In the prevailing scenario, a number of banks have adopt a new deployment strategy of infrastructure
outsourcing, to lower the cost of service channels. As a result, other banks too will need to align their
reinvented business models. The required changes at both the business and technology levels are
enormous. In highly competitive banking markets, early adopters are profiting from increased
efficiencies.

CHAPTER - 6
SUGGESTIONS
Based on the study conducted, there are some of the suggestions given by the customers of how the
modern banking should be. These are the comment given by them about the improvement of the banking
sector in India.

Banks should obey the RBI norms and provide facilities as per the norms, which are not being
followed by the banks. While the customer must be given prompt services and the bank officer
should not have any fear on mind to provide the facilities as per RBI norms to the units going sick.

Banks should increase the rate of saving account

Maintenance of proper hierarchy should be done. A good hierarchy set up can ensure better results
with in the bank.

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 Banks should provide loan at the lower interest rate and education loans should be given with ease
without much documentation. All the banks must provide loans against shares.
Fair dealing with the customers. More contribution from the employee of the bank. The staff
Should be co-operative, friendly and must be capable of understanding the problems of customers
Internet banking facility must be made available in all the banks.
Prompt dealing with permanent customers and speedy transaction without harassing the customers
Each section of every bank should be computerized even in rural areas also.
Real time gross settlement can play a very important role.
More ATM coverage should be provided for the convenience of the customers.
No limit on cash withdrawals on ATM cards.
The bank should bring out new schemes at time-to-time so that more people can be attracted. Even
some gifts and prizes may be offered to the customers for their retention.
24 hours banking should be induced so as to facilitate the customers who may not have a free time
in the daytime. It will help in facing the competition more effectively.
The charges for saving account opening are high, so they should also be reduced.
The need of the customer should properly be understood so that customer feels satisfied. The
relationship value should be maintained.
Maintenance of proper hierarchy should be done. A good hierarchy set up can ensure better
results with in the bank.
Banking sector is improving by leaps but still it needs to be improved. Proper and efficient relationship
staffs having knowledge for one stop banking, customer friendly atmosphere, and better rate of interest
are need of the hour. The concept of privatization has overall improved the services in all the banks.
Home banking will be order of the day.

CHAPTER - 7
FINDING

More number of people has account with private banks.

Majority of the respondents whether in public sectors or in private sector banks have savings
account with banks.

Number of problem faced by the people is more in public sector banks.

People want a change in the behavior of the staff of the public sector banks.

People are more satisfied form the private sector banks due to their better services provided by
them in terms of speedy transactions, fully computerized facilities, more working hours (in case of
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ICICI bank, the number of working hour are 12), good investment Advisory services, efficient and
co-operative staff, better approach to Customer Relationship Management.

In private sector banks proper promotional activities should be taken up so as to make the
population aware of the services provided by the banks even in rural areas.

The facility that was availed by most of the people at public sector banks was that of ATM/Debit
cards. The least availed facility was that of Demat account and foreign transfer of funds.

The facility that was availed by most of the people at private sector banks was that of
Internet/Phone banking by ATM/Debit card.

Majority of respondents do not want to shift from their present bank.

From the above study it is clear that private banks are providing better services than nationalized
banks. 95% respondents favored that private banks are providing better services than nationalized
banks while 5% respondents are not agree with it.

From the above study it is clear that majority of the respondents said that the average balance
requirement for operating their saving account is between 5000-10000. 20% said it is between
10000-20000 and remaining 5% said it is between 20000-50000 in private sector banks which as
compared to Public sector bank is very high.

Positive reaction in the favour of bank. 30% respondents favored that their problems are solved by
bank executives and 20% respondents said they are received with smile by bank executives. So
there is a mix response.

Majority of the respondents said that the average time taken for transactions is between 25 to 50
minutes in their bank. 30% respondents said the average time taken for transaction is between 2025 minutes, 20% said it is between 10 to 25 min. and remaining 10% said that the average time
taken for transaction by their bank is 5 to 10 minutes.

CHAPTER - 8
RECOMMENDATIONS
For Public Sector Banks:

Bank staff should be customer friendly and highly motivated to serve the normal
customer.

As far as possible, banks should reduce its documentation process while providing
loans.

Computerization should be done in banks at all level and the operators should de
properly trained.
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Token system should be induced so as to minimize the waiting lines in the banks.

Proper ambience in the banks can develop a healthy working culture.

Quick services should be provided.

For Private sector Banks

24 hours banking should be induced so as to facilitate the customers who may not have
free time in the day time. It will help in facing the competition more effectively.

More ATM coverage should be provided for the convenience of the customers.

Customer care services should be provided by banks.

CHAPTER - 9
BIBLIOGRAPHY

WEBSITES

http://www.google.com

http://www.statebankofindia.com

http://www.icicibank.com

http://www.rbi.org.in
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Weblography
BOOKS:

Icici bank annual report

State bank of India annual report

principles and practices of banking and insurance.

Newspapers:
Times of India
Economic times
DNS newspaper

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