A

Summer Training Report

On
A CASE STUDY OF COUSTOMER
SATISFACTION IN DEMAT
ACCOUNT AT

Submitted To
Dr. Abdul Kalam Technical University, Lucknow
For the partial fulfilment of the
Requirement for the award of

MASTER OF BUSINESS ADMINISTRATION

2017-2019
Submitted To: Submitted By:
Mr. Pankaj Kumar Mohd. Asif

MBA 2nd Year

Roll No. 1724970054

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 Index
ACKNOWLEDGMENT

1. Introduction

1.1 Objectives

1.2 Methodology

1.3 Limitations

2. Company Profile

2.1 Company Details

2.2 BNP-Corporate Structure

2.3 List of Key Foreign Institutional Clients

2.4 Networks of Share Shops

2.5 Services Offer by Sharekhan

2.6 Service Provided by Sharekhan

2.7 Business Growth

3. About Online trading account

3.1 Classic account

3.2 Speed Trade

3.3 Investing advices

4. Different competitors

4.1 Sharekhan

4.4 Indiabulls

4.5 ICICIDirect

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4.6 HDFC Sec

5.Requirement for opening an account

5.1 Documents required

5.2 Computer Hardware and Software requireme

5.3 Different charges taken by sharekhan for its se

6. Analysis

6.1 Learning about dematerilization

6.1.1 How to convert your security to demat for

6.1.2 Benefits of Deposit

6.1.3 Disadvantages of Dematerialization System

6.1.4 Depository System ( working model)

6.2 Analysis on future of online trading in India

7. Equity research (Banking Introduction)

7.1 Evaluation of the bankig sector

7.2 Structure of banking sector

7.3 Factors effecting the banking sector

7.4 Union Budget 2005-2006

7.5Company analysis

7.5.1 Bank of Baroda

7.5.2 Corporation Bank

7.5.3 ICICI Bank

7.5.4 Punjab National Bank

7.5.5 State Bank of India

8.Conclusions

9. References

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 ACKNOWLEDGEMENT

The successful completion of this project has been accomplished with the invaluable
guidance and support of numerous people. I take opportunity to express my profound sense
of gratitude to all of them. First, I thank to almighty God for enabling me to complete the
project on time and in it’s entirely.
I would like to thank our (HOD) Dr. Ashfaq Ali who, providing me an opportunity to carry
out the project. I also thank my project guide Mr. Pankaj Kumar for his support and
encouragement all throughout the project work.
Last but not the least I thank my parents and family members for their continuous and great
support encouragement throughout this project work.

Mohd. Asif

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 DECLARATION

I Mohd. Asif hereby declare that the project report on “A Case Study of Coustomer
Satisfaction in Demat Account at Sharekhan” is my original work and has not been
submitted by any other person to APJAKTU, LUCKNOW or elsewhere.
Further, I also declare that I have tried my best to complete this project with my sincerity and
accuracy even than if any mistake or error has crept in, I shall most humbly request the
readers to point out those errors or omission and guide me for the removal of these errors in
the future.

(Mohd. Asif )

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 1. Introduction
Share khan is India's leading retail financial services company with We have over
250 share shops across 115 cities in India. While our size and strong balance sheet
allow us to provide you with varied products and services at very attractive prices,
our over 750 Client Relationship Managers are dedicated to serving your unique
needs.

Share khan is lead by a highly regarded management team that has invested crores
of rupees into a world class Infrastructure that provides our clients with real-time
service & 24/7 access to all information and products. Our flagship Share khan
Professional Network offers real-time prices, detailed data and news, intelligent
analytics, and electronic trading capabilities, right at your finger-tips. This powerful
technology complemented by our knowledgeable and customer focused Relationship
Managers. We are creating a world of Smart Investor.

Share khan offers a full range of financial services and products ranging from
Equities to Derivatives enhance your wealth and hence, achieve your financial goals.
Share khan' Client Relationship Managers are available to you to help with your
financial planning and investment needs. To provide the highest possible quality of
service, Share khan provides full access to all our products and services through
multi-channels.

Services provided by the SHAREKHAN:--

1. Equities & Derivatives :--Comprehensive services for independent

investors, active traders & Non-Resident

Indians.

2. Share khan equity analysis :--Premium research on 401+ companies updated

daily.

3. Depository Services :--Value added services for seamless delivery.

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1.1 Objectives:-

The Broad objective of the project is to make clients and let them know about the
different services offered by the Share khan. Also to convince them about how Share
khan services out score there rivals. And how in future they will be benefited from the
services offered by Share khan.

This project will accomplish to understand the problem faced by the existing client
and find ways to solve there queries at your level otherwise let the above level know
about there problem.

We have to be in regular contacts with our clients so that we come to know about the
problem they are facing. This also helps us to multiply our clients by getting the
further references.

By this we are able to make a chain of the customers which expands as we satisfy
there needs.

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1.2 Methodology:-

Methodology of the project starts with:

 In the first phase we are trained and they teach us different things about market.

 After that they conduct a mock viva, in this they ask about the real life problem

faced by the customers.

 They provide leads and after that we make calls.

 Then after that we have to provide details of product and convince them

 Then we have to visit them and get the formed filled from them.

 Maintaining dairy of clients and contacting them at regular basis.

The next part is knowing the pattern of the banking sectors scripts. How they
move

with the correspondence to the market movement and also the economy.

 Get the knowledge of technical as well as fundamental methods.

 Observe the patterns of the scripts.

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1.3 Limitations:-

The various Limitations are:--

 Lack of awareness of Stock market :-- Since the area is not known before it

takes lot of time in convincing people to start investing in shares primarily in

IPO’s.

 Mostly people comfortable with traditional brokers: -- As people are doing

trading from there respective brokers , they are quite comfortable to trade via

phone.

 Lack of Techno Savvy people and poor internet penetration: -- Since

most of

the people are quite experienced and also they are not techno savvy. Also

internet penetration is poor in India.

 Some respondents are unwilling to talk: -- Some respondents either do not

have time or willing does not respond as they are quite annoyed with the
phone

call.

 Inaccurate Leads: -- Sometimes leads are provided which had error in it

which

varies from only 5 digit phone number to wrong phone number.

 Misleading concepts:-- Some people think that Shares are too risky and just

another name of gamble but they don’t know its not at all that risky for long

investors.

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 2. COMPANY PROFILE
2.1 INTRODUCTION

Sharekhan is the retail broking arm of BNP PARIBAS, an organization with more
than eight decades of trust & credibility in the stock market. It is India's leading retail
financial
services company .We have over 250 share shops across 115 cities in India. While
our size and strong balance sheet allow us to provide you with varied products and
services at very attractive prices, our over 750 Client Relationship Managers are
dedicated to serving your unique needs.

Sharekhan is lead by a highly regarded management team that has invested crores
of
rupees into a world class Infrastructure that provides our clients with real-time
service &
24/7 access to all information and products. Our flagship Sharekhan Professional
Network offers real-time prices, detailed data and news, intelligent analytics, and
electronic trading capabilities, right at your finger-tips. This powerful technology
complemented by our knowledgeable and customer focused Relationship Managers.

We are Creating a world of Smart Investor.

Share khan offers a full range of financial services and products ranging from
Equities
to Derivatives enhance your wealth and hence, achieve your financial goals.
Share khan' Client Relationship Managers are available to you to help with your
financial and investment needs. To provide the highest possible quality of service,
Share khan provides full access to all our products and services through multi-
channels.

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 Amongst pioneers of investment research in the Indian market

• In 1984 ventured into Institutional Broking & Corporate Finance.

• Leading domestic player in Indian institutional business

• Over US$ 5 billion of private equity deals

BNP PARIBAS Group Companies

• BNP PARIBAS Investor Services Ltd (Sharekhan)

• S.S. Kantilal Ishwarlal Securities

• BNP PARIBAS Corporate Finance

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2.2 BNP PARIBAS – Corporate Structure

BNP PARIBAS as a Institutional Broking

Serving Institutional Investors –Domestic / International

• In the Indian securities business since 1922….

• Our institutional Research team is rated as one of the best in the industry

• Rated 1st by Asia Money

Research Coverage

• Amongst the widest coverage’s among broking houses in India.

• Total coverage exceeds some 100 stocks spread over 20 sectors.

• Sector wise investment strategies are in place.

• Stock ideas are presented from time to time, in tune with overall strategy.

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 • Active coverage of political developments, economy changes.

Highly rated Research

Research team ranks very high in fund-manager surveys

Best Domestic Securities House

 Euro money Survey July 1995

 Euro money Survey July 1996

Top ranked Domestic Brokerage House

 Asia money Survey September 1994

 Asia money Survey September 1995

 Asia money Survey September 1996

 Asia money Survey October 1998

 Asia money Survey October 2004

2.3 List of Key Foreign Institutional Clients

 Alliance Capital Management

 Emerging Markets Investment Management

 Edinburgh Fund Management Limited

 Foreign & Colonial Emerging Markets

 Goldman Sachs Investment Management

 Government of Singapore Investment Corporation

 Grantham, Mayo, Van Otterloo & Co.

 Indosuez Asset Management

 Jardine Fleming Investment Management Limited

 LGT Asset Management

 Lloyd George Investment Management

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 Martin Currie Investment Management Limited

 Morgan Stanley Asset Management

 TIAA-Cref Investment Management

 UBS

 BOI Mutual Fund

 Birla Capital Mutual Fund

 BOB Mutual Fund

 Canbank Investment Management Services Ltd.

 Chatterjee Group (SOROS)

 GIC Mutual Fund

 HDFC Bank

 IDBI Mutual Fund

 Indbank Mutual Fund

 ICICI Mutual Fund

 ITC Threadneedle Mutual Fund

 Kotak Mahindra Asset Management

 Kothari Pioneer Mutual Fund

 PNB Mutual Fund

 SBI India Magnum Fund

 SBI Mutual Fund

 Unit Trust of India

 UTI Offshore

 Corporation Bank

 LIC / LIC Mutual Fund / LIC Housing Finance

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Share khan Retail broking

• Among the top 3 branded retail service providers (Rs 650 crore average daily
vol- Apr Dec’04) .
• No. 2 player in online business.
• Largest network of branded broking outlets in the country servicing 100,000
clients.

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 2.4 NETWORK OF SHARE SHOPS

From sharekhan.com to
India’s largest chain of branded retail
share
Shops

2.5 SERVICES OFFER BY SHAREKHAN

331 branded share

shops across 311 Research Based
cities in India Investment
Advice

Training and Investment and

Seminars Trading
EQUITIES Services
DERIVATIVES
COMMODITIE
S

Technology Based
Integrated Demat
Investment Tools
PMS Facility

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2.6 Services provided by the SHAREKHAN :--

I. Equities and Derivatives

Our Retail Equity Business caters to the needs of individual Indian and Non-Resident

Indian (NRI) investors. Indiabulls offers broker assisted trade execution, automated

online investing and access to all IPO's.

Through various types of brokerage accounts, Indiabulls offers the purchase and
sale

of securities which includes Equity, Derivatives and Commodities Instruments

listed

on National Stock Exchange of India Ltd (NSEIL), The Stock Exchange, Mumbai

(BSE) and NCDEX.

 Sharekhan Classic account - Comprehensive services including research

and

investing guidance for independent investors.

 Sharekhan Fast trade - Sharekhan is dedicated to empower Active Traders

through personal service and advanced trading

technology.

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  Sharekhan Speed trade plus - With an extensive range of investment
products,

you will discover an unwavering commitment

to

helping you invest in India.

II. Sharekhan equity analysis

Building and maintaining your ideal portfolio demands objective, dependable

information. Sharekhan Equity Analysis helps satisfy that need by rating stocks
based

on carefully selected, fact-based measures. And because we're not focused on

investment banking, we don't have the same conflicts of interest as traditional

brokerage

firms. This objectivity is only one important difference in our ratings

TYPE OF CATEGORIES

1. Evergreen
2. Apple Green

3. Emerging Star

4. Ugly Duckling

5. Vulture's Pick

6. Cannonball

III. Depository Services

Sharekhan is a depository participant with the National Securities Depository Limited

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 (NSDL) and Central Depository Services (India) Limited (CDSL) for trading and

settlement of dematerialized shares. Sharekhan performs clearing services for all

securities transactions through its accounts. We offer depository services to create a

seamless transaction platform – execute trades through Indiabulls Securities and

settle

these transactions through the Indiabulls Depository Services. Sharekhan

Depository

Services is part of our value added services for our clients that create multiple

interfaces with the client and provide for a solution that takes care of all your needs

2.7 BUSINESS GROWTH

NETWORK GROWTH

250
223

200

147
150
122

100
68

50
25 29 30
14

0 - 19 -
2001-2002 2002-2003 2003-2004 2004-2005(till July)

Branch Franchisee
 REVENUE GROWTH

7000

6000

5000 1916

4000
653

3000

2000
819 3523

1000 466
716
877
55
207
0
Apr'01-Mar'02 Apr'02-Mar'03 Apr'03-Mar'04

Branch Online Franchisee

90000

80000
CLIENT-BASE GROWTH
70000
29796
60000

50000

40000
30991
30000
12512
20000
- 20 -
10000 7742 22,086 20514
4872 6420
0 2213
2001-2002 Ground Clients
2002-2003 Web clients2003-2004 Franchisee Clients
2004-2005(till Nov)
MARKET SHARE

2.00%

1.83%

1.80%

1.60%

1.40%

1.20%
1.07%

1.00%

0.80%
0.67%

0.60%

0.40%

0.20%

0.00%

01-02 02-03 03-04

Future Plans (Need to have strategic perspective with timeliness)

• 200000+ retail customers being serviced through centralized call centre / web
solution
• 60 branches/semi branches servicing affluent/aggressive traders through
highly skilled financial advisors
• 250 independent investment managers/franchisees servicing 50000 highly
valued clients
• Strong advisory role through Fundamental & technical research

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• New initiatives - Portfolio Management Services & Commodities trading

- 22 -
- 23 -
 3. Online Trading Account

Sharekhan provide two types of trading account:

1. Classic account (For beginners and medium investor)

2. Speed Trade (For heavy investor)

ARE YOU AN INVESTOR? ARE YOU AN ACTIVE TRADER?

The Classic Account enables you to trade online SPEEDTRADE is a

through our website, and gives you our research next-generation online trading product that

content. brings the power of your broker's terminal

to your PC...

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3.1 Classic Account :--

The CLASSIC ACCOUNT is a Sharekhan online trading account, through which you can buy and
sell shares through our website www.sharekhan.com in an instant.

Along with enabling access for you to trade online, the CLASSIC ACCOUNT also gives you our
Dial-n-Trade service. With this service, all you have to do is dial 1-600-22-7050 to buy and sell
shares using your phone.

Features of the CLASSIC ACCOUNT

that enable you to invest effortlessly

1. Online trading account for investing in Equities and Derivatives via sharekhan.com

2. Integration of: Online trading + Bank + Demat account

3. Instant cash transfer facility against purchase & sale of shares

4. Reasonable transaction charges

5. Instant order and trade confirmation by e-mail

6. Streaming quotes

7. Personalized market watch

8. Single screen interface for cash, derivatives and more

9. Provision to enter price trigger and view the same online in market watch

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3.2 SPEED TRADE ACCOUNT:--

SPEEDTRADE is an internet-based software application, that enables you to buy and sell
shares in an instant.

It’s ideal for active traders and jobbers who transact frequently during day's trading session
to
capitalize on intra-day price movements.

Speed Trade provides all the features of Classic, with the added functionality of trading in
derivatives from the same single-screen software interface.

Features of Speed trade

that enable you to trade effortlessly

1. Instant order Execution & Confirmation
2. Single screen trading terminal
3. Real-time streaming quotes, tic-by-tic charts
4. Market summary (most traded scrip, highest value)
5. Hot keys similar to a brokers terminal
6. Alerts and reminders

Back-up facility to place trades on Direct Phone lines :--

Our Dial-n-Trade service gives you the convenience of buying and selling shares over the
phone by calling our dedicated phone lines at 1-600-22-7050.

DIAL-N -TRADE now comes as a part of the Sharekhan Classic Account, an exclusive
service for

trading shares from your telephone.

Just dial 1-600-22-7050*, enter your TPIN number, and you will be directed to a tiebreaker
who

will buy or sell shares for you.

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Features of DIAL-N –TRADE that make the stock market easier to access

1. Dedicated Toll-Free number for order placements.

2. Automatic fund transfer with phone banking**

3. Simple and secure IVR based system for authentication

4. No waiting time. Enter TPIN to be transferred to our teleprocess.

5. Trusted, professional advice of our tele brokers

6. After-hours order placement facility between 9.30 a.m. & 9.45 a.m. ***

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1.3 INTRODUCTION TO THE TOPIC
Satisfaction is consumer’s fulfillment response. It is a judgment that a product or a service
feature or the product or service itself provides pleasurable level of consumption related
fulfillment.

Customer’s satisfaction influenced by specific product are service features and by perceptions
of quality. It is also influenced by specific service attributions, and their perceptions
MARKETING ORGANIZATION
CEO

MANAGING DIRECTOR

TRANSFER MANAGER WORK MANAGER EXECUTIVE MANAGER SALE & SERVICE

MANAGER
Customer Satisfaction is the pillar of the marketing concept.
Satisfaction is consumer’s fulfillment response. It is a judgment that a product or a service
feature or the product or service itself provides pleasurable level of consumption related
fulfillment.
Customer’s satisfaction influenced by specific product are service features and by perceptions
of quality. It is also influenced by specific service attributions, and their perceptions
The telling factor in the company’s long run fortunes will be the amount of customer
satisfaction that it managers to generate. But it doesn’t not mean the company’s sole aim is to
maximize Customer Satisfaction. If that where the case, it should simply put out the best
product and service in the world and price is below cost. There by it would be creating
substantial customer satisfaction. But in the long run it would be also be out of business.
Customer Satisfaction like happiness bet achieved by rendering substantial forma of
assistance to others rather than by direct pursuit.
Companies that move towards adopting the market concept benefit themselves and The
society. It leads the society’s recourse to move in the direction of social needs, there by
bringing the interests of business firms and the interest of society in to harmonious
relationship. Thus the third pillory of the marketing concept aims to achieve good profits by
giving the customer genuine values in the satisfaction.

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Customer satisfaction, a business term, is a measure of how products and services supplied by
a company meet or surpass customer expectation. It is seen as a key performance indicator
within business and is part of the four perspectives of a Balanced Scorecard.

In a competitive marketplace where businesses compete for customers, customer satisfaction

is seen as a key differentiator and increasingly has become a key element of business
strategy. Increasing competition (whether for-profit or nonprofit) is forcing businesses to pay
much more attention to satisfying customers. (It may help the reader to notice the role of
customer satisfaction in the overall context of product or service development and
management.
Measuring customer satisfaction
Organizations are increasingly interested in retaining existing customers while targeting non-
customers;[2] measuring customer satisfaction provides an indication of how successful the
organization is at providing products and/or services to the marketplace.
Customer satisfaction is an ambiguous and abstract concept and the actual manifestation of
the state of satisfaction will vary from person to person and product/service to
product/service. The state of satisfaction depends on a number of both psychological and
physical variables which correlate with satisfaction behaviors such as return and recommend
rate. The level of satisfaction can also vary depending on other options the customer may
have and other products against which the customer can compare the organization's products.
Because satisfaction is basically a psychological state, care should be taken in the effort of
quantitative measurement, although a large quantity of research in this area has recently been
developed. Work done by Berry, Brooder between 1990 and 1998 [3] defined ten 'Quality
Values' which influence satisfaction behavior, further expanded by Berry in 2002 and known
as the ten domains of satisfaction. These ten domains of satisfaction include: Quality, Value,
Timeliness, Efficiency, Ease of Access, Environment, Inter-departmental Teamwork, Front
line Service Behaviors, Commitment to the Customer and Innovation. These factors are
emphasized for continuous improvement and organizational change measurement and are
most often utilized to develop the architecture for satisfaction measurement as an integrated
model. Work done by Parasuraman, Zeithaml and Berry between 1985 and 1988 provides the
basis for the measurement of customer satisfaction with a service by using the gap between
the customer's expectation of performance and their perceived experience of performance.
This provides the measurer with a satisfaction "gap" which is objective and quantitative in
nature. Work done by Cronin and Taylor propose the "confirmation/disconfirmation" theory
- 29 -
of combining the "gap" described by Parasuraman, Zeithaml and Berry as two different
measures (perception and expectation of performance) into a single measurement of
performance according to expectation. According to Garbrand, customer satisfaction equals
perception of performance divided by expectation of performance.
The usual measures of customer satisfaction involve a survey [4] with a set of statements using
a Likert Technique or scale. The customer is asked to evaluate each statement and in term of
their perception and expectation of the performance of the organization being measured.

Customer Loyalty
"It takes a lot less money to increase your retention of current customers than to find new
ones-but I know I don't give it as much effort as I should because it does take a lot of energy
and effort!"
Strategize And Plan For Loyalty!
 Do you even have a specific plan for building customer loyalty?
 I bet you haven't given it as much thought as you should- because to tell the truth I
need to give it more effort also.
 If you currently retain 70 percent of your customers and you start a program to
improve that to 80 percent, you'll add an additional 10 percent to your growth rate.
 Particularly because of the high cost of landing new customers versus the high
profitability of a loyal customer base, you might want to reflect upon your current
business strategy.
These four factors will greatly affect your ability to build a loyal customer base:

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 1. Products that are highly differentiated from those of the competition.
2. Higher-end products where price is not the primary buying factor.
3. Products with a high service component.
4. Multiple products for the same customer.
Market to Your Own Customers!
Giving a lot of thought to your marketing programs aimed at current customers is one aspect
of building customer loyalty.
When you buy a new car, many dealers will within minutes try to sell you an extended
warranty, an alarm system, and maybe rust proofing. It's often a very easy sale and costs the
dealer almost nothing to make. Are there additional products or services you can sell your
customers.
Three years ago my house was painted, and it's now due for another coat. Why hasn't the
painter called or at least sent a card? It would be a lot less expensive than getting new
customers through his newspaper ad, and since I was happy with his work I won't get four
competing bids this time. Keep all the information you can on your customers and don't
hesitate to ask for the next sale.
Use Complaints To Build Business!
When customers aren't happy with your business they usually won't complain to you -
instead, they'll probably complain to just about everyone else they know - and take their
business to your competition next time. That's why an increasing number of businesses are
making follow-up calls or mailing satisfaction questionnaires after the sale is made. They find
that if they promptly follow up and resolve a customer's complaint, the customer might be
even more likely to do business than the average customer who didn't have a complaint.
In many business situations, the customer will have many more interactions after the sale
with technical, service, or customer support people than they did with the sales people. So if
you're serious about retaining customers or getting referrals, these interactions are the ones
that are really going to matter. They really should be handled with the same attention and
focus that sales calls get because in a way they are sales calls for repeat business.

Reach Out To Your Customers!

Contact . . . contact . . . contact with current customers is a good way to build their loyalty.
The more the customer sees someone from your firm, the more likely you'll get the next
order. Send Christmas cards, see them at trade shows, stop by to make sure everything's okay.

- 31 -
Send a simple newsletter to your customers-tell them about the great things that are
happening at your firm and include some useful information for them. Send them copies of
any media clippings about your firm. Invite them to free seminars. The more they know about
you, the more they see you as someone out to help them, the more they know about your
accomplishments-the more loyal a customer they will be.
Loyal Customers and Loyal Workforces
Building customer loyalty will be a lot easier if you have a loyal workforce-not at all a given
these days. It is especially important for you to retain those employees who interact with
customers such as sales people, technical support, and customer-service people. Many
companies give a lot of attention to retaining sales people but little to support people. I've
been fortunate to have the same great people in customer service for years-and the
compliments from customers make it clear that they really appreciate specific people in our
service function. The increasing trend today is to send customer-service and technical-support
calls into queue for the next available person. This builds no personal loyalty and probably
less loyalty for the firm. Before you go this route, be sure this is what your customers prefer.
Otherwise I'd assign a specific support person to every significant customer.
“MARKETTING JOB IS TO CONVERT SOCIETAL NEEDS IN TO PROFITABLE
OPPORTUNITIES”.
Definition of marketing as follows
“Marketing is a social managerial process by which individuals and group obtain what the
need and want through creating. Offering and exchanging products of value with others”.
This definition of marketing rests on the following core concepts needs, wants and elements,
products (goods, services and ideas); value cost and satisfaction exchange and transactions,
relationships and networks, markets and marketers and prospects.
THE MAKETING CONCEPT
“ The marketing concept hold that key to achieving organizations goals consists of being
more effective than competitor in integrating more effective then competitive in integrating
marketing activities towards determining and satisfying the needs and wants of target
markets”.

- 32 -
2.1 STATEMENT OF PROBLEM
The objective of every company would be ensuring customer satisfaction for the customer
satisfaction would create loyal customers. Measuring customer satisfaction is always a
challenge, as customer either would not disclose or sometimes do not assess their satisfaction
level clearly. Many times the customer can not specify the reasons for his satisfaction.

2.2 NEED FOR THE STUDY

ANATHA P.V.C PIPES believes in satisfactory delivery of service quality to the customer,
but due to unknown reasons that the customer satisfaction analyzed by the company is not up
to the make. The company intends to find out the causes and remedies for the low customer
satisfaction.

2.3 OBJECTIVES OF THE STUDY

The following are the objectives of the study to solve the problem.
They are:
 To know the customer satisfaction regarding Share khan.
 To identify customer interest in buying pipes.
 To find service rendered by the company.
 To know price impact on product purchase.
 To find word of mouth impact on product purchase.

2.4 HYPOTHESIS
 The purpose of usage influence customer satisfaction.
 Rural/Urban market influence customer satisfaction.

2.5 SOURCE OF DATA

Primary Data
The Primary Data is collected through questionnaire survey to customers.
Secondary Data
Information is gathered from company profile, website and book Consumer Behaviour author
by Loudon and Della Betta

2.6 SCOPE OF THE STUDY

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The scope of the study is to find out the customer satisfaction with reference to Sharekhan.
The study covers the different aspects of customer satisfaction.

This has been conducted in Muzaffarnagar Zone. Data have been collected from customer by
a personal interview. The researcher took 3 weeks to study the entire customers’ perception.

4. Different Competitors

The major players in online trading

• ShareKhan.com

• IndiaBulls.com

• ICICIDirect.com

• HDFCsec.com

4.1 Sharekhan

Company Background

 Share khan is the retail broking arm of BNP PARIBAS Securities Pvt Ltd.
BNP PARIBAS owns

56% in sharekhan, balance ownership is HSBC, First Caryle, and Intel

Pacific.

Into broking since 80 years.

 Focused on providing equity solutions to every segment Largest ground

network

of 210 Branded Share shops in 90 Cities.

.

Online Account Types

- 34 -
  Classic Account / Applet: Investor in equities

 SpeedTrade: Trader in equities & derivatives

Pricing for Retail Customers

Speed Trade

 Account Opening : Rs 1000 ( Refundable against brokerage in Month +1)

 Demat 1st Yr : Including in Account Opening

 Initial Margin : NIL

 Min Margin Retainable : NIL

 Brokerage : Trading 0.10% each side + All Taxes

Delivery 0.50% each side + All Taxes

( Negotiable based on volume )

 Account Access Charges :

 Monthly Rs 500, adjustable against brokerage of Rs 9000/- for qtr

 No access charges for gold customers ( Above 1 lac brokerage p.a)

4.2 INDIABULLS

Company Background

IndiaBulls is a retail financial services company present in 70 locations covering 62

cities. It offers a full range of financial services and Products ranging from Equities to

Insurance. 450 + Relationship Managers who act as personal financial advisors.

Online Account Type

 Signature Account : Plain Vanilla Account with focus on Equity Analysis.

The

 equity analysis is a paid service even for A/c holders.

 Power Indiabulls: Account with sophisticated trading tools, low commissions

and priority access to R.M

- 35 -
Pricing of IB Accounts

Signature Account

 Account Opening : Rs 250

 Demat : Rs 200 if POA is signed, No AMC for this DP

 Initial Margin : NIL

 Brokerage : Negotiable

Power IndiaBulls

 Account Opening : Rs 750

 Demat : Rs 200 if POA is signed, No AMC for this DP

 Initial Margin : NIL

 Brokerage : Negotiable

PAID Research

SCHEME FACILITY

WeMBAsed-1-Month-500 : View & Print on website

WeMBAsed-1-Year -6000 : View & Print on website

PrintReport-1-Month-750 : View & Print on website + 10 Reports Delivered

PrintReport-1-Year- 9000 : View & Print on website + 10 Reports Delivered

Deal Clinchers v/s IndiaBulls

 POA for Clients DMAT

 All shares held by client trading with IB are moved to IB Pool Account and

 the same is shown as a reflection in client DP account. Charges are levied

to move shares from IB pool Account to client DP account.

 Paid Research Services

Access to an research even for an IB trading account holder is charged a

min of Rs 500 a month.

- 36 -
  Margin Funding hoax

The interest on funding starts on leveraged delivery trades from T+1 day

itself @21% p.a, on a daily basis.

The role of Relationship Manager

Each RM is looked upon as a revenue generator and he gets a % on business

generated from client. This can lead to over leveraged (Interest) & high

frequency(Brokerage) trading, which may not be in the best interest of the client.

4.3 ICICIDirect

Company Background

ICICI Web Trade Limited (IWTL) maintains ICICIdirect.com. IWTL is an

Affiliate of ICICI Bank Limited and the Website is owned by ICICI Bank

Limited.

Account Types

ICICI Direct e-invest Account : Plain Vanilla Account with focus on 3 in 1

advantage.

Differentiated in services within the account

1.Cash on spot

2.Margin Plus

Premium Trading interface of ICICIDirect Link is given to DBC partners and

HNI’s

Pricing of Account

 Account Opening : Rs 750

 Schemes : For short periods Rs 750 is refundable

against brokerage generated in a qtr.

- 37 -
 These schemes are introduced 3-4 times a year.

 Demat : NIL, 1st year charges included in Account

Opening Plus a facility to open additional

4 DP’s without 1st year AMC

 Initial Margin : Nil

 Brokerage : All brokerage is inclusive of stamp duty and

exclusive of other taxes.

Delivery Vol per qtr Brokerage *

<10 lakh 0.75%

10 lakh -25 lakh 0.70%

25 lakh -50 lakh 0.55%

50 lakh -1 Cr 0.45%

1 Cr - 2 Cr 0.35%

2 Cr - 5 Cr 0.30%

> 5 Cr 0.25%

4.4 HDFC Securities

Company Background

HDFC Securities Ltd, is promoted by the HDFC Bank, HDFC and Chase Capital

Partners and their associates. Pioneers in setting up Dial-a-share services with the

largest team of Tele-brokers.

Online Account Type

 HDFC Online Trading A/c : Plain Vanilla Account with focus on 3 in 1

 advantage

Pricing of HDFC Account

- 38 -
 Account Opening : Rs 750

 Demat : NIL, 1st year charges included in Account Opening

 Initial Margin : Rs 5000/- for non HDFC Bank customers ( AQB)

 Brokerage : Trading 0.15%* each side + ST

Delivery 0.50%** each side + ST

* Rs 25 Min Brokerage per transaction

** Rs 8 Min Brokerage per transaction

- 39 -
 5. Requirement for
Opening Online Account

Sharekhan Depository Services

Dematerialization and trading in the demat mode is the safer and faster alternative to

the physical existence of securities. Demat as a parallel solution offers freedom from

delays, thefts, forgeries, settlement risks and paper work. This system works through

depository participants (DPs) who offer demat services and the securities are held in

the electronic form for the investor directly by the Depository.

Opening a DP account with Sharekhan

 You can open a Depository Participant (DP) account, either through a

Sharekhan

branch or through a Sharekhan Franchisee center.

 There is no fee for opening DP accounts with Sharekhan. However a nominal

deposit (refundable) is charged towards services which will be adjusted

against

all future billings.

5.1 Documents required to opening of demat account:--

Requirement for opening Demat a\c:

All investors have to submit their proof of identity and proof of address along with the

prescribed account opening form.

1. Proof of identity: You can submit a copy of Passport, Voters ID card, Driving

licence or PAN card with two photograph.

- 40 -
 2. Proof of address: You can submit a copy of Passport, Voters ID card, Driving

license, PAN card with photograph, Ration card or Bank passbook as proof of

address. You must remember to take original documents to the DP for

verification.

3. Passport-size photograph: The above are mandatory requirements as per

Securities and Exchange Board of India(SEBI).

Dematerialization with Sharekhan

Dematerialization is the process by which a client can get physical certificates

converted into electronic balances maintained in his account with the DP.

Features:

 Holdings in only those securities that are admitted for dematerialization by

National Securities Depository Ltd (NSDL) can be dematerialized.

 Structure of holding in the securities should match with the account structure
of

the depository account. Now shares in different order of names can also be

dematted.

Example:

If the shares are in the name of X and Y, the same cannot be dematerialized into
the

account of either X or Y alone. However if the shares are in the name of X first
and Y

second, and the account is in the name of Y first and X second, then these
shares

- 41 -
 can be dematerialized in this account.

Only those holdings that are registered in the name of the account holder can be

dematerialized. Physical shares which have not been transferred and are still
there

with a transfer deed cannot be dematted. Only a few companies have been given

the permission to offer Transfer-cum-Demat. The list of these companies can be

viewed here.

Rematerialization

Rematerialization is the process by which a client can get his electronic holdings

converted into physical certificates. The client has to submit the rematerialisation

request to the DP with whom he has an account along with a Remat request
form.

The physical shares will be posted by the company directly to the clients.

Trades

For all sales made by clients, the shares will have to be given to the broker, so

that the Pay In can be made by the broker to the stock exchange concerned. For

that it's essential that the shares be transferred to the account of the broker well

before the deadline date.

You must confirm with your broker the settlement date and settlement number and

then submit your instructions to your DP. Also it's important to give the instructions

to your DP as early as possible.

- 42 -
Pledge

Pledge enables you to obtain loans against your dematerialised shares. So you

get liquidity without having to sell your shares.

A highly simplified procedure may be availed of for pledging of securities in the

electronic mode. The pledged securities continue to be reflected in the DP

account of the clients (pledgor) but the concerned securities are "blocked" and

cannot be used for any transactions. As and when the pledge is to be removed,

based on confirmations received from both the pledgor and the pledgee, the

blocked securities will be released to "Free Balance" of the account holder.

A very big advantage of using pledges in the electronic mode is that the securities

continue to be in your account and therefore all benefits--viz Dividend, Bonus and

Rights--accrue to the holder, ie you and not the bank (pledgee).

Corporate Benefits

Corporate benefits are benefits given by a company to its investors. These may be

either monetary benefits like dividend, interest etc or non-monetary benefits like

bonus, rights etc. NSDL facilitates distribution of corporate benefits. It's important to

mention your correct MICR No and attach copy of the cheque leaf with your

account opening form. NSDL is planning to distribute all cash corporate benefits to

bank accounts directly.

- 43 -
6. Analysis

6.1 Learning about dematerilization

6.1.1 How to convert your security to demat form:--

Process of conversion of securities into the demat form

Securities specified as being eligible for dematerialization by the depository in

its bye laws and as under the SEBI (Depositories and Participants)

Regulations, 1996 (the Regulations) can be converted or issued in a

dematerialized form. The process of conversion of securities into a

dematerialized form or the issuance of the same in a dematerialized form can

be explained thus:

1. Firstly, the issuer company, whose securities are eligible for

dematerialization, has to enter into an agreement with a depository for

dematerialization of securities already issued, or proposed to be issued to the

public or existing shareholders .

2. The investor is given an option to hold the securities in a dematerialized

form and it is his prerogative to exercise the option to hold the securities in

that manner.

- 44 -
6.1.2 Benefits of Depository System:--

In the depository system, the ownership and transfer of securities takes place

by means of electronic book entries. At the outset, this system rids the capital

market of the dangers related to handling of paper. NSDL provides numerous

direct and indirect benefits, like:

Elimination of bad deliveries

In the depository environment, once holdings of an investor are

dematerialized, the question of bad delivery does not arise i.e. they cannot be

held "under objection". In the physical environment, buyer was required to

take the risk of transfer and face uncertainty of the quality of assets

purchased. In a depository environment good money certainly begets good

quality of assets.

Elimination of all risks associated with physical certificates

Dealing in physical securities have associated security risks of theft of stocks,

mutilation of certificates, loss of certificates during movements through and

from the registrars, thus exposing the investor to the cost of obtaining

duplicate certificates and advertisements, etc. This problem does not arise in

the depository environment.

- 45 -
No stamp duty

for transfer of any kind of securities in the depository. This waiver extends to

equity shares, debt instruments and units of mutual funds.

Immediate transfer and registration of securities

In the depository environment, once the securities are credited to the

investors account on pay out, he becomes the legal owner of the securities.

There is no further need to send it to the company's registrar for registration.

Having purchased securities in the physical environment, the investor has to

send it to the company's registrar so that the change of ownership can be

registered. This process usually takes around three to four months and is

rarely completed within the statutory framework of two months thus exposing

the investor to opportunity cost of delay in transfer and to risk of loss in transit.

To overcome this, the normally accepted practice is to hold the securities in

street names i.e. not to register the change of ownership. However, if the

investors miss a book closure the securities are not good for delivery and the

investor would also stand to loose his corporate entitlements.

Faster settlement cycle

- 46 -
The exclusive demat segments follow rolling settlement cycle of T+2 i.e. the

settlement of trades will be on the 2nd working day from the trade day. This

will enable faster turnover of stock and more liquidity with the investor.

6.1.3 Disadvantages of Dematerialization

The disadvantages of dematerialization of securities can be summarized

as follows:

A. Trading in securities may become uncontrolled in case of dematerialized

securities.

B. It is incumbent upon the capital market regulator to keep a close watch

on the trading in dematerialized securities and see to it that trading does

not act as a detriment to investors. The role of key market players in case

of dematerialized securities, such as stock-brokers, needs to be supervised

as they have the capability of manipulating the market.

C. Multiple regulatory frameworks have to be confirmed to, including the

Depositories Act, Regulations and the various Bye Laws of various

depositories. Additionally, agreements are entered at various levels in the

process of dematerialization. These may cause anxiety to the investor

desirous of simplicity in terms of transactions in dematerialized securities.

However, the advantages of dematerialization outweigh its disadvantages

and the changes ushered in by SEBI and the Central Government in terms

of compulsory dematerialization of securities are important for developing

the securities market to a degree of advancement. Freely traded securities

- 47 -
are an essential component of such an advanced market and

dematerialization

addresses such issues and is a step towards the advancement of the

market.

- 48 -
Data Related to dematerialization

- 49 -
Explanation of diagram:

The monthly average turn over was 129.27 crores shares in the total turn over

segment and 0.677 crores shares was in demat segment. This clearly reveals

that the growth in the dematerialization process was not keeping pace with the

growth in the total turn over of shares in the Indian capital market (Stock

Exchange). This shows that in spite of popularity of the dematerialization

process or electronic buying, selling and possessing of shares are not

popular.

- 50 -
- 51 -
he analysis of the table reveals that the monthly average delivery in the BSE

over the period from January 1998 to April 2000, was 55.72 crores shares and

the same in the demat segment mode was 0.677 crores shares revealing a

poor share through the new mode.

The total delivery represents the Delivery of A-Group, B1-Group, B2 Group

and demat Group securities at BSE. The delivery of demat segments

represents the exclusive demat transaction.

However when an attempt was made to find out the annual growth of the

delivery through both modes it revealed that delivery is the Indian Capital

market was growing on an average at a rate of 2.6173 crores share and

delivery of share through the dematerialized segment was on an average of

0.458 crores shares per month. When these trends in the growth were tested

with the students 't' test, both segments growth wore found significant at/

percent level.

This leads to the conclusion that in the volume wise analyse/comparison

conducted both for the total turn over and turnover through dematerialized

process and the total delivery in the BSE and delivery through the demat

mode have not grown as the generally know physical/paper mode have

grown. This may be due to lack of information and also short direction after he

inception of the scheme.

- 52 -
The volume analysis conducted earlier may represent the number of shares

dealt in the stock exchange, but there one certain, shares, which are high in

market value and certain other company’s shares are low in value therefore

the value of the shares dealt in the dematerialization becomes essential one.

Table & Graph shows that total turnover & Exclusive demat segment

turnover at BSE (Value-Wise analysis)

- 53 -
- 54 -
- 55 -
Analysis:

The number of trading days in a month has been ranging between 16 days

(January 2000) and 23 days (July 1998). From the Table IV - V it can be

observed that the average daily turnover in a month have been at a rate of Rs.

13.83 crores per month in the total segment and in the demat segment it was

on an average Rs. 1.3113 crores per month.

When verify the result, the student 't' statistics have showed that the growth in

both the segments are significant are 1 percent level.

While analyzed the average daily turnover in a month it was found that Rs.

1949.67 crores in the total segment. At the same time in the demat segment

the monthly average daily turnover was Rs. 11.40 crores during the trading

days.

From the above result it can be concluded that the average daily turnover was

growing at a minimum rate in rate in demat segment, when compare to total

segment. This may be due to the infancy stage of demat segment. But how

ever in the latest periods (i.e. from January 2000) it is growing at a fast rate.

- 56 -
6.2 Analysis on future of online trading

Broker-wise Business Done

(From July 1999 to June 2000)

Brokerwise

contracts % to
Brokers* Business Brokerage Paid
outstanding for
Done (Rs. in Lakh) Total
more than 60

days

UTI Securities & Exchange Ltd. 58095249148.70 364.8050 Nil 22.8492

AJCON Capital Markets Ltd. 5791667584.90 29.7400 Nil 2.2779

KJMC Capital Market Services Ltd. 5403176981.62 27.8800 Nil 2.1251

PNR Securities Ltd. 5207165284.77 36.9500 Nil 2.0480

DSP Merrill Lynch Ltd. 5161988027.92 45.0300 Nil 2.0302

S S Kantilal Ishwarlal Securities 4919280820.11 119.9500 Nil 1.9348

IDBI Capital Market Services 4887066448.82 119.1550 Nil 1.9221

Mukesh Babu Securities Ltd. 4074343429.84 72.1000 Nil 1.6025

ICICI 3807355200.00 0.0000 Nil 1.4975

Bonanza Portfolio Ltd. 3566594657.13 21.4200 Nil 1.4028

Dolat Capital Market Ltd. 3295896951.91 89.2250 Nil 1.2963

ICICI Brokerage Services Ltd. 3263458260.80 87.1400 Nil 1.2835

Roongta Capital Markets Pvt. Ltd. 2544422898.95 66.6400 Nil 1.0007

J M Morgan Staniey Securities 2501907205.83 61.3900 Nil 0.9840

ICICI Sec. & Fin. Co. Ltd. 2416875564.40 0.0000 Nil 0.9506

Bhagirath Merchant Stock Brok. 2382992171.44 60.8500 Nil 0.9372

Mata Securities India Pvt. Ltd. 2296753616.21 21.8550 Nil 0.9033

Dhanki Securities Pvt. Ltd. 2275933637.13 52.7800 Nil 0.8951

- 57 -
 ABN Amro Asia Equities (I) Ltd. 2141347460.32 55.4500 Nil 0.8422

Deutsche Bank 2097139250.00 0.0000 Nil 0.8248

From the above chart we can easily see that share is very spread.

Ifs and Buts of Indian online share trading

You have some money to dabble with. Trading shares on BSE/NSE has

always been your dream. When will you ever find the time? And besides, the

hassle of finding a broker is not easy.

Realizing there is untapped market of investors who want to be able to

execute their own trades when it suits them, brokers have taken their trading

rooms to the Internet. Known as online brokers, they allow you to buy and sell

shares via Internet.

- 58 -
 7. Equity Research

Banking Sector (Introduction )

EVOLUTION OF BANKING

Banking in India has an early origin where the indigenous bankers played a

very important role in lending money and financing foreign trade and

commerce. During the days of the East India Company, was the turn of the

agency houses to carry on the banking business. The General Bank of India

was first Joint Stock Bank to be established in the year 1786. The others

which followed were the Bank Hindustan and the Bengal Bank.

PRE-INDEPENDENCE (1786-1947)

The evolution of the modern commercial banking industry in India can be

traced to 1786with the establishment of Bank of Bengal in Calcutta (now

Kolkata). Subsequently, three Presidency Banks were set up—at Calcutta in

1806, Bombay (now Mumbai) in 1840, and Madras (now Chennai) in 1843. In

1860, the concept of limited liability was introduced in banking, resulting in the

establishment of a number of joint sector banks. The early 1900s led to the

establishment of a number of indigenous joint stock banks, such as the Bank

of India, Bank of Baroda, and the Central Bank of India. In 1921, the three

- 59 -
Presidency Banks were amalgamated to form the Imperial Bank of India (IBI).

This new bank took on the triple role of a commercial bank, a banker's bank

and a banker to the government. The establishment of the Reserve Bank of

India (RBI) as the central bank of the country in 1935 ended the quasi-central

banking role of the IBI. It ceased to be banker to the Government of India

(GoI) and instead became agent of the RBI for the transaction of government

business at centres at which RBI was not established. IBI also acted as a

bankers' bank by holding their surplus.

POST-INDEPENDENCE

India inherited a weak financial system after Independence in 1947. At end-

1947, there were 625 commercial banks in India, with an asset base of Rs.

11.51 billion. Commercial banks mobilized household savings through

demand and term deposits, and disbursed credit primarily to large

corporations. Following Independence, the development of rural India was

given the highest priority. The commercial banks of the country including the

IBI had till then confined their operations to the urban sector and were not

equipped to respond to the emergent needs of economic regeneration of the

rural areas.

However, by the 1980s, it was generally perceived that the operational

efficiency of banks was declining. Banks were characterized by low

profitability, high and growing non performing assets (NPAs), and low capital

base. Average returns on

- 60 -
assets were only around 0.15% in the second half of the 1980s, and capital

aggregated an estimated 1.5% of assets. Poor internal controls and the lack of

proper disclosure norms led to many problems being kept under cover. The

quality of customer service did not keep pace with the increasing

expectations. In 1991, a fresh era in Indian banking began, with the

introduction of banking sector reforms as part of the overall economic

liberalization in India.

CREDIT MARKET STRUCTURE

In India, given the relatively underdeveloped capital market and with little

internal resources, firms and economic entities depend, largely, on financial

intermediaries to meet their fund requirements. In terms of supply of credit,

financial intermediaries can broadly be categorized as institutional and non-

institutional. The major institutional suppliers of credit in India are banks and

non-bank financial institutions (that is, development financial institutions or

DFIs), other financial institutions (FIs), and non-banking finance companies

(NBFCs).

STRUCTURE OF THE BANKING SECTOR

The banking sector in India functions under the umbrella of the RBI—the

regulatory, central bank. The Reserve Bank of India Act was passed in 1934

and the RBI was constituted in 1935 as the apex bank. The Banking

- 61 -
Regulations Act was passed in 1949. This Act brought the RBI under

government control. Under

the Act, the RBI received wide-ranging powers in regards to establishment of

new banks, mergers and amalgamations of banks, opening and closing of

branches of banks, maintaining certain standards of banking business,

inspection of banks, etc. The Act also vested licensing powers and the

authority to conduct inspections with the RBI.

Banks in India can broadly be classified as regional rural banks or RRBs,

scheduled commercial banks or SCBs, and co-operative banks. the scope of

my study is restricted to SCB’s only.. The SCBs for the purpose of this

comment can be classified into the following three categories:

 Public sector banks or PSBs (SBI & its associates, and nationalized

banks);

 Private sector banks (old and new); and

 Foreign banks.

- 62 -
With about 286 scheduled commercial banks (and now non-banking financial

institutions), the sector is highly competitive. Banking in India, though, is

dominated by the banks in the public sector (the SBI Group and the

nationalized banks), which account for 73% of the assets and 77% of the

deposits.

- 63 -
The SBI Group handles more than a quarter of the sector’s assets, private

banks 17% and foreign banks 7%. In the private sector, 21 old private sector

banks handle 35% of the sector’s assets whereas eight new private sector

banks handle 65%. The ICICI Bank (on its merger with ICICI) has a 36%

market share, followed by the HDFC Bank with 12%. Although there are an

overwhelming 196 regional rural banks (RRBs), they account for a meager 3%

of the assets and deposits of the banking sector.

Public Sector Banks

- 64 -
The banking sector in India has been characterized by the predominance of

PSBs. The PSBs had 47,677 offices (SBI & associates: 13,735; nationalized

banks: 33,942) at end-FY2003, and their assets of Rs. 12,852 billion at end-

FY2003 accounted for 75.7% of assets of all SCBs in India. An estimated

63.4% of the offices of PSBs at end-FY2003 were in rural/semi-urban areas.

The PSBs’ large network of branches enables them to fund themselves out of

low-cost deposits. At end-FY2003, PSBs accounted for 75.7% of assets,

79.6% of deposits, 74.2% of advances, 74.5% of income, and 88.7% of offices

of all SCBs in India, thus clearly demonstrating their dominance of the Indian

banking sector. However, PSBs have suffered a gradual loss of market share,

mainly to new private sector banks. PSBs accounted for 80% of asset growth

of SCBs during FY2003, compared with 51.9% during FY2002, and 75.3%

during FY20014.

Private Sector Banks

- 65 -
As of end-FY2003, there were 30 private sector banks operating in India

through 5,879 offices. These can further be classified as old (OPBs) and new

private sector banks (NPBs). At end-FY2003, there were 21 OPSBs operating

in the country. These banks had an estimated 4,737 offices at end-FY2003,

are regional in character and, except for a few, have a comparatively small

balance sheet size.

In July 1993, as part of the banking sector reform process and as a measure

to induce competition in the banking sector, the RBI permitted entry by the

private sector into the banking system. This resulted in the introduction of 9

private sector banks. These banks are collectively known as the `new’ private

sector banks (NPBs), and operated through an estimated 988 branches at

end-FY2002. With the merger of Times Bank Limited into HDFC Bank Limited

in February 2000, and the entry of Kotak Mahindra Bank Limited (KMBL)

during March 2003, there are nine NPBs in India at present.

- 66 -
At end-FY2003, the total assets of private sector banks aggregated Rs. 2,973

billion and accounted for 17.5% of the total assets of all SCBs. Although the

share of private sector banks in total assets has increased from 12.6% at end-

FY2001, most of the gain has been accounted for by NPBs. The share of

NPBs in the share of assets of all private sector banks increased from 27.5%

at end-FY1997 (2.4% of assets of SCBs) to 64.6% at end-FY2003 (11.3% of

assets of SCBs). By contrast, the share of OPBs banks (in total assets of

SCBs) has

declined from 6.4% at end-FY1997 to 6.2% at end-FY2003; their share of

assets of private sector banks has declined from 72.5% at end-FY1997 to

35.4% at end-FY2003. At end- FY2003, three (ICICI Bank, HDFC Bank, and

UTI Bank) of the five largest private sector banks (by asset size) were NPBs

(refer Table below). The five largest private sector banks controlled 62.5% of

assets of all private sector banks at end-FY2003.

- 67 -
Foreign Banks

At end-FY2003, 36 foreign banks were operating in India through 208 offices.

All offices of foreign banks were in urban and metropolitan areas. At end-

FY2003, the total assets of foreign banks aggregated Rs. 1,164 billion and

accounted for 6.9% of the total assets of all SCBs (refer Table below). In

recent years, because of closures and increased competition from NPBs, the

share of foreign banks in aggregate assets of SCBs has declined from 8.1% at

end- FY1999.

- 68 -
The biggest foreign bank in India by asset size is Standard Chartered Bank,

followed by Citibank, and the Hongkong & Shanghai Banking Corporation

(HSBC) (refer Table below).

As of end-FY2003, the five largest foreign banks accounted for 77.9% of

assets of all foreign banks in India. The primary activity of most foreign banks

in India has been in the corporate segment. However, in recent years, foreign

banks have started making consumer financing a larger part of their portfolios,

based on the growth opportunities in this area in India. These banks also offer

products such as automobile finance, home loans, credit cards and household

consumer finance.

- 69 -
COST DYNAMICS

Banking, everywhere in the world, is a highly regulated industry.  The banking

industry is the repository of savings of a nation contributed by millions of

people. Thus a bank basically acts as an intermediary between savers and

borrowers. Hence, costs to a bank are the interest cost paid to savers and the

establishment cost. A bank's margin arises out of the difference in interest

paid to depositors and charged to borrowers. The funds raised from savers

are deployed in three ways - loans and advances to industry and agriculture,

investment in government securities, investment in private sector equity,

debentures, commercial papers, etc. A bank's sources of revenue are interest

from loans and advances, income from government securities and

dividend/interest from private sector equity investments and debt instruments.

Apart from this, a bank also earns non-fund-

- 70 -
based income, also called as fee-based income for the various services

rendered by it as a banker or in the course of banking activities. It includes

treasury and forex operations, income from trading in shares, guarantee

commission, etc.

The employee cost is about 9% of the normal banking income of private

sector banks, while it is over 16% in public sector banks. Recently, the over-

staffed public sector banks have rolled out a VRS package for their

employees.

Unlike in past where the bankers had practically forgotten the significance and

importance of profits in the life and operations of a bank. They perceived that

rules of the game have changed. Instead of deposits and priority sector

lending’s, which were the yardstick for measuring the banks performance

hitherto, it will now to be the profits. Innovative and unconventional methods of

profits are being learnt and devised.

With the economy engulfed in recession, many of the bank advances to core

industries like steel, textiles have ended up as NPAs affecting the profitability,

liquidity of banks and in some cases their very financial viability. With

prudential norms getting stringer, of late, banks incur substantial costs on

account of reversal of income booked earlier in respect of non-performing

assets, and the provisions to be made thereof.

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Further with the deregulation of interest rate structure, pricing of loan and

deposit products will be determined by market forces as well as assets-liability

profile of specific banks. This versatile instrument of interest rate can be very

usefully employed to meet different or changing objectives of a bank from time

to time.

Non-wage expenditure growth will be 15%

Besides the wage bill, banks will also focus on reducing other operating

expenses, which form 25-30% of their total expenses. These expenses are

growing because of higher investment in technology and refurbishment of

existing network. Over the last three years, Indian banks have been trying to

change the face of banking that has been created in last 30 years. Setting up

of ATMs, installing core banking solution, providing marketing efforts to branch

network, refurbishing networks and creating more brand awareness has led to

a growth of an average 15% in other operating expenses. While a bulk of the

technology spend has happened, banks would continue upgrading their

technology platforms and infuse more marketing power to their networks,

resulting in an average 15% increase in these expenses for the next few

years. However, as these expenses are just 30% of the operating expenses,

the overall impact of this increase will be limited.

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Credit growth without deterioration in asset quality

The Indian banking system has been witnessing robust credit growth over the

last 12 months. Loan growth, which used to average 16-18%, has accelerated

to almost 25%.Non-food credit, which is 95% of the total credit, has been on

an up trend for the last several quarters. In the last three quarters, even food

credit has started to move up.

- 73 -
Unlike the past, the current momentum in loan growth is led by multiple

sectors. Continued growth in mortgages, auto and personal loans is driving

the robust growth in retail credit. Corporate credit has also begun to pick up on

the back of increased working capital requirements and fresh capacity

additions. Moreover, agriculture and infrastructure lending is also witnessing

strong growth.

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 Company Analysis

1.Bank of Baroda

Background

Bank of Baroda (BoB), incorporated in 1908, is one of the largest state-owned

banks with a strong presence in the western part of India. The bank has a

large network of 2,697 branches and offices spread across 19 foreign

countries. Rebound in loan growth and trimming of employee expenses will

lead to higher earnings for the bank.

Investment arguments

Loan book expansion, stable margins to drive NII growth

BoB concentrated on margin expansion rather than volume growth in the last

couple of years. Hence, its loan book growth languished. However, as

margins have stabilized, the management has begun concentrating on volume

growth. Loan book growth has rebounded in FY05, with agricultural advances

and retail loans being the main growth drivers. BoB has a strong presence in

the western part of India, viz. the states of Gujarat and Maharashtra. Hence, it

is best positioned to benefit from industrial buoyancy. The bank’s net interest

margins are expected to remain stable at 3.1-3.2%, as the bank intends to

grow its low-cost deposits and further decrease its cost of funds. These

- 75 -
initiatives will enable the bank to achieve a healthy growth in its net interest

income.

Asset quality set to improve

Aggressive cash recoveries and lower delinquency rates have lowered the

bank’s gross NPAs from 14.1% in FY01 to 8.3% as at end-December 2004

and net NPAs from 6.8% to 2.1%. Considering the management’s continuous

efforts to curtail delinquencies by selective lending, we expect BoB’s net NPAs

to fall below 1% by the end of FY06.

Concerns

Securities portfolio exposed to interest rate risk

BoB has transferred the most vulnerable portion of its securities portfolio from

the AFS category to the HTM category in 4QFY05. However, it continues to

hold 72% of its portfolio in the AFS category. A significant rise in interest rates

will erode the AFS portfolio, whose current duration is 3.6 years and will result

- 76 -
in a mark-to-market hit. However, the management intends to trim down the

investment book to fund credit growth and lower the duration of the portfolio.

Corporation Bank

Background

Corporation Bank, established in 1906, is a South India based mid-sized

state-owned bank. The bank had inducted LIC as its strategic partner, with the

latter holding 26% of its equity. The bank has a network of 768 branches, 87

extension counters and 790 ATMs, of which 125 units are set up in LIC

premises. Corporation Bank has always been rated amongst the efficient

state-run banks, having high asset quality.

Investment arguments

Core business parameters well on growth track

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Corporation Bank has been performing well on all the core business

parameters. The loan book has grown by 39% in 3QFY05. This growth is the

reflection of the fact that the bank has started growing its loan book after

completion of the sell-down of its old sub-PLR loans sanctioned to large

companies. The fresh disbursements have happened to high yielding retail

customers and SMEs. In contrast to high loan growth, deposits have grown by

merely 10%. Thus, the incremental credit/deposit ratio of the trailing 12

months has been very high at 220%. Higher proportion of low-cost deposits

and retail assets resulted in net interest margins of 3.97%, which are amongst

the highest in the sector.

Fee income spurts after languishing for a few quarters

After languishing for a few quarters, the bank’s fee income has zoomed up

32% in 3QFY05. Fee income as a percentage of assets has been inching up

and is currently at 1.1%. We believe that increasing penetration by network

expansion, higher conversion of LIC outlets into Corporation Bank branches

and technological advancement will enable high growth in retail assets and

deposits. This in turn would help to stabilize margins and earn higher core fee

income.

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LIC could provide immense upside potential

Since LIC has picked up a stake in Corporation Bank, a lot of positives have

been expected out of the deal. There has been some movement forward – like

opening branches and ATMs at LIC premises, getting few salary accounts,

etc. This has helped the bank to increase its low cost resources and fee

income. We

believe that any moves to synergize on the corporate side could bring in big

benefits for Corporation Bank.

Bond portfolio has lower interest rate risk

To pare the interest rate risk on the bond portfolio, the management sold

down its investment book, which yielded robust treasury profits in 3QFY05.

The proceeds are being used to fund credit growth, which will yield higher and

sustainable returns. Also, in 2QFY05, bonds worth Rs49b were transferred to

the HTM category from the AFS category. Bank has taken reasonable steps to

protect its bond portfolio against significant value erosion.

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High CAR – strong cushion against equity dilution

Corporation Bank’s capital adequacy ratio is the highest in the sector at

20.27%. Thus, the bank will not need to raise capital in the near future to fund

its credit growth and comply with Basel-II norms. However, the bank will have

to speed up its business growth to earn higher RoE.

Concerns

Operating expenses growing

Corporation bank has always been regarded as the most efficient state-run

bank in India. However, its operating expenses have been growing quite

steeply off late. This is because Corporation Bank has been trying to increase

its geographical reach by branch and ATM network expansion. Conversion of

LIC outlets into branches is also warranting higher expenditure. Though this

expenditure will adversely affect its cost to income ratio for some time, higher

customer base will ensure generation of high volume of business in the future.

The wage bill of the bank has increased due to provisions for wage arrears.

The bank introduced the VRS scheme only in FY03. Most other banks had

introduced VRS in FY01 and FY02. Thus, unlike its peers, Corporation Bank

will have to bear the burden of the VRS in more coming years.

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ICICI Bank

Background

ICICI Bank is the second largest bank in India (the largest private sector

bank). It was incorporated in January 1994 and received its banking license

from the Reserve Bank of India in May 1994. In FY02, ICICI Bank took over

Bank of Madura (BOM). In FY03, the parent ICICI merged itself with the bank

and created the biggest private sector bank in India. Since the merger, ICICI

Bank has focused on retail customers as a growth driver. It has emerged as a

leader in retail finance with nearly 30% of the retail market share.

Investment arguments

Largest private bank – focused on retail

Over the last three years, ICICI Bank has grown its retail assets at a rapid

pace and has emerged as a market leader in almost all the segments of retail

banking. Its focus on retail has helped the bank to grow its loan book rapidly,

with low delinquency levels. With the retail market still under-penetrated in

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India, ICICI Bank, which has all its systems in place, will continue to maintain

strong growth in retail assets.

Improving NIMs due to repricing of funds

On account of its merger with ICICI, ICICI Bank had suffered on the margins

front, as it had to maintain a 25% SLR and 5% CRR, which had a negative

gap when compared to its liabilities. Over the last three years, ICICI Bank has

been repaying high cost borrowings and replacing them with low cost retail

deposits.

This coupled with its growing retail asset base has helped the bank to earn

higher incremental margins. As a result, its overall margins have been inching

up.

Improving asset quality

ICICI Bank had also inherited significant bad loans from the erstwhile ICICI,

mainly related to project finance. Over the last three years, the bank has been

able to bring down its NPAs on account of recoveries and up gradations. Its

net NPAs currently stand at 2.3%. With incremental NPAs in the retail

segment being close to 1%, expect ICICI Bank’s NPAs to continue declining.

Subsidiaries could provide significant upsides

ICICI Bank has set up subsidiaries, which are amongst the top players in their

respective segments. ICICI Prudential Life Insurance Company, for instance,

has emerged as the leading private sector player in the life insurance

segment. Similarly, its subsidiaries in nonlife insurance, securities broking etc

have also been doing well.

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Concerns

Tax rates likely to rise going forward

At the time of the merger with ICICI, the bank had got tax breaks as it had to

make huge provisions for bad loans at that time. On account of deferred tax

asset being created, its overall tax rates have been low compared to the

marginal tax rate. Moreover, some of the assets in the balance sheet also

provided tax

incentives. However, the tax rate for the bank has been increasing and soon,

it would have a tax rate similar to other banks. Thus, even as NII and PBT

posts strong growth the PAT growth is expected to be lower.

Retail business could witness delinquencies:

While ICICI Bank has done a commendable job in building up its retail

franchise, any sharp rise in interest rates could lead to higher delinquencies.

Further, higher competition in the retail arena is likely to put pressure on the

margins in the retail segment.

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Jammu & Kashmir Bank

- 84 -
Background

Jammu and Kashmir Bank (J&K Bank) is a quasi-private sector bank, with the

J&K government holding a 53% stake. Predominantly present in the state of

Jammu and Kashmir, the bank has a network of 487 branches and 130 ATMs.

It

is the banker to the state government and holds the agency to transact

central-government business in J&K.

Investment arguments

Strong on all business parameters

J&K Bank is witnessing a rebound in all business parameters off late. After

staggering at 15-20% over that last several quarters, the loan book grew by a

handsome 26% in 3QFY05 due to aggressive lending to infrastructure

projects. The cost of deposits declined by 48bp to 5.04%, due to 20% growth

in savings deposits and 15% growth in current deposits against a mere 2%

growth in term deposits. High capital adequacy ratio of 16.3%, growing trade

prospects in the state of J&K and active diversification of branch and ATM

network in other states opens immense opportunities for higher credit

disbursements. The bank ranks high on operating efficiency – it has the lowest

cost to income ratio in the sector. Asset quality also remains strong, with net

NPAs at 1.5%, despite robust loan growth.

- 85 -
New business initiatives generate higher fee income

J&K Bank is engaged in value-added services like depository services,

distribution of life and non-life insurance products, and equity trading. Apart

from these, the bank also holds the agency of transacting business of the

central government, like collection of income taxes, in the state of J&K. Being

the banker for the state government, it has good prospects to augment its fee

income, as the volume of business in J&K is on the rise. On the technology

front, nearly 100% of its business is computerized and it has rolled out its core

banking solution (CBS) at its branches. All these multi-faceted initiatives will

ensure high fee income growth.

Concerns

Risks on the bond portfolio remain

The bank transferred Rs26b worth of securities from the AFS category to the

HTM category in 2QFY05. Despite this, it had to make high mark-to-market

provisions on its non-HTM portfolio in 3QFY05. J&K Bank remains exposed to

the risk of upward movement in the interest rates. However, the bank is selling

- 86 -
down its investment book to fund its credit growth. Returns from loans would

be higher and more sustainable. Bank is largely through with the restructuring

of its investment book and will need to make lower provisions going forward.

High capital adequacy ratio lowers the RoE

J&K Bank has a high CAR of 16.32%. Since the bank has not been successful

in deploying the entire capital, its RoE is expected to remain subdued.

However, this concern will be addressed as and when the loan book expands

and higher volumes of business are generated.

Oriental Bank of Commerce

- 87 -
Background

Oriental Bank of Commerce (OBC), established in 1943, is a North India

based state owned bank. After the merger with Global Trust Bank (GTB) in

August 2004, OBC has acquired a pan-India presence and has a network of

1,121 branches. Though most of OBC’s ratios post-merger have deteriorated,

we believe that the bank has strong recovery procedures in place to tackle

bad loans and turn around GTB’s loss-making operations.

Investment arguments

Cost/Income ratios to decline on cost rationalization

OBC was considered to be the most cost-efficient bank in the industry, with

the lowest cost to income ratio of 29.6% and the highest business per

employee of Rs37.1m. However, post the merger of GTB, these ratios have

been adversely impacted due to GTB’s higher salary and other operating

costs. To optimize costs and revert to the status of the most cost efficient

bank, OBC has taken several initiatives. It has initiated rationalization of

owned and leased premises and has started repayment of interest free

deposits worth Rs200m. It has roped in a management consultant to tackle

the staff issue and align the salary levels of GTB with OBC’s. These initiatives

coupled with higher core interest and non-interest income will lead to lower

cost to income ratios, going forward.

Zero net NPA status – not far away

- 88 -
OBC was the first bank to achieve zero net NPA status. Adequate risk

management procedures and prudent provisioning levels allowed the bank to

maintain this status for quite some time. However, the biggest problem that

OBC now faces post the merger is that of large accumulated losses of

Rs12.2b and net NPAs of Rs4.6b. The bank has successfully initiated

consultations with all problem loan accounts of GTB. It has already made cash

recovery of Rs960m, restructured assets worth Rs3.56b and upgraded NPLs

worth Rs490m. The

management expects to recover almost Rs7-8b of bad loans in the next 15

months. In the recent budget, OBC has also got a tax break to write-off these

accumulated losses. The management has also indicated that it will make

aggressive provisions in 4QFY04 to go back to its original status of being a

zero NPA bank.

Concerns

Bond portfolio exposed to interest rate risk

OBC is one of the last few banks that has not yet transferred SLR securities to

the HTM category from the AFS category. At present, only 13% of its SLR

book lies in the HTM category. The rest remains exposed to interest rate risk.

However, we believe that the bank will transfer a part of its investment book to

HTM in the current quarter as the yields have softened. To guard against any

significant hit that the bank might have to take, it has already made a provision

- 89 -
of Rs1b and is expected to make another provision of Rs0.5b in 4QFY05,

which would possibly take care of the transfer.

Punjab National Bank

Background

Punjab National Bank (PNB) is the second largest Indian state-owned bank,

with a strong presence in North and Central India. Established in 1894, it is

the most technologically advanced state-owned bank having a network of

4,474 branches. With a consistent track record of strong loan growth,

sustained earnings momentum and improvement in asset quality, PNB

continues to be one of our most preferred stocks in the sector.

- 90 -
Investment arguments

Strong loan growth; favorable deposit-mix

Business momentum has been strong for PNB over the last several years. Its

loan book expanded at a CAGR of 20% while its deposits grew at a CAGR of

16.6% during FY00- FY04. Its widespread network of technologically-

advanced branches, mainly concentrated in the North, has resulted in high

retail growth – both in terms of high yielding advances and low-cost deposits.

Loan book growth is expected to remain buoyant on the back of strong growth

potential for agricultural lending, especially in the state of Punjab, upcoming

surge in demand for corporate loans and continuing demand for retail assets.

Superior technology aids fee income growth

- 91 -
PNB is well ahead of its peers in terms of technological advancement. It has

already achieved 100% computerization of branches and has implemented

the core banking solution in 977 branches covering 50% of the business. It

plans to roll out core banking solutions (CBS) in 1,200 branches by March

2005 and 2,000 branches in March 2006. These initiatives, along with its

strong retail focus, enable the bank to earn higher fee income. Operating

efficiency is achieved by a decline in transaction time and costs. Higher fee

income, mainly in the form of commissions, brokerage and foreign exchange

transactions would help to offset the impact of lower trading gains.

Net NPAs – near zero

PNB’s asset quality is amongst the best in the sector. Its net NPAs were just

0.28% as at end December 2004 as compared to 6.7% as at end-March 2001.

The bank followed the strategy of making aggressive provisions in the years

when it earned huge treasury profits and improved its asset quality. PNB has

already achieved a coverage ratio of nearly 100% and has adequate risk

management tools in place. Thus, it no longer needs to make high provisions.

Cash recoveries would result in write-back and aid earnings growth.

Concerns

Overstaffing adversely affects operational efficiency

PNB is overstaffed when compared to its peers. Its business per employee is

the lowest in the sector. Higher wage expenses result in high cost to income

ratio

- 92 -
and adversely impact operational efficiency. Also, PNB would witness high

staff redundancy as and when its technological platform is fully rolled-out.

However, these concerns should get addressed over the years due to a

number of factors. Firstly, the age of the average employee in PNB is 48

years. Thus, almost 2,000 employees are expected to retire every year. When

compared to this, only 300 specialists

would be employed at lower scales. Secondly, FY05 is the last year of the

amortization of the annual VRS expenses of Rs1.16b. Lastly, PNB had been

making provisions for wage arrears at the rate of 12.25%. But when the wage

hike was finalized at 13.25%, PNB had to make higher provisions.

State Bank of India

Background

State Bank of India (SBI) is the largest bank in India, having a network of over

9,000 branches and an asset base of over Rs 4,000b as on March 2004. It

controls nearly 20% of the Indian banking sector’s total advances and

deposits. SBI has also promoted seven associate banks, which cumulatively

have an asset base of close to Rs1,500b. In all, the SBI group controls 25% of

Indian banking.

Investment arguments

Strong loan growth despite large base; expanding margins

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Despite its large base, SBI has been witnessing strong traction in its loan

book. During 3QFY05, SBI’s loan book expanded by a robust 29% YoY to

Rs1,955b, fuelled by a strong YoY growth of 46% in retail advances. The

bank’s incremental C/D for the quarter was over 100%, which helped improve

its NIMs, as well. Given the positive outlook for the Indian economy, coupled

with the start of the capex cycle, overall credit growth in the system should

remain robust. SBI, being a proxy to the Indian economy, is likely to be the

key beneficiary.

Cost control, operational efficiency to drive profitability

SBI had effected a big VRS in FY01 with a total cost outlay of Rs22.7b. This

was to be amortized over five years and thus FY05 is the last year of

amortization. In FY05, the bank will provide for Rs3.5b – 7.2% of its operating

profit – towards VRS amortization. Further, it will provide for wage arrears of

about Rs8b during the year.

- 94 -
Subsidiaries add substantial value

SBI has promoted seven regional banks which add about 40% to its total

assets and over 50% to its profits. Together, these associate banks have

about 4,000 branches in addition to SBI’s 9,000 branches.

- 95 -
However, the SBI group is already acting as a merged entity – sharing ATMs,

marketing SBI Insurance products and credit cards.

Asset quality set to improve

Aggressive cash recoveries and lower delinquency rates have resulted the

bank’s gross NPAs declining from 12% in FY02 to 6.5% as at end-December

2004. Net NPAs have fallen from 5.6% in FY02 to 2.6% as at end-December

2004.

Concerns

Government unlikely to bring its stake below 55%, FII limit hit at 20%

With aggressive loan growth and adherence to Basel-II norms, we believe that

SBI will need to raise capital in FY06. The bank has the option to raise further

- 96 -
Tier2 capital. However, as the government does not intend to reduce its stake

in SBI to below 55% (at present 59%), it would constrain any equity dilution by

the bank if needed. Moreover, the FII limit in the stock has hit 20% couple of

years back, which itself has limited the upside in the valuations.

Rise in interest rates could see losses on AFS portfolio

SBI has transferred Rs260b to HTM in 4QFY05 and has taken a hit of Rs17b,

of which Rs14b has already been provided for. These securities were the

ones, which were most vulnerable to interest rates. However, the bank still

holds a significant portion of bonds in the AFS category.

Conservative accounting policies, a key differentiator

Vijaya Bank has been following very conservative accounting policies. It

writes-off the entire expenditure through its P&L as and when it is incurred

rather that amortizing it over the permitted period. It completely wrote off its

- 97 -
VRS expenses in FY03 itself, unlike other banks that amortized it over a

period five years. It has also followed a similar strategy to write-off its public

issue expenses. Vijaya Bank has made a total provision of Rs780m on

account of the wage hike at 13.25% until December 2004.

Concerns

Bond portfolio already out of money

Vijaya Bank’s bond portfolio, and hence its earnings, are vulnerable to

fluctuations in the interest rates. This is despite the fact that it has already

transferred some bonds from the AFS category to the HTM category in

2QFY05. It had to make mark-to-market provisions to the tune of Rs614m in

3QFY05. Since the bond portfolio is already out of money, any further rise in

interest rates will erode its value further and warrant the bank to make

marked-to-market provisions at the end of each quarter.

Government stake lower at 54%; leaves little room for raising tier-I capital

Unlike most other state-owned banks, the government’s stake in Vijaya Bank

has reduced to 54% after two public issues. Thus, Vijaya Bank is left with little

room to raise capital to augment its tier-I capital by stake reduction. Vijaya

Bank will have to strengthen its flow of retained earnings and internal accruals

to bolster its tier-I capital to fund loan growth and comply with Basel-II norms.

Its capital adequacy ratio stands at a healthy 12.79% (as at end-3QFY05).

- 98 -
Suggestions to Customers
- 99 -
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Indian economy has been globalized and the capital market has been linked

to the international financial market. Foreign individuals and institutional

investors have encouraged participating into it. So, there is a need for raising

- 101 -
the Indian Capital market in to the international standards in terms of

efficiency and transparency. One such measure is the passing out of the

Depository Act during the year 1996.

Dematerialization of securities and under this system is one of the major steps

aimed at improving and modernizing the capital market and enhancing the

levels of investor’s protection measures which aims at eliminating the bad

deliveries and forgery of shares and expediting the transfer of shares.

The draw back of the old system and the pool proof measures sought to

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developments of the depository system in the Indian capital market.

The study showed that there is a growth in the shares included in the

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9. Bibliography
Securities Market (Basic) Module: --NCFM

Economic Times.

Training Kit Provided by the Share khan.

- 102 -
Websites:

www.indiastat.com

www.sharekhan.com

www.equitymaster.com

www.investopedia.com

www.valuenotes.com

www.nseindia.com

www.bseindia.com

www.sebi.com

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