University of Mumbai

“Role Of Financial Institution In India ”

Semester VI

A Project Submitted to
University of Mumbai for partial completion of the degree of
Bachelor in Commerce (Accounting and Finance)

By
Mr. Akshay Bhausaheb Parhad
Under the Guidance of
Mr. Vijendra Gupta

Cosmopolitan’s
Valia C.L. College of Commerce & Valia L.C. College of Arts,
D.N Nagar, Andheri (West), Mumbai-400053
March 2022-2023
 CERTIFICATE

This is to certify that Mr. Akshay Bhausaheb Parhad has worked and duly

completed his Project Work for the degree of BACHELOR IN COMMERCE

(ACCOUNTING & FINANCE) under the Faculty of Commerce in the subject

of ACCOUNTANCY and his project is entitled, “Role Of Financial
Institution In India” under my supervision.

I further certify that the entire work has been done by the learner under my guidance
and that no part of it has been submitted previously for any Degree or Diploma of any
University.

It is his own work and facts reported by her personal findings and investigations.

Name and Signature of

Guiding Teacher

Date of submission:
 DECLARATION

I the undersigned Mr. Akshay Bhausaheb Parhad here by, declare that the work
embodied in this project work titled “Role Of Financial Institution In India”
forms my own contribution to the research work carried out under the guidance of MR.
VIJENDRA GUPTA is a result of my own research work and has not been previously
submitted 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 as such and included in the bibliography.

I, hereby further declare that all information of this document has been obtained and
presented in accordance with academic rules and ethical conduct.

Name & Sign of the learner

Certified by
Name and signature of the Guiding Teacher
 ACKNOWLEDGMENT

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

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

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

I would like to thank my Principal, Dr. Mrs Shobha Menon for providing the
necessary facilities required for completion of this project.

I take this opportunity to thank our Vice Principal, Ms. Rajlaxmi Nayak

for her moral support and guidance.

I would also like to express my sincere gratitude towards my project guide Mr.
Vijendra Gupta 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 the completion of the project especially my Parents and Peers who
supported me throughout my project.
 INDEX
SR. NO. TOPIC PG.NO.

1 Introduction 1

1.1 Meaning 1

1.2 Definition 2

1.3 Types of financial system 2

2 Research Methodology 36

2.1 What is research 37

2.2 What is research methodology 37

2.3 Types of research 37

3 Review of literature 51

4 Data analysis 62

5 CONCLUSION 76

6 Recommendation & suggestions 78

7 References 79

8 Appendix 80
 1. Introduction

Finance is a system that involves the exchange of funds between the borrowers and the
lenders and investors. It operates at various levels from firms to global to national
levels. Thus, there are many complexities involved in it related to markets, institutions,
etc. An introduction to finance will provide a basic idea of how the finance sector in
general works in India. In the finance system, credit, money, and finance are used as a
medium for various exchanges. So, they work as a know value for which the services
and goods are exchanged.

Thus, in morden systems, banks financial instruments, financial markets, and services
are included. Also, this system allows for the funds invested, allocated, and moved
within a smooth process. The economic development of any country depends upon the
existence of a well-organized financial system. When the system functions properly, it
channelizes funds from savers to investors. By increasing productivity, the financial
system helps super economic growth and raise the standard of living. The financial
system is possibly the most important institutional and functional vehicle for economic
transformation. Finance is a bridge between the present and the future and whether it is
mobilization of savings or their efficient, effective and equitable allocation for
investment, it is the success with which the financial system performs its functions that
sets the pace for the achievement of broader national objectives.
Financial system is a concept derived from the wide concept of finance. The financial
system is a system that allows the transfer of money between savers and investors. It
plays an important role in global, national, regional, institutional and individual areas.
This states the healthy and soundness of financial status from global to individual.

1.1 Meaning of financial system:

the term financial system is a set of interrelated activities or services working together
to achieve some predetermined purpose or goal. It includes different markets, the
institutions, instruments, services and mechanisms which influence the generation of
savings, capital formation and growth.
In simple, financial system refers to all the securities, intermediaries and markets that
exist to make transfers from savers to borrowers possible.

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1.2 Definitions:

1. In the words of dr.s. Guruswamy, in his book financial services and systems defined
the term financial system as “a set of complex and closely interconnected financial
institutions, markets, instruments, services, practices and transactions.”

1.3 Types of financial system:

The Indian financial system can be broadly classified into two types i.e. Formal
(organized) financial system: this is also known as organized financial
system because it comes under the purview of ministry of finance (mof),
reserve bank of India (rbi), securities exchange board of India (sebi), and
regulatory bodies. Formal financial system consists of four sub-systems. These
are:
1. Financial institutions.
2. Financial markets.
3. Financial instruments.
4. Financial services.

Informal (unorganized) financial system: the informal financial system consists

of individual money lenders, groups of persons operating as associations,
partnership firms consisting of local brokers’ pawn brokers and non-banking
financial intermediaries such as finance, investment and chit fund companies.
These people have a system and they have their own rules on how they should
function in their day-to-day activities.
However, the formal financial system is always preferable because it is
systematic, transparent and offers numerous benefits.

1. Financial institutions:

Meaning: financial institutions are business organizations serving as a link between

savers and investors and so help in the credit allocation process.
In simple, financial institutions are the institutions which offer financial services for its
clients or members. The most probable service is financial intermediation. The
institutions include banks, trust, companies, insurance companies and investment
dealers.

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Definition: financial institution is defined as “an establishment that focuses on dealing
with financial transactions, such as investment, loans and deposits.”
In other words, the financial institution is an organization which may be either profit or
non-profit, that takes money from clients and places it in any of a variety of investment
vehicles for the benefit of both the client and the organization. Financial institutions
include banks and other non-finance banking institutions. It is a company that is
engaged in the business of dealing with monetary and financial transactions like loans,
deposits, and investments.

It comprises various banking operations like trusting the companies, brokerage firms,
insurance companies, and dealers. A bank is a financial institution that is legally
allowed to borrow and lend money.

Along with these banks also provides financial services like an exchange of currency,
wealth management, and safe deposits. Generally, banks are categorized into two types:
investment banks and commercial banks. While non-banking financial institution or
nbfcs do not have a banking license.

Furthermore, they are not supervised by any national or international regulatory body.
Nbfcs generally function services such as risk management, market borrowing,
investment, etc.

Salient feature of financial institutions

an understanding of the above meaning and definition provides the following salient
features of financial institutions:

1. It is an institution as well as intermediary.

2. It channelizes savings fund into investment fund.
3. It creates financial assets such as deposits, loans, securities etc.
4. It includes banking and non-banking institutions.
5. It includes both organized and unorganized institutions.
6. Established with a clear operating function.
7. Regulated by the government and regulating authority.
8. It accepts deposits.
9. It provides commercial loans, real estate loans and mortgage loans.

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10. Financial institutions keep money flowing through the economy among
consumers, businesses and government.

Classification of financial institutions

The financial institutions are classified into term lending institutions, refinance
institutions, investment institutions and state level institutions. These are also to be
classified into banking and non-banking institutions.
Banking institutions:
these are the type of financial institutions which involve in accepting public deposits
and lending the same to the needy customers. These are fundamentally established to
earn profit, secondarily to safeguard the interest of the members. The banking
institutions ensure that deposits accumulated from people are productively utilized.

The following are the types of banking institutions which are running their business in
India.

A) commercial banks: these are also called as business banks. The following are the
types of commercial banks.
I. Public sector.
Ii. Private sector.
Iii. Regional rural banks (rrb`s)
iv. Foreign banks.

B) cooperative banks: these are established to safeguard the interest of its members.
These are organized on a co-operative basis, accept deposits and lend money to the
required member.

Non-banking institutions:
these are the financial institutions that provide banking services without meeting the
legal definition of a bank. The non-banking financial institutions also mobilize
financial resources directly or indirectly from the people. They lend the financial
resources mobilized.
The non-banking institutions are classified into organized and unorganized financial
institutions. The following are examples of non-banking institutions:

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i. Provident and pension fund.
Ii. Small saving organization.
Iii. Life insurance corporation (lic).
Iv. General insurance corporation (gic).
V. Unit trust of India (uti).
Vi. Mutual funds.
Vii. Investment trust, etc.

Non-banking financial institutions can also be categorized as investment companies

housing companies, leasing companies, hire purchase companies, specialized financial
institutions (exim bank), investment institutions, state level institutions etc.

2 .financial market :

Financial markets consist of two types of market, primary market, and the secondary
market. This is a broad term used to describe a market place where equities, currencies,
and bonds are traded. So, in the primary market, the exchange for the government,
companies, are done by the new companies. Thus, this is done through equity based or
debit base securities.

Also, this process is facilated by the investment banks that have set a beginning price
and are over seeing a sale for its investors. Once the sale is completed it is further seen
by the secondary market.

The secondary market comes after the primary market. Also, this is a market place
where investors buy and sell the securities that are already owned by them.

Primary market:

The primary market consists of arrangements, which facilitate the procurement of long-
term funds by companies by making fresh issue of shares and debentures. You know
that companies make fresh issue of shares and/or debentures at their formation stage
and, if necessary, subsequently for the expansion of business. It is usually done through
private placement to friends, relatives and financial institutions or by making public
issue. In any case, the companies have to follow a well-established legal procedure and
involve a number of intermediaries such as underwriters, brokers, etc. Who form an

5
integral part of the primary market. You must have learnt about many initial public
offers (ipos) made recently by a number of public sector undertakings such as ongc,
gail, ntpc and the private sector companies like tata consultancy services (tcs), biocon,
jet-airways and so on. The major players in the primary market are merchant bankers,
mutual funds, financial institutions, and the individual investors.

Secondary market :

The secondary market known as stock market or stock exchange plays an equally
important role in mobilizing long-term funds by providing the necessary liquidity to
holdings in shares and debentures. It provides a place where these securities can be
encashed without any difficulty and delay. It is an organised market where shares, and
debentures are traded regularly with high degree of transparency and security. In fact,
an active secondary market facilitates the growth of primary market as the investors in
the primary market are assured of a continuous market for liquidity of their holdings.
The major players in the secondary market include all the players in the money market
and the stockbrokers who are members of the stock exchange who facilitate the trading.

3.financial instruments :

Financial instruments are the assets which can be traded in the market. They can also
be a form of package which is traded. Most financial instruments provide earn efficient
flow to facilated the transfer of capital.

Thus, this asset can be of any form from cash to contractual right to receive and deliver
the cash. They are usually monetary contract between the two firms. Also, this
instrument can be modified, traded, or settled.

The cash instruments are the instruments whose value is directly determine by the
market. They can also be securities which are tradable and transferable.

This includes deposits and loans. While for derivative instruments, the value is derived
from more than one underlying commodity, currency, precious metals, bonds stocks,
etc.

They represent claims on a stream of income and/or assets of another economic unit
and are held as a store of value and for the return that is expected. The financial assets
fall into three broad categories: (i) direct/primary; (ii) indirect and (iii) derivatives.

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I) direct/primary securities are: equity/ordinary shares: they are ownership
securities and represent risk capital. The owners of such security bear the risk, are
residual claimants on the income and assets and participate in management of the
company.

Debentures: a debenture is a creditorship security. Their holders are entitled to a

prespecified interest rate and first claim on the assets of the entity. They have no right
to vote in the meetings of the company. Debentures can bea either bearer/ negotiable/
transferable by delivery or registered which are payable to the registered holders only.
They can be secured or unsecured/naked. Debentures can be convertible and non-
convertible into equity shares.

Preference shares: a preference share is hybrid security and partakes the features of both
equity and debentures. It combines both ownership and creditorship privileges. The
holders of such security have preference over the equity holders in respect of fixed
dividend as well as return of capital.

Warrants: these are also referred to as sweeteners. A warrant is a security which entitles
the holders to purchase a specified number of shares at a stated price before a stated
date/ period. They are issued with either debentures or equity shares.

Ii) indirect securities/financial assets: indirect securities are financial assets issued by
financial intermediaries such as units of mutual funds, policies of insurance companies,
deposits of banks and so on. The indirect financial assets are coined from the underlying
primary security and bearing their own utilities (khan, m.y).

Iii) derivatives: the derivatives market is not for faint-hearted. Derivative is a

product/financial instruments whose value is derived from the value of one/more basic
variables called base (underlying assets/ index/reference rate) in a contractual manner.
They generally take the form of contracts under which parties agree to make payment
to each other based on the value of the assets at a particular point in time. The
underlying assets can be equity/ forex/ any other assets. The price of the derivative is
driven by the post price of the asset price which is ‘underlying.’ the securities contract
(regulation) act defines derivatives to include (1) a security derived from debt
instrument/shares/secured or unsecured loan/ risk instrument/contract for
differences/any other form of security, (2) a contract which derives its value from the

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prices/ index of prices of underlying securities. The most commonly used derivative
contracts are forwards, futures and options and swaps.

Financial services

The economic services that are provided by financial institutions and covers a broader
aspect of money like managing money, banks, credit card, debit card are called financial
services. Also, the other financial services that are offered by the institutions are
consumer finance, stock brokerage, investment funds and many more.

Financial institutions for agriculture(NABARD):

National bank for agriculture and rural development (NABARD) is an apex regulatory
body for overall regulation of regional rural banks and apex cooperative banks in India.
It is under the jurisdiction of ministry of finance, government of India. The bank has
been entrusted with "matters concerning policy, planning, and operations in the field of
credit for agriculture and other economic activities in rural areas in India". NABARD
is active in developing and implementing financial inclusion.

In India, there are financial institutions available for a different sector. As Indian
economy is so large, every sector needs different institutions to manage its economy.
To manage the agriculture sector, the government of India has established a national
bank for agriculture and rural development which is also known as NABARD. There
are other financial institutions for agriculture in India which also helps and supports the
farmers.

NABARD was established on the recommendations of b. Sitaraman committee (by act

61, 1981 of parliament) on 12 July 1982 to implement the national bank for agriculture
and rural development act 1981. It replaced the agricultural credit department (acd) and

8
rural planning and credit cell (rpcc) of reserve bank of India, and agricultural refinance
and development corporation (ardc). It is one of the premier agencies providing
rs.14080 crore (100% share). The authorized share capital is rs.30,000 crore.

International associates of NABARD include world bank-affiliated organizations and

global developmental agencies working in the field of agriculture and rural
development. These organizations help NABARD by advising and giving monetary aid
for the upliftment of the people in the rural areas and optimizing’ the agricultural
process.

Nabfoundation has been set up by NABARD as a section 8 or subsidiary company,

where the chairman of NABARD is the chairman of nabfoundation too.

Thus, it was developed as an apex bank to help and support the agriculture section in
India. Currently, the headquarters of NABARD is in mumbai, maharashtra and the
chairman of the bank is harsh kumar bahnwala.

National bank for agriculture and rural development is considered a developmental

bank in India. The bank was conceived and recommended by the committee for review
arrangement for institutional credit for rural development and agriculture.

This was done under the chairman ship of dr. B sivaraman. Also, the primary objective
of establishing and setting up the NABARD was uplift the rural sector of India by
increasing the credit flow such that agriculture and rural non farming sector are
elevated.

Currently, rbi has 0.4% stake in NABARD while the government of India has a 96.4%
of stake in NABARD. Also, NABARD is actively looking for developing the financial
inclusion policy. It is also a member of the alliance for this financial inclusion.

For the agriculture sector, NABARD has replaced 3 banks in India. Rural planning and
credit cell (rpcc), agricultural credit department is also known as acd and agriculture
refinance and development corporation which ardc. Earlier these institutions where
tasked with the development of the agriculture sector in India.

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NABARD regional office, lucknow

NABARD has been instrumental in grounding rural, social innovations and social
enterprises in the rural hinterlands. As of may 2020, NABARD operates at 32 regional
offices in the country. It has in the process partnered with about 4000 partner
organizations in grounding many of the interventions be it, shg-bank linkage
programme, tree-based tribal communities’ livelihoods initiative, watershed approach
in soil and water conservation, increasing crop productivity initiatives through lead crop
initiative or dissemination of information flow to agrarian communities through farmer
clubs. Despite all this, it pays huge taxes too, to the exchequer – figuring in the top 50
tax payers consistently. NABARD virtually ploughs back all the profits for
development spending, in their unending search for solutions and answers. Thus the
organization had developed a huge amount of trust capital in its 3 decades of work with
rural communities.

1.NABARD is the most important institution in the country which looks after the
development of the cottage industry, small scale industry and village industry, and other
rural industries.

2.NABARD also reaches out to allied economies and supports and promotes integrated
development.

3.NABARD discharge its duty by undertaking the following roles:

Serves as an apex financing agency for the institutions providing investment and
production credit for promoting the various developmental activities in rural areas

Takes measures towards institution building for improving absorptive capacity of the
credit delivery system, including monitoring, formulation of rehabilitation schemes,
restructuring of credit institutions, training of personnel, etc.

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Co-ordinates the rural financing activities of all institutions engaged in developmental
work at the field level and maintains liaison with government of India, state
governments, reserve bank of India (rbi) and other national level institutions concerned
with policy formulation

Undertakes monitoring and evaluation of projects refinanced by it.

NABARD refinances the financial institutions which finances the rural sector.

NABARD partakes in development of institutions which help the rural economy.

NABARD also keeps a check on its client institutes.

It regulates the institutions which provide financial help to the rural economy.

It provides training facilities to the institutions working in the field of rural upliftment.

It regulates and supervise the cooperative banks and the rrb's, throughout entire India.

NABARD has its head office at mumbai, India and regional offices in all states and one
special cell at srinagar j&k. The regional office [ro] is headed by a chief general
manager [cgms] as officer in charge, and the head office has several top executives viz
the directors, deputy managing directors [dmd], and the chairperson. The board of
directors are appointed by the government of India in consonance with NABARD act.
It has 336 district offices across the country which are staffed by district development
managers (ddms). It also has six training establishments.

NABARD is also known for its 'shg bank linkage programme' which encourages India's
banks to lend to self-help groups (shgs). Largely because shgs are composed mainly of
poor women, this has evolved into an important Indian tool for microfinance. By march
2006, 22 lakh shgs representing 3.3 crore members had to be linked to credit through
this programme.[12]

NABARD also has a portfolio of natural resource management programme involving

diverse fields like watershed development, tribal development and farm innovation
through dedicated funds set up for the purpose.

Bank regulation edit

11
NABARD supervises state cooperative banks (stcbs), district cooperative central banks
(dccbs), and regional rural banks (rrbs) and conducts statutory inspections of these
banks.

Refinancing edit

NABARD's refinance fund from world bank and asian development bank to state co-
operative agriculture and rural development banks (scardbs), state co-operative banks
(scbs), regional rural banks (rrbs), commercial banks (cbs) and other financial
institutions approved by rbi. While the ultimate beneficiaries of investment credit can
be individuals, partnership concerns, companies, state-owned corporations or co-
operative societies, production credit is generally given to individuals.

The advantages of the NABARD scheme are as follows:

It provides support for refinancing and funding.

It promotes the infrastructural growth of rural communities in India.

The scheme helps in creating credit plans at a district level.

Supervises the cooperative banks and regional rural banks (rrbs) in India

Objectives of NABARD

NABARD is an active member of the financial inclusion alliance. The initial capital for
NABARD was rs. 100 crores. Currently, the share of the government of India in
NABARD is 99% while rbi holds a 1% share.

So, NABARD is responsible for taking measures for the institutions which are helping
in improving the absorption capacity of the credit system. This delivery system includes
formulating the rehabilitation schemes, training of the personnel, monitoring, and
reshaping the credit institutions.

For financial activities in rural India, it coordinates with state governments, reserve
bank of India, the Indian government, and various national banking institutions which

12
are concerned with the formation of the policies. For more and more reach, NABARD
currently has more than 330 district offices.

This also includes one special cell in Srinagar and a sub-office in port blair.
NABARD refinances the financial institutions which finance the rural sector. Thus,
these are available for many institutions which include state co-op banks, commercial
banks, regional rural banks, and other financial institutions that are approved by the rbi.

Further NABARD is also named as a self-help group and under this program there 22
lakh sghs which are credited. So, for national resource management, NABARD has a
portfolio in fields of tribal development, farm innovation, and watershed development.
So, there are guidelines by NABARD to rrbs, commercial banks, and cooperative
banks.

Role of NABARD

NABARD discharge its duty by undertaking the following roles:

Serves as an apex financing agency for the institutions providing investment and
production credit for promoting the various developmental activities in rural areas

Takes measures towards institution building for improving absorptive capacity of the
credit delivery system, including monitoring, formulation of rehabilitation schemes,
restructuring of credit institutions, training of personnel, etc.

Co-ordinates the rural financing activities of all institutions engaged in developmental

work at the field level and maintains liaison with government of India, state
governments, reserve bank of India (rbi) and other national level institutions concerned
with policy formulation

Undertakes monitoring and evaluation of projects refinanced by it.

NABARD refinances the financial institutions which finances the rural sector.

NABARD partakes in development of institutions which help the rural economy.

NABARD also keeps a check on its client institutes.

It regulates the institutions which provide financial help to the rural economy.

It provides training facilities to the institutions working in the field of rural upliftment.

13
It regulates and supervise the cooperative banks and the rrb's, throughout entire India.

Financial institutions for industries

The financial institutions in India are developed keeping in mind the need of the specific
sectors. There specific role of financial institutions for agriculture, export-import,
insurance, currency exchange, etc. Similarly, there are financial institutions for
industries. Let us study them in detail.

Icici bank limited is an Indian multinational bank and financial services company
headquartered in mumbai. It offers a wide range of banking products and financial
services for corporate and retail customers through a variety of delivery channels and
specialized subsidiaries in the areas of investment banking, life, non-life insurance,
venture capital and asset management.

This development finance institution has a network of 5,275 branches and 15,589 atms
across India and has a presence in 17 countries.[11] the bank has subsidiaries in the united
kingdom and canada; branches in united states, singapore, bahrain, hong kong, qatar,
oman, dubai international finance centre, china[12] and south africa;[13] as well as
representative offices in united arab emirates, bangladesh, malaysia and indonesia. The
company's uk subsidiary has also established branches in belgium and germany.[14]

History

14
The industrial credit and investment corporation of India (icici) was a government
institution established on 5 January 1994 and sir arcot ramasamy mudaliar was elected
as the first chairman of icici ltd. It was structured as a joint-venture of the world bank,
India's public-sector banks and public-sector insurance companies to provide project
financing to Indian industry. Icici bank was established by icici, as a wholly owned
subsidiary in 1994 in vadodara. The bank was founded as the industrial credit and
investment corporation of India bank, before it changed its name to icici bank. In
october 2001, the boards of directors of icici and icici bank approved the merger of icici
and two of its wholly-owned retail finance subsidiaries, icici personal financial services
limited and icici capital services limited, with icici bank. The merger of parent icici ltd.
Into its subsidiary icici bank led to privatization.

In the 1990s, icici transformed its business from a development financial institution
offering only project finance to a diversified financial services group, offering a wide
variety of products and services, both directly and through a number of subsidiaries and
affiliates like icici bank. Icici bank launched internet banking operations in 1998.

Icici's shareholding in icici bank was reduced to 46% through a public offering of shares
in India in 1998, followed by an equity offering in the form of american depositary
receipts on the nyse in 2000. Icici bank acquired the bank of madura limited in an all-
stock deal in 2001 and sold additional stakes to institutional investors during 2001–02.
In 1999, icici become the first Indian company and the first bank or a financial
institution from non-japan asia to be listed on the nyse.

Icici, icici bank, and icici subsidiaries icici personal financial services limited and icici
capital services limited merged in a reverse merger in 2002. During the financial crisis
of 2007–2008, customers rushed to icici atms and branches in some locations due to
rumors of bank failure. The reserve bank of India issued a clarification on the financial
strength of icici bank to dispel the rumors.

Icici bank office in financial district, hyderabad.

In march 2020, the board of icici bank ltd. Approved an investment of ₹10
billion (us$130 million) in yes bank, resulting in a 5% ownership interest in yes.

15
Headquarters in bandra kurla complex, mumbai

Industrial credit and investment corporation of India (as a

Formerly
government organization)

Type Private development finance institution

Bse: 532174

Nse: icicibank

Traded as Nyse: ibn

Bse sensex constituent

Nse nifty 50 constituent

Isin Ine090a01021

Industry Financial services

Founded 5 january 1994; 29 years ago,

Headquarters Mumbai, maharashtra, India

Number of
5,275 (2020)
locations

Area served Worldwide

Girish chandra chaturvedi (chairman)

Key people
Sandeep bakhshi (md & ceo)

16
 Banking, commodities, credit cards, equities trading, insurance,
Products investment management, mortgage loans, mutual funds, private
equity, risk management, wealth management, asset management

Revenue ₹157,536 crore (us$20 billion) (2022)

Net income ₹25,783 crore (us$3.2 billion) (2022)

Total assets ₹1,752,637 crore (us$220 billion) (2022)

Total equity ₹180,662 crore (us$23 billion) (2022)

Number of
97,354 (2020)
employees

Icici prudential
icici lombard
Subsidiaries
icici securities
icici direct

Capital ratio Tier 1 16.97% (2022)

S&p bbb-/stable

Rating Moody's baa3/stable

Fitch bb+/stable

Website Www.icicibank.com

Acquisitions edit

1996: icici ltd. A diversified financial institution with headquarters in mumbai

1997: itc classic finance. Incorporated in 1986, itc classic was a non-bank financial firm
that engaged in hire, purchase and leasing operations. At the time of being acquired, itc
classic had eight offices, 26 outlets and 700 brokers.

1997: scici (shipping credit and investment corporation of India)

17
1998: anagram (enagram) finance. Anagram had built up a network of some 50
branches in gujarat, rajasthan, and maharashtra that were primarily engaged in the retail
financing of cars and trucks. It also had some 250,000 depositors.

2001: bank of madura

2002: the darjeeling and shimla branches of grind lays bank

2005: investitsionno - kreditny bank (ikb), a russian bank

2007: sangli bank. Sangli bank was a private sector unlisted bank, founded in 1916, and
30% owned by the bahte family. Its headquarters were in sangli in maharashtra, and it
had 198 branches. It had 158 in maharashtra and 31 in karnataka, and others in gujarat,
andhra pradesh, tamil nadu, goa, and delhi. Its branches were relatively evenly split
between metropolitan areas and rural or semi-urban areas.

2010: the bank of rajasthan (bor) was acquired by the icici bank in 2010 for ₹30 billion
(us$380 million). Rbi was critical of bor's promoters not reducing their holdings in the
company. Bor has since been merged with icici bank.

Role of financial institutions for industries

Financial institutions help the small as well as the medium size industries financially
by providing them loans. Thus, these industries can survive in the long run and have
the basic infrastructure to develop their industry.

18
Icici bank has contributed to the setting up of a number of Indian institutions to establish
financial infrastructure in the country over the years:

The national stock exchange was promoted by India's leading financial institutions
(including icici ltd.) In 1992 on behalf of the government of India with the objective of
establishing a nationwide trading facility for equities, debt instruments and hybrids, by
ensuring equal access to investors all over the country through an appropriate
communication network.

In 1987, icici ltd along with uti set up crisil as India's first professional credit rating
agency.

Ncdex (national commodities and derivatives exchange) was set up in 2003, by icici
bank ltd, lic, NABARD, nse, canara bank, crisil, goldman sachs, Indian farmers
fertilizers cooperative limited (iffco) and punjab national bank.

Icici bank facilitated the setting up of "fino cross link to case link study" in 2006, as a
company that would provide technology solutions and services to reach the underserved
and underbanked population of the country. Using technologies like smart cards,
biometrics and a basket of support services, fino enables financial institutions to
conceptualize, develop and operationalize projects to support sector initiatives in
microfinance and livelihoods.

Entrepreneurship development institute of India (edii), was set up in 1983, by the

erstwhile apex financial institutions like idbi, icici, ifci and sbi with the support of the
government of gujarat as a national resource organization committed to
entrepreneurship development, education, training and research.

Eastern development finance corporation (nedfi) was promoted by national level

financial institutions like icici ltd in 1995 at guwahati, assam for the development of
industries, infrastructure, animal husbandry, agri-horticulture plantation, medicinal
plants, sericulture, aquaculture, poultry and dairy in the north eastern states of India.

Following the enactment of the securitisation act in 2002, icici bank, together with other
institutions, set up asset reconstruction company India limited (arcil) in 2003. Arcil was
established to acquire non-performing assets (npas) from financial institutions and
banks with a view to enhance the management of these assets and help in the
maximisation of recovery.

19
Icici bank has helped in setting up credit information bureau of India limited (cibil),
India's first national credit bureau in 2000. Cibil provides a repository of information
(which contains the credit history of commercial and consumer borrowers) to its
members in the form of credit information reports.

Products

Icici bank offers products and services such as online money transfers, tracking
services, current accounts, savings accounts,[41] time deposits, recurring deposits,
mortages, loans, automated lockers, credit cards, prepaid cards, debit cards and digital
wallets called icici pocket.

Icici bank launched 'icici stack' which provides online services such as payment
options, digital accounts, instant car loans, insurance, investments, loans and more

Like for agriculture, industries approach these financial institutions for any monetary
help. Besides this, these institutions also help keep the policies and rules in check for
the industries. One such institution that works in India is small industries development
bank ok India. This is also known as sidbi.

Financial institutions for specific areas

Indian economy is one of the largest economies in the world. To meet all the financial
activities in India is not an easy task. That is why the government of India has decided
to go with financial institutions for specific areas. These institutions focus on the
specific areas so that they can be monitored and provide them the support. We are going
to discuss a few financial institutions for specific areas based on the purpose they serve.
Financial institutions for specific areas

In India, there are specific financial institutions for insurance, export-import, currency
exchange, housing and many more.

20
Insurance regulatory and development authority of India

Irda as it’s commonly known as is an independent, statutory, an apex body that

supervises and governs the insurance sector in India. It was formed as a part of the 2014
act by the parliament of India. Finally, it was passed on the recommendation of the
malhotra committee headed by mr. R.n. Malhotra.

Objectives of irda

To ensure the growth of the insurance sector in India.

Promoting the rights and interests of the policyholders.

To ensure that the settlements are settled speedily for the genuine claims and prevent
the malpractices and frauds.

Bringing the orderly conduct and transparency for the financial markets dealing with
the insurance.

Export-import bank of India (exim)

Exim is a specialized bank which is wholly owned by the government of India. Thus,
it promotes financing and facilitating foreign trade in India.

Some of the important functions of exim bank are

It provides the finance for joint ventures happening in the countries outside India.

Helps with the financing of imports and exports of goods and services in India as well
as abroad. Provides the administrative and technical help to the firms engaged in the
import and export business.

Provides the advance information and business advice to the Indian exports with respect
to multi-funded business projects abroad.

21
Securities and exchange board of India (sebi)

Sebi is the designated body for investment and financial markets in India. It creates and
enforces the regulation for financial markets in India. Thus, it plays a vital role in
maintaining financial and investment markets efficiently and stable.

The headquarters for sebi is located in mumbai, maharashtra. Thus, the primary
objective of sebi is to protect the interests of the investors and promotes the
development of the stock exchange. It also regulates the activities of the stock market

The first organised stock exchange in India was started in mumbai known as bombay
stock exchange (bse). It was followed by ahmedabad stock exchange in 1894 and
kolkata stock exchange in 1908. The number of stock exchanges in India went up to 7
by 1939 and it increased to 21 by 1945 on account of heavy speculation activity during
second world war. A number of unorganised stock exchanges also functioned in the
country without any formal set-up and were known as kerb market. The security
contracts (regulation) act was passed in 1956 for recognition and regulation of stock
exchanges in India. At present we have 23 stock exchanges in the country. Of these, the
most prominent stock exchange that came up is national stock exchange (nse). It isalso
based in mumbai and was promoted by the leading financial institutions in India. It was
incorporated in 1992 and commenced operations in 1994. This stock exchange has a
corporate structure, fully automated screen-based trading and nation-wide coverage.
Another stock exchange that needs special mention is over the counter exchange of
India (otcei). It was also promoted by the financial institutions like uti, icici, idbi, ifci,
lic etc. In september 1992 specially to cater to small and medium sized companies with
equity capital of more than rs.30 lakh and less than rs.25 crore. It helps entrepreneurs
in raising finances for their new projects in a cost-effective manner. It provides for
nationwide online ringless trading with 20 plus representative offices in all major cities
of the country. On this stock exchange, securities of those companies can be traded
which are exclusively listed on otcei only. In addition, certain shares and debentures
listed with other stock exchanges in India and the units of uti and other mutual funds
are also allowed to be traded on otcei as permitted securities. It has been noticed that,
of late, the turnover at this stock exchange has considerably reduced and steps have
been afoot to revitalize it. In fact, as of now, bse and nse are the two stock exchanges,

22
which enjoy nation-wide coverage and handle most of the business in securities in the
country.

Sebi’s main job is to observe whether the stock market follows the by-laws or not.
Furthermore, they check for books of accounts of various financial intermediaries. So,
they ask for returns from some of the recognized stock exchanges. According to sebi,
the risk in mutual funds is shown using three color boxes.

Thus, these color boxes are yellow, brown, and blue. Furthermore, the blue box
represents a fund at low risk, yellow represents the principal at medium risk, and brown
represents the fund at high risk.

Role of sebi as part of economic reforms programme started in june 1991, the
government of India initiated several capital market reforms, which included the
abolition of the office of the controller of capital issues (cci) and granting statutory
mcm3ef02 : financial markets and institutions school of distance education, university
of calicut 29 recognition to securities exchange board of India (sebi) in 1992 for: (a)
protecting the interest of investors in securities; (b) promoting the development of
securities market; (c) regulating the securities market; and (d) matters connected there
with or incidental thereto. Sebi has been vested with necessary powers concerning
various aspects of capitalmarket such as: (i) regulating the business in stock exchanges
and any other securities market; (ii) registering and regulating the working of various
intermediaries and mutual funds; (iii) promoting and regulating self-regulatory
organisations; (iv) promoting investors education and training of intermediaries; (v)
prohibiting insider trading and unfair trade practices; (vi) regulating substantial
acquisition of shares and takeover of companies; (vii) calling for information,
undertaking inspection, conducting inquiries and audit of stock exchanges, and
intermediaries and self-regulation organisations in the stock market; (viii)performing
such functions and exercising such powers under the provisions of the capital issues
(control) act, 1947 and the securities contracts (regulation) act, 1956 asmay be
delegated to it by the central government.

23
Non-banking financial company

Nbfcs or non-banking financial company as it is commonly known as in India is the

financial institution that provides the banking services without any bank licenses.

They are allowed to perform some banking activities but they do not require any pre-
banking licenses for such activity.

The nbfcs in India runs under the companies act which came into place in 1956.
Services provided by nbfcs includes investment, hire purchase, and chit funds.

Non-banking financial company

There are different types of non-banking finance companies in India such as loan
companies, asset finance companies, and investment companies.

The main purpose of the loan companies is to provide loans and advances. Asset finance
companies provide the finance the assets of a company like machines, equipment, etc.

While the investment companies mainly deal in securities. There are certain guidelines
that rbi has mandated for non-banking financial company in India.

Guidelines by rbi for non-banking financial company in India

Creating the reserve

It is mandatory for nbfcs to have a reserve of more than 5% but less than 25%. This is
the percentage of deposits outstanding on the last working day when the business closes
of the second preceding quarter.

Also, it is specified by rbi, that the nbfcs have to invest a certain amount of reserves
into approved securities.

These securities should not have value at a price more than the current market price.

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Registration certificate

Nbfcs do not require banking licenses but they do need to obtain a registration
certificate from rbi so as to carry their business. To obtain the certificate, earlier the
minimum net owned fun which is nof was rs. 25 lakhs.

But this was changed to a minimum of rs. 2 crores from april 1999. This is done because
of the strengthening of the financial sector and technology in this sector.

The nof of rs. 2 crores to be achieved say for 2018 should be done in the following
manner. Rs. 1 crore should be achieved by march 2017 while rs. 2 crores to be achieved
march 2018.

Creating the reserve fund

We discussed the need for reserves for nbfcs mandated by the rbi earlier. For this, nbfcs
will also need to create the reserve fund.

The nbfcs will have to create a reserve fund of an amount which is more than 20% of
their net profit.

This amount should be created before any dividend is declared.

Regulation related to deposit acceptance

Here are the regulations related to the acceptance of deposits by the nbfcs.

Deposit periods

Investments in liquid assets

Ceiling on public deposits

Deposit periods

For nbfcs, the period of deposits is up to 60 months.

Pnbfcs are allowed to accept the deposits between 12 to 84 months.

For mnbfcs, the deposits are to be done between 6 to 36 months.

Investments in liquid assets

Nbfcs are allowed to invest in liquid assets up to 15% in public deposit liabilities.

25
This can also be done at the last working day on the second preceding quarter.

This 15% should include approved securities of more than 10% and deposits with
scheduled commercial banks of less than 5%.

Ceiling on public deposits

For rated afc that is asset finance companies, which are complying to all the prudential
rules are allowed to accept deposits till four times of their nof.

But in 2014, to limit these deposits, the amount has been reduced to 1.5 times of nof.

For unrated afc, an nof of rs. 25 lakhs and more is accepted when it complying with all
the prudential rules and regulations.

Furthermore, the capital adequacy ratio should be more than 15%. Public deposits in
such cases are allowed to be 1.5 times that of nof or rs. 10 crores.

Financial inclusion

Financial inclusion means making the financial services available to everyone at

affordable costs. Under this, the services should be available for disadvantaged people
and low-income groups.

Thus, the main objective is to serve the basic banking services to the unreserved people
in the country. This process is for achieving economic growth in the country.

Also, the main idea is to bridge the gap between poor and rich people. Furthermore, it
is done by getting the excess money from and serving it to the poor. The pivotal role in
financial inclusion is played by the rbi.

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Financial inclusion by RBI

There are varieties of initiatives through which financial inclusion can be achieved in
India. There are some initiatives taken by the financial regulators, government, and
banking officials in India. They are:

No frills account

Bsbda – basic savings bank deposit account

Lbs – lead banking scheme

Pmjdy – pradhan mantri jan dhan yojana

Business correspondent system

No frills account

This is a basic banking account where you keep a minimum balance of zero or a very
low balance. Recently, the changes were made in the no-frills account.

Also, these accounts were converted into bsbda which is basic savings bank deposit
account.

This was issued by the rbi in 2012.

Bsbda – basic savings bank deposit account

This account does not have the facility of minimum balance account. As mentioned
above, the no-frills account was also converted to bsbda accounts. In this account, there
are many services availed by the banks.

27
Also, these services include deposit and withdrawal of cash at the bank branch. This
can also be done at the respective atm’s of the bank.

Furthermore, receipt and credit of money done through electronic payment or by the
means of cheque. There is also a facility of atm card or atm cum debit card.

Lbs – lead banking scheme

This scheme envisages the lead role for an individual bank. This includes private banks
as well as public banks.

So, it is with respect to the districts allotted to them. Here the lead banks act as a point
of contact. It is for coordinating with the credit institutions which perform towards
districts.

Thus, this is done to increase the flow of small-scale industries, agriculture, and various
other economic services. So, this includes the priority section in semi-urban and rural
areas.

The word district here means the basic unit used for the geographical areas.

Pmjdy – pradhan mantri jan dhan yojana

The main slogan of this scheme is ‘mera khata – bhagya vidhata’. This means that my
bank account is my god.

Also, the scheme is provided for the 50,000 plus overdraft facilities for accounts that
are linked with aadhar card. It is also provided for rupay debit cardholders.

Business correspondent system

These are the bank representatives that individually go to the areas that are allowed to
them. Here are they have to carry out the banking tasks.

These individuals will help villagers to open their bank account and perform regular
transactions.

For every account opened they get a commission from the bank or every transaction
made and so on.

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Benefits of financial inclusion

By bringing more and more customers to the bank, it potentially increases the business
of the banks.

This also helps to improve the standard of living of the majority of people.

It bridges the gap between rural people and urban people.

Furthermore, it boosts the business of the banks and enhances the number of bankable
customers.

Financial stability and development council

Raghuram rajan committee in 2008 proposed an apex body called financial stability
and development council. Later in 2010, it was set up as an autonomous body.

Thus, this apex body deals with financial regularities in the same sector around the
country. Also, the organization is not a statutory body.

Financial stability and development council

Financial stability and development council which is also known as fsdc was introduced
to look after the financial regularities in the financial sector.

So, there are various segments of financial institutions in India that look after the
different sectors.

29
For example, rbi looks out for nbfcs and commercial banks, sebi takes care of the capital
market, etc. So, fsdc ensures that there is better coordination between the financial
sectors.

Furthermore, fsdc ensures better efficiency along with avoiding the conflicts between
the functions of these institutions. Thus, keeping all these views in mind fsdc was
formed in 2010 with finance minister as its chairman.

Also, this apex body will act as an intermediary between different financial sectors like
the sebi, rbi, irda, and pfrda. So, the primary task of this body is to look out for macro
related supervisions of the Indian economy.

It also looks after the development and functioning of large multinational companies
and deals with inter-regulated issues.

What is fsdc composed of?

There are several governing bodies that make up for the development council. Also, the
finance minister of India is the chairman of this council. It’s members are:

Chairman of sebi

Reserve bank of India’s governor

Chairman of irda (insurance regulatory and development authority)

Chairman of pfrda

Finance secretary

Secretary of the department of financial services

Chief economic advisor

Other than this the council can invite the expert when it requires. The secretariat of fsdc
is also in the department of economic affairs.

Sub-committee of fsdc

This council along with other committees also has a subcommittee. Also, this
subcommittee is chaired by the governor of the rbi. The meetings of this committee
happen more frequently than the full councils.

30
Furthermore, the members that are included in the fsdc are also the members of the
subcommittee. But there are some additional members in this committee.

Also, this includes governors of the rbi, dea, and additional secretary.

Functions of fsdc

Fsdc plays an edge between financial inclusion and financial literacy.

Furthermore, it is responsible for the assessment of the functioning of large financial

organizations and controls the macro-prudential regulations of the economy.

Also, fsdc strengths and institutionalizes the mechanism for financial development and
stability.

The issues related to inter-regulatory coordination are also taken care of by the fsdc.

There are other groups as well within fsdc. These are:

A technical group for financial literacy and financial inclusion.

Early warning group

Monitoring group and macro-financial

The inter-regulatory group for technical issues

Working group responsible for the resolution of financial institutions.

Axis bank limited, formerly known as uti bank (1993–2007), is an Indian banking and
financial services company headquartered in mumbai, maharashtra. It sells financial
services to large and mid-size companies, smes and retail businesses.

As of 30 june 2016, 30.81% shares are owned by the promoters and the promoter group
(united India insurance company limited, oriental insurance company limited, national
insurance company limited, new India assurance company ltd, gic, lic and uti). The
remaining 69.19% shares are owned by mutual funds, fiis, banks, insurance companies,
corporate bodies and individual investors.

31
History

The bank was founded on 3 december 1993 as uti bank, opening its registered office in
ahmedabad and a corporate office in mumbai. The bank was promoted jointly by the
administrator of the unit trust of India (uti), life insurance corporation of India (lic),
general insurance corporation, national insurance company, the new India assurance
company, the oriental insurance corporation and united India insurance company. The
first branch was inaugurated on 2 april 1994 in ahmedabad by manmohan singh, then
finance minister of India.

In 2001 uti bank agreed to merge with global trust bank, but the reserve bank of India
(rbi) withheld approval and the merger did not take place. In 2004, the rbi put global
trust under moratorium and supervised its merger with oriental bank of commerce. The
following year, uti bank was listed on the london stock exchange.[13] in the year 2006,
uti bank opened its first overseas branch in singapore. The same year it opened an office
in shanghai, china. In 2007, it opened a branch in the dubai international financial centre
and branches in hong kong.

On 30 july 2007, uti bank changed its name to axis bank.

In 2009, shikha sharma was appointed as the md and ceo of axis bank.

In 2013, axis bank's subsidiary, axis bank uk commenced banking operations.

On 1 january 2019, amitabh chaudhry took over as md and ceo.

In year 2021, the bank had reduced its stake in yes bank from 2.39 per cent to 1.96 per
cent.

Operations

32
Indian business

Axis bank branch in mysore

As of 12 august 2016, the bank had a network of 4,096 branches and extension counters
and 12,922 atms.

Axis bank has the largest atm network among private banks in India. It even operates
an atm at one of the world's highest sites at tegu, sikkim at a height of 4,023 meters
(13,200 ft) above sea level.

International business

The bank has nine international offices with branches at singapore, hong kong, dubai
(at the difc), shanghai, colombo and representative offices at dhaka, dubai, sharjah and
abu dhabi, which focus on corporate lending, trade finance, syndication, investment
banking and liability businesses.[25] in addition to the above, the bank has a presence in
uk with its wholly owned subsidiary axis bank uk limited.

Services

Retail banking

The bank offers lending services to individuals and small businesses, along with
liability products, card services, internet banking, automated teller machines (atm)
services, depository, financial advisory services, and non-resident Indian (nri) services.
Axis bank is a participant in rbi's neft enabled participating banks list.

Corporate banking

Transaction banking: axis bank provides products and services related to transaction
banking to customers in areas of current accounts, cash management services, capital

33
market services, trade, foreign exchange and derivatives, cross-border trade and
correspondent banking services, and tax collections on behalf of the government and
various state governments in India.

Investment banking and trustee services: the bank provides investment banking and
trusteeship services through its owned subsidiaries. Axis capital limited provides
investment banking services relating to equity capital markets, institutional stock
brokering besides m&a advisory. Axis trustee services limited is engaged in trusteeship
activities, acting as a debenture trustee and as a trustee to various securitization trusts.

International banking

The bank offers corporate banking, trade finance, treasury and risk management
through the branches at singapore, hong kong, difc, shanghai and colombo, and as also
retail liability products from its branches at hong kong and colombo. The representative
office at dhaka was inaugurated during the current financial year.

Advantages

1. Earn interest

A savings account helps you earn interest on the deposited amount. To attract new
customers, banks now offer higher interest rates and a host of other benefits such as
discounts on locker rentals, unlimited atm transactions, and more. Moreover, some of
the banks also offer many different types of savings account to meet the different needs
of the customers.

2. Safest investment option

One of the biggest advantages of saving account is unlike most other investment
options, a savings bank account does not invest your money but still offers modest
returns. All you need to do is to deposit money in your savings account to take
advantage of this feature.

3. Minimum investment amount

Browse through the different investment options and you’ll see that a savings account
is also the most affordable. You are simply required to keep the minimum balance in
your account to keep earning interest. This minimum deposit amount can be different
for every bank.

34
Role of axis bank

1. Economic growth of the nation

At the national level, financial institutions are subject to government regulation. They
serve as an agent of the government and develop the economy of the country. For
instance, following government regulations, financial institutions may extend a
selective credit line with lower interest rates to assist a struggling industry in resolving
its problems.

2. Capital formation

Financial institutions offer financial services to investors who require external cash to
raise their capital stocks by accepting individual savings. Investors may want financial
services to carry out development plans by setting up new machinery, tools, and
equipment; constructing a new facility; and purchasing new transport vehicles, among
other things. Financial institutions contribute to the creation of capital in this way.

3. Regulate monetary supply

The financial institution assists in controlling the amount of money in the economy.
These organizations keep the money supply stable and manage inflation. The federal
reserve bank regulates the nation’s liquidity in several ways, including adjusting repo
rates, participating in open markets, and setting cash reserve ratios. In order to control
liquidity, financial institutions participate in the purchasing and selling of government
assets.

4. Banking services

Commercial banks and other financial institutions assist their clients by offering
savings and deposit services. Additionally, they provide their clients with credit
options, including overdraft facilities, to meet their short-term funding needs.
Additionally, commercial banks offer their clients loans such as house loans,
mortgages, personal loans, and loans for schooling.

5. Pension fund services

Financial institutions assist people in retirement planning through the different types of
investment plans they offer. A pension fund is one of these investing possibilities.

35
Employers, banks, or other institutions contribute to the investment pool on behalf of
the individual, who then receives a lump sum or monthly income upon retirement

36
Chapter 2 : Research Methodology

37
2.1 What is research?

Research is a process of systematic inquiry that entails collection of data;

documentation of critical information; and analysis and interpretation of that
data/information, in accordance with suitable methodologies set by specific
professional fields and academic disciplines research is the careful consideration of
study regarding a particular concern or research problem using scientific methods.
According to the american sociologist earl robert babbie, “research is a systematic
inquiry to describe, explain, predict, and control the observed phenomenon. It involves
inductive and deductive methods. Inductive methods analyze an observed event, while
deductive methods verify the observed event. Inductive approaches are associated
with qualitative research, and deductive methods are more commonly associated with
quantitative analysis.

2.2What is research methodology?

Research methodology is a way of explaining how a researcher intends to carry out

their research. It's a logical, systematic plan to resolve a research problem. A
methodology details a researcher's approach to the research to ensure reliable, valid
results that address their aims and objectives. It encompasses what data they're going
to collect and where from, as well as how it's being collected and analyzed.

2.3Types of research

Exploratory: as the name suggests, researchers conduct exploratory studies to explore

a group of questions. The answers and analytics may not offer a conclusion to the
perceived problem. It is undertaken to handle new problem areas that haven’t been
explored before. This exploratory process lays the foundation for more conclusive data
collection and analysis. Exploratory research is defined as a research used to investigate
a problem which is not clearly defined. It is conducted to have a better understanding
of the existing research problem, but will not provide conclusive results. For such
research, a researcher starts with a general idea and uses this research as a medium to
identify issues, that can be the focus for future research. An important aspect here is
that the researcher should be willing to change his/her direction subject to the revelation
of new data or insight. Such research is usually carried out when the problem is at a
preliminary stage. It is often referred to as grounded theory approach or interpretive
research as it used to answer questions like what, why and how

38
Descriptive: descriptive research is a research method describing the characteristics of
the population or phenomenon studied. This descriptive methodology focuses more on
the “what” of the research subject than the “why” of the research subject.

Descriptive research is usually defined as a type of quantitative research,

though qualitative research can also be used for descriptive purposes. The research
design should be carefully developed to ensure that the results are valid and reliable.

The method primarily focuses on describing the nature of a demographic segment

without focusing on “why” a particular phenomenon occurs. In other words, it
“describes” the research subject without covering “why” it happens.

Explanatory: explanatory research is a method developed to investigate a phenomenon

that has not been studied or explained properly. Its main intention is to provide details
about where to find a small amount of information.

With this method, the researcher gets a general idea and uses research as a tool to guide
them quicker to the issues that we might address in the future. Its goal is to find
the why and what of an object of study.

Explanatory research is responsible for finding the why of the events by establishing
cause-effect relationships. Its results and conclusions constitute the deepest level of
knowledge, according to author fidias g. Arias. In this sense, explanatory studies can
deal with the determination of causes (post-facto research) and effects (experimental
research) through hypothesis testing.

Causal or explanatory research is conducted to understand the impact of specific

changes in existing standard procedures. Running experiments is the most popular
form. For example, a study that is conducted to understand the effect of rebranding on
customer loyalty.

39
Qualitative research

Qualitative research involves collecting and analyzing non-numerical data (e.g., text,
video, or audio) to understand concepts, opinions, or experiences. It can be used to
gather in-depth insights into a problem or generate new ideas for research.

Qualitative research is used to understand how people experience the world. While
there are many approaches to qualitative research, they tend to be flexible and focus on
retaining rich meaning when interpreting data.

Common approaches include grounded theory, ethnography, action research,

phenomenological research, and narrative research. They share some similarities, but
emphasize different aims and perspectives.

Qualitative research is the opposite of quantitative research, which involves collecting

and analyzing numerical data for statistical analysis.

Qualitative research is commonly used in the humanities and social sciences, in subjects
such as anthropology, sociology, education, health sciences, history, etc.

Qualitative research methods

Each of the research approaches involve using one or more data collection methods.
These are some of the most common qualitative methods:

Observations: recording what you have seen, heard, or encountered in detailed field
notes.

Interviews: personally, asking people questions in one-on-one conversations.

Focus groups: asking questions and generating discussion among a group of people.

Surveys: distributing questionnaires with open-ended questions.

Secondary research: collecting existing data in the form of texts, images, audio or
video recordings, etc.

Qualitative data analysis

Qualitative data is usually in spoken or written information, such as interview

transcripts, video and audio recordings, notes, images and text documents. Qualitative
data analysis involves identifying common patterns in participants' responses and

40
critically analyzing them to achieve research aims and objectives. Qualitative data can
take the form of texts, photos, videos and audio. For example, you might be working
with interview transcripts, survey responses, fieldnotes, or recordings from natural
settings.

Most types of qualitative data analysis share the same five steps:

Prepare and organize your data. This may mean transcribing interviews or typing up
fieldnotes.

Review and explore your data. Examine the data for patterns or repeated ideas that
emerge.

Develop a data coding system. Based on your initial ideas, establish a set of codes that
you can apply to categorize your data.

Assign codes to the data. For example, in qualitative survey analysis, this may mean
going through each participant’s responses and tagging them with codes in a
spreadsheet. As you go through your data, you can create new codes to add to your
system if necessary.

Identify recurring themes. Link codes together into cohesive, overarching themes.

There are several specific approaches to analyzing qualitative data. Although these
methods share similar processes, they emphasize different concepts.

Quantitative research methods

Quantitative research is the process of collecting and analyzing numerical data. It can
be used to find patterns and averages, make predictions, test causal relationships,
and generalize results to wider populations.

Quantitative research is the opposite of qualitative research, which involves collecting

and analyzing non-numerical data (e.g., text, video, or audio).

Quantitative data analysis involves turning numbers into meaningful data by applying
rational and critical thinking. Most researchers use analytical software to assist with
quantitative data analysis. The first stage in analyzing quantitative data is validating,
editing and coding the data. Once completed, the data is ready for analysis. Quantitative

41
research is widely used in the natural and social sciences: biology, chemistry,
psychology, economics, sociology, marketing, etc.

Quantitative research methods

You can use quantitative research methods for descriptive, correlational or

experimental research.

In descriptive research, you simply seek an overall summary of your study variables.

In correlational research, you investigate relationships between your study variables.

In experimental research, you systematically examine whether there is a cause-and-

effect relationship between variables.

Correlational and experimental research can both be used to formally test hypotheses,
or predictions, using statistics. The results may be generalized to broader populations
based on the sampling method used.

To collect quantitative data, you will often need to use operational definitions that
translate abstract concepts (e.g., mood) into observable and quantifiable measures (e.g.,
self-ratings of feelings and energy levels).

Quantitative data analysis

Once data is collected, you may need to process it before it can be analyzed. For
example, survey and test data may need to be transformed from words to numbers.
Then, you can use statistical analysis to answer your research questions.

Descriptive statistics will give you a summary of your data and include measures of
averages and variability. You can also use graphs, scatter plots and frequency tables to
visualize your data and check for any trends or outliers.

Using inferential statistics, you can make predictions or generalizations based on your
data. You can test your hypothesis or use your sample data to estimate the population
parameter.

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Observation

Observation is an act or instance of noticing or perceiving in the natural sciences and

the acquisition of information from a primary source. In living beings, observation
employs the senses. In science, observation can also involve the perception and
recording of data via the use of scientific instruments. The term may also refer to any
data collected during the scientific activity. Observations can be qualitative, that is, only
the absence or presence of a property is noted, or quantitative if a numerical value is
attached to the observed phenomenon by counting or measuring. Observations play a
role in the second and fifth steps of the scientific method. However, the need
for reproducibility requires that observations by different observers can be comparable.

Human sense impressions are subjective and qualitative, making them difficult to
record or compare. The use of measurement was developed to allow recording and
comparison of observations made at different times and places, by different people. The
measurement consists of using observation to compare the phenomenon being observed
to a standard unit. The standard unit can be an artifact, process, or definition which can
be duplicated or shared by all observers. In measurement, the number of standard units
which is equal to the observation is counted. Measurement reduces an observation to a
number that can be recorded, and two observations which result in the same number
are equal within the resolution of the process.

Case study

A case study is a research approach that is used to generate an in-depth, multi-faceted

understanding of a complex issue in its real-life context. It is an established research
design that is used extensively in a wide variety of disciplines, particularly in the social
sciences

Case studies involve in-depth research and study of individuals or groups. Case studies
lead to a hypothesis and widen a further scope of studying a phenomenon. However,
case studies should not be used to determine cause and effect as they can’t make
accurate predictions because there could be a bias on the researcher’s part. The other
reason why case studies are not a reliable way of conducting descriptive research is that
there could be an atypical respondent in the survey. Describing them leads to weak
generalizations and moving away from external validity.

43
He has helpfully characterised three main types of case study: intrinsic, instrumental
and collective. An intrinsic case study is typically undertaken to learn about a unique
phenomenon. The researcher should define the uniqueness of the phenomenon, which
distinguishes it from all others.

Survey method

A survey method is a process, tool, or technique that you can use to gather information
in research by asking questions to a predefined group of people. Typically, it facilitates
the exchange of information between the research participants and the person or
organization carrying out the research.

Survey methods can be qualitative or quantitative depending on the type of research

and the type of data you want to gather in the end. For instance, you can choose to
create and administer an online survey with form plus that allows you to collect
statistical information from respondents. For qualitative research, you can conduct a
face-to-face interview or organize a focus group.

Survey research allows you to gather large volumes of data that can be analyzed for
frequencies, averages and patterns. Common uses of surveys include:

Describing the demographics of a country or region

Gauging public opinion on political and social topics

Evaluating satisfaction with a company’s products or an organization’s services

Survey research methods can be derived based on two critical factors: survey research
tool and time involved to conduct research.

There are three main survey research methods, divided based on the medium of
conducting survey research:

Online/ email: online survey research is one of the most popular survey research
methods today. The cost involved in online survey research is extremely minimal, and
the responses gathered are highly accurate.

Phone: survey research conducted over the telephone (cati) can be useful in collecting
data from a more extensive section of the target population. There are chances that the

44
money invested in phone surveys will be higher than other mediums, and the time
required will be higher.

Face-to-face: researchers conduct face-to-face in-depth interviews in situations where

there is a complicated problem to solve. The response rate for this method is the highest,
but it can be costly.

Objective of the study

 To study in details about financial institutions in India

 To know how financial institutes contribute the economy of the country
 To establish proper financial institutions to cater to the needs of the poor people
 To study how financial institutions increase awareness about the benefits of
financial services among the economically underprivileged sections of the
society.

Data source

What is data?

Research data is any information that has been collected, observed, generated or
created to validate original research findings. Research data may be arranged or
formatted in a such a way as to make it suitable for communication, interpretation and
processing. Data comes in many formats, both digital and physical.

Source of data: -

What is data source?

The study is based on both primary and secondary data.the primary data was gathered
by employing a questionnaire method. Self - administered questionnaires were
distributed to be answered by the public in large as per requirement of the questions
included in the questionnaire.

The goal of the study was to provide information primarily out of raw data. After data
gathering was completed, it has been edited to detect errors or omissions and cross
checked to verify consistency with other respondents. Then the data was grouped based
on their similarity for easy handling.raw data was transformed into a format that is easy
to understand and interpret. Calculations of average and percentage were made for the
purpose of summarising data. Finally the task of interpretation and a report describing

45
the result has been done.the secondary data was used for establishing research
backgrounds and collected from books, magazines, journal articles and the web.

Data collection: the data collection for this study was obtained from primary data as
well as secondary data

1. Primary data: it is the first-hand information collected directly from the customers.
The primary data are those, which are collected for the first time for the specific purpose
of the study. Primary data are collected by:

● questionnaire: it is a set of definite questions formed to collect the required facts or

opinions from others. While preparing the questionnaire the prime attention was given
to the aim of collecting responses from a variety of respondents. Various questions-
both open ended as well as close ended questions were asked to the respondents to
conduct the survey and obtain information for analysis

2. Secondary data: secondary data is the data that has already been collected through
primary sources and made readily available for researchers to use for their own
research. Secondary data for my project was collected from various books, articles,
journals and numerous websites.

Distinguish between

Tabulation of data:

1. Google forms: survey method is employed to collect the data from the respondents
and the data are collected with the help of questionnaire formed in google forms.
Google forms provide a convenient, systematic and easy to interpret representation of
data through pie charts, bar graphs and rating scales.

2. Google docs: google docs application has been my prime aid in organizing, editing
and storing all of my data in a methodical and secure manner.

Techniques and tools used: data collected from the respondents have been analyzed
with the help of the following tools.

1. Pie chart diagram: with the help of pie charts formed through google forms, careful
analysis of respondents’ answers is performed. This is done in order to have an accurate
and reliable understanding of the data collected.

46
2. Percentage technique: one of the most effective ways to represent statistics is by
percentage. Percent simply means “per hundred”. Percentage analysis is applied to
create a contingency table from the frequency distribution and represent the collected
date for better understanding.

Objectives of financial institutions

Financial inclusion intends to help people secure financial services and products at
economical prices such as deposits, fund transfer services, loans, insurance, payment
services, etc.

It aims to establish proper financial institutions to cater to the needs of the poor people.
These institutions should have clear-cut regulations and should maintain high standards
that are existent in the financial industry.

Financial inclusion aims to build and maintain financial sustainability so that the less
fortunate people have a certainty of funds which they struggle to have.

Financial inclusion also intends to have numerous institutions that offer affordable
financial assistance so that there is sufficient competition so that clients have a lot of
options to choose from. There are traditional banking options in the market. However,
the number of institutions that offer inexpensive financial products and services is very
minimal.

Financial inclusion intends to increase awareness about the benefits of financial

services among the economically underprivileged sections of the society.

The process of financial inclusion works towards creating financial products that are
suitable for the less fortunate people of the society.

Financial inclusion intends to improve financial literacy and financial awareness in the
nation.

Financial inclusion aims to bring in digital financial solutions for the economically
underprivileged people of the nation.

It also intends to bring in mobile banking or financial services in order to reach the
poorest people living in extremely remote areas of the country.

47
It aims to provide tailor-made and custom-made financial solutions to poor people as
per their individual financial conditions, household needs, preferences, and income
levels.

Objectives of SEBI

Sebi is a regulator for the securities market in India. It was established during the year
1988 and given statutory powers on 12th april 1992 through the sebi act.

Objectives:

➢ to protect the interest of the investors.

➢ to regulate the securities market

➢ to promote efficient services by brokers, merchant bankers and other intermediaries.

➢ to promote orderly and healthy growth of the securities market in India.

➢ to create proper market environment.

➢ to regulate the operations of financial intermediaries.

➢ to provide suitable education and guidance to investors.

NABARD schemes for farming sector and dairy sector

In order to aid the farming sector, the NABARD loan scheme also offers specially
developed schemes like the dairy entrepreneurship development scheme. This
NABARD dairy loan aims to help potential entrepreneurs of the dairy market and
enable them to enlarge their businesses by setting up dairy farms and boosting growth..

Objectives of NABARD

The objectives of providing long-term refinance are as under:

 Supporting capital formation in agriculture and allied activities, thereby

promoting growth of agriculture, ah, fishery, forestry etc. Sectors.
 Increasing the number of modern-day farms for milk production.
 Technological upgrades increase the production of milk and promote it on a
commercial scale.
 Promoting self-employment and making infrastructural improvements.

48
  Conserving breeding stock and encouraging heifer calf-rearing
 Directing flow of credit for promotion of thrust activities of goi and NABARD.
 To meet the credit requirement of jlgs and shgs.
 Support for non-farm sector activities (msme, rural housing & commercial
vehicles), thereby promoting alternate employment opportunities in rural and
semi-urban areas.
 Agri-clinic and agribusiness centers scheme
 National livestock mission
 Gss – ensuring end-use of subsidy
 Interest subvention scheme
 Credit-linked capital subsidy scheme (clcss) under NABARD
 Support for climate adaptation and mitigation projects.
 Refinance support for credit linked capital subsidy schemes of goi, whose
subsidy is channelized through NABARD.

Limitation of study

Restriction on dividend payment imposed on the powers of the borrowing company by

the financial institutions.

As these institutions come under government criteria, they follow rigid rules for granting
loans. Too many formalities make the procedure time-consuming

Financial institutions may have their nominees on the board of directors of the borrowing
company thereby restricting the powers of the company.

Nbfcs cannot accept demand deposits as it falls within the realm of activity of
commercial banks

An nbfc is not a part of the payment and settlement system and as such an nbfc cannot
issue cheques drawn on itself

Deposit insurance facility is not available for nbfc depositors unlike in case of banks

All nbfcs cannot accept deposits; only some can. Only those nbfcs holding a valid
certificate of registration with authorisation to accept public deposits can accept/hold
public deposits

The regulatory mechanism for nbfcs is stringent

49
Complex process: the process of granting loans by financial institutions is rigid and
involves lots of paperwork. This makes the process time-consuming and expensive.

Restriction on the borrower: the financial institutions have a right to have their
nominee on the board of directors of the borrowing company, which restricts the
power of the company. Besides this, they may directly interfere with the dividend
distribution decision of the borrowing company.

System of collateral securities: financial institutions are governed under strict rules of
the government, which requires them to grant loans only against some security. Due
to this, sometimes deserving organisations fail to get financial assistance due to a lack
of security.

1. Interest rates can change

One important disadvantage of a savings bank account is that the interest rates offered
by the bank are variable. This means that the bank has the right to make changes to the
interest rate. While the changes are generally minimal, it is possible that the interest
rate of a savings account now can be lower 6 months down the line.

2. Easy access

While easy access to funds is seen as one of the most important features of savings
account, it can also work as a disadvantage for some people. As these accounts allow
you to access your funds anytime you like, people are more tempted to spend. This can
make long-term savings challenging.

3. Minimum balance requirement

When you open a savings bank account, you’ll be required to maintain a minimum
average balance in your account. If you fail to maintain this balance, the bank charges
a penalty for the same. So, before opening an account, make sure that you check the
minimum balance requirements of the bank and always maintain this balance to avoid
the penalty.

50
Methodology: -

1. The paper contains material which is a blend of primary and secondary data.

2. The researcher does not violate the provision of copyright act 2012. Due credits are
given at the end of the paper.

3. The due credits are given to the writers at the end of the research. (bibliography,
webliography)

Sample size

What is sample?

A sample is a smaller set of data that a researcher chooses or selects from a larger
population using a pre-defined selection method. These elements are known as sample
points, sampling units, or observations.

Creating a sample is an efficient method of conducting research. Researching the whole

population is often impossible, costly, and time-consuming. Hence, examining the
sample provides insights the researcher can apply to the entire population.

For example, if a cell phone manufacturer wants to conduct a feature research study
among students in us universities. An in-depth research study must be conducted if the
researcher is looking for features that the students use, features they would like to see,
and the price they are willing to pay.

What is sample size?

1. Sample size denotes the number of the responses that are collected for the survey and
its analysis.

2. In this particular survey i have collected responses from a diverse group of

respondents. A total of 116 responses were collected from people belonging to different
age groups and occupations.

51
Chapter 3: Review of literature

52
What is review of literature?

A literature review surveys books, scholarly articles, and any other sources relevant to
a particular issue, area of research, or theory, and by so doing, provides a description,
summary, and critical evaluation of these works in relation to the research problem
being investigated. Literature reviews are designed to provide an overview of sources
you have explored while researching a particular topic and to demonstrate to your
readers how your research fits within a larger field of study.

Why review of literature is important and its purpose?

A literature review may consist of simply a summary of key sources, but in the social
sciences, a literature review usually has an organizational pattern and combines both
summary and synthesis, often within specific conceptual categories. A summary is a
recap of the important information of the source, but a synthesis is a re-organization, or
a reshuffling, of that information in a way that informs how you are planning to
investigate a research problem. The analytical features of a literature review might:

 give a new interpretation of old material or combine new with old interpretations,

 trace the intellectual progression of the field, including major debates,

 depending on the situation, evaluate the sources and advise the reader on the most
pertinent or relevant research, or

 usually in the conclusion of a literature review, identify where gaps exist in how a
problem has been researched to date.

The purpose of a literature review is to:

 place each work in the context of its contribution to understanding the research
problem being studied. 49

 describe the relationship of each work to the others under consideration.

 identify new ways to interpret prior research.

 reveal any gaps that exist in the literature.

 resolve conflicts amongst seemingly contradictory previous studies.

 identify areas of prior scholarship to prevent duplication of effort.

53
 point the way in fulfilling a need for additional research.

 locate your own research within the context of existing literature

The final and specific reason for reviewing related literature is to know the
recommendations of the previous researchers for further research which they have listed
in their studies.

3.1 Bhattacharjee (2011) discussed that due to adoption of privatization and

globalization policies, the nationalized commercial banks of India come under pressure
in their business. One of the reasons is the presence of private banking companies in
this endeavor. Maintaining a good relationship with the customers is the primary
functions of the banking business and to increase the profitability of the banking unit,
it is necessary to lay emphasis on the business, which is located in rural, and semi urban
areas, in particular. So, the banking units have to satisfy the customer of semi urban
areas along with the customers of urban and metropolitan cities. Keeping in mind the
above fact, the present study has been undertaken to examine whether the customers of
semi urban areas are satisfied with the banking services especially in the modern era.

3.2 Uppal (2010) studied the extent of mobile-banking in Indian banking industry
during 2000-2007. The study concludes that among all e-channels, atm is the most
effective while mobile-banking does not hold a strong position in public and old private
sector but in new private sector banks and foreign banks m banking is good enough
with nearly 50 percentage branches providing m-banking services. M-banking
customers are also the highest in ebanks, which have positive impact on net profits and
business per employee of these banks. Among all, foreign banks are on the top position
followed by new private sector banks in providing m-banking services and their
efficiency is much higher as compared to other groups. The study also suggests some
strategies to improve m-banking services.

3.3 Ramalingam (2009) studied the usage pattern of credit card holders of sbi, icici
and abn banks of kanchipuram town in tamil nadu. The study concludes that higher
income group and married persons utilize the cards to the maximum mainly for impulse
purchases and citibank cards are more popular because of dominance in advertising.
The study also reveals that master and visa cards are the leading card brands in India

54
and suggests that the banks should improve overall functioning to provide satisfied
credit card services.

3.4 Ali ataullah (2004) concluded that there is still room for improvement in the
efficiency of banks in both the countries. A step forward for the liberalization
programmer, therefore, is not only to deregulate interest rates and enhance the level of
competition but also to strengthen the institutional structure to support good practices
in the banking industry .

3.5 Gupta sumeet&vermarenu (2008) concluded that management of non-performing

assets and risk emanating from adverse event is the key to higher profitability of the
Indian banking. Transparency and good governance would work as principal guiding
force in present scenario.

3.6 Ghoshsaibal (2009) concluded that with international standards, Indian banks
would need to improve their technological orientation and expand the possibilities for
augmenting their financial activities in order to improve their profit efficiency in the
near future.

3.7 Dr. Ibrahim syed m (2011) concluded that this is diagnostic and exploratory in
nature and makes use secondary data. The study finds and concludes that the scheduled
commercial banks in India have significantly improved their operational performance.

3.8 Dr. Pardhan kumar tanmay (2012) concluded that-the study is based on primary
data. The data has been analyzed by percentage method. The tool used to collect data
from the bank officials was a structured questionnaire. Responses obtained from the 50
bank managers / senior officers.

3.9 Dr. Dhanabhakyam m &kavitha m. (2012) studied that banks have to re-orient
their strategies in the light of their own strength and the kind of market in which their
likely to operate on. In the perspective of this domestic and international development,
the banking sector has to chart perfect for development.

3.10 Gupta shipra (2012) concluded that- public and private sector banks both are
giving good service in India. Financial condition of any bank is measured by the help
of financial ratio. A leverage ratio cannot do the job alone it needs to be complemented
by other prudential tools or measures to ensure a comprehensive picture of the buildup
of leverage in individual banks or banking groups as well as in the financial system.

55
3.11 Sharma esha (2012) concluded that- the liberalized policy of the govt. Of India
permitted entry to the icici in the banking; the industry has witnessed a generation of
private players. That’s why the present paper special emphasis has been laid down on
the financial analysis of the bank by using different research ant statistical tools.

3.12 Gejalakshamisandanam (2012), concluded that the public sector banks

performed remarkably well during the period than that of the private sector banks the
overall regression analysis show that the financial performance of the banking
industries strongly.

3.13 Goelcheenu&rekhibhutanichitwan (2013) concluded that the analysis supports

that new banks are more efficient than old ones. The public sector banks are as not
profitable as other sectors are. It means that efficiency and profitability are inter related.

3.14 Davda v. Nishit (2012) concluded that a review of fundamental analysis research
in accounting the paper has outlined the development of different accounting valuation
model and reviewed related empirical work .

3.15 Dr. Koundalvirender (2012) concluded that although various reforms have
produced favorable effects on commercial banks in India and because of this
transformation is taking place almost in all categories of the banks.

3.16 Sai naga radha v & et.al. (2013) concluded that net profit margin, operating profit
margin, return on capital employed, return on equity and debt equity ratio there is no
significant difference in these ratios before after merger. Significant difference with
respect to gross profit margin.

3.17 Mishra kumar aswini& et.al. (2013) concluded that dea provide significant
insights on efficiency of different banks and places private sector ones at an advantage
situation and there by hints out the possibility of further improvisation of most of the
public sector banks.

3.18 Kamraj k. &somu a. (2013) conclude that Indian overseas bank is one of the
oldest nationalized commercial banks in India. Banking industry is an indicator of for
many development activities in the nation. Indian overseas bank has higher potential to
provide better and quality services to the billions of people in India.

56
3.19 Samir & kamra deepa (2013) concluded that this analysis the position of npas in
selected banks sbi, pnb & central bank of India. It also highlights the policies pursued
by the banks to tackle the npas and suggest a multi-pronged strategy for speedy
recovery of npas in banking sector.

3.20 Selvam paneer & et.al. (2013) concluded that-the present study was aimed to
analyze the financial assistance of nationalized bank in India. To identify the relative
performance of the operational variables the linear and compound growth rates have
been calculated. The performance of nationalized banks followed by private sector
banks is found to be higher when compared to sbi and its associates and foreign banks.

3.21 Dr. Gupta r. & dr. Shikarwar n.s. (2013) concluded that the banking industry
occupies a unique place in a nation’s economy. A well-developed banking system is a
necessary precondition of economic development in a modern economy. The main
parameters of growth in banks are net profit growth , net assets growth , eps growth and
reserve and surplus growth and the results reveal that in terms of the parameters defined
key words : net assets ,eps , reserves ,surplus growth .

3.22 Desrani r hiralal (2013) concluded that scheduled bank has wide scope in India.
It is providing loans to various industries, business mans, small scale sector industries.
It is very helpful to all people who want loan.

3.23 Bansal rohit (2014) concluded that federal has best price earnings ratio among
other banks. The total assets turnover ratio of federal bank shows that it keeps
significantly highly assets to meet the debt. Overall federal bank is the most financially
stable company in comparison to others.

3.24 Dr. Tamilarasu a. (2014) concluded that mere opening of no-frill bank account
is not the purpose or the end of financial inclusion while formal financial institution
must gain the trust and goodwill of the poor through developing strong linkages with
community based financial ventures and cooperatives.

3.25 Dr. Shuklasmita&malusarerakesh studied that this evaluates the changes in the
capital structure and solvency position of banks by using various risk indicators for
highlighting risk profile of Indian bank entities. This evaluates risk profile of ten public
and private sector banks.

57
3.26 Yeboahsebe gilbert &mensah charles (2014) concluded that adb’s focus on
agriculture financing is diminishing since a sector analysis of loans and advance
indicates that agriculture sector lost its first position to service sector. The bank’s
liquidity showed a downward and slipped trend.

3.27 Ms. Gupta shikha (2014) concluded that it focused on operational control,
profitability and solvency etc. It aimed to analyze and compare the financial
performance of icici banks and offer suggestion for improvement of efficiency in the
bank.

3.28 Gaur arti & arora nancy (2014) concluded that it studies about the causes and
consequences of the various component of the financial statement in relation to the
profitability of the bank. We analyzed the financial stability and overall performance
of sbi and study profitability of sbi.

3.29 V. Naseer abdul (2014) studied that – study compares the financial performance
and employee efficiency of Indian banks during 2007-2013. Both the financial
performance and employee efficiency of foreign banks working in India are better than
domestic banks and private sector banks performance are better than the public sector
banks. It is noted that the public sector bank performance is more stable when compared
to the private sector banks.

3.30 Sharma pooja & hemlata (2014) concluded that - the banking mirrors the larger
economy its linkages to all sector make it proxy for what is happening in the economy
as a whole. Banking plays a silent yet crucial role in our day-to-day economy. The data
is taken from financial reports of both the banks for last five years ranging from 2008-
09 to 2013-13. The results depict that icici bank is performing better than sbi bank as it
is able to generate more loans from its deposits to the customers.

3.31 Soni kumar anil & kapre abhay, regional rural bank play a vital role in the
agriculture and rural development of India. The study is diagnostic and exploratory in
nature and makes use of secondary data. The study finds and concludes that
performance of rrbs has significantly improved.

3.32 Varathan sathiya & el.at. Concluded that- in canara bank the credit appraisal is
done by the study involves the evaluation in management, technical feasibility,
financial viability, risk analysis and credit rating. This shows canara bank has sound

58
system for credit appraisal. The credit appraisal process carried out at canara bank has
good parameters to appraise.

3.33 Dr. Rao madhusudhana k. (2014) concluded that – with respect to the banking
activities the performance of hdfc is better than the sbi and for the investor who are
intended for long term investment & risk takers hdfc is better but with respect to the
growth in the market for the company price sbi is better. Sbi shares value market more
than hdfc.

3.34 Patel s vijay & et.al. Concluded that information has its own value but if someone
wants to have better judgment of the concern, he has to analyze them. This provides
guideline about analysis of profitability ratio of krishakbharati bank.

3.35 Gul shah & et.al. (2014) concluded that the study has it limitation in term of
selection of banks. The present research work serves as a guideline to public sector
banks to look up the financial performance and make superior allocation for improving
efficiency for the coming time.

3.36 Thakarshibhaichiragloryia (2014) concluded that it attempts to analyze

profitability of selected public and private sector banks in India. This study which looks
into three key factors which affect the profitability analysis of Indian banking sector
using mean, standard deviation, and anova model.

3.37 Movalia p. Nilesh&et.al (2014) concluded that public sector banks are quite good
compared to private sector banks in the area of profitability debt equity, earning per
share found that price earning ration of private sector banks is high compare to public
sector banks suresh and deepak have made a thorough analysis of the expansion of the
non-banking sector in India, including a discussion of the number of operating firms,
the nature of the businesses conducted by nbfcs, the size of their assets, the regional
distribution of nbfcs, the regulations that govern them, the challenges they face, and the
opportunities they have ahead. According to the findings of the research, the expansion
of nbfcs contributes to the accelerated expansion and increased profitability of the
banking industry. The survey found that nbfcs face a number of issues, including
difficulty in accepting open assets, customer communication and management, as well
as a lack of clarity in rbi control directives and legislation. According to the findings of
the research, non-bank financial companies (nbfcs) should be eligible for increased tax
breaks.

59
Devendra has done an this study was conducted at a regional level and consisted of
empirical research work on asset and liability management methods at two public sector
banks, namely andhra bank and bank of India, as well as two private banks, hdfc and
axis, throughout the period of 2007 to 2016. The assessment of interest rate risk analysis
using gap analysis has been the primary focus of the research, along with the
identification of a link between npa and asset liability structure. In addition to this, he
investigated the effect that alm procedures have on the efficiency of the banking
industry. According to the findings of the research, in order to prevent issues caused by
a shortage of cash, private banks maintained larger cash reserves than public sector
banks. Throughout the whole of the research period, private sector banks were shown
to have better returns from their operations than public sector banks. According to the
findings of the research, the profitability position of banks in the private sector is much
greater than that of banks in the public sector because of the high competency of their
employees.

3.38 Sathya kala, a study that was conducted between 2006 and 2015 in India on seven
new generation private sector banks to investigate the link between asset liability
management techniques and financial situation found a correlation between the two. In
order to conduct research, he made use of a wide variety of financial and statistical
methods, including ratios (including spread, burden, and coverage ratios), growth rates,
the t-test, the mean, the standard deviation, the coefficient of variance, and structural
equation modelling. According to the findings of the survey, hdfc and kotak mahindra
banks reported a better financial situation than the majority of other new generation
banks over the time period covered by the study. In a similar vein, the asset and liability
management methods of icici banks are consistent with industry norms when compared
to those of other banks. According to the report, new generation banks need to reduce
the maturity gap that exists between their assets and liabilities in order to avoid being
exposed to liquidity risk.

3.39Basappahas conducted an investigation on the asset and liability management

procedures used by regional rural banks during the years 2011 and 2015, paying
particular attention to karnataka vikasgrammena bank. Within the scope of the research,
he investigated the methods of risk management used by karnataka bank with regard to
the areas of credit risk, interest rate risk, and liquidity risk. According to the findings
of the research, the level of capital adequacy ratio in tier ii of kvgb was inadequate in

60
comparison to tier i. The research also discovered that there was a considerable
difference in the asset-liability gap and the interest gap throughout the course of the
study period. But the maturity gaps for very short and short periods revealed a negative
gap in the first three years and a positive gap in the following two years, while the
maturity gaps for lengthy periods discovered a positive gap during the whole research
period. This suggests that the company had a healthy liquidity position throughout the.
course of the investigation.

3.40 Jayanthi has used the camel methodology to conduct an analysis of the efficacy
of asset liability management in a variety of commercial banks throughout the period
of 2003–2012. Statistical cost accounting and multiple regression analysis were two of
the methods that were used in this research to investigate the influence that alm
management has on the profitability of banks. According to the findings of the research,
alm procedures in the banking industry are noticeably distinct from one another. During
the time period under review, the risk management capabilities of certain Indian banks
were much lower than that of international banks. However, the findings of the research
indicate that the banking industry is making progress toward the efficient application
of alm via the use of novel and sophisticated methods such as duration gap, simulation,
and value at risk.

3.41Raygani has conducted a comparative analysis on the credit and liquidity risk
management procedures of two Indian banks throughout the period of 2007 to 2013;
these banks are sbi and icici. Nevertheless, this analysis did not take into account
additional dangers that the banking industry faces, such as those caused by fluctuations
in interest rates and currency rates, amongst others. In the study, he measured the
liquidity risk of banks using various ratios, such as the ratio of core deposits to total
assets, the ratio of total loans to total deposits, the ratio of time deposits to total deposits,
the ratio of liquid assets to total assets, the ratio of prime assets to total assets, the ratio
of short term liabilities to liquid assets, the ratio of market liabilities to total assets in a
similar fashion, credit risk is evaluated using ratios such as npa to tl, risk adjusted
margin, tl to ta, tl to td, te to ta, tl to te, ta to gdp, and so on. According to the findings
of the research, both sbi and icici banks were exposed to credit and liquidity risk
throughout the time period under investigation; however, the level of exposure was
comparable in the case of liquidity risk but different in the case of credit risk. In the
course of the research, he made use of t-tests as well as multiple regression analyses.

61
3.42Rosy karla has conducted an analysis of the performance of 20 different asset-
based and core investment non-banking financial organizations between the years 2006
and 2015. The research looked at how certain nbfcs fared in terms of their increase in
physical assets and how well they performed. According to the findings of the study,
the company's assets and investments have been steadily growing throughout the course
of the research period, which is indicative of an increasing industry contribution to the
financial sector.

62
Chapter 4: Data analysis

63
What is data analysis?

In this chapter, i will analyse and interpret the data which i have collected from the
respondents. Data analysis is a process of inspecting, cleansing, transforming and
modelling data with the goal of discovering useful information, informing conclusions
and supporting decision-making.

Data analysis has multiple facets and approaches, encompassing diverse techniques
under a variety of names, while being used in different businesses, science, and social
science domains. In today’s world of business, data analysis is playing a role in making
decisions more scientific and helping businesses achieve effective operation.

Analysis refers to breaking a whole set of data into separate components for individual
examination. Data analysis is a process for obtaining raw data and converting it into
information useful for decision-making by users. Data are collected and analysed to
answer questions, test hypotheses or disprove theories.

Data interpretation refers to the implementation of processes through which data is

reviewed for the purpose of arriving at an informed conclusion. The interpretation of
data assigns a meaning to the information analyzed and determines its significance and
implications.

Data interpretation is the process of making sense of numerical data that has been
collected, analyzed and presented.

Data analysis and interpretation helps in structuring the findings from different sources
of data collection like survey research. It is again very helpful in breaking a macro
problem into micro parts. It acts like a filter when it comes to acquiring meaningful
insights out of huge data-set. Data analysis proves to be crucial in this process. It
provides a meaningful base to critical decisions. It helps to create a complete
dissertation proposal.

One of the most important uses of data analysis is that it helps in keeping human bias
away from research conclusion with the help of proper statistical treatment. With the
help of data analysis and interpretation, a researcher can filter both qualitative and
quantitative data for an assignment writing projects. Thus, it can be said that data
analysis is of utmost importance for both the research and the researcher.

64
Q.1 what is the gender of respondent

No of respondent: 77

GENDER
4.00%

MALE
40.30% FEMALE
55.80% PREFER NOT TO SAY

Interpretation: -

According to the survey conducted, it is observed that most responses are from males
i.e., 55.80 % responses, represented by blue colour while 40.3% responses are from
female respondents which are represented in the pie chart by orange colour. 4.0% have
selected prefer not to say option which is represented by grey colour. Thus, a total of
77respondents participated in the survey, out of which 43 are male respondents and 31
respondents are female and 3 respondents selected prefer not to say.

65
Q.2.what is age of respondents?

No of respondent 77

AGE

1%,1%
1%, 1%

15-20
41.60%, 21-35
55.80%, 36-50
51-60

Interpretation: -

As per the survey conducted, it is observed that most respondents are from the age
group of 15-20 which is 55.80% represented by blue colour. Age group 21-35 i.e.,
41.60% is represented by red colour. Age group 36-50 i.e., 1% is represented by grey
colour. Lastly, age group 51-60 i.e., 1% which is represented by yellow colour ranks
lowest with only 1 response.

66
Q3. What is the qualification of respondent?

Number of respondents: 76

QUALIFICATION

7%

undergraduate
35% graduate
58% postgraduate

Interpretation: -

As per the survey conducted, it is observed that most respondents are undergraduate
i.e., 58 % which is represented by blue colour.35% respondents are graduate which is
represented by orange color and only 7% respondent are postgraduate they are
represented by grey color. Thus, a total of 76 respondents participated in the survey,
out of which 44 respondents are undergraduate, 22 respondents are graduate and only
5 respondents are postgraduate.

67
Q4. What is the employment status of respondents?

Number of reponses: 77

OCCUPATION

13%,

11.70%, STUDENT
SELF EMPLOYED
SERVICE
75.30%,

Interpretation

The survey states that the majority of the responses are from students i.e..75.30%
represented by blue colour. Self-employed is 11.70% which is represented by orange
colour and service sector 13% which is represented by grey colour. Thus, a total of 77
respondents participated in the survey, out of which 58 respondents are students, 9
respondents are self-employed and only 10 respondents are of service sector.

68
Q5. Do you have any account in financial institution?

Number of responses: 76

FINANCIAL INSTITUTIONS

15%
ICICI BANK
11% AXIS BANK
1% NABARD

73% OTHER

Interpretation

According to the survey conducted, 15% respondents have their account in icici bank
which is represented by blue colour, 11% respondents have their account in axis bank
which is represented by orange colour,1% respondent have NABARD account which
is represented by grey colour and 73% respondents have their account in other financial
institutions it is represented by yellow colour.

69
Q6. Since how many years you have been attached to bank?

Number of respondents: 74

Sales

10%
13% 5 YEARS
10 YEARS
15 YEARS
77%

Interpretation

The survey states that the majority (i.e.,77%) of the respondents have 5 years’
experience with their bank which is represented by blue colour 13% have 10 years’
experience which is represented by orange colour and only 10% have 15 years’
experience which is represented by grey colour.

70
Q7. What is the main role of financial institutions?

Number of respondents 75

Series 1

ACT AS A INTERMEDIARY BETWEEN SAVERS AND

30.70%
BORROWERS

PERFORM A CRUCIAL ROLE IN FINANCIAL

25.30%
OPERATION THROUGH INTERVENTION

PROVIDE FINANCIAL TRANSACTIONS AND PLAY AS

66.70%
A MEDIATOR IN ECONOMIC ACTIVITIES

0.00%10.00%20.00%30.00%40.00%50.00%60.00%70.00%80.00%

Series 1

Interpretation

This survey was to know what is the main role of financial institutions in India. In this
survey 75 respondents have participated from which 30.70% states that the main role
is to act as a intermediary between savers and borrowers,25.30% says, to perform a
crucial role in financial operation through intervention,66.70% says, to provide
financial transactions and play as a mediator in economic activities.

71
Q8. What services are provided by financial institutions?

Number of respondents: 76

BOTH A AND B

ADVANCING LOANS

MAKING INVESTMENT

ACCEPTING DEPOSITS

0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00% 70.00%

Series 1

Interpretation

In this survey 76 respondents have participated. 23.70% of respondents suggest that

advancing loan is the service provided by financial institution, 25% of the respondent
suggest that making investment is the service provided by financial institution. 38.20%
of the respondents suggest that accepting deposits. 57.90% of the respondents suggest
that all the three option services are provided by financial institution.

72
Q9.is commercial bank type of financial institution?

Number of respondents: 75

Series 1

MAY BE 38.70%

NO 12%

YES 57.30%

0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00% 70.00%

Series 1

Interpretation

As per the survey respondent have answered in yes, no, maybe. Respondent have
answered yes in 57.03% and no in 12% may be 38.70%. Respondent are 75.

73
Q10. What is the role performed by financial institutions?

Number of respondents: 76

Series 1

25%, 25%
CAPITAL FORMATION

44.70%, 45% ECONOMIC GROWTH OF NATION

REGULATE MONETARY SUPPLY
13.20%, 13%
ALL OF THE ABOVE

17.10%, 17%

Interpretation

According to survey conducted 76% have responded that capital formation is 44.70%
and 45% represented as blue in colour economic growth is represented in orange colour
17.10%, 17% . Regulate monetary supply is presenting in grey colour 13.20%,13%.
Role performed by financial institution all above is presented in yellow colour
25%,25%.

74
Q11. What are the advantages of financial institutions?

Number of respondents: 76

Series 1

NONE OF THE ABOVE 14.50%

EMPLOYMENT CREATION 28.90%

FINANCIAL CONSULTATION 47.40%

OFFERS SAFETY 50%

0% 10% 20% 30% 40% 50% 60%

Series 1

Interpretation

50% of respondents says that advantage of financial institution is offers safety,47.40%

of respondents says financial consultation,28.90 of respondents says employment
creation and 14.50% saya that none of this is the advantage of financial institution.

75
Q12. According to you which financial institutions is best iin India?

Number of respondents: 51

According to the survey majority of respondents have suggested that icici bank is the
best financial institution in India .

76
 5 .Conclusion

The financial system in India has grown rapidly in the last three
decades and more. The functional and geographical coverage of the system is truly
impressive. Nevertheless, data do show that there is exclusion and that poorer sections
of the society have not been able to access adequately financial services from the
organized financial system. There is an imperative need to modify the credit and
financial services delivery system to achieve greater inclusion. The implementation of
the recommendations made in this report could go a long way to modify particularly
the credit delivery system of the banks and other related institutions to meet the credit
requirements of marginal and sub-marginal farmers in the rural areas in a fuller
measure. However, creating an appropriate credit delivery system is only a necessary
condition. This needs to be supplemented by efforts to improve the productivity of
small and marginal farmers and other entrepreneurs so that the credit made available
can be productively employed. While banks and other financial institutions can also
take some efforts on their own to improve the absorptive capacity of the clients, it is
equally important for government at various levels to initiate actions to enhance the
earnings capacity of the poorer sections of the society. The two together can bring
about the desired change of greater inclusion quickly.

Icici is the second largest private sector of bank, is far better than others because is
flying continuously towards the sky is many of the observations and provides various
services for his customers. Per branch performance of icici is better than in majority of
the cases which reflects the efficiency and managerial skills of the bank, and if the
situation will remain same icici may take a lead in Indian banking industry in terms of
profitability in near future. Banks activities implementation and services are most
important for any nation society. Icici bank has designed and implemented a very
innovative and apparently effective strategy for engaging in the growing micro-finance
market, despite the fact that the bank has only 88 branches outside the major cities. Icici
has also mobilized a number of specialist institutions with long experience of social and
financial intermediation. Many of these institutions are financially weak, poorly
capitalized, and dependent on grant funds for their survival. Thus, the banks have come
to play a useful role in promoting economic development by mobilising the financial
resources of the community and by making them flow into the productive channels.
The Indian banks are now playing a very active role in fostering economic development

77
of the country. The above study reveals that how commercial banks are helpful in
development of country. If we make the comparison between rural area and urban area
then it is clear that urban areas are more developed. This is because of low credit flow
and less contribution of agriculture sector in gdp of India.

Icici bank has strong banking operations. They believe in customer satisfaction in every
possible way. They are focused on quality of products and services rather than quantity
of products and services. They have a strong banking solution such as finacle which
was developed by infosys. The bank is rapidly growing. They have an aggressive
marketing strategy. The bank provides speedy way of services to its customer with
satisfaction. The five plans really help in the operation of the organization. The bank
has spent millions of rupees in different types of investments on behalf of its customers. The bank
is well known for its 90 days strategies. '90 days strategies' means whatever the bank wants to
implement, implements within 90 days.

The study mainly was on the customer orientation that how they think, what they want
from their banks and how they take decision going to any bank.

• in this study i found that the bond of axis bank with its customers is very strong,
because axis bank mainly focuses on retaining their customers.

• this study finds that however axis bank is not the leading private sector bank but its
vast range of products and availability of options make it one of the better banks in
India.

• the bank should focus on the semi urban and rural market because these markets are
very good opportunity for someone like axis bank which is in growing face. Without
expanding in these markets axis bank cannot be a leading bank so they should focus on
this market.

• the bank should focus on mass banking in order to increase their market share. They
should launch such products which would be within the reach of the lower middle class

• the bank should pay more attention on giving updates and should increase the level of
service providing because the competitors of axis are better in this area. •

The bank should try to increase the use of technology like mobile and net banking
among its customers.

78
 6. Recommendation & suggestions

From this research majority of the people suggested that icici bank is the best financial
institution in India. This banks provides financial services such as fixed deposits with
6.7% of interest rate and 7.5% for senior citizens, recurring deposits allow investors to
invest in small amounts regularly for a fixed tenure. Icici bank recurring deposit rate
ranges between 4.75% to 6.90%p.a. For regular citizens. For senior citizens, the rd
interest rate range between 5.25% to 7.50% p.a. Also, icici bank rd interest rates are
higher than its saving account rates.

Mostly service class persons prefer the axis bank in the comparison of business and
students and other class persons thus it needs to promote its product and services that
are offered mainly for the business class people and students. Because these two classes
form major users of the banking services.

Axis bank is normally not using properly for the current account so its popularity ratio
is quite down. This bank normally using for the long-term planning like saving and fd.

This bank is not investing more into the marketing sector so i will suggest that some of
the part of income it investing in the advertising and marketing sector.

Into the comparison of other bank its performance is quite good but not an effective so
this may be doing the rates were down with some other facilities.

79
7. References

Www.hampshire.edu

Www.researchgate.net

Https://www.westernsydney.edu.au/

Www.britannica.com

Www.sebi.gov.in

Www.scribbr.com

Www.indeed.com

Www.questionpro.com

Www.collinsdictionary.com

Https://library.leeds.ac.uk/
Www.ncbi.nlm.nih.gov
Www.wssu.edu
Www.ncbi.nlm.nih.gov
Https://en.wikipedia.org/
Www.icicibank.com
Www.geeksforgee
Https://muds.co.in/
https://www.shiksha.com/online-courses/articles/financial-institutions-types-roles-
and-advantages/
https://www.wallstreetmojo.com/role-of-financial-institutions/
https://unacademy.com/content/bank-exam/study-material/general-awareness/role-of-
financial-institutions-in-india/
https://www.toppr.com/guides/general-awareness/financial-banking-institutions-in-
india/financial-institutions-for-industries/
https://www.investopedia.com/terms/f/financialinstitution.asp
https://www.fiserv.com/en/about-fiserv/the-point/the-important-role-of-financial-
institutions-in-a-time-of-uncert.html
https://www.worldbank.org/en/news/speech/2019/10/26/a-strong-financial-sector-for-
a-stronger-india
80
 8. Appendix

Q1. What is your name?

Q2. What is your gender?

Q3. What is your age?

 15-20
 21-35
 36-50
 51-60

Q4. What is your qualification?

 Graduate
 Post graduate
 Undergraduate

Q5. What is your occupation?

 Student
 Self employed
 Service

Q6. Do you have any account in following institutions?

 Icici bank
 Axis bank
 Nabard
 Other

Q7. Snice how many years you have been attached to bank?

 5
 10
 15

81
Q8. What is the main role performed by financial institution?

 Provide financial transactions and play as a mediator in economic activities

 Perform a crucial role in financial operations through intervention
 Act as an intermediary between savers and borrowers

Q9. What services are provided by financial institutions?

 Accepting deposit
 Making investment
 Advancing loans
 Both a and b

Q10. Is commercial bank type of financial institution?

 Yes
 No
 May be

Q11. What are the advantages financial institutions?

 Offers safety
 Financial consultation
 Employment creation
 None of the above

Q12. According to you which financial institutions is best?

82
83