PURPOSE Of STUDY:

The main purpose of project is to know about how many people have bank a/c. & to find out
what people mostly preferred to have a/c an public sector bank Or private sector banks.

OBJECTIVE Of STUDY:
1. To study the usage of various products and & services of public & private sector banks

2. To find & compare the satisfaction level of customers in public sector as well as private
sector bank.

3. To study the problem faced by customer.

4. To study the factor infulencing the choice of a bank for availing services.

5. To get suggestions for improvements or change in the services of public & private sector
banks.
RESEARCH METHODOLOGY
For the purpose of analyzing the data it is necessary to collect the vital information. There are
two types of data, this are-
1. Primary Data.
2. Secondary Data.
Primary Data- The data was collected from survey. The survey questionnaire was filled from
customers through conducting a survey of 50customers.
Secondary Data- Secondary data was collected from social networking sites, newspaper,
internet etc.
RESEARCH LIMITATIONS
In undertaking the study, a number of problems were faced. Thus the study has several
limitations which are:

1. The sample size for survey was small. The survey was conducted only of 54
respondents.

2. The results from the survey may be inaccurate or biased.

3. The accuracy of the findings of study depends upon the correctness of the responses
provided by the respondents.

4. There was lack of time on the part of respondents.

CHAPTER 1

INTRODUCTION OF BANK:

financial institution and a financial intermediary that accepts deposits and channels those
deposits into lending activities, either directly by loaning or indirectly through capital markets.

A bank may be defined as an institution that accepts deposits, makes loans, pays checks, and
provides financial services. A bank is a financial intermediary for the safeguarding,
transferring, exchanging, or lending of money. A primary role of banks is connecting those
with funds, such as investors and depositors, to those seeking funds, such as individuals or
businesses needing loans. A bank is the connection between customers that have capital deficits
and customers with capital surpluses.

Banks distribute the medium of exchange. Banking is a business. Banks sell their services to
earn money, and they must market and manage those services in a competitive field. Banks are
financial intermediaries that safeguard, transfer, exchange, and lend money and like other
businesses that must earn a profit to survive. Understanding this fundamental idea helps you to
understand how banking systems work, and helps you understand many modern trends in
banking and finance.

MEANING:

Banking means transacting business with bank; depositing or withdrawing funds or requesting
a loan etc.

DEFINITION:

Banking has been defined as " Accepting for the purpose of lending & investment, of deposit
of money form the public, repayable on demand order or otherwise and withdraw able by
cheque, draft or otherwise. "

Features of a Bank ↓

1. Dealing in Money

Bank is a financial institution which deals with other people's money i.e. money given by
depositors.

2. Individual / Firm / Company

A bank may be a person, firm or a company. A banking company means a co which is in the
business of banking.

3. Acceptance of Deposit

A bank accepts money from the people in the form of deposits which are usually repayable on
demand or after the expiry of a fixed period. It gives safety to the deposits of its customers. It
also acts as a custodian of funds of its customers.

4. Giving Advances

A bank lends out money in the form of loans to those who require it for different purposes.

5. Payment and Withdrawal

A bank provides easy payment and withdrawal facility to its customers in the form of cheques
and drafts, It also brings bank money in circulation. This money is in the form of cheques,
drafts, etc.

6. Agency and Utility Services

A bank provides various banking facilities to its customers. They include general utility
services and agency services.

7. Profit and Service Orientation

A bank is a profit seeking institution having service oriented approach.

8. Ever increasing Functions

Banking is an evolutionary concept. There is continuous expansion and diversification as

regards the functions, services and activities of a bank.

9. Connecting Link

A bank acts as a connecting link between borrowers and lenders of money. Banks collect
money from those who have surplus money and give the same to those who are in need of
money.

10. Banking Business

A bank's main activity should be to do business of banking which should not be subsidiary to
any other business.

11. Name Identity

A bank should always add the word "bank" to its name to enable people to know that it is a
bank and that it is dealing in money.

History of banking:

The history of banking began with the first prototype banks which were the merchants of the
world, who made grain loans to farmers and traders who carried goods between cities. This
was around 2000 BC in Assyria, India and Sumeria. Later, in ancient Greece and during the
Roman Empire, lenders based in temples made loans, while accepting deposits and performing
the change of money. Archaeology from this period in ancient China and India also shows
evidence of money lending.

Many histories position the crucial historical development of a banking system to medieval and
Renaissance Italy and particularly the affluent cities of Florence, Venice and Genoa. The Bardi
and Peruzzi Families dominated banking in 14th century Florence, establishing branches in
many other parts of Europe.[1] The most famous Italian bank was the Medici bank, established
by Giovanni Medici in 1397.[2] The oldest bank still in existence is Banca Monte dei Paschi
di Siena, headquartered in Siena, Italy, which has been operating continuously since 1472.[3]

The development of banking spread from northern Italy throughout the Holy Roman Empire,
and in the 15th and 16th century to northern Europe. This was followed by a number of
important innovations that took place in Amsterdam during the Dutch Republic in the 17th
century, and in London since the 18th century. During the 20th century, developments in
telecommunications and computing caused major changes to banks' operations and let banks
dramatically increase in size and geographic spread. The financial crisis of 2007–2008 caused
many bank failures, including some of the world's largest banks, and provoked much debate
about bank regulation.

THE IMPORTANCE OF THE BANKING SYSTEM

The banking sector was always deemed to be one of the most vital sectors for the economy to
be able to function. Its importance as the “lifeblood” of economic activity, in collecting
deposits and providing credits to states and people, households and businesses is undisputable.
Banks are one of the most important economic wing of any country. In this modern time, money
and its necessity is very important. A developed financial system of the country ensures to
attain development. A bank provides valuable services to a country. To attain development
there should be a good developed financial system to support not only the economic but also
the society. So, a bank plays a vital role in the socio economic matters of the country. Some of
the important role of banks in the development of a country is briefly showing below.

1:- PROMOTE SAVING HABITS OF THE PEOPLE:

Bank attracts depositors by introducing attractive deposit schemes and providing rewards or
return in the form of interest. Banks provide different kinds of deposit schemes to its customers.
It enable to create banking habits or saving habits among people.

2:- CAPITAL FORMATION AND PROMOTE INDUSTRY:

Capital is one of the most important part of any business or industry. It is the life blood of
business. Banks increase capital formation by collecting deposits from depositors and convert
these deposits in to loans advances to industries.

3 :-SMOOTHING OF TRADE AND COMMERCE FUNCTIONS:

In this modern era trade and commerce plays vital role between any countries. So, the money
transaction should be user friendly. A bank helps its customers to sent funds to anywhere and
receive funds from anywhere of the world. A well developed banking system provides various
attractive services like mobile banking, internet banking, debit cards, credit cards etc. these
kinds of services fast and smooth the transactions. So, bank helps to develop trade and
commerce

4 GENERATE EMPLOYMENT OPPORTUNITY:

Since a bank promote industry and investment, they automatically generate employment
opportunity. So, a bank enables an economy to generate employment opportunity.

5 SUPPORT AGRICULTURAL DEVELOPMENT:

Agricultural sector is one of the integral part of any economy. Food self sufficiency is the major
challenge and goal of any country. Bank promote agricultural sector by providing loans and
advances with low rate of interest compared to other loans and advances schemes.

6 APPLYING OF MONITORY POLICY:

Monitory policy is an important policy of any government. The major aim of monitory policy
is to stabilize financial system of the country from the dangerous of inflation, deflation, crisis
etc.The recent increase in repo rate to 6.5% is just an example of the same.

7 BALANCED DEVELOPMENT:

Modern banks are spreading its operations throughout the world. We can see number of big
banks like citi bank,Baroda bank etc. It helps a country to spread banking activities in rural and
semi urban areas. With the spread of banking operations around the country,bank helps to attain
balanced development by promoting rural areas. It plays vital role in the socio- economic
development of the country. A developed banking system enables the country to attain
balanced development without any special consideration of rich and poor, cities and rural areas
etc.

So in a developing country like India, banking sector holds a major responsibility towards
stabilising the socio-economic conditions of the country!!!

Advantages & disadvantages of banking:

Advantages:

-Liquidity

-Safe place to deposit money

-Earn interest on deposits

-Permits many individuals and business to obtain loans for major purchases and investments

-Money pooling allows banks to use leverage to increase the money supply and fuel economic
growth

Disadvantages:
-Use of leverage means everybody cannot withdraw deposit at the same time, which would
cause a run of the banks and precipitate bank failures and depression

-Individuals cannot compete with banks to earn high interest on debts of similar quality
CHAPTER 2

TYPES OF BANKS
CHA

1.Central Bank

Every country has its own Central Bank. The Central bank aims at non-profit functioning. It
regulates the monetary and credit system of the country. Central Bank acts as controller,
supervisor, and regulator of the activities of commercial banks and other financial institutions
in the country. The Central bank is considered as the apex institution of the country’s money
market.

Functions of Central Bank

⦿ Note issue

⦿ Credit control

⦿ It acts as a banker to the banks

⦿ It acts as a banker to the government

⦿ It maintains the foreign exchange reserves of the country

⦿ It maintains the Gold reserves of the country

2.Commercial Banks:

Commercial banks are the banks that accept money in the form of deposits from the public and
give loans and advances to its customers by charging interest. They mobilize small savings and
promote the growth of trade and commerce. Generally, commercial banks lend money for a
short period only. They only provide working capital to the organizations. But in recent times
commercial banks are providing long-term capital also to the organizations.

There are several types of deposits which are accepted by the commercial banks like

⦿ Savings Deposits

⦿ Current Deposits
⦿ Fixed Deposits

⦿ Seasonal Deposits

⦿ Recurring Deposits, etc

The Commercial banks give different types of loans and advances to the businessmen like

⦿ Cash Credits

⦿ Overdrafts

⦿ Loans

⦿ Discounting Bills

Commercial Banks: It’s Functions and Types –

Commercial banks are the most important components of the whole banking system.

A commercial bank is a profit-based financial institution that grants loans, accepts deposits,
and offers other financial services, such as overdraft facilities and electronic transfer of funds.

According to Culbertson,

“Commercial Banks are the institutions that make short make short term bans to business and
in the process create money.”

In other words, commercial banks are financial institutions that accept demand deposits from
the general public, transfer funds from the bank to another, and earn profit.

Commercial banks play a significant role in fulfilling the short-term and medium- term
financial requirements of industries. They do not provide, long-term credit, so that liquidity of
assets should be maintained. The funds of commercial banks belong to the general public and
are withdrawn at a short notice; therefore, commercial banks prefers to provide credit for a
short period of time backed by tangible and easily marketable securities. Commercial banks,
while providing loans to businesses, consider various factors, such as nature and size of
business, financial status and profitability of the business, and its ability to repay loans.

Commercial banks are of three types, which are as follows:

(a) Public Sector Banks:

Refer to a type of commercial banks that are nationalized by the government of a country. In
public sector banks, the major stake is held by the government. In India, public sector banks
operate under the guidelines of Reserve Bank of India (RBI), which is the central bank. Some
of the Indian public sector banks are State Bank of India (SBI), Corporation Bank, Bank of
Baroda, Dena Bank, and Punjab National Bank.

(b) Private Sector Banks:

Refer to a kind of commercial banks in which major part of share capital is held by private
businesses and individuals. These banks are registered as companies with limited liability.
Some of the Indian private sector banks are Vysya Bank, Industrial Credit and Investment
Corporation of India (ICICI) Bank, and Housing Development Finance Corporation (HDFC)
Bank.

(c) Foreign Banks:

Refer to commercial banks that are headquartered in a foreign country, but operate branches in
different countries. Some of the foreign banks operating in India are Hong Kong and Shanghai
Banking Corporation (HSBC), Citibank, American Express Bank, Standard & Chartered Bank,
and Grindlay’s Bank. In India, since financial reforms of 1991, there is a rapid increase in the
number of foreign banks. Commercial banks mark significant importance in the economic
development of a country as well as serving the financial requirements of the general public.

Functions of Commercial Banks:

Commercial banks are institutions that conduct business for profit motive by accepting public
deposits for various investment purposes.

The functions of commercial banks are broadly classified into primary functions and secondary
functions, which are shown in Figure-1:

Functions of Commercial Banks

The functions of commercial banks (as shown in Figure-1) are discussed as follows:

(a) Primary Functions:

Refer to the basic functions of commercial banks that include the following:

(i) Accepting Deposits:

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Implies that commercial banks are mainly dependent on public deposits.

There are two types of deposits, which are discussed as follows:

(1) Demand Deposits:

Refer to kind of deposits that can be easily withdrawn by individuals without any prior notice
to the bank. In other words, the owners of these deposits are allowed to withdraw money
anytime by simply writing a check. These deposits are the part of money supply as they are
used as a means for the payment of goods and services as well as debts. Receiving these
deposits is the main function of commercial banks.

(2) Time Deposits:

Refer to deposits that are for certain period of time. Banks pay higher interest on rime deposits.
These deposits can be withdrawn only after a specific time period is completed by providing a
written notice to the bank.

Types of Accounts

(3) Advancing Loans:

Refers to one of the important functions of commercial banks. The public deposits are used by
commercial banks for the purpose of granting loans to individuals and businesses. Commercial
banks grant loans in the form of overdraft, cash credit, and discounting bills of exchange.

(b) Secondary Functions:

Refer to crucial functions of commercial banks. The secondary functions can be classified
under three heads, namely, agency functions, general utility functions, and other
functions.These functions are explained as follows:

(1) Agency Functions:

Implies that commercial banks act as agents of customers by performing various functions,
which are as follows:

(i) Collecting Checks:

Refer to one of the important functions of commercial banks. The banks collect checks and
bills of exchange on the behalf of their customers through clearing house facilities provided by
the central bank.(ii) Collecting Income:

Constitute another major function of commercial banks. Commercial banks collect dividends,
pension, salaries, rents, and interests on investments on behalf of their customers. A credit
voucher is sent to customers for information when any income is collected by the bank.

(iii) Paying Expenses:

Implies that commercial banks make the payments of various obligations of customers, such
as telephone bills, insurance premium, school fees, and rents. Similar to credit voucher, a debit
voucher is sent to customers for information when expenses are paid by the bank.

(2) General Utility Functions:

Include the following functions:

(i) Providing Locker Facilities:

Implies that commercial banks provide locker facilities to its customers for safe keeping of
jewellery, shares, debentures, and other valuable items. This minimizes the risk of loss due to
theft at homes.

(ii) Issuing Traveler’s Checks:

Implies that banks issue traveler’s checks to individuals for traveling outside the country.
Traveler’s checks are the safe and easy way to protect money while traveling.

(iii) Dealing in Foreign Exchange:

Implies that commercial banks help in providing foreign exchange to businessmen dealing in
exports and imports. However, commercial banks need to take the permission of the central
bank for dealing in foreign exchange.

(iv) Transferring Funds:

Refers to transferring of funds from one bank to another. Funds are transferred by means of
draft, telephonic transfer, and electronic transfer.

(3) Other Functions:

Include the following:

(i) Creating Money:

Refers to one of the important functions of commercial banks that help in increasing money
supply. For instance, a bank lends Rs. 5 lakh to an individual and opens a demand deposit in
the name of that individual.

Bank makes a credit entry of Rs. 5 lakh in that account. This leads to creation of demand
deposits in that account. The point to be noted here is that there is no payment in cash. Thus,
without printing additional money, the supply of money is increased.

(ii) Electronic Banking:

Include services, such as debit cards, credit cards, and Internet banking.

Commercial Bank in India

Types of Credit Offered by Commercial Banks:

A commercial bank offers short-term loans to individuals and organizations in the form of bank
credit, which is a secured loan carrying a certain rate of interest.

There are various types of bank credit provided by a commercial bank, as shown in Figure-2:

Showing Types of Bank Credit

Bank Loan:

Bank loan may be defined as the amount of money granted by the bank at a specified rate of
interest for a fixed period of time. The commercial bank needs to follow certain guidelines to
extend bank loans to a client. For example the bank requires the copy of identity and income
proofs of the client and a guarantor to sanction bank loan. The banks grant loan to clients
against the security of assets so that, in case of default, they can recover the loan amount. The
securities used against the bank loan may be tangible or intangible, such as goodwill, assets,
inventory, and documents of title of goods.

The advantages of the bank loan are as follows:

a. Grants loan at low rate of interest

b. Involves very simple process of loan granting

c. Requires minimum document and legal formalities to pass the loan

d. Involves good customer relationship management

e. Consumes less time because of modern techniques and computerization

f. Provides door-to-door facilities

In addition to advantages, the bank loan suffers from various imitations, which are as follows:

a. Imposes heavy penalty and legal action in case of default of loan

b. Charges high rate of interest, if the party fails to pay the loan amount in the allotted time

c. Adds extra burden on the borrower, who needs to incur cost in preparing legal documents
for procuring loans

d. Affects the goodwill of the organization, in case of delay in payment

Cash Credit:

Cash credit can be defined as an arrangement made by the bank for the clients to withdraw cash
exceeding their account limit. The cash credit facility is generally sanctioned for one year but
it may extend up to three years in some cases. In case of special request by the client, the time
limit can be further extended by the bank.

The extension of the allotted time depends on the consent of the bank and past performance of
the client. The rate of interest charged by the bank on cash credit depends on the time duration
for which the cash has been withdrawn and the amount of cash.

The advantages of the cash credit are as follows:

a. Involves very less time in the approval of credit

b. Involves flexibility as the cash credit can be extended for more time to fulfill the need of the
customers.

c. Helps in fulfilling the current liabilities of the organization

d. Charges interest only on the amount withdrawn by the customer. The interest on cash credit
is charged only on the amount of cash withdrawn from the bank, not on the total amount of
credit sanctioned.

The cash credit is one of the most important instruments of short-term financing but it has some
limitations.

These limitations are mentioned in the following points:

a. Requires more security for the approval of cash

b. Imposes very high rate of interest

c. Depends on the consent of the bank to extend the credit amount and the time limit

Bank Overdraft:

Bank overdraft is the quickest means of the short-term financing provided by the bank. It is a
facility in which the bank allows the current account holders to overdraw their current accounts
by a specified limit. The clients generally avail the bank overdraft facility to meet urgent and
emergency requirements. Bank overdraft is the most popular form of borrowing and do not
require any written formalities. The bank charges very low rate of interest on bank overdraft
up to a certain time.

The advantages of the bank overdraft are as follows:

a. Involves no documentation for the extension of overdraft amount

b. Imposes nominal interest on the overdraft amount

c. Charges fee only on the amount exceeding the account limit

The disadvantages of the bank overdraft are as follows:

a. Incurs high cost for the clients, if they fail to pay the amount of overdraft for a longer period
of time

b. Hampers the reputation of the organization, if it fails to pay the amount of overdraft on time

c. Allows the bank to deduct overdraft amount from the customers’ accounts without their
permission

Discounting of Bill:
Discounting of bill is a process of settling the bill of exchange by the bank at a value less than
the face value before maturity date. According to Sec. 126 of Negotiable Instruments, “a bill
of exchange is an unconditional order in writing addressed by one person to another, signed by
the person giving it, requiring the person to whom it is addressed to pay on demand or at fixed
or determinable future time a sum certain in money to order or to bearer.”

The facility of discounting of bill is used by the organizations to meet their immediate need of
cash for settling down current liabilities.

Conditions laid down by the bank for discounting of bill are as follows:

a. Must be intended to specific purpose

b. Must be enclosed with the signature of the two persons (company, bank or reputed person)

c. Must be less than the face value

d. Must be produced before the maturity period.

3.Co-operative Banks:

Co-operative Banks are the banks that usually provide short term, medium term, long term
credit to agricultural purposes. Co-operative Banks also provides loans to small-scale artisans.
Co-operative Banks usually provide credit facilities to farmers, small-scale industries, etc at a
cheaper rate of interest. Co-operative Banks are mainly situated in rural areas and can also be
seen in urban areas.

Co-Operative Banks are small financial institutions that offer lending facility to the small
businesses in both urban and non-urban regions. These are monitored and regulated by the
Reserve Bank of India (RBI) and come under the Banking Regulations Act, 1949 as well as
the banking laws act, 1965.

The Co-Operative Banks have a huge significance for the small businesses as these have around
67% penetration in villages and account for 46% of the net funding for the rural businesses
through support for processing, housing, warehousing, transport, dairy, etc.

There are 4 types of co-operative banks in India:

Central Co-Operative Banks

These banks are organized and operated at the district level and can be of two types:
Co-operative Banking Union

Mixed control Co-operative Bank

In the first, the members of the bank are the co-operative societies only. However, in the
second, the members can be co-operative societies as well as individuals.

The central co-operative banks lend money mainly to the affiliated primary societies with
typical loan tenure lending between 1 to 3 years.

State Co-Operative Banks

These banks are organized and operated at the district level and rest at the top of the hierarchy
in the co-operative credit structure.

With the help of State Co-operative Banks (SCBs), the RBI funds the co-operative institutions.
These banks also get loans at an interest rate 1% to 2% lower than the standard bank rate.

Primary Co-Operative Banks

These offer credit services in the urban and semi-urban regions. Thus, they are not considered
as agricultural credit societies.

Primary Co-Operative Banks receive concessional refinance service from RBI and IDBI from
time to time for them to offer housing loans and other types of loans that can be used by small
businesses.

Land Development Banks

The land development banks are divided into three tiers which are primary, state, and central.
These offer credit services to the farmers for developmental purposes. They used to be
regulated by the RBI as well as the state governments. However, this responsibility was
recently transferred to the National Bank for Agricultural and Rural Development (NABARD).
Meaning of Development Banks

Development banks are specialized financial institutions. They provide medium and long-term
finance to the industrial and agricultural sector. They provide finance to both private and public
sector. Development banks are multipurpose financial institutions. They do term lending,
investment in securities and other activities. They even promote saving and investment habit
in the public.

Definition of development bank:

"Development banks are financial institutions established to lend (loan) finance (money) on
subsidized interest rate. Such lending is sanctioned to promote and develop important sectors
like agriculture, industry, import-export, housing and allied activities."

Development Banks in India

Development banking was started after the World War II. It provided finance to reconstruct
the buildings and industries which were destroyed in the war.

In India, development banking was started immediately after independence.

The arrangement of development banks in India is depicted below.

development banks in India

Development banks in India are classified into following four groups:

Industrial Development Banks : It includes, for example, Industrial Finance Corporation of
India (IFCI), Industrial Development Bank of India (IDBI), and Small Industries Development
Bank of India (SIDBI).

Agricultural Development Banks : It includes, for example, National Bank for Agriculture &
Rural Development (NABARD).

Export-Import Development Banks : It includes, for example, Export-Import Bank of India

(EXIM Bank).

Housing Development Banks : It includes, for example, National Housing Bank (NHB).

Industrial Finance Corporation of India (IFCI) is the first development bank in India. It started
in 1948 to provide finance to medium and large-scale industries in India.

REGIONAL RURAL BANK

Regional Rural Bank. Regional Rural Banks (RRBs) also known as Gramin banks, are
Indian scheduled banks (Government banks) operating at regional level in different
States of India. They have been created with a view of serving primarily the rural areas
of India with basic banking and financial services.

Reginal rural bank:

Regional Rural Banks (RRBs) also known as Gramin banks, are Indian scheduled banks
(Government banks) operating at regional level in different States of India. They have been
created with a view of serving primarily the rural areas of India with basic banking and financial
services. However, RRBs may have branches set up for urban operations and their area of
operation may include urban areas too.

The area of operation of RRBs is limited to the area as notified by Government of India
covering one or more districts in the State. RRBs also perform a variety of different functions.
RRBs perform various functions in following heads:

Providing banking facilities to rural and semi-urban areas.

Carrying out government operations like disbursement of wages of MGNREGA workers,

distribution of pensions etc.

Providing Para-Banking facilities like locker facilities, debit and credit cards.
Small financial banks

List of Regional Rural banks

Andhra Pradesh

Andhra Pradesh Grameena Vikas Bank

Andhra Pragathi Grameena Bank

Chaitanya Godavari Grameena Bank

Saptagiri Grameena Bank

Arunachal Pradesh

Arunachal Pradesh Rural Bank

Assam

Assam Gramin Vikash Bank

Bihar

Dakskin Bihar Gramin Bank

Uttar Bihar Gramin Bank

Chhattisgarh

Chhattisgarh Rajya Gramin Bank

Gujarat

Baroda Gujarat Gramin Bank

Saurashtra Gramin Bank

Haryana

Sarva Haryana Gramin Bank

Himachal Pradesh

Himachal Pradesh Gramin Bank

Jammu and Kashmir

Ellaquai Dehati Bank

J&K Grameen Bank

Jharkhand

Jharkhand Gramin Bank

Vananchal Gramin Bank

Karnataka

Karnataka Gramin Bank

Karnataka Vikas Grameena Bank

Kerala

Kerala Gramin Bank

Madhya Pradesh

Madhyanchal Gramin Bank

Narmada Jhabua Gramin Bank

Central Madhya Pradesh Gramin Bank

Maharashtra

Vidharbha Konkan Gramin Bank

Maharashtra Gramin Bank

Manipur

Manipur Rural Bank

Meghalaya

Meghalaya Rural Bank

Mizoram

Mizoram Rural Bank

Nagaland
Nagaland Rural Bank

Odisha

Utkal Grameen bank

Odisha Gramya Bank

Puducherry

Puduvai Bharathiar Grama Bank

Punjab

Punjab Gramin Bank

Rajasthan

Baroda Rajasthan Kshetriya Gramin Bank

Rajasthan Marudhara Gramin Bank

Tamil NaduPallavan Grama Bank

Pandyan Grama Bank

Telangana

Telangana Grameena Bank

Tripura

Tripura Gramin Bank

Uttar Pradesh

Prathama UP Gramin Bank

Aryavart Bank

Baroda UP Gramin Bank

Kashi Gomti Samyut Gramin Bank

Purwachal Gramin bank

Uttarakhand
Uttarakhand Gramin Bank

West Bengal

Bangiya Gramin Vikas Bank

Paschim Banga Gramin Bank

Uttarbanga Kshetriya Gramin Bank

4.Industrial Banks:

Industrial banks are also called as Investment Banks. Industrial banks provide long-term loans
to the industries. Industries require long-term capital for buying machinery, construction of
buildings, expansion of operations, etc. These capital required by industries is provided by
industrial banks for industrialists to grow their businesses. Industrial banks accept long-term
deposits from the public. They secure capital by issuing shares and debentures.

5.Agricultural Banks:

Agricultural Banks are the banks which provide agricultural credit to the farmers. The
Agricultural Development Banks provide medium term and long term credit. Some examples
of Agricultural Banks in India are Agricultural Finance Corporation, Agricultural Refinance
and Development Corporation, National Bank for Agricultural and Rural Development
(NABARD).Agricultural Banks are established by the government to promote agricultural
credit in the country.

6.Savings Bank:

Savings Banks mainly concentrates on the mobilization of savings of the people. In India Post
offices run by Postal department act as savings banks. Since Commercial banks are providing
these facilities of savings banks to the public, the need for separate savings bank is fading.

7.Foreign Exchange Banks:

Foreign Exchange Banks are the banks which provide finance for foreign trade These banks
accept deposits from the public. Foreign Exchange Banks are specialized banks in providing
credit for the foreign trade. These banks usually have their branches in foreign countries for
uninterrupted functioning of their service But in recent times commercial banks are also
financing foreign trade.
8.Exchange Banks:

Exchange Banks are the banks which operate by financing the imports and exports of the
country. These banks are mainly concerned with providing foreign exchange to their customers
and help to promote international trade. They also offer to discount of foreign bills of exchange
to their customers.

9.Private Bankers:

Private Bankers are the individuals who do banking business individually or as a partnership.
It is purely an unorganized sector.Most of the private bankers do not receive or accept any
deposits from the public, they do banking business with their own capital. They lend money to
the people for high-interest rates.

10.Chit Funds:

There are chit funds in India. They provide finance to trade and commerce. However, they
cannot be called as banks in the regular sense. The Chit fund business is very large in a country
like India. it is also an unorganized sector in India.
WHAT IS PUBLIC BANK:

A public bank is a bank, a financial institution, in which a state, municipality, or public actors
are the owners. It is an enterprise under government control. Prominent among current public
banking models are the Bank of North Dakota, the German public bank system, and many
nations’ postal bank systems.

Public or 'state-owned' banks proliferated globally in the late 19th and early 20th centuries as
vital agents of industrialisation in capitalist and socialist countries alike; as late as 2012, state
banks still owned and controlled up to 25 per cent of total global banking assets.

Proponents of public banking argue that policymakers can create public-sector banks to reduce
the costs of government services and infrastructure; protect and aid local banks; offer banking
services to people and entities underserved by private-sector banking; and promote particular
kinds of economic development reflecting polities’ shared notions of social good. The 2015
Addis Ababa Financing for Development Action Agenda noted that public banks should have
an important role in achieving the new Sustainable Development Goals. Increasingly, major
international financial institutions are recognising the positive and catalytic role public banks
can serve in the coming low carbon climate resilient transition. Further, international NGOs
and critical scholars argue that public banks can play a significant role in financing a just and
equitable energy transition.

How Public Banks Work:

Public banks come in a variety of models. A public bank might be capitalized through an initial
investment by the city or state, as well as through tax and fee revenue. A public bank, like a
private bank, can take tax revenues and other government income as deposits, create money in
the form of bank credit, and lend at very low interest rates. Where private banks are committed
by their business model to take advantage of low interest rates by charging higher rates to
borrowers, a public bank has no shareholders to pay, and so can pass the low rates onto
borrowers such as public agencies, local businesses, residents, and students.

Public banks can also partner with (underwriting or guaranteeing the loans of) local banks to
fund projects that might otherwise go unfunded. Such partnering with local banks leads
practitioners of public banking to say, like Bank of North Dakota President Eric Hardmeyer,
that public banks are partners, rather than competitors, with local private financial institutions.
Public savings banks, such as postal banks, typically offer individual savings accounts, savings
bonds, remittances and other services. Around three out of four postal systems worldwide offer
such banking services, and such a system existed in the United States from 1911 to 1967.

Advantages and Disadvantages of Public Sector Banks:

Public sector banks are those financial institutions in which government holds more than 51
percent stake and also has controlling power of the bank. Public sector banks are the backbone
of the financial system of the country, in order to understand more about public sector banks
let’s look at some of the advantages and disadvantages of public sector banks –

Advantages of Public Sector Banks

1.FIXED DEPOSIT:

The first and foremost advantage of public sector banks is that they are safe and people keeping
money in fixed deposit and in saving account do not have to worry about the safety of their
funds as chances of default by public sector banks is next to nil as government ten Every
country has its own Central Bank. The Central bank aims at non-profit functioning. It regulates
the monetary and credit system of the country. Central Bank acts as controller, supervisor, and
regulator of the activities of commercial banks and other financial institutions in the country.
The Central bank is considered as the apex institution of the country’s money market.

ds to bail out these banks in case they are in financial stress and hence as far as individual is
concerned his or her money will be safe even if bank has financial problem.

2 SAVING ACCOUNT:

Another advantage of these banks is that there are less hidden charges and also lower limit of
amount to be held as minimum deposit as far saving account is concerned, so for example in
case of private banks minimum balance to be maintained is anywhere between 5000 to 20000
rupees whereas in case of public sector banks it is 1000 rupees and in case of student account
and no frill accounts it is 0.

3. As far as employees are concerned these banks are more beneficial because of job security
and once an individual gets into public sector bank he or she does not need to worry about
retrenchment which is the case with private sector banks, though at higher levels of
management private banks pay higher remuneration to its employees but at lower levels the
exploitation is more in case of private banks as compared to public sector banks.
Disadvantages of Public Sector Banks

1. TECHNOLOGY:

The biggest disadvantage of public sector banks is that in terms of technology they lag far
behind as compared to private sector banks so if you are one of those who do his or her majority
of work online than public sector bank is not his or her cup of tea. Although public sector banks
are trying their best by upgrading their technology still private sector banks hold an edge over
them.

2. Another disadvantage of public sector banks is that if you go in public sector banks
excepting that you will get all information at one seat which is the case with private sector
banks then you will be disappointed because in public sector banks one individual keep doing
same work for years resulting in he or she losing touch with other areas of banking.

3 LOANS:

Due to government share in public sector banks there is lot of government intervention and due
to it these banks have to give loans not on the basis of merit of project but due to political
pressure resulting in that loan becoming NPA which will result in loss for the bank. Another
area of distress due to government intervention is opening various no frills account due to
government seeking political mileage, also opening branches in far-flung areas due to
government financial inclusion program affects the profitability of the banks.

As one can see from the above that public sector has both advantages as well as disadvantages
and for an economy like India they are very important because of large unbanked population
and also due to the state of the Indian economy which requires not only fast growth but an
inclusive growth where everybody benefits and not some sections of society.

Functions of Public Sector Banks:

The main functions of commercial banks are accepting deposits from the public and advancing
them loans.

However, besides these functions there are many other functions which these banks perform.
All these functions can be divided under the following heads:
1. Accepting deposits

2. Giving loans

3. Overdraft

4. Discounting of Bills of Exchange

5. Investment of Funds

6. Agency Functions

7. Miscellaneous Functions

(i) Accepting Deposits:

The most important function of commercial banks is to accept deposits from the public. Various
sections of society, according to their needs and economic condition, deposit their savings with
the banks.

For example, fixed and low income group people deposit their savings in small amounts from
the points of view of security, income and saving promotion. On the other hand, traders and
businessmen deposit their savings in the banks for the convenience of payment.

Therefore, keeping the needs and interests of various sections of society, banks formulate
various deposit schemes. Generally, there ire three types of deposits which are as follows:

i. (a) Current Deposits:

The depositors of such deposits can withdraw and deposit money whenever they desire. Since
banks have to keep the deposited amount of such accounts in cash always, they carry either no
interest or very low rate of interest. These deposits are called as Demand Deposits because
these can be demanded or withdrawn by the depositors at any time they want. Such deposit
accounts are highly useful for traders and big business firms because they have to make
payments and accept payments many times in a day.

i(b) Fixed Deposits:

These are the deposits which are deposited for a definite period of time. This period is generally
not less than one year and, therefore, these are called as long term deposits. These deposits
cannot be withdrawn before the expiry of the stipulated time and, therefore, these are also called
as time deposits.

These deposits generally carry a higher rate of interest because banks can use these deposits
for a definite time without having the fear of being withdrawn.

i(c) Saving Deposits:

In such deposits, money upto a certain limit can be deposited and withdrawn once or twice in
a week. On such deposits, the rate of interest is very less. As is evident from the name of such
deposits their main objective is to mobilise small savings in the form of deposits. These
deposits are generally done by salaried people and the people who have fixed and less income.

3.3(ii) Granting Loans:

The second important function of commercial banks is to advance loans to its customers. Banks
charge interest from the borrowers and this is the main source of their income.

Banks advance loans not only on the basis of the deposits of the public rather they also advance
loans on the basis of depositing the money in the accounts of borrowers. In other words, they
create loans out of deposits and deposits out of loans. This is called as credit creation by
commercial banks.

Modern banks give mostly secured loans for productive purposes. In other words, at the time
of advancing loans, they demand proper security or collateral. Generally, the value of security
or collateral is equal to the amount of loan. This is done mainly with a view to recover the loan
money by selling the security in the event of non-refund of the loan.

At limes, banks give loan on the basis of personal security also. Therefore, such loans are called
as unsecured loan. Banks generally give following types of loans and advances:

ii(a) Cash Credit:

In this type of credit scheme, banks advance loans to its customers on the basis of bonds,
inventories and other approved securities. Under this scheme, banks enter into an agreement
with its customers to which money can be withdrawn many times during a year. Under this set
up banks open accounts of their customers and deposit the loan money. With this type of loan,
credit is created.

ii(b) Demand loans:

These are such loans that can be recalled on demand by the banks. The entire loan amount is
paid in lump sum by crediting it to the loan account of the borrower, and thus entire loan
becomes chargeable to interest with immediate effect.

ii(c) Short-term loan:

These loans may be given as personal loans, loans to finance working capital or as priority
sector advances. These are made against some security and entire loan amount is transferred to
the loan account of the borrower.

3.3(iii) Over-Draft:

Banks advance loans to its customer‘s upto a certain amount through over-drafts, if there are
no deposits in the current account. For this banks demand a security from the customers and
charge very high rate of interest.

3.3(iv) Discounting of Bills of Exchange:

This is the most prevalent and important method of advancing loans to the traders for short-
term purposes. Under this system, banks advance loans to the traders and business firms by
discounting their bills. In this way, businessmen get loans on the basis of their bills of exchange
before the time of their maturity.

3.3(v) Investment of Funds:

The banks invest their surplus funds in three types of securities—Government securities, other
approved securities and other securities. Government securities include both, central and state
governments, such as treasury bills, national savings certificate etc.

Other securities include securities of state associated bodies like electricity boards, housing
boards, debentures of Land Development Banks units of UTI, shares of Regional Rural banks
etc.

3.3(vi) Agency Functions:

Banks function in the form of agents and representatives of their customers. Customers give
their consent for performing such functions. The important functions of these types are as
follows:

(i) Banks collect cheques, drafts, bills of exchange and dividends of the shares for their
customers.
(ii) Banks make payment for their clients and at times accept the bills of exchange: of their
customers for which payment is made at the fixed time.

(iii) Banks pay insurance premium of their customers. Besides this, they also deposit loan
installments, income-tax, interest etc. as per directions.

(iv) Banks purchase and sell securities, shares and debentures on behalf of their customers.

(v) Banks arrange to send money from one place to another for the convenience of their
customers.

3.3(vii) Miscellaneous Functions:

Besides the functions mentioned above, banks perform many other functions of general utility
which are as follows:

(i) Banks make arrangement of lockers for the safe custody of valuable assets of their customers
such as gold, silver, legal documents etc.

(ii) Banks give reference for their customers.

(iii) Banks collect necessary and useful statistics relating to trade and industry.

(iv) For facilitating foreign trade, banks undertake to sell and purchase foreign exchange.

(v) Banks advise their clients relating to investment decisions as specialist

(vi) Banks does the under-writing of shares and debentures also.

(vii) Banks issue letters of credit.

(viii) During natural calamities, banks are highly useful in mobilizing funds and donations.

(ix) Banks provide loans for consumer durables like Car, Air-conditioner, and Fridge etc.
Chapter:4

WHAT IS PRIVATE BANK:

Private banking is banking, investment and other financial services provided by banks to high-
net-worth individuals (HNWIs) with high levels of income or sizable assets. The term "private"
refers to customer service rendered on a more personal basis than in mass-market retail
banking, usually via dedicated bank advisers. It does not refer to a private bank, which is a non-
incorporated banking institution.

Private banking forms a more exclusive (for the especially affluent) subset of wealth
management. At least until recently, it largely consisted of banking services (deposit taking
and payments), discretionary asset management, brokerage, limited tax advisory services and
some basic concierge-type services, offered by a single designated relationship manager.

DEFINE PRIVATE BANK:

The term private banking refers to a customized line of banking & financial services offered to
private individual banking clients that earn high levels of income and/ or owning sizable
investment assets, such as 'High Net Worth Individuals' (HNWIs). Such private services are
distinctive from retail banking services offered or standard wealth management in that clients
are assigned a relationship managers or private banker that specifically deal with them
personally. In general, it is a valued added banking service in comparison to traditional banking
that offers more sophisticated products and more personalized customer service.

ROLE OF PRIVATE BANK:

The private sector is the engine of growth. Government plays a central role in supporting
economic growth and reducing poverty. It needs to provide good policy, strong institutions and
efficient public goods and services to ensure the private sector can thrive and the benefits of
growth reach all citizens.

TYPES OF PRIVATE BANK:

Private Sector Banks in India

Private Sector Banks refer to those banks where most of the capital is in private hands. In India,
there are two types of private sector banks viz. Old Private Sector Banks and New Private
Sector Banks. Old private sector banks are those which existed in India at the time of
nationalization of major banks but were not nationalized due to their small size or some other
reason. After the banking reforms, these banks got license to continue and have existed in India
along with new private banks and government banks.

Contents

1.Old Private Banks

2.New Private Sector Banks in India

Old Private Banks:

At present, there are 12 old private sector banks in India as follows:

1. Catholic Syrian Bank

2. City Union Bank
3. Dhanlaxmi Bank
4. Federal Bank
5. Jammu and Kashmir Bank
6. Karnataka Bank
7. Karur Vysya Bank
8. Lakshmi Vilas Bank
9. Nainital Bank
10. Ratnakar Bank
11. South Indian Bank
12. Tamilnad Mercantile Bank

Among the above, Nainital Bank is a subsidiary of the Bank of Baroda, which has 98.57%
stake in it.

Defunct Private Banks:

Some other old generation private sector banks in India have merged with other banks. For
example, Lord Krishna Bank merged with Centurion Bank of Punjab in 2007; Sangli Bank
merged with ICICI Bank in 2006; Centurion Bank of Punjab merged with HDFC in 2008.More
recently, in 2016, the ING Vysya Bank merged with Kotak Mahindra Bank, creating the fourth
largest private sector bank in India.

New Private Sector Banks in India:

The new private sector banks were incorporated as per the revised guidelines issued by the RBI
regarding the entry of private sector banks in 1993. At present, there are nine new private sector
banks as follows:

1. Axis Bank
2. Development Credit Bank (DCB Bank Ltd)
3. HDFC Bank
4. ICICI Bank
5. IndusInd Bank
6. Kotak Mahindra Bank
7. Yes Bank
8. IDFC
9. Bandhan Bank of Bandhan Financial Services.

Kindly note that all the old and new banks listed above are scheduled commercial banks

ADVANTAGES & DISADVANTAGE OF PRIVATE BANK:

Advantages:

1.Service of private bank is very fast and accurate.

2.You can update details at any branch .

3.Coustomer services is very good

Disadvantages:-

1.In private bank transaction charge is high

2.In public bank you can update details or any query at only and only your home branch where
you have opened Your account.

4.3 Functions of Private sector banks:

The private sector banks play a vital role in the Indian economy. They indirectly motivate the
public sector banks by offering a healthy competition to them. The following are their
functions:

4.3(i) Offering high degree of Professional Management:

The private sector banks help in introducing a high degree of professional management and
marketing concept into banking. It helps the public sector banks as well to develop similar skill
and technology.

4.3(ii) Creates healthy competition:

The private sector banks provide a healthy competition on general efficiency levels in the
banking system.

4.3(iii) Encourages Foreign Investment:

The private sector banks especially the foreign banks have much influence on the foreign
investment in the country.

4.3(iv) Helps to access foreign capital markets:

The foreign banks in the private sector help the Indian companies and the government agencies
to meet out their financial requirements from international capital markets. This service
becomes easier for them because of the presence of their head offices/other branches in
important foreign centres. In this way they help a large extent in the promotion of trade and
industry in the country.

4.3(v) Helps to develop innovation and achieve expertise:

The private sector banks are always trying to innovate new products avenues (new schemes,
services, etc.) and make the industries to achieve expertise in their respective fields by offering
quality service and guidance.

They introduce new technology in the banking service. Thus, they lead the other banks in
various new fields. For example, introduction of computerised operations, credit card business,
ATM service, etc.

The commercial banks serve as the king pin of the financial system of the country. They render
many valuable services. The important functions of the Commercial banks can be explained
with the help of the following chart.
Primary Functions

The primary functions of the commercial banks include the following:

A. Acceptance of Deposits

1. Time Deposits:

These are deposits repayable after a certain fixed period. These deposits are not withdrawn able
by cheque, draft or by other means. It includes the following.

(a) Fixed Deposits:

The deposits can be withdrawn only after expiry of certain period say 3 years, 5 years or 10
years. The banker allows a higher rate of interest depending upon the amount and period of
time. Previously the rates of interest payable on fixed deposits were determined by Reserve
Bank. Presently banks are permitted to offer interest as determined by each bank. However,
banks are not permitted to offer different interest rates to different customers for deposits of
same maturity period, except in the case of deposits of Rs. 15 lakhs and above.

These days the banks accept deposits even for 15 days or one month etc. In times of urgent
need for money, the bank allows premature closure of fixed deposits by paying interest at
reduced rate. Depositors can also avail of loans against Fixed Deposits. The Fixed Deposit
Receipt cannot be transferred to other persons.

(b) Recurring Deposits:

In recurring deposit, the customer opens an account and deposit a certain sum of money every
month. After a certain period, say 1 year or 3 years or 5 years, the accumulated amount along
with interest is paid to the customer. It is very helpful to the middle and poor sections of the
people. The interest paid on such deposits is generally on cumulative basis. This deposit system
is a useful mechanism for regular savers of money.

(c) Cash Certificates:

Cash certificates are issued to the public for a longer period of time. It attracts the people
because its maturity value is in multiples of the sum invested. It is an attractive and high
yielding investment for those who can keep the funds for a long time.
It is a very useful account for meeting future financial requirements at the occasion of marriage,
education of children etc. Cash certificates are generally issued at discount to face value. It
means a cash certificate of Rs. 1, 00,000 payable after 10 years can be purchased now, say for
Rs. 20,000.

2. Demand Deposits:

These are the deposits which may be withdrawn by the depositor at any time without previous
notice. It is withdraw able by cheque/draft. It includes the following:

(a) Savings Deposits:

The savings deposit promotes thrift among people. The savings deposits can only be held by
individuals and non-profit institutions. The rate of interest paid on savings deposits is lower
than that of time deposits. The savings account holder gets the advantage of liquidity (as in
current a/c) and small income in the form of interests.

But there are some restrictions on withdrawals. Corporate bodies and business firms are not
allowed to open SB Accounts. Presently interest on SB Accounts is determined by RBI. It is
4.5 per cent per annum. Co-operative banks are allowed to pay an extra 0.5 per cent on its
savings bank deposits.

(b) Current Account Deposits:

These accounts are maintained by the people who need to have a liquid balance. Current
account offers high liquidity. No interest is paid on current deposits and there are no restrictions
on withdrawals from the current account.

These accounts are generally in the case of business firms, institutions and cooperative bodies.
Nowadays, banks are designing and offering various investment schemes for deposit of money.
These schemes vary from bank to bank.

It may be stated that the banks are currently working out with different innovative schemes for
deposits. Such deposit accounts offer better interest rate and at the same time withdraw able
facility also. These schemes are mostly offered by foreign banks. In USA, Current Accounts
are known as 'Checking Accounts' as a cheque is equivalent to check in America.

B. Advancing of Loans
The commercial banks provide loans and advances in various forms. They are given below:

1. Overdraft:

This facility is given to holders of current accounts only. This is an arrangement with the
bankers thereby the customer is allowed to draw money over and above the balance in his/her
account. This facility of overdrawing his account is generally pre-arranged with the bank up to
a certain limit.

It is a short-term temporary fund facility from bank and the bank will charge interest over the
amount overdrawn. This facility is generally available to business firms and companies.

2. Cash Credit:

Cash credit is a form of working capital credit given to the business firms. Under this
arrangement, the customer opens an account and the sanctioned amount is credited with that
account. The customer can operate that account within the sanctioned limit as and when
required.

It is made against security of goods, personal security etc. On the basis of operation, the period
of credit facility may be extended further. One advantage under this method is that bank charges
interest only on the amount utilized and not on total amount sanctioned or credited to the
account.

Reserve Bank discourages this type of facility to business firms as it imposes an uncertainty on
money supply. Hence this method of lending is slowly phased out from banks and replaced by
loan accounts. Cash credit system is not in use in developed countries.

3. Discounting of Bills:

Discounting of Bills may be another form of bank credit. The bank may purchase inland and
foreign bills before these are due for payment by the drawer debtors, at discounted values, i.e.,
values a little lower than the face values.

The Banker's discount is generally the interest on the full amount for the unexpired period of
the bill. The banks reserve the right of debiting the accounts of the customers in case the bills
are ultimately not paid, i.e., dishonored.

The bill passes to the Banker after endorsement. Discounting of bills by banks provide
immediate finance to sellers of goods. This helps them to carry on their business. Banks can
discount only genuine commercial bills i.e., those drawn against sale of goods on Credit. Banks
will not discount Accommodation Bills.

4. Loans and Advances:

It includes both demand and term loans, direct loans and advances given to all type of
customers mainly to businessmen and investors against personal security or goods of movable
or immovable in nature. The loan amount is paid in cash or by credit to customer account which
the customer can draw at any time. The interest is charged for the full amount whether he
withdraws the money from his account or not. Short-term loans are granted to meet the working
capital requirements where as long-term loans are granted to meet capital expenditure.

Previously interest on loan was also regulated by RBI. Currently, banks can determine the rate
themselves. Each bank is, however required to fix a minimum rate known as Prime Lending
Rate (PLR).

Classification of Loans and Advances

Loans and advances given by bankers can be classified broadly into the following categories:

(i) Advances which are given on the personal security of the debtor, and for which no tangible
or collateral security is taken; this type of advance is given either when the amount of the
advance is very small, or when the borrower is known to the Banker and the Banker has
complete confidence in him (Clean Advance).

(ii) Advances which are covered by tangible or collateral security. In this section of the study
we are concerned with this type of advance and with different types of securities which a
Banker may accept for such advances (Secured Advance).

(iii) Advances which are given against the personal security of the debtor but for which the
Banker also holds in addition the guarantee of one or more sureties. This type of advance is
often given by Banker to persons who are not known to them but whose surety is known to the
Banker. Bankers also often take the personal guarantee of the Directors of a company to whom
they agree to advance a clean or unsecured loan.

(iv) Loans are also given against the security of Fixed Deposit receipts.

5. Housing Finance:
Nowadays the commercial banks are competing among themselves in providing housing
finance facilities to their customers. It is mainly to increase the housing facilities in the country.
State Bank of India, Indian Bank, Canara Bank, Punjab National Bank, has formed housing
subsidiaries to provide housing finance.

The other banks are also providing housing finances to the public. Government of India also
encourages banks to provide adequate housing finance.

Borrowers of housing finance get tax exemption benefits on interest paid. Further housing
finance up to Rs. 5 lakh is treated as priority sector advances for banks. The limit has been
raised to Rs. 10 lakhs per borrower in cities.

6. Educational Loan Scheme:

The Reserve Bank of India, from August, 1999 introduced a new Educational Loan Scheme
for students of full time graduate/post-graduate professional courses in private professional
colleges.

Under the scheme all public sector banks have been directed to provide educational loan up to
Rs. 15,000 for free seat and Rs. 50,000 for payment seat student at interest not more than 12
per cent per annum. This loan is on clean basis i.e., without calling for security.

This loan is available only for students whose annual family income does not exceed Rs. 1,
00,000. The loan has to be repaid together with interest within five years from the date of
completion of the course. Studies in respect of the following subjects/areas are covered under
the scheme.

(a) Medical and dental course. (b) Engineering course. (c) Chemical Technology.(d)
Management courses like MBA. (e) Law studies. (f) Computer Science and Applications.

This apart, some of the banks have other educational loan schemes against security etc., one
can check up the details with the banks.

7. Loans against Shares/Securities:

Commercial banks provide loans against the security of shares/debentures of reputed

companies. Loans are usually given only up to 50% value (Market Value) of the shares subject
to a maximum amount permissible as per RBI directives. Presently one can obtain a loan up to
Rs.10 lakhs against the physical shares and up to Rs. 20 lakhs against dematerialized shares.
8. Loans against Savings Certificates:

Banks are also providing loans up to certain value of savings certificates like National Savings
Certificate, Fixed Deposit Receipt, Indira Vikas Patra, etc. The loan may be obtained for
personal or business purposes.

9. Consumer Loans and Advances:

One of the important areas for bank financing in recent years is towards purchase of consumer
durables like TV sets, Washing Machines, Micro Oven, etc. Banks also provide liberal Car
finance.

These days banks are competing with one another to lend money for these purposes as default
of payment is not high in these areas as the borrowers are usually salaried persons having
regular income? Further, bank's interest rate is also higher. Hence, banks improve their profit
through such profitable loans.

10. Securitization of Loans:

Banks are recently trying to securities a part of their part of loan portfolio and sell it to another
investor. Under this method, banks will convert their business loans into a security or a
document and sell it to some Investment or Fund Manager for cash to enhance their liquidity
position.

It is a process of transferring credit risk from the banker to the buyer of securitized loans. It
involves a cost to the banker but it helps the bank to ensure proper recovery of loan.
Accordingly, securitization is the process of changing an illiquid asset into a liquid asset.

11. Others:

Commercial banks provide other types of advances such as venture capital advances, jewel
loans, etc.

1. Effective October 18, 1994 banks were free to determine their own prime lending rates
(PLRs) for credit limit over Rs. 2 lakh. Data relate to public sector banks.

2. The stipulation of minimum maturity period of term deposits was reduced from 30 days to
15 days, effective April 29, 1998. Data relate to public sector banks.

3. The change in the Bank Rate was made effective from the close of business of respective
dates of change except April 29, 1998.
4. Effective April 29, 1998.

C. Credit Creation

Credit creation is one of the primary functions of commercial banks. When a bank sanctions a
loan to the customer, it does not give cash to him. But, a deposit account is opened in his name
and the amount is credited to his account. He can withdraw the money whenever he needs.

Thus, whenever a bank sanctions a loan it creates a deposit. In this way the bank increases the
money supply of the economy. Such functions are known as credit creation.

Secondary Functions

The secondary functions of the banks consist of agency functions and general utility functions.

A. Agency Functions

Agency functions include the following:

(i) Collection of cheques, dividends, and interests:

As an agent the bank collects cheques, drafts, promissory notes, interest, dividends etc., on
behalf of its customers and credit the amounts to their accounts.

Customers may furnish their bank details to corporate where investment is made in shares,
debentures, etc. As and when dividend, interest, is due, the companies directly send the
warrants/cheques to the bank for credit to customer account.

(ii) Payment of rent, insurance premiums:

The bank makes the payments such as rent, insurance premiums, subscriptions, on standing
instructions until further notice. Till the order is revoked, the bank will continue to make such
payments regularly by debiting the customer's account.

(iii) Dealing in foreign exchange:

As an agent the commercial banks purchase and sell foreign exchange as well for customers as
per RBI Exchange Control Regulations.

(iv) Purchase and sale of securities:

Commercial banks undertake the purchase and sale of different securities such as shares,
debentures, bonds etc., on behalf of their customers. They run a separate 'Portfolio Management
Scheme' for their big customers.

(v) Act as trustee, executor, attorney, etc:

The banks act as executors of Will, trustees and attorneys. It is safe to appoint a bank as a
trustee than to appoint an individual. Acting as attorneys of their customers, they receive
payments and sign transfer deeds of the properties of their customers.

(vi) Act as correspondent:

The commercial banks act as a correspondent of their customers. Small banks even get travel
tickets, book vehicles; receive letters etc. on behalf of the customers.

(vii) Preparations of Income-Tax returns:

They prepare income-tax returns and provide advices on tax matters for their customers. For
this purpose, they employ tax experts and make their services, available to their customers.

B. General Utility Services

The General utility services include the following:

(i) Safety Locker facility:

Safekeeping of important documents, valuables like jewels are one of the oldest services
provided by commercial banks. 'Lockers' are small receptacles which are fitted in steel racks
and kept inside strong rooms known as vaults. These lockers are available on half-yearly or
annual rental basis.

The bank merely provides lockers and the key but the valuables are always under the control
of its users. Any customer cannot have access to vault.

Only customers of safety lockers after entering into a register his name account number and
time can enter into the vault. Because the vault is holding important valuables of customers in
lockers, it is also known as 'Strong Room'.

(ii) Payment Mechanism or Money Transfer:

Transfer of funds is one of the important functions performed by commercial banks. Cheques
and credit cards are two important payment mechanisms through banks. Despite an increase in
financial transactions, banks are managing the transfer of funds process very efficiently.

Cheques are also cleared through the banking system. Correspondent banking is another
method of transferring funds over long distance, usually from one country to another. Banks,
these days employ computers to speed up money transfer and to reduce cost of transferring
funds.

Electronic Transfer of funds is also known as 'Chequeless banking' where funds are transferred
through computers and sophisticated electronic system by using code words. They offer Mail
Transfer, Telegraphic Transfer (TT) facility also.

(iii) Traveller cheques:

Traveller‘s Cheques are used by domestic traveller as well as by international travellers.

However the use of traveller's cheques is more common by international travellers because of
their safety and convenience. These can be also termed as a modified form of traveller's letter
of credit. A bank issuing travellers cheques usually have banking arrangement with many of
the foreign banks abroad, known as correspondent banks. The purchaser of traveller's cheques
can encase the cheques from all the overseas banks with whom the issuing bank has such an
arrangement.

Thus traveller's cheques are not drawn on specific bank abroad. The cheques are issued in
foreign currency and in convenient denominations of ten, twenty, fifty, one hundred dollar, etc.
The signature of the buyer/traveller is written on the face of the cheques at the time of their
purchase.

The cheques also provide blank space for the signature of the traveller to be signed at the time
of encashment of each cheque. A traveller has to sign in the blank space at the time of drawing
money and in the presence of the paying banker.

The paying banker will pay the money only when the signature of the traveller tallies with the
signature already available on the cheque.

A traveller should never sign the cheque except in the presence of paying banker and only when
the traveller desires to en-cash the cheque. Otherwise it may be misused. The cheques are also
accepted by hotels, restaurants, shops, airlines companies for respectable persons.
Encashment of a traveller cheque abroad is tantamount to a foreign exchange transaction as it
involves conversion of domestic currency into a foreign currency.

When a traveller cheque is lost or stolen, the buyer of the cheques has to give a notice to the
issuing bank so that stop order can be issued against such lost/stolen cheques to the banks
where they are permitted to be encased.

It is also difficult to the finder of the cheque to draw cash against it since the encasher has to
sign the cheque in the presence of the paying banker. Unused travellers cheques can be
surrendered to the issuing bank and balance of cash obtained.

The issuing bank levies certain commission depending upon the number and value of travellers
cheques issued.

(iv) Circular Notes or Circular Letters of Credit:

Under Circular Letters of Credit, the customer/traveller negotiates the drafts with any of the
various branches to which they are addressed. Thus the traveller can obtain funds from many
of the branches of banks instead only from a particular branch. Circular Letters of Credit are
therefore a more useful method for obtaining funds while travelling to many countries.

It may be noted that travellers letter of credit are usually paid for in advance. In other words,
the traveller first makes payments to the issuing bank before obtaining the Circular Notes.

(v) Issue "Travellers Cheques":

Banks issue travellers cheques to help carry money safely while travelling within India or
abroad. Thus, the customers can travel without fear, theft or loss of money.

(vi) Letters of Credit:

Letter of Credit is a payment document provided by the buyer's banker in favour of seller. This
document guarantees payment to the seller upon production of document mentioned in the
Letter of Credit evidencing dispatch of goods to the buyer.

The Letter of Credit is an assurance of payment upon fulfilling conditions mentioned in the
Letter of Credit. The letter of credit is an important method of payment in international trade.
There are primarily 4 parties to a letter of credit.
The buyer or importer, the bank which issues the letter of credit, known as opening bank, the
person in whose favour the letter of credit is issued or opened (The seller or exporter, known
as 'Beneficiary of Letter of Credit'), and the credit receiving/advising bank.

The Letter of Credit is generally advised/sent through the seller's bank, known as Negotiating
or Advising bank. This is done because the conditions mentioned in the Letter of Credit are, in
the first instance; have to be verified by the Negotiating Bank. It is mostly used in international
trade.

(vii) Acting as Referees:

The banks act as referees and supply information about the business transactions and financial
standing of their customers on enquiries made by third parties. This is one on the acceptance
of the customers and help to increase the business activity in general.

(viii) Provides Trade Information:

The commercial banks collect information on business and financial conditions etc., and make
it available to their customers to help plan their strategy. Trade information service is very
useful for those customers going for cross-border business. It will help traders to know the
exact business conditions, payment rules and buyers' financial status in other countries.

(ix) ATM facilities:

The banks today have ATM facilities. Under this system the customers can withdraw their
money easily and quickly and 24 hours a day. This is also known as 'Any Time Money'.
Customers under this system can withdraw funds i.e., currency notes with a help of certain
magnetic card issued by the bank and similarly deposit cash/cheque for credit to account.

(x) Credit cards:

Banks have introduced credit card system. Credit cards enable a customer to purchase goods
and services from certain specified retail and service establishments up to a limit without
making immediate payment. In other words, purchases can be made on credit basis on the
strength of the credit card.

The establishments like Hotels, Shops, Airline Companies, Railways etc., which sell the goods
or services on credit forward a monthly or fortnightly statements to the bank.
The amount is paid to these establishments by the bank. The bank subsequently collects the
dues from the customers by debit to their accounts. Usually, the bank receives certain service
charges for every credit card issued. Visa Card, BOB card are some examples of credit cards.

(xi) Gift Cheques:

The commercial banks offer Gift cheque facilities to the general public. These cheques received
a wider acceptance in India. Under this system by paying equivalent amount one can buy gift
cheque for presentation on occasions like Wedding, Birthday.

(xii) Accepting Bills:

On behalf of their customers, the banks accept bills drawn by third parties on its customers.
This resembles the letter of credit. While banks accept bills, they provide a better security for
payment to seller of goods or drawer of bills.

(xiii) Merchant Banking:

The commercial banks provide valuable services through their merchant banking divisions or
through their subsidiaries to the traders. This is the function of underwriting of securities. They
underwrite a portion of the Public issue of shares, Debentures and Bonds of Joint Stock
Companies.

Such underwriting ensures the expected minimum subscription and also convey to the investing
public about the quality of the company issuing the securities. Currently, this type of services
can be provided only by separate subsidiaries, known as Merchant Bankers as per SEBI
regulations.

(xiv) Advice on Financial Matters:

The commercial banks also give advice to their customers on financial matters particularly on
investment decisions such as expansion, diversification, new ventures, rising of funds etc.

(xv) Factoring Service:

Today the commercial banks provide factoring service to their customers. It is very much
helpful in the development of trade and industry as immediate cash flow and administration of
debtors' accounts are taken care of by factors. This service is again provided only by a separate
subsidiary as per RBI regulations.
Chapter5

Distinguish between private sector banks v/s public sector banks

Private sector bank Public sector bank

1.Meaning
Private banking is banking, investment and A public bank is a bank, a financial
other financial services provided by banks to institution, in which a state, municipality, or
high-net-worth individuals (HNWIs) with public actors are the owners. It is an
high levels of income or sizable assets. ... It enterprise under government control. ...
does not refer to a private bank, which is a Further, international NGOs and critical
non-incorporated banking institution. scholars argue that public banks can play
significant role in financing a just and
2 Objectives equitable energy transition.
Usually, to increase profit.
Usually, to achieve define the service levels.
3 ownership and control
Buyer's are responsible to directors, who in
turn are responsible to shareholders, the Buyers are responsible Ultimately to the
owners of the organization. general public, the "owners" Of
organization.
4.Legal & regulatory environment
Activities are regulate by company law,
employment law, product Libality l aw etc.
Most of this applies equally to public sector,
5. Competition but additional regulations are present too( eg
There is usually strong competition between compulsory competitive tendering)
many different firms.
6. Publicity There is usually no competition.
Confidentiality applies in dealings between
suppliers and buyers.
7. Budgetary limits Confidentiality is limited because of public
interest in discoluse.
Investment is constrained Only by
availability of attractive opportunity; Investment is constrained by externally
funding can be found if prospects are good. imposed spending limits.
8. Sources of finance
Typically this comes from shareholders and
lenders.. Ultimately the source of public funding is
9. Information exchange the tax payer.
Private sector buyers do not exchange
information with other firms, because of Public sector buyers are willing to exchange
confidentiality and competition. notes.
10. Defined procedures
Private sector buyers can cut red tape when
speed of action is necessary.
Public sector buyers are often constrained to
follow established procedures.
Chapter7

Customer's satisfaction in public and private sector banks in

India: A comparative study.

Abstract

Banking is to be considered as pure financial service industry and responsible for the economic
development of an economy upto great extent. Satisfaction of customers is the vital for
retaining existing customers and attracting prospective customers to widen the level of
operational activities in any concern. In India, Private and Public banks are rendering financial
services. The Policies and Strategies of Private and Public banks are different that leads
variation in the customers’ satisfaction level. This paper tries to measure satisfaction level of
customers of Public and Private Banks and factors responsible for variation in customers’
satisfaction between Private and Public banks in India. The objective of the research is to get
the satisfaction level, variations in satisfaction level and reasons responsible for variations in
satisfaction level or dissatisfaction in public and private banks. This research is based on
primary informations obtained from customers of Public and Private sectors banks in India.
Overall, Customers of Private and Public sector banks are satisfied except some tangibles and
behavioral factors of the banks employees due to the policies, strategies for tangibles and
inefficiency of the employees. So, there are need to consider tangibles and behavioral factors
of the employees to enhance the level of satisfaction in Public banks.

Keywords

Customers’ satisfaction, Banking services, Private & public banks, Expectations &
perceptions, SERVQUAL.

Introduction

The satisfaction of the customers is very important factor in all service industries to enhance
and improve the profitability and financial performance of the concern. Banking sector is
purely financial service industry and the customer’s satisfaction is much more important to run
banking business successfully. The satisfaction level of the customers is varying due to
different kinds of banking services and their benefit to the customers. There are so many factors
that are responsible in the discrimination of the services for different types of banking
customers and lead to uneven satisfaction level. In India, Private and Public sector banks are
providing the financial services to the different types of customers in rural and urban areas.
The offices of the Private and Public sector banks are increasing rapidly

Literature Review

Puja K and Yukti A reveals that Private Banks have more satisfied customers due to good
services. Private sector banks are successfully maintaining level of quantity of its customers by
providing better banking services than Public sector Banks. In any economy, innovative
technologies and changing expectations of markets, consideration of quality of each and every
service is important to enhance customers’ satisfaction level. Further, Puja K and Yukti A
advocated that success mantra could be customer centric orientation, where the customer
relationships management with its customers in Private sector Banks has been successful in
achieving its goals. However, Public sector banks have to improve in the area of dealing with
the customers. Private Banks need to focus on their loan and insurance services while Public
sectors banks need to improve their infrastructural facilities and provide some training to the
employees’ who are dealing with customers. Equipped with latest technology, developed
infrastructure and well trained employees, convenient office hours and locations of the
branches are the factors affecting the customers’ satisfaction level. Mishra US, Sahoo KK,
Mishra S and Patra SK (2010) explained that service quality, customers satisfaction, customers
retention, customers loyalty etc. are the major challenges to in attracting and retaining
customers in banking sector. Among all, customers’ satisfaction is playing a significant role in
attracting, retaining customers and creating brand loyalty among the customers. Mishra US,
Mishra BB, Praharaj S, and Mahapatra R observed that whole banking sector is facing the
challenge of attracting and retaining customers. They revealed that public sector banks are
better than private sector banks in attracting and retaining customers. The main factors for
opening a new account are convenient location and reputation of the banks etc. Retired or
higher age group business man customers prefer public sector banks due to its high reputation.
The customers of public sectors banks are more satisfied than private sector banks. But, the
major factors of dissatisfaction of customers in public sector banks are enquiry counter and
front office services. The private sector banks are executing pure banking services while public
sector banks have to deploy some social responsibilities. Nirmaljeet V and Prabhjot KM
explains that infrastructural facilities in the branch not only leads to customer satisfaction but
overall improves the working of the branch [3] revealed that the Private Banks has advanced
technologically but the reverse situation is available in Public sector banks observed from their
analysis that that customer satisfaction in banks vary according to the quality of services.
Nominal charges of services, location of bank branches and staff attitude towards solving
problems of customers are the factors responsible for highest customer’s satisfaction. Private
bank customers are more satisfied with their bank because of their multiple branches at
convenient locations and technological facilities. Public sector banks are not so technologically
advanced. But, Public sector banks are maintaining satisfaction level of the customers due to
its reliability, high reputation in the society and low charges of the services. Customer care
services of the Private Banks are better than Public sector banks. Vijay PG and Agarwal PK
found in their research that the empathy, friendly attitude of staff, and customer guidance,
customer support are the behavioral treatment factors for high customers’ satisfaction.
Tangibility and empathy are the other factors create satisfaction among customers. Private and
Public sectors banks are needed to consider the weak areas of the concern to enhance the level
of satisfaction. According to Doddaraju ME, the behavior of Public sector banks employees
are not so courteous comparatively Private sector banks. The Public banks should provide
special training and developmental programs to the employees engaged in directly dealing with
customers. Development of infrastructure and tangibility of the banks are also affecting the
satisfaction level of the customers. The new schemes of the investment and other related
informations should be published and displayed systematically. Customer relation management
and promotional schemes of the banks also increase satisfaction level. Puri J, Yadav SP found
that the public sectors bank performed better than private sector banks in all dimensions and
revealed that the new private sector banks are performing better than the old private sector
banks. The technical efficiency was better in public sector banks comparatively private sector
banks [4] indicated that the time factor is very important for the customers and customer
relationship should be maintained to satisfy the customers. Location of the bank, timely
delivery of the services and customer oriented policy making are the factors enhance
satisfaction in Private sector banks resulting larger customers base. Public sector banks are
equipped with latest technology and technically trained staff. The infrastructural appearances
and extra services like home facility, round the clock facility etc. and query resolution through
telephone, lowest prices of the services and above all availability of the multiple products are
the special features in Private Banks to enhance the level of satisfaction of the customers [2]
observed that there is a significant relation between customer satisfaction and dimensions of
service quality in Public sector commercial Banks. Khushboo B, Naveena C and Neha J
explained in their study that people are more satisfied from the Private sector banks due to their
better services provided by them in terms of fast transactions, fully automatic computerized
facilities, more and convenient working hours, advisory services, skilled and co-operative staff,
better customer relationship management etc. But, there is need to make aware rural customers
about the services of Private Banks. The most facility availed by customers of the Public sector
banks are ATM and least facilities are demat a/c and foreign transfer of funds. The Private
sector banks’ customers are using internet or phone banking by ATM/ Debit card. Justin P,
Arun M and Garima S [5] explains about Private sector banks’ fast services, quick connection
to the right person, efforts to reduce time in processing transactions, knowledge of the banks
products and responsiveness of the employees are positively associated with the customers’
satisfaction level. In Public sector banks, slow services, low knowledge of banking products
appearance is the factors negative for the satisfaction level of the customers. Kesari S and Nitin
G [6,7] explain in his studies that Public sector banks should work to attain the confidence of
salaried class, lower age group customers, students and self-employed businessman people.
Private sector banks should give much attention to the lower income group customers also
because the higher income group found the services provided by banks to be more effective
but high service charges, which is out of the reach of the lower income group of customers.
Seema S stated that the performance of urban banks on service delivery and customer
satisfaction exceeds the expectations of the customers in terms of physical facilities,
appearance of employees and attitude of employees to help customers. Kumar J, Thamilselvan
R [8-13] stated in his research that private sector banks are competing with the public sector
banks in terms of Capital Adequacy, Asset Quality, Management Efficiency, Earning Capacity
and Asset Quality. They found that capital adequacy, assets quality and liquidity in public
sector banks while management efficiency, earning quality banks was better, comparatively
[1]. found that few customers are dissatisfied because of the poor responsiveness and empathy
of the employees in urban and rural area branches. Further, concluded that there is need to give
special training to the employees who are working in rural areas directly dealing with the
customers. Equipment of branches with latest technology, Publication of required informations
on the websites of the bank and unbiased behavior of the employees are the factors lead to
customers’ satisfaction in banking industry.

Research Problems

Banking sector in any nation is the vital for developing the business and economy. Banks are
the heart of the business sector of any economy and supply the necessary money blood to all
business organizations and simultaneously support the weaker sectors or the organizations of
a nation. Customers’ satisfaction is the elemental factor that decides the success of any bank.
Now a days, Private and Public sector banks are expanding their branches in urban as well as
in rural areas to get more and more customers. Brach size, services, infrastructure, facilities,
staff, working hours etc. is varying according to the governing ownership and location the
branch i.e. Private sector and Public sector or Rural and Urban branch. So, there is need to
assess the satisfaction level of customers from Private and Public sector Banks or Rural and
Urban areas to provide the suggestions for the improvement of services and other tangibles of
the banks.

Research Objectives

The objectives of the research are as follows:

• To know the satisfaction level of customers from Private and Public sector banks.

• To know the difference between the satisfaction level of Private and Public sector customers
of banks considering various aspects of satisfaction.

• To know the factors responsible for the low satisfaction level among the banking customers.

• To provide suggestions to improve satisfaction level of the customers.

Research Methodology

This research is purely based upon the primary informations obtained from the banking
customers of different parts of India. There were 200 banking customers, who responded well
the all informations containing in the questionnaire. Persuraman et al. [14] supports and applied
five factors questionnaire to know the satisfaction level in service sector. The questionnaire
contains five factors as per the SERVQUAL of Persuraman et al. [14]. There were 51 questions
in the SERVQUAL questionnaire to get the differences in satisfaction levels of customers of
Public sector and Private sector banks in various terms (Demographical -11 questions,
Expectations -20 questions, Perceptions-20 questions). The respondents were from different
parts of India, but mostly from Uttar Pradesh due to native state of the researcher. The mean
difference between expectations and perceptions of the customers calculated to know the
satisfaction level differences. The demographical analysis is made to know the satisfaction
level differences of customers of Private and Public sector assuming the various demographical
factors as base. Chi Square is used to test hypotheses to get the differences between or among
the dimensions of customers’ satisfaction and Private Banks, Public Banks and in between
related terms. The secondary informations are obtained from the other sources like research
papers, published papers etc.

Hypothesis of the Study

The Null and Alternative hypotheses of the study are as follows:

1. H0: There is no significant difference between being satisfied and not satisfied customers
from their rural and urban branches.

H1: There is a significant difference between being satisfied and not satisfied customers from
their rural and urban branches.

2. H0: There is no significant difference between satisfaction and not satisfaction in terms of
being employment of the customers.

H1: There is a significant difference between satisfaction and not satisfaction in terms of being
employment of the customers.

3. H0: There is no significant difference between Public and Private Banks in terms of gender
of the customer.
H1: There is a significant difference between Public and Private Banks in terms of gender of
the customer.

4. H0: There is no significant difference between Public and Private Banks in terms of income
of the customer.

H1: There is a significant difference between Public and Private Banks in terms of income of
the customer.

5. H0: There is no significant difference between being satisfied and not satisfied customers
from their Public and Private sector banks.

H1: There is a significant difference between being satisfied or not satisfied customers from
their Public and Private Banks.

6. H0: There is no significant difference between Public and Private Banks in terms of being
types of banks account.

H1: There is significant difference between Public and Private banks in terms of being types
of banks account.

7. H0: There is no significant difference between being satisfied and unsatisfied in terms of
male and female.

H1: There is significant difference between being satisfied and unsatisfied in terms of male and
female.
8. H0: There is no significant difference in perception and expectation of customers from urban
and rural branch in terms of Tangibles, Reliability, Responsiveness, Assurance and Empathy.

H1: There is significant difference in perception and expectation of customers from urban and
rural branch in terms of Tangibles, Reliability, Responsiveness, Assurance and Empathy.

9. H0: There is no significant difference in perception and expectation of customers from

Private, Public and Public and Private Banks in terms of Tangibles, Reliability,
Responsiveness, Assurance and Empathy.

10. H1: There is significant difference in perception and expectation of customers from Private,
Public and Public and Private banks in terms of Tangibles, Reliability, Responsiveness,
Assurance and Empathy

Chaper 8