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“Comparative study of current account of ICICI with SBI,OBC,ING Vysya, Standard Chartered and survey of ICICI Bank presence in the market”
SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENT OF BACHELOR OF BUSINESS ADMINISTRATION (BBA) GURU JAMBHESHWAR UNIVERSITY, HISAR.
TRAINING SUPERVISOR MR. MANORANJAN HOTA UNIT MANAGER
SUBMITTED BY:VIKRAM SINGH ENROLLMENT NO. 05511242064
GURU JAMBHESHWAR UNIVERSITY HISAR
The success of my research report would not hint at any one individual, but it was a consolidated effort on the part of all who contributed to this report.
I express my sincere thanks to Mr. Manoranjan Hota, Unit Manager for providing me an opportunity to undergo training at ICICI BANK. I am also grateful to him for giving me guidance and support in the preparation of my summer project. It has been a wonderful learning experience for me.
TOPIC: - Comparative study of current account of ICICI with SBI, OBC, ING Vysya, Standard Chartered and survey of ICICI Bank presence in the market. I have done my summer internship in ICICI BANK. My whole summer internship was divided into two sections.
In the first section of my summer internship I was into the hard-core selling of current accounts and in the second section I have to analyze the behavior of the people who are opening an account with ICICI. The following project starts with an idea regarding the banking sector and also the profile of ICICI. It also informs how an account can be made with the ICICI. The project contains the comparison chart of ICICI with other banks like OBC, State Bank of India and ING Vysya Bank, with respect to current accounts on the basis of 7 p’s of service marketing. The comparison is followed by the survey and its analysis and at the end the recommendations which could help ICICI to be more effective in the field of banking sector.
Chartered Comparative Analysis Limitation 25-36 37-61 62-63 64 65-67 68 6-24 PAGE NO. BIBLIOGRAPHY INTRODUCTION OF BANKS 4 .CONTENT TOPIC 1. 1-5 3. COMPANY PROFILE 4. RESEARCH METHODOLOGY Objective of the Research Project Activity Sequence Chart Positioning Comparative Study of Current Account o ICICI o SBI o OBC o ING Vysya o Std. CONCLUSION 6. ANNEXURES Questionnaire 8. INTRODUCTION Banking sector in India 2. RECOMMENDATION 7. DATA ANALYSIS & INTERPRETATION 5.
Business of Banking:Banking in tradition sense is the business of accepting deposits of money from public for the purpose of lending and investment.Purpose:The Banking has undergone a sea change in the last couple decades and would certainly see more changes with modern information technology making its way in the field of life. These deposits can have a distinct feature of being withdrawal by cheques. In addition to this Banks also offer various other financial services also with include:*Providing loans *Collection of cheques. The major regulation and acts that govern Banking business are:*Banking regulation Act. Room service. All these changes have helped banking in improving delivery channels for its services and products Phone Banking. Cash management is the example of these new products. 5 . Which no other financial institution can offer. Bills of exchange *Safe deposit lockers *Investment services *Issuing letters of credit and letter of guarantee The business of Banking is highly regulated since Banks deal with money offered to them by the public and ensuring the safety of this public money in one of the prime responsibility of any bank. In spite of these the core banking remains the same. The ever increasing customer – expectations and the completion have compelled bank to relook at its products and many innovative products like two – in – one deposit are now offered by banks ever in India. That is why Banks are expected to be prudent in their lending and investment activities.
6 . saving and saving and loan associations. placing loans and dealing with negotiable instruments. Lending is risk taking. “he cashed a check at the bank”. Three major types of banks are commercial. or buying housing property. However Bank does not finance any speculative activity. *Negotiable Instrument Act. Having prudent norm for lending should cover the risk. *Foreign Exchange Regulation (Amendment) Act. • Financial institution servicing saving and checking accounts. Currently the term bank is generally understood an institution that holds a banking license. Banking licenses are granted by financial supervision authorities and provide rights to conduct more fun. Bank lend money either for productive purpose to the individual firm corporate etc. education and other consumer durables and for investment purpose to individual and others. cars. FEW IMPORATANT FACTS RELATED TO BANKING • Depository financial institution: a financial institution that accepts deposits and channels the money into lending activities. The deposits of Banks are also assured of safety of their money by deploying some percentage of deposits in statutory reserves like SLR and CRR.*Reserve bank of India Act. “that bank holds the mortgage on my home” • The essential function of a bank is to provide service related to the storing of value and the extending of credit. and continues in the presence where a bank is a financial institution that provides banking and other financial services. The evolution of banking dates back to the earliest writing. All are subject to federal and local regulations.
credit cards and gold? The gold standard belongs to history but even today in many rich people in different parts of the world rather keep some of their wealth in the form of gold than in official. or which had been compulsorily deposited to the credit of the king. inflation-prone currencies. • The Invention of Banking and Coinage: The invention of banking preceded that of coinage.U. In Egypt too the centralization of harvests in state warehouses also led to the development of a system of banking. usually a corporation. the man or woman in the street would agree on coins and banknotes. soon became used as a more general method of payment of debts to other persons including tax gatherers. Banking originated in Ancient Mesopotamia where the royal places and temples provided secure places for the safe-keeping of grain and other commodities. Receipts came to be used for transfers not only to the original depositors but also to third parties. Written orders for the withdrawal of separate lots of grain by owners whose crops had been deposited there for safety and convenience. which does most or all of the following: receives. • Money: At first sight the answer to this question seems obvious. and collects checks.O. makes loans.s (I owe you). but would they accept them from any country? What about cheques? They would probably be less willing to accept them than their own country’s coins and notes but bank money (i. chartered by a state or federal government. Eventually private houses in Mesopotamia also got involved in these banking operations and laws regulating them were included in the code of Hammurabi. from an aesthetic point of view. What about I. a form of money with virtually no tangible properties whatsoever – electronic money – seems set to gain rapidly in popularity. In complete contrast. anything for which you can write a cheques) actually accounts for by far the greatest proportion by value of the total supply of money. priests 7 . pays interest on them. invests in securities.e.• An organization. and its resistance to corrosion are two of the properties which led to its use for monetary transaction for thousands of years. The attractiveness of gold.
The banking industry. Bank also needs to learn the technique of Risk Management implying efficiency in debt recovery and restructuring of weak banks. treasury market. Nationalized Bank and SBI and its subsidiaries from the heart of the Indian Banking Sector. particularly in connection with military activities. The economic reforms initiated in the aftermath of the 1991 crisis have blown winds of change in every segment of the economy. Indus land Bank. At this moment of time new private sector Banks like ICICI Bank. private and foreign are the cornerstones of the changing banking industry. The Indian banking sector has a massive geographical reach and the credit deposit (48%) figures speak volumes of the inherent strength of this industry. Over 8 . They have used technology to provide quality service through lower cost delivery mechanism. It performs central Banking functions and controls all the other Banks in the country. On the whole the Banking sector appears to have a good future ahead given the current boom in the Indian economy and the overall improvement in the efficiency of the Banks in recent times. housing finance.and traders. and foreign Banks have made services inroads in to highly profitable end of banking business. Banking Sector in India The Banking system plays a crucial role in nation’s economy. Banks are now foraying into net banking. The Reserve Bank of India (RBI) is the central Bank and monetary authority of the country. until recently the lack of competitiveness vis-à-vis global standards low technological level in operations. one of the supporting pre cursors to any rapidly growing economy has undergone a period of considerable change since the 1990’s. Global Trust Bank. securities and customer finance. Merchant Banking and insurance. Health of banking industry is one of the most important pre conditions for sustained economy progress of any country. The three sectors of the banking industry namely public. Even after the introduction of coinage these Egyptian grain banks served to reduce the need of precious metals which tended to be reserved for foreign purchase. HDFC Bank.
high NPAs and low levels of motivation had shackled the performance of the banking industry.satisfying. 9 . *Pays interest on the money deposited with it-lends or invests money. *Repays the amount on demand-Allow the money deposited to withdrawn by cheques and draft. Banks:*Accepts deposits of money from the public.
“A research design is the arrangement of condition for collection and analysis of data in a manner that aims to combine Relevance to the research purpose with economy in procedure”. Where will the study be carried out? 4. What type of data is required? 5. How will data be analyzed? 10 . What will be the sample design? 7. What is study being made? 3. Design decision happens. 1. 2) Customer satisfactory for ICICI Bank along with different Bank. 8. METHODOLOGY Research Design:A research design is the specification of methods and procedure for acquiring the information needed to structure or to solve problems.RESEARCH METHODOLOGY OBJECTIVE OF THE STUDY Primary Objective:To search the prospective customer for ICICI Bank. Technique of data collection. Where can the required data be found? 6. What is study about? 2. Secondary Objective:1) To know the service polices about the current account of different Bank. and analyzing the current account of different Bank. It is the overall operation pattern or framework of the project that stipulates what information is to be collected from which source. and be what procedures.
Standard Chartered and survey of ICICI Bank presence in the market was divided in to two PARTS:1. research approaches. sampling plan and contract method. 2. Designing the research plan calls for the decision on data source.9. Who is the competitor of ICICI? RESEARCH METHODOLOGY Methodology that was adopted to work on the assign project of Comparative study of current account of ICICI with SBI. 11 . Defining the problem and research objective:The first step calls to define the problem and agree on the research objective. 2. Defining the problem and research objective. Developing a research plan. How to increase the market share of ICICI? 11. How can the customer can be persuaded for opening current with ICICI? 10.” The research to be done on this project was exploratory to gather the primary data to shed light on the real nature of the problem and suggest possible new ideas. research instrument. 1. ING Vysya. An old adage say’s “ A problem well defined is half solved. Developing a research plan:The stages call for developing the most efficient plan for gathering the needed information. OBC.
on the other hand.The decisions were taken on the basis of following attributes:Data Source Research approaches Research instrument Sampling plan Contract method >>Primary data >>Survey >>Questionnaire >>Sample size >>Direct interview Tacking the above attributes in to consider the following decision is to be taken for research plan. The Secondary data. are those which have already been collected by someone else and which have already been passed away through then statistical process. e by Questionnaire or through Observations INSTRUMENT USED In questionnaire method a set of redesigned question are prepared. The Primary data are those data which are collected afresh and for the fist time and thus happen to be original in character. the data is collected be the researcher be directly asking question to the respondent. METHOD OF COLLECTION OF DATA While deciding the method of data collection to be used for the study. the questionnaire are of many kinds such as Structured. The researcher should have to decide which sort of data he would be his study and accordingly have to select one or the other method of data collection i. Nondisguised Questioning Nonstructured. *data sourcePrimary data and information was collected form various Business entities of NOIDA *Research ApproachesThe survey s conduct through the direct interview. Nondisguised Questioning 12 . the research should keep in mind two types of data Primary data and Secondary data. Each and every day interaction was essential it was involved interaction with bank managers and chief accounts of various entities.
answer are in the respondent’s own words. Unwillingness of Respondent to provide Information. 2) It is free from the basis of the interview. Disguised Questioning Each of the types have advantages and disadvantages. 3) Respondents have adequate time to give well through out answers. Disguised Questioning Structured.Nonstructureed. 5) Large samples can be made use of and the results can be made more dependable and reliable 13 . The mints claimed on behalf of this method are as follows:1) There is low even when sample size is large. The data which have been collocated is primary data and the method of data collection used in this project is Questionnaire method Here questionnaire method had been for the comparative study of current account of different banks and also for the knowing the market potential of ICICI or you may say that customer survey of ICICI. Questionnaire method has used for knowing the grievances and to search prospective customer for ICICI. can also be reached conveniently. 4) Respondents. Inability of respondent to provide information. The respondent may furnish report quite different from the fact. who are not easily approachable. The overall advantages of Questionnaire method are. It’s Versatility It’s cheaper ness then Observation method The overall disadvantages of questionnaire method are.
Project Activity Sequence Chart START Getting deeper Knowledge of the Product / service and the Competitors Marketing of the product / Service Designing the Questionnaire Synopsis Preparation Constructing structured survey by giving Presentation of bank to Different prospect and Doing personal selling to them Compile and analyze collected data Gather the idea of type of question by the respondents Prepare final report 14 .
Hence the service design. but for service all the elements of the service marketing mix reinforce the chosen position. 15 . Responsiveness: The organization this is willing to respond to the customer desire for prompt. POSITION OF SERVICE ON FIVE DIMENSIONS Reliability: This dimension of position works up to the time reliability can be maintain as a distinguishing characteristics among set of competitors. Herein the standards are based on customer requirement for responsiveness and customer perceptions of speed and promptness.g. rather than on company definitions. banking services. specification and position and its relationship to service design elements. However in many cases reliability is not a good distinguishing feature even though it is a critically important quality dimensions e.POSITIONING The way the service is designed will impact the image of the service in the mind of the customer. telecommunication or airlines. In the similar way the image or the position that the organization chooses will dictate to some extent the essential feature and design of the of the service process. “willing to help service “choose to focus on responsive in their positioning. reliability is the basis requirement that they must meet for reaming in the race. There is a tendency to assume that market position are established mainly through advertising but this may be true for the products of the consumer package good.
particularly the physical environment. may be the focus of a positioning strategy. Assurance The third quality dimension. Individualized attentions. Tangible are also the common positioning element for service like resorts. When companies pursue a course directed at mass customization or segment of one positioning themselves on the empathy dimension. associated with a service organization are so highly visible to customer. which builds on the customer’s desire for caring. it is important that they be designed consistent with the positioning strategy. tangibles. It is critically important in industries like healthcare and insurance. assurance is used for positioning in industries where trust and confidence in the service provider are particularly critical. Tangibles The final quality dimensions. Empathy Firms can also position themselves on empathy. whatever it is. 16 . Because tangibles. hotels and restaurants.
17 . By gathering information from a number of customers. One can than develop marketing strategies that trigger consumer interest. one can identify the most frequent stimuli that space an interest in a product category.CUSTOMER’S BUYING BEHAVOUR Five stage model of the customer buying process: Problems Recognition ↓ Information Search ↓ Evaluation of Alternative ↓ Purchase decision ↓ Post Purchase Behaviour Problem Recognition One should be identify the circumstance that a particular need.
One can distinguish between two levels of arousal.e. At the next level. and Acquaintances. Dealers. i. the person mat enter an active information search. Commercial Sources: Advertising. Examining. Some basis concept will help to understand consumer evaluation processes. There are several decision evaluation process. Consumer rating and organization. Public Sources: Mass Media. Total Set → Awareness Set → Consideration Set → Choice Set → Decision Evaluation of Alternatives There is no single process used by all customers or by one customer in all buying situations. they see the consumer as forming judgment largely on a conscious and rational basis. the consumer is trying to satisfy a need. Sales persons. looking for reading material. At this level a person simply becomes more respective to information about a product. Consumer information source fall into few groups. Packaging. Personal source: Family. The wilder search state is called heightened attention. Display. Information Search An aroused consumer will be inclined to search for more information. and using the product. friend. Experiential Source: Handing. Second. Third the consumers see each product as a bundle of attributes with varying abilities for delivering the benefits sough to satisfy this need. phoning friends and visitors stores to learn about the product. the consumer is looking for certain benefits from the product solution. neighbors. firs. 18 .
per. 50/-per Instrument Rs. Above that Rs. Rs. 300000 Platinum Rs. 50/. 30/-per Instrument Free up to Rs. Free Free Free Free up to Rs. Rs.Rs. Rs. Purchase Decision In the evaluation stage.50/. Rs. 30/.50/. 0. 1/. two factors can intervene between the purchase intention and the purchase decision.12. 100000 Free Gold Plus Rs. Rs 1000. 30/-per Instrument.per Instrument DD Payable at Category A Location Rs. 50000 Gold Rs. 10. 1/-per. The consumer may also form an intention to the most preferred brand. 1000. 1/.per Rs.50/per Rs. 30/per Instrument Free up to Rs. 30/per Instrument 19 . 0. min.per Rs. Rs 1000. Rs. Rs. 0.per Rs.0. 0.5lack per day.per Rs.60/per Rs.per Instrument Rs. 1000/Min. 500000 Free Free Free Rs. 6lac per day. 1000. 1000/Min. 1. min.50/per Rs. Above that Rs. 30/-per Instrument Free up to Rs. min. POLICIES OF CURRENT ACCOUNT OF I CICI BANK Quarterly Standard Classic Average Balance Rs.12. 1000.per Instrument Premium Rs.per. (QAB) 2500 DEMAND DRAFT CHARGES DD pay order from base Branches only DD Payable at Category A Location Rs. 30/. 30/. Rs. the consumer forms preference among the brands in the choice set. min.50/. However.per Instrument Free up to Rs. Above that Rs. min. 30/.50/. 1000. Above that Rs.5lack per day. 1.per Instrument Rs. Rs. 10lack per day. 1000/Min. 1/. 1000/Min. Rs.per Rs. 4 lack per day.000 Rs. Rs. min. Above that Rs.
min. 1000. 1000.9/-per Rs. 25/-per Transaction Free Free free 20 .25/-per Transaction Rs.60/Per Rs.60 Lac per month. 25/-per Transaction Free Upto Rs. min. Above that Rs. 1. Above that Rs. 25/-per Transaction Free Upto Rs. 0.1000. 1000.min Rs.60/Per Rs.80 Lac per month.25/-per Rs. 0. min.40 Lac per month. 0. Rs.min Rs. Above that Rs.min Rs. 0.ANY WHERE PAYMENT THROUGH MULTICITY CHEQUES / FUND TRASNFER For payment at Category Location. 25/Per Transaction.50/-per Rs.min Rs. Rs. 25/-per Transaction Free Upto Rs. Above that Rs. 1.25/per Transaction Free Upto Rs. 1/-per Rs. 25/-per Transaction Rs.15 Lac per month. Min Rs.50/Per Rs 1000. Rs.1000. Rs. 0. For payment at Category B Location Rs. 0. 1000. Above that Rs. Rs.50/Per Rs 1000.50/Per Rs 1000.20 Lac per month. min. 25/-per Transaction Free Upto Rs.
PHONE BANKING Balance Inquire and last 10 Free Free Free Free Free Free Transactions Cheques Status Free Request for the At no extra Cheque Book Make a fixed deposit Stop Payment Request Cost At no extra Cost At no extra Cost Free At no extra Cost At no extra Cost At no extra Cost Free Free At no extra Cost At no extra Cost At no extra Cost Free Free At no extra Cost At no extra Cost At no extra Cost Free Free At no extra Cost At no extra Cost At no extra Cost Free Free At no extra Cost At no extra Cost At no extra Cost Free Request for the Free email statement Hot listing of Cards Dial A DD# Free Courier charges applicable Free Courier charges Free Courier charges Free At no extra Cost Free At no extra Cost Free At no extra Cost applicable applicable 21 .
INTERNET BANKING Account Related Information Request for a cheque book Make a fixed deposit Free At no extra cost At no extra cost At no extra cost Free At no extra cost At no extra cost At no extra cost Free At no extra cost At no extra cost At no extra cost Free At no extra cost At no extra cost At no extra cost Free At no extra cost At no extra cost At no extra cost Free At no extra cost At no extra cost At no extra cost Stop payment request Fund Transfer within ICICI Bank For paymen t at categor yA location Free Up to Rs. 30 lac per day. 5/-per Transactio n Rs. Above that Rs. 40 lac per day.20/per Rs.1000/min. Rs. Rs.15/Per Rs. 1000/min. 20 lac per day. Rs.20/Per Rs. 5/-per Transactio n Rs.15/Per Rs. 5/-per Transactio n Free Up to Rs.1000/min. 0.15/Per Rs. 0. Rs. Rs. 5/-per Transactio n Free Up to Rs. Above that Rs. 1000/min. Above that Rs. 1000/min. 0. Above that Rs. 1000/min.15/Per Rs. 10 lac per day. Rs. 1000/min.20/Per Rs. 1000/min.20/per Rs. Above that Rs. 0. Rs.15/Per Rs. 0. Rs.15 lac per day. Above that Rs. 5/-per Transactio n 22 . 5/-per Transactio n Free Up to Rs. 20 lac per day. 1000/min.5/per Transactio n Free Up to Rs. 0. Above that Rs.10 lac per day. 0.5/per Transactio n Free Up to Rs. 5/-per Transactio n Free Free Free For paymen t at categor yA location Free Up to Rs. Rs. 0. 0.
2. Current Account maintenance. 100/Cheque.STATE BANK OF INDIA 14. Stop Payment Charges -: Rs. 23 .4/1000. 50/Cheque. required).000 BRANCHES IN INDIA. Multicity Cheque available in 1100 branches(no charges). 450 charged as penalty) No limitation of each cash deposit ( for more than 50. Fund transfer charges Rs. (Documentation for opening current account is similar to the banks) Minimum Balance-: 10. Mobile Banking (Going to started shortly) Account Statement every month on demand. Phone Banking free. 55 BRANCHES OVERSEAS. Internet Banking free. Cheque Return charges-: Rs.000 deposit PAN No.000 (If minimum balance goes below the limit Rs. Demand Draft charges are similar as saving account holder. Anywhere access free.
4. Non performance assets zero. Individual (Sole proprietorship) Documentation: A. C. 3. No. PAN No. 1 in % profit. Introducer D. Photographs 2. B.1 in customer service. Memorandum of Association. CompanyA. Company24 (These are common for all types of account) .. Address proof B.(comparing last year) Current Account can be opened by: 1. Article of Association.ORIENTAL BANK OF COMMERCE (Where every individual is committed) Salient Feature of Oriental Bank of Commerce: No. Public Ltd. Ltd. Partnership Partnership deed. PVT.
B. C.P.A. for depositing 50. Objective Letter. 6. pay order.D. TrustA. 25 charged as penalty. By cheque through collection. Memorandum of Association B. 10+postal charges Multicity cheque facility yet to be started. HUFIf owner will be directory of any firm then he can open Current Account MINIUM BLANCE: Urban-: 5000 Rural-: 500 (If the minimum balance goes below the limit Rs. Fund transfer facility through D. 20 postal charges. 3/1000+Rs.) No limitation of cash deposit. Article of Association. Fund transfer charges out of station Rs. From one account to another account Rs. Commencement of Business. 10 & for other branch Rs. T. Anywhere access yet to be started. Tele Banking – Only for limited customer. is necessary. 5. Phone Banking – no Internet Banking – yet to be started. 25 . Trust Deed.000 & above Pan No.O.
Min. • • ING is a foreign bank. 2/1000+service tax Rs.000 (QAB) Free up to Rs. 28.) Free Fund transfer Multicity Cheque Rs. 10/transfer Anywhere Access N. Account Statement charges Rs. Of existience) Type of current account-: Features Minimum Balance Penalty is balance go below the Limit D. 1. 27 . Oldest private sector bank.D Commission for account Holder Cheque book charge Limitation of cash deposit Normal current account 10. 20/page. (75 yrs. 2. 4/transfer Rs. 2/leaf No limit for deposit more than 50. ING Bank serves customer in over 60 countries. 40/ 6 months Free of cost (Centralized) But if taken from branches then Rs. up to Rs.ING Vysya BANK ING Yysya is a part of ING Group.A. Free of cost No charges. (If balance maintained.000 (QAB) 750 (QAB) Rs.000 after That Rs.00.000 (QAB) 3. required.5 crores/month Rs.000 PAN No. the world’s fourth largest financial services company & the twentieth largest global corporation.5/leaf ------------------------Orange current account 1.
When the Chartered Bank first established itself in India. Kolkota was the most important commercial city. on 12 April 1856. and was the centre of the jute and indigo trades. at Kolkota . you can always be assured of a banking service that is flexible enough to tailor-make a product suite to take care of your specific banking needs. Standard Chartered offers a wide range of premium banking products and service through its network of 66 branches in 24 cities across the country.STANDARD CHARTERED BANK The Chartered opened its first overseas branch in India. Bombay tool over from Kolkota as India’s main centre. To carter to drive financial needs. As privileged customer. eight years later the Klkota agent described the Bank’s credit locally as splendid and its business as flourishing. Today the Bank and. particularlythe substantial turnover in rice bills with the leading Arab firms. With the growth of the cotton trade and the opening of Suez Canal in 1869. 28 .branches in India are directed and administrated from Mumbai (Bombay) Kolkota remaining as important trading and banking centre.
• It’s account opening system is more complicated than other and takes more time than other banks. 29 . • All the facility provided be this bank is unique in itself and not provide be other banks • Service provide by this bank is the best through the service charges are more than other banks.Comparative Analysis • The ICICI bank have a unique 8 to 8 service. which is not in the case of other banks. • It is the second largest bank of INDIA which it self is a achievement in itself. The data mentioned in the project would only useful to know customer satisfaction level. LIMITATION • • The data mentioned in this report can be used by the company to get an idea of the customers only.
ICICI’s principal business include: • • • • • • • • Project Finance Infrastructure finance Corporate Finance Securitization Leasing Deferred Credit Consultancy services Custodial Services The ICICI Group draws its strength from the core of its individual companies. Over the years. ICICI set up specialized subsidiaries in the areas of commercial banking. To led the financial services industry into the new millennium. The Group also offers a gamut of personal finance solutions to individuals. top Indian Corporate look towards ICICI as a business partner for providing solutions to their varied financial requirements. The Government of India and representatives of private industry on January 5. Today. Was founded by the World Bank. The liberalization of the Indian economy in the 1990s offered ICICI an opportunity to provide a wide range of financial services. For regulatory and strategic reasons. investment banking. ICICI has evolved into a diversified financial institution. the Group is now truly positioned as a Virtual Universal Bank. 1955. The objective was to encourage and assist industrial development and investment in India.COMPANY PROFILE INTRODUCTION TO ICICI BANK ICICI Group The Industrial Credit and Investment Corporation of India Limited now known as ICICI Ltd. non-banking 30 .
supported by ICICI Capital Services Limited (ICICI Capital) • • ICICI Investors Services Limited (ICICI Services). Leasing Deferred Credit Securitization Infrastructure ICICI Custodial Finance Universal Banking Services Project Finance Consultancy Services Corporate Finance ICICI plans to focus on its retail finance business and expects the same to contribute up to 15-20% of its turnover in the next five years. The ICICI Group comprises of • • ICICI Bank Limited. venture capital financing and state level infrastructure financing. The bank hard selling its image as a retail segment bank has for the first times come up with an advertisement that addresses its products at the individuals. offering quality investor servicing ICICI Venture Funds Management Limited (ICICI Venture). ICICI Securities and Finance Company Limited (ICICI Securities). For this purpose the network of ICICI Bank shall come into use.finance. a commercial bank that provides both retail and wholesale products. an investment bank that offers a wide range of fee based services with the support of ICICI Brokerage services Limited (ICICI Brokerage) • ICICI Credit Corporation Limited (ICICI Credit). The parent plans to sell its products and also raise retail funds through the banking subsidiary. investor servicing broking. It is trying to change the perception that it is a corporate oriented bank. This is to drive home the point that the bank has products and services catering to all individuals. a venture capital company. a non-banking finance company that provides a retail distribution channel for the group’s retail products. 31 .
As of March 31. The branches are fully computerized with state-of-the-art technology and systems. investment.000 customers. ICICI BANK ICICI bank is a commercial banking outfit set up by the ICICI Group. 1999. and a prelude to banking in the next millennium. The Bank has an authorized capital of INR 300 crore (USD 75. 1994 and received its banking license from the Reserve Bank of India on May 17. All of them are fully networked through V-SAT (Satellite) Technology. ICICI Bank’s Infinity was the first Internet banking service in the country. a company that offers infrastructure financing and development assistance in Kerla. 32 . an off shore investment management company ICICI –KINFRA Limited (I-KIN). ICICI Bank offers a wide spectrum of domestic and international banking services to facilitate trade. cross-border business. This is in addition to a whole range of deposit services offered to individuals and corporate bodies. and treasury and foreign exchange services. 1994. By this 36 more branches/offices are expected to be added to the network. The Bank was registered as a banking company on January 5. Currently the Bank has around 150. of which subscribed and paid-up capital is INR 165 crore (USD 41. 64 branches were functional across the country. The Bank is the international SWIFT network since March 1995.96 million).• • ICICI International Limited. He first branch of ICICI Bank was started in Madras in June 1994.78 million).
when the Committee on the Financial System.Need for merger of ICICI Ltd. United States and other parts of the world. With competition becoming acute and foreign banks entering the Indian market steps have to be taken to sustain growth in the Indian Banking sector. As banks across the globe have realized. The concept of mergers is not new to Indian banks. the banks to keep them ahead in the race need to improve their services and innovate customer friendly products. headed by the Reserve Bank of India’s former Governor chalked out a comprehensive blueprint for banking reforms. This is evident from the mergers occurring in Japan. Further with the emergence of customer satisfaction as a goal and intense competition as a phenomenon in the banking sector. The need is being felt for stronger and fewer players.. financial muscle. Mergers are recognized as an imperative for the survival of banks. consolidation etc. It has been on the reforms agenda since 1991. often greater than the sum of its parts. The 1997 report on bank has received an encouraging response. And ICICI Bank The recent trend in world banking is towards mergers and acquisitions. So. As ICICI bank fits into the overall strategy of ICICI Ltd. In order to grow in this sector the players will be on a lookout for mergers and acquisitions. 33 . offering a wide gamut of services (universal banking). ICICI Bank has threat not only from private and foreign banks but from public sector banks also. a defense strategy against any take-over attempt would be to either increase the stakes of the parent or to merge the subsidiary with the parent. there are several variables that add unto synergies including economies of scale. larger cushions. A merged banking entity is. market share.
Merger of ICICI Ltd and ICICI Bank Mr. K. V. Kamath, CEO of ICICI Limited, has recently voiced the intentions of ICICI Limited towards banking and ICICI Bank. ICICI Limited is endeavoring to forge a closer relationship with ICICI bank. Mr. K. V. Kamath recently quoted in a leading daily “ Banking is dead. Universal banking is in offering with a whole range of financial products and services. The basic idea is for banks to do business along with “banking”. Bankers will have to emerge as businessman. ICICI Bank is a focused banking company coping with the changing times of the banking industry. So it can be a lucrative target for other players in the same line of operations. However, when merged with ICICI Limited the attraction is reduced manifold considering the magnitude of operations of the ICICI Limited. In short we can classify the threat of takeover for ICICI Bank under the following heads. • De-Regulation Markets regimented by regulation are integrating. Walls between Financial Institutions (FIs) and Banks are crumbling. Banks are venturing into diversified areas and the concept of universal banking is the concept of the day. • Globalization Competition from abroad is also set to intensity. The foreign banks are looking to expand beyond their narrow niches to acquire retail reach. Restrictions on branch expansion of the foreign banks are being relaxed in live with the commitment made to the World Trade Organization, under the Financial Services Agreement, by India. The reach of existing banks would enhance the foreign bank’s network, Given their undoubted financial muscle and technical expertise, the foreign banks are likely to dominate the new markets for derivative securities and loan syndication that are bound to mature in the Indian economy. Unless Indian banks are strengthened through a process of mergers, they will concede market share 34
to the foreign banks. This increases the risk of takeover for ICICI Bank and to consolidate its position, it may be advisable for the parent to merge the subsidiary into the parent. • Disinter mediation As capital markets deepen and widen, the core banking functions come under attack. And the number of alternative savings vehicle multiply, limiting bank deposits growth. To survive, banks need to diversify into non-investment based activities and concentrate on upcoming areas like insurance, Internet banking and house financing. ICICI is a pioneer in Internet banking thus making it a lucrative target for the other banks. • Volatility As markets mesh together, both locally and internationally, prices become more volatile and risk mushrooms. A large capital-base provides the necessary cushion to withstand nasty shocks. The Public sector banks’ dominance is eroding, forcing the former leaders to consider mergers to regain their supremacy. With the regulators opting for stringent capital adequacy requirements and the budgetary support through recapitalization dwindling, the poorly- capitalized public sector banks would like to trigger off a merger wave. As higher levels of capital banking are vital, which mergers can achieve, mergers are gaining popularity. Suitability Test The suitability test involves the following five analyses 1. Life Cycle analysis 2. Positioning analysis 3. Value Chain analysis 4. Portfolio analysis 5. Business profile analysis
1. Life Cycle analysis
The question whether the merger will in the life cycle of the area of operation is answered. The days of aggressive growth are over. Faced with the worst ever scrutiny of their balance sheets the banks are now hard-pressed to clean up their tarnished image. Indian banking is under threat as never before. Americans typically prefer to invest mutual funds rather than in bank deposits. With the introduction of cheque facility in money market mutual funds in India, the next decade will see deposits being diverted from banks to mutual funds. However, the pace of growth could be slow. While disinter mediation and thinning spreads are already knocking crores off bank’ bottom lines, the entry of tele banking, ATMs and Internet banking has also neutralized their sole competitive strengthretail spread. But for true prosperity. Banks will have to do something more than embrace technology. They have to look at opportunities beyond their current horizon of borrowing and lending. Fee-based incomes would hold the key to customer retention. In this case as ICICI Bank is a sister of the ICICI group carrying out related activities in the financial sector? It has already ventured into new avenue likes Internet banking. Thus a positive score for the merger in this analysis.
In the US. The tend is packing up in Indian also Objective Interest Strategies Segment Business NPA Mgt. Concentration HR policy Credit Rating What’s IN Profitability Shareholder Pro-active Target banking Fee based Recovery mgt.2. cell Investments Hire & Fire Individual What’s OUT Developmental & social Priority sector Passive Mass banking Fund based credit monitoring cell Advance Job Security Corporate As ICICI Bank is a leading private player emphasizing more on what’s in rather than what’s out in the banking sector? Thus this merger is beneficial for the parties concerned. The same is the case in other developed countries. 37 . more than 40% of bank revenues are from fee-based businesses. Positioning To ascertain whether the positing is viable. this analysis is undertaken.
They offer. Does it improve value for money? Does it exploit the core competence? The answer to the first is positive that is reflected in the valuation annexed herewith. 2.up and running costs. 5. just 10% of traditional banking. Besides convenience. Thus the merger of ICICI Limited and ICICI Bank scores in this analysis also. 4. costs per transaction are also low. a 50% cost benefits. Modern banks offer several advantages in terms of set. on an average. 38 .8-2% from the existing 2. Business Profile Analysis Will it lead to good financial performance? As the functioning of ICICI Bank would not be largely affected by this merger and with greater composition the financial performance of the entity is expected to be satisfactory. Value Chain Analysis 1. ICICI Bank as ventured into these areas. The core competence of the first ICICI Group is financial service and ICICI Bank is a part of this group dealing in commercial banking. The benefits of Net Banking are evident. Portfolio Analysis Does it strength the balance of activities? As this bank is already a part of the portfolio of ICICI Limited and a larger stake would not affect the balance of activities.3. Spreads in tradition lending businesses are shrinking and are expected to align with international levels of 1.8% over the next decade.
of which subscribed and paid –up capital is INR 165 crore (USD 41.000 customers. 39 . 1995 to encourage and assist industrial development and investment in India. Over the years. the Government of India and representatives of private industry on January 5. 1994 and received its banking license from the Reserve Bank of India on May 17. ICICI Limited The Industrial Credit and Investment Corporation Of India Limited (ICICI) was founded by the World Bank.HISTORY AND CURRENT ACTIVITES OF ICICI ICICI Bank ICICI Bank is a commercial banking outfit set up by the ICICI Group. ICICI’s principal business activities include medium. ICICI has evolved into a diversified financial institution. corporate finance to meet the treasury requirements of Indian companies. The Bank has an authorized of INR 300 crore (USD 75. and a prelude to banking in the next millennium. 1994.78 million). Currently the Bank has around 150. lease finance as well as comprehensive range of financial and advisory services. ICICI Bank’s Infinity was the first Internet banking service in country.96 million).term and long-term project financial for the infrastructure and manufacturing sectors. The banking was registered a banking company on January 5.
ICICI Bank is India’s second-largest bank with total assets of about Rs.005 crore for the year ended March 31. an equity offering in the form of ADRs listed on the NYSE in fiscal 2000. China. an Indian financial institution. 1. ICICI was formed in 1955 at the initiative of the World Bank. 1. ICICI transformed its business from a development financial 40 . In the 1990s. ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialized subsidiaries and affiliates in the areas of investment banking.900 ATMs. ICICI Bank has a network of about 560 branches and Extension counters and over 1. venture capital financing and state-level infrastructure financing. 2005 (Rs.67. life and non life insurance. Mumbai and the National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE). 2. ICICI Bank was originally promoted in 1994 by ICICI Limited. non-banking finance.For regulatory and strategies reasons. branches in Singapore and Bahrain and representative officers in the United States. investment banking. ICICI Bank’s equity shares are listed in India on the Stock Exchange.637 crore in fiscal 2004). and was its wholly-owned subsidiary. ICICI Bank set its international banking group in fiscal 2002 to cater to the cross border needs of clients and leverage on its domestic banking strength to offer products internationally.659 crore at March 31. ICICI Bank’s acquisition of Bank of Madura Limited in an all-stock amalgamation in fiscal 2001. 2005 and profit after tax of Rs. investor servicing. broking. United Arab Emirates. the Government of India and representative of Indian industry. venture capital and asset management. and secondary market sales by ICICI to institutional investors in fiscal 2001 and fiscal 2002. The principal objective was to create a development financial institution for providing medium-term and long-term project financing to Indian businesses. Bangladesh and South Africa. ICICI’s shareholding in ICICI Bank was reduced to 46% through a public offering of shares in India in fiscal 1998. ICICI Bank currently has subsidiaries in the United Kingdom and Canada. ICICI set up specialized subsidiaries in the areas of commercial banking.
both directly and through a number of subsidiaries and affiliates like ICICI Bank. 41 . In 1999.institution offering only pfoject finance to diversified financial service group offering a wide variety of products and services. ICICI become the first Indian company and the first or financial institution from non-Japan Asia to be listed on the NYSE.
phone number just to review back if there are any changes in the data base. .DATA ANALYSIS The entire study is aimed to assessing the fund allocation & investment profile of existing clients for the product SSA. which would reflect the analysis of whole of the questionnaire as against each section. It includes the analysis and interpretation arrived at from the primary data collected according to the research to facilitate the analysis. This is nothing to relate with the objective of this project. Thus I would be going for a sectional data analysis in which I would analyze each of the section then finally I would go for a final conclusion. 42 . The Questionnaire is been divided into Four parts first part is relating to Organization Profile which discuses its nature of business its network branches and the address.
Fund Inflow Details:First Question was relating to Whether Grant is Received or not In this 60% said yes &40% No Grants Received % Respondant Response Rate 80% 60% 40% 20% 0% yes Response Options no 60% 40% Second question was relating to what type of account you have? Platinum 10% Gold 20% Standard 20% Classic 5% Premium 45% 43 .
FCRA is about Foreign currency reserves for which a client is suppose to take an approval from Government its being done through a bank thus ICICI also has FCRA Accounts for some of its exiting clients In this case 60% said Yes 40% No. 44 .The third question was related to what type of constitution you have? 60% 50% 40% 30% 20% 10% 0% Sole proprietorship Partnership Private Limited Public Limited The fourth question was asking about most preferred banking mode of transaction 70% 60% 50% 40% 30% 20% 10% 0% ATM Mobile Net Phone The fifth question is that have you got foreign currency reserves approval.
000-50.000 3-<1.00.000& Next 45% said < 1.00.0000 < 50.00.000 2-20.000.00.000 45 .00. 35% said >than 20.000 Amount Of Grant Recieved In Ruppes Response Rate 50% 40% 30% 20% 10% 0% 45% 35% 20% 1 2 Grant in Rupee s 3 1->20.Respondant Rate For FCRA Approval Respondant Rate 80% 60% 40% 20% 0% yes no Respondant Response 60% 40% Sixth Question was relating to approximately Grants/Inflows in Rupees In this case 20% said >20.00.00.00.00.00.
which received a cheque or DD.Analysis for this section: the questions in this section were prepared with the objective of Understanding the in flow pattern of existing clients it could be generally gathered from the respondents reply that the organizations having Grants have quite potential as they have a flow of inflows quite regularly especially in case of domestic as for the government grants were concerned they were quite numerable but generally they are being received in good amount the case with foreign grants is that they were very limited in number but huge in corpus size thus a track has to be kept of them as those would give a good business to the bank While mode of receiving the grants/donations suggested that if in cash. tend to invest so it was in interest of bank to initiate and be in constant touch with such clients. it was utilized by the client and was not accounted in accounts as could be read through there bank balances as provided bank. Where as those organizations. While the clients having an FCRA with the bank are highly potential clients as there transactions in normal course is some what a crore and it could be more depending upon the nature of client. 46 .
Of Accounts 1Account 22% 24% Accounts 2 3-5 Accounts 18% 36% more than 5 Accounts 47 .Banking/Investment Details In this section First Question was relating to whether Clients have separate account for branches 70% said yes & 30% said No. Respondant Rate For Holding No. Respondant Having Seperate Account For The Branches Respondant Rate no yes 0% 20% 30% 70% 40% 60% 80% Respondant Response Second Question was relating to total no. Of accounts hold for banking purpose In this case 24% said 1 account 36% said 2 accounts 18% said 3-5 accounts 22% said more than 5 accounts.
Third Question was relating to whether respondents hold Fixed Deposit at bank or not In this case 70% said yes 30% said No Respondants Response For Acquisition Of FD'S Respondant Rate 100% 50% 0% yes Respondant Response no 70% 30% 48 .
Fourth Question in this part. was relating to percentage of unutilized fund in FD’s % Of Unutilized Fund In FDs Respondant Response more than 70% Less than 70% but more than 50% Less than 50% but more than 20% Less than 20% 0 0.2 0.4 0.6 Respondant Rate In this case the results were: - Less than 20% Less than 50% but more than 20% Less than 70% but more than 50% More than 70% 55% 35% 6% 4% 49 .1 0.3 0.5 4% 6% 35% 55% 0.
represents more than 5 deposits No. OF DEPOSITS 40% 30% 20% 10% 0% 1 2 3 36% 24% 40% Respondant Rate Respondant Response (b) 1-represents 1 to 2 withdrawals 60% 2-represents 3 to 5 withdrawals 32% 3-represents more than 5 withdrawals 8% 50 .represents 3 to 5 Deposits 3.Fifth Question was relating to average Deposits& Withdrawals by clients (a) 1.represents 1to2 Deposits 2.
then Q1(b) Satasfaction Towards ICICI Services Respondant Rate 100% 80% 60% 40% 20% 0% yes no Respondant Response Q1(b).Are people satisfied with ICICI services If yes.what makes people like ICICI What makes people like ICICI ATM Facility 37% 8 to 8 Banking 15% Product 26% Door Step Facility 8 to 8 Banking Door Step Facility 22% ATM Facility Product 26% Door Step Facility 22% 8 to 8 Banking 15% ATM Facility 37% Seventh Question was relating to comfort ability towards changing accounts.Sixth Question was divided into two parts Q1(a). 51 .
K.In this the general reply was in favor of ICICI bank as most of the clients preferred to continue with services of ICICI bank Very Moderately O.5 Response Rate 1 12% 18% 70% No. Very 52 . I will Not Change 18% 12% 70% Comfortability Towards Shifting Of Accounts Respondants Response 2 1 0 0.K.I will Not Change Moderately O. No.
3000 crores). the 2 banks had the largest exposure to GOI Securities (32%). than Rs. d) The investment portfolio of the 2 sectors was the most diversified across the entire sample. we were unable to adequately represent any particular industry. high return on investments was an equally important consideration as safety in determining their investment portfolio. balance with RBI. it is difficult to estimate special characteristics of the investment pattern of particular industries. These sectors were the only ones investing in the call market. a) For the 2 sectors. the banking and insurance sectors show a distinct pattern when compared to the other 15 companies. meeting statutory requirements and government guidelines with respect to investment in GOI Securities. Following are some brief comments about the same (some of these have been touched upon earlier in the report). b) They invested both in long-term and short-term instruments again in contrast to the sample average. in corporate debentures. In fact. but due to paucity of time. They also made investments in other instruments (not covered in our study) to meet government regulations. Such diversification was necessary as well as profitable due to the large corpus in these sectors (more 53 . However. c) They had an additional consideration to keep in mind when making investments.IMPACT OF BUSINESS OF THE COMPANY ON ITS INVESTMENT PATTERN Our sample consists of companies selected from a range of industries. Hence. These include advances and term lending. and in commercial paper. and loans to State Governments for Housing and Fire Fighting Equipment. This is in contrast to the sample average.
IMPACT OF CORPUS OF THE COMPANY ON ITS INVESTMENT PATTERN In our sample. there were six companies with corpus less than Rs. 71% of their funds were invested in various kinds of MFs. and the banks invested the largest proportion of their funds in GOI Securities. 10 crores (small investors). mutual funds were not the major claimant of investments in this sector.e) Surprisingly. four companies with corpus between Rs. Also. Oriental Insurance invested about 16% in MFs. been left out of the succeeding analysis. in comparison with the large investors. while for the banks the figure was even less than 1%. this category 54 . 50% of these companies invested solely isn one category of assets (MFs or FDs). (b) There was no significant trend in the investment pattern of medium-size investors. thus. There seem to be three rasons for the above trend. Though MFs and Bank FDs remained the dominant investment avenue. the relatively small corpus did not give the companies adequate economies of scale to invest in a diversified portfolio and generate gains. On average. Finally. On the contrary. it has. 10-50 crores (medium-size investors). Following are the findings: (a) The small investors invested only in MFs (only debt and liquid/STP funds) and FDs. 50 crores (large investors). The cause for the same lies in their objective of high return and meeting government guidelines respectively. Firstly. Their portfolio was not well diversified. majority of the companies in this group invested for short periods of time. Secondly. and 29% were invested in FDs. There was one company unwilling to reveal its corpus. and seven companies with corpus more than Rs. the insurance sector put majority of its funds in equity. the banks had no funds invested in FDs. They did not have exposure to any other financial asset. these companies put greater value on safety and liquidity as opposed to high return.
on average. Finally. (Please refer to Graphs 3 and 4 for a pictorial presentation of the above analysis). corporate debentures. (It must be kept in mind that the banking and insurance sector in represented in this category). commercial paper. Even then funds of individual companies were not invested in well-diversified portfolios. followed by direct exposure to equity (11%). FDs fell to the fourth position in terms of proportion of funds invested in any asset (5%). A large corpus generates economies of scale and helps reduce the cost of investing in a large number of assets. PSU bonds. inter-corporate deposits. firms in this category were investing less than 40% of their surplus funds in this asset on average. namely inter-corporate deposits. and call market (though. Two companies rated return higher than safety. While MFs were still the most popular investment option. Deeper analysis reveals three reasons for the above trend. More than 71% of the companies in this category had exposure in four or more financial products. 50% of the companies put all their funds in one financial asset (MFs or FDs). Firstly. and all investments were made for the short-term. Secondly 71% of the companies in this category invested both for short-term and longterm purposes. and equity. diversification was feasible and profitable due to a relatively larger corpus.of companies did show an inclination towards other assets. Safety continued to remain their first priority. Hence. The second-most popular option was investment in GOI Securities (22%. 55 . These companies also invested in corporate debentures. while three equally valued the 2 parameters. investments such as direct exposure to equity begin to look attractive (equity markets tend to be volatile over a small period but give stable returns over a longer period of time). this was the only category in which any company rated high return on investment as a higher priority than safety. investment in each asset class was less than 3% of total funds). (c) The large investors had the most well diversified portfolio from among the entire sample of companies. in fact nearly all large investors invested some part of their funds here).
ur ta al n Ti En m gin es ee rs Lt d. er DL (P F )L O Un td rie Th . No Se ida cu Ca irit To re ies ll B er rid La ge un Lt ch d. du ns ct or s tiu Lt m d.50 crore Name of the Company 56 K& Co .% of Surplus Funds Invested Ar c 100% 10% 20% 30% 40% 50% 60% 70% 80% 90% 0% Graph 3 Investment pattern for companies with corpus less than Rs. FDs MFs ICDs Equity GOI Secs . Co nt ine nt hie al s D ev G re Ho ic et e nd ing In a di s Si a an el Lt d d. Po G we ifts rP Lt ro Co d. ive nt e al rs H St al ind ru Lt us ct d.
L En s td In er . at ion al Pu Ba nja Bh nk b& ar Si ti T nd ele O ba -v rie nk en nt al tu re In G s su od Lt ra fre d.% of Surplus Funds Invested Jin da l M en th ol & 100% Sp an 10% 20% 30% 40% 50% 60% 70% 80% 90% 0% Graph 4 Investment pattern for companies with corpus more than Rs.50 crore Name of the Company 57 FDs CDs MFs T-Bills GOI Secs PSU Bonds In ve st m en In ts di a Lt Ho d. nc y Ta e Ph Co ta ilip . ch In st itu te CP Call ICDs Equity Others Corp Debt . Pu ldi ng nja s b Lt N d. dia gy (P Re )L se td ar .
and all belonged to the financial services industry. 4 of the 5 companies that invested directly had no exposure at all to MFs and invested solely in FDs (bank of inter-corporate). and the remaining 4 used options. Further analysis suggests that demand for distributors depended directly on the preference for investment in mutual funds. 58 . 9 of the 18 companies depended completely on distributors to make their investments. All 4 companies that invested directly as well as through a distributor had but a minor exposure to MFs. Demand for Distributors 9 8 No. of companies 7 6 5 4 3 2 1 0 through a distributor directly directly as well as through a distributor How does the company invest? As can be seen clearly from the graph.II. 5 invested directly. investing a proportion of their funds directly and employing the services of a distributor to deploy the rest. All the nine companies that invested through a distributor were found to deploy the major chunk of their funds in MFs. Demand for Distributors by Corporate Houses.
which in turn was preferred to attractive incentives. Bajaj Capital and SPA Capital (in no particular order). 59 . and so a choice between them could be made only on the basis of the incentives offered. reducing their dependence on distributors for the same.When questioned about their expectations from the distributors (incentive sharing. Few companies were willing to reveal the names of their distributors and whom they preferred most. but the preference was very marginal and not much must be made of this preference order. the response of the concerned executives was mixed. followed by DSP Merrill Lynch. The reasons for the same are not clear. way below the other three in the preference scale by a significant margin. Our study also aimed at determining the name of the distributor(s) that fulfilled the above expectations in the most efficient manner. Birla Sun Life seemed to be the most popular distributor. JM Fixed Income. On the basis of the responses given by those who were willing to reveal this information. It may be so since most big investors themselves have set up full-fledged in house treasuries that have access to the latest market information and tools for research analysis. companies preferred superior research support to better services. services. Many companies also felt that all big distributors provided comparable research support. One interesting observation is that most big investors valued incentive sharing higher than research support. no doubt. On average. These two were closely followed by ICICI Securities. value addition to decision making). Value addition to decision making was. research support.
Comparison of services Services Zero Balance Facility Telebanking Anywhere Banking EFT ATM Loan Facility Homebanking Sunday Banking Computerized Pass Book Demat Facility IDBI X 80% X ICICI 80% X Abn Amro X 75% BOP x X X 90% X x x 60 .
100% 100% 100% 100% No Can't comment - Compare your experience in ICICI with other banks Name of Bank Excellent IDBI HDFC Bank Bank of Punjab ICICI Bank 20% 50% 30% 30% 10% 20% Very Good 70% 60% 70% Good 20% 10% Satisfactory 10% - ANALYSIS 61 .Quality of Service Name of Bank Excellent ICICI HDFC Bank of Punjab ICICI Bank 30% 20% 50% 60% 20% 30% Very Good 30% 30% 40% Good 10% 40% 20% Satisfactory 10% 10% Staff members look receptive with pleasing personality Name of Bank IDBI Bank HDFC Bank Bank of Punjab ICICI Bank Yes.
ATMs. From product enhancement point of view one of the biggest challenges is to identify paperless money including electronic cash and smart card technologies. 62 . tele-banking and mobile banking. They will be forced to cross-sell their products through different channels. The desire to bank from home will surge in turn forcing the banks to deploy more transaction-enabled applications to the customers’ desktops. Global changes in consumer attitude and technological advancements are forcing banks to adopt to a new ‘avatar’. Deregulation has brought in aggressive private participation.The banking industry in India is undergoing a sea change of activities. Banks will now have to think of customers differently. And the demand from customers for better services is adding impetus to the change. Indian banks are rapidly moving towards offering newer channels to the consumers. With homes getting computer enabled and Internet access becoming cheaper. These include the Internet. people will refuse to stay in line for their bill payments or to collect their bank statements.
5 Bank of India 2.5 0.3% 37.4 0.2 189.4 8.1 42.0% Measure of performance HDFC Particulars Branches (x) Employees/branch (x) Deposits/employee (Rs m) Deposits/branch (Rs m) Operating profit/employee (Rs m) ICICI Bank SBI Corporation Bank 648 15.6% 68.2% 25.4 0.0 217.8% 37.5 16.6 9.3 63 .7 14.0 1.0 220.2% 5.0% 18.3 759.9% 16.5% 18.3 1.050 13.0 73.0% CAGR: Compounded Annual Growth Net Profit 44.218.520 20.2 Bank 111 81 9.0% 27.4% 75.The digital divide Particulars ICICI Bank HDFC Bank Global Trust Bank UTI Bank SBI Corporation Bank CAGR of Operating Income 81.6 26.5 2.
Also in government banks prospects is hindered by capital adequacy ratio (CAR) constraints and high non-performing assets (NPAs). The public sector banks (PSBs) on the hand are also not lagging behind. After online banking and ATMs.9% 0.0% 4.3% 6. lack of autonomy for restructuring operations.4% 20.4% 19.9% 0. They will continue to enjoy significant first mover advantage for a few more years due to the enormous technology gap.6% 11.6% Private sector banks in India have taken a lead in introducing new technologies.5% Bank of India 8.8% 12. SBI and Corporation Bank have made an investment in technology improvement and are planning to launch Net-banking products in the near future.1% ICICI Bank SBI Corporation Bank 1. The passage of Information Technology Bill will provide a boost to the online selling efforts of the banks by giving legal recognition to electronic contracts and signatures.6% 10.8% 1.5% 1.2% 16.5% 0. Most of the PSBs have a CAR of between 9-11 percent and need to raise capital over the next two or three years.1% 6.9% 1.0% 16.9% 12.2% 1.3% 2. private banks have been quick to offer WAP (Wireless Application Protocol) enabled mobile banking services. overstaffing and unwieldy branch network are dampening their growth prospects.Key ratios HDFC Particulars NPA level CAR Return on assets Return on equity Return on capital Bank 0. However absence of dynamic and proactive management. 64 .9% 1.6% 0. Thus private banks have virtually created an exit barrier by broadening their product range and effectively cross-selling them with the latest available technology.8% 9. The value-added products offered by private sector banks have resulted in corporate clients migrating from the traditional banks to new generation banks.
Thus capital constraints will not allow these banks to grow their assets in any significant way.8% 65 . a customer centric approach. Also the year over year growth in the profits by 66 percent indicates a good sign for banking companies. full range of retail asset and liability products.9% FY00 15.2% -23. It would also give them an opportunity to build a low cost deposit base. While incremental deposits of the banks during financial year 2000 declined by 14 percent to Rs 1. banks globally are focusing on the retail segment.155 billion. Historically commercial banks in India mostly focused on corporate and business loans (besides mandatory priority sector lending). They have everything the foreign banks could offer.3% 42. For them raising capital is very difficult. Once again it is private sector banks that are ahead. These hurdles make PSBs an unattractive investment.5% FY99 19. Focus on retail banking will help banks in increasing their wafer thin spreads on lending to large corporates. A turnaround Particulars Growth in operating income Growth in net profit % Change year over year Source: CMIE FY98 11. Advances witnessed an astounding 50 percent jump to Rs 448 billion. Retail lending presents a huge untapped potential as banks largely ignored the segment so far. The only advantage they have is access to large pool of low cost saving and current account deposits collected through their extensive branch network. reasonable service charges and a wide distribution network.The government regulation requires them to lend to sectors where there is low growth opportunity resulting in large NPAs. Apart from technological enhancement.5% 65. Economic recovery during the last year boosted credit growth to a certain extent. which has emerged as a key area.
66 . stabilising interest spreads. reduction in NPA level. Mergers and acquisitions amongst the banks have been found as an effective remedy for fragmentation. Mergers can prove to be very effective in strengthening the Indian financial sector. maintain lower levels of NPAs. While the trigger for investment in PSBs could come with improvement in productivity.It is crystal clear from the above analysis that a handful of tiny new banks are out to change India’s banking landscape. Technology is helping the banks to grab market share with superior product offering and most importantly in extending the distribution reach. higher capital base and sparkling profit growth. declining staff strength and good earnings growth. Private banks on the other hand will continue to enjoy higher valuations as long as they are able to change with the technology. These banks are trying to consolidate their place in the financial sector and provide a one-stop financial service supermarket to their customers. efficient and customer friendly banking system. It initiated the build up of a modern.
public sector banks are still lagging behind with operational inefficiencies. Indian banks.CONCLUSION The Indian banking sector is witnessing a technology revolution. Also focus on the nonfund based income as a major source of revenue has enabled them to grow at a faster rate. less efficient government banks. convenient banking services and variety of financial products to suit their requirements. Public sector banks have the government as a majority shareholder. ATMs. improved. net banking and mobile banking are changing trend in the sector. As can be seen from the table HDFC Bank and ICICI Bank have comparatively better productivity ratios than the government banks due to their fast adaptation to technology change. traditionally just borrowers and lenders. In plastic money segment. overstaffing and unwieldy branch network are dampening their growth prospects. Thus private banks have virtually created an exit barrier by 67 . Their technological edge and product innovation has seen them gaining market share from the slower. customers have also got a new option of debit cards against the earlier popular credit cards. have now started providing complete corporate and retail financial services to its customers. On the other hand with emphasis on service and technology. Absence of dynamic and proactive management. These banks are making heavy use of technology to give good service on par with foreign banks but to a much wider audience. Many banks have started capitalising on the recent capital market boom by providing IPO finance to the investors. phone banking. While the private sector banks have taken a lead by rapidly offering newer channels to the consumers. lack of autonomy for restructuring operations. Technology drive has benefited the customers in terms of faster. Branch size has been reduced considerably by using technology and having less manpower. Retail financing is the other area where the banks have started to concentrate. it is for the first time that private banks are challenging the foreign banks.
Cleaner loans and higher capital adequacy ratio (CAR) are allowing the private sector banks to grow their assets in a significant way. This was also led by their comparatively better financial performance compared to public sector banks. 68 . The positive signs of improving banking scenario coupled with the thrusts made by most of the banks towards technology and e-commerce has been reflected in the share prices gains (HDFC Bank and ICICI Bank) in last one year.broadening their product range and effectively cross-selling them with the latest available technology.
5.It could be noticed through the analysis that the clients receiving Grants are potential to the bank but at same time clients receiving Foreign Grants are highly potential to the bank.Attractive package in terms of interest rate could be offered by the bank to initiate investments amongst clients. 2.RECOMMENDATIONS 1. thus in that case business would remain with ICICI only. 69 .FCRA clients are the HNI’s (High Net Worth Clients) for the bank hence a special care Of such clients to be taken by bank in terms of regular follow up timely feedback etc. as required by certain organization to maintain a separate account for the branch. Thus its in benefit for the bank to be in touch with them for generating Incremental business & could be taken as a criterion by the bank while going for a prospective client.While it could also initiate a client to invest in the ICICI mutual fund. 3. 6. 4.Bank should focus on the Investment cycle of the organization and should initiate investment at that time .While bank could offer its services to the branch of the organization. as mutual fund the most preferred other way of investment this would lead to cross – sales of product as well as a way to keep client yours.
. 2..... Organization -: ………………………………………… Address -: ………………………………………………......... …………………………………………………………………………... 1) What is your occupation? a) Business b) Service c) Others (……………………) 2) What is the nature of your job? …………………………………………………………………………........ 00...... 000 b) Rs.. 00.................. …………………………… 3) What is your approximate monthly income? a) Less than Rs....QUESTIONNAIRE Name -: ….......... 5) Type of account you are having with the Bank(s).. 50..... 1................ 000 c) Rs... a) Current Account c) Fixed deposits b) Saving Account d) Others............ 1.000 d) More than Rs......... specify 70 ............000 – Rs. E-mail -: …... 50.....000 4) What which bank(s) you have banking relation currently? a) ICICI b) HDFC c) Standard Chartered Bank d) SBI e) OBC f) ING Vysya g) Other please specify ……………………………………………. Phone No -: ……………………… Mobile -: ……………………….......00.............. 2.000 – Rs.00......
m. 71 . b) More than 1 yr. e) Internet Banking f) Mobile Banking g) Doorstep Banking h) Any Where Access i) Daily / Monthly / Quarterly Bank statement 8) How will you rate the service provided by Bank(s). but less than 3 yrs. d) More than 5 yrs. to 8:00 p.6) How long you been banking with the above mentioned Bank(s)? a) Less than 1 year c) More than 3 yrs. Banking.m. you are presently banking with? a) Excellent d) Below b) Good e) Poor d) Average If you are ICICI Bank’s customer then proceed further -: 9) which factor influenced your decision while opening Current Account / Other Account at here? a) Recommended by Family / friend b) Dissatisfaction from previous Bank c) Responded to advertisement d) Other (specify)………………………………………………. but less than 5 yrs. 7) Which of the following services providing by your Bank(s) you frequently use? a) ATMs b) Phone Banking c) International Debit Care d) 8:00 a..
………………………………………………………………………………………… ……………………………………………………… 12) What kind of account do you have? (a) Standard (b) Classic 13) Type of Constitution (a) Sole proprietorship (c) Partnership (b) Private Limited (e) Public Limited (c) Premium (d) Gold (e) Platinum 14) Whether the grants received or not? 15) Which is the most preferred banking mode? (a) ATM (b) Mobile (c) Net (d) Phone 16) Have you get foreign currency reserve approvals? 17) How much grants received? 18) Do you have separate account for different branches? 19) How many accounts do you have for banking purpose? 20) Do you have fixed deposits (FDR)? 72 . if not please specify? ………………………………………………………………………………………… ………………………………………………………………………………………… ………………………………………………………………………………………… ………………………………………………………………………………………… 11) Please give your valuable suggestion to make the services more convenient.10) Are you satisfied with the service provided by ICICI Bank.
K. ‘An Exposition Of Consumer Behaviour In The Financial Industry Services’. A.com http://www. 2003 ‘Race will end in survival of the fittest’. by Dr A. Investment Management A. 2002. http://www. Business Line. January 31. Volume 18. Hewer.BIBLIOGRAPHY Beckett.sap. ICICI). K. Shahbhag..N.V. Banking in India. Dataquest. ‘RBI road map for banking’. The Indian Express. The Times of India. Mishra (Professor & Chairman of Finance Group at IIM Lucknow). April 14.indiainfoline. (2002).icicibank. International Journal of Bank Marketing. The Financial Express. and Howcroft. Issue 1.2004. 26 July.com http://www. ‘The future is in e-banking’ by Mr. p 15 Preeti Singh. November 29. 2003. 2004.com 73 . B. July 21. by Yogesh Sharma. Kamath (Managing Director. P. In the Wonderland of Investment ‘Banking : The Network is the bank’.
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