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Banking in India originated in the first decade of 18th century with The General Bank of India coming into existence in 1786. This was followed by Bank of Hindustan. Both these banks are now defunct. The oldest bank in existence in India is the State Bank of India being established as "The Bank of Calcutta" in Calcutta in June 1806. Couple of decades later, foreign banks like HSBC and Credit Lyonnais started their Calcutta operations in the 1850s. At that point of time, Calcutta was the most active trading port, mainly due to the trade of the British Empire, and due to which banking activity took roots there and prospered. The first fully Indian owned bank was the Allahabad Bank set up in 1865. By the 1900s, the market expanded with the establishment of banks like Punjab National Bank, in 1895 in Lahore; Bank of India, in 1906, in Mumbai - both of which were founded under private ownership. Indian banking sector was formally regulated by Reserve Bank of India from 1935. After India's independence in 1947, the Reserve Bank was nationalized and given broader powers. NATIONALISATION: The next significant milestone in Indian Banking happened in the late 1960s when the then Indira Gandhi Government nationalised, on 19th July, 1969, 14 major commercial Indian banks, followed by nationalization of 6 more commercial Indian banks in 1980. The stated reason for the nationalisation was more control of credit delivery. After this, until the 1990s, the nationalised banks grew at a leisurely pace of around 4%-also called as the Hindu growth of the Indian economy. After the amalgamation of New Bank of India with Punjab National Bank, currently there are 19 nationalised banks in India.

LIBERALISATION: In the early 1990s the then Narasimha Rao government embarked on a policy of liberalisation and gave licences to a small number of private banks, which came to be known as New Generation tech-savvy banks, which included banks like ICICI Bank and HDFC Bank. This move along with the rapid growth in the economy of India, kick started the banking sector in India, which has seen rapid growth with strong contribution from all the three sectors of banks, namely, government/public banks, private banks and foreign banks. However there had been a few hiccups for these new banks with many either being taken over like Global Trust Bank while others like Centurion Bank have found the going tough. The next stage for the Indian banking has been setup with the proposed relaxation in the norms for Foreign Direct Investment, where all Foreign Investors in banks may be given voting rights which could exceed the present cap OF 10%.


Banks are the most significant players in the Indian financial market. They are the biggest purveyors of credit, and they also attract most of the savings from the population. Dominated by public sector, the banking industry has so far acted as an efficient partner in the growth and the development of the country. In terms of quality of assets and capital adequacy, Indian banks are considered to have clean, strong and transparent balance sheets-as compared to other banks in comparable economies in its region. The Reserve Bank of India is an autonomous body, with minimal pressure from the government. The stated policy of the Bank on the Indian Rupee is to manage volatility-without any stated exchange rate-and this has mostly been true. The unleashing of products and services through the net has galvanized players at all levels of the banking and financial institutions market grid to look anew at their existing portfolio offering. Conservative banking practices allowed Indian banks to be insulated partially from the Asian currency crisis. Indian banks are now quoting al higher valuation when compared to banks in other Asian countries (viz. Hong Kong, Singapore, Philippines etc.) that have major problems linked to huge Non Performing Assets (NPAs) and payment defaults. The Indian banking has finally worked up to the competitive dynamics of the new Indian market and is addressing the relevant issues to take on the multifarious challenges of globalization. Banks that employ IT solutions are perceived to be futuristic and proactive players capable of meeting the multifarious requirements of the large customers base. The Indian banking has come from a long way from being a sleepy business institution to a highly proactive and dynamic entity. This transformation has been largely brought about by the large dose of liberalization and economic reforms that allowed banks to 3

explore new business opportunities rather than generating revenues from conventional streams (i.e. borrowing and lending). The banking in India is highly fragmented contributing to almost 50% of deposits and 60% of advances. With the growth in the Indian economy expected to be strong for quite some timeespecially in its services sector, the demand for banking services-especially retail banking, mortgages and investment services are expected to be strong. Mergers and Acquisitions, takeovers, asset sales and much more action (as it is unraveling in China) will happen on this front in India.

Some Important Statistics:

Growth rate of the Indian Banking Industry is expected at 10% PA The Indian banking system has a large geographic and functional coverage. Presently the total asset size of the Indian banking sector is US$ 270 billion while the total deposits amount to US$ 220 billion with a branch network exceeding 66,000 branches across the country. IT spending stands at 1% of revenues. High level of NPAs. Multiple channels (ATM, phone, mobile branch and the Net) are becoming the order of the day. Huge potential in the retail banking market, expected to rise by 25 30% PA

Currently, India has 88 Scheduled Commercial Banks (SCBs) - 28 public sector banks (that is with the Government of India holding a stake), 29 private banks (these do not have government stake; they may be publicly listed and traded on stock exchanges) and 31 foreign banks. They have a combined network of over 53,000 branches and 17,000 ATMs. According to a report by ICRA Limited, a rating agency, the public sector banks hold over 75 percent of total assets of the banking industry, with the private and foreign banks holding 18.2% and 6.5% respectively.


Reserve Bank of India

Commercial banks

Co-operative banks

Regional rural banks

Urban/Primary Rural Scheduled Non-scheduled Scheduled Non-scheduled

SBI & Associates Private sector banks Short-term Structure Long-term Structure Nationalized banks/ Public banks Foreign banks

Source: Cygnus Industry Insight Indian Commercial Banking 2006


S c h e d u le d C o m m e r c ia l B a n k s : N u m b e r o f B a n k s
P u b lic S e c to r Banks, 27

F o re ig n B a n k s , 36

P riv a te S e c to r Banks, 30

Structure of the Scheduled Commercial Banks in India (in numbers)

Foreign Banks, 116 4, 7% Private Sector Banks, 2 973, 17%

Public Sector Banks, 12 852, 76%

Asset [Size & Percentage] of Scheduled Commercial Banks in India Source: ICRA Report Indian Banking Industry May 2006

Public sector banks or Nationalised banks are so called as they are owned and managed by the government thus holding more than 51% stake in the bank. In case of certain listed banks the government stake ranges between 65-75 per cent. Public sector banks were of the first kind to be introduced in the Indian market. Since the nationalization of banks in 1969, more and more public banks have been introduced by the government in India. These banks have however acquired a place of prominence in the Indian market and also seen tremendous progress since then. However, many of the branches of the public banks are not networked, but they are slowly introducing internet banking, ATM cards and other facilities. Sometimes, IT requirements are not correctly estimated and this results in problems for customers. Public Banks are also known to offer better service compared to all other types of banks. Driven by the socialist ideologies and the welfare state concept, public sector banks have long been the supporters of agriculture and other priority sectors. These banks act as crucial channels of the government in its efforts to ensure equitable economic development. The need to become highly customer focused has forced the slow-moving public sector banks to adopt a fast track approach. Indian nationalized banks (banks owned by the government) continue to be the major lenders in the economy due to their sheer size and penetrative networks which assures them high deposit mobilization. These banks continue to dominate the Indian banking arena.

In order to understand the Public Banks better, an example of BANK OF BARODA which is also a Public Bank has been presented in the project.

BANK OF BARODA (Public Sector Bank)


It all started with a visionary Maharaja's uncanny foresight into the future of trade and enterprising in his country. On 20th July 1908, under the Companies Act of 1897, and with a paid up capital of Rs 10 Lacs started the legend that has now translated into a strong, trustworthy financial body, THE BANK OF BARODA. It was established in the princely state of Baroda, in Gujarat. The founder, Maharaja Sayajirao Gaekwad, with his insight into the future, saw "a bank of this nature will prove a beneficial agency for lending, transmission, and deposit of money and will be a powerful factor in the development of art, industries and commerce of the State and adjoining territories." These words are etched into the mind, body and soul of what has now become a banking legend. Between 1913 and 1917, as many as 87 banks failed in India. Bank of Baroda survived the crisis, mainly due to its honest and prudent leadership. The Bank survived the Great War years. It ensured survival during the Great Depression. Even while big names were dragged into the Stock Market scam and the Capital Market scam, the Bank of Baroda continued its triumphant march along the best ethical practices. 8

New norms for capital adequacy required new capital management strategies. In 1995 the Bank raised Rs 300 crores through a Bond issue. In 1996 the Bank tapped the capital market with an IPO of Rs 850 crores. Despite adverse market conditions prevailing then, the issue was over subscribed, reflecting the positive public perception of the Bank's fundamental financial strength. The Bank has also provided around a dozen CEOs to the industry- men who went on to build other great institutions.

To be a top ranking national bank of international standards committed to

augmenting stake holders value through concern, care & competence. MOTTO OF THE BANK:
CUSTOMER CENTRICITY FOR BUSINESS DEVELOPMENT Market factors such as liberalization, entry of new generation private sector banks, advent of technology has fueled the competition. The growth of the business depends on the quality of customer service. Excellent Customer Service can bring in business spontaneously. The foremost goal of the organization has always been to become customer centric. The Customer is the pivot around which all financial activities revolve. He is the real source of earning to an organization, therefore, we (the bank) have to keep customer at the middle of our thoughts.


Bank of Baroda (BSE: 532134 ) is a bank in India established on July 20, 1908 in the princely state of Baroda, in Gujarat. The bank, along with 13 other major commercial banks of India, was nationalised on 19th July, 1969, by the Government of India In its international expansion Bank of Baroda followed the Indian diasporas, and especially that of the Gujaratis. Bank of Baroda has total assets of about Rs.1133bn (endMar 2006), a network of over 2800 branches and offices, and about 650 ATMs. Bank of Baroda offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialised subsidiaries and affiliates in the areas of investment banking, credit cards and asset management. Bank of Baroda is the fifth largest bank in India with business crossing Rs. 1.63 lakh crores. Bank of Baroda was one of the early movers in Public sector Banks to have tapped the equity market in December 1996. Further the Bank has recently come out with a Follow on Public Offer of 71 million equity shares in January 2006. Today out of the total equity capital of Rs.365.53 crore, the Public Shareholding" is as large as 46.20%, which is held by Retail Investors, Employees, Banks and Financial Institutions, FIIs and OCBs, Mutual Funds, Insurance Companies and Others. In its relentless striving for quality perfection, the Bank also secured the ISO 9001:2000 certification for 15 branches. By end of the current financial, the Bank is targeting 54 more branches for this quality certification.




As on 31.03.2005, Baroda Corporate Centre, Mumbai and Head Office, Baroda supported by 2700 branches, 43 Regional Offices and the following 12 Zonal Offices: 1) Bihar, Orissa & jharkand 2) Central Gujarat 3) Eastern Gujarat 4) Eastern Uttar Pradesh 5) Greater Mumbai 6) Madhya Pradesh & Chattisgarh 7) Maharashtra & Goa 8) Northern Gujarat 9) Northern Rajasthan 10) South Gujarat 11) Southern Uttar Pradesh 12) Western Uttar Pradesh & Uttaranchal DOMESTIC SUBSADIARIES: BOB Housing Finance Ltd.


BOB Asset Management Co. Ltd. BOB CARDS Ltd. BOB Capital Markets Ltd.

ASSOCIATE BANK: Nainital Bank Ltd.

The following are the lines of business, the bank is going to pursue and expand upon under the Business Transformation Plan drafted by the Bank: Personal Financial Services (PFS) Business Financial Services (BFS) Baroda Rural International


Bank of Baroda (BOB) opened its first branch abroad in Mombasa, Kenya in 1953. Since then BOB has come a long way in expanding its international network and today it is a leading International Bank from India having significant international presence with a network of 57 Offices in 19 countries spread over all the time zones over the Globe. BOB is thus "Round the clock around the Globe Bank". It has overseas network which include 39 branches of Bank, 17 branches of seven Subsidiaries and two Representative Office


and one Joint Venture having 9 branches. BOB have also recently opened new offices in Malaysia and Tanzania. About 19.09% of the profit & 13.84% business is contributed by overseas branches. Six branches at London, New York, Brussels, OBU Mauritius, OBU Nassau and Dubai are its Money Centre Branches It is further in the process of identifying/ opening more overseas centers for increasing its global presence.


ASSOCIATE: Indo-Zambia Bank Ltd. (Lusaka)



Sales Rs. 8291 crores Profits Rs. 826 crores Assets Rs. 113392 crores


The constitution and the present 10 members of the board are as under:

Dr. Anil. K. Khandelwal Shri Vinod Rai Shri H.N. Prasad Dr. Pradip N. Khandwala Shri Manesh P. Mehta Ms Masarrat Shahid Shri T. K. Balasubramanian Shri Dharmendra Bhandari Dr. Deepak B. Phatak Maulin .A. Vaishnav

Chairman & Managing Director Nominee of Govt. of India. Nominee of RBI. Director Director Director Director Director Director Director


Private Banks have been fast on the uptake and are reorienting their strategies using the internet as a medium. The liberalize policy of Government of India permitted entry to private sector in the banking, the industry has witnessed the entry of nine new generation private banks. The major differentiating parameter that distinguishes these banks from all the other banks in the Indian banking is the level of service that is offered to the customer. Their focus has always centered on the customer understanding his needs, preempting him and consequently delighting him with various configurations of benefits and a wide portfolio of products and services. These banks have generally been established by promoters of repute or by high value domestic financial institutions. The popularity of these banks can be gauged by the fact that in a short span of time, these banks have gained considerable customer confidence and consequently have shown impressive growth rates. Today, the private banks corner almost four per cent share of the total share of deposits. Most of the banks in this category are concentrated in the high-growth urban areas in metros (that account for approximately 70% of the total banking business). With efficiency being the major focus, these banks have leveraged on their strengths and competencies viz. Management, operational efficiency and flexibility, superior product positioning and higher employee productivity skills. The private banks with their focused business and service portfolio have a reputation of being niche players in the industry, a strategy that has allowed these banks to concentrate on few reliable high net worth companies and individuals rather than cater to the mass


market. These well-chalked out integrates strategy plans have allowed most of these banks to deliver superlative levels of personalized services. With the Reserve Bank of India allowing these banks to operate 70% of their businesses in urban areas, this statutory requirement has translated into lower deposit mobilization costs and higher margins relative to public sector banks. Private bankers often make house calls at the customers convenience, offer investment and other advice and even send clients flowers on birthdays. Private banking customers account for a considerable percentage of a banks fee-based income. Essentially private banking is for people who do not have the time to study the various investment instruments or have access to information. A bank can earn between Rs 35,000 and Rs 1 lakh per annum from a good customer. But earnings start only after the first two years of dealing with the customer. In a mature relationship, the average profitability per customer through fees and other incentives can amount to Rs 1 lakh plus. But the expenses in terms of time, effort, recognizing individual needs and offering a customised investment solution are high. Private bankings annual growth rate of over 100 per cent is the outcome of the fact that financial instruments have become too complex for the lay investor to understand. The introduction of derivative products, an increase in the number of mutual fund schemes, falling interest rates and the growing wealth of individuals who wish to ensure that a part of their wealth is protected against business risks have contributed to the growth of private banking. For all this, private banking is still at a nascent stage. The threshold of private banking has not evolved as per international standards, where the limit is usually $1 million. For e.g. The threshold limit for an HSBC customer in India is Rs 1.5 crore, which is lower than the banks international threshold limit of Rs 4.5 crore ($ 1 million). Clearly, private banking still has a long way to go.


In order to understand the Private Banks better, an example of ICICI BANK which is also a Private bank has been presented in the project.


The World Bank, the Government of India and representatives of Indian industry formed ICICI Limited (Industrial Credit and Investment Corporation of India) as a development finance institution to provide medium-term and long-term project financing to Indian businesses in 1955. However in1994 ICICI established ICICI Bank as a subsidiary. ICICI became the first Indian company and the first bank or financial institution from non-Japan Asia to list on the NYSE in 1999. The other major leap of ICICI was its acquirement of Bank of Madura in 2001. In April 2002, ICICI Group announced a synergistic merger of itself and two of its retail finance subsidiaries with ICICI Bank to create the new ICICI Bank - India's first universal bank and a leading financial supermarket.



To develop ICICI Bank into an organization that is empowered by bright and talented individuals, working in teams and riding on the backbone of world class technology.


ICICI Bank (formerly Industrial Credit and Investment Corporation of India) is India's largest private sector bank and the second largest bank in the country, with total assets of over Rs. 1 trillion. ICICI Bank is arguably the most aggressive bank in the country and can rightfully claim credit for the spread of retail financing in the country. . Formed by the reverse merger of former ICICI with its banking subsidiary, the bank has been highly focused on expanding its retail portfolio which it believes would be the major growth driver in future. ICICI Bank's equity shares are listed at various stock exchanges in India and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE). ICICI Bank's long-term foreign currency debt is rated one notch higher than the sovereign rating for India by Moody's, the international rating agency. ICICI Bank is currently active in the areas of corporate finance, commercial banking, retail and personal banking, corporate finance and investor services with the specialized activities of insurance, asset management, investment banking and venture capital being performed by associate companies. The ICICI Group is committed to the communities in which it operates and supports a diverse range of social projects in the areas of primary education, healthcare and micro-finance. A recent entrant in the area of retail assets including mortgages, credit and debit cards, car loans and consumer loans, ICICI Bank has quickly acquired market leadership in most of these markets. ICICI Bank has the largest market share among all banks in retail or consumer financing. Its growth rate in


home loans exceeds more established HDFC and its total home loan portfolio would go past HDFC in a few years at current growth rates. ICICI Bank is also India's foremost technology bank. It pioneered Internet banking in India and today has more than a million retail customer accounts on the net. ICICI Bank has been following a multi-channel multi-product retail strategy, which enables it to access and service an ever-growing number of customers. ICICI Bank has a network of about 573 branches and extension counters and over 2,000 ATMs. It was the first bank to offer a wide network of ATM's and had the largest network of ATM's till recently, before SBI caught up with it.




ICICI established representative offices in NY and London.


ICICI opened subsidiaries in Canada and the United Kingdom (UK), and in the UK it also established alliance with Lloyds TSB. It also opened an Offshore Banking Unit (OBU) in Singapore and representative offices in Dubai and Shanghai.


ICICI opened a representative office in Bangladesh to tap the extensive trade between that country, India and South Africa.



ICICI acquired Investitsionno-Kreditny Bank (IKB), a Russia bank with about US$4mn in assets, headoffice in Balabanovo in the Kaluga region, and with a branch in Moscow.


NAME Mr. K.V. Kamath Ms. Lalita D. Gupte Ms. Kalpana Morparia Ms. Chanda Kochhar Dr. Nachiket Mor Mr. Sridar Iyengar Mr. R.K.Joshi Mr. Lakshmi N. Mittal Mr. Narendra Murkumbi Mr. Anupam Puri Mr. Vinod Rai Mr. M.K. Sharma DESIGNATION Managing Director & CEO Joint Managing Director Joint Managing Director Deputy Managing Director Deputy Managing Director Board Member Board Member Board Member Board Member Board Member Board Member Board Member


Mr. P.M. Sinha Prof. Marti G. Subrahmanyam

Board Member Board Member

In a developing country like India where Foreign Direct Investments is increasing day by day in all the sectors be it service oriented or product oriented, Banking arises as one of the sector attracting very large number of foreign players This is primarily because of the increasing population of India and the potential of the Indian market. Today, there are around 36 foreign banks present in India having more than 200 branches which accounts for only 0.3% of total bank branches. Standard Chartered Bank has the maximum number of branches (83), followed by HSBCs 39, Citibanks 44 and ABN Amro Banks 24. These foreign banks can operate only as branches of their overseas parent and in order to operate in India a license is required from RBI. An initial minimum capital of USD10mn for first two branches and USD5mn for the third branch is required in order to start operations in India. The Top 20 foreign banks operating in India employ 26,530 people. This will increase by 50 per cent to 39,770 by 2008. Only 46 expatriates (or 0.17 per cent) are employed by these 20 foreign banks. This number will increase to 72 by 2008. Five of the top 20 banks have no expatriates on their payroll and the maximum number of expatriates present at any individual foreign bank is 10.This essentially means that the foreign banks operating in India are predominately run by Indians who understand the market realties, customers psyche and local needs for financial products. And yet foreign banks market share on the Indian turf has been declining. Between 2004 and 2005, foreign banks market share of aggregate deposits declined from 5.1 per cent to 4.7 per cent and that of advances came down from 7 per cent to 6.8 per cent. Overall, foreign banks market share of assets dropped from 6.9 per cent in 2004 to 6.8 per cent in 2005.


Other Foreign Banks, 16%

American Express Bank, 3% Citibank, 22%

Standard Chartered Bank, 24% Bank Of America, Deutsche Bank, 4% 5%

HSBC, 18% ABN AMRO Bank, 8%

Break Up of Total Assets [in %] of Foreign Banks in India Source: Annual Results, Fitch ratings
Though most of the CEOs feel that the market is not over-banked and there is a consensus that more and more foreign banks will enter the market. However, 15 of the 20 foreign banks believe that some of the overseas players including the smaller players will quit the Indian market. So, while around 25 applications are pending with the RBI for getting a foot-hold in the country either through a branch, or a representative office, the existing players are still groping for the right strategy to capture the market. If the overseas players do not start chalking out strategies to change their business models immediately, they will be left with no choice but to say good bye to growth. Some of them will also find it difficult to survive in Indian markets even after the RBI opens it up in 2009. Citibank is the consumer and corporate banking arm of financial services giant Citigroup the largest company of its kind in the world. Citibank was founded in 1812 as the City Bank of New York by a group of New York merchants. The bank's first head was Samuel Osgood. In 1865 the bank joined the U.S.'s new national banking system and became The National City Bank of New York. By 1894, it was considered one of the largest banks in the United States. 22

National City became the first U.S. national bank to open an overseas banking office when its branch in Buenos Aires, Argentina. After this overseas foray, it started its operation in various other countries like offices in London, Shanghai, etc. It was at this time that in 1902, Citi Bank started its operation in India by setting up its first office in Kolkata. In order to understand the Foreign Banks better, an example of CITI BANK which is also a Foreign bank has been presented in the project.


CITI BANK (Foreign Bank)

Citibank is the consumer and corporate banking arm of financial services giant Citigroup the largest company of its kind in the world. Citibank was founded in 1812 as the City Bank of New York by a group of New York merchants. The bank's first head was Samuel Osgood. In 1865 the bank joined the U.S.'s new national banking system and became The National City Bank of New York. By 1894, it was considered one of the largest banks in the United States. National City became the first U.S. national bank to open an overseas banking office when its branch in Buenos Aires, Argentina. After this overseas foray, it started its operation in various other countries like offices in London, Shanghai, etc. It was at this time that in 1902, Citi Bank started its operation in India by setting up its first office in Kolkata.


Citi Bank is the third largest bank by holdings behind Bank of America and JP Morgan Chase & Co. It has Approx. 200 million customer accounts all across the world. It has its businesses in more than 100 countries. It has also established the largest equity base in the banking industry at $93 billion. It provides a lot of employment opportunities which is visible from the fact that it employs 250,000 people worldwide.


VISION: To be a global bank, unique in worldwide presence, dedicated to our customers, financially strong, consistent, committed to our staff and its development, delivering sustained superior performance to investors.


Citi Bank had its first office in India in Kolkata in 1902. The bank has achieved in developing itself as a Pioneer in consumer banking in India because of its presence for over 100 years in the Indian market. With capital in excess of US$ 800 million, it is the single largest foreign direct investor in the financial services industry in India.

It has a customer base of over : 900 large corporates. 22,000 small and medium enterprises and 3,500,000 retail customers. Employs 8500 people as a Group.


Citigroup India offers the full range of corporate and investment banking services under the Citigroup brand name and consumer banking products and services under the Citibank banner.

It has 50 branches across 20 metro and semi- metro cities and Over 500 CitiCard/ATM Banking centers.

It enjoys 40% share of consumer durables and automobiles financing. Citi Bank is the largest credit card issuer in India with over 2.5 million credit cards.

Citibank is one of the largest providers of Foreign Exchange products in India (has one of the largest overnight positions as approved by the Reserve Bank of India). It is also the leading Derivatives House in India.

Top Rated Custodial Services Provider for 3 consecutive years with a wide client base.


ISO 9001:2000 - Citibank is a quality provider of financial services and the first financial institution to be awarded the ISO certification for its operations in Cash Management, Custodial Services, Treasury, Funds Transfer and Trade Services.

Citibank is the second largest foreign bank in india, logging 17.58 per cent rise in net profit over the year to Rs 705.5 crore in Mar-2006




In order to understand the difference in the management systems of the 3 banks namely Bank of Baroda (Public Bank), ICICI Bank (Private Bank) and Citi Bank (Foreign Bank), a comparative study between management systems of the 3 banks has been provided below in the form of the various products and services they offer to the consumers.



1) DEPOSITS: BoB offers various deposit plans that one can choose from depending on the term period, nature of deposit and its unique saving and withdrawal features. Fixed Deposits Savings Deposits Current Deposits

2) RETAIL LOANS: BoB provides a wide range of solutions for financial needs of their

Housing Loans Education Loans Car Loans Personal Loans Two wheeler Loans Marriage Loans Consumer durables Loans Personal computer Loans, etc.


The Bank tries to cater and fulfill each and every need of the account holder by providing him loans for all purposes. 3) DEBIT CARDS: The Bank of Baroda International Debit Card is accepted at over 10,000 Visa Electron ATMs in India and 8,50,000 ATMs worldwide. The card being Visa powered is accepted at any 1,00,000 merchant outlets in India and around 13 millions globally. The card enables to enjoy the convenience of cash-less purchasing power without the fear of overdrawing the account. However, in India the Debit card service provided by such public banks is used to a lower extent as compared to the usage of debit cards provided by the private and public banks.

BoBs Debit Card 4) CREDIT CARDS: The BoB Credit cards are popularly called as BoB Cards. BoBCARDS provides financial flexibility, worldwide acceptance and round the clock convenience at the minimum service charges in the card industry




## #

Global 29 million Yes 20% of Limit 15,000.00

Acceptability Member Establishment Add-on-card

Global 29 million Yes

Global 30 million Yes 10,000.00 No

Global 30 million Yes 10,000.00 No

Global 29 million Yes 10,000.00 15,000.00

Global 30 million Yes 20% of Limit 15,000.00

Cash withdrawal5,000.00 limit* Emergency cashNo Advance medical aid#


5) SERVICES: Services provided by BoB to its customers are as follows: Baroda Health: "BarodaHealth" is a Mediclaim Insurance Policy which is exclusively made available only for Banks Account holders. the premium charged by the bank is comparatively lower than other insurance companies. Mutli City Cheque: Multi city Cheques are special series cheques issued by the banks customer to their clients. The cheques will be payable at par, like local cheques, in the Multi City Cheque centres of the Bank. This facility is being offered to Current account customers at 201 branches in 16 cities maintaining a balance of over Rs.50,000/-. Baroda Money Express (Remittances): The Baroda Money Express remittance facility ensures instant payments and transfer of funds, saving customers from waiting endlessly for funds to get credited. This facility is available for both retail and corporate customers enabling efficient and easy transfer of money. So there will be no more delays in transfer of funds typical of Banker's Cheque, Demand Drafts, Mail Transfers and Telegraphic Transfers. ECS: This is a unique system under which Bank of Baroda helps companies and institutions making heavy payments disburse these amounts directly into the bank accounts of the beneficiaries such as account holders, shareholders, investors etc. bet companies around the world adopt the ECS system. Government Business: Apart from rendering all other Personal banking services to its customers/public, Bank of Baroda also works as Agency Bank for undertaking various types of Govt. Business viz. Govt. Deposit Schemes/Bonds Pension Payment Business Collection of Central/State Taxes 30

Services to Civil/Non-Civil Ministries Bill Payment: BoB helps the account holder to pay any of his bills through any device connected to the Internet (computer, kiosk, etc). 6) LOCKERS: This is a unique facility provided by the public banks in India only. BoB offers lockers to their customer which is a safe, trustworthy space to store the valuables, jewellery, documents and other things dear to them. These State-of-the-art Lockers are fully equipped, latest burglar alarm systems. The Locker holder assigns a code word which further increases security. The locker system is the only service under the personal banking facility which private and foreign banks. is

made available to the customers of the public banks. This facility is not available in



1) DEPOSITS: ICICI Bank offers a wide variety of Deposit Products to suit the banking requirements of the people. The deposit products offered by ICICI are quite more than those offered by BOB. In addition to the typical deposit plans viz. Fixed Deposits Savings Deposits Current Deposits ;

ICICI offers various other deposit plans to the public thus showing more flexibility. the added deposit plans are given below Senior citizens services: Its an ideal Banking Service provided to those who are 60 years and above. Young stars: ICICI feels that its really important to help children learn the value of finances and money management at an early age. So, it also provides deposit options to children so that they learn to manage finance Recurring deposits: ICICI Bank Recurring Deposit helps to invest small amounts of money every month that ends up with a large saving on maturity. Bank @ campus: This is quite similar to the young stars plan but it primarily encourages students to open accounts. Salary account: This has played an important role in the huge success of ICICI in the market. Here, an easy disbursement of salaries is ensured as salary is automatically credited to the account of the customer. ICICI has affiliated with many companies by providing its employees with the salary account and thus expanding its customer base.


2) RETAIL LOANS: The loaning system of ICICI is confined to basic plans only as the Indian nationals feel that they are better secured with the loaning system of government aided banks. The basic loans provided are Home loans, Personal loans, Car loans, Two-wheeler loans, etc. Loans that cater to each and every need of the consumer are not provided. Such loans include marriage loans, personal computer loans, etc. 3) CARDS: ICICI Bank offers a variety of cards to suit the different transactional needs. The range includes Credit Cards, Debit Cards and Prepaid cards. Credit cards: ICICI Bank Credit Cards give the facility of cash, convenience and a range of benefits, anywhere in the world. These benefits range from life time free cards, Insurance benefits, global emergency assistance service, discounts, utility payments, travel discounts and much more. The credit cards are furhur classified into different types: Premium cards Co-Branded cards Classic cards Corporate cards EMI card Debit cards: Like BOB, the ICICI Bank Debit Card can be used for shopping at more than 100,000 merchants in India and 13 million merchants worldwide. However, the ICICI debit cards are being extensively used in India as the number of ATM centres (2200) is comparatively high in number and thus easily accessible.


Prepaid cards: ICICI bank Pre Paid cards are a safe & convenient way for associate payments, disbursements, gifting & Small ticket transactions. Pre Paid cards are available on a VISA platform thus providing accessibility to over one Lakh Merchant establishments & cash withdrawal from all ICICI Bank and VISA ATM's in India.

4) INVESTMENTS: Along with Deposit products and Loan offerings, ICICI Bank assists to manage finances by providing various investment options. ICICI Bank facilitates following investment products: ICICI Bank Tax Saving Bonds Government of India Bonds Investment in Mutual Funds Initial Public Offers by Corporates Investment in "Pure Gold"

5) INSURANCE: ICICI has merged with the world renowned Prudential Insurance and formed ICICI Prudential in order to provide life insurance to the public. This company is giving tough competition to other insurance companies by providing various plans to the people. It has further expanded its insurance base by providing Home, Motor and Travel Insurance. 6) DEMAT SERVICES: This is one of the important advantages that banks like ICICI and CITI have over public banks like BOB because Demat services are not provided by most of the public banks in India. In a Demat account you deposit and withdraw your securities. Demat holds them in electronic, dematerialised form. Thus, opening of Demat account is essential in order to deal in stock market as the transfer of securities between your account and broker account takes place through the Depository Participant i.e. the bank. ICICI provides the following services to its Demat account holder: E-instructions Mobile alerts 34

Mobile request Digitally signed statement Corporate Benefit Tracking i.e. Tracking your dividend, interest, bonus

7) ONLINE SERVICES: ICICI offers a variety of online services to its customers so that customers can use the facilities anytime through internet. Some of the services include: Bill Payments like untility bills, ICICI credit card bills, mobile bills, etc. Online shopping that facilitates buying of products from more than 75 shopping websites. E-commerce i.e. Train/ Air ticket booking, donating to charity, buying of movie tickets, etc. Recharge of Prepaid Mobile Cards conveniently, etc.



1) DEPOSITS: The deposit plans provided by Citi bank to its customers are a little different in comparison to those of BOB and ICICI. The various deposit plans provided are as follows: Savings Deposits which is also called as Suvidha Globe Deposit: The Globe Deposit Scheme helps the individual to invest in global products. The account can be opened in 8 different currencies. Also, a maximum of 25000 USD can be invested every year. Term Deposit: In case of Term deposits, the individual gets a choice of flexible tenure and also attractive interest rates depending on the preferred time periods. Here, the individual gets an option of setting automatic roll-over. Overdraft facilities are also provided to the customer over his term deposit. Salary Account: Like ICICI, Citi bank also gets a huge customer base by targeting companies and providing its employees salary account with fewer complications. Citi Gold Wealth Management: This is specially designed for the elite class customers. This focus on customers with net relationship value greater than Rs 30 lakh. It also provides Financial planning, Transactional convenience and Exclusive privileges to its account customers. Junior Account: This account helps the little kids to replace their pocket money in cash as they can invest their money and earn interest too. The juniors are also motivated as they are also provided with ATM Debit cards.

2) LOANS: Citi bank does not indulge in providing different type of loans for different purposes. It only believes in providing basic loans to its customers like Personal 36

loans, Home loans, Car loans and Loan against property. Being a foreign company the Reserve Bank of India confines its operations in India, so in order to tap the growing Indian market, Citi Bank has formed its own Indian entity called Citi Finance. Citi Finance has affiliated with many Consumer Durable selling showrooms through which it tries to give easy loans to the individuals who purchase the durable products. These loans are quite attractive as the interest rates are very less and sometimes there are even 0% interest rates. 3) CREDIT CARDS: Citi Bank was the first credit card issuer. There are 23 different types of credit cards made available by the bank. These cards even include Cobranded cards and Classic cards. Some of the credit cards issued by the bank are: Jet Airways Citibank Card Hutch Citibank Card Citibank Cash Back Gold Card Citibank MTV Card Citibank Gold Card Citibank Silver Card International Times Card Citibank Woman's Card, etc.

4) DEBIT CARDS: In addition to the usual debit cards used for ATM purpose, in order to make the customer more satisfied it also provides differrnt types of debit cards like Citi Bank Grocery Debit Card, Citi Bank MTV Debit Card, Indian Oil Citi Bank Debit Card, etc. 5) INVESTMENTS: Investment Services offered by Citi Bank provides smart investment options to the customer for effective Wealth Management and growth. The investment options provided are short listed by experts of the bank so that the customer gets excellent returns. The investment option provided are as follows:


Mutual Funds: Citi Bank helps its customer in investing in Mutual Funds, which as mentioned above are short listed by experts on the basis of the risk appetite, desired returns and asset allocation plan. Citi Bank makes the investing process easier as the customer can login to Citibank Online to trade in Mutual Funds. The Account holder can easily take advantage of financial plans tailor-made for him.

GOI Bonds: These bonds are issued by RBI on behalf of Government of India and are mandatory to be issued by all the banks. They are absolutely safe and an attractive investment option in the current volatile market situation.

Citi Bank Regular Investment Scheme: This is one of the easiest and the most affordable to invest money as the customer has to invest as little as Rs. 500 / month. This helps to create wealth with disciplined savings.

6) DEMAT ACCOUNTS: This is quite similar to the service provided by ICICI Bank. The only unique feature of Citi bank is that it also helps NRIs to open Demat accounts in India. 7) INSURANCE: Private and Foreign banks have understood the buying behavior of the Indian consumers and therefore in order to make the people more satisfied they often merge with Indian entities. Here, like ICICI, even Citi Bank has merged with Birla Sun Life Insurance Limited, thus providing insurance packages and policies to its customers.

8) ONLINE SERVICES: The various online services provided by Citi Bank to its customers are as follows: Statement on E-Mail


Bill Payments Citi Alert: CitiAlert helps to keep track of the savings account, credit card transactions and investments activity with Citibank, through regular alerts. Regular SMS/ e-mail alerts are sent on your account or even confirmation of transactions. It helps to the customer to stay informed 24x7 even when he is on the move.

Pre-paid mobile charging E-commerce



Business banking is specially designed for small and medium business enterprise which is considered to be one of the fastest growing sectors in the country.


Bank of Baroda offers various products and services that meet the specific requirements of business enterprises and also helps them grow. The products and services can be classified as below: 1) DEPOSITS: Irrespective of whether the needs are short term or for longer periods, Bank of Baroda provides with the following deposit plans: Fixed Deposits: Further classified as; Short Term (Under 12 months) Term Deposits (Over 12 months) Current Deposits: Current Deposits plan is ideal for professionals and provides flexibility through overdraft facility. They are the back-bone of all trading activities. 2) LOANS AND ADVANCES: Loan and advances offered by Bank of Baroda to the businesses are: Working Capital Finance: A firm's working capital is the money it has available to meet current obligations (those due in less than a year) and to acquire earning assets. Bank of Baroda offers corporations Working Capital Finance to meet their operating expenses, purchasing inventory, receivables financing, either by direct funding or by issuing letter of credit. Term Finance: Under Term Finance, Bank of Baroda, offers the following:


Fund Based Finance for capital expenditure / acquisition of fixed assets towards starting / expanding a business or industrial unit or to swap with high cost existing debt from other bank.. Non-Fund Based Finance in the form of Deferred Payment Guarantee for acquisition of fixed assets towards starting / expanding a business or industrial unit. Small Scale Industries and Ancillary Units (SSI Units): Bank of Baroda has special Loans and Advances for SSIs for the purpose of fixed capital investment and also for working capital requirement. Traders Loans: The Traders Loan facility enables individuals, Proprietorships, bodies such as Partnership firms and Co-op societies to create working capital or undertake development of shop by way of loan/overdraft. 3) SERVICES: Bank of Baroda offers various other services to businesses which assist in making financial dealings easy and convenient. The services which are quite similar to the ones given to the personal bankers are listed below: Multi City Cheque Baroda Money Express Collection services ECS Debit Cards

4) LOCKERS Locker Facility is also provided to business enterprises so that valuable documents like blueprints can be well safeguarded. It also helps in keeping various other valuable items of the company.



1) DEPOSITS: Here, ICICI bank offers only Current Account facility to its business customers. ICICI classifies the current account in the following three types: Roaming Current Account: ICICI Bank's Roaming Current Account provides the advantage of anytime-anywhere banking. Here companies are not confined to one branch as they can deposit and withdraw in any branch or ATM across the country. Even a local business can go national overnight. RCAs helps to pick up and deliver cheques to the doorstep. Trade RCAs: ICICI Bank's Trade Current Account provides a comprehensive range of trade services including Remittance, Export, Import, Forex and free Advisory services. Its vast network of correspondent banks ensures a highly efficient, predictable and speedy remittance mechanism. The state-of-the-art technology and SWIFT tie ups ensure that payments which are just a click away. Made to Order Accounts: Here, the companies are given the flexibility to open an account with the bank which offers certain facilities prescribed by the companies themselves. Some of the facilities include: Free cash withdrawal at non-base branches. Avail of higher Free Limits on transactions at non-RBI(Category B)locations. Extra cheque leaves. Customised DD/PO limits. Multiple fund transfers.

2) BUSINESS LOANS: The different loan plans provided by ICICI to its business customers are as follows: 42

Vendor/Dealer Finance: In Vendor/Dealer Finance, ICICI offers Bill Discounting services to the vendors on bills drawn by them on a company. Bills accepted by the company are eligible for discounting under this scheme.

Working Capital Finance: ICICI facilitates working capital finance with other products such as trade finance, forex, derivatives and cash management.

Credit Card Securitization: The Bank here offers select establishments financing in the form of demand loan and overdraft facilities against securitization of future credit card sales.

Equipment Finance: The finance provided here helps the companies in procuring the equipments they require in order to run the business. Further, even Medical and Office Equipment loans are provided by ICICI.

3) CASH MANAGEMENT SERVICES: ICICI Bank's Cash Management Services helps to make optimum use of the working capital of the company, thus leveraging the float between faster collections and just-in-time payments. The Banks superior edge on technology helps in speedy and efficient collections. Collection: Collection services are of two types: Local cheque collections (LCC) and Upcountry cheque collection (UCC). Payment: Under Payments, services offered include: Bulk Demand Drafts/PO printing. DDs can be issued payable at more than 540 locations in India. Fund Transfers.


A secure technology platform to meet bulk payment requests from client quickly. Remote printing of pay orders at 46 major centres 4) SERVICES: Other services offered by ICICI Bank include: Tax Payment: As each and every business organisation has to pay taxes regularly, ICICI ensures that its account holders can pay the taxes in a very simple and convenient manner. The taxes can be paid through the branches of the bank, its collection desks and also through internet banking. Insurance: For the business to be secured, ICICI provides many insurance schemes. Such may include Marine Insurance, Fire Insurance, Corporate Insurance, Industrial Insurance, Shop Insurance, etc. Investments: ICICI Bank helps businesses in investing their money on Mutual Funds, regulated by SEBI, with the advantages of easy liquidity and tax benefits. Using asset allocation strategies an appropriate mix of Mutual Fund schemes can be identified.



In Citi Bank, Business Banking is also known as CitiBusiness. Citi Bank provides the following services to its Business customers 1) DEPOSITS: Like ICICI, Citi Bank also provides the businesses with access to only current account. Also the current account services are less comparatively. However, through the Citi current account, personalized services are provided so that not only domestic but even foreign exchange flows are managed effectively. 2) CitiBusiness CARD: CitiBusiness Card provides extended credit lines up to Rs.10 lakh and enhanced cash withdrawal up to Rs. 5 lakh which is quite advantageous to companies.

3) LOANS: Like BOB and ICICI Bank, Citi Bank does not provide loans to businesses for various purposes. It only provides an array of business lending products like Fast Track Loans, Secured Term Loans and Overdraft Facility to the companies. 4) POWER ACCESS: This is a unique and a very valuable facility granted by Citi Bank to its business customers. Power Access has been divided into the following categories: Personal Business Assistance: Business Service: Makes arrangements of conference services, translation service assistance in India and major foreign cities. Business Equipment Rental Services: Helps in getting access to rentals of complete office supplies.


Legal Assistance: Takes care of legalities by accessing the names, addresses, telephone numbers and office hours of lawyers and legal practitioners worldwide. Flowers and gifts are delivered to friends, family or business associates Pre-trip Information Services: Information concerning customs, airport tax, visa and inoculation requirements for foreign countries are also provided Community/Advisory Services: CitiBusiness helps in procuring information to help in starting and running a new business, or even keeping the existing ahead in the corporate world. Invitations to third party conferences and seminars, advisory services on tax and real estate are also granted by them. Travel services: Power Access helps in delivering the tickets at the doorstep, gives discounts on your hotel room, food & beverages and car rentals. Even travel-related privileges are provided with CitiBusiness. Deals and Discounts: Great discounts on business products and services are given. Getting the best deals in services like Hotels, Courier, Car Rental, Stationery and Office Supplies, Hardware, Accounting Software, Marketing Consultancy, Telecom, Airline ticketing, etc is the uniqueness of Power Access services. CitiBusiness Centers: Citi Bank has set up CitiBusiness Centers located all across the nation. Each business center is fully equipped with office supplies and stationery. These centers have a great ambience in addition to the Library and Television facilities, Long Distance Calling Facility, Fax and Internet connections, etc.

5) INVESTMENTS: Like ICICI, Citi Bank also provides investment options in Mutual funds



Bank of Baroda opened its first branch outside the country in Mombassa, Kenya in 1953. Since then Bank of Baroda has come a long way in expanding its international network and today is a leading International Bank of Indian origin. IT has a significant international presence with a network of 59 Offices in 21 countries including 39 branches of the Bank, 17 branches of seven Subsidiaries and three Representative Offices. Bank of Baroda is further in the process of identifying / opening more overseas centres for increasing its global presence. Here's a brief look at the international banking services of Bank of Baroda 1) FOREIGN CURRENCY CREDIT: The Foreign currency denominated credit facilities are granted to the Indian corporations in India as well as at the Money Centre Branches abroad. Corporations who are interested in raising foreign currency funds both in India and abroad have to contact in India the branches they are dealing with. Foreign Currency Loans In India (FCNR 'B' Loans): The foreign currency denominated loans in India are granted against the foreign currency funds a bank has on account of FCNR(B) Deposit. These loans are commonly known as FCNR(B) Loans. Bank of Baroda with a wide global presence has a large base of NRI customers/ depositors. This enables, Bank of Baroda pool in from a large resource base of FCNR(B) deposits and is in a position to offer the Foreign Currency Loans in India at very competitive rates. Foreign Currency Credit outside India: With a presence at major financial centers of the world, Bank of Baroda has strong foreign currency resources at Money Centre Branches. This enables Bank of Baroda to arrange for and grant Foreign Currency Credits to Indian as well as multinational corporations.


2) EXTERNAL COMMERCIAL BANKING: The foreign currency borrowings raised by the Indian corporates from confirmed banking sources outside India are called "External Commercial Borrowings" (ECBs). These Foreign Currency borrowings can be raised within ECB Policy guidelines of Govt. of India/ Reserve Bank of India applicable from time to time. ECBs includes the following: Commercial Loans Syndicated Loans Lines of Credit from Foreign banks and Financial institutions Import loans, loans from the export credit agencies of other countries. Commercial loans from multilateral agencies such as IFC, ADB, CDC etc

BOB is very active and is a leading player in granting and arranging various forms of foreign currency facilities through ECB route for the Indian Corporates. BOB focuses on all type of foreign currency credit requirements of Indian corporates in arranging the Foreign Currency Loans. BoB is one of the leaders in the ECB market. 3) OFFSHORE BANKING: With years of experience and expertise in overseas banking BoB are just one of the few banks that have been granted permission by the Government of India to operate Offshore Banking Unit (OBU) within the country. BOBs first OBU in India is set up at SEEPZ, Mumbai. This comes in addition to its already existing OBUs in Mauritius and Bahamas. Here, when corporates invest their FOREX reserves, they get the expert opinions and services of a bank which has an international presence in 16 countries through 61 offices and represented by 2800 fully equipped branches spanning the globe. 4) EXPORT FINANCE: BoB offers both pre and post shipment credit to the Indian exporters through Rupee Denominated Loans as well as foreign currency loans in India. Exporters having firm export orders or confirmed L/C from a recognized Bank 48

can avail the export credit facilities from BOB provided they satisfy the required credit norms. BoB also provides financing of export by way of bill discounting of export bills to provide post shipment finance to the exporters at competitive international rate of interest. 5) IMPORT FINANCE: Bank of Baroda provides various types of funding/ services to the importers for facilitating the imports in the country. The various facilities provided are: Opening of Import L/Cs (Sight/ DA) Financing of import by way of Foreign Currency Loans Issuing Guarantees etc. on behalf of importers. Collection of import bill.

6) TRADE FINANCE: Bank of Baroda through its overseas branches and subsidiaries is very active in financing of Usance post sales international trade bills by way of discounting of the same. With its large foreign currency resources, the bills under the L/Cs of the most of the Indian Banks as well as International Banks can be discounted at competitive rates. 7) INTERNATIONAL TREASURY: Bank of Baroda has a strong presence in the Treasury Market in India as well as abroad. The overseas Money Centre Branches undertake the Forex treasury operations on behalf of the customers. All the branches deal in all the major international currencies i.e. US$, GBP, Euro, Yen as well as other currencies. These branches undertake the following treasury related activities: Forex Inter Bank Placements/ Borrowings Sale & Purchase of currency on behalf of customers Cross Currency Swaps Interest Rate Swaps (IRS)


Forward Rate Arrangements (FRA's) Forex Money Market Operations


The services provided by ICICI Bank under international banking are as follows: 1) EXPORT SERVICES: ICICI Bank offers a wide range of export services so that the company can seize new business opportunities around the world. ICICI Bank customers experience fewer delays in receiving payment, require less effort in locating collection information details, gain increased control over foreign receivables and experience improved cash flows. Export services provide by ICICI bank: Export Packing Credit: We provide pre-shipment finance in the form of Export Packing Credit (EPC) when exporters are manufacturing or packing goods for export from India. Export Bill Negotiation: ICICI negotiates the export bills drawn under Letter of credit, if the documents are found to be strictly in terms with LC conditions. Export Bill Purchase & Discounting: if exports are not covered under Letter of credit, ICICI can pay the exporters the discounted value of th invoice, immediately on shipment Export Bill Collection Services: All the branches of ICICI also act as collection centres of the export bill. Bank Guarantees: Bank Guarantees in foreign currency on behalf of our exporters are also issued.


Export LC Advising: With a correspondent banking relationship of more than 700 leading banks across the world, exporting company can always insist that your Letter of credit are advised through ICICI Bank. LC are guaranteed to reach on time. electronic LC advising or preadvise LCs by telephone and fax are also provided.

Export LC Confirmation: Confirmation regarding the credit standing of the opening bank of LC is given by ICICI thus assuring the exporter about the payment.

2) IMPORT SERVICES: ICICI Bank offers comprehensive range of Import services to the importers of India. The import services are in relation to the following items: Import Letters of Credit Import Collection Bill Services Advance Payment towards Imports Arranging for Buyers & Suppliers Credit Bank Guarantees

3) TRADE WAY: TradeWay from ICICI Bank is designed to be the international banking gateway for India related trade business. With TradeWay, ICICI Bank is the single point contact for India related documentary collections. It helps in efficient document Handling and Payment Collection Services. it also provides cost/ime advantages through economies of scale. 4) REMITTANCE SERVICES: As the trading partner is from across the globe, ICICI Bank arranges to receive and credit the remittances received to the account of the customer.


5) ONLINE TRADE SEVICES: ICICI Bank customers can effect remittances as well as get their applications for issuance of Letters of Credit and Bank Guarantees processed Online. This not only extends tremendous convenience to the entire process, but also allows the customer to enjoy the benefits of simplified documentation, online verification of status and savings in cost and time. All services relating to the export and import of goods like preparation of LC, Bank Guarantees, EEFC, EPC, Remitances, etc. can be carried out online too. However, Online Trade Services can be availed only by enrolling for Corporate Internet Banking (CIB) offered by ICICI Bank



Citi Bank has a greater advantage over other Public and Private Banks of India in providing international banking services to Indian exporters and importers. This is because of the following reasons: Citibank being a consumer and corporate banking arm of financial services giant Citigroup which is the largest company of its kind in the world; it has Banking businesses established in more than 100 countries. Because of its extensive international coverage, it does not have to link up with other banks in order to provide basic international services to the Indian importers and exporters. Indian Banks like Bank of Baroda and ICICI have jus entered the global market and therefore their overseas operations do not even cover 10% of Citi Banks worldwide operation. Even after the set up of Indian banks in other countries, most of the account holders in such banks are Indians settled abroad. Foreigners have not yet able to associate themselves with such banks. On the other hand, Citi Bank has 200 million customers across the globe which further proves advantageous for them. Here, if the importer and the exporter have an account in Citi Bank in their respective countries, they dont have to incur much cost in arranging for LCs and other related services as both branches across, work for the interest of each other and no cross examining in case of the banks and the customers solvency is necessary. This would further reduce the time gap and the importer and the exporter can carry on the trade without any hindrances.

The services provided by Citi Bank under international banking are quite similar to those provided by Bank of Baroda and ICICI Bank. They can be categorized in the following manner:





Regulation 2(vi) of FEMA 5 considers the following points o describe an NRI: Person resident outside India, who is a citizen of India or is a person of Indian origin Indian citizens working abroad on assignment with Foreign Governments, Govt. agencies or in UNO and its affiliates IMF, IBRD etc. and Govt. officials (both central and state) and other officials of PSU's deputed abroad on assignments or posted abroad including Diplomatic Missions. Non-resident foreign citizens of Indian origin are treated on par with NRI citizens for the purpose of certain facilities The NRI population is increasing day by day as the number of people moving abroad is increasing because of the growth potential in foreign countries which helps them to earn more revenue. The banks operating in India have realised that the NRI market is very large and thus are engaged in providing improved services to them.



1) REMITTANCE/MONEY TRANSFER FACILITIES: Money can be send to India by any of the following means: Remittance on collection basis: A demand draft / Cashiers Check /Official Check drawn in foreign currency such as US Dollar / Great Britain Pound/Euro/ Japanese Yen etc. purchased from any banker abroad NRIs personal cheque in foreign currency, drawn on his account abroad Demand draft / Mail Transfer / Cable Transfer purchased from any of BOBs foreign branches and drawn on its Indian branches either in Rupees or foreign currency Drafts drawn abroad normally in Middle East in Indian Rupees by Exchange Houses, authorized by Reserve Bank of India. Other mode of money transfers for immediate credit are: For the convenience of the customer abroad, BoB has introduced its Online International Money Transfer Service BarodaRemitXpress. Swift Remittance: This modern mode of sending money instantaneously electronically can be used by the NRI. 2) DEPOSITS: There are may types of deposits provided to the NRIs Foreign Currency Denominated Non-resident Fixed Deposits (FCNR-FD): This deposit plan enables entire maturity proceeds i.e. principal and interest fully repatriable in Foreign Currency at par at a place of any choice. Funds may be transferred from FCNR A/C of one NRI to FCNR/NRE Rupee Savings/Fixed Deposit accounts of another NRI. Easy liquidity & convertibility, no income tax liability on interest earned and confidentiality of transactions and accounts make this an idea deposit plan.


Non Resident External (NRE) (RUPEE) Savings Account: Its a deposit plan that enables opening an account through instruments such as Demand Drafts, Telegraphic Transfers, Telex, Mail Transfers etc. and which also provides standard banking facilities such as cheque book, provision for nomination and other remittance facilities.

Non Resident External (NRE) (RUPEE) Current Account: This account can be opened by NRI's by way of remittance from abroad. These accounts are useful for business transactions for Individuals and Institutions.

Non Resident External (NRE) (RUPEE) Fixed Deposits: This deposit plan not only enables in opening an account through various instruments but also provides the option for reimbursement plan and quarterly interest plan. Confidentiality of accounts, automatic renewal of deposits and the option of payment of proceeds in the currency of ones own choice are other highlights of this deposit plan.

Non Resident Ordinary Rupee Savings Account (NRO-SB): Specific to NRI's, a NRO-SB account can be opened by remittance from abroad or by legitimate dues in rupees of the account holder in India. The existing domestic a/c of the resident gets converted to NRO a/c on their taking up business/employment abroad.

Non Resident Ordinary Rupee Current Account (NRO-CA): Here, the current domestic account of the resident gets converted to NRO a/c

Non Resident Ordinary Rupee Fixed Account (NRO-FA): Here, the current domestic account of the resident gets converted to NRO a/c.

Baroda Structured Deposit: This is an Interest Rate Linked structured product with derivative features, offering opportunities to earn higher returns to investors. The Product guarantees 100% principal protection if the deposit is held till 57

maturity. The interest earning on the structured deposit is maximized if the US dollar interest rate remains within the range as set at the time of booking the deposit. Baroda Term Deposit: The Baroda Term deposit is offered at Banks major overseas centres excluding USA. The rate of interest on this deposit is better than rate currently offered in the market, the period of term deposit being 3.4 or 5years. 3) LOANS: BoB provides a variety of loans to NRIs. Some of them are: Housing Loans to NRIs Loans/Overdrafts Against Security of Non-Resident (RUPEE) Fixed Deposits Loans Against FCNR (B) Deposits in Rupees

4) FACILITIES TO RETURNING INDIANS: Returning Indians i.e. those who were Non- Residents earlier and are returning now for permanent stay, are permitted to open hold and maintain a RFC account in India. Here, all their existing repatriable accounts can be transferred to RFC (Resident Foreign Currency) accounts denominated in any one / or more than one foreign currencies - USD, GBP, Euro, JPY, CAD and AUD. 5) VALUE ADDED SERVICES: Certain value added services like Lockers, BoBCards, ECS, Swift and Collection services are also provided by BOB.


1) MONEY TRANFER: Modes of transfer include


Online Transfers: Online transfer facilities offered to the NRIs depend on the country in which the NRI is employed or running a business (residing). This can be well explained with the help of the following classification. Direct Debit: This is specially designed for countries like USA, UK, Singapore, Canada, Germany, Australia and France. Direct Debit is a completely online money transfer service to India. With Direct Debit, money can be send using local internet banking account. MeNRI - UAE: ICICI Bank NRI services and meBANK combine to deliver to the NRIs. meNRI is a single account through which you get a meACCOUNT from meBANK in UAE and an ICICI Bank Easy Rupee Account in India. NRI Direct - Qatar: NRI Directs account remittance service allows you to transfer money from your QAR-denominated Commercial bank account to your ICICI Bank Easy Rupee Account in INR quickly and free of charge

Wire Transfer Instructions: NRIs can remit money from their local bank to any ICICI Bank Account by giving Wire Transfer Instructions instructions to local bank according to the currency they want to send funds in. The wire transfer will be processed in 24 banking hours after ICICI Bank has received the funds into its account. However, local bank will charge for the wire transfer. No matter where a person is in the world, Wire Transfer Instructions allows to remit money to family and friends from local bank to any ICICI Bank account.

Foreign Currency Cheque: If you are receiving foreign currency cheques from abroad, ICICI Bank Money2India offers an easy way to get fast credit into ICICI Bank account by just depositing the cheque in any ICICI branch. Cheques, Travelers cheques and Demand Drafts to Cashier orders, Pay Orders, Bankers' cheques, etc. are all accepted


Exchange Houses/Correspondent Banks: Here, ICICI Bank has partnered with several exchange houses and banks to provide a variety of offline money transfer products so that money can be easily transferred to the desired location.

2) DEPOSITS: The deposit plans provided by ICICI Bank are quite similar to those provided by BOB. However, current deposit plans are not provided by ICICI Bank. FCNR Fixed Deposits NRE Fixed Deposits NRE Savings Deposits NRO Fixed Deposits NRO Savings Deposits RFC Savings: ICICI Banks Resident Foreign Currency (RFC) accounts are a great choice for Non-Residents Indians who have returned to India and need an account for the funds they hold in foreign currency. RFC Fixed: ICICI Banks Resident Foreign Currency (RFC) Fixed Deposit accounts offer Non-Residents Indians who have returned to India the opportunity to earn good returns on the funds they hold in foreign currency. Student's Accounts: This account is quite helpful as they are for students who move abroad to pursue their studies. Student's Accounts 3) LOANS: Loans provided by ICICI Bank to the NRIs are as follows:


Housing Loans Rupee loans are provided against the security of your: - Rupee deposits - NRO and NRE - FCNR deposits

4) INSURANCE: Life Insurance Even though NRIs stay away from home, ICICI Prudential offers Life Insurance to them too. So, whether its a dream to retire in the hometown; to secure funds for children's education; or to build assets, ICICI Prudential has a range of solutions that can be customized to meet the needs of NRIs. General Insurance: ICICI Bank NRI Services & ICICI Lombard brings insurance services for the Global Indian too. General insurance helps the NRIs to secure the assets back home which normally include home / commercial property / motor.



The NRI services offered by Citi Bank are quite different and also the options provided under each plan are less to a certain extent than those offered by BOB and ICICI Bank. They NRI services also totally depend on the country where the NRI is residing. The location where the services are offered can be classified into: USA and Canada Europe and Africa Asia Pacific Middle East

Some of the common facilities offered by ICICI to all the above locations are given below: 1) RUPEE CHECKING ACCOUNT: Citibank Rupee Checking Account (RCA) offers free online money transfers to India, free ATM/Debit card for you and the NRIs family in India and also free demand draft deliveries at 700+ locations. This helps in taking care of all financial commitments in India. 2) INDIA DEPOSITS: Citibank India Deposits offers Foreign Currency Non Resident Deposits (FCNR) and Rupee Deposits at attractive interest rates of deposit choice. These deposits can be opened in USD, GBP or Euro. 3) LOANS: The various types of loans provided to the NRI by Citi Bank are: Home loans. Rupee loans against Citi NRI deposits and investments. Foreign currency loans against Citi NRI deposits and investments.

Certain extra facilities that are provided to the NRIs settled in Europe and Africa, Asia Pacific and the Middle East and not to USA and Canada are as follows: 62

4) DEMAT ACCOUNT: The NRIs are also provided the option of opening Demat accounts in the respective countries where they are residing so that they are able to deal in Indian Stock Market by holding them in electronic, dematerialised form. This leads to reduction in handling huge volumes of paper. 5) OVERDRAFTS: This is also called as the US Dollar Overdraft which is a secured overdraft facility against NRI investments and deposits which further helps in meeting short term liquidity needs. As much as 90% against Globe, FCNR or NRE deposits can be borrowed. Interest here is pegged to the US Dollar Prime Rate and is deducted from the account at the end of each month. Minimum amount of borrowing is US $25,000




Being a public sector bank, Bank of Baroda has to cover the rural areas by providing them the best banking service. Keeping in view the potential of the rural market, BOB have established 19 Rural Regional Banks in the five states of Gujarat, Rajasthan, Uttaranchal, Uttar Pradesh and Madhya Pradesh. Their main motive to enter the rural market is to make a Self-Reliant rural India. They believe that like the urban areas, the rural areas should also be provided with rational banking services. The rural people are given the choice of selecting from any deposits plan i.e. Fixed, Current and Savings which are however clubbed with less interest rates and convenient withdrawal options BOB also provides PRIORITY SECTOR ADVANCES to the rural areas which can be categorized in the following way. 1)AGRICULTURE: Agriculture being the backbone of the Indian Economy, Bank of Baroda, is contributing significantly in accelerating the pace of rural development by providing finance to farmers by way of following agriculture products. Baroda Kisan Credit Card (BKCC): The BKCC facility designed exclusively for the benefit of the farmers aims to provide them the opportunity to manage and utilise their funds in the manner they deem fit. BKCC provide adequate and timely support to farmers for their production needs e.g. purchase of quality inputs, investment requirements like purchase of agriculture implements/tractor etc Purchase of agricultural implements including indigenous improved ones being utilised for field operations including harvesting/sorting/grading not only to farmers but also for land-less labourers.


Providing help to the farmers for the purchase of heavy agricultural machinery like tractors, power-tillers, etc.

Production credit for raising various crops from the point of preparatory tillage till harvesting

Farm produce marketing loan against pledge of reciept of warehouse/ cold storages to the farmers.

Extending working capital needs to dealers of agricultural inputs like seeds, fertilisers etc.

Providing employment to the unemployed technical personnel through Agro service Centre.

Development of horticulture including production, processing and marketing of various fruits, vegetables, plantation and flowers which cover from nursery to the point of market

Development of allied activities to agriculture like dairy, poultry, fisheries, sericulture, mushrooms, apiculture etc. Finance by way of long term nature and short term nature is being extended.

2) SMALL SCALE INDUSTRIES: Bank of Baroda has special Loans and Advances for the purpose of fixed capital investment and also for working capital requirement for the small scale industries. The loans and advances offered by Bank of Baroda for SSI Units can be used for the basic needs of Acquisition of factory land, Purchase of plant and machinery, meeting working capital requirements, temporary additional assistance for meeting the urgent needs of raw material, Additional monitory assistance for any eligible purpose, etc.


3) SMALL BUSINESS: Various schemes have been launched best suited for individuals conducting business independently i.e. The Professionals and The Self Employed. Such schemes include: Rural Internet Kiosk Finance Scheme: Here, loans to the rural people are granted in order to set up internet centers in rural areas so that people can get access to top class services. These services include communication, education, information, STD/ISD, etc. Roads & Water Transport Operators: This product is primarily targeted at Road Transport Operators Retails traders: This product is specifically for those engaged in the retail trade of any commodity / goods, which are required by the community. This will include grocers, cloth merchants, grain merchants, chemists and druggists, dealers in electrical goods, hardware merchants, automobile spare parts dealers, stationers etc. Loans can be used to promote existing shop/business. Business Enterprises: This product is primarily for service providing business enterprises and not a professional services unit. Software development centres, XRay Clinics, Photographic Labs, Operators of Cable TV Networks, Crches, and Beauty Parlours can avail of facilities under this plan. 4) RETAIL LOANS: These are premier loans that are provided to the rural people at low interest rates. Retail loans include Housing, Education, Car, Two wheeler loan, Personal, Marriage, Professional, Advance against security, etc.

5) GOVERNMENT SPONSORED LOANS: In accordance with the laws set by the government BOB provides sustained employment to educated unemployed youth in rural areas


In addition to the Priority Sector Advances, Bank of Baroda offers other services to make financial dealings easy and convenient which include services like Remittances, Collection services and Pension plans.


ICICI Bank has understood the potential of the rural market and is therefore building a sustainable rural business model that meets the mandatory requirements. ICICI Bank's priority sector target is 40 per cent of lending to the rural market. Since late 2004, ICICI Bank has built a robust agricultural loans portfolio of Rs 10,000 crore (Rs 100 billion). But the bank's other initiative is the one that is getting talked about: Micro-Finance. In order to avoid direct lending to self-help groups ICICI Bank signed up micro-finance institutions as intermediaries for micro lending. It is through Micro Finance Institutions (MFIs) that the bank is making its foray into the rural market more stabilized. The bank plans to partner with 200-250 MFIs, each serving three districts in the country, thus reaching out to 600 in all across the country, through a mix of its products and channels. The bank also plans to develop a unique rural banking proposition by capitalizing on the partnership model instead of solely relying on the branch-led approach. Under the partnership model with MFIs, the bank forges an alliance with an MFI, wherein the latter dons the promotional role of identifying, training and promoting microfinance clients, and the bank finances the clients directly, based on the recommendations of a given MFI. The MFI also shares the credit risk, along with the bank. Taking the partnership model further, ICICI Bank also offers securitization of portfolios, whereby an MFI continues to service the clients and acts as a collection agent.



The major setback faced by Citi Bank is that it has not yet established banking operations in rural areas. Thus, they are not in a position to provide banking services to 70% of the Indian population residing in rural areas. Even though their returns from the urban market is rising annually, their share can be further increased if they foray into the rural markets thus designing their products and services according to the rural needs.



Internet banking or Online banking is a term used for performing transactions, payments, etc. over the internet through a bank, credit union or building societys secure website. This allows customers to their banking outside a bank hours and from anywhere where internet access is available. In most cases a web browser such as Internet Explorer or Mozilla Firefox is utilized and any normal internet connection is suitable. No special software or hardware is usually needed. In today's digital world, Internet banking assumes a special significance. Realizing that the default access to your banking information in the near future would be only through the Internet, most of the banks today have made available to their customers a globally benchmarked Internet Banking facility. With Internet Banking, Bank travels with the customer around the world wherein the customer has on-line, real-time access to his accounts. There are a slew of services that are made available by the Bank of Baroda, ICICI Bank and Citi Bank through Internet Banking to its customers. Some of the common services include: Bank statements. Electronic bill payment Funds transfer between a customers own checking and savings accounts or to other customers account Investment, purchase or sale Loan application and transactions such as repayments Account aggregation to allow the customers to monitor all of their accounts in one place whether they are with their main bank or with other institutions, etc To avail of internet banking service is very simple. All the customer needs is to have his Internet Banking user ID and Internet Banking password.


Admittedly, internet banking requires security of the highest nature and complete privacy. Protection through single password authentication, as is the case in most secure Internet shopping sites, is not considered secure enough for personal online banking applications in some countries. Online banking user interfaces are secure sites and traffic of all information - including the password - is encrypted, making it next to impossible for a third party to obtain or modify information after it is sent. However, encryption alone does not rule out the possibility of hackers gaining access to vulnerable home PCs and intercepting the password. There is also the danger of password cracking and physical theft of passwords written down by careless users. Many online banking services therefore impose a second layer of security Strategies vary, but a common method is the use of transaction numbers, or TANs, which are essentially single use passwords. Another strategy is the use of two passwords, only random parts of which are entered at the start of every online banking session.



Mobile banking or Telephone banking is a service provided by most of the banks which allows its customers to perform transactions over the telephone, usually 24/7. With the obvious exception of cash withdrawals and deposits, it offers virtually all the features of an automated teller machine: account balance information and list of latest transactions, electronic bill payments, funds transfers between a customer's accounts, etc. To guarantee security, the customer must first authenticate through a numeric or verbal password or through security questions. Most telephone banking services also offer the possibility to speak to a live representative located in a call centre or a branch. In addition to the self-service transactions listed earlier, telephone banking representatives are usually trained to do what was traditionally available only at the branch: loan applications, investment purchases and redemptions, cheque book orders, debit card replacements, change of address, etc. Customers having cell phones are also provided with certain additional facilities like alert facility where timely messages keep the customer informed about the significant transactions in his Accounts. For example, if a person is using an ICICI Bank Debit Card in order to pay a shopping bill, he is immediately informed via SMS that a certain sum of money has been removed from his account. Thus Mobile Banking keeps the customer updated wherever he goes.


In order to understand and rate the quality of service provided by the three banks namely Bank of Baroda, ICICI Bank and Citi Bank, an interactive session was carried out by me. The session was done with 3 account holders of each of the three banks. Each account holder was contacted individually and the questions regarding the quality of service provided by their respective banks was asked to them accordingly. Their answers have been discussed below by taking out a common solution of what the respective account holders think of the Banks in which they hold their account. The questions that were asked are given below in the form of topics and the solutions (answers) are discussed in the form of comparative analysis. 1) CHEQUE DEPOSITS: In case of Bank of Baroda, cheques can only be cleared through counters in the respective branches and as such no cheque drop boxes are provided in the branches as well as in the ATM centres. This however is quite inconvenient for the customers of the bank as they need to be deposit the cheques only during the bank working hours during which the customer may not be available. The queue for depositing at the counters may also be very long, thus wasting the customers time. The cheque deposit facility provided by ICICI Bank and Citi Bank is quite convenient for the account holders as here, cheques can be deposited not only at the counters during the bank working hours but also at the cheque drop boxes provided in the branches itself. This also omits the possibility for the customer to stand in long queues. Another convenience provided is that the cheques can also be deposited at the ATM centres. This facility is available 24*7 but this may also affect the clearing time.


2) TIME TAKEN TO CLEAR A CHEQUE: Name Bank Bank of Baroda of the Time Taken to Clear (Working Days) In-House cheques (same bank) Within 3 hours. Local cheques Within (Mumbai, 24 Out-Station Cheques hours. Takes 3 to 5 Delhi, customers also

Here even metro city days. Here, the Chennai, etc) cheques have to pay extra take only 24 hours charges. ICICI Bank Citi Bank Within 24 hours. Within 24 hours. clear. Takes 3-5 days. Takes only 2 days. Takes 5 days + charges. Takes 5 days + charges. The table shows that Bank of Baroda is faster than the two banks indicating that customers are more satisfied with the clearing procedure of the bank. In case of ICICI Bank and Citi Bank, the customers are not fully satisfied as they have tow ait for a long time in order to get any kind of cheque cleared.

3) TYPE OF ACCOUNT HOLDERS: The account holders of Bank of Baroda are normally the lower class and the middle class people while the account holders of ICICI Bank are normally more of office goers, the middle class and the upper class people. Citi Bank has normally less of office goers but more of upper middle class and the upper class people as its account holders. 4) RENEWAL/DELIVERY TIME OF CHEQUE BOOKS, CREDIT CARDS, DEBIT CARDS, ETC. : 73

Name Bank


the Renewal/Delivery Time(Working Days) Cheque books Debit cards and Credit cards

Bank of Baroda

Cheque books, if applied through Before the expiry date, BoB the branches itself would take only contacts the customer asking him around 30 mins to get it. whether he would be continuing the Card the to the service card and is If applied through phone banking, with days to be sent through courier.

it would take a maximum of 3 accordingly dispatched


before the expiry itself. ICICI Bank Here, the cheque books applied Here, the customers have to through any means would take apply for the card and the around 5 days to be delivered to delivery of the debit and credit Citi Bank the customer. cards takes minimum of 8 days. Here, the cheque books applied Like ICICI, here too the delivery through any means would take period for debit and credit cards around 3-4 days to be delivered to is a minimum of 8 days after the customer. application.

In this case too, Bank of Baroda proves quite proficient in providing the required facility on time and also faster than ICICI Bank and Citi Bank. Also, ICICI is more sluggish than Citi Bank in providing the service.

5) BRANCH TIMINGS OF THE BANK: Bank of Baroda: 8:30 a.m. to 2:30 p.m. 74

According to the account holders the timing should be extended up to atleast 6:00 p.m. as it is sometimes quite inconvenient for them to adjust to the day timings of the banks. As the number of branch operations is higher in BoB, the timings should be set accordingly. ICICI Bank: 8:00 a.m. to 8:00 p.m. ICICI Bank is the most convenient bank in terms of its timings. The customer if not available in the morning can also come in the evening and carry oput his transaction efficiently. Citi Bank: 8:30 a.m. to 5:00 p.m. Citi Bank does not lag behind as its branch timing is better than BoB but not like ICICI Bank. 6) ASSISTANCE BY BANK EMPLOYEES: There are more branch operations taking place in Bank of Baroda compared to the other two banks as the customers have to frequently visit the branch for various work like depositing cheques, upgrading the pass book, applying loans, etc. This indicates that the interaction between the bank employees and the customer is quite high. Nationalised banks being in operation for a very long time have many experienced and old personnel working for them and so the assistance provided to the customers by them are very good. These personnel have required skills to deal with the customers and answer any query if asked. They understand the customers very well and also provide them with extra information so that the customers feel secured. The bank employees treat every customer equally be it rich or poor. The employees of ICICI Bank and Citi Bank on the other hand carry on very less interactions with the customers because the visit by the customer to the branch is not that often. These banks normally have young employees working at the branches who are enthusiastic but also not that efficient. They only believe in answering only those


questions which they are asked for, thus not providing the customer with extra information if needed. Their behaviour towards the customer changes from person to person. 7) PHONE AND INTERNET BANKING PROCEDURE: According to the account holders of all the three banks, the phone and internet banking procedure is quite satisfactory. There are some limitations too, like sometimes the procedure to get information about any service is long but the bank also has to give considerations to the privacy status of the customer and thus follow a strict process to safeguard it. 8) ASSISTANCE BY PHONE BANKERS: Bank of Baroda being a public sector bank, its customers prefer in having interactions with the branch employees rather than speaking to the phone bankers. Phone banking being a newly introduces facility, the lead time is quite low as the number of customers using this service is also low which further reduces the possibility of a long waiting period. Also the assistance provided by the phone bankers is jus satisfactory. In case of ICICI Bank and Citi Bank, people use more of the phone banking facility. Their interaction with the phone bankers is also quite frequent. Therefore, here the phone bankers are required to have more knowledge about the services of the bank as compared to the branch employees. The lead time is high in case of both the banks as there are long queues for enquiring purposes. The assistance provided by the ICICI Bank phone bankers is not up to the mark as they often confuse the customers and are unaware of many services of the bank. On the other hand, the CITI Bank phone bankers are very well organised and provide proper assistance to its customers.


9) BANK STATEMENTS OR PASS BOOK FACILITY: All nationalised banks including Bank of Baroda provide the Pass book facility to its saving account holders which show the net balance in the account of the customer. Bank Statements are only provided on demand by the account holder. Balance can also be known through Mobile and Internet Banking. ICICI Bank and Citi Bank do not have any pass book facility; instead they provide the account holder with monthly Bank Statements which shows the net balances in the account. Mobile and Internet Banking can also be used for knowing the balances. 10) ATM SERVICES: Bank of Baroda has only around 650 ATM centres installed in various cities across India. People have not yet been able to associate themselves with the ATM services of a Public Bank. They feel that as foreign and private banks were the first ones to introduce this technology in India, they are more consistent. This can be known from the fact that Citi Bank today has around 500 while ICICI Bank has around 2000 ATMs across India. BoB is however facing the competition and therefore increasing the numbers to keep up with it but other banks are not staying behind too. However people using the ATM centres of all the 3 banks are quite satisfied with the service. The disadvantage of BoB is that it does not provide the cheque drop box facility in its ATMs.

11) RELIABILITY: Today, even after private and foreign players have entered the Indian banking industry, public banks has still managed to have a firm hold over the banking sector.


This is because people believe that public banks are more reliable than others as they are owned and managed by the government and ultimately the peoples interest rests in the hands of the government itself. So people feel more secured. Even though BoB is lacking behind in providing the technological aspect, it still stays ahead when it comes to providing loans and such other related services. Also, the interest rates on loans are lower as compared to ICICI Bank and Citi Bank. If there is any delay or default in the payment of the loan installment by the customer, BoB being a Govt. Bank is quite lenient and thus it takes around 6 months to 6 years for it to take back the property. But banks like ICICI Bank and Citi Bank are very stringent and therefore they take back the property immediately giving very little time for the customer to pay the installment. This further adds to the reliability factor.


Though the new private sector banks and foreign banks have a lower share in customer deposits (8.2 per cent and 4.9 per cent respectively), they command a higher share of the net profit (9.8 per cent and 10.4 per cent respectively). Due to restrictions on branch 78

expansion, foreign banks traditionally focused their operations on the top 25 cities of the country. However, they differentiated their operations by focusing on premier customers and set superior standards in productivity, customer service and operating efficiencies by using state-of-the-art technology. Global best practices were introduced and practiced. More importantly (as we will discuss later), they built durable competencies by attracting the best manpower, building proprietary technologies and processes and by building strong brand image. The new private sector banks modeled their strategies after the foreign banks. They built much larger branch networks than foreign banks, though small by comparison to public sector banks and pose, by far, the greatest challenge to the dominance of public sector banks. However, the present Indian market scenario has the Private Sector Banks and the Foreign Banks competing with the huge dominance of the Public Banks. So, now it is more of Private Banks and Foreign Banks against the Public Banks alone. STRATEGIC RESPONSE OF PUBLIC SECTOR BANKS TO REFORMS The public sector banks had to face a tough challenge when the new private sector banks and even the foreign banks who made their entry in early nineties. The new banks had the benefit of starting on a clean slate and had started with state-of-the-art technology which in turn helped them save on man power costs and provide better services. On the other hand, the older banks had not kept up-to-date with technology and were facing competition of this kind for the first time.

INITIATIVES TAKEN BY PUBLIC SECTOR BANKS: Introduction of new products and services: Many of the public sector banks launched an array of products and services, especially on the retail front, to match the competition. Some of the new products include debit cards, credit cards, international cards, special deposits, sweep-in accounts, demat accounts and


any-where-banking. Some of the new services include round-the-clock phone-banking, Automated Teller Machines (ATMs), inter-city, inter-branch banking, net-banking and bill payment services. Many public sector banks have even launched their own asset management companies to offer mutual fund services to their customers. Computerization and networking of branches: Banks invested aggressively in computerization and networking of branches. The oldest and the biggest bank, SBI, had computerized around 5500 branches by March 2006, constituting nearly over 50 per cent of its total branches. Many of these branches were also networked so that their customers could be offered any-time, any-where banking services. The other public sector banks too embarked on a similar computerization drive. Installation of ATM networks: All banks have made heavy investments in the installation of large networks of ATMs. As of March 2006, SBI had a network of 1500 ATMs, Canara Bank had 300 ATMs, Bank of Baroda had 650 ATMs to match the ATM network of private sector banks such as HDFC Bank (1300) and ICICI Bank (2000 ATMs,) and foreign banks such as Citi Bank (500 ATMs) and Standard Chartered Bank (300). ATMs proved a tremendous success by reducing the load on branches significantly as, apart from carrying out routine transactions such as cash withdrawal etc, customers can avail such services as transfer of funds and payment of utility bills by visiting any of the ATMs located conveniently.

Risk Management and Capital Adequacy: Many public sector banks were saddled with large non-performing assets (NPAs) and suffered from low capital adequacy. Banks have since put in place stringent Risk Management Systems to address not only credit risk, but also market risk and other operational risks. There have been attempts to systematically recover from defaulting 80

customers and make adequate provisions for NPAs. Many Banks have raised capital either on their own strengths or with the help of governments infusion of capital to raise the capital adequacy levels to meet prudential norms. All these measures resulted in a much better financial structure for the older banks compared to the position a decade back.

DO THESE STRATEGIES YIELD ANY SUSTAINABLE COMPETITIVE ADVANTAGE? Most of the public sector banks have focused their efforts on the above strategies and a cursory glance at the management reports in any of the latest Annual Reports of these banks would reveal lengthy discussions of the improvements achieved on these fronts. However, the key question to be asked is whether these strategies provide any sustainable competitive advantage? It is easy to observe that most of the above strategies can be categorized as measures to improve operational efficiencies and effectiveness. Most of the above can be replicated by any competitor with adequate capital at its disposal. They are me-too strategies. The only advantage is the time required by the competitor to implement them, which too does not yield any long-term advantage. While all these measures to improve operational efficiencies are certainly necessary to survive the competition, they are by no means sufficient. These are what are typically called by organisational behaviorists as hygiene factors. The realisation of the fact that the above measures do not provide any distinctive advantages is reinforced by the announcements by many banks to share their ATM networks. On February 10, 2004, the largest public sector bank SBI and two of its largest private sector competitors HDFC Bank and UTI Bank announced plans to share their ATM networks for the combined benefit of all their customers. In fact, if the ATM


networks did not provide any distinct strategic advantage it raises a key question as to whether these banks should have outsourced the whole networks to a third party in the first place.

COMPETING ON VALUABLE RESOURCES: If the above strategies are merely measures to improve operational effectiveness, then what strategies should banks follow to gain a sustainable competitive advantage? The current thinking in Strategy Research advocates those strategies that generate valuable resources to the firm. Every bank has a collection of physical and intangible assets and capabilities that it has developed over a period of time. These can be broadly termed as resources and each companys or banks unique stock of resources is the basis for its competitive advantage. For example, possession of a wide network of interconnected branches is a resource for a bank. A resource is termed valuable, if it possesses some characteristics. These characteristics include: Inimitability: One of the ways in which a resource becomes inimitable is due to physical uniqueness. For example, the physical location of a branch of a public sector bank in the heart of the financial centre of Nariman Point in Mumbai is a unique resource that cannot be replicated. Another example of an inimitable resource is a strong brand name. Even if a competitor spends billions of rupees, it will find it difficult to acquire the trust and brand equity that customers associate with, say for example, SBI. Scarcity: For the resource to be valuable it should be scarce or rare. A prime example of such resources is the Human Resources. The best quality manpower is very limited in number and is scarcely available. For a service industry such as banking where human resources form a significant source of value addition, possession of excellent quality manpower generates a key competitive advantage.


Durability: In todays world of increasing dynamism, the durability of a resource becomes a valuable characteristic. The longer a resource can last, the more valuable it will be. For example, technological superiority is not a durable resource because new technologies are becoming available at a rapid pace. Brand equity, on the other hand, is an example of a resource that is durable.

Superiority: The resources need to be evaluated relative to competitors. Many banks may assert that their customer service standards are the best. But banks have to conduct an honest assessment of whether their customer service standards are so distinct and superior to competitors that it can qualify to be a valuable resource.

These characteristics make it very difficult or impossible for competitors to acquire. Possessing such valuable resources lends a bank a sustainable competitive advantage because it becomes very hard or sometimes impossible for competing banks to acquire similar resources. Hence successful strategies are those that enable banks to acquire such valuable resources which cannot be competed away.


In addition to pursuing strategies that keep public sector banks up-to-date on operating efficiencies, they have to pursue strategies that generate inimitable, scarce, durable and superior resources. It is not possible to propose a generic list of best resources that are applicable to all banks because no two banks are alike and each bank may possess its own


stock of unique and valuable resources. Each bank has to conduct a detailed internal assessment to identify what are its unique assets and capabilities that can serve as valuable resources. Two choices for consideration are brand image and a wide network of branches. In multiple customer surveys, the brand recollection and positive image of SBI has come out to be so strong that it is comparable to many well-known consumer brands. This is a valuable resource that SBI could continuously nurture and build into a strong competitive advantage. Many other older banks such as Bank of Baroda, Bank of India, Indian Bank etc., which are currently bigger than many private sector banks may find themselves rapidly losing market share if they do not invest in building strong brands. Another resource that is potentially valuable is the wide network of branches that public sector banks possess. For example, SBI, Bank of Baroda and Indian Bank have a network of 9400, 2800 and 1400 branches compared to HDFC Banks 535, ICICIs 573 branches and Citis 50 branches. While the large branch networks of older banks are currently being looked at as a liability, they can be potentially a very valuable resource. It will take many, many years for any of the private sector banks and the foreign banks to build such a wide-spread network. It is possible for the older banks to find ways to leverage on their branch network in rural areas in ways that a new bank will find difficult to match. A winning strategy has to be unique and different. Each bank can find its own set of valuable resources that can be the foundation for winning strategies.