THE PROJECT ON

“A STUDY ON CONSUMER PREFERENCES ON DIFFENRT TYPES

OF LOANS”

A PROJECT SUBMITTED TO UNIVERSITY OF MUMBAI FOR PARTIAL

COMPLETION OF THE DEGREE OF
BACHELOR OF MANAGEMENT STUDIES(FINANCE)
UNDER THE FACULTY OF MANAGEMENT

BY
MANSI MOUNDEKAR
ROLL NO: 73
UNDER THE GUIDANCE OF PROF NITIN PAGI

K.G. JOSHI BEDEKAR COLLEGE OF ARTS AND N.G JOSHI BEDEKAR

COLLEGE OF COMMERCE THANE, (AUTONOMOUS)

SUPERVISED BY:
PROF MAKRAND MAHAPADI
DECLARATION

I the undersigned Miss MANSI MOUNDEKAR here by, declare that the work embodied
in this project work titled “A study on consumer preferences on different types of loans”
forms my own contribution to the research work carried out under the guidance of (Ms.)
NITINPAGI SIR M, COM, CS, NET, is a result of my own research work and has not been
previouslysubmitted to any other University for any other Degree/ Diploma to this or any
other University.

Wherever reference has been made to previous works of others, it has been clearly indicated
assuch and included in the bibliography.

I, here by further declare that all information of this document has been obtained and
presentedin accordance with academic rules and ethical conduct.

Name and Signature of the learner

Certified by

Name and signature of the Guiding Teacher

ACKNOWLEDGEMENT

To list who all have helped me is difficult because they are so numerous and the depth is
soenormous.

I would like to acknowledge the following as being idealistic channels and fresh dimensions
inthe completion of this project.

I take this opportunity to thank the University of Mumbai for giving me chance to do
thisproject.

I would like to thank my principal, Dr. (Mrs.) SUCHITRA NAIK MA’AM for
providing thenecessary facilities required for completion of this project.

I take this opportunity to thank our Coordinator (MS) NITIN PAGI SIR, for his moral
supportand guidance.

I would also like to express my sincere gratitude towards my project guide Prof
MAKRAND MAHAPADI SIR whose guidance and care made the project successful.

I would like to thank my College Library, for having provided various reference books
and magazines related to my project.

Lastly, I would like to thank each and every person who directly or indirectly helped me in
thecompletion of the project especially my Parents and Peers who supported me throughout
my project.
A STUDY ON CONSUMER PREFERENCE ON
DIFFERENT TYPES OF LOANS
 TABLE OF CONTENTS

Chapter no. Title Page no.

Title 4

Table of content 5

List of figures 6

List of tables 6

Executive summary 8

1 Introduction to A study of consumer preference 9

on different types of loans

1.1 Introduction 10
1.2 Brief history on loans in India 13
2. Literature review 14
3. Need and objective of the study 20
3.1 need of the study 21
3.2 objective of the study 22
4. Research design and methodology 23
4.1 data collection 25
5. Brief study on consumer preference on different 26
types of loans
5.1 what are different types of loans 27
5.2 Current scenario of banking industry 28

5.3 Accessible to common man 29

6 Global scenario on consumer preference on 30

different types of loans
 7. Government initiative towards consumer 33
preference
7.1 projects for consumer preference 34
8. Data analysis and Interpretation 40
9. Findings 53
10. Future scope 56
11. Conclusion 58
12. Suggestion 60
13. Bibliography 61-66
 List of figures

Figure no. Title Page no.

1. Gender 45
2. Annual income 46
3. Types of loans 47
4. Occupation 49

List of tables

Table no. Title Page no.

8.1 Reliability statics 44

8.2 Gender 45

8.3 Annual income 46

8.4 Types of loan 47

8.5 Occupation 49
EXECUTIVE SUMMARY

The study is mainly conducted to understand ―Comparative Analysis of loan preference by

customers in private and public banks. This project talks about the Customer Satisfaction of
how products and services provide by any banks to meet the expectations of a customer. The
project is divided into different sections. Firstly, the project comprises of the brief
information in order to survive in this competitive environment and provide continual
customer satisfaction, the banking services providers are required to frequently increase the
quality of services. It also recovers a brief description about the objectives and scope of the
study and the tools and techniques that has been applied or used in the project. Afterwards the
project gives brief descriptions of the past studies that have been conducted by various other
researchers in the same field and also about the techniques that they have used in the project.
Different journals or research papers of researchers has been analyzed before conducting the
research or study to make concepts more clear. Now, the project has been divided into two
parts which are data presentation in which data was presented and factor analysis has been
calculated using second part data analysis has done to describe the analysis and interpretation
of the data which are collected through the questionnaire and the internet website. After data
analysis and data presentation, the project explained about the finding that has been found
after analyze the data and also it comprises of limitations and scope of the study that has been
done. In last part or section the project comprises of the recommendations that can help the
customer in taking decisions while he have to take loan or not and also it can help in future
study or research.
 CHAPTER 1.
INTRODUCTION TO A STUDY OF CONSUMER
PREFERENCE ON DIFFERENT TYPES OF LOANS
 1.1 INTRODUCTION

Banks play a role of considerable economic significance as intermediaries in mobilizing

public savings and channelizing the flow of funds for productive purposes, keeping on the
process of the economic growth of the country. Realizing the importance of the role of the
banks in economic development, Government of India/Reserve Bank of India took several
major initiatives after the country attained independence to gear the banking system to serve
the national objective. One of the most momentous of such initiatives was the substitution of
private ownership by public ownership, through the medium of an ordinance, of the 14
largest commercial banks in the private sector on 19 July 1969. This has popularly come to
be known as nationalization of these banks without which it would not have been possible to
transform the class banking into mass banking and align bank credit to serve the planned
priorities and social needs. Branch expansion programmes formulated by the Reserve Bank
of India aimed at making available necessary banking facilities in all parts of the country
specially the unbanked rural and semiurban areas. This was perceived as essential for
implementation of project for rural development and upliftment of economically weaker
sections and also spreading the banking habit even in the remote areas of the country. 12
Banks assisted in the rehabilitation of sickly weak industrial units and in the prevention of
unemployment, which would result from the closure of industrial units for want of credit.
Measures thus mentioned substantially contributed to the channelising of the bank credit to
the various sectors of the economy which involved inter alia, flow of credit to sectors, which
were hither to neglected or the so called priority sectors‘. Currently, overall banking in India
is considered as fairly mature in terms of supply, product range and reach even though reach
in rural India still remains a challenge for the private sector and foreign banks. Well-
computerized foreign banks are beginning to compete seriously with the nationalized banks.
They aim at a profitable and wealthy part of the market and, in contrast to the nationalized
banks, do not recognize any social responsibilities to small account holders or to a rural and
semi urban clientele. Almost 80% of the businesses are still controlled by Public Sector
Banks (PSBs). PSBs are still dominating the commercial banking system. The bank system is
facing the challenges with stiff competition and advancement of technology, the services
provided by banks have become more easy and convenient. The competitive character has
been promoted by facilitating the entry of foreign banks. 13 The country is flooded with
foreign banks and their ATM stations. Efforts are being put to give a satisfactory service to
customers. Phone banking and net banking are introduced. The entire system has become
more convenient and swift. Time is given more importance than money. Customer
Satisfaction is a measure of how products and services provide by any organization meet the
expectations of a customer. It varies from person to person and service to service. A customer
can be defined as a user or potential user of banking services. A customer would include an
account holder, or a person carrying out casual business transactions with a bank. The
efficiency of a banking sector depends upon how best it can deliver services to its target
customers. In order to survive in this competitive environment and provide continual
customer satisfaction, the banking services providers are required to frequently increase the
quality of services. In banking business it is seen that only 5% increase in customer retention
can extend 35% profitability. In the developing country like India international banks are
coming to market, which are competing with local banks irrespective with that they are
private sector banks or public sector banks. Various banks are available with new offers,
schemes, and services with wide range of products. 14 Customer has range of choices where
proper information can be gathered at cheap cost, and can take the advantage of such
competitiveness. In the era of globalization customer has more rights to choose right product
according their profile, opportunities available for their money. In order to survive in this
competitive environment and provide continual customer satisfaction, the providers of
banking services are now required to continually improve the quality of services. The
globalization of Indian economy has truly called for much more disciplined approach on the
part of Indian banking sector to improve the overall quality of customer services through
smart use, absorption and adoption of flexible and appropriate information technology. It is
seen that 5% increase in customer retention can increase profitability by 35% in banking
business, 50% in insurance and brokerage, and 125% in the consumer credit card market.
Therefore, banks are now stressing on retaining customers and increasing market share
(Chothani et al. 2004). A favourable climate for excellent service manifests itself in employee
behaviour, for example, being attentive to customers, speaking favourably about the
organization and its services. With frequent employee-customer contact, customers are more
often exposed to such positive behaviours, which in turn, affect customer satisfaction. 15 To
sum up, the adoption of technology in banks is increasing with the growing use of Internet,
electronic commerce, and various other banking innovations. Evolution of technology in
banks is taking place at an enormous pace and it is only question of time before banks
commit themselves on full-scale technology up gradation, aiding their growth and adding
their competitive features. The computer and the communication age is opening up a flood of
new opportunities that are redefining the very concept of traditional banking. It is for the
individual banks to reinvest themselves and reconfigure their business processes and
practices in tune with the growing customer expectations in an ever increasing competitive
environment. There is no way, a bank can remain lukewarm to new technology products and
yet hope to grow because it is a choice of survival or extinction. The objective is to seek and
measure the level of customer satisfaction and services rendered in the banking industry in
India. As a matter of fact, many banks subscribe to the fact that high customer satisfaction
will lead to greater customer loyalty which, in turn, leads to future revenue. For that matter,
many organizations (including banks) that resorted to having superior service quality have
been found to be market leaders in terms of sales and long-term customer loyalty and
retention. Public and private bank offer various types of bank loans to loan seekers to satisfy
them, especially those having a good track record of repaying their bills 16 and a stable job
get these loans passed easily. The person have proof of identity and income to get bank loans
and certain bank loan types may also require collateral such as a car or home equity loan. The
first important thing is to know what the different types of bank loans are. There is a
difference between any two kinds of bank loans. For example, there is a difference between
secured and unsecured bank loan types.

A) Personal Bank Loans

These are the kinds of bank loans which are provided to an individual, rather than to a
group or business. The personal bank loans are further divided into many different
categories like secured and unsecured loans.
B) Unsecured Personal Loans
These types of bank loans allow a borrower to get a check or cash and pay it back in fixed
installment over a certain fixed period of time.
C) Secured Personal Loans
The secured personal loans issue cash or a check to the loan seeker. The loan seeker has
to provide the bank with interest in collateral such as a savings account or a property in
case the loan doesn‘t get repaid.
D) Mortgage Loans
These types of bank loans allow the loan recipients to live in a home while paying it off
over time.
1.2 HISTORY

In 1969 the Indian government nationalized all the major banks that it did not already
own and these have remained under government ownership. They are run under a
structure known as 'profit-making public sector undertaking' (PSU) and are allowed to
compete and operate as commercial banks. The Indian banking sector is made up of
four types of banks, as well as the PSUs and the state banks, they have been joined
since the 1990s by new private commercial banks and a number of foreign banks.
Banking in India was generally fairly mature in terms of supply, product range and
reach-even though reach in rural India and to the poor still remains a challenge. The
government has developed initiatives to address this through the State Bank of India
expanding its branch network and through the National Bank for Agriculture and
Rural Development with things like microfinance. Indian Banking Industry currently
employees 1,175,149 employees and has a total of 109,811 branches in India and 171
branches abroad and manages an aggregate deposit of 67504.54 billion (US$1.1
trillion or €860 billion) and bank credit of 52604.59 billion (US$840 billion or €670
billion). The net profit of the banks operating in India was 1027.51 billion (US$16
billion or €13 billion) against a turnover of 9148.59 billion (US$150 billion or €120
billion) for the fiscal year 2012-13.
2.1 LITERATURE REVIEW

Private sector Banks seem to have satisfied its customers with good services and they
have been successful in retaining their customers by providing better facilities than
Public sector Banks. But, still Private Banks need to go a long way to become
customer‘s first preference. In an economy of innovative technologies and changing
markets, each and every service quality variable has become important. New financial
products and services have to be continuously introduced in order to stay competent
and Private Banks need to concentrate more on their credit facilities and insurance
services since customers do not have a very good opinion about these facilities being
offered by Private Banks also Public sector banks enjoy the trust of the customers,
which they have been leveraging to stay in the race however they need to improve
their service quality by improving their physical facility, infrastructure and giving
proper soft skill trainings to their employees. Geiger's (1975) carried out study to
establish the needs of customers. Social status of the bank's customers and the
perception that the customers had of banks were studied along with customers
judgment of the range of services that the banks had to offer, the effectiveness of
various advertising and other sales promoting measures, and the customers' will to
save and other habit.

Meidan (1976) thinks about 90% of the respondents banked at the branch nearest
to their home place and place of work. Convenience, in terms of location, was found to
be the single most important factor for selecting a bank.

Lewis and Booms (1983), service quality is ‗a measure of how well the service
level delivered matches customer expectations. Delivering quality service means
conforming to customers‘ expectations on a consistent basis‘. The most common
explanation of the difference between service quality and customer satisfaction is
highlighted by Bateson (1992).
Cronin and Taylor (1992), suggested that service quality is antecedent of
customer satisfaction and that customer purchase intentions are related more closely to
levels of satisfaction than to perceptions of service quality.

Hallowell Roger (1996) studied customer satisfaction in banks in providing

products and services and found banks should target and serve only those customers
whose needs it can meet better than its competitors in a profitable manner. By adopting
this strategy customers will be retained for longer periods, consume multiple products;
recommend the bank to their friends.

B. K. Tiwary (2000), In the banking sector it is necessary to increased adoption of

technology to better meet customer requirements, improve efficiencies, reduce costs
and ensure customer delight and it was the private sector and foreign banks which
established the technological revolution in Indian banking and considering the fact that
in the new economy, mind share leads to market share and mind share is influenced not
only by the promotions and advertisements but more importantly on favorable customer
perception which in turn is based on satisfaction with regard to products, services and
interaction

Vijay M. Kumbhar (2001), The private sector banks are providing more satisfied
services then public sector banks and the customer perception about Productivity,
Security and Sensitivity, Cost Efficiency, Problem Handling, Compensation and
Contact services related to service is very less in both the public sector and privates
sector banks, Therefore both kinds of banks should be aware about these facets of
service to improve customers‟ satisfaction.

Campbell (2007) focused on the relationship between nonperforming loans (NPLs)

and bank failure and argued for an effective bank insolvency law for the prevention and
control of NPLs for developing and transitional economies as these have been suffering
severe problems due to NPLs.

Rayappan and shunmghan (2008) have used factor analysis tool of customer
satisfaction with demographic profile of the customer.
Keerthe and Vijayalkshmi (2009) analysed perception level of the customer
with their demographic profile.

Kumber and at al. (2009) reviewed the Indian banks are changing towards
modern banking system. Modernization in banking is changing banking services,
products and operational methods of banking. All these developments are lead to
facilities to customers delight as well as operational efficiency of banks and reducing
operational expenses of banking services

Kumar and Rajesh (2009) covered that working performance of the bank must
be improved and derived that the factors which brings satisfaction to customer are
modernization and technological advancement.

Trivedi and Aggrawal (2009) has focused on five major dimension to measure
customer satisfaction towards bank, viz., tangibility, assurance, responsiveness,
empathy, and reliability. Rayappan and shunmghan (2008) have tested regression of
customer satisfaction with demographic profile of the customer. Bharathe et al (2008)
have found that inaccuracy in transaction nak charges, staff attitude; 31 complaint
handling, system and procedure are some of the factors which derive dissatisfaction to
the customers.

Keerthe and Vijayalkshmi (2009) analysed perception level of the customer

with their demographic profile.

Dutta et al, (2009) conducted a study to investigate perception of expectations of

customers across all the banks in India. It was found that foreign banks were the most
preferred banks followed by private banks and public banks.

Puja et, al, (2009) Private sector Banks seem to have satisfied its customers with
good services and they have been successful in retaining their customers by providing
better facilities than Public sector Banks. But, still Private Banks need to go a long way
to become customer‘s first preference. In an economy of innovative technologies and
changing markets, each and every service quality variable has become important. New
financial products and services have to be continuously introduced in order to stay
competent and Private Banks need to concentrate more on their facilities and services
since customers do not have a very good opinion about these facilities being offered by
Private Banks also Public sector banks enjoy the trust of the customers, which they have
been leveraging to stay in the race 32 however they need to improve their service quality
by improving their physical facility, infrastructure and giving proper soft skill trainings
to their employees.

Santhiyavalli and at al. (2011) emphasis that the service quality of banking
industry. Banking operations are driven by the market, and the customer is seen as a
consumer of the bank and not of any particular branch of the bank. Along with
technology, banking services have also evolved, and the delivery of various banking
products are carried out through the medium of high technology at a fraction of the cost
to the customer.

Selvaraj (2011) measured and analyzed the awareness level of the customers
towards services provided by the Banks of India. He found that 70% of the sample
respondents had low level of awareness towards the services provided by the bank. It
may be due to the fact that the study area was mostly covered by rural areas. The bank
has to initiate necessary measures to increase the awareness level through conducting
awareness programs in the rural areas and the bank has to concentrate more on
promotional activities.

Sarkar (2011) proved this statement ―If there is any secret of success, it lies in the
ability to get the other person‘s point of view, and seeing things from his angle‖ - Henry
Ford by comparison studies between two private sector banks services.

Swami (2012) stipulates the facts related to banking products. Customer service is
perhaps the most important dimension of banking. While most public sector banks offer
the same range of service with similar technology/expertise, the level of customer
service matters the most in bringing in more business.
Sumedha Kalia and Urvashi Kalra (2012) investigated various factors
influencing customer‘s perception and satisfaction level towards E-Banking. They
found that, lack of knowledge, inadequate legislations and security concerns are the
major reasons for not using E-Banking. They suggested that, banks should provide
―demo‖ on their website for new users to know about online banking services and
facilities of experts to increase awareness in the minds of customers to use e banking
safely.
Ravi and Kundan basavaraj (2013) analyzed the customer preference and satisfaction
towards banking services both private and public banks in Delhi district. The authors
found business and vehicle loans are fast moving than other services and overall
satisfaction resulted at 50%. Further, overall satisfaction on bank deposit schemes
resulted positively while other services of banking still need to be given attention by
focusing on customer issues. They authors suggested that, bankers should work
towards 100% customer satisfaction that automatically fosters customer delight and to
sustain customers on a long term basis. 34 The implementation of globalization,
government policies and liberalization has made the banking industry very
competitive by providing various products and services to the customers. The various
services offered by the banks can be utilized by the customers only when they are
made aware of these services. The banker and customer have to know about one
another. The banker has to understand the customers‘ needs and in the same way, the
customer has to know about the carious services offered by the banks. Increased level
of awareness among the customers leads to increased preferences. The purpose of this
study was to investigate the awareness and satisfaction level of customers towards
various loans. To develop and to sustain business any of the banks must have quality
of customer service that can link up cordial relation with the customer and result in to
the satisfaction to the customer. In the present research an efforts has done to measure
satisfaction level of the customers by comparing various factors that can impact on
satisfaction of customer to bank located in Delhi. The main focus is done on whether
private bank bring more satisfaction then public sector banks to the people residing in
Delhi, and what are those factors which are considered when people say they are
satisfied. This paper is aims at carrying out the comparative analysis of loan
preference by customers in private and public bank. Since banking service sector is
one of the most upcoming sectors in the Indian Market.
3. NEED AND OBJECTIVE OF THE STUDY
3.1 NEED OF THE STUDY

The value of loans in India increased 12.4 percent year-on-year in the fortnight ended
in May 2021. . As the lending and borrowing process is getting simpler by the day,
the rate of preference for unsecured loans is getting exceptionally high. Modern-day
Indians are no more skeptical when it involves taking loans, unlike the older days.
The success of any business relies on understanding the consumer and providing the
type of products that the buyer wants. Consumers react well while assessing the items
that best fulfill their necessities. Knowledge of consumer behavior is going to be of
immense help to the marketer which can help to satisfy their needs. A business
concern that's unaware of consumer preferences cannot reach the marketplace.
According to Peter F. Drucker. “It is the consumer who determines what a business
is”. It is observed that the Loan market in India is growing at an incredible pace so it's
important to check the consumer behavior and preference towards the unsecured loan.
3.2 OBJECTIVE OF THE STUDY

 To study the banking services and customer satisfaction of public and private sector
banks .

 To know in which service quality dimension the bank is performing well and in which
dimension it needs improvement.

 To analyze and compare the loan perceptions of the customers in public and private
sector banks.

 To evaluate the level of awareness towards loan products and services.

 To assess various aspects of services provided by the public sector, private sector and
foreign banks.

 To assess the extent of use of services especially the IT enabled services in these banks.

To determine and compare the extent of customer‘s satisfaction with quality of banking
services on the basis of different constituent factors
4. RESEARCH DESIGN AND METHODOLOGY
4.1 RESEARCH METHODOLOGY

Research methodology deals with a systematic and scientific methods that can be adopted
to solve research problems. Methodology is a crucial step in any research because it
directly influences the whole research and its findings. The present study will be carried
out to gain an insight into the customer satisfaction level with the quality of services
provided by public sector, private sector and foreign banks.

Research design

For obtaining information, about customer satisfaction in providing loan services through
banking via a survey conducted at a sample of the general consumer population. The
survey questionnaire is design and distributed to target respondent randomly. Targeted
respondents are the general public and data is collected from a large population. Thus, the
survey questionnaires are designed to apply to a heterogeneous population, where
targeted respondents come from the general open public (from difference genders, races,
age groups, marital status education backgrounds, designations and professionalisms).
The survey questionnaires were conducted via face to face interviews so as to ensure that
the survey encompasses a broader geographical area.
4.2 Data collection

The study bases itself on primary data collected by using the SERVQUAL model for
ascertaining the service quality of retail banking in India. The information has been
elicited through a field survey by means of a well designed questionnaire comprising of
queries on the various service quality attributes and their dimensions as identified and
contained in the SERVQUAL. One additional attribute has been added to the original
SERVQUAL. This relates to ascertainment of ATM Service Quality which is one of the
most important factors that reflects the service quality of banks in retail segment. The
questionnaire has been administered on a randomly selected sample of customers availing
retail banking services from the private and public sector Indian banks. The spread of
survey covers nine districts of the State of Uttar Pradesh, Uttarakhand and Delhi A blow-
up of the methodology adopted for primary data collection is presented below. This study
is an empirical study; it is based on the primary and secondary data.
Primary Data –
The primary data relating to the level of preferences and satisfaction customer of the
banks about the services offered by commercial banks were collected from persons
having their accounts in any public sector bank or private sector bank by interviewing
them directly by the researcher with the help of a questionnaire.
Secondary Data –
Secondary data were obtained from different brochures of banks, websites of banks,
magazines and journals.
5 BRIEF STUDY ON CONSUMER PREFERENCE
ON DIFFERENT TYPES OF LOANS
 5.1 WHAT IS A LOAN

A loan is a debt (a sum of money), provided to you by a Commercial Bank or Microfinance

Institution now in order to repay it later with definite conditions, on a specific term, with an
interest.

TYPES OF LOAN

There are many types of Loans, but the most usual ones used in Kosovo are: Personal Loan,
Mortgage Loan, Business Loan, Consumers loan, Overdraft, Agricultural loan, Education
Loan, etc.

THE PRINCIPAL AMOUNT

The amount borrowed, or the part of the amount borrowed which remains unpaid (excluding
interest), is called principal. Principal is the original amount of the loan that is owed by the
Consumer to the Creditor (bank) on the date the loan contract is signed. Once the Consumer
has begun to pay back the loan, principal refers to the amount of money still owed to the

Creditor.

INTEREST RATE

Interest rate is the amount charged to the Consumer for the use of the Creditor's funds. It is
expressed as a percentage of the amount borrowed and is calculated at a specific interval over
the course of the term of the loan contract. Interest rate can be specified either as fixed
interest rate or variable interest rate. For variable interest rates it is important to provide all
necessary details on its variability.
5.2 Current scenario of banking industry

In recent time, we have witnessed that the World Economy is passing through intricate
circumstances as bankruptcy of banking and financial institution, death crisis in major
economies of the world and euro zone crisis. The scenario has become very uncertain causing
recession in major economies like US and Europe. This poses some serious questions about
the survival, growth and maintaining the sustainable development.
However, amidst all this turmoil India’s banking industry has been amongst the few to
maintain resilience. The tempo of development for the Indian banking industry has been
remarkable over the past decade. It is evident from the higher pace of credit expansion,
expanding profitability and productivity similar to banks in developed markets; lower
incidents of non-performing assets and focus on financial inclusion have contributed to
making Indian banking vibrant and strong. Indian banks have begun to revise their growth
approach and re evaluate the prospects on hand to keep the economy rolling.
5.3 ACCESSIBLE TO A COMMON MAN

Access refers to a situation in which affordable, mainstream financial products are available
to all segments of the population across the range of income levels and demographic
characteristics. Suitability addresses the appropriateness of the products for particular
consumer groups. Innovative products will tend generally to be either positive for access to
finance or neutral. But products that actually result in increased access to finance may
nonetheless still raise suitability issues. Innovative products can be particularly difficult for
retail consumers to understand and better financial education is needed to help address
financial illiteracy. In addition, service providers should have appropriate internal controls to
minimise the chances that consumers take on inappropriate exposures. Even the best
disclosures, alone, may not be adequate, so to avoid situations in which retail investors
become involved with unsuitable products, institutions should be “encouraged” to develop
sufficient measures for client protection as part of their product development activities.
Stricter penalties should be used when needed to address mis-selling, fraud or firm
misconduct.
 CHAPTER 6. GLOBAL SCENARIO ON
CONSUMER PREFERENCE ON DIFFERENT
TYPES OF LOANS
6.1 GLOBAL SCENARIO ON CONSUMER PREFERENCE ON DIFFERENT
TYPES OF LOANS

The bank system is facing challenges with stiff competition and advancement of technology.
It becomes imperative for service providers to meet or exceed the target customers‘
satisfaction with quality of services expected by them. Hence, the present research attempted
to study customers‘ perception of quality of services, both transaction based and IT enabled
in terms of its constituent factors in public sector, private sector and foreign banks. Also
through the present study, we would gauge the extent of IT adoption in public sector, private
sector and foreign banks in this e-age. The present investigation was planned with the
objective to assess the extent of use of services especially the IT enabled services in these
banks and to analyse the constituent factors affecting customer satisfaction with the quality of
services. The present study was conducted in public sector, private sector and foreign banks
of Delhi. Multistage random sampling was used for selection of sample. The study was
proposed to be conducted in five zones (East, West, North, South, and Central) of Delhi. One
branch of the above banks in any zone of Delhi was selected randomly. While selecting the
branch, care was taken to see that branch should provide at least five IT enabled services.
This step was followed to have Intra Bank comparison. The study shows that the customers
of nationalized banks were not satisfied with the employee behaviour and infrastructure,
while respondents of private and foreign banks were not satisfied with high charges,
accessibility and communication. 9 Following are the types of Banks:

Nationalized Banks:

Nationalized banks dominate the banking system in India. The history of nationalized banks
in India dates back to mid-20th century, when Imperial Bank of India was nationalized (under
the SBI Act of 1955) and re-christened as State Bank of India (SBI) in July 1955.

Private Banks in India:

Initially all the banks in India were private banks, which were founded in the pre-
independence era to cater to the banking needs of the people. In 1921, three major banks i.e.
Banks of Bengal, Bank of Bombay, and Bank of Madras, merged to form Imperial Bank of
India.

State Bank of India:

The State Bank of India, the country‘s oldest Bank and a premier in terms of balance sheet
size, number of branches, market capitalization and profits is today going through a
momentous phase of Change and Transformation – the two hundred year old Public sector
behemoth is today stirring out of its Public Sector legacy and moving with an agility to give
the Private and Foreign Banks a run for their money. The bank is entering into many new
businesses with strategic tie ups – Pension Funds, General Insurance, Custodial Services,
Private Equity, Mobile Banking, Point of Sale Merchant Acquisition, Advisory Services,
structured products etc – each one of these initiatives having a huge potential for 10 growth.
The Bank is forging ahead with cutting edge technology and innovative new banking models,
to expand its Rural Banking base, looking at the vast untapped potential in the hinterland and
proposes to cover 100,000 villages in the next two years. It is also focusing at the top end of
the market, on whole sale banking capabilities to provide India‘s growing mid / large
Corporate with a complete array of products and services. It is consolidating its global
treasury operations and entering into structured products and derivative instruments. Today,
the Bank is the largest provider of infrastructure debt and the largest arranger of external
commercial borrowings in the country. It is the only Indian bank to feature in the Fortune 500
list.

ICICI Bank:
ICICI Bank is India‘s second-largest bank and the largest private bank in the country, having
more than US$50 billion in assets. The Bank has a network of 2,044 branches and about5,
546 ATMs in India and presence in 18 countries. ICICI Bank provides a wide range of
banking products and financial services — investment banking, life and non-life insurance,
venture capital and asset management to corporate and retail customers through a variety of
delivery channels and specialized subsidiaries and affiliates. Customers of all the groups
under the ICICI umbrella are served through roughly614 branches and global services
provided through 14 international offices. ICICI has incubated Financial Information
Network & Operations Pvt. Ltd. (FINO)
CHAPTER 7. GOVERNMENT INITIATIVES
TOWARDS CONSUMER PREFERENCE
7.1 PROJECTS FOR CONSUMER PREFERENCE

Consumer behaviour is the study of how individuals, customers, groups or organisations

select, buy, use and dispose ideas, goods and services to satisfy needs and wants. consumer
behaviour is a composite of four aspects viz., consumer preference, information search,
purchase decision and post purchase behaviour or satisfaction. Majority of the consumers
give more preference to the quantity of the product followed by price, design, sales and
services etc. the study of the consumer preference not only focus on how and why consumers
make buying decision, but also focuses on how and why consumers make choice of goods
they buy and their evaluation of these goods they buy and their evaluation of these goods
after use. This study reveals the attribute of the consumers towards selected home appliances
which determine the brand preference and satisfaction level.

Meaning of consumer behaviour

Consumer behaviour is the study of individuals, groups or organization and all the activities
associated with purchase, use and disposal of goods and services, how the consumer
behaviour.

Definition of consumer behaviour

In accordance with Solomon 2006 “consumer behaviour is defined as the process decision
making and physical activity involved in acquiring disposing goods and services to satisfy
needs and wants.

Factors influencing consumer behaviour

There are four major factors influencing on buying behaviour of consumer

(a)Cultural factors
Consumer behaviour culture can be defined as sum total of learned belief, values that serve
to guide and direct the consumer behaviour of all member of that society. Cultural factor is
learned through the following three ways: formal learning, informal learning, technical
learning.
(b)Social factors
Consumer behaviour is also influenced by such social factors as reference group, family and,
social role and status.
(c)Personal factors
Buyers decision are also influenced by personnel characteristics, the buyers age life cycle
stages, occupation, economics circumstances life style and personality and self concept.

(d)Psychological factors
Abraham Mallows need can be ranked in order of importance from the low biological needs
to higher level of psychological needs. Maslow’s hierarchy of human needs make us
understand consumer motivation. It is useful for the marketer who can identify what generic
level needs this brand is capable of fulfilling and according position his brand up with
relevant marketing input.

Advantages of consumer behaviour

(a) Saves from disaster

The failure rate of new product is surprisingly high not only in highly competitive
economies of USA, Europe and japan etc. but even in India for instance, roohafza of
hamdard succeeded well but when other companies tried like Dabur to produce
similar product they could not succeed. Dabur had to sleep production of sharbat,
because consumers did not like its taste. There are many more such examples. If one
tests the market before launching a new product this type of disaster can be
minimized or avoided.
(b) Segmentation of market is helped

The study of consumer behaviour suggested that everyone does not buy on price
consideration or utility consideration. Only for high income groups high priced cloth,
cars etc have been produced.in certain cases prices of such cloth is three to eight times of
normal suiting price but some section still buy it for prestige or show
(c) Helps in product orientation

The study of consumer behaviour helps to find out why consumer are drifting away
from a product or why they are not liking it. for instance, some of indian toothpaste
are being produced for long like neem but it could not capture the market. There are
many other instances when a new product has been developed or reoriented to again
capture its old glorious position.
(d) Helps the consumer

to study their behaviour The consumers often are guided by their income,
emotions, opinion of others and they do not undertake study of their behaviour
whether it is scientific or not. The science, however, can help them to study cost
benefit of their buying decision. The study can reveal them whether buying an
expensive item it’s rational or not.

Disadvantages of consumer behaviour

The marketers study the behaviour of consumers to mold it in favour of their

product and sometimes make fancy claims and use objectionable techniques.
They also take the help to produce and market such product which have utility. In
many cases consumers are exploited by sexy or otherwise attractive
advertisements through the media.

They take full advantage of weakness of consumers to mold it in their favour

whether it is scheme of exchange, gift, lotteries or otherwise. All over the world
consumers have been exploited by sales promotion schemes and campaigns. For
instance, certain producers claim that use of their tooth paste will guard against
germs and cavity.

Producers of medicine claim cure of certain deceases. Producers of hair oils claim
that it will stop falling of hairs and or new hairs will start growing. Slim centers
claims reduce weight in magic speedy manner. Someone claims that boldness can
be cured by replanting of new hairs in short period. Someone claims regeneration
of vitality even in old person.

Any number of examples can be given but such claims sometimes even by big
companies are only partially true. High priced products are introduced to take
advantage of consumers weakness just by changing shapes, packing etc.
customers are attracted by gifts, lotteries, exchange scheme etc.

In such cases often claims are exaggerated and benefits in the form of sales
promotion scheme is only to seller and not to buyer. The government in most of
the countries has found though consumer is the he is exploited. Hence most of the
countries have framed and enacted many acts and regulations to safeguard the
interest of consumers.
Accordingly, DAC&FW has formulated the Central Sector Scheme to mobilize a medium -
long term debt financing facility for investment in viable projects relating to postharvest
management Infrastructure and community assets through incentives and financial support.

Rationale of the Scheme

Agriculture and allied activities are the primary income source for ~58% of total population
of India. ~85% of the farmers are Small Holding Farmers (SHFs) with less than 2 hectares of
land under cultivation and manage ~45% of agricultural land. Annual income of majority of
the farmers is very low. Further, India has limited infrastructure connecting farmers to
markets and hence, 15-20% of yield is wasted which is relatively higher vs. other countries
where it ranges between 5-15%.Investment in agriculture in India has further been stagnant
with less than 2% CAGR over last 5 years. Investment in FY17 was ~ Rs. 2.19 lac crore out
of which private sector share was ~83% vs. a higher investment of ~ Rs. 2.50 lac crore in
FY14 and a higher share of private sector at ~88%. Also, lack of investor confidence is
leading to lower plowback ratio (~14% of Gross Value addition in FY18) . other sectors
(~33% of Gross 4 Value addition in FY18).

Objectives of Scheme

To mobilize a medium - long term debt finances facility for investment in viable projects for
post-harvest management Infrastructure and community assets through incentives and
financial support in order to improve infrastructure in the country. This financing facility
will have numerous objective for all the stakeholders in the eco-system.
a. Farmers (including FPOs, PACS, Marketing Cooperative Societies, Multipurpose
cooperative societies) –
 Improved marketing infrastructure to allow farmers to sell directly to a larger
base of consumers and hence, increase value realization for the farmers. This
will improve the overall income of farmers.
 With investments in logistics infrastructure, farmers will be able to sell in the
market with reduced post-harvest losses and a smaller number of
intermediaries. This further will make farmers independent and improve
access to market.
  With modern packaging and cold storage system access, farmers will be able
to further decide when to sell in the market and improve realization.
 Community farming assets for improved productivity and optimization of
inputs will result in substantial savings to farmers.

b. Government –

o Government will be able to direct priority sector lending in the currently

unviable projects by supporting through interest subvention, incentive and
credit guarantee. This will initiate the cycle of innovation and private sector
investment in agriculture.
o Due to improvements in post-harvest infrastructure, government will further
be able to reduce national food wastage percentage thereby enable agriculture
sector to become competitive with current global levels.
o Central/State Government Agencies or local bodies will be able to structure
viable PPP projects for attracting investment in agriculture infrastructure.
CHAPTER 8. DATA ANALYSIS AND
INTERPRETATION
The study has been conducted on the basis of primary data and was descriptive in its nature.
Primary data obtained by interacting with various people, getting the questionnaires filled by
them. The data was collected by means of questionnaire and was classified and analyzed
carefully. Questionnaire was constructed innovatively and systematically distributed to
respondents in the study field. In this research, the questionnaire was formed. The questions
were mostly close-ended questions. Open-ended question has been used only for deriving
suggestions from the respondents.
 TABLE 1: CLASSIFICATION OF TABLE ON THE BASIS OF CUSTOMERS’
BANK DETAILS AND NO. OF YEARS OF EXPERIENCE

Characteristic Name of the bank No. of respondent Percentage

Customer’s account holding SBI 70 50.67
bank details
ICCI 74 49.33
No of years experience with Above 12 years 18 12.00
respective account holding
bank 10-2 years 15 10.00

7-9 years 43 28.67

4-6 years 52 34.67
1-3 years 22 14.67

Table reveals the details about the customers having accounts in specific banks and the
number of years of having transactions with two banks. It is highlighted that 50.67% of
the respondents have their account in State Bank of India (SBI), 37 49.33% of the
respondents in ICICI bank. another inferred that 34.67% of the respondents have 4-6
years of experience with the same bank, followed by 7-9 years of bank transaction
experiences as assigned by 28.67% experience of the respondents had 1-3 years of
experience while a very minimal 14.67% of the respondents with their respective banks.
TABLE 2: CLASSIFICATION OF TABLE ON THE BASIS PREFERENCES
AND SATISFACTION LEVEL OF VALUE ADDED SERVICES

Value added Good Moderate Poor Total

services

ATM 28 16 02 46

Locker services 14 06 01 21

Mobile banking 24 02 0 26

Net banking 15 02 0 17

Others 29 11 0 40

110 37 03 150

More banks are offering similar value added services such as mobile banking (customer
convenience), SMS banking (account balance, last few transactions, cheque-book requests
and updated interest rate charges). For examples, ICICI bank uses immobile (mobile banking
platform) for paying utility bills, insurance premiums, and account transactions to other
banks. SBI mobile banking moves are similar to that of ICICI bank and it allows its
customers to pay telephone 38 bills, fund transfer, utility bills, recharge of mobile SIM cards,
etc. Nevertheless the commonly used value added services are: ATM (46 users) locker
facilities (21 users), mobile banking (26 users), net banking (17 users) and tele-banking,
online fund transfers, 24*7 customer care, etc., are categorized as others (only 40 users) and
successful reach of these services are highly influenced by factors like customer needs,
wants, expectations, preferences, knowledge about usage of value added services as well as
length of value added services offered by bankers. Respondents were asked to rank the level
of satisfaction of the five commonly known and used value added services (refer table 5).
ATM was ranked first, rank two was assigned to other value added services like tele banking,
24*7 customer care, SWIFT operations, NRI accounts, E-ticketing, Etaxing, credit cards,
debit cards, etc. table 5 shows that rank 3 goes to mobile banking as it indicates increase in
usage of mobiles day by day for the various purposes while chances of usage of net banking
was low, due to confusion, poor internet literacy, fear of online theft, no training on this
aspect etc hence it was given the last rank.

Factor Analysis: Since the questionnaire used in this research has various set of questions
focusing on different factors for over-all customer satisfaction and dissatisfaction with
banking services in terms of loan services and services pertaining to loans provided by the
banks. Therefore, factor analysis is conducted separately on each of sets within the
questionnaire. Significant 39 factors from each of these sets have been calculated and from
these factors, a significant factor of the entire questionnaire is calculated.

Reliability Statistics

Alpha No. of items

.788 30

Reliability Assessment

Analysis As statistics tells more the Alpha value near to 1 more will be the
reliability. The above table reveals that the Cronbach’s Alpha value = .788.
Therefore based on the Alpha value it can be decided that the framed
questionnaires are more reliable with each other and the questionnaire survey
can be conducted by using the questionnaire.
 Gender

Frequency Percent Valid Cumulative

percent percent

valid Male 60 60.0 60% 65.0

Female 40 40.0 40% 100.0

Total 100 100.0 100%

Gender

40%

60%

male female

Interpretation

Table no-8.2, shows that the total numbers of respondents are 100. In the first column of the
table numerical value is assigned for male and numerical value is assigned for females. The
total numbers of male and female are 60 and 40 respectively out of 100(the total sample size
of the respondents). The study of table reveals that in this study more than 60% respondents
are male. The table shows that the majority of people who take the loan from the banks are
males.

Annual Income

Frequency Percent Valid Cumulative

percent percent

Less than 7 7.0 7% 7.0

50000

50000- 29 29.0 29% 36.0

100000

100000- 45 45.0 45% 88.0

2500000
Above 19 19.0 19% 100.0
2500000

Total 100 100% 100%

 Annual Income

7%
19%

29%

45%

Less than 50000 50000-100000 100000-250000 Above 250000

fd

Interpretation

Table no- 8.3 and shows that the total numbers of respondents are 100. In the table 45% of
respondents whose annual income lies between 100000- 250000, 29% of respondents annual
income is 50000- 100000, 19% of respondents annual income is above 250000 and
7%respondents is less than 50000. The table states that the majority of people who take the
loan from the banks their annual income lies between 100000-250000.
 Type of loan

Frequency Percent Valid Cumulative

percent percent

Personal 41 41.0 41% 41.0

loan
Housing 24 24.0 24% 65.0
loan
Education 15 15.0 15% 77.0
loan
Other 20 20.0 20% 100.0

Total 100 100.0 100%

Types of loans

20%

41%

15%

24%

Personal loan Housing loan Education loan other

Interpretation

Table no- 8.4 shows that the total numbers of respondents are 100. In the table 41% of
respondents are interested in taking personal loan, 24% of respondents are interested in taking
housing loan, 20% of respondents are interested in taking other type of loan and
15%respondents are taking education loan. The table states that the majority of people who
take the loan from the banks are the personal loan.

Occupation

Frequency Percent Valid percent Cumulative

percent
Business 35 35.0 35% 35.0

Public sector 11 11.0 11% 46.0

Private sector 31 31.0 31% 77.0

service
Self employed 11 11.0 11% 88.0

Others 12 12.0 12% 100.0

Total 100 100.0 100%

 Occupation

12%

11% 35%

31%
11%

business Public sector service Private sector service self employed Others

Interpretation

Table no-8.5 shows that the total numbers of respondents are 100. In the table 35% of
respondents occupation is business, 31% of respondents occupation is private sector service,
11% of respondents occupation is public sector services, self-employed and others. The table
states that the majority of people who take the loan from the banks whose occupation is
business.
DATA ANALYSIS

The chapters describe the analysis and interpretation of the data which are collected through
the questionnaire and the internet website. Above analysis shows that customer satisfaction
vary according to the nature of the services and in this case, highest customer satisfaction is
shown in such areas like price charged by banks is nominal, convenient location of bank
branches & staff attitude toward problem solving of customers. When the private sector
banks are compared with public sector banks, public bank customers were more satisfied with
their bank because of convenient locations and technology which were not even seen in
private sector banks. But when we talk about private sector banks customers of public sector
banks were more satisfied with reputation, reliability and the prices which public sector banks
impose on services.
CHAPTER 9. FINDINGS
Findings

The world of banking has assumed a new dimension at dawn of the 21st century with the
advent of tech banking, thereby lending the industry a stamp of universality. In general,
banking may be classified as retail and corporate banking. Retail banking, which is designed
to meet the requirement of individual customers and encourage their savings, includes
payment of utility bills, consumer loans, credit cards, checking account and the like.
Corporate banking, on the other hand, caters to the need of corporate customers like bills
discounting, opening letters of credit, managing cash, etc. Metamorphic changes took place in
the Indian financial system during the eighties and nineties consequent upon deregulation and
liberalization of economic policies of the government. India began shaping up its economy
and earmarked ambitious plan for economic growth. Consequently, a sea change in money
and capital markets took place. Application of marketing concept in the banking sector was
introduced to enhance the customer satisfaction the policy of privatization of banking
services aims at encouraging the competition in banking sector and introduction of financial
services. Consequently, services such as Demat, Internet banking, Portfolio Management,
Venture capital, etc, came into existence to cater to the needs of public. An important agenda
for every banker today is greater operational efficiency and customer satisfaction.

The major findings are as follows:

a) This study shows that public sector banks are providing better products and services as
compared to private sector banks
b) As per the study more of the respondents were interested in taking personal loan from the
bank.
c) This study shows that private sector banks are providing better infrastructure facilities as
compared to public sector banks
d) As per the study most of the respondents are the post graduates who take education loan.
From the 90 respondents, it was also observed that the Government Employee is 29 %. This
indicates that the Government employed respondents can be prospective borrowers with
stable Income. So, if in case they require additional Loans existing based on their payback
capacity they can be offered a Loan. With frequent hikes in interest rates by the RBI and the
subsequent hike in rates by banks, the cost of unsecured financial lending is increasing.
Mostly Private employee and Self-employed takes the personal and business loan as
compared to a government employee, Bank need to focus on the government employee and
should take extra efforts to market this product to government employee as there are potential
customers. In this competitive world, the consumers feel secured and reliable to take
unsecured loans from the Bank rather than taking them from NBFCs.
CHAPTER 10. FUTURE SCOPE
Scope of the Study

This study will help in understanding the analysis customer in public and private bank and
also the services provided by the bank in Delhi and also focusing on key factors based on
loan perception of the customer in public and private sector bank. The area of study is
restricted to Delhi and NCR. A number of surveys are conducted in the main cities of India
like Bangalore, Chennai and Delhi but the customers of the big cities differ with the
customers of small cities in attitude, usage pattern and recall etc., therefore the present
work has been undertaken in the Shivamogga district the most people are being in use of
banking services. This study is mainly confined to the customer preference and satisfaction
towards banking services only, who have been using 24 the particularly ATM, and mobile
banking in Shivamogga district of Karnataka state. The study mainly focuses on the
customers of the Kothrud branch of HDFC Bank Ltd. Pune region. It will be helpful to the
marketer to analyze consumer behavior (Borrowers) at the point of purchase and plan the
products accordingly. The Study will help to understand the preference of consumers
towards the personal loan and business loan for availing loans. This study will also help to
identify consumer Preference on basis of various factors that influence consumer behavior.
The study will help the Loan lenders and banks to take steps towards customer service
models as well as identify the consumer Preference based on various
CHAPTER 11. CONCLUSION
Conclusion

The study is aimed at measuring the customers‘ preference and satisfaction levels for two
basic services offered by private and public bank in Shivamogga district. Business and
vehicle loans are fast moving than other services and overall satisfaction resulted at 50%.
Further, overall satisfaction on bank deposit schemes resulted positively while other services
of banking still need to be given attention by focusing on customer issues. New innovative
schemes, strategies to cater to non users other services have to be adopted. A study or future
research is recommended on all verticals of banking services. In value added services
customer preference for net banking was least ranked and if the 51 bankers with to increase
net banking traffic, bankers should take maximum efforts to educate the customers by
offering on line training instead of handing out instruction manuals. Finally, if they want to
sustain customers on a long term basis, bankers should work towards 100% customer
satisfaction that automatically fosters customer delight.

Various traditional and IT enabled banking services used by customers are studied in the
present paper. In addition, customer satisfaction was also measured with various dimensions.
It is observed that cheque deposit and cheque clearance were the most common banking
services used by the customers of all six banks. While the charges levied by the bank on
different services were perceived higher by the customers in private and foreign banks in
comparison to nationalized banks. A small number of respondents were using IT enabled
services other than ATM. Security, lack of facility, improper awareness and so on were found
to be the reasons for not using IT enabled services. The customers of nationalized banks were
not satisfied with the employee behavior and infrastructure, while respondents of private and
foreign banks were not satisfied with high charges, accessibility and communication. The
study shows that only a few respondents made complain to their respective banks. The nature
of complain was mostly delay in transaction and extra charges. 52 Hence, the study throws
light on different aspects and drawback of services of the nationalized, private and foreign
banks. Training on stress management and public dealing should be imparted to the
employees of nationalized banks. Nationalized banks need to improve their infrastructure and
ambience to compete with private and foreign banks in India. Branches of private and foreign
banks should be increased for easy accessibility.
CHAPTER 12. SUGGESTION
Suggestions

Finally some suggestions for the company are as follows:

a) The banks should adopt the modern methods of banking services like internet
banking, credit cards, ATM, etc.
b) The banks should plan to introduce new schemes for attracting new customers and
satisfying the present ones.
c) The banks should plan for expansion of branches.
d) The banks should improve the customer services of the bank to a better extent.
e) The study can be conducted to a broader geographical area.
f) The study should be conducted on specified bank.
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