35847069 Comparative Study of the Public Sector Amp Private Sector Bank

8/2/2019 35847069 Comparative Study of the Public Sector Amp Private Sector Bank

1/61

ASUMMER TRAININGPROJECT REPORTON

COMPARATIVE STUDY BETWEEN PRIVATE

SECTOR BANKS ANP PUBLIC SECTOR BANKS

Submitted To:

PUNJAB TECHNICAL UNIVERSITY,JALANDHAR

MASTER OF BUSINESS ADMINISTRATION(MBA)

SESSION(2007-09)

CT INSTITUTE OF ENGINEERING,MANAGEMENT &TECHNOLOGY,JALANDHAR (SHAHPUR CHAMPUS)

PREFACE

Someone has rightly said that practical experience is forbetter and closer to the real world then mere theoretical


2/61

exposure. The practical experience helps the students viewthe real world closely, which in turn widely influences theirperceptions and argument their understanding of the realsituation.

Research work constitutes the backbone of any

management education programme. A management studenthas to do research work quite frequently during his entirespan.

The research work entitle COMPARATIVE STUDYBETWEEN PRIVATE SECTOR BANKS ANDPUBLIC SECTOR BANKS aims to analyze variousservices provided by private sector banks and public sectorbanks for this purpose Pathankot city have been chosen.

ACKNOWLEDGEMENT


3/61

I feel immense pleasure to give the credit of my summertraining project work not only to one individual effort of allthose who concern with it. I want to thanks to all thoseindividual who guided me to move on the track.

The summer training project entitled

COMPARATIVE STUDY BETWEEN PRIVATESECTOR AND PUBLIC SECTOR BANKS

I am gratefully indebted to Mr. Davinder Singh forproviding me all the necessary help and required guidelinefor the completion of my project and also for the valuabletime that he gave me from his scdedule.

Neha Kapoor

TABLE OF CONTENTS

CHAPTER PARTICULARS PAGE NO.


4/61

NO.1 INTRODUCTION OFTHE STUDY1-232 OBJECTIVES OF THESTUDY

24-253 3.1 RESEARCHMETHODOLOGY3.2 LIMITATIONS OFTHE STUDY26-36374 DATA ANALYSIS ANDITS INTERPRETATION38-465 FINDING OF THESTUDY

47-506 SUGGESTIONS 51-547 CONCLUSION 55-568 BIBLIOGRAPHY 57-589 ANNEXURE 59-62


5/61

Introduction

The world of banking has assumed a new dimension at dawn ofthe 21st century with the advent of tech banking, thereby lendingthe industry a stamp of universality. In general, banking may beclassified as retail and corporate banking. Retail banking, which is

designed to meet the requirement of individual customers andencourage their savings, includes payment of utility bills,consumer loans, credit cards, checking account and the like.Corporate banking, on the other hand, caters to the need ofcorporate customers like bills discounting, opening letters of credit,managing cash, etc.Metamorphic changes took place in the Indian financial systemduring the eighties and nineties consequent upon deregulation andliberalization of economic policies of the government. India beganshaping up its economy and earmarked ambitious plan foreconomic growth. Consequently, a sea change in money andcapital markets took place. Application of marketing concept in the

banking sector was introduced to enhance the customer satisfactionthe policy of privatization of banking services aims at encouragingthe competition in banking sector and introduction of financialservices. Consequently, services such as Demat, Internet banking,Portfolio Management, Venture capital, etc, came into existence tocater to the needs of public. An important agenda for every bankertoday is greater operational efficiency and customer satisfaction.The mew watchword for the bank is pretty ambitious: customerdelight.The introduction to the marketing concept to banking sectors canbe traced back to American Banking Association Conference of1958. Banks marketing can be defined as the part of managementactivity, which seems to direct the flow of banking services

profitability to the customers. The marketing concept basicallyrequires that there should be thorough understanding of customerneed and to learn about market it operates in. Further the market issegmented so as to understand the requirement of the customer at aprofit to the banks.


6/61

DEFINITION OF BANK

The Oxford dictionary defines the Bank as,

An establishment for the custody of money, which it pays out, on acustomers order.According to Whitehead,

A Bank is defined as an institution which collects surplus fundsfrom the public, safeguards them, and makes them available to the trueowner when required and also lends sums be their true owners to those whoare in need of funds and can provide security.

Banking Company in India has been defined in the Banking Companies act1949,

One which transacts the business of banking which means theaccepting, for the purpose of lending or investment of the deposits of moneyfrom the public, repayable on demand, or otherwise and withdraw able becheque, draft, order or otherwise.

The banking system is an integral subsystem of the financial system. Itrepresents an important channel of collecting small savings form thehouseholds and lending it to the corporate sector.

The Indian banking system has Reserve Bank of India (RBI) as the apexbody for all matters relating to the banking system. It is the central Bank ofIndia. It is also known as the Banker To All Other Banks.


7/61

EVOLUTION OF INDIAN BANKING

Ancient banking system of India constituted of indigenous bankers. Theyhave been carrying on their age-old banking operations in different parts ofthe country under different names. The modern age of banking constitutes

the fundamental basis of economic growth. The term Bank is being usedsince long time but there is no clear conception regarding its beginning.According to the viewpoint, in good old days. Italian money leaders wereknown as Banchi because they kept a special type of table to transact theirbusiness.

IMPORTANCE OF BANKS

Today banks have become a part and parcel of Kotak Bank's life. There wasa time when dwellers of the city alone could enjoy their services. Now banksoffer access to even a common man and their activities extend to areas

hitherto untouched. Banks cater to the needs of agriculturalists,industrialists, traders and to all the other sections of the society. In modernage, the banking constitutes the fundamental basis of economic growth.Thus, they accelerate the economic growth of a country and steer the wheelsof the economy towards its goals of self reliance in all fields. It naturallyarouses Kotak Bank's interest in knowing more about the Bank and thevarious men and the activities connected with it.


8/61

Indian Banking System

Banking in India has its origin as early as the Vedic period. It wasbelieved that transition from money lending to banking must haveoccurred even before Manu, The great Hindu Jurist, who has

devoted a section of his work to deposit advance and laid downrules relating to rates of interest. During the Mogul period, theindigeneousBankers played a very important role in lending moneyfinancing foreign trade and commerce. During the days of EastIndia Company, it was turn over the agency houses to carry on thebusiness. The General Bank of India was the first to join sectorin the year 1786.The others that followed were the Bank ofHindustan and the Bengal bank. The bank of Hindustan is reportedto have continued till 1906 while the other two failed in themeantime.

In the first half of the 19th century the East India Company

established three banks:

1. Bank of Bengal (1809).2. Bank of Bombay (1840).3. Bank of Madras (1843.These three banks are also known as Presidency Banks wereindependent units and functioned well. These three banks wereamalgamated in 1920 and Imperial Bank of India was establishedon 27th january1921, which started as private shareholders banks,mostly Europeans shareholders, with the passing of time Imperialbank was taken over by the newly constituted State bank of Indiaact in1955.In 1865 Allahabad Bank was established and first timeexclusively by Indians, Punjab National Bank Ltd. was set up in

1894 with headquarters at Lahore. Between 1906 and 1913, Bankof India, Central Bank of India, Bank of Baroda, Canara Bank,Indian Bank, and Bank of Mysore were set up. Reserve Bank ofIndia came in 1935. On July, 1969, 14 major banks of India were


9/61

nationalized and on 15th April, 1980 six more commercial privatebanks were also taken over by the government.

Reserve Bank of India

The Banking system is an integral sub-system of the financial

system. It represents an important channel of collecting smallsavings from the households and lending it to the corporate sector.The Indian banking system has The Reserve Bank of India (RBI)as the apex body from all matters relating to the banking system. Itis the Central Bank of India and act as the banker to all otherbanks.

Functions of RBI:

Currency issuing authority Banker to the government. Banker to other Bank.

Framing of monetary policy. Exchange control. Custodian to foreign exchange and gold reserves. Development activities. Research and development in the banking sector.


10/61

CLASSIFICATION OF BANKS

On the basis of Ownership

PUBLIC SECTOR BANKS

Public sector banks are those banks that are owned by the government. Thegovernment owns these banks. In India 20 banks were nationalized in 1969and 1980 respectively. Social welfare is there main objective.

PRIVATE SECTOR BANKS

These banks are those banks that are owned and run by private sector. Anindividual has control over these banks in proportion to the shares of thebanks held by him.

CO-OPERATIVE BANKS

These are those banks that are jointly run by a group of individuals. Eachindividual has an equal share in these banks. Its shareholders manage theaffairs of the bank.

According to the Law

SCHEDULED BANK

Schedule banks are the banks, which are included in the second schedule ofthe banking regulation act 1965. According to this schedule bank:

1. Must have paid-up capital and reserve of not less than Rs500, 000.


11/61

2. Must also satisfy the RBI that its affairs are not conducted in amannerDeterminate to the interest of its depositors.

Schedule banks are sub-divided as:

a) State co-operative banks

b) Commercial banks

NON-SCHEDULED BANKS

Non -schedule banks are the banks, which are not included in the secondschedule of the banking regulation act 1965. It means they do not satisfy theconditions lay down by that schedule. These are the banks having paid upcapital, less than Rs.5Lakhs. They are further classified as follows:

A. Central Co-operative banks and Primary Credit Societies.B. Commercial banksAccording to Function

COMMERCIAL BANKS

These are the banks that do banking business to earn profit. These banksmake loans for short to business and in the process create money. Creditcreation is the main function of these banks.

FOREIGN BANKS

These are those banks that are incorporated by foreign company. They haveset up their branches in India. These banks have their head offices in foreign


12/61

countries. Their principle function is to make credit arrangement or theexport and the import of the country and these banks deals in foreignexchange.

INDUSTRIAL BANKS

Industrial banks are those banks that offer long term and medium term loanto the industries and also work for their development. These banks helpindustries in sale of their shares, debentures and bonds. They give loan to theindustries for the purchase of land and machinery.

AGRICULTURAL BANKS

Agricultural banks are those banks that give credit to agricultural sector ofthe economy.

SAVING BANKS

The principle function of these banks is to collect small savings across thecountry and put them to the productive use. In India department of postoffice functions a savings banks.

CENTRAL BANK

Central Bank is the apex bank of the banking system of the country. It issuescurrency notes and acts a banker's bank. Economic stability is the principlefunction of this bank. In short, it regulates and controls the banking systemof the country. RBI is the Central Bank of India.


13/61

PRIVATIZATION OF INDIAN BANKING

For the public sector banks, the era of bumper profit is over. For much of thelast decade the process of collaborated financial liberalization had cleared upthe Banks balance sheet enabling them to with stand increased competition,

global financing, turmoil and even unprotected industrial slow down. But thecycle of liberalization has run its full course. Now it is the time for the bigstructural leap, rationalization, mergers, and privatization. Unless the banksundertake these fundamental changes, their profit will stay under pressure.

There are twp areas of competitions which banking industry is facinginternationally and nationally. In the pre-liberalization era, Indian bankscould grow in a closed economy but the banking sector opened up forprivate competition. It is possible that private banks could become dominantplayers even within India. It has been recorded a rapid rise of the newprivate sector banks and it has tracked the transformation of the public sectorbanks as they grapple with the changes of financial deregulation.

Use of ATM cards, Internet Banking, Phone Banking, Mobile Banking arethe new innovative channels of banking which are being widely used as theyresult in saving both time and money which are two essential things thatevery one is short of and is running to catch hold of them. Moreover privatesector banks are aligning its infrastructures, marketing quality andtechnology to build deep commitment in building consumer and retailbanking. The main focus of these banks is on innovative range of services orproducts.


14/61

STRUCTURE OF BANKING SYSTEM

Different countries of the world have different types of banking systems.However, commercial banking had grown under all these banking systems.To understand the structure of banking system, let us take up various types

of banking systems one by one. These types are:

(1) UNIT BANKINGUnit Banking originated in the United State of America. It grew in theUnited States of America. As a counter part of independent or industrialunits.An independent unit bank is a corporation that operates one office and thatis not related to other banks through either ownership or control.

Shaper, Solomon and White.Thus under unit banking, a single bank is a complete organization in itselfhaving its own management. The scale of operation is small and the area is

restricted to a locality only. Unit banking is localized banking and is muchmore responsive to the needs of the locality. It has better understanding ofthe local problems and conditions, which helps it to cater to the needs of thearea in a better way. The staff of the unit bank is generally local and is in abetter position to determine the standing or desirability of the customers.The failure of the unit bank will not endanger the banking system andeconomy. It is free from the difficulties and diseconomies of large scaleoperations. It will not drain out the financial resources of villages and smalltowns to big industrial centers and will ensure a balanced growth.


15/61

(2) BRANCH BANKING:Economic and Managerial problems faced by the unit banks let to theemergence of banking system. Now, This the most popular and importantbanking system. In branch banking, a bank has a large network of branchesscattered all over the country. Branch banking developed in England.Subsequently most of the countries of the world adopted the system. In

terms of branches, the State Bank of India has emerged as one of the largestbanks in the world.As under the system the resources of a number of branches get pooled underthe same management, any individual branch is in a better position to faceexcessive withdrawals by the customers. It facilitates diversification ofactivities because the area covered by the branches is generally widespread.Under the system branches can operate without keeping large idle cashreserves. It becomes possible for the bank to hire the services of competentand professionally qualified managers, capable of understanding thehandling technical problems and complex situations. The cost of remitting ortransferring funds from one place to another works out to be less. The staffstays at a branch only for a limited period, so the chances of objective

decision making in the branch banking are high.Branch Banking tends to bring homogeneity in the prevailing Interest Ratesas it increases the mobility of resources from one place to another. It iseasier for the Central Bank to exercise Control. It will communicate onlywith a few Registered /Head Offices of the Banks and not with eachindividual branch. In this system there more safety and liquidity of funds.The choice of securities and investments is larger. Branch banking makescomplete banking services available to the smallest communities. The


16/61

branches in small localities can be initially operated at loss in expectation offuture gains.The comparative study of unit banking and branch banking is a case of smallscale banking versus large scale banking. It is evident that the scale is clearly

titled towards branch banking. With the growth of large scale business it isno wonder that the trend is almost every country towards the branch banking

i.e. big banks with a network of branches all over the country. Even in theU.S.A. The birthplace of unit banking. The Bank of America has now morethan 500 branches in the state of California itself.(3) CHAIN BANKING :Shaper, Solomon and White have defined Chain Banking as

An arrangements by which two or more banks each of which retains itsidentity, capital and personnel are brought under common control by anydevice other than a Holding Company.

Under the system there is pooling of resources. Chain banking overcomescertain limitations of unit banking. But the system suffers from certainlimitations of its own. There may be a lack of co-ordination, proper controletc. The system is inflexible.

(4) GROUP BANKING :It is similar to Chain Banking, the difference being that under GroupBanking two or more banks are brought under the control of the samemanagement through a Holding Company. Both the systems aim at gainingthe advantages of large scale operations. The banks are able to pool theirresources in case of emergency or when large amount of cash is required tomeet the loan requirements of the customer. The advantages and


17/61

disadvantages of both the systems are similar. Both the systems developed inthe United State of America as a result of attempts to overcome thedifficulties or limitations of unit banking.

(5) CORRESPONDENT BANKING:Under Correspondent banking, small banks serving local communities hold

deposits with joint banks serving in big cities. This kind of banking isprevalent in U.S.A. The correspondent banks perform two importantservices of outstation cheque clearing and loan participation for therespondent banks while they benefit for the deposit funds of respondentbanks.


18/61

A) COMMERCIAL BANKS


19/61

PRIMARY FUNCTIONS :

1) Accepting of Deposits : A bank accepts deposits from the public.People can deposit their cash balances in either of the following accounts totheir convenience:

a. Fixed or Time Deposit Account : Cash is deposited in thisaccount for a fixed period. The depositor gets receipts for the amountdeposited. It is called Fixed Deposit Receipt. The receipt indicates the nameof the depositor, amount of deposit, rate of interest and the period of deposit.This receipt is not transferable. If the depositor stands in need of the amountbefore the expiry of fixed period, he can withdraw the same after paying thediscount to the bank.b. Savings Account : This type of deposit suits to those who justwant to keep their small savings in a bank and might need to withdraw themoccasionally. Banks provide a certain rate of interest on the minimum balance

kept by the depositor during the month.c. Current Account : This type of account is kept by thebusinessman who are required to withdraw money every new and then.Banks do not pay any interest on this account. Any sum or any number ofwithdrawals can be presented by such an account holder.2) Advancing of Loans : The bank advances money in any one of thefollowing ways.

a. Overdraft Facilities : Customers of good trading are allowed tooverdraw from their current account. But they have to pay intereston extra amount they have withdrawn. Overdrafts are allowed to


20/61

provide temporary accommodation since the extra amountwithdrawn is payable within a short period.

b. Money at Call : It is the money lent for a very short period varyingfrom 1 to 14 days. Such advances are usually made to other banksand financial institutions only. Money at call ensures liquidity. In

the Interbank market it enables bank to make adjustment accordingto their liquidity requirements.c. Loans : Loans are granted by the banks on securities which can beeasily disposed off in the market. When the bank has satisfied itselfregarding the soundness of the party, a loan is advanced.d. Cash Credit : The Debtor is allowed to withdraw a certain amounton a given security. The debtor withdraws the amount within thislimit, interest is charged by the bank on the amount actuallywithdrawn.e. Discounting Bill of Exchange : It is another method of makingadvances by the banks. Under this method, bank give advance totheir clients on the basis of their bills of exchange before the

maturity of such bills.f.Investment in Government Securities : Purchasing of governmentsecurities by the banks tantamount to advancing loans by them tothe Government. Banks prefer to buy government securities asthese are considered to be the safest investment. For example :Indira Vikas Patra : It enables the banks to meet requirement ofstatutory liquidity ratio (SLR)3) Credit Creation :One of the main functions of banks these days is tocreate credit. Banks create credit by giving more loans than their cash


21/61

reserves. Banks are able to create credit because the demand deposits i.e. aclaim against the bank is accepted by the public in settlement of their debts.In this process the bank creates money. For this reason Prof. Sayers hascalled bank the manufactures of money.

4) Cheque system of Payment of Funds

A cheque, a negotiable instrument, which in fact is a bill of exchange, drawnupon a banker, is the most popular credit instrument used by the client tomake payments. Cheque system is the main credit instrument in the bankingworld.Although a cheque is not a legal tender money, the serves as a medium ofexchange in a limited way as it is a negotiable instrument.Because of clearing houses and clearing operations of the banks, chequescan be and are used for transferring funds from one centre to another. In themodern days they can also be used for transferring funds from one country toanother.

SECONDARY FUNCTIONS

Besides the above primary functions, banks also perform may secondaryfunctions such as agency functions, general utility and social functions.A) Agency FunctionsBanks act as agents to their customers in different ways :i)Collection and Payment of Credit and Other Instruments: The Commercialbanks collect and pay cheques, bills of exchange, promissory notes, hundies,rent, interest etc. On behalf of their customers and also make payments ofincome tax, fees, insurance premium etc. on behalf of the customers.


22/61

Customers can leave standing instructions with the banker for variousperiodic payments ensuring the regular payments and avoiding the trouble ofperforming it themselves.ii) Purchase and Sale of Securities : The modern commercial banks alsoundertake the purchase and sale of various securities like shares, stocks,bonds units and debentures etc. On behalf of the customers, banks do not

give any advice regarding the suitability or otherwise of a security but simplyperform the functions of a broker.iii) Trustee and Executor : Banks also acts as trustees and executors of theproperty of their customers on their advice. Sometimes banks also undertakeincome tax services on behalf of the customers.iv) Remittance of Funds : The Commercial banks remit funds on behalf ofclients from one place to another through cheques, drafts, mail transfers etc.v) Representation and Correspondence : Sometimes commercial banks actsas representatives or correspondents of the clients especially in handlingvarious applications. For instance, passports and travel tickets, booking ofvehicles, plots etc.vi) Billion Trading : In many countries, the commercial banks trade is

billions like gold and silver. In Oct 1997, 8 banks including SBI, IOB,Canara Bank and Allahabad Bank have been allowed import of gold whichhas been put under open general licensed category.vii) Purchase and Sale of Foreign Exchange : Banks buy and sell foreignexchange, promoting international trade. This function is mainly dischargedby foreign Exchange Banks.viii) Letter of References : Banks also give information about economicposition of their customers to domestic and foreign traders and vice versa.


23/61

B) GENERAL UTILITY SERVICESIn addition to agency services, banks render many more utility services to thepublic. These services are :i)Locker Facilities : Banks provide locker facilities to theircustomers. People can keep their valuables or important documents in theselockers. Their annual rent is very nominal.

ii) Acting as a referee : It desired by the customers, the bank can be areferee i.e. who could be referred by the third parties for seeking informationregarding the financial position of the customers. The bank will acts asreferee only and only if it is desired by the customer, otherwise the secrecy ofa customers is account is maintained very carefully.iii) Issuing letters of credit : Bankers in a way by issuing letters ofcredit certify the credit worthiness of the customers. Letters of credit are verypopular in foreign trade.iv) Acting as Underwriters : Banks also underwrite the securities issuedby the Government and Corporate bodies for a commission. The name of

bank as an underwriter encouraged investors to have faith in the security.v) Acting as information banks : Commercial banks also acts asinformation bureau as they collect the financial, economic and statisticaldata relating to industry, trade and commerce. HDFC Bank is providinginformation relating to NRI Schemes and commentaries of experts ondevelopment in the areas of finance through Internet.vi) Issuing Travelers cheques and credit cards : Banks have beenrendering great service by issuing travelers cheques, which enable a personto travel without fear of theft or loss of money. Now, some banks havestarted credit card system under which a credit card holder is allowed to availcredit from the listed outlets without any additional cost or effort. Thus,


24/61

credit card holder need not carry or handle cash all the time. Now,international credit cards are joining hands with Indian Banks.vii) Issuing of gift cheques: Certain banks issue gift cheques of variousdenominations, e.g. Some Indian banks issue gift cheques f thedenominations of Rs. 21, 31, 51 and 101 etc. They are generally issued freeof charge.

viii) Dealing in Foreign Exchange: Major branches of commercial banksalso transact business of foreign exchange. Commercial banks are the mainauthorized dealers of foreign exchange in India.ix) Merchant banking Services: Commercial banks also rendermerchant banking services to the customers. They help in availing loans fromnon-banking financial institutions.x) Help in Transportation of Goods: Big businessmen or industrialistsafter consigning goods to their retailers send the Railway Receipt(Consignment Note) to the bank.

List of Public Sector Banks

oState Bank of Bikaner & JaipuroState Bank of HyderabadoState Bank of IndoreoState Bank of MysoreoState Bank of SaurastraoState Bank of TravancoreOther Nationalised banks are:

Allahabad Bank Andhra Bank


25/61

Bank of Baroda Bank of India Bank of Maharastra Canara Bank Central Bank of India Corporation Bank

Dena Bank Indian Bank Indian Overseas Bank Oriental Bank of Commerce Punjab & Sind Bank Punjab National Bank Syndicate Bank UCO Bank Union Bank of India United Bank of India Vijaya BankList of Private Sector Bank

Bank of Punjab Bank of Rajasthan Catholic Syrian Bank Centurion Bank City Union Bank Dhanalakshmi Bank Development Credit Bank Federal Bank HDFC Bank ICICI Bank IDBI Bank

IndusInd Bank ING Vysya Bank Jammu & Kashmir Bank


26/61

Karnataka Bank Karur Vysya Bank Laxmi Vilas Bank South Indian Bank United Western Bank UTI Bank

List of Foreign Banks in India

ABN-AMRO Bank Abu Dhabi Commercial Bank Bank of Ceylon BNP Paribas Bank Citi Bank China Trust Commercial Bank Deutsche Bank HSBC JPMorgan Chase Bank Standard Chartered Bank

Scotia Bank Taib BankUpcoming Foreign Banks In India

By 2009 few more names is going to be added in the list of foreignbanks in India. This is as an aftermath of the sudden interest shownby Reserve Bank of India paving roadmap for foreign banks in Indiagreater freedom in India. Among them is theworld's best private bank by Euro Moneymagazine, Switzerland's UBS.

The following are the list of foreign banks going to set upbusiness in India

Royal Bank of Scotland Switzerland's UBS US-based GE Capital


27/61

Credit Suisse Group Industrial and Commercial Bank of ChinaMerrill Lynch is having a joint venture in Indian investment bankingspace -- DSP Merrill Lynch. Goldman Sachs holds stakes in KotakMahindra arms.GE Capital is also having a wide presence in consumer finance

through GE Capital India.India's GDP is seen growing at a robust pace of around 7% over thenext few years, throwing up opportunities for the banking sector toprofit from.The credit of banks has risen by over 25% in 2004-05 and the growthmomentum is expected to continue over the next four to five years.Participation in the growth curve of the Indian economy in the nextfour years will provide foreign banks a launch pad for greaterbusiness expansion when they get more freedom after April 2009.


28/61

Objectives of the Study

This study has been conducted with a variety of importantobjectives in mind. The following provides us with the chiefobjectives that have tried to achieve through the study. The extent

to which these objectives have been met could judged from theconclusions and suggestions, which appear in the later of thisstudy.

The Chief Objectives of this study are:

1.To find the bank sector that is largely availed by the customer.2.To study the factors the factors influencing the choice of a bank for3.availing services.4.To find and compare the satisfaction level of customers in public sector5.as well as in private sectors bank.

6.To study the problem faced by customer.7.To get suggestions for improvement or change in the services of publicand private sector banks.8.To study what do people expect in the new era of banking.


29/61

RESEARCH METHODOLOGY

Research is an art of scientific investigation. In other word research is ascientific and systematic search for pertinent information on a specific topic.The logic behind taking research methodology into consideration is that one

can have knowledge about the method and procedure adopted forachievement of objectives of the project. With the adoption of this others canevaluate the results also. Its main aim is to keep the researchers on the righttrack.

The methodology adopted for studying the objectives was surveying thesaving account holders of District Jalandhar. So keeping in view the natureof requirements of the study to collect all the relevant information regardingthe comparison of saving account of Centurion Bank of Punjab with otherbanks, direct personal interview method with structured questionnaire wasadopted for the collection of primary data.

Secondary data has been collected through the various magazines andnewspapers and by surfing on Internet. And the guide in the organizationwas consulted at many times.

SAMPLE DESIGN:-A sample design is a definite plan for obtaining asample from a given population. It refers to the techniques or the procedurethe researcher would adopt in selecting items for the sample. Sample designmay as well lay down the number of items to be included in the sample i.e.,


30/61

the size of the sample. Sample design is determined before data arecollected. Here we select the population as sample in our sample design. Theselected respondents should be as representatives of the total population.

POPULATION:-The persons holding saving account related to businessclass of District Jalandhar were taken into consideration.

DATA COLLECTION

Data was collected by using main two methods i.e primary data andsecondary data.

PRIMARY DATA

Primary data is the data which is used or collected for first time and it is notused by anyone in the past. There are number of sources of primary datafrom which the information can be collected. We choose the following

resources for our research.

QUESTIONNAIRE:-This method of data collection is quite popular,particular in case of big enquiries. Here in our research we set 15 simplequestions and request the respondents to answer these questions with correctinformation.

RESPONDENTS:-Respondents helps in creation of more accurate ideaabout our research. We personally meet the respondents inside and outsidethe banks.


31/61

SECONDARY DATA

Secondary data is the data which is available in readymade form and whichis already used by people for some purposes. There may be various sourcesof secondary data such as-newspapers, magazines, journals, books, reports,documents and other published information.

BANKS ANNUAL REPORTS:-Banks issues there annual reports to getthe people informed with the profitability and growth of the bank. Theseannual reports helps us a lot to get the latest data and other relatedinformation for our research. It tells us about the increase or decrease inprofits and other facilities.

JOURNALS AND PUBLICATIONS OF DIFFERENT BANKS :-Wealso take into consideration the journals and publications issued by the bankat different times. we comes to know about the Branches, ATM, locationsand other useful information.

MANUALS AND BROACHERS OF DIFFERENT BANKS:-We takethe help of bank staff and other people who gives us deep information anddata which may not be available at anywhere. They gives us there full cooperation.

INTERNET:-We also take into consideration the internet facility withwhich we collect lot of latest information.


32/61

SAMPLE PLAN :

.SAMPLE SIZE: Keeping in mind all the constraints the size of the

sample of the study was selected as 80.

.SAMPLING UNIT:

Centurion Bank of Punjab Branch in Jalandhar city. Due to nature ofstudy, we also visited various different banks ICICI, HDFC, SBI,PUNJAB NATIONAL BANK etc. of Jalandhar District.

.SAMPLING TECHNIQUE:-Stratified convenient sampling.

All the saving account holders were taken into consideration.Research was conducted on clear assumptions that the respondentswould give frank and fair answers in a pragmatic way and without anybias.

.SAMPLING DESCRIPTION:-In order to understand the natureand characteristics of various respondents in this study, theinformation was collected and analyzed according to their socioeconomic background which included the characteristic of theirrespondents like education, age marital status and monthly income.This description shows that respondents included in this surveybelong to different backgrounds and this turn increase the scope of the

study.


33/61

PERSONAL DETAILAGE

Particulars %age of Respondent20-30 years 20%30-40 years 50%

40-50 years 20%50-60 years 10%

Analysis & Interpretation: From the above study we find that nobody is below20 age and 20% respondents are between 20-30 age group, 50% respondents are between30-40 age group, 20% respondents is between 40-50 age group and 10% respondentsarebetween 50-60 age group.


34/61

SEX

Particulars No of Respondent %ageMale 70 70%Female 30 30%

Total 100 100%

Analysis:

From the above result we come to know that out of 100, 62 respondents aremale and 38 are female which is 62% and 38% are respectively.Interpretation: From the above data we conclude that most of ourrespondents are male.


35/61

MARITAL STATUS

Particulars No ofRespondent%age

Married 33 33%Unmarried 67 67%Total 100 100%

Analysis:

From the above study we find that out of 100%, 33% respondents aremarried and 67% respondents are unmarried.

Interpretation: Most of the respondents of our survey are Unmarried.

Q4: HIGHEST EDUCATIONAL QUALIFICATION:


36/61

Particulars No of Respondent % ageMatric 4 4%Senior Secondary 14 14%Graduate&professional46 46%

Post graduate 36 36%Total 100 100%

Analysis: This analysis shows that out of 100 respondent, 46% respondents are graduate& professional, 36% respondents are post graduate, 14% respondents are seniorsecondary and 2% respondents are of Matric category. All the respondents of oursurveyare qualified.Interpretation: From the above data we conclude that most of our respondents are

Graduates & professional degree holders.

OCCUPATION

Particulars No ofRespondent%age ofrespondentsBusinessman 32 32%Government 28 28%


37/61

EmployeeStudent 24 24%Others 16 16%

32%28%24%

16%OccupationBusinessmen Government Employee Students OthersAnalysis: From the above analysis it is clear that 32% respondents are doingtheir own business, 28% are employees and 16% respondents belong toother category And 24% of our respondents are students. Most of therespondents of our survey are Businessmen.Interpretation: From the Above data we conclude that most of our surveyrespondents are businessmen.


38/61

DATA COLLECTION: Data was collected using two main methods:

COLLECTION OF DATA

Secondary DataBanks Annual Reports

Primary DataQuestionnaireJournals and Publications of

Respondents

Different banks

Manuals/Broachers ofDifferent Bank

Economics timesand financial world


39/61

LIMITATIONS OF THE STUDY

Due to constraints of time and resources, the study is likely to suffer fromcertain limitations. Some of these are mentioned here under so that thefindings of the study may be understood in a proper perspective.

The limitations of the study are:.Some of the respondents of the survey were unwilling to shareinformation.

.The research was carried out in a short period of 6 weeks . Thereforethe sample size and other parameters were selected accordinglyso as to finish the work within the given time frame.

.

The information given by the respondents might be biased becausesome of them might not be interested to give correct information..The officials of the bank supported me a lot, but did not have

sufficient time to make the points more clear.


40/61

Analysis of Data collected

1. The respondents were asked aboutwhich banking sectors services do their avail.Table1: banking sectors services which therespondents avail.

Banking sector Number ofrespondentsPublic 32Private 38Both 30

Graph 1: Banking Sectors services which the respondents avails


41/61

INTERTRETATION:-It was found that most of the respondents were availingservices of private sectors banks while those of the public sector bankswere less as compare to public sector

2. The respondents were Asked about thetype of account they have in the public sector as well as

Private sector banksTable 2.1 Number of type of account held in Public sectors banksType of Accounts

Name ofAccountSavings Current Demat FixeddepositsSalaryTotal no ofrespondents

50 15 6 15 14

0102030405060Saving Current Demat FixeddepositsSalaryTotalnoofrespondents

Total no of respondentsGraph 2.1 :-Number of type of accounts held in Public sector banksAnalysis: 50% people own Saving Account, 15% own Current account,6% demat,15% fixed deposits account and 14% salary Account


42/61

Interpretation: It was found that in case of public sector banks,maximum number of account holders owns Saving Account. AfterSaving account most prefer account is salary account prefer by peopleand the next priority goes to fixed deposits Accounts.

3. The basic purpose of this question was to know the most preferred

bank.Table 3. Number of respondents preferring different banks

Names of Banks Number of respondentsICICI Bank 24HDFC Bank 22State Bank Group 20Punjab National Bank 28Punjab And Sind Bank 6

05

1015202530Number of respondentsICICI bankHDFCBankState Bank GroupP.N.BPunjaband sindBankAnalysis: From above graph, it is seen that 28% stake of the respondentsfollows to Punjab National bank followed byICICI bank. It is the bank


43/61

which provide 12-hour banking.also the ATM machine is more as comparedto the other private sector banks.

Interpretation : From the above graph, it is seen that Punjab national is themost preferred bank as compared to other Public and Private sector Banks.The reason for preference of public sector bank is the minimum amount of

deposit for saving account.

4. The aim to ask this question was to know he reasons for theirpreference in different banks :Table4:- Reason for account in different banks

Reasons No of respondentsFriendly Behaviour of the Staff 16Reliability/trust 14Quick and fast services 55Location 15

Graph 4:-Reasons for account in different banks


44/61

Inpretation: By analyzing this graph, we can conclude that most of thepeople is influenced by the quick and speedy services provided by the bankand location is given less preference than others.

5.The respondents were asked about the facilities they were availing inpublic as well as private sector banks :

Table 5.1 Number of people availing different facilities at public sectorbanks:

Facilities Availed No of respondentsATM/Debit card 60Demat 5Internet/Mobile/Phone Banking 15Insurance 20

Graph 5.1: Number of people availing different facilities at public sectorbanks

Interpretation: From the above graph, it was found that was availed by mostof the people at public sector banks was that of ATM/Debit cards which hold


45/61

90% of respondents. It is clearly observed by the graph that Insurance areneck to neck holding 20% of respondent each.

6. The purpose of this question is to know the satisfaction level they werehaving with their banks overall performance:Publicsector banks

Table 6.1 Satisfaction level of the customers regarding the facilitiesavailed from the public sector banks

Level of Satisfaction No.of respondents %ageExcellent 12 24%Good 21 42%Very Good 27 54%

Graph 6.1 Satisfaction level of Customers regarding the facilities availedfrom the public sector banks.

Analysis:


46/61

It was found that in case of public sectors banks, 18% of the respondents werehighly satisfied ranked excellent from the products and services availed bythem. 44% were just satisfied given very good and 38% have moderate view.

Interpretation: People have mixed type of view regarding public sectorbanks.

7. The respondents were asked that if they have given option, would theylike to shift from the present banks:Table7 Number of customers ready to shift from present bank.

Graph 7:- Number of customers ready to shift from their present bankor not.

Interpretation:


47/61

From this above Graph, we can conclude that the number of respondentsready to shift from their present bank is 28% while 70% customers seems tobe satisfied from their bank and hence willing to shift from their present bankto other.

8. The aim to ask this question was to know whether the respondents

faces any problem regarding the services provided them by theirpreferred bank :Table8 Problem faced by customers.

Types of problem No of respondentsTime consuming 10Introduction 8Reference 15Too many formalities 6No facility of photograph instantly 4No problem 6

Interpretation:


48/61

It was found that most of the respondents are facing problem of reference.Respondents also find that the time and too much formalities also causeproblem in banks.


49/61

FINDINGS OF THE STUDY

.More number of people have account with private banks.

.

Majority of the respondents whether in public sectors or in privatesector banks have savings account with banks.

.Number of problem faced by the people is more in public sectorbanks.

.People want a change in the behavior of the staff of the public sectorbanks.

.

People are more satisfied form the private sector banks due to theirbetter services provided by them in terms of speedy transactions, fullycomputerized facilities, more working hours (in case of ICICI bank,the number of working hour are 12), good investment Advisoryservices, efficient and co-operative staff, better approach to CustomerRelationship Management.

.In private sector banks proper promotional activities should be takenup so as to make the population aware of the services provided by thebanks even in rural areas.

.

The facility that was availed by most of the people at public sectorbanks was that of ATM/Debit cards. The least availed facility was thatof Demat account and foreign transfer of funds.


50/61

.The facility that was availed by most of the people at private sector

banks was that of Internet/Phone banking by ATM/Debit card..

Majority of respondents do not want to shift from their present bank.

.From the above study it is clear that private banks are providing betterservices than nationalized banks. 95% respondents favored thatprivate banks are providing better services than nationalized bankswhile 5% respondents are not agree with it.

.From the above study it is clear that majority of the respondents saidthat the average balance requirement for operating their saving

account is between 5000-10000. 20% said it is between 10000-20000and remaining 5% said it is between 20000-50000 in private sectorbanks which as compared to Public sector bank is very high.

.40% respondents said that the bank employees never pay any attentionto them and 10% respondents said that their problems are not solvedby bank executives. The remaining 50% respondents give a positivereaction in the favour of bank. 30% respondents favoured that theirproblems are solved by bank executives and 20% respondents saidthey are received with smile by bank executives. So there is a mixresponse.

.Majority of the respondents said that the average time taken fortransactions is between 25 to 50 minutes in their bank. 30%respondents said the average time taken for transaction is between 2025minutes, 20% said it is between 10 to 25 min. and remaining 10%


51/61

said that the average time taken for transaction by their bank is 5 to 10minutes.

.From the above study is clear that the banks do not organize anycustomer meets. All the 100% respondents said that their bank does

not organize any customer's meets to resolve their problems.Customer satisfaction is the demand of time, so the banks shouldorganize customer meets to resolve the problems of their customers.

.From the above study it is clear that majority of the respondents areready to pay nominal charges for better services provided by privatebanks while 40% respondents are not ready to pay any nominalcharges.

.The above study depicts that 60% respondent said that their bank

updates them time to time about the latest facilities and remaining40% said that their bank doesn't update them.


52/61

SUGGESTIONS

Based on the study conducted, There are some of the suggestions given bythe customers of how the modern banking should be. These are the commentgiven by them about the improvement of the banking sector in India.

.Banks should obey the RBI norms and provide facilitiesas per thenorms, which are not being followed by the banks. While thecustomer must be given prompt services and the bank officer shouldnot have any fear on mind to provide the facilities as per RBI norms tothe units going sick.

.Banks should increase the rate of saving account

.

Banks should provide loan at the lower interest rate and educationloans should be given with ease without much documentation. All thebanks must provide loans against shares.

.Fair dealing with the customers. More contribution from the employeeof the bank. The staff Should be co-operative, friendly and must becapable of understanding the problems of customers

.Internet banking facility must be made available in all the banks..Prompt dealing with permanent customers and speedy transaction

without harassing the customers.Each section of every bank should be computerized even in rural areasalso..Real time gross settlement can play a very important role.


53/61

.More ATM coverage should be provided for the convenience of the

customers.

.

No limit on cash withdrawls on ATM cards.

.The bank should bring out new schemes at time-to-time so that morepeople can be attracted. Even some gifts and prizes may be offered tothe customers for their retention.

.24 hours banking should be induced so as to facilitate the customerswho may not have a free time in the daytime. It will help in facing thecompetition more effectively.

.The charges for saving account opening are high, so they should alsobe reduced.

.Customers generally complain that full knowledge is not granted tothem. Thus the bank should properly disclose the features of theproduct and services to the customers. Moreover door to door servicescan also be introduced by bank.

.The need of the customer should properly be understood so thatcustomer feels satisfied. The relationship value should be maintained.

.The branch should promote cooperation and coordination amongemployees which help them in efficient working.

.Maintenance of proper hierarchy should be done. A good hierarchyset up can ensure better results with in the bank.

Banking sector is improving by leaps but still it needs to be improved.Proper and efficient relationship staffs having knowledge for one stopbanking, customer friendly atmosphere, and better rate of interest are


54/61

need of the hour.the concept of privatization has overall improved theservices in all the banks. Home banking will be order of the day.

Recommendations

For Public Sector Banks:

Bank staff should be customer friendly and highly motivatedto serve the normal customer.As far as possible, banks should reduce its documentationprocess while providing loans.Computerization should be done in banks at all level and theoperators should de properly trained.

Token system should be induced so as to minimize thewaiting lines in the banks.Proper ambience in the banks can develop a healthyworking culture. Quick services should be provided.For Private sector Banks

24 hours banking should be induced so as to facilitate thecustomers who may not have free time in the day time. It willhelp in facing the competition more effectively.

More ATM coverage should be provided for theconvenience of the customers. Customer care services should be provided by banks.


55/61

CONCLUSION

The customers now days are not only exposed of what type of service isbeing provided by banks in India but in the world as a whole. They expectmuch more than what is actually being provided. So the new coming

banking sector has to provide and cater to all the needs of the customersotherwise it is difficult to survive in the competition coming up.

They not only expect the safety of money but also best ways to invest thatmoney which need needs to be fulfilled. Banks need to have a better outlooktowards to actually what customers are requiring. Entries of the privatesector banks have made the competition tougher. If a bank is not functioningproperly it is being closed. So it is difficult to face these types of conditions.Here a simple philosophy can work that customers are God and we need tofollow this to survive and serve better.

The banking sector is poised for explosive growth. In this, scenario, it isimperative that banks adopt technology at an aggressive Pace, if they wish toremain competitive. Mani Mamallan makes a case for banks to outsourcetheir technology infrastructure requirement, thus enabling early adoption andincreased efficiencies.

In the prevailing scenario, a number of banks have adopt a new deploymentstrategy of infrastructure outsourcing, to lower the cost of service channels.As a result, other banks too will need to align their reinvented businessmodels. The required changes at both the business and technology levels areenormous. In a highly competitive banking markets, early adopters areprofiting from increased efficiencies.


56/61

BIBLIOGRAPHY

BOOKS:

.Kothari C.R. (1990) Research Methodology: Method and

Techniques; Wishva Prakashan, New Delhi..Bodie.Z, Kane.A & Mracus.J : Essentials of Investments..Prof. E Gordon & Dr. K. Natrajan Banking Theory Law and

Practice..Indian financial System & Commercial Banking by Khan

Masood Ahmed.Banking in India by P.N.Varshney

WEBSITES:

.www.centurionbop.co.in.www.pnbindia.com.www.statebankofindia.com.

www.icicibank.com.www.rbi.org.in.www.iba.org.in.www.knowledgestom.com.www.igniter.com

BROACHERS & PAMPHLETS

.Broachers and pamphlets of Saving A/c


57/61

QUESTIONNAIRE

Comparative Study on public and private sector banksDear customer,We are the students of C.T.I.E.M.T. Shahpur, Jalandhar. We are undergoing the pr

ojectentitled named Comparative Study on public and Private sector banks So byfilling this questionnaire please helps us in completing our project.Q1. Which Sector bank do you have your account?Public .Private . Both .Q2. In which bank do you have your Account?

1.2.3.4.

Q3. Which type of account do you have in the bank?

Saving . Current .Demat . F.D .Salary .

Q4 In Case you have yours Account in more than one a Bank which one is your mostpreferred bank (Give only one bank)


58/61

Q5. Rank the selection criteria for opening account with bank?Brand Image .Services .Location .Charges .Q6. Kindly rank the reasons for yours preference in this particular bank?

Quick and fast services .Location .

Friendly Behavior . Reliability .Q7. Which facilities are you availing at your bank?Atm/Debit card . Credit card .

Insurance . Mobile Banking .Q8.How often do you use debit card to shop?Occasionally .

Never .Q9. How much Satisfied are you with your banks overall performance ?Excellent .Very Good .

Good .Q10. Any Specific services you expect from your bank ?

Q11.If an option is given to you, would you like to shift from the presentBank?Yes . No .


59/61

Q12. Do you face any problem regarding the services provided by your preferred

bank?If Yes

Q13. Would you like to give any suggestions for the better functioning of banks

in these sectors?Public Sector

Private sector

16. Any other suggestions please specify ?Thanks for your valuable time given to us .We assure you that the information providedby you will remain confidential. Thanks for your co-operation.

PERSONAL DETAILS.NAME-

AGE-

...GENDER-..EDUCATION-...ADDRESS-..PHONE NO.-.E-MAIL ID-


60/61

SIGNATURE OF RESPONDENT


61/61

35847069 Comparative Study of the Public Sector Amp Private Sector Bank

Documents