INDEX

SR.NO. CONTENTS PAGE NO.

1. Introduction To Banking 2
2. Significance Of Banking 4
3. Introduction To Commercial Banking 7
4. HDFC BANK 35
5. ICICI BANK 39
6. SBI BANK 43

7. Review of Literature 50

8. Objective Of the Study 52

9. Research Methodology 53

10. Hypothesis Of the Study 54

11. Data Interpretation 55

12. Testing Of Hypothesis 64

13. Conclusion 67

14. Bibliography 68

15. Annexure:Questionnaire 69

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Introduction Of Banking
Banking, in its crude form, is an age-old phenomenon. It was in existence even in ancient times, too. It is
the business of providing financial services to consumers and businesses. They are the single major source
of institutional finance in the country.

A bank is a 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.

According to Section 5 (c) of the Banking Regulation Act, 1949 -

―Banking company means any company which transacts the business of banking in India‖. Section 5 (b) of
the act defines banking as accepting for the purpose of lending or investment of deposits of money from the
public repayable on demand or otherwise and withdrawable by cheque, draft, order or otherwise.
Banking services also serve two primary purposes. First, bysupplying customers with the basic mediums-
of-exchange (cash, checking accounts, and credit cards), banks play a key role in the way goods and
services are purchased. Without these familiar methods of payment, goods could only be exchanged by
barter (trading one good for another), which is extremely time-consuming and inefficient. Second, by
accepting money deposits from savers and then lending the money to borrowers, banks encourage the flow
of money to productive use and investments. This in turn allows the economy to grow. Without this flow,
savings would sit idle in someone‘s safe or pocket, money would not be available to borrow, people
would not be able to purchase cars or houses, and businesses would not be able to build new factories the
economy needs to produce more goods and grow. Enabling the flow of money from savers to investors is
called financial intermediation, and thus, banking is extremely important to a free market economy.

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 Origin And Evaluation Of Indian Banking

Opinions differ as to the origin of the work "Banking". The word "Bank" is said to be of Germanic origin,
cognate with the French word "Banque" and the Italian word "Banca", both meaning "bench". It is surmised
that the word would have drawn its meaning from the practice of the Jewish money-changers of Lombardy,
a district in North Italy, who in the middle ages used to do their business sitting on a bench in the market
place. Again, the etymological origin of the word gains further relevance from the derivation of the word
"Bankrupt" from the French word "Banque route" and the Italian word "Banca-rotta" meaning "Broken
bench" due probably to the then prevalent practice of breaking the bench of the moneychanger, when he
failed.

Banking is different from money-lending but two terms have in practice been taken to convey the same
meaning. Banking has two important functions to perform, one of accepting deposits and other of lending
monies and/or investment of funds. It follows from the above that the rates of interest allowed on deposits
and charged on advances must be known and reasonable. The money-lender advances money out of his own
private wealth hardly accepts deposits and usually charges high rates of interest. More often, the rates of
interest relate to the needs of the borrower. Moneylending was practiced in all countries including India,
much earlier than the recent type of Banking came on scene.

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 Significance of Banking

The importance of a bank to modern economy, so as to enable them to develop, can be stated as follows:

(i) The banks collect the savings of those people who can save and allocate them to those who need it. These
savings would have remained idle due to ignorance of the people and due to the fact that they were in
scattered and oddly small quantities. But banks collect them and divide them in the portions as required by
the different investors.

(ii) Banks preserve the financial resources of the country & it is expected that they allocate them
appropriately in the suitable & desirable manner.

(iii) They make available the means for sending funds from one place to another and do this in cheap, safe
and convenient manner.

(iv) Banks arrange for payments by cheques, order or bearer, crossed and uncrossed, which is the easiest and
most convenient. Besides they also care for making such payments as safe as possible.

(v) Banks also help their customers, in the task of preserving their precious possessions intact and safe. To
advance money, the basis of modern industry and economy and essential for financing the developmental
process, is governed by banks.

(vii) It makes the monetary system elastic. Such elasticity is greatly desired in the present economy, where
the phase of economy goes on changing and with such changes, demand for money is required. It is quite
proper and convenient for the government and R.B.I. to change its currency and credit policy
frequently.This is done by RBI, by changing the supply of money with the changing needs of the public.
Although traditionally the main business of banks is acceptance of deposits and lending, the banks have now
spread their wings far and wide into many allied and even unrelated activities.

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 Structure Of Banking Activities

At present the organized banking system in India can be broadly divided into three categories:

I. The Central Bank of the country , the Reserve Bank Of India.

II. The Commercial Banks

III. The Cooperative Banks.

The RBI is the apex monetary and banking authority in the country and has the responsibility to
control the banking system in India.

Commercial Banks play a major role in the growth and development of the country .They mobilize
savings and make them available to large and small industrial enterprise and traders for working
capital reqirements.After 1969,commercial banks broadly classified into nationalized or public
sector banks and private sector banks.The SBI and its associate banks along with another 20 banks
and the public sector banks.The private sector banks include Indian scheduled banks which have not
been nationalized and branches of foreign banks operating in India. The Regional Rural Banks came
into existence since the middle of 1970‘s with the specific objective of providing credit and deposits
facilities to the small and marginal farmers ,agricultural labourers and artisans and small
entrepreneurs.

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 Banking In India

Banking In India act as a connected link between the borrowers and lenders of money.The banks
main activity should be to do the business of banking which should not be subsidiary to any other
business.Thus ,a bank should always add the word ‗BANK‘ to its name to enable people to know
that it is a bank and is dealing in money.

The banking industry handles finances in a country including cash and credit. Banks are the
institutional bodies that accept deposits and grant credit to the entities and play a major role in
maintaining the economic stature of a country. Given their importance in the economy, banks are

kept under strict regulation in most of the countries. In India, the Reserve Bank of India
(RBI) is the apex banking institution that regulates the monetary policy in the country.

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 Introduction to Commercial Banking In India.

Commercial banks play a vital role in the economic development of a nation.They are the most important
source of institutional credit in the money market as they provide short term loans and advances to its
customers.They perform a variety of functions and are the main source of credit which is the main input for
trade and business activity.Credit Created by commercial banks is a major component of money supply in a
modern economy.Modern economies depend on the banking sector for production ,exchange and
distribution.

A commercial Bank is a type of financial intermediary and a type of bank.Commercial bank has two
possible meanings:

a)It is the term for a normal bank to distinguish it from an investment bank.

b)Commercial banking can also refer to a bank or a division of a bank that mostly deals with
deposits and loans from corporations or large businesses,as opposed to normal individual members
of the public(retail banking).

A commercial bank is a profit seeking organization dealing in the other people‘s money ,in the sense
that it accepts deposits of money from the public to keep them in its custody for safety.So also, it
deals in credit,i.e, it creates credit by making advances out of the funds received as deposits to needy
people.It charges higher rate of interests for the loans sanctioned and offers lower rate of interest for
the deposits.The difference between the two is the profit earned by the bank. Thus, a commercial
bank functions as a mobiliser of saving in the economy.

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The most distinctive feature of a commercial bank is that it accepts deposits called demand deposits
from the public which are chequable, i.e., withdrawable by means of cheque. Acceptance of chequable
deposits alone, however, does not give it a status of bank. Its another essential function is to make use of
these deposits for lending to others.
Commercial banks ordinarily are simple business or commercial concerns which provide various types of
financial services to 'customers in return for payments in one form or another, such as interest, discounts,
fees, commission, and so on. So, we can say that their objective is to make profits.
A commercial bank is therefore like a reservoir into which flow the savings, the idle surplus money of
households and from which loans are given on interest to businessmen and others who need them for
investment or productive uses.

DEFINITIONS:

Economists have defined a Commercial Bank in various ways.

- According to Prof. Crowther, ―a banker is a dealer in debt, his own and other people‘s.‖
- According to Prof. sayes, ―Commercial Banks are institutions whose debts – usually reffered to as bank
deposits – are commonly accepted in final settlement of other people‘s deposits.‖
Thus, all these definitions clearly indicate the essential function of a bank namely dealing in money and
credit.

FUNCTIONS OF COMMERCIAL BANKS

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Commercial banks perform several crucial functions to satisy the needs of the various sectors of the
economy, which may be classified into two categories:
(I) Primary functions, and
(II) Secondary functions.
(I) Primary banking functions of the commercial banks include:
1. Acceptance of deposits from the public;
2. Lending of funds;
3. Use of cheque system; and
4. Remittance of funds.

1. Acceptance of Deposits from the Public

Accepting deposits is the primary function of a commercial bank. By receiving deposits from the public,
commercial banks mobilise savings of the household sector.
Banks generally accept deposits in three types of accounts:

1.Current Account,
2. Savings Account
3. Fixed Deposits Account.
Deposits in Current Account are withdrawable by the depositors by cheques for any amount to the extent
of the balance at their credit, at any time without any prior notice. Deposits of current accounts are, thus,
knownas Demand deposits. Such accounts are maintained by commercial and industrial firms and
businessmen, and the cheque system is the most convenient and very safe mode of payment. No interest is
provided for such deposits. In fact bank charge certain commission for providing the facility.

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Saving Accounts are maintained for encouraging savings of households. Withdrawals from deposits from
savings account are not freely allowed as in the case of current account. There are some restrictions on the
amount to be withdrawn at a time and also on the number of withdrawals made during a period. Indian
commercial banks have, however, relaxed these rules of savings accounts to a certain extent in recent times.
Banks pay a rate of interest on the savings account deposits as prescribed by the central bank. Presently, it is
5 % p.a. A nominal rate of interest is provided for such deposits.

Deposits in Fixed Account are time deposits. In the normal course, deposits cannot be withdrawn before
the expiry of the specified time period of the deposits. A premature withdrawal is, however, permitted only
at the cost of forfeiture of the interest payable, at least partly. On these deposits commercial banks pay
higher rates of interest, and the rate becomes higher with the increase in duration. Longer the time period,
higher would be the rate of interest and vice versa.By creating such varieties of deposits, banks motivate
savers and depositors in a variety of ways and encourage savings in the economy. Further, by keeping
deposits with banks, depositors‘ money is not secure and remains in safe custody, but it yields interest also.

Moreover, banks demand deposits are in the form of liquid cash, for they serve as money to the business
community and, therefore, is called bank money.

2. Lending of funds
Another major function of commercial banks is to extend loans and advances out of the money which comes
to them by way of deposits to businessmen and entrepreneurs against approved such as gold or silver
bullion, government securities, easily saleable stocks and shares, and marketable goods.
Banks advances to customers may be made in many ways:
(i) Overdrafts,
(ii) Cash Credits,
(iii) Discounting Trade Bills,
(iv) Money-at-call or very short-term advances,
(v) Term loans,
(vi) Consumer Credit,
(vii) Miscellaneous Advances.

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(i) Overdraft: A commercial bank grants overdraft facility to an account holder by which he is allowed
to draw an amount in excess of the balance hels in the account, up to the extent of stipulated limit.
Overdrafts are permissible in current account only. Suppose, a customer has Rs. 50,000 in his current
account with the bank. Bank grants him overdraft facility up to Rs. 10,000. Then, this customer is entitled to
issue cheques upto Rs. 60,000 on his account. Obviously, overdraft facility sanctioned up to Rs.10,000 by
the bank in this case is as good as credit granted by the bank to that extent.

(ii) Cash credit: Bank give credit in cash to business firms in industry and trade, against pledge or
hypothecation of goods, or personal guarantee given by the borrowers. It is essentially a drawing account
against credit sanctioned by the bank and is operated like a current account on which an overdraft is
sanctioned. It is the most popular mode of advance in the Indian banking system.

(iii) Discounting trade bill: The banks facilitate trade and commerce by discounting bills of exchange
called trade bills. Traders often draw bill of exchange to meet their obligations in business transitions. Such
a trade bill is payable in cash on maturity, after a stipulated date. Discounting of bills by the bank amounts
to granting of credit to the party concerned till the maturity date of the bill. This method of bank lending is
widely adopted for two reasons: (a) such loans are self liquidatory in character; and
(b) these trade bills are rediscountable with the central bank.

(iv) Money at call or very short term advances: Bank also grants loans for a very short period,
generally not exceeding 7 days to the borrowers, usually dealers or brokers in stock exchange markets
against collateral securities like stock or equity shares, debentures, etc., offered by them. Such advances are
repayable immediately at notice hence, they are described as money at call or call money.

(v) Term Loans: Banks give term loans to traders, industrialists and now to agriculturists also against
some collateral securities. Term loans are so called because their maturity period varies between 1 to 10
years. Term loans as such provide intermediate or working capital funds to the borrowers. Sometimes, two
or more banks may jointly provide large term loans to the borrower against a common security. Such loans
are called participation loans or consortium finance.

(vi) Consumer Credit: Banks also grant to households in a limited amount to buy some durable
consumer goods such as television sets, refrigerators, etc; or to meet some personal needs like payment of
hospital bills, etc. such consumer credit is made in a lump sum and is repayable in installments in a short

11
time. Under the 20-point programme, the scope of consumer credit has been extended to caver expenses on
marriage funeral etc; as well.

(vi) Miscellaneous Advances: Among other forms of bank advances there are packing credits given to
exporters for a short duration, exports bills purchased/ discounted, import finance - advances against import
bills, finance to the self employed, credit to the public sector, credit to the cooperative sector and above all,
credit to the weaker sections of the community at concessional rates.

3. Use of cheque system:

It is a unique feature and function of banks that they have introduced the cheque system for the withdrawal
of deposits.
There are two types of cheques:
i) the bearer cheque and
ii) the crossed cheque.

A bearer cheque is encashable immediately at the bank by its possessor. Since, it is negotiable, it serves
as good as cash on transferability.

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A crossed cheque, on the other hand, is one that is crossed by two parallel lines on its face at the left
hand corner and such a cheque is not immediately encashable. It has to be deposited only in the payee‘s
account. It is not negotiable. In modern business transactions, the use of cheques to settle debts is found to
be much more convenient than the use of cash. Commercial banks, thus, render an important service by
providing an inexpensive medium of exchange such as cheques. In fact, a cheque is also considered as the
most developed credit instrument.

4. Remittance of Funds:
Commercial banks, on account of their network of branches throughout the country, also provide facilities to
remit funds from one place to another for their customers by issuing bank drafts, mail transfers or
telegraphic transfers on nominal commission charges. As compared to the postal money orders or other
instruments, bank drafts have proved to be a much cheaper mode of transferring money and has helped the
business community considerably.

(II) Secondary banking functions of the commercial banks are also known as non-banking
functions. They perform a multitude of other nonbanking functions which may be classified as:
1. Agency Services, and
2. General Utility Services.

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1. Agency Services
Bankers perform certain functions for & on behalf of their clients, as:
a) To collect or make payments for bills, cheques, promissory notes, interest, dividends, rents; subscriptions,
insurance premia, etc. For these services, some charges are usually levied by the banks.
b) To remit funds on behalf of the clients by drafts or mail or telegraphic transfers.
c) To act as executor, trustee and attorney for the customer‘s will.
d) Sometimes, bankers also employ income-tax exporters not only to prepare income-tax returns for their
customers but also to help them to get refund of income-tax in appropriate cases.
e) To work as correspondents, agents or representatives of their clients. Often, bankers obtain passports,
traveller‘s tickets, secure passages for their customers, and receive letters on their behalf.

2. General Utility Services

Modern commercial banks usually perform certain general utility services for their community, such as:
a) Letters of credit may be given by the banks at the behest of the importer in favour of the exporter.
b) Bank drafts and traveller‘s cheques are issued in order to provide facilities for transfer of funds from one
part of the country to another.
c) Banks may deal in foreign exchange or finance foreign trade by accepting or collecting foreign bills of
exchange.
Shares floated by government, public bodies and corporations may be underwritten by banks;
d) Certain banks arrange for safe deposit vaults, so that customers may entrust their securities and valuables
to them for safe custody.

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e) Banks also compile statistics and business information relating to trade,commerce, and industry. Some
banks may publish valuable journals or bulletins containing research on financial, economic and commercial
matters.

Commercial Banks Play an Important Role in a Modern Economy

1) They constitute the very life-blood of modern trade, commerce & industry, as they
provide the necessary funds for their working capital such as to buy raw materials, to pay
wages, to incur current business expenses in marketing of goods, etc
2) These banks encourage people‘s savings habit through their various savings deposit
schemes.
3) They also mobilize idle saving resources from households to business people for
productive use.
4) They transmit money from place to place with economy and safety.
5) Their agency services are, no doubt, of immense value to the people at large, as they case
their difficulties, save their time & energy &provide them safety & security.

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 Products Of Commercial Bank

1. Industrial Loans- A industrial loan (C&I loan) is a loan to a business rather than a
loan to an individual consumer. These short-term loans may have an interest rate
based on the LIBOR(London Interbank Offered Rate) rate or prime rate and are secured
by collateral owned by the business requesting the loan.

2. Project Finance-Project finance is the funding (financing) of long-term infrastructure,

industrial projects, and public services using a non-recourse or limited recourse
financial structure. The debt and equity used to finance the project are paid back from
the cash flow generated by the project. Project financing is a loan structure that relies
primarily on the project's cash flow for repayment, with the project's assets, rights, and
interests held as secondary collateral. Project finance is especially attractive to the
private sector because companies can fund major projects off-balance sheet.

3. Syndicated Loans-Syndicated loan is a form of loan business in which two or more

lenders jointly provide loans for one or more borrowers on the same loan terms and
with different duties and sign the same loan agreement. Usually, one bank is
appointed as the agency bank to manage the loan business on behalf of the syndicate
members.

4. Leasing-A lease is a contract outlining the terms under which one party agrees to rent
property owned by another party. It guarantees the lessee, also known as the tenant,
use of an asset and guarantees the lessor, the property owner or landlord, regular
payments for a specified period in exchange. Both the lessee and the lessor face
consequences if they fail to uphold the terms of the contract.

5. Foreign Trade Financing-Trade finance signifies financing for trade, and it concerns
both domestic and international trade transactions. A trade transaction requires a seller

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 of goods and services as well as a buyer. Various intermediaries such as banks and
financial institutions can facilitate these transactions by financing the trade.

6. Bills Of Exchange-A bill of exchange is a written order once used primarily in

international trade that binds one party to pay a fixed sum of money to another party
on demand or at a predetermined date. Bills of exchange are similar to checks and
promissory notes—they can be drawn by individuals or banks and are generally
transferable by endorsements.

7.Treasury Management-Treasury management includes management of an enterprise's

holdings, with the ultimate goal of managing the firm's liquidity and mitigating its
operational, financial and reputational risk. Treasury Management includes a firm's
collections, disbursements, concentration, investment and funding activities.

8.Cash Management-Cash management refers to a broad area of finance involving the

collection, handling, and usage of cash. Sometimes, private banking customers are given
cash management services. Financial instruments involved in cash management include
money market funds, treasury bills, and certificates of deposit.

NATIONALISATION OF COMMERCIAL BANKS

By the 1960‘s, the Indian banking industry has become an important tool to facilitate the
development of the Indian economy. With effect from July 19, 1969, 14 largest commercial
banks were nationalized. A second dose of nationalization of 6 more commercial banks
followed in 1980. The stated reason for the nationalization was to give the government more
control of credit delivery. With the second dose of nationalization, the GOI controlled
around 91% of the banking business of India. After this, until the 1990‘s the nationalized
banks grew at a place of around 4%, closer to the average growth rate of the Indian
economy. So, these nationalization of banks was carried out with the aim of ‗removal of
control by a few‘ and to bring about a more optimal allocation of bank funds. After

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nationalization, the credit policy of public sector banks underwent a radical change, with
special emphasis being placed on credit to priority sectors including agriculture, small scale
industry and programmes for poverty alleviation.

The main Objectives of Nationalization were as follows:

1.To introduce social banking by directing bank funds at concessional rates to the weaker
sections of society for productive purposes.

2. To prevent monopolies in the banking sector caused due to use of major share of funds by
a few private entrepreneurs.
3. To introduce & promote banking facilities in backward areas & reduce regional disparities
in branch expansion and growth of banking.
4. To expand the role of Commercial banking in agricultural credit

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  PERFORMANCE OF COMMERCIAL BANKS IN THE
POST -NATIONALIZATION PERIOD

1. Achievements :

(a) Lead Bank Scheme: After nationalization, it was felt that banks should be allotted particular
districts where they would take the lead in studying the need and scope for banking development. Under the
scheme, districts were allotted to the State Bank Group, 14 nationalised banks and 3 private banks .Each
bank was assigned the status of ‗lead bank‘ in a particular district. The lead bank had to study and
understand the socio-economic condition of the district and undertake surveys for this purpose. Through the
surveys the lead bank would collect useful information about the credit needs, development needs and
pattern of production and nature of employment in the district. After such informations were gathered, the
lead bank would then plan and implement development programmes in the area, with the help of other
banks and financial institutions. This scheme was a unique experiment and it helped in branch expansion,
deposit mobilization and expansion of priority sector lending.

(b) Branch Expansion: After nationalization, there was massive expansion of bank branches, especially
in the rural areas. The Lead Ban k scheme played played a major role in this. During the first fifteen years
after nationalization, branches expanded at about 2,400 per year. Total number of bank branches has
increased from 8262 in 1969 to 67,283 in 2007. Over 80% of bank offices are located in backward states
and in semi-urban areas and rural areas. This, to some extent took care of regional imbalance in the spread
of banking.

(c) Deposit Mobilization: As a result of expansion of banking facilities, there was a large increase in
deposits. In 1969, deposits amounted to 13% of the GDP, by 2004 this ratio increased 350 times. The
increase in rural deposits as production of total has been from 3% to 15%. Bank deposits now constitute
about 40% of financil assets held by households.

(d) Bank Lending: Traditionally, banks in India had concentrated in providing working capital to
industry and trade. Only after nationalization, loans are being given for agricultural operations. Bank credit
stood at Rs. 3, 399 crore in 1969. In the next 3 decades, his increased by about 200 times. In 1968, large and
medium industries accounted for about 200 times. In 1968, large and medium industries accounted for about
60% of aggregate bank credit. Agriculture accounted for about 2%. This changed drastically after
nationalization and bank credit to priority sector, including agriculture was close to 40% of total credit.

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(e) Directed Credit Programmes: A major objective of bank nationalization was to make bank credit
available the priority sector, comprising of agriculture, small scale industries, exports, transporters and
small traders at concessional rates. This system of directed bank credit was expected to contribute to
contribute to economic growth as well as social justice. Success was achieved in this direction after
nationalization.

2. Shortcomings:

(a) Inadequate Banking facilities: Despite achievements in branch expansion, banking facilities
continue to remain inadequate to meet the needs of the large population. The national average population
per bank branch is still very high at about 12000. This ratio is higher than the national average in some
states like Bihar, Orissa, West Bengal and Madhya Pradesh. Banking facilities are still not equitably
distributed among all states.

(b) Inadequate Deposit Mobilization: Banking habits of people in India are still not very good. A
large part of the population still prefer to carry out transactions in cash and are not covered by the banking
system . Therefore, there is a large scope for further increasing deposits and bring in more money in the
banking system.

(c) Inadequate lending: Even though there has been significant increase in lending to priority sectors,
it is still inadequate in comparison to the needs of these sectors. Because of these small farmers and traders
have to still depend on the unorganized sector for meeting their credit requirements.

(d) Increased Expenditure: After nationalization, there has been significant increase in expenditure
on banking operations. This is due to aggressive and sometimes irrational branch expansion. There has been
overstaffing in nationalized banks and some of their operations in rural areas are simply not economically
feasible.

(e) Low Level of Efficiency: Public sector banks have suffered from lack of proper supervision and
control. Due to high degree of political interference and lack of competition, these banks have become
highly insufficient. There work culture was poor compared to private sector banks. However, this scenario
has now changed with these banks becoming more profit oriented and autonomous. Thus, nationalization of
Commercial banks was done with the objective of social and economic development. But this resulted in
several problems and desortions in the banking system. Till 1990s public sector banks operated with low

20
profitability and efficiency. In early 1990s, the government implemented the Narsimham Committee
Recommendations in order to bring about much needed reforms in the banking sector. Since then,
the sector has been performing with higher profitability and efficiency.

TYPES OF COMMERCIAL BANKS:

 Scheduled banks
 Non- Scheduled Banks

Scheduled Banks:
A scheduled bank is one which is registered in the second schedule of the Reserve Bank of India. The
following conditions must be fulfilled by a bank for inclusion in the schedule:
i) The banker concerned must be in business of banking in India;
ii) It is either a company defined in Section 3 of the Indian Companies Act,corporation or a company
incorporated by or under any law in force in any place outside India or an institution notified by the
central government in this behalf;
iii) It must have paid-up capital and reserves of an aggregate role of exchangeable value of not less than
rupees five lakhs;
iv) It must satisfy the Reserve Bank of India that its affairs are not conducted in a manner detrimental to
the interests of its depositors.

Scheduled banks come under the purview of the various credit control measures of the Reserve Bank of
India. They are required to maintain a certain minimum balance in their accounts with the RBI, and do
certain things prescribed by law. The Scheduled banks are entitled to borrowings and rediscounting
facilities from the RBI. These are similar to the member banks of the U.S.A.

Non- Scheduled Banks:

21
Banks, which are not included in the Second Schedule of the RBI, are known as non-scheduled banks.
They may be classified into 4 groups:
a) Banks with paid-up capital and reserves in excess of Rs. 5 lakhs;
b) Banks with paid-up capital and reserves ranging between Rs. 50,000 and one lakh of rupees;
c) Banks with paid-up capital and reserves ranging between one lakh of rupees and 5 lakhs;
d) Banks with paid-up capital and reserves below Rs. 50,000.

Non- Scheduled banks are not entitled to all those facilities that the scheduled banks avail of from the
Reserve Bank of India. Since the enactment of the Banking Regulation Act in 1949, non-scheduled
banks have also come under the ambit of the RBI control. It has become obligatory on the part of these
banks to carry a portion of their deposits with the RBI or in the vault with the bank itself, and prepare
their annual accounts and
balance sheets in accordance with the requirements stipulated in Section 29 of the Banking Companies
Act. Scheduled Banks may be classified into two groups: Indian Schedule Banks and Foreign Scheduled
Banks. The Indian Scheduled Banks are those which have their registered officers in India and are
registered in the second schedule if the RBI. As against this, foreign scheduled banks comprise those
commercial banks which are registered in the said schedule but have their registered offices outside
India. These banks have played a prominent role in India‘s foreign trade; in fact, they had complete
sway in this sphere until the Second World War. Since then, a number of leading Indian scheduled banks
entered the field of foreign trade and have in the course of time achieved an important position in this
field. Indian scheduled banks may be distinguished in two broad sectors:

a) Public sector commercial banking comprising the State Bank of Indian and its subsidiaries and the
twenty nationalized banks;

b) Private sector commercial banking comprising all the other Indian scheduled banks that do not fall in
the above group.

22
 Top 10 Commercial Banks In India are :
1.State Bank Of India
2.Icici Bank
3.Hdfc Bank
4.Axis Bank
5.Kotak Mahindra Bank
6.IndusInd Bank
7.Bank Of Baroda Bank
8.Punjab National Bank
9.Yes Bank
10.IDBI Bank

Services Typically offered by Commercial Bank:

Although the basic type of services offered by a commercial bank depends upon the type of bank and the
country, services provided usually include:
 Taking deposits from their customers and issuing current (UK) or checking (US) accounts and
savings accounts to individuals and businesses.
 Extending loans to individuals and businesses; Cashing cheques
 Facilitating money transactions such as wire transfers and cashier's cheques.
 Issuing credit cards, ATM cards, and debit cards
 Storing valuables, particularly in a safe deposit box
 Cashing and distributing bank rolls
 Consumer & commercial financial advisory services
 Pension & retirement planning.

23
Financial transactions can be performed through many different channels:

 A branch, banking centre or financial centre is a retail location where a bank or financial
institution offers a wide array of face to face service to its customers.
 ATM is a computerised telecommunications device that provides a financial institution's
customers a method of financial transactions in a public space without the need for a human
clerk or bank teller.
 Mail is part of the postal system which itself is a system where in written documents typically
enclosed in envelopes, and also small packages containing other matter, are delivered to
destinations around the world.
 Telephone banking is a service provided by a financial institution which allows its customers to
perform transactions over the telephone.
 Online banking is a term used for performing transactions, payments etc. over the Internet
through a bank, credit union or building society's secure website.

STRENGTHS OF INDIAN COMMERCIAL BANKS:

Indian commercial banks possess the following strengths which are distinct from others:
i. Tremendous branch network giving an access to almost entire spectrum
of customers
ii. High market coverage
iii. Diversified operations
iv. Intimate knowledge of local environment
v. High class human resource pool

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 WEAKNESS OF INDIAN COMMERCIAL BANKS:
Indian commercial banks have been ailing from the following weakness because of which they
are finding it to difficult to out beat the new players and exploit the emerging opportunities:
i. Lower Profitability
ii. High Operating Costs
iii. High NPAs
iv. Low Productivity
v. High Provisioning
vi. Complex and Non- responsive organizational structure
vii. Poor asset management
viii. Inadequate HRD strategy
ix. Low work culture
x. Action flippant and inward looking management and employees
xi. Strong, militant and non-responsive unions
xii. Limited automation.

Advantages of Commercial Banks

Following are the important advantages of financial assistance provided by commercial banks:

1. The deposited amount with the banks is used for the overall development of the country
through the financial assistance provided by the banks.
2. Socialism was established in the country with the help of the banks and their nationalization.
3. Banks help the unorganized and weaker sections. As a result, the loan requirements of small
and marginal farmers, artisans, small entrepreneurs, and weaker sections have started getting
fulfilled.
4. The commercial banks have provided financial assistance to the unemployed persons in
starting their own venture.
5. By the establishment of regional banks in the rural areas, farmers are coming out of the grip of
moneylenders and rural indebtedness has started declining.
6. The commercial banks are encouraging the development of small and cottage industrial also
and loan facilities are being provided to the entrepreneurs.
7. The economic position of the common man has been rapidly improving due to the significant
role of commercial banks in the process of national development. As a result, their living
standard is going high.

25
8. The entrepreneurs can obtain the loan on easy terms, without much of formalities.
9. Banks maintain the secrecy of all information about their customers.
10. The bank is a real friend at the time of need because the bank helps the entrepreneurs during
the crisis through overdraft facilities and credit facilities.

Disadvantages of Commercial Banks

The entrepreneurs and institutions may have the following disadvantages also, from the
commercial banks:
1. The efficiency of the banks is fast reducing.
2. Customer services are also fast deteriorating. As a result, the customers are getting
dissatisfaction also
3. The branch managers have become weak and helpless due to fast expansion and the majority
of local staff. All these adversely affect management and control.problems of commercial banks
4. The profit earning capacity of banks is also reducing due to the decline in their efficiency.
5. The significant share of loans provided by the banks is utilized only by the organized sectors
of the economy, even today.
6. No change has taken place in the organizational structure of the banks, even after their fast
expansion and new challenges to them.
7. Good progress has not been achieved in the sphere of recovery of loans by the banks. As a
result, the efficient circulation of funds does not become possible.
8. The cases of frauds and embezzlements of banks funds by the bank officers and staff are also
alarmingly increasing.
9. The deposits of the bank have not increased in the proposition of expansion of branches of the
banks. Hence, significant assistance is not being provided to the entrepreneurs.
10. The political influence in providing loans, especially the concessional loans have adversely
affected the recovery of bank loans.

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Difficulties of Commercial Banks
Following difficulties are experienced in taking financial assistance from the commercial banks:

1.Banks provide loans only against the security of stocks and fixed property. For many business
organizations, it becomes difficult to take loans, on the security of fixed assets.
2.Banks do not provide loans against the security of fixed assets.
3.Many formalities are to be completed for taking loans from banks, which cause unnecessary
delays also.
4.Delays in getting loans to occur also due to redtapism in the banks.
5.Banks keep a high margin in providing loans, due to which very low amount of loan is
provided in comparison to the value of the property.
6.Some bank loan bears very high-interest rates.
7.In several cases, partiality and nepotism are observed in sanctioning of loans by the banks.
8.Whereas banks are very liberal in providing loaning facilities to the reputed large business
organizations, they do not easily provide loans to small and new units.

27
9 Basic Principles That Commercial Banks Should Follow:
Commercial banks follow certain principles to serve the maintain some principles which are
very important for banks to remain in the competition in modem days.

The bank which deals with money and money a worth with a view to earning prom is known
as the commercial bank.Commercial banks must maintain some principles which are very
important for banks to remain in the competition in modem days.

9 principles that commercial banks follow;

 Liquidity.
 Solvency.
 Profitability.
 Loan and Investment.
 Savings.
 Services.
 Secrecy.
 Efficiency.
 Location.

Some principles are discussed below;

1. Principle of Liquidity
The principle of liquidity is very important for the commercial bank. Liquidity refers to the
ability of an asset to convert into cash without loss within a short time.
|Paying the deposited money on demand of‘ customers is called liquidity in sense of banking.

2. Principle of Solvency
Solvency means the financial capability or sufficiency in the capital. To stay in these competitive
market commercial banks must have sufficient capital. If the funds are not sufficient the bank
cannot run his business.
The main source of fund of the commercial bank is the deposited money by the depositors‘
through the different type of account.
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Depositors keep cash in the bank, especially for safety. So commercial bank must ensure the
safety of deposited fund.

3. Principle of Profitability
The main objective of the commercial bank is to earn a profit. For earning profit commercial
bank have to make the investment by providing short-term loan, before providing loan
commercial bank have to compensate a certain amount of money as liquidity.

4. Principle of Loan and Investment

The main source of profit of bank is granting loans to any individual or organization. Investment
is the profitable and sound source of income. Commercial banks invest in business and
investment sector.

5. Principle of Savings
Commercial banks collect fund by creating savings facilities. Commercial banks try to collect
savings from society surplus.
The commercial bank makes the investment from this savings to generate profit. So, more
savings, more investment, and more profit.

6. Principle of Services
Commercial bank ensures best services to their customers. The success of a bank depends on the
services provided by the bank. Customer chooses those banks that provide improved services.

7. Principle of Secrecy
Customers want to keep secret about their valuable assets and money. So banks must have to
keep secret about their customer‘s account. If a commercial bank does not maintain secrecy the
customer will be dissatisfied.

8. Principle of Efficiency
The commercial bank should operate their business efficiently. So that they can succeed at the
objective.
In this competitive market, there is no alternative way without efficiency in management. So
commercial bank must train their employees to increase the efficiency in management.

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9. Principle of Location
Commercial banks must have to locate their branches in the commercial area where many
customers are available. The location must be safe for the customers and easy communication
system must exist.

Other principles;
The principle of goodwill.
The principle of the economy.
The principle of technology.
The principle of publicity.
These are the basic principles of the commercial bank. The commercial bank must follow these
principles.

Effect of commercial banking on business and industry in india?

The term Commercial Bank is not meant only for Business and industry. Commercial bank is
meant primarily for personal banking and secondarily for commercial developments. The banks
looking mainly deposits from public and lending small and short term loans to public and short
businessmen.
Banking sector is called the ―Nerve centres of the nation's economy‖ and ―Backbones of modern
Industries and Commerce‖. A minor change in the basis points by the nation's central bank can
make a huge impact on the
1. nation's production and
2. inflation.
Commercial banks facilitate the growth of the business. Be it rural small scale (Cottage
industries) or Very large scale investments. The deposits from public is mobilised to fund the
commercial activities. These activities in turn generate income which is added to the gross
domestic product of the nation. Thus, banks are the most crucial sector that helps a nation grow
economically.

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 CHALLENGES BEFORE INDIAN COMMERCIAL BANKS

Major challenges which Indian commercial banks are facing today and which are likely to be
more poignant in the ensuing years in view of the irreversible process of the reforms and
resultant verisimilitude of more players entering the banking sector are discussed below.
 Problem of pressure on profitability:
The greatest challenge which PSBs are facing in recent years arises out of pressure on their
profitability. With continuous expansion in number of branches and manpower, thrust on social
and rural banking, directed sector lending, maintenance of higher reserve ratios, waiver of loans
under ARDR-type concessions, repayment defaults by large industrial corporate and other
borrowers etc. had their telling impact on the profitability of the banks.
Further with the introduction of prudential norms, to be effective from March 1993 a majority of
the commercial banks balance sheets had shown huge losses. In order to improve financial health
of these banks the Government provided a dose of hybrid capital and in return these banks
were made to sign a memorandum of understanding with RBI. Accordingly, the focus of
operation of banks shifted from deposit mobilization to services marketing. Further, accent of
banks operation shifted to non-fund based business with an eye on capital adequacy achievement
and other ancillary business which may cross subsidize the cost of certain unremunerative
services, the banks have to offer.

 Problem of low productivity:

Another furious challenge which indian commercial banks are confronting is low productivity.
The low productivity has been due to huge surplus manpower, absence of good work culture,
andbabsence of employees commitment to the organization.The management have continued to
prefer not to see the problem in its proper perspective due to the fear of strong unions. They have
camouflaged the issue by diverting their attention to such apparent face saving devices like
redeployment, repositioning , retraining, etc.. There are various ways of minimizing the size of
the staff, such as voluntary retirement scheme or golden shakehand. The problem before the
management at present is how to cut size of the staff and improve productivity of the bank.

 Problem of Non-Performing Assets(NPA):

A serious threat to the survival and success of Indian banking system is uncomfortably high level
of non-performing assets. In its Report on trend and Progress of banking In India, 1997-98, the
RBI reported that gross NPAs as percentage of advances of PSBs was 16 percent as on March
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 31, 2000 with a colossal amount of about Rs. 52,000 crore being locked up. This might have
recently recorded further increase due to default in repayment by the industrial units affected by
the two-year old recession.
This is much higher than the international level of below 5%. Spiraling nonperforming
assets are hurting bank‘s profitability and even the basic inability of the banking system by way
of both non-recognition of interest income and loan loss provisioning.

 Problem from customers:

In view of unleashing of competitive forces and fast changing life styles and values of customers
who are now better informed and more sophisticated and discerning and who have a wide choice
to choose from various banking and non-banking intermediaries have become more
demanding and their expectations in terms of products, delivery and price are increasing, the
PSBs lacking in customers‘ orientation are finding it difficult to even retain their highly valued
customers what to talk of attracting the new clients particularly when the foreign banks are also
the new breed of private sector banks have embarked upon aggressive marketing
programme aiming at niche markets. The telebanking, anywhere banking, virtual or internet
banking, ATM, credit cards and newly introduced interest rate swap, forward rate agreements,
etc. are some of the products innovated by the new players. Although the PSBs are trying to
computerize their operations, the pace of progress in this direction has been decidedly slow.
The rather tardy progress in the area has been due to the initial reservation of the staff unions
against computerization for the lurking fear of employment cut, as also the existence of huge
number of branches in the rural areas, where suitable logistics are not available. Market share of
PSBs both in deposits and lending has declined. This has already become a serious cause
of concern for PSBs regulating strategic efforts for thwarting the challenges from the new
players.

 Competition from New Banks:

The commercial banks in India which enjoyed monopoly position until recently are facing
perilous challenges particularly on quality, cost and flexibility fronts from the newly emerging
players who by dint of their invigorating ambience and work culture supported by pragmatic
leadership committed, courteous, affable and trained staff and modern ultra gadgets are
offering excellent customers services and making inroads in the business centres.

32
 The new banks have set the tone and to extent also the standard for technological improvements
and product innovations which the vastly dominating PSBs will have to bring about in their own
operations if they have to maintain their present position of dominance.
For instance, Bank of Punjab has opened a new savings bank product-swagat with a minimum
balance requirement . HDFC has launched q new retail account-Freedom-for customers who
would be using the non-branch infrastructure of the bank like ATM, phone banking and internet
banking .

The ICICI Bank has product offerings tailor-made to specific categories of customers, such as
students, traders, NRIs as well as the salary customers.It is going to offer a special scheme for
senior citizens.
By resorting to latest methods in human resources management as well as information
technology, the new entrants in the field have suddenly sensitised even the ordinary user of the
banking services in India to the type and quality of services he can expect from his bank.
The market has become highly competitive and largely customers centric. This calls for an
ability to reach the client at his door step and meet his requirements of products and services in a
customized manner. The race for customers could at times lead to adverse selections. This
situation demands aggression laced with caution, in turn, calls for highly efficient management
by the banks of both liabilities and assets. These banks have to work in a market which will not
know any geographical barriers and therefore will have to develop abilities of product
innovation and delivery comparable to the best in the world.

 Competition from global majors

Globalisation and integration of Indian financial market with world and the consequent entry of
foreign players in domestic market has infused, in its wake, brutal competitive pressure on the
Indian commercial banks.
Foreign players endowed with robust capital adequacy, high quality assets, world-wide
connectivity, benefits of economies of scale and stupendous risk management skills are posing
serious threats to the existing business of the Indian banks. In order to compete successfully with
the new entrants, Indian banks need to possess matching financial muscle, as fair competition is
possible only along the equals. Average size of an Indian bank is niggardly low in comparison to
a foreign bank. The question before the major Indian Commercial Banks, therefore, is how to
acquire competitive size.

 Problem of Managing Duality of Ownership:

33
Managing duality of ownershipis a peculiar problem which the PSBs have to encounter because
of participation of the private shareholders in their capital. A public sector bank to survive and
grow successfully is expected to operate according to the expectations if one of its principal
shareholders. In the changed scenario,
there would be two major groups of shareholders, viz., the government of India and RBI on the
one hand and the private shareholder , on the other . Since the expectations of these two
categories of owners are not necessarily identical, the bankers will have to manage conflicting
interests.

Current Scenario of Commercial Bank in India

In the financial stability report released by RBI as at end of June 2016, it is expected that gross
bad loans at commercial banks in India could increase to 8.5% by March 2017, from 7.6% as
compared to March 2016.

34
 HDFC BANK

The Housing Development Finance Corporation Limited (HDFC) was amongst the first to
receive an 'in principle' approval from the Reserve Bank of India (RBI) to set up a bank in the
private sector, as part of RBI's liberalisation of the Indian Banking Industry in 1994. The bank
was incorporated in August 1994 in the name of 'HDFC Bank Limited', with its registered office
in Mumbai, India. HDFC Bank commenced operations as a Scheduled Commercial Bank in
January 1995.

 Incorporation Year: 1994

 Ownership Group: HDFC Group
 Headquarter: Mumbai, Maharashtra, India
 Chairman: Deepak S. Parekh
 Present Head(MD): Aditya Puri
 Chief Financial Officer: Sashidhar Jagdishan

HDFC Bank happens to be one of the largest banks in India. Further, it is the market leader in e-
commerce. Definitely, such a pioneer would require adequate infrastructure to cater to its
customers. As a matter of fact, HDFC Bank‘s web of distribution is woven of 4,715 branches and
12,260 ATMs across 2,657 cities.
Moreover, it provides a number of products and services which includes Wholesale banking,
Retail banking, Treasury, Auto (car) Loans, Two Wheeler Loans, Personal loans, Loan against
Property and Credit Cards. In 2017, HDFC bank‘s revenue amounted to ₹81,602 crore and gave
employment to 84,325.

History
35
 HDFC Bank incorporated in 1994, began operations with its first registered office in Mumbai,
India. In fact, Dr. Manmohan Singh, our then Finance Minister, in
augurated HDFC Bank‘s full-service branch and first corporate office at Sandoz House, Worli.
To point out, it is the only private bank to receive in-principle approval from the RBI for the
establishment of a bank.

Company’s Own Words

Mission: To be a World Class Indian Bank. The objective is to build sound customer franchises
across distinct businesses so as to be the preferred provider of banking services for target retail
and wholesale customer segments, and to achieve healthy growth in profitability, consistent with
the bank‘s risk appetite.
HDFC Bank‘s business philosophy is based on five core values: Operational Excellence,
Customer Focus, Product Leadership, People and Sustainability.

Portfolio
HDFC Group companies are HDFC Ltd., HDFC Securities., HDFC Mutual Fund, HDFC Realty,
HDFC Life, HDFC ERGO, HDFC Pension, and HDB Financial Services.

In News
According to BrandZ rankings in 2016, HDFC Bank was the most valuable brand in India for a
third consecutive year. Also, in 2016 again, a study of India‘s best banks by KPMG declared
HDFC Bank as the best bank of the year and awarded it the best digital banking initiative award.
On February 2000, HDFC Bank merged with the Times Bank. Then again in 2008, it acquired
the Centurion Bank. Lastly, in 2016 it was awarded as the best-performing branch in the
microfinance among the private sector banks by NABARD.

SWOT ANALYSIS OF HDFC BANK

Strengths in the SWOT analysis of HDFC

 HDFC bank is the second largest private banking sector in India having 2,201 branches and
7,110 ATM‘s.
 HDFC bank is located in 1,174 cities in India and has more than 800 locations to serve customers
through Telephone banking.

36
 The bank‘s ATM card is compatible with all domestic and international Visa/Master card, Visa
Electron/ Maestro, Plus/cirus and American Express. This is one reason for HDFC cards to be
the most preferred card for shopping and online transactions.
 HDFC bank has the high degree of customer satisfaction when compared to other private banks
The attrition rate in HDFC is low and it is one of the best places to work in private banking
sector.
 HDFC has lots of awards and recognition, it has received ‗Best Bank‘ award from various
financial rating institutions like Dun and Bradstreet, Financial express, Euromoney awards for
excellence, Finance Asia country awards etc.
 HDFC has good financial advisors in terms of guiding customers towards right investments.

Weaknesses in the SWOT analysis of HDFC

 HDFC bank doesn‘t have strong presence in Rural areas, where as ICICI bank its direct
competitor is expanding in rural market.
 HDFC cannot enjoy first mover advantage in rural areas. Rural people are hard core loyals in
terms of banking services.
 HDFC lacks in aggressive marketing strategies like ICICI.
 The bank focuses mostly on high end clients.
 Some of the bank‘s product categories lack in performance and doesn‘t have reach in the market.
 The share prices of HDFC are often fluctuating causing uncertainty for the investors.

Opportunities in the SWOT analysis of HDFC

 HDFC bank has better asset quality parameters over government banks, hence the profit growth
is likely to increase.
 The companies in large and SME are growing at very fast pace. HDFC has good reputation in
terms of maintaining corporate salary accounts.
 HDFC bank has improved it‘s bad debts portfolio and the recovery of bad debts are high when
compared to government banks.
 HDFC has very good opportunities in abroad.
 Greater scope for acquisitions and strategic alliances due to strong financial position.

37
 Threats in the SWOT analysis of HDFC

 HDFC‘s nonperforming assets (NPA) increased from 0.18 % to 0.20%. Though it is a slight
variation it‘s not a good sign for the financial health of the bank.
 The non banking financial companies and new age banks are increasing in India.
 The HDFC is not able to expand its market share as ICICI imposes major threat.
 The government banks are trying to modernize to compete with private banks.
 RBI has opened up to 74% for foreign banks to invest in Indian market.

38
 ICICI BANK

 Incorporation Year: 1994

 Ownership Group: ICICI Group
 Headquarter: Mumbai, Maharashtra, India
 Chairman: M.K. Sharma
 Present Head(MD and CEO): Sandeep Bakhshi
 Chief Financial Officer: Rakesh Jha

One of the oldest private banks standing in our country, ICICI Bank is the leader in the private
sector.ICICI Bank( Industrial Credit and Investment Corporation of India) is a multinational
banking and financial services company.
The bank caters to both corporate and retail customers through a variety of delivery channels and
subsidiaries. These subsidiaries focus on areas like investment banking, life, non-life insurance,
venture capital, and asset management.
Further, it is indeed an international bank with a presence in 19 countries. The bank currently has
a network of 4867 branches and 14367 ATMs across India. In 2016, it saw a revenue of US$10.3
billion and employed 74,096.

Company’s Own Words

Vision: To be the leading provider of financial services in India and a major global bank.

Mission: ICICI will leverage our people, technology, speed and financial capital to
 be the banker of the first choice for our customers by delivering high quality, world-class
products, and services.
 expand the frontiers of our business globally.
39
 play a proactive role in the full realization of India‘s potential.
 maintain a healthy financial profile and diversify our earnings across businesses and geographies.
 maintain high standards of governance and ethics.
 contribute positively to the various countries and markets in which we operate.
 create value for our stakeholders.

Portfolio

ICICI Group companies and its subsidiaries are ICICI Prudential Life Insurance Company, ICICI
Securities, ICICI Lombard General Insurance Company, ICICI Prudential AMC & Trust, ICICI
Venture, ICICI Direct, ICICI Foundation, and Disha Financial Counselling.

Also, it has banking subsidiaries in the UK and Canada. Further, the various products in the
portfolio bag of this bank are Credit cards, consumer banking, corporate banking, finance and
insurance, investment banking, mortgage loans, private banking, wealth management, personal
loans, payment solutions.

In the News
To point out, ICICI bank has etched so many acquisitions in its history that it is out of the scope
of our study to mention them all. However, recently in 2010, it acquired the Bank of Rajasthan
for a staggering ₹ 30 billion.
Moreover, a survey by Brand Equity in 2016 for India‘s most trusted brands of 2016, ranked
ICICI Bank first amongst all the private sector banks.

Likewise, ICICI Foundation won the ‗Best CSR & Sustainability Practices Award for 2016‘ at
the 4th Asia Business Responsibility Summit. On the contrary, ICICI Bank gathered negative
attention for being India‘s one of the leading private banks to be accused of blatant money
laundering through violation of RBI guidelines.

40
 SWOT ANALYSIS OF ICICI BANK

Strengths in the SWOT analysis of ICICI Bank

 ICICI is the second largest bank in terms of total assets and market share
Total assets of ICICI is Rs. 4062.34 Billion and recorded a maximum profit after tax of Rs. 51.51
billion and located in 19 countries.
 One of the major strength of ICICI bank according to financial analysts is its strong and
transparent balance sheet.
 ICICI bank has first mover advantage in many of the banking and financial services. ICICI bank
is the first bank in India to introduce complete mobile banking solutions and jewelry card.
 The bank has PAN India presence of around 2,567 branches and 8003 ATM‘s.
 ICICI bank is the first bank in India to attach life style benefits to banking services for exclusive
purchases and tie-ups with best brands in the industry such as Nakshatra, Asmi, D‘damas etc.
 ICICI bank has the longest working hours and additional services offering at ATM‘s which
attracts customers.
 Marketing and advertising strategies of ICICI have good reach compared to other banks in India
SWOT analysis of ICICI bank.

Weaknesses in the SWOT analysis of ICICI Bank

 Customer support of ICICI section is not performing well in terms of resolving complaints.
 There are lot of consumer complaints filed against ICICI.
 The ICICI bank has the most stringent policies in terms of recovering the debts and loans, and
credit payments. They employ third party agency to handle recovery management.
 There are also complaints of customer assault and abuse while recovering and the credit payment
reminders are sent even before the deadlines which annoys the customers.
 The bank service charges are comparatively higher.
 The employees of ICICI are bank in maximum stress because of the aggressive policies of the
management to win ahead in the race. This may result in less productivity in future years.

41
 Opportunities in the SWOT analysis of ICICI Bank

 Banking sector is expected to grow at a rate of 17% in the next three years.
 The concept of saving in banks and investing in financial products is increasing in rural areas as
more than 62% percentage of India‘s population is still in rural areas.
 As per 2010 data in TOI, the total number b-schools in India are more than 1500. This can ensure
regular supply of trained human power in financial products and banking services.
 Within next four years ICICI bank is planning to open 1500 new branches.
 Small and non performing banks can be acquired by ICICI because of its financial strength.
 ICICI bank is expected to have 20% credit growth in the coming years.
 ICICI bank has the minimum amount of non performing assets.

Threats in the SWOT analysis of ICICI Bank

 RBI allowed foreign banks to invest up to 74% in Indian banking.

 Government sector banks are in urge of modernizing the capacities to ensure the customers
switching to new age banks are minimized.
 HDFC is the major competitor for ICICI, and other upcoming banks like AXIS, HSBC impose a
major threat.
 In rural areas the micro financing groups hold a major share.
 Though customer acquisition is high on one side, the unsatisfied customers are increasing and
make them to switch to other banks.

42
 STATE BANK OF INDIA(S.B.I)

SBI is the number one Bank in India and is regarded as India's largest commercial bank, listed in the
Fortune 500 among Banks world wide and is having more than 9300 branches world wide (approximately
14% of all bank branches) and commands one-fifth of deposits and loans of all scheduled commercial
banks in India. The main Branch Of State Bank Of India is at Panaji, has the unique privilege in Goa to trace
back its roots to two centuries of banking. As there was no formal transition either in Government or in
banking from Portuguese control, for a time the entire territory of Goa was without any commercial banking
facility.
In this backdrop, Panaji Branch then became first Branch of a Bank to start functioning in Goa. The State
Bank Group includes a network of eight banking subsidiaries and several non-banking subsidiaries offering
merchant banking services, fund management, factoring services, primary dealership in government
securities,credit cards and insurance.

The eight banking subsidiaries are:

- State Bank of Bikaner and Jaipur (SBBJ)
- State Bank of Hyderabad (SBH)
- State Bank of India (SBI)
- State Bank of Indore (SBIR)
- State Bank of Mysore (SBM)
- State Bank of Patiala (SBP)
- State Bank of Saurashtra (SBS)
- State Bank of Travancore (SBT)

The origins of State Bank of India date back to 1806 when the Bank of Calcutta (later called the Bank of
Bengal) was established. In 1921, the Bank of Bengal and two other Presidency banks (Bank of Madras and
Bank of Bombay) were amalgamated to form the Imperial Bank of India. In 1955, the controlling interest
in the Imperial Bank of India was acquired by the Reserve Bank of India and the State Bank of India (SBI)
came into existence by an act of Parliament as successor to the Imperial Bank of India.
43
Today, State Bank of India (SBI) has spread its arms around the world and has a network of branches
spanning all time zones. SBI's International Banking Group delivers the full range of cross-border finance
solutions through its four wings - the Domestic division, the Foreign Offices division, the Foreign
Department and the International Services division.

FEATURES OF STATE BANK OF INDIA

- Extended Banking Hours
- Round the Clock ATM and Telebanking
- Attractive Deposit Schemes
- The first Branch in operation in Post Liberation Goa
- Warm unmatched ambience that you will love
- Fully computerized Branch with latest Technological value added services.
- Branch with the largest number of Customers among all Banks
- The number one Bank in Goa
- Part of a group with over a century of Banking tradition.

SWOT analysis of State Bank of India

State Bank of India is the biggest nationalized bank in India and it is completely owned by the government
with its headquarters in Mumbai. The bank is listed in the top 50 banks of the world and has a revenue of
?33 trillion, 278,000 employees, 420 million customers, and around 24,000 branches and 59,000 ATMs.
The bank around 198 offices in 37 countries; 301 correspondents in 72 countries and has been placed at rank
23 on the Fortune 500 list of companies. It is also one of the oldest banks in India in 1806 and was
established right during the age of the British Regime. Here is the SWOT analysis of State Bank of India.

STRENGTHS IN THE SWOT ANALYSIS OF STATE BANK OF INDIA :

Strengths are defined as what each business best in its gamut of operations which can give it an upper hand
over its competitors. The following are the strengths of Strengths are defined as what each business best in
its gamut of operations which can give it an upper hand over its competitors. The following are the strengths
of SBI are:

44
  A network of the bank: The bank around 198 offices in 37 countries; 301 correspondents in 72
countries, 278,000 employees, 420 million customers, and around 24,000 branches and 59,000
ATMs making it the owner of one of the largest banking networks in the world.
 Goodwill: The bank is one of the oldest in the region and has been having a steady inflow of
customers from all income brackets. They have also had good relationships with stakeholders which
have created a goodwill amongst customers.
 Special privileges: Being one of the most popular nationalized banks, the bank has a lot of special
privileges including a special act for itself.
 Strong backing from the government: SBI is one of the first initiatives in the government in the
banking sector and since then has always been its top priority. The bank is also a partner in the e-
governance project of the government.
 A wide variety of services: The State Bank of India has a wide variety of services like investment
banking, online banking, stockbroking, rural banking and loans amongst others.
 Strong brand: The bank has a very strong image amongst customers, visibility and there have been
numerous instances of strong word of mouth advertising about the bank.

WEAKNESSES IN THE SWOT ANALYSIS OF STATE BANK OF INDIA :

Weaknesses are used to refer to areas where the business or the brand needs improvement. Some of the key
weaknesses of State Bank of India are:
 Limited market share growth: Earlier when banking was not privatized SBI had undoubted
leadership. But with the privatization of banking, there has been a surge in the competition which
has resulted in a drop in market share.
 Bad debts: State Bank of India has been facing a problem of being unable to resolve bad debts which
have resulted from the non-repayment of loans.
 Huge size: After the merger with five of its associate banks, SBI has become the largest banker in
India and the network in huge with branches even in remote locations. This huge size can create
serious challenges in management.
 Loan issues: There have been issues in loan repayment, bad loan, non-performing assets and loan
restructuring especially in the case of the associate banks.
 Customer service: Due to many salary accounts and government accounts with SBI, the branches are
overpopulated creating too much dissatisfaction and frustration for users. Thur customer service is
known to be bad from SBI.

45
OPPORTUNITIES IN THE SWOT ANALYSIS OF STATE BANK OF INDIA :
Opportunities refer to those avenues in the environment that surrounds the business on which it can
capitalize to increase its returns. Some of the opportunities include:

 Restructuring: The banking industry in India was restructured by the government helping the sector
to cope up with the challenges of the new financial environment.
 Growing income brackets: There is a steady growth of per capita income in India which in turn
indicates a growing economy. These signals are positive for the growth of the banking business.
 Increase in borrowing capacity: The society has undergone a change in the structure of double
income households with high disposable income. This has created a resultant change which is an
increase in borrowing capacity of the customer.
 Increased use of technology: The urban Indian is very comfortable with all latest technologies such
as mobile, internet and computers. This shows a lot of promise for services such as online banking.
This is also backed by a growth in internet shopping behavior which makes credit cards a must.
 Digitisation: Banks have become more relevant with digitization and demonetization and this will
see an increase in the number of bank accounts as well as for credit card usage.

THREATS IN THE SWOT ANALYSIS OF STATE BANK OF INDIA :

Threats are those factors in the environment which can be detrimental to the growth of the business. Some
of the threats include:

 Bad Loans and Non-performing assets: India has a history of bad loans and amounts to a total of Rs
10 lakh crores. Non-performing assets in India are estimated at 10.2% by March 2018, from 9.6% in
March 2017 in comparison to the statistics last year September 2016, gross NPAs were at 9.2%.
 Cyber threats: There has been a lot of issues lately on information theft and security. These cyber
threats from a headache for the banks which can affect the image of the bank if not managed well.

46
 POLICY OF COMMERCIAL BANKS

The major business of banking company is to grant loans and advances to traders as well as
commercial bank lending. While lending loans or advances the banks usually keep such
securities and assets as a supports so that lending may be safe and secured. Suppose, any
particular state is hit by disasters but the bank shall get advantages from the lending to another
states units. Thus, the effect on the entire business of banking is reduced. So the banks follow
certain principles to minimize the risk. Following are the important areas to be taken care while
lending:

1. Safety
2. Liquidity
3. Profitability
4. Purpose of loan
5. Principle of diversification of risks

Safety:

Normally the bank uses the money of depositors in granting loans and advances. Because of that
while granting loans the banker should think about the safety of depositor‘s money. The purpose
behind the safety is to see the financial position of the borrower, whether he can pay the debt as
well as interest easily.

Liquidity:

It is a legal duty of a banker to pay the total deposited money to the depositor on demand. So the
banker has to keep certain percent cash of the total deposits in hand. Moreover the bank grants
loan. It is also for the addition of short term or productive capital. Such type of lending is
recovered on demand.

47
Profitability:

Commercial banks are profit earning institutes; nationalized banks are also not an exception.
They should have planning of deposits in a profitability way to pay more interest to the
depositors and more salary to the employees. Before taking any decision the banker should make
sure that it is profitable.

Purpose of loan:

Banks never lend or advance for any type of purpose that will lead to loose of money. The banks
grant loans and advances for the safety of its wealth, and assurance of recovery of loan and the
bank lends only for productive purposes. Before giving a loan the bank has to make sure that
whether the purpose for which the loan has given is productive or not.

Principle of diversification of risks:

A bank should be very careful while lending loans because if the bank lends to a non credit
worthy customer, it will affect the survival of the bank. To diversify the lending risk they should
lend loans to customers from different sectors such as agriculture, housing, educational, etc.
Concentrating on a particular set of customers will adversely affect the bank.

REGULATING AUTHORITY OF COMMERCIAL BANKS IN INDIA

India has both private sector banks (which include branches and subsidiaries of foreign banks)
and public-sector banks (ie, banks in which the government directly or indirectly holds
ownership interest). Banks in India can primarily be classified as scheduled commercial banks
(ie, commercial banks performing all banking functions); cooperative banks (set up by
cooperative societies for providing financing to small borrowers); and
regional rural banks (RRBs) (for providing credit to rural and agricultural areas).
Recently, the RBI has also introduced specialised banks such as payments banks and small
finance banks that perform only some banking functions.

48
The key statutes and regulations that govern the banking industry in India and particularly
scheduled commercial banks are as follows:

RBI Act

The RBI Act was enacted to establish and set out functions of the RBI. It grants the RBI powers
to regulate the monetary policy of India and lays down the constitution, incorporation, capital,
management, business and functions of the RBI.

BR Act

The BR Act provides a framework for supervision and regulation of all banks. It also gives the
RBI the power to grant licences to banks and regulate their business operation.

FEMA

FEMA is the primary exchange control legislation in India. FEMA and the rules made thereunder
regulate cross-border activities of banks. These are administered by the RBI.

Other key statutes

The other key statutes include:

the Negotiable Instruments Act 1881;
the Recovery of Debts Due to Banks and Financial Institutions Act 1993;
the Bankers Books Evidence Act 1891;
the Payment and Settlement Systems Act 2007;
the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest
Act 2002; and
the Banking Ombudsman Scheme 2006.
Public sector banks are regulated by the BR Act and the statute pursuant to which they have been
nationalised and constituted. These include:banks constituted under the Banking Companies
(Acquisition and Transfer of Undertakings) Act 1970 or the Banking Companies (Acquisition
and Transfer of Undertaking Act) 1980; and the State Bank of India and subsidiaries and
affiliates of the State Bank of India constituted and regulated by the State Bank of India Act 1955
and the State Bank of India (Subsidiary Banks) Act, 1959 respectively.

49
 REVIEW OF LITERATURE
N. Kavitha (2012) in her paper used various kinds of ratios to study the asset and liability
management in as many as 56 banks from various categories. She found that the group of
SBI and its associates performed better as compared to private sector banks and nationalized
banks group. It is witnessed that borrowing of private banks group have the least variability in
terms of measures of dispersion.

Kanhaiya Singh (2013) in his paper opined that there are serious attempts by banks to
minimize the asset liability mismatch since the implementation of RBI guidelines in 1997.
Banks have made adequate follow up and monitoring arrangements at different levels.
Individual banks have also fixed maximum tolerance limits of the mismatch for close
monitoring. The study suggests that there is substantial scope for banks to improve profitability
by monitoring and reducing short term liquidity. One of the observations of the study is that to
fill the short term liquidity gap, banks resort to market borrowings at higher rate of interest
which reduces interest margin and profitability of banks. Banks have greater scope to manage
interest rate risk through various techniques.

The paper of M R Das (2013) attempts to investigate whether there exist any maturity
mismatch between assets and liabilities of public sector banks and seeks to measure the
extent of concentration of assets (loans, advances and investment securities) and liabilities
(deposit and borrowing) in various maturity buckets. There is maturity mismatch in assets
and liabilities of public sector banks basically because of differences in portfolio selection
by different banks. Moreover, there may be lack of awareness across the branches,
particularly those in the remote rural areas as they do not know the implications of the asset
liability mismatch. The author suggested that by educating the branch level operators about
the subjects of asset liability mismatch, reviewing the maturity wise position of assets and
liabilities at various levels and by computerizing and networking the branches, assets
liabilities mismatch can be detected and problem can be minimized.

Abhiman Das and Saibal Ghosh's (2004), study conducted "to know the performance of bank
CEOs in the era of corporate governance, tried to identify the adaptability characteristics of
CEOs in terms of technology. The study also states that CEOs of poorly performing banks are
likely to face higher turnover than CEOs of well performing ones".

50
T.Uma Maheshwari Rao and L Hymavathi {2005) stated the importance of internet usage for
banking worldwide and its relevance in Indian scenario To compete the present banking business
the banks were transforming themselves and conducting their business electronically. This
transformation leads to normal banking to electronic banking, enabled customers to transact
online, while saving on various factors. Normal Banking activities still prevails in developing
countries like India.

Bhatia (2007), found that the amount of NPAs has been seen on a continues increase and had
reached an alarming 6 per cent in 2006 which was much higher than 4 per cent benchmark of
financial indicators.

Guillen and Tschoegi (2008), Traditional banks accepted the change in their functioning in
order to be more receptive to the worldwide market demand for new financial product in new
competitive market.

"Indian Bank's Association (IBA) , conducted an all India survey to rate the customer service
provided by all the 27 public sector banks aimed at fostering healthy competitive spirit amongst
banks to improve upon their customer service.
The aim of this study is to ensure the quality of service as perceived by the customers of public
sector banks and identify areas where the banks need to improve for achieving higher levels of
customer satisfaction. The study has been a massive one covering about 2500 bank branches and
about 85,000 customers (respondents) at the all India level. Sample branches in all categories
have been randomly chosen by IBA in proportion to the business/the number of branches in
a particular category. In addition to bank rating at regional level and all India level, the survey
results will also be used for rating each region on the basis of the customer service of all sample
branches of the banks' operating in the region".

51
 OBJECTIVE OF THE STUDY

1.)To study if the commercial bank play a major role in development of country.
2.)To study if the services provided on online banking platforms by commercial bank are upto
work.
3.)To study whether commercial banks help in economic growth.
4.)To study whether people prefer opening accounts in public banks and private banks.
5.)To study if peoples queries are responded by the commercial bank.

NEED OF THE STUDY

1.) To find out the areas of activities of commercial banks in India.

2.) To find the popularity of commercial banks in India amongst people.
3.) To find the level of trust that the people have on commercial bank and its services.
4.)To find out if people prefer to open which type of account.
5.)To find out the reasons why people prefer opening an account in a commercial bank.

52
 RESEARCH METHODOLOGY
Data Collection and Methodology and Survey Details-
Researcher forwarded Google Forms to 100 people and asked them to fill their responses in the form.

Research Type:
This research is casual research design.
Casual research also called explanatory research is the investigation into cause-and –effect relationships.
To determine casuality ,it is important to observe variation in the variable assumed to cause the change in
the other variables and then measure the changes in the other variables.

In this research design, cause is to find commercial banks and its impact on economy.

Research Method:
Survey through Google Forms

Research Sample Size:

100 Random People.

53
 HYPOTHESIS OF THE STUDY

Null Hypothesis(H0):

 Commercial Banking in India does not play a major role in development of our
country.

 The services provided by the commercial bank are not upto the mark,there should be
few changes in the commercial banking services.

 Commercial Banking in India does not help in the economic growth of our country.

 Customers of commercial bank do not feel the need for investment policy.

Alternative Hypothesis:

 Commercial Banking In India Plays a major role in development of our country.

 Customers feel that the services provided by the Commercial Bank in India are upto
the mark.

 Commercial Banking In India helps in the economic growth of our country.

 Customers of commercial Banks in India feel the need for investment policy.

54
 Data Interpretation
1.AGE

FINDINGS:

 It was found that the use of banking services has started evolving and has been used by the all the
age group starting from 18 years .
This Form was circulated and 53% of age 18-20 have filled it and then followed by it 28% of age
group 21-23 have filled it and so on.

55
2. In which bank do you have your account?

FINDINGS:

 It was found that 71% of the people have their bank accounts in PRIVATE BANK whereas 40% of
the people have their bank accounts in PUBLIC BANK.
People prefer opening their bank accounts in private banks because these banks provide lot of
services compared to the public banks.

3.) Are You satisfied with the number of services offered on your online banking

platforms?

56
FINDINGS:

 It was observed that 90% of the people are satisfied with the number of services provided on our
online banking platforms by the respective banks. Whereas there are 10% of the people who are not
satisfied with these services.

4. Does a commercial bank play a major role in growth and development of the
country?

FINDINGS:

 It was observed that 99 % of the people agree that commercial bank plays a major role in growth and
development of the country whereas 1% of the survey does not agree for the same.

It is because of the commercial banks that the economy has been changing and also commercial
banks plays a major role in our society.

57
5. How quick is your commercial bank at responding your queries /problems?

FINDINGS:

 It was observed that 77% Of the people find that the commercial banks provides good response
towards the queries /problems,whereas 17% Of the people find that the commercial banks provide
excellent responses towards the queries/problems.

Whereas 3% of the people feel that commercial banks provide bad and poor responses towards the
queries/problems.

58
6. What type of account would you prefer opening?

FINDINGS:

 87% Of the people prefer opening a savings acoount in the commercial banks, whereas 26% of the
people prefer opening a fixed deposit and current account.

7.).Do you feel the need for investment policy?

FINDINGS:

 According to the survey 79% of the people feel that there is a need for investment policy.Whereas 21% of the
people feel that there isn‘t a need for the investment policy.

59
8.)How do you know about the existing and new policies and services offered by the
bank?Through?

FINDINGS:

 According to the survey,40%Of the people come to know about the existing and new policies and
services offered by the bank through advertisement, whereas 27% of the people come to know about
it by the staff at the branch of the commercial bank and 17% of the people come to know through the
various branch managers who keep their clients updated about the various new policies and services
offered by the bank.

60
9.)In which areas of commercial bank you need improvement?

FINDINGS:

 According to the survey the people feel that there should be some improvement done by the various
commercial banks .So 47% of the people feel that the commercial banks should improve the interest
rates whereas 43% of the people feel that the banking schemes need to be improved whereas 31% Of
the people want some improvement in the E-banking services offered by their banks.Also 30% of the
people want some changes in the banking services offered at the branch as well as online.Also few
people i.e 20% of the people want some changes in the behaviour of the staff at the branch.

10. .You open an account in commercial bank for what reasons?

61
FINDINGS:

 According to the survey people tend to open an account in a commercial bank for various
reasons.Out of which 55% of the people open an account for the quick services provided by the
commercial bank.Whereas 43% of the people open for investment purpose and they get good interest
on it.Also 39% of the people open an account in a commercial bank as they trust the bank for their
legacy and also for its good reputation.Whereas 17% Of the people choose the bank for the high
profile of the respective commercial Bank.

11. Would you prefer Flexible /Fixed Interest Rate?

62
FINDINGS:

 According to survey people feel that flexible interest rate is much better than fixed interest rate.So
64% of the people feel that flexible interest rate is much more preferable also 36% of the people
prefer getting a fixed interest rate being offered by their commercial bank.

12. Do You Carry on The Banking activities by going to the branch/through internet
banking?

FINDINGS:

 According to the Survey 73% of the people prefer carrying out their banking facilities through
internet banking after it has been evolved and made things easier for everyone .Also 27% of the
people still like to carry on their banking activities at the Branch.

63
 TESTING OF HYPOTHESIS

 The First Null Hypothesis was “ that the commercial bank plays a major and important role
in the development of our country.

According to the study most of the people were in the favour of that commercial banking in india
plays a major role in development of our country hence alternative hypothesis is accepted and null
hypothesis‖ is rejected.

 The Second Null Hypothesis was ― that the customers in India feel that the services provided
by commercial banks of India are Upto the Mark.
According to the survey most of the people i.e 90% of the people were in the favour that the services
provided by the commercial banks in India are upto the mark hence alternative hypothesis is
accepted and null hypothesis‖ is rejected.

 The Third Null Hypothesis was “ that the Commercial Banking in India helps in the
economic growth of our country .
According to the study most of the people were in the favour of that commercial banking In india
helps in the economic growth of our country hence alternative hypothesis is accepted and null
hypothesis‖ is rejected.

 The Fourth Null Hypothesis was “ that the customers of Commercial Banking In India feel
the need of Investment policy.
So according to the survey most of the people i.e 79% of the peopke were in the favour that
customers of commercial banking in India feel the need for investment policy hence alternative
hypothesis is accepted and null hypothesis‖ is rejected.

64
 FUTURE PROSPECTS OF COMMERCIAL BANKING:

Indian banking has developed. But, its perfection is yet to be seen. There still remain many tasks to be
fulfilled. Historically, profitability from lending activities has been cyclic and dependent on the needs and
strengths of loan customers. In recent history, investors have demanded a more stable revenue stream and
banks have therefore placed more emphasis on transaction fees, primarily loan fees but also including
service charges on array of deposit activities and ancillary services (international banking, foreign exchange,
insurance, investments, wire transfers, etc). However, lending activities still provides and in future, too will
provide bulk of a Commercial bank's income.

As part of the financial services industry, commercial banking are worldwide attempting to compete better
by improving core operations and differentiating the customer experience. The banking sector has been
consolidating; it is worth noting that far more people are employed in the Commercial banking sector than
any other part of the financial services industry. Jobs in banking can be exciting and offer excellent
opportunities to learn about business, interact with people and build up a clientele. In future, if we are well-
prepared and enthusiastic about entering the field, we are likely to find a wide variety of opportunities open
to us. Thus, we can predict the future of Commercial bank, to be spreaded world wide. They will be
providing an unprecedented level of service to a wide range of business clients, from small business,
through to multi-national corporate clients. In future, Commercial Bank will come up with more innovative
and experienced depth knowledge of specific sectors, to meet all of our banking requirements.

65
 RECOMMENDATIONS
Banking in India has made a remarkable progress in its growth and expansion, as well as business with
social perspective in the fulfillment of national objectives. Indian Commercial banking has developed, but,
its perfection is yet to be seen. There still remains many tasks to be fulfilled.
1. Still there are villages left without banking facilities, so many more rural banks branches need to be
opened.
2. Quality of Commercial banking facilities should be improved to the atmost satisfaction of the customer.
3. Operational costs of Commercial banks should be reduced to the minimum profitability and working
results must be maximized.
4. Banking staff should be adequately trained.
5. More lending should be made in favour of priority sectors.
6. Malpractices, fraud, corruption and red-tapism must be done away with.
7. More attention should be paid to the development of exports.
8. Nationalised banks should give more technical assistance to the small industrialists.
9. Interest rates on deposits should be enhanced reasonably up to 12-13 % so that savers get their legitimate
returns.
10. The high level of overdues of banks have become a matter of concern.
So, banks should make all possible efforts to reduce their overdues. This all requires that no loans should be
given without proper identification and address of the deserving rural poor.
Thus, in order that the association of banks with industry is more fruitful and rewarding, many innovations
have to be planned and introduced systematically and greater degree of managerial competence will have to
be developed in Commercial banking sector.

66
 CONCLUSION

Friends, as we know, over five decades the Commercial banks in India achieved astounding
success by enormously spreading banking services in far-flung and unbanked areas of the
country through their massive branch network are garnering burgeoning amount of savings
which represent half of the GDP of the country. A major portion of these resources
had been deployed to meet the needs of priority sectors which are critical to the economy.

However, it is crucial for the commercial banking industry to meet the increasingly complex
savings and financing needs of the economy by offering a wider and flexible range of
financial products tailored for all types of customers. In recent years, it is being felt widely
that the commercial banking system has not actually grown as sound & vibrant as it needed
to be. Strong capital positions and balance sheets places the Commercial banks in a better
position to deal with and absorb the economic shocks. These Banks need to face competition
without diluting the operating standards.

In banking, there is no such thing as "one size fits all." But today's commercial banks are
more diverse than ever. You'll find a tremendous range of opportunities in commercial
banking, starting at the branch level because commercial bankers, now are highly
experienced in working with businesses to develop the right financial package to meet your
unique business needs. The face of Commercial banking is changing rapidly. Competition is
going to be tough Banks should avail of the existing and upcoming opportunities as well as
address the above-discussed issues if they have to succeed, not just survive, in the changing
environment.

Thus, Commercial Banks occupy a dominant place in the money market, they are like a
reservoir into which flow the savings, the idle surplus, money of households and from which
loans are given on interest to businessmen & others who need them for investment or
productive uses.

67
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6. https://www.marketing91.com/swot-analysis-icici-bank/
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 ANNEXURE:QUESTIONNAIRE
Name:_______________________________

Email Id:_____________________________

1.Age group:
 18-20
 21-23
 23-25
 Above 25

2.In which bank do you have your account?

 Private
 Public

3.Are You satisfied with the number of services offered on your online banking platforms?
 Yes
 No

4.Does a commercial bank play a major role in growth and development of the country?
 Yes
 No

5. How quick is your commercial bank at responding your queries /problems?

 Poor
 Bad
 Good
 Excellent

6.What type of account would you prefer opening?

 Fixed Deposit
 Current
 Savings

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7.Do you feel the need for investment policy?
 Yes
 No

8.How do you know about the existing and new policies and services offered by the bank?Through?
 Branch Manager
 Advertisement
 Staff at the branch
 Others

9.In which areas of commercial bank you need improvement?

 Interest Rate
 Services
 Behaviour of the Staff
 Schemes
 E banking
 Others

10.You open an account in commercial bank for what reasons?

 High Profile
 Quick Services
 Trust
 Investments
 Others

11.Would you prefer Flexible /Fixed Interest Rate?

 Flexible Interest Rate
 Fixed Interest Rate

12.Do You Carry on The Banking activities by going to the branch/through internet banking?
 At branch
 Internet Banking

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