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Project Report On

In the partial fulfillment of the Master of Business Administration Program 2011-2012

Department of Management Studies Shrinathji Institute of Technology and Engineering Upali Oden, Nathdwara.





“Behind every successful effort there lies a contribution from numerous sources irrespective of their magnitude. My project is no exception and I take this opportunity to express my sincere thanks those helping hands whole heartedly”. It is with great pleasure and gratitude I acknowledge my indebtness to those who have helped me in completing this project work. Let me take this opportunity to express my sincere thanks to all of them, although they all can’t be mentioned here. I wish to place on record my thanks to Dr.Deepthi Bhargv, head of the department, Srinathji institute of management for giving me this opportunity. I wish to express my heartly gratitude and sincere thanks to Mr.Ashish Adholiya for their valuable support, I also want to thank all the faculties of Sreenathji institute of management for helping and providing their valuable time for making this project a success. I give my profound thanks to my friends for their support and last but not the least I want to thanks my family for their help and support without their presence it would not be possible for me to complete this project satisfactorily. Above all I wish to thanks God Almighty for having blessed me to complete this project.



Retail banking is banking in which banking institutions execute transactions directly with consumers, rather than corporations or other banks. Services offered include: savings and transactional accounts, mortgages, personal loans, debit cards, credit cards, and so forth. Retail banking aims to be the one-stop shop for as many financial services as possible on behalf of retail clients. Some retail banks have even made a push into investment services such as wealth management, brokerage accounts, private banking and retirement planning. While some of these ancillary services are outsourced to third parties (often for regulatory reasons), they often intertwine with core retail banking accounts like checking and savings to allow for easier transfers and maintenance



draft. 6 . MEANING OF BANKING Banking has come to occupy a pivotal position in a nation’s economy. “Bank” is an institution which deals in money and credit. the essentials of banking are: (1) There should be acceptance of deposited.EXECUTIVE SUMMERY Retail means sale of goods in small quantities. A bank may defined as a corporation or person which collects deposits from the public.” Thus. He acts as a link between the wholesaler and the customers. lending and remittance of funds. defines the term banking as “the accepting for the purpose of lending or investment of deposits of money from the public or otherwise and withdraw able by cheque. The retailer does not specialize in a particular line or a particular product. (4) The purpose of deposits should be lending or investment. it is concerned with buying of goods in small quantities from the wholesaler and selling them in small quantities to the ultimate consumers as per their requirements. According to the modern concept. In retail trade goods are sold to the ultimate consumers for personal use and for the use of the business in small quantities only. but also an important instrument for fostering economic growth. Rather he maintains a large variety of goods. Generally. repayable on demand and which supplies and facilitates all kinds of exchanges. It is body of persons whether incorporated or not who carry on the business of banking. banking is a business which not only deals with borrowings. (2) Deposits should be from the public. It buys money from depositors and sells to the borrowers. (3) Deposits should be repayable on demand or expiry of a term or after a specified periods. order or otherwise. sales are limited to a local and on a small scale. The Banking Regulation Act 1949. The person engaged in this trade is called the “retailer”.

High cost structure rendering massmarket servicing is prohibitively expensive. improved service and banking convenience. The solution lies to market demands and challenges lies in innovation of new offering with minimum dependence on branches – a multi-channel bank and to eliminate the 7 . The market today gives us a challenge to provide multiple and innovative contemporary services to the customer through a consolidated window as so to ensure that the bank’s customer gets “Uniformity and Consistency” of service delivery across time and at every touch point across all channels. The pace of innovation is accelerating and security threat has become prime of all electronic transactions. The changing customer demographics demands to create a differentiated application based on scalable technology. debit cards. mortgages. Present day tech-savvy bankers are now more looking at reduction in their operating costs by adopting scalable and secure technology thereby reducing the response time to their customers so as to improve their client base and economies of scale. Increasing use of modern technology has further enhanced reach and accessibility. Higher penetration of technology and increase in global literacy levels has set up the expectations of the customer higher than never before. and so” The Retail Banking environment today is changing fast.CHAPTER 1 INTRODUCTION “Retail banking is typical mass-market banking where individual customers use local branches of larger commercial banks. credit cards. personal loans. Services offered include: savings and checking accounts.

. 8 . auto. In retail banking all the needs of individual customers are taken care of in a well-integrated manner. and the financial institution deal in small numbers of high value transactions. and educational) on the assets side. personal. current / savings accounts on the liabilities side. The concept is not new to banks but is now viewed as an important and attractive market segment that offers opportunities for growth and profits. Retail banking is. and mortgages. and corporate). loans (e.disadvantage of an inadequate branch network. or depository services. Retail banking refers to provision of banking services to individuals and small business where the financial institutions are dealing with large number of low value transactions. This is in contrast to wholesale banking where the customers are large. however. quite broad in nature . Retail banking and retail lending are often used as synonyms but in fact. credit cards. the later is just the part of retail banking. are the more important of the products offered by banks. insurance. small business. branch. Related ancillary services include credit cards. both on liabilities and assets sides of the balance sheet. governments and government enterprise. Generation of leads to cross sell and creating additional revenues with utmost customer satisfaction has become focal point worldwide for the success of a Bank. housing. investments and Securities)   Multiple channels of distribution (call center. internet) Multiple customer groups (consumer. Today’s retail banking sector is characterized by three basic characteristics:  Multiple products (deposits. Fixed. often multinational refers to the dealing of commercial banks with individual customers.g.

the bank has successfully gained market share in its target customer franchises while maintaining healthy profitability and asset quality. wholesale banking. its three principal business segments. To cater to non-resident Indians. phone banking. HDFC's distribution network spans 283 outlets that include 66 offices of HDFC's distribution company and HDFC Sales Private Limited. HDFC Bank is one of India's premier banks providing a wide range of financial products and services to its over 18 million customers across hundreds of Indian cities using multiple distribution channels including a pan-India network of branches. Singapore. 9 . is an Indian NBFC. and treasury operations. HDFC covers over 90 locations through its outreach programmes. The bank’s competitive strength clearly lies in the use of technology and the ability to deliver world-class service with rapid response time. net banking and mobile banking. focusing on home mortgages. Promoted in 1995 by Housing Development Finance Corporation (HDFC). HDFC Bank Limited and other third party Direct Selling Agents (DSA). HDFC's marketing efforts continue to be concentrated on developing a stronger distribution network. India's leading housing finance company. Home loans are also sourced through HDFC Sales. the bank has emerged as a leading player in retail banking. Over the last 13 years. and Dubai and service associates in GCC countries.Housing Development Finance Corporation Limited or HDFC. ATMs. Within a relatively short span of time. founded 1977 by Hasmukhbhai Parekh. In addition. HDFC has an office in London.

Some of the parameters that winners were measured on: • • • • • • • • • • Outstanding annual performance of the retail banking unit Sustainability as a franchise over a long period of time and across economic cycles A well-defined franchise in the chosen marketplace Transparency and accountability of business model Ethical banking Clear sales and execution skills at the product level Rigorous risk management capabilities Superior business and operational processes and technology Strong penetration and efficiency of distribution channels Focus on developing human resources to support the bank’s strategy 10 . The Bank is also one of the leading players in the “merchant acquiring” business with over 70. Loans. The Bank launched its credit card business in late 2001.000 Point-of-sale (POS) terminals for debit / credit cards acceptance at merchant establishments. Bill Payments.HDFC Bank was the first bank in India to launch an International Debit Card in association with VISA (VISA Electron) and issues the Mastercard Maestro debit card as well. The Bank is positioned in various net based B2C opportunities including a wide range of internet banking services for Fixed Deposits. etc. the bank had a total card base (debit and credit cards) of over 13 million. By March 2009.

I tried to select the sample representative of the whole group during my job training. RESEARCH DESIGN: Research was initiated by examining the secondary data to gain insight into the problem. I have collected data from people linked with different profession at Udaipur RESEARCH PLAN: Preliminary Investigation: In which data on the situation surrounding the problems shall be gathered to arrive at  The correct definition of the problem. A structured questionnaire was framed as it is less time consuming. easier to tabulate and interpret. By analyzing the secondary data. DEVELOPING THE RESEARCH PLAN: The data for this research project has been collected through self Administration. Exploratory Study: To determine the approximate area where the problem lies. the study aim is to explore the short comings of the present system and primary data will help to validate the analysis of secondary data besides on unrevealing the areas which calls for improvement. Moreover respondents 11 . Due to time limitation and other constraints direct personal interview method is used.   An understanding of its environment. generates specific and to the point information.CHAPTER 2 RESEARCH METHODOLOGY All the findings and conclusions obtained are based on the survey done in the working area within the time limit.

The method of collection of primary data was direct personal interview through a structured questionnaire. Since it was not possible to cover the whole universe in the available time period.prefer to give direct answers. management books. news papers. preserved information in the company’s database and website of the company. it becomes necessary to take sample from the universe to know about its characteristics. COLLECTION OF DATA: Secondary Data: It was collected from internal sources. it was necessary for me to take a sample size of 200 respondents. magazines.  Research Instrument: Structured Questionnaire. 12 . They were the main source of Primary data. SAMPLING PLAN: Since it is not possible to study whole universe. both the types of questions has been used.  Contact Method: Personal Interview. In questionnaires open ended and closed ended.  Sampling Units: Different professionals’ businessman. SAMPLE SIZE: My sample size for this project was 200 respondents.  Sample Technique: Random Sampling. households. Primary data: All the people from different profession were personally visited and Interviewed. etc. The secondary data was collected on the basis of organizational file. official records.

RESEARCH LIMITATIONS:  It was not possible to understand thoroughly about the different marketing aspects of the Financial Consultant within 60 days.’ To give satisfaction regarding services offered by bank To make out which bank provide services with best resources To know the awareness among the common man about loan which they want to take. money was not given it was difficult to continue the project work. 13 . I have prepared the questionnaire according to the necessity of the data to be collected.   All the work was limited in some limited areas of Udaipur so the findings should not be generalized.  As stipend.DATA COLLECTION INSTRUMENT DEVELOPMENT: The mode of collection of Data will be based on Survey Method and Field Activity. Research Objectives: The main objective of the project report is to understand the Retail loans provided by bank of Udaipur. The objective was successfully achieved by performing the detailed survey of 5 other banks. Primary data collection will base on personal interview.  The area of research was Udaipur and it was too vast an area to cover within 60 days. The questionnaire for survey study was prepared keeping in mind the following:To give level of information to the customer.

CHAPTER 3 RETAIL BANKING IN INDIA All around the world retail lending has been an established market. Unlike its predecessors. Indian retail banking is up and kicking. the housing loan as a percentage of GDP at 4. Housing constitutes the biggest segment of 48% of the entire retail credit. All the players in this market are adopting an aggressive attitude and the housing loan availability is playing into the players hands. In Asia Pacific. Banks are increasing their dominance in housing finance and capturing the market share of the housing finance companies. India has emerged as the third largest market for cars and MUVs i. it attaches no social-stigma in taking loans for spending. the market share of banks stood at 62%. educational and other personal loans take the remaining 16%. The traditional debt-averse. middle-class Indians who lived within their thrifty means. But again this coupled with the population growth indicates good future prospects. During 2004-05 retail contributed 42% of overall credit growth. the middle-class of today has donned a new attitude. auto finance.89. Rs2-5 lakh margins constitutes almost a third of the loan size.91% indicates low penetration when compared to other countries like Malaysia (17%) and Thailand (9%). If recent statistics on consumer finance are any indication. During 2004-05. followed by the auto loans segment which constitutes almost 27. seem to have given way to a new middle-class that is free from all inhibitions regarding conspicuous consumption. consumer durable loan and credit cards to name a few.e. never to venture beyond their means. 14 .8%. against the 33% by Housing finance companies. only after Japan and China. personal loans. While the balance retail credit is used by consumer durables at 7. Growing at the CAGR of 35% over last 5 years the retail asset touched Rs1.000 crore. it is the auto loan which is also giving the growth of retail credit the necessary boost. Following the housing loans. the last few years have been trend setting. Major product segments of retail credit include housing finance. Despite this phenomenal growth in India.2%. however its rise in emerging economies like India has been of recent origin.

Banks are now having a direct tie-up with the educational institutions to cash in on the opportunity. Metropolitan and urban areas together constitute two third of total loans under this category. Urban and Semi Urban centers contribute around 22% each. The last few years have witnessed a high increase in students aspiring for management and professional courses.000 from 1. Given this macroeconomic scenario. changing customer attitudes towards borrowing and optimism regarding economic growth. The rural areas are dominated by RRBs. whereas in the rural areas the nationalized banks dominate. the share of retail banking will grow dramatically and it is expected that about 35% of the incremental growth in net credit will come from retail banking. Retail lending constitutes just 12. nationalized banks have their hold in the urban and semi-urban areas. disbursement of domestic banks has surged by 13% to Rs2249 crore in 200405.wheeler to 4-wheelers and opening up of second hand car finance are growth drivers of this segment. The rural market uprising is a recent phenomenon. all the retail banking segments are expected to witness a tremendous growth owing to the low cost of borrowing. up from Rs1983 crore in 2003-04.000 during this period.Low interest rates. Public sector banks (PSBs) are more focused on the educational loans segment. In the next five years i. easy finance. While private sector banks have dominance in metropolitan areas. till 2010. In India. The other personal loans market is characterized by intense competition and the players vie with one another to get business. Private sector banks lead in metropolitan areas. leading to a spurt in educational loans. In the educational loan segment.36% of the Indian banking system. retail banking is 15 .08.e. up-gradation of rider from two. These loans are driven by urgent and short-term needs and banks have to act swiftly to cash in on that need. Metro centers continue to dominate the market with 29% of total retail credit. closely followed by the rural market at 27% of total retail market. constituting approximately 7% of total credit.40. which has immense growth potential. The consumer durable loan follows the auto loan market in the third position. The number of students availing education loans has increased to 1.

Retail Banking is an attractive market segment having a large number of varied classes of customers. BENEFITS Traditional lending to the corporate are slow moving along with high NPA risk. Aggressive credit growth in retail has increased the requirement for measuring and managing this risk. This requires expansion and diversification of retail banking product portfolio. However.expected to grow by a CAGR of 25% to touch the figure of Rs575. Hitherto. Retail Banking focuses on individual and small units. the competitive market shall continue to see the pricing pressure. The other concern is of suicidal pricing by the aggressive banks. There is also a need for a database and management information system to identify the right type of borrowers. These require extremely skilled workforce and highly evolved credit delivery and monitoring processes. Housing prices have grown rapidly.000 crore. Though rational pricing is critical. Deflation of asset value is a possibility in certain areas. the growth had come from metros and tier I cities. Lack of consensus on definition of retail and transparency in declaration by the players as well the coverage of retail by the central banker in its reports. and frauds in home loans. and recent draft guidelines on outsourcing are the steps in the right direction. Revision of credit cards issue regulations. The risk 16 . the delinquency rates in credit cards. better penetration and faster service mechanism. all of this needs a thorough re-look. there are some areas of concern like rising NPA in consumer loans particularly. explosive growth in credit is expected to register in tier II cities. treasure profits are now loosing importance hence Retail Banking is now an alternative available for the banks for increasing their earnings. This will not limit only to increase of risk weight of consumer loan by 25 basis points which the regulator announced in mid-term policy review 2004-05. While the loan requirement from larger cities will continue to grow. This is bringing the margins under pressure. Keeping pace with explosive changes will pose challenge to regulatory authorities. semi-urban and rural areas. Customize and wide ranging products are available.

Products can be designed. India has 200 million households and 400 million middleclass population more than 90% of the savings come from the house hold sector. RESOURCE SIDE ○ Retail deposits are stable and constitute core deposits. The rural areas have the large purchasing power at their disposal and this is an opportunity to market Retail Banking. SCOPE FOR RETAIL BANKING IN INDIA • • • All round increase in economic activity Increase in the purchasing power. ○ They constitute low cost funds for the banks. ○ They are interest insensitive and less bargaining for additional interest.” • Nuclear family concept is gaining much importance which may lead to large increasing. large number of banking services to be provided are day. “Now People Want To Save Less And Spend More. • Tax benefits are available for example in case of housing loans the borrower can avail tax benefits for the loan repayment and the interest charged for the loan. 17 . ○ Retail banking increases the subsidiary business of the banks. Surplus deployable funds can be put into use by the banks. ○ Effective customer relationship management with the retail customers built a strong customer base. developed and marketed as per individual needs. Falling interest rates have resulted in a shift. Advantages are analyzed from the resource angle and asset spread and the recovery is good. ADVANTAGES AND DISADVANTAGES OF RETAIL BANKING ADVANTAGES: Retail banking has inherent advantages outweighing certain disadvantages.

○ Innovative product development credit. ○ Improves lifestyle and fulfils aspirations of the people through affordable credit. ○ Customers now-a-days prefer net banking to branch banking.ASSETS SIDE ○ Retail banking results in better yield and improved bottom line for a bank. DISADVANTAGES: ○ Designing own and new financial products is very costly and time consuming for the bank. The banks that are slow in introducing technology-based products. ○ A major disadvantage is monitoring and follow up of huge volume of loan accounts inducing banks to spend heavily in human resource department. ○ Long term loans like housing loan due to its long repayment term in the absence of 18 . ○ Consumer loans are presumed to be of lower risk and NPA perception. ○ Retail banking involves minimum marketing efforts in a demand – driven economy Diversified portfolio due to huge customer base enables bank to reduce their dependence on few or single borrower ○ Banks can earn good profits by providing non fund based or fee based services without deploying their funds. ○ Retail segment is a good avenue for funds deployment. they are not able to exploit the same to the full extent. ○ Helps economic revival of the nation through increased production activity. are finding it difficult to retain the customers who wish to opt for net banking. ○ Customers are attracted towards other financial products like mutual funds etc. ○ Though banks are investing heavily in technology.

the areas of potential conflicts of interest tend to increase in universal banks and financial conglomerates. coupled with more liberal attitudes towards personal debt. OPPORTUNITIES Retail banking has immense opportunities in a growing economy like India. financial capability.proper follow-up. The younger population not only wields increasing purchasing power. can become NPAs. but as far as acquiring personal debt is concerned. ○ The issue of outsourcing has become very important in recent past because various core activities such as hardware and software maintenance. refilling) etc. ○ Banks are expected to take utmost care to retain the ongoing trust of the public. they are perhaps more comfortable than previous generations. As the growth story gets unfolded in India. Due to bundling of services and delivery channels. This compels all the banks to consider seriously all the documents which they accept while approving the loans. 19 . are being outsourced by Indian banks. which at present is in the nascent stage. The percentage of middle to high-income Indian households is expected to continue rising. This does not allow banks to to exploit the advantage of earning huge profits from single customer as in case of wholesale banking. consumer protection. The rise of Indian middle class is an important contributory factor in this regard. and access to finance. regulation and financial crime prevention. Improving consumer purchasing power. ○ The volume of amount borrowed by a single customer is very low as compared to wholesale banking. is contributing to India’s retail banking segment. responsible lending. retail banking is going to emerge a major driver. CHALLENGES TO RETAIL BANKING IN INDIA The issue of money laundering is very important in retail banking. long-term savings.. Some of the key policy issues relevant to the retail-banking sector are: financial inclusion. The combination of above factors promises substantial growth in retail sector. entire ATM set up and operation (including cash.

If all these challenges are faced by the banks with utmost care and deliberation. the customers can easily switchover to the one. So the banks are required to adopt innovative strategies to meet customer’s needs and requirements in terms of Services/products etc. which 20 . mutual funds and insurance. ○ The dependency on technology has brought IT departments’ additional responsibilities and challenges in managing. STRATEGIES FOR INCREASING RETAIL BANKING BUSINESS ○ Constant product innovation to match the requirements of the customer Segments. “It takes months to find a good customer but only seconds to lose one. strategy Of Knowing Your Customer (KYC) is important. for a modern banking sector.○ Customer service should be at the end all in retail banking. so banks need to retain their customer in order to increase the market share. ○ One of the crucial impediments for the growth of this sector is the acute shortage of manpower talent of this specific nature.”Thus. ○ Quality service and quickness in delivery As most of the banks are offering retail products of similar nature. as in case of other nations. Someone has rightly said. The banks should come out with new products in the area of securities. It is equally important that banks should maintain security to the advance level to keep the faith of the customer. the retail banking is expected to play a very important role in coming years. The customer database available with the banks is the best source of their demographic and financial information and can be used by the banks for targeting certain customer segments for new or modified product. maintaining and optimizing the performance of retail banking networks. a modern banking professional. ○ The efficiency of operations would provide the competitive edge for the success in retail banking in coming years. ○ The customer retention is of paramount important for the profitability if retail banking business.

to retain the customers. With changing psyche of Indian consumers. ATMs. The quality of service that banks offer and the experience that clients have. This will enable them to have an edge over their competitors and increase their share in retail banking pie by offering better products and services. ○ Detail market research Banks may go for detail market research. ○ Cross-selling of products PSBs have an added advantage of having a wide network of branches. ○ Business process outsourcing Outsourcing of requirements would not only save cost and time but would help the banks in concentrating on the core business area. Therefore. Hence. which will help them in knowing what their competitors are offering to their clients. Marketing departments of the banks be geared up and special training be imparted to them so that banks are successful in grabbing more and more of retail business in the market. banks have tremendous potential lying in this segment. banks have to come out with competitive products satisfying the desires of the customers at the click of a button. banks should try to give high quality service across all service channels like branches.offers better service at comparatively lower costs. who are now comfortable with the idea of availing loans for their personal needs. which gives them an opportunity to sell third-party products through these branches. matter the most. This will compensate for the thin margins. ○ Tapping of unexploited potential and increasing the volume of business. The Indian retail banking market still remains largely untapped giving a scope for growth to the banks and financial institutions. Introduction of new delivery channels Retail customers like to interface with their bank through multiple channels. ○ Infrastructure outsourcing: This will help in lowering the cost of service channels combined with quality and quickness. Banks can devote more time for 21 . Internet. etc.

bankers have to run very fast even to stay where they are now. ○ Sound documentation A latest system for credit documentation is necessary pre-requisite for healthy growth of credit Ability of a bank to administer a large portfolio of retail credit products depends upon such factors: ○ Strong credit assessment capability Because of large volume good infrastructure is required. where the risk may be concentrated on a selected few plans. banks should make all out efforts to boost the retail banking by recognizing the needs of the customers. Retail Credit ensures that the business is widely dispersed among a large customer base unlike in the case of corporate lending. Hence. this will also minimize the need to follow up at future point of time. than the need for follow up in the future reduces considerably. ○ Strong possessing capability 22 . SPECIAL FEATURES OF RETAIL CREDIT One of the prominent features of Retail Banking products is that it is a volume driven business. Further. This will save the banks from dealing with the intricacies of technology. It is the innovative and competitive products coupled with high quality care for clients will only hold the key to success in this area. It is the survival of the fastest now and not only survival of the fittest. banks are aware that it is finally the retail banking which will enable them to hold the head above water. For example. customer service and brand building. as in the case of credit assessment. In short. ○ Tie-up arrangements PSBs with regional concentration can reap the benefit of reaching customers across the country by entering into strategic alliance with other such banks with intensive presence in other regions. If the credit assessment itself is qualitative. Management of ATMs can be outsourced. In the present regime of falling interest and stiff competition. It is essential that banks would be imaginative in predicting the customers' expectations in the ever-changing tastes and environments.

A scheme of entrusting a group of important customers to the care of each employee/officer with a be implemented all sundry advices/notices such as Dr. Focused merchandizing through effective market segmentation is the need of the hour. etc. and inviting customers to contact them for further assistance in the matter. because of large volumes of business. advices. maintenance of backups is required. ○ Skilled human resource This is one of the most important pre-requisite for the efficient management of large and diverse retail credit portfolio. whether signed by employees or officers should be identifiable by the name of those signing. whose ultimate goal is to "own" a customer. /Cr.up Ideally. A first step can be the organization of the various retail branches to enter for different market segments like 23 . TDR maturity advices. Perhaps more than the efficiency of service. maintaining database. the need to provide instantaneous service to the customer large. It should start from customer enquiry and last till the loan is repaid fully. etc. ○ Technological support This is yet another vital requirement. A customer centered organization has to be built up. Retail credit is highly technological intensive in nature. Front line staffs have to be educated in this regard. While most public sector banks offer the same range of service with similar technology/expertise. follow up for loan repayments should be an ongoing process.since large volumes of transactions are involved. faster processing. the approach and attitude towards customers will make the difference. SOME CRITICAL ISSUES ○ CUSTOMER SERVICE Customer service is perhaps the most important dimension of retail banking. ○ Regular constant follow. the level of customer service matters the most in bringing in more business. Only highly skilled and experienced man power can withstand the river of administrating a diverse and complex retail credit portfolio. today transactions.

private banking to affluent customers can be introduced. traders. the importance of technology cannot be understated for retail banks which entail large volumes. Innovative schemes like "paper-gold" schemes can be introduced. 24 . ○ TECHNOLOGY In the current scenario.. In the urban areas. banks should try to cater to the credit needs of the people involved in this profession. Nationalized banks compare very poorly with the foreign banks when it comes to the efficiency in services. Special facilities for cash tendered in bulk and immediate issue of drafts. the focus should be on identifying efficient units and allocations of loans these units. In order to improve the speed of service the bank should. large queues and paperwork. thus resulting in better productivity and ultimately in improved customer service. With the urban segment moving away because of disintermediation and competition from foreign banks. retail banks should focus en the rural/semi-urban areas that hold the maximum potential. A wide network is absolutely imperative for this sector.  Improve the rapport between the controlling offices and the branches to ensure that decisions arc communicated fast. through which advisory and execution services could be provided for a fee. The personal segment is however the most important one. Foreign currency denominated accounts can also be introduced for them. common customers. etc.up market individuals. Separate branches/division should be opened for traders and similar government businesses. by extending facilities like "guarantee bond" system. will go a long way in mitigating problems faced by traders who are the major customers for drafts issue. For the SIB (Small Industry and Business) sector banks. Provision for cash counting machines in these branches will reduce the monotony of cashiers and unnecessary delays. With agricultural output growing at a fast rate and mechanization setting in.  Make sure that the officials as well as the staff are fully aware of the rules so that processing is faster. These banks should try Merchant Banking services en a small scale. But most of the banks are burdened with a large staff strength which cannot be done away with.

Housekeeping operations can also be speeded up. It will 25 . Cross-selling opportunities and larger customer base can also be the motive for merger against usually stated advantage of cost savings. There are inordinate delays in India because of geographical and other factors. banks are acquiring enormous amount of customer information. Communication technology is especially needed for money transfer between the same city and also between cities. As banks are multi-product firms this strategy is more applicable to retail banking. Computerization will be of great help in improving back-office operations. impersonal environment. PRICE BUNDLING Price bundling is a selling arrangement where several different products are explicitly marketed together to a price that is dependent on the offer. Installation of FAX facilities at all the big branches will facilitate speedy transfer of payment advices. The objective would be to ensure faster and easier customer service and more usable information. customers will not be at home in an automated. If this in formation is systematically stored. in the rural and semi-urban areas. economically and easily to all those who need it -customers as well as employees. Price bundling offers several economic and strategic benefits to a bank. instantly. These can be used for quick retrieval and report generation.Besides. banks can efficiently utilize this information in order to explore new segments and to cross-sell new services to these segments. Price bundling can be used in order to lengthen the relationship with a customer. 60% of India's rural branches can have PCs. It offers economies of. In the process of extending variety of services. Modem technology can make it possible to clear any check anywhere in India within three days. utilization of the existing capacities and reaching wider population of customers. At present. This will also drastically reduce the time bank staffs spend in filling and filing returns. Bank can get the benefits of information and transacting. Proper management information systems can also be implemented to aid in superior decision making.

reduce the need of resources to be put on acquiring new customers and saves time of the bank. Among the strategic benefits. price bundling may cause less aggressive competition. 26 . it differentiates its products compared to rivals in the same market where the products are sold individually or in other kinds of bundles.

Your Age? TABLE Seria l No 1 2 3 4 Base 200 respondents GRAPH 80 70 60 50 40 30 20 10 0 18 . 15% respondent’s age are 35 to above years.CHAPTER -4 DATA ANALYSIS.23 YEAR 24 .29 YEAR 30 . INTERPRETATION AND PRESENTATION Q1. 35% respondent’s age are 27 to 29 years. 27 . 30% respondent’s age are 30 to 35 years.35 YEAR 35 YEAR AND ABOVE NO OF RESPONDENT Age Category 18-23Years 24-29 years 30-35 year 35 years and above Number of Respondents 40 70 60 30 Percentage 20% 35% 15% 100% AGE Interpretation: From the table and graph above it can be seen that 20% respondent’s age are 18 to 23 years.

28 . 30% respondents are unmarried.Q2. Marital Status? TABLE Seria l No 1 2 Category Number of Respondents 140 60 Percentage 70% 30% Married Unmarried 160 140 120 100 80 60 40 20 0 married unmarried Interpretation From the table and graph above it can be seen that 70% respondents are married.

10% respondents are Post graduate.Q3. Educational Qualification? TABLE Seria l No 1 2 3 4 Category Number of Respondents 70 40 20 70 Percentage 35% 20% 10% 35% Under graduate Graduate Post graduate Illiterate Base 200 respondents GRAPH 80 70 60 50 40 30 20 10 0 Graduate Post graduate Illiterate Interpretation From the table and graph above it can be seen that 35% respondents are Under graduate. 2 0% respondents are Graduate. 29 .

61% respondents are customer of HDFC for more than five years 30 .Q4. Number Of year’s Are You are a customer of HDFC TABLE Seria l No 1 2 Category Number of Respondents Percentage 70% Less than five years More than five years 78 122 61% Base 200 respondents GRAPH 140 120 100 80 60 40 20 0 less than more than 5 year 5 year Interpretation From the table and graph above it can be seen that 39% respondents are customer of HDFC for less than five years.

31 . 54% respondents Occupation is Service.Q5. 26% respondents Occupation is Profession. What type of customer you are ? TABLE Seria l No 1 2 3 Category Number of Respondents 40 108 52 Percentage 20% 54% 26% Business Profession Service Base 200 respondents GRAPH 120 100 80 60 40 20 0 Business profession service Interpretation From the table and graph above it can be seen that 20% respondents Occupation is Business.

30% is not satisfied with retail banking services provided by HDFC Bank.Q6. Are you satisfy with the retail banking services provided by the HDFC bank? TABLE Seria l No 1 2 Category Number of Respondents 140 60 Percentage 70% 30% Yes No Base 200 respondents GRAPH 160 140 120 100 80 60 40 20 0 Yes No Interpretation From the table and graph above it can be seen that 70 % is satisfy with retail banking services provided by HDFC Bank. 32 .

33 .Q7. 58% respondents use credit card. Do you use credit card in your dairly routine? TABLE Seria l No 1 2 Category Number of Respondents Percentage Yes No 84 116 42% 58% Base 200 respondents GRAPH 140 120 100 80 60 40 20 0 Yes No Interpretation From the table and graph above it can be seen that 42% respondents use credit card.

What is your perception about different products/services provided by HDFC bank? TABLE Seria l No 1 2 3 Base 200 respondents GRAPH 140 120 100 80 60 40 20 0 e e cr at iv ra tiv o id e a Category Lucrative Not lucrative No idea Number of Respondents 50 120 30 Percentage 25% 60% 15% uc Lu Interpretation From the table and graph above it can be seen that 25% respondent’s perception about different products is lucrative. N on l N 34 . 60% respondent’s perception about different products is not lucrative. 15% respondent’s have no idea.Q8.

5% respondents are interested to open an account with the bank. Are you satisfied with the online banking in HDFC bank? TABLE Seria l No 1 2 3 Category Number of Respondents Percentage 5% 80% 15% Yes No Will tell later 10 160 30 Base 200 respondents GRAPH 180 160 140 120 100 80 60 40 20 0 yes no will tell you later Interpretation From the table and graph above it can be seen that 80% respondents are not interested to open an account with the bank.Q9. 15% of the respondents say that they will tell later. 35 .

Do you want any changes in retail banking services provided by HDFC? TABLE Seria l No 1 2 Category Number of Respondents Percentage 60% 40% No yes 120 80 Base 200 respondents GRAPH 140 120 100 80 60 40 20 0 NO YES Interpretation From the table and graph above it can be seen that 60% no suggestions. 25% have suggestion. 36 .Q10.

27 public sector banks (that is with the Government of India holding a stake)after merger of New Bank of India in Punjab National Bank in 1993.  Bank lending has been a significant driver of GDP growth and employment.  India has 88 scheduled commercial banks (SCBs) . The banking index has grown at a compounded annual rate of over 51 per cent since April 2001 as compared to a 27 percent growth in the market index for the same period.000 branches and 17.CHAPTER 5 SWOT ANALYSIS STRENGTH:  Indian banks have compared favorably on growth. a rating agency.  Extensive reach: the vast networking & growing number of branches & ATMs. the public sector 37 . they may be publicly listed and traded on stock exchanges) and 31 foreign banks.  In terms of quality of assets and capital adequacy. strong and transparent balance sheets relative to other banks in comparable economies in its region. 29 private banks (these do not have government stake.000 ATMs. enhancing the payments system and integrating regulations between commercial and co-operative banks. They have a combined network of over 53. These changes include strengthening prudential norms. According to a report by ICRA Limited.  The government's regular policy for Indian bank since 1969 has paid rich dividends with the nationalisation of 14 major private banks of India. asset quality and profitability with other regional banks over the last few years. Indian banks are considered to have clean.  Policy makers have made some notable changes in policy and regulation to help strengthen the sector. Indian banking system has reached even to the remote corners of the country.

5% respectively. restrictions on capital availability and deployment.banks hold over 75 percent of total assets of the banking industry. consumer finance and wealth 38 . unless industry utilities and service bureaus. service operations. weak corporate governance and ineffective regulations beyond Scheduled Commercial Banks (SCBs). WEAKNESS:  PSBs need to fundamentally strengthen institutional skill levels especially in sales and marketing. risk management and the overall organizational performance ethic & strengthen human capital.  Foreign banks will have the opportunity to own up to 74 per cent of Indian private sector.  Structural weaknesses such as a fragmented industry structure. OPPORTUNITY:  The market is seeing discontinuous growth driven by new products and services that include opportunities in credit cards.  The cost of intermediation remains high and bank penetration is limited to only a few customer segments and geographies.  Old private sector banks also have the need to fundamentally strengthen skill levels. with the private and foreign banks holding 18.  Banks and 20 per cent of government owned banks. restrictive labour laws.  Refusal to dilute stake in PSU banks: The government has refused to dilute its stake in PSU banks below 51% thus choking the headroom available to these banks for raining equity capital. lack of institutional support infrastructure.  Impediments in sectoral reforms: Opposition from Left and resultant cautious approach from the North Block in terms of approving merger of PSU banks may hamper their growth prospects in the medium term.2% and 6.

 Reach in rural India for the private sector and foreign banks. developing and retaining more leadership capacity  Foreign banks committed to making a play in India will need to adopt alternative approaches to win the “race for the customer” and build a value-creating customer franchise in advance of regulations potentially opening up post 2009. Attracting. Maintaining a fundamentally long-term valuecreation mindset. and in fee-based income and investment banking on the wholesale banking side.  Given the demographic shifts resulting from changes in age profile and household income. credit and operations.  With the growth in the Indian economy expected to be strong for quite some time especially in its services sector-the demand for banking services. consumers will increasingly demand enhanced institutional capabilities and service levels from banks. competition from foreign banks will only intensify. mortgages and investment services are expected to be strong.  With increased interest in India.  Banks will no longer enjoy windfall treasury gains that the decade-long secular decline in interest rates provided. they should stay in the game for potential acquisition opportunities as and when they appear in the near term. This will expose the weaker banks. 39 . especially retail banking.  New private banks could reach the next level of their growth in the Indian banking sector by continuing to innovate and develop differentiated business models to profitably serve segments like the rural/low income and affluent/HNI on the retail side.  the Reserve Bank of India (RBI) has approved a proposal from the government to amend the Banking Regulation Act to permit banks to trade in commodities and commodity derivatives. These require new skills in sales & marketing. At the same time. actively adopting acquisitions as a means to grow and reaching the next level of performance in their service platforms.

Significantly.  Hybrid capital: In an attempt to relieve banks of their capital crunch. left with little headroom for raising equity. FII and NRI investment limits in these securities have been fixed at 49%. 40 . THREATS:  Threat of stability of the system: failure of some weak banks has often threatened the stability of the system. explore this route for raising cheaper funds in the overseas markets. This enabled banks and financial institutions. compared to 20% foreign equity holding allowed in PSU banks.  Increase in the number of foreign players would pose a threat to the PSB as well as the private players. If the new instruments find takers.  Rise in inflation figures which would lead to increase in interest rates. which were earlier not permitted to raise such funds.Liberalization of ECB norms: The government also liberalised the ECB norms to permit financial sector entities engaged in infrastructure funding to raise ECBs. the RBI has allowed them to raise perpetual bonds and other hybrid capital securities to shore up their capital. it would help PSU banks.

if not all. Banks face several hurdles in achieving this. The benefits flowing out of cross-selling and upselling will remain a far cry in the absence of this vital input. The Issues involved include adoption of the right technology at the right time and at the same time ensuring volumes and margins to sustain the investments. can be mined. Whether it is setting up of a Customer Relationship Management System or Establishing Loan Process Automation or providing anytime. Cleansing of existing data is the first step in this direction. anywhere convenience to the vast number of customers or establishing channel/product/customer profitability. remain far from being enviable. took nearly a decade to make profits in credit cards. technology plays a pivotal role. PSBs have a long way to go in this regard. In this regard the customer databases available with most of the public sector banks. What needs to be done is setting up of a robust data warehouse where from meaningful data on customers. there spending patterns. etc. the key to reduction in transaction costs simultaneously with increase in ability to handle huge volumes of business lies only 41 . It is pertinent to remember that Citibank. In order to that the product lines are targeted at the right customers-present and prospective-it is imperative that an integrated view of customers is available to the banks. their preferences. it would be well nigh possible toad minister the growing retail portfolio without allowing its health to deteriorate. It has also to be added in the same breath that without adequate technology support.CHAPTER 6 RECOMENDATION  KNOWING CUSTOMER ‘Know your Customer’ is a concept which is easier said than practiced. And it is a long haul. TECHNOLOGY ISSUES  Retail banking calls for huge investments in technology. Further. known for its deployment of technology.

the initiatives in this regard should include creating flexible computing architecture amenable to changes and having scalability.The need for building the organizational capacity needed to achieve the desired results cannot be overstated. a futuristic approach. absence of customer profiling. development of a strong Customer Information Systems (CIS) and adopting Customer Relationship Management (CRM) models for getting a 360 degree view of the customer. ORGANIZATIONAL ALIGNMENT  It is of utmost importance that the culture and practices of an institution support its stated goals. high net worth customer group and improve the recall value of the institution and its products by arresting the trend of getting receded from public memory. stand alone models. etc.As a part of organizational alignment. banks need to have a well defined business strategy based on the competitive of the bank and its potential.A fully fledged marketing department or division would help in evolving a brand strategy. Creation of a proper organization structure and business operating models which would facilitate easy work flow are the needs of the hour. are a few deficiencies that are being overcome in a great way. lack of convergence amongst available channels. However. address the issue of alienation from the upwardly mobile. networking across channels. Most of the public sector banks have only publicity departments and not marketing setup. This would mean a strong commitment at all technology adoption. etc..The much needed tie-ups with manufacturers/distributors/builders will also facilitated smoothly. putting in place a proper incentive scheme. Having decided to take a plunge into retail banking.It is time to break the myth PSBs are not customer friendly. intensive training of the rank and file. concept of branch customer as against bank customer.The attention is to be diverted to vast databases of customers lying with the PSBs till unexploited for marketing. PSBs are on their way to catch up with the technology much required for the success of retail banking efforts. lack of proper decision support systems. 42 . there is also the need for setting up of an effective Corporate Marketing Division. Lack of connectivity.

A realization has to drawn that automating the inefficiencies will not help anyone and 43 . Revisiting the features of the existing products to continue to keep them on demand should not also be lost sight of. Even though bank after bank is coming out with new products. with each bank wanting to have a larger slice of the cake that is the market. This will be one issue that will be gaining importance in the near future. The industry today is witnessing a price war. The strategy of each player in the market seems to be: ‘under cutting others and wooing the clients of others’ . PRODUCT INNOVATION Product innovation continues to be yet another major challenge. Simplified processes and aligning them around delivery of customer service impinging on reducing customer touch-points are of essence. at least on the part of few to camouflage the price. novelty creates only amusement”. The days of selling the products available in the shelves are gone.Banks need to innovate products suiting the needs and requirements of different types of customers. confusing novelty with innovation (should be avoided).Most of the banks that use rating models for determining the health of the retail portfolio do not use them for pricing the products. test of innovation is that it creates value. PROCESS CHANGES  Business Process Re-engineering is yet another key requirement for banks to handle the growing retail portfolio. margins. The much needed transparency in pricing is also missing. with many hidden charges. What is of crucial importance is the need to understand the difference between novelty and innovation? Peter Drucker in his path breaking book: “Management Challenges for the 21stCentury” has in fact sounded a word of caution: “innovation that is not in tune with the strategic realities will not work. There is a tendency. etc. without much of a scientific study into the cost of funds involved. PRICING OF PRODUCT  The next challenge is to have appropriate policies in place. not all are successful. The situation cannot remain his way for long.

emphasizing. good manners and best behavioral models. There is still a vast market available in rural India. the initiatives have to really come from the ‘back end’. devising appropriate tools for performance measurement bringing about a transformation – ‘can’t do ‘to’ can do’ mind-set change from restrictive practices to total flexible work place. which remains to be trapped.The corporate initiatives need to focus on bringing around a frontline revolution. coaching etiquette. The initiatives should aim at improved delivery time and methods of approach. formulating objective appraisals. bringing in managerial controlling work place. have 44 . This would mean a lot of proactive steps on the part of bank management which would include empowering staff at various levels. By having universal tellers. ○ RURAL ORIENTATION As of now. Though the changes envisaged are seen at the frontline. Work flow and document management will be integral part of process changes. Multinational Corporations. ISSUE CONCERNING HUMAN RESOURCES  While technology and product innovation are vital. The documentation issues have to remain simple both in terms of documents to be submitted by the customer at the time of loan application and those to be executed upon sanction. provision of intensive training on products and processes. bringing in transparency.continuing the old processes with new technology would only make the organization an old expensive one. The top management of banks must be seen as practicing what preaches. There is an imperative need to create a perception that the banks are market-oriented. say. facilitating the placement of young /youthful staff in front-line defining a new role for front-line staffby projecting them as sellers of products rather than clerks at work and changing the image of the banks from a transaction provider to a solution provider. putting in place good and acceptable reward and punishment system. action that is taking place on the retail front is by and large confined two metros and cities. as manufacturers and distributors. the soft issues concerning the human capital of the banks are more vital.

1 sachet made available through an efficient network and testimony to the determination of the MNCs to penetrate the rural market.already taken the lead in showing the way by coming out with exquisite products. keeping the rural customer in mind. Washing powders and shampoos in Re. In this scenario. These and only these will propel retail growth that is envisaged as a key strategy for portfolio expansion by most of the banks. 45 . banks cannot lack behind. which have a strong rural presence. In particular PSBs. need to address the needs of rural customers in a big way. packaging and promotions.

000 Point-of-sale (POS) terminals for debit / credit cards acceptance at merchant establishments. The changing customer demographics compel to create a differentiated platform based on latest technology. the retail banking environment today is changing fast. By March 2009. improved service and banking convenience. Bill Payments. The Bank launched its credit card business in late 2001. To keep in pace. 46 . It has evolved from a time when the mindset of a traditional middle class Indians used to be debt averse. the bank had a total card base (debit and credit cards) of over 13 million.Chapter 7 Conclusion Retail banking in India has seen a dramatic change over the years. HDFC Bank was the first bank in India to launch an International Debit Card in association with VISA (VISA Electron) and issues the Mastercard Maestro debit card as well. The Bank is also one of the leading players in the “merchant acquiring” business with over 70. etc. The Bank is positioned in various net based B2C opportunities including a wide range of internet banking services for Fixed Deposits. Loans. which preferred managing under their thrifty means to the current mindset which doesn’t hesitate in taking loans for spending.

Number of year’s Are You are a customer of HDFC Q5.QUESTIONNAIR Q1. Your Age? Q2. Are you satisfied with the online banking in HDFC bank? 47 . Are you satisfied with the retail banking services provided by the HDFC bank? Q7. What type of customer you are? Q6. Do you use credit card in your dairly routine? Q8. Marital Status? Q3. Educational Qualification? Q4. What is your perception about different products/services provided by HDFC bank? Q9.