A Project Study Report On “COMPARATIVE STUDY OF HOME LOAN AND PERSONAL LOAN OF ICICI BANK Submitted in partial fulfillment for the Award of degree of Master of Business Administration MASTER OF BUSINESS ADMINISTRATION Submitted To : Submitted By The Director Rahim Chopdar 1
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“Comparative Study of Home Loan and Personal Loan of Icici Bank With Sbi & Other Banks”
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A
Project Study Report
On
“COMPARATIVE STUDY OF HOME LOAN AND PERSONAL
LOAN OF ICICI BANK
Submitted in partial fulfillment for theAward of degree of
Master of Business Administration
MASTER OF BUSINESS ADMINISTRATION
Submitted To : Submitted By
The Director Rahim Chopdar
JAIPUR ENGINEERING COLLEGE AND RESEARCH CENTER,
JAIPUR
1
Declaration
I Rahim Chopdar declare that the project report title “COMPARATIVE STUDY
OF HOME LOAN AND PERSONAL LOAN OF ICICI BANK WITH SBI &
OTHER BANKS” is based on my project study. This project report is my
original work and this has not been used for any purpose anywhere.
Rahim Chopdar
M.B.A. iv Sem.
2
PREFACE
As we know that M.B.A programme is more concern with the practical aspect of the business world.
The M.B.A students need to gain more and more practical experience. It is not possible for them to
have this from classroom lectures only. So in the Fourth Semester the students have to undergo
with the Project Report.
As banking sector is one of the booming sector in current market and in this sector the name ICICI
occupies its own space and doing project with this would provide us with knowing of the banking
sector as a whole and in this we shall know about the banking transaction their procedure of
opening the account, how the marketing helps in this sector and how can we describe our
knowledge either that we achieved after doing the study of this sector. Thus as per syllabus we
have to take project. This project has helped us a lot to gather much practical knowledge about
banking and other functional areas.
In our curriculum we have to cover four area of the company and to gather the information related to
those areas like general information, personnel department, marketing department and finance
department. Being a service firm bank has somewhat different working. And so as per the working
areas of company we have covered this information.
So whatever information we have covered is as per our knowledge and experience with the bank. It
had given added advantage to us by making us aware this new immerging concept of the
investment. During project we have gone through this concept in glance.
3
Acknowledgement
I express my sincere thanks to my project guide, Mr.Navneet Sharma I.C.I.C.I.Incharge Training for
guiding me right from the inception till the successful completion of the project. I sincerely
acknowledge him for extending their valuable guidance, support for literature, critical reviews of
project and the report and above all the moral support he had provided to me with all stages of this
project.
I would also like to thank the supporting staff for their help and cooperation throughout our
project.
Khushbu Trivedi
4
EXECUTIVE SUMMARY
Home is a dream of a person that shows the quantity of efforts, sacrifices luxuries and above
all gathering funds little by little to afford one’s dream. Home is one of the things that everyone one
wants to own. Home is a shelter to person where he rests and feels comfortable. Many banks
providing home loans whether commercial banks or financial institutions to the people who want to
had a home. The housing sector plays an important role in the economic development of the
country.
My project title is “COMPARATIVE STUDY OF HOME LOAN AND PERSONAL LOAN OF ICICI
BANK WITH SBI & OTHER BANKS”.
. I selected this topic because The Indian housing finance industry & personal loan has
grown by leaps and bound in few years. Total home loans disbursements by banks have raised
which witness’s phenomenal growth from last 5 years. There is greater number of borrowers of
home & personal loans. So by this study we can find out satisfaction level of customers and
problems faced by them in obtaining home loans & personal loans.
My objectives of study are-
• To make comparative study of Disbursement of home loans & personal loans by commercial
banks.
• To study the satisfaction level of customers about home loans & personal loans.
• To study the problems faced by customers in obtaining the home loans & personal loans.
In the research methodology I had taken primary data. In the primary data I had make a
questionnaire to check the satisfaction level of customers about home loans & personal loans.
For the first objective I had collected the information about the number of account holders of
specified banks, no of disbursement of home loans and recovery of these loans.
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CONTENTS
S.no. Particulars Page No.
1. Introduction to the Industry 7 – 40
2. Introduction to the Organization 41– 96
3. Research Methodology
4.1 Title of the Study
4.2 Duration of the Project
4.3 Objective of Study
4.4 Type of Research
4.5 Sample Size and method of selecting sample
4.6 Scope of Study
4.7 Limitation of Study
97– 100
4. Facts and Findings 101 – 104
5. Analysis and Interpretation 105-120
6. SWOT 121-122
7. Conclusion 123
8. Recommendation and Suggestions 124-125
9. Appendix – Questionnaire 126- 128
10. Bibliography 129
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1 . INTRODUCTION TO THE INDUSTRY:-
Indian banking system:
Organized banking was active in India since the establishment of the general bank of India in
1786. After the independence, the reserve bank of India RBI was established as the central bank
and in 1955, the imperial bank of India the biggest bank at the time ,was taken over by the
government to from state owned state bank of India . RBI had undertaken an exercise to merge
weak banks to strong banks and the total number of banks, thus reduced from 566in 1951 to 85 in
1969.
With the objective of reaching out to masses and meeting the credit needs of all sections of
people, the government nationalized 14 large banks in 1969 followed by another 6 banks in 1980.
This period saw enormous growth in the number of the branches and the banks ‘branches network
become wide enough to reach the weakest sections of the society in a vast country like India. SBI‘s
network of 9033 domestic branches and 48 overseas offices is considered to be one of the largest
for any banks in the world
The economic reforms unleashed by the government in early nineties included banking
sector too, to a significant extant. Entry of new private sector banks was permitted under specific
guidelines issued by RBI. A number of liberalization and deregulation measures aimed at
consolidation, efficiency productivity, asset quality capital adequacy and profitability have been
introduced by the RBI to bring Indian banks in line with international beat practices.
Banks are prone to crisis:
The traditional bank has an inherent tendency to crisis. This is because the bank borrows
short terms and lends leveraged long term. The sum of deposits and the bank’s capital will never
equal more than a modest percentage of the loans the bank has outstanding.
Even if liquidity is not a concern, if there is no run on the bank, banks can simply choose a
ban portfolio of loans, and lose more money than they have. The US Savings and Loan Crisis in the
late 1980s and early 1990s is such an incident.
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Role in the money supply:
A bank raises funds by attracting deposits, borrowing money in the inter-bank market, or
issuing financial instruments in the money market or a securities market. The bank then lends out
most of these funds to borrowers. However, it would not be prudent for a bank to lend out all of its
balance sheet. It most keeps a certain proportion of its funds in reserve so that it can repay
depositors who withdraw their deposits. Bank reserves are typically kept in the form of a deposit
with a central bank. This behavior is called fractional-reserve banking and it is a central issue of
monetary policy. Some government (or their central banks) restrict the proportion of a bank’s
balance sheet that can be lent out, and use this as a tool for controlling the money supply. Even
where the reserve ratio is not controlled by the government, a minimum figure will still be set by
regulatory authorities as part of banking supervision.
Social control of banks:
Indian banking structure has grown considerably in strength and stability due to the vigorous
control and effective monitoring by reserve bank of India. However, Order to remove the deficiency
pointed above, the Government introduced a scheme of social control of banks. According to the
Banking Commission (1972), the social control scheme was introduced with the main objective of
“achieving a wider spread of bank credit flow to priority sectors and making it a more effective
instrument of development.
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Structure of the indian banking industy
The Indian Banking industry, which is governed by the Banking Regulation Act of
India, 1949 can be broadly classified into two major categories Non-Scheduled Banks and
Scheduled Banks. Scheduled banks comprise commercial banks and the co-operative banks. In
terms of ownership, commercial banks can be further grouped into nationalized banks, the Stat
Bank of India and its group banks, regional rural banks and private sector banks these banks have
over 67,000 branches spread across the country.
The first phase of financial reforms resulted in the nationalization of 14 major banks in 1969
and resulted in a shift from Class banking to Mass banking. This in turn resulted in a significant
growth in the geographical coverage of banks. Every bank had to earmark a minimum percentage
of their loan portfolio to sectors identified as “priority sectors”. The manufacturing sector also grew
during the 1970s in protected environs and the banking sector was a critical source. The next wave
of reforms saw the nationalization of 6 more commercial banks in 1980. Since then the number of
scheduled commercial banks increased four-fold and the number of bank branches increased eight-
fold.
After the second phase of financial sector reforms and liberalization of the sector in the early
nineties, the Public Sector Banks (PSB) s found it extremely difficult to compete with the new private
sector banks and the foreign banks. The new private sector banks first made their appearance after
the guidelines permitting them were issued in January 1993. Eight new private sector banks are
presently in operation. These banks due to their late start have access to state-of-the-art
technology, which in turn helps them to save on manpower costs and provide better services.
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BANKING STRUCTURE
10
RESERVE BANK OF INDIA Central Bank and Supreme Monetary Authority
Scheduled of Banking Sector
COMMERICAL BANKS CO-OPERATIVE BANK
Foreign Banks Regional Rural Banks
Urban cooperative Banks
Public Banks Private Banks
OLD BANKS New Banks
State Banks of India & Other Banks
Other Nationalized Banks
State cooperative Banks
1.4. Structure of Indian Banking Industry
Organized banking was active in India since the establishment of the General Bank of India in 1786.
After independence, the Reserve Bank of India (RBI) was established as the central bank and in
1955, the Imperial Bank of India, the biggest bank at the time, was taken over by the government to
form state-owned State Bank of India (SBI). RBI had undertaken an exercise to merge weak banks
to strong banks and the total number of banks thus reduced from 566 in 1951 to 85 in 1969.
With the objective of reaching out to masses and meeting the credit needs of all sections of people,
the government nationalized 14 large banks in 1969 followed by another 6 banks in 1980. This
period saw enormous growth in the number of branches and the banks’ branch network became
wide enough to reach the weakest sections of the society in a vast country like India. Sib’s network
of 9033 domestic branches and 48 overseas offices is considered to be one of the largest for any
bank in the world.
The economic reforms unleashed by the government in early nineties included banking sector too,
to a significant extent. Entry of new private sector banks was permitted under specific guidelines
issued by RBI. A number of liberalization and de-regulation measures aimed at consolidation,
efficiency, productivity, asset quality, capital adequacy and profitability have been introduced by the
RBI to bring Indian banks in line with International best practices. With a view to giving the state-
owned banks operational flexibility and functional autonomy, partial privatization has been
authorized as a first step, enabling them to dilute the stake of the government to 51 per cent. The
government further proposed, in the Union Budget for the financial year 2000-01, to reduce its
holding in nationalized banks to a minimum of 33 per cent on a case by case basis.
The banking system can be broadly classified as organized and unorganized banking system. The
unorganized banking system comprises of moneylenders, indigenous bankers, lending
pawnbrokers, landlords, traders, etc. Whereas the organized banking system comprise of
Scheduled Banks and Non-Scheduled Banks that are permitted by RBI to undertake banking
business.
1.4.1. Types of Banks
A. Scheduled Banks
Scheduled commercial banks are those that come under the purview of the Second Schedule of
Reserve Bank of India (RBI) Act, 1934. The banks that are included under this schedule are
those that satisfy the criteria laid down vide section 42 (6 of the Act).
11
1. The bank is dealing in banking business in India only.
2. The paid up capital and total funds of the bank should not be less than five lakh rupees.
3. It should convince RBI that its activities would not be against the interest of investors.
4. The bank must be:
(a) State cooperative bank, or
(b) A company according to the definition of the companies Act1956, or
(c) An institution notified by the central government, or
(d) A corporation or a company incorporated by or under any law in force in any place
outside India.
Thus,
(I) Indian Commercial Banks
(II) Foreign Commercial Banks, and
(iii) State Cooperative Banks fulfilling the above condition are considered as
scheduled banks.
Moreover under the RBI Act section 42, the Central Government has declared the
following banks as scheduled banks.
(i) State Bank of India and its seven subsidiary banks,
(ii) Twenty nationalized banks, and
(iii) Urban Banks.
In June 1980 there were 149 scheduled banks which included
(i) Public Sector Banks
(ii) Private sector Banks,
(iii) Foreign Exchange Banks and
(iv) State Cooperative Banks.
A bank which wants to register its name as scheduled bank has to apply to the Central Government.
On receiving such application, the central government orders RBI to investigate the banks’
accounts. If RBI gives favorable reports, the central government sanctions its proposal, and the
bank is listed under schedule annexure II and is considered as a scheduled bank.
Some co-operative banks come under the category of scheduled commercial banks though not all
co-operative banks.
12
PUBLIC SECTOR BANKS
Public sector banks are those in which the Government of India or the RBI is a majority
shareholder. These banks include the State Bank of India (SBI) and its subsidiaries, other
nationalized banks, and Regional Rural Banks (RRBs). Over 70% of the aggregate branches
in India are those of the public sector banks. Some of the leading banks in this segment
include Allahabad Bank, Canara Bank, Bank of Maharashtra, Central Bank of India, Indian
Overseas Bank, State Bank of India, State Bank of Patiala, State Bank of Bikaner and
Jaipur, State Bank of Travancore, Bank of Baroda, Bank of India, Oriental Bank of
Commerce, UCO Bank, Union Bank of India, Dena Bank and Corporation Bank.
PRIVATE SECTOR BANKS
Private Banks are essentially comprised of two types:
Old banks and new banks
The old private sector banks comprise those, which were operating before Banking
Nationalization Act was passed in 1969. On account of their small size, and regional
operations, these banks were not nationalized. These banks face intense rivalry from the
new private banks and the foreign banks. The banks that are included in this segment
include: Bank of Madura Ltd. (now a part of ICICI Bank), Bharat Overseas Bank Ltd., Bank
of Rajasthan, Karnataka Bank Ltd., Lord Krishna Bank Ltd., The Catholic Syrian Bank Ltd.,
The Dhanalakshmi Bank Ltd., The Federal Bank Ltd., The Jammu & Kashmir Bank Ltd., The
Karur Vysya Bank Ltd., The Lakshmi Vilas Bank Ltd., The Nedungadi Bank Ltd. and Vysya
Bank.
The new private sector banks were established when the Banking Regulation Act was
amended in 1993. Financial institutions promoted several of these banks. After the initial
licenses, the RBI has granted no more licenses. These banks are gearing up to face the
foreign banks by focusing on service and technology. Currently, these banks are on an
expansion spree, spreading into semi-urban areas and satellite towns. The leading banks
that are included in this segment include Bank of Punjab Ltd., Centurion Bank Ltd., Global
Trust Bank Ltd., HDFC Bank Ltd., ICICI Banking Corporation Ltd., IDBI Bank Ltd., IndusInd
Bank Ltd. and UTI Bank Ltd.
13
CO-OPERATIVE BANKS
Co-operative banks act as substitutes for moneylenders, and offer timely and adequate
short-term and long-term institutional credit at reasonable rates of interest. Co-operative
banks are relatively similar in terms of functions to the other banks except for the following:
a) They are organized and managed on the principal of co-operation, self-help, and
mutual help.
b) They operate under the rule of "one member, one vote".
c) Operate on "no profit, no loss" basis.
d) Co-operative bank conducts all the main banking functions of deposit mobilization,
supply of credit and provision of remittance facilities. Co-operative banks offer limited
banking products and are functionally specialists in agriculture-related products, and
even in providing housing loans of late. Urban Co-operative Banks offer working capital
loans and term loans as well.
e) Co-operative banks primarily operate in the agriculture and rural sector. However,
UCBs, SCBs, and CCBs function in semi urban, urban, and metropolitan areas too
f) Co-operative banks are probably the first government sponsored, government-
supported, and government-subsidized financial agency in India. They get
financial and other aid from the Reserve Bank of India NABARD, central
government and state governments. They are the "most favored" banking sector
Hand if they find that something which is required is missing from your profile they might impose
higher terms, which could increase the cost of your personal loan drastically.
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Benefits and drawbacks of personal loans in India:
Personal loans are a panacea for any urgent cash crunch. A medical emergency, payments for a
laptop, funding a vacation, quick cash for marriage- whatever the need, personal loans are here to
help. Banks in India are more than willing to give a personal loan to the right applicant, but before
jumping on the bandwagon it would be good if a borrower knows the benefits and drawbacks of
taking a personal loan.
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Benefits of a personal loan in India:
1. No questions asked about the end use of the money:
Banks will simply give the cash and it's up to the borrower, where to use it and how to use it. So, it is
a very convenient monetary help.
2. No collateral, security or guarantor requirements:
Personal loans are solely granted on the basis of an individual's credit-worthiness. Banks do take
into account the income, employment, continuity of business and other factors so as to establish the
fact that the borrower will be able to repay the personal loan with interest in due time. No collateral
or security requirements are put forth by the banks for issuing a personal loan. This saves a lot of
embarrassment and hassles.
3. Total confidentiality:
Since there are no security or collateral requirements, personal loans can remain a secret between
you and the bank. Moreover every bank has some privacy policies, which ensures adequate
confidentiality.
4. Easy repayment:
Banks provide personal loans for 12 to 60 months. Varying from bank to bank, these tenures allow
easy repayment options to the borrower. The borrowed amount along with the interest rate is
calculated for the entire ten has to pay every month. Personal loans also come with a prepayment
clause are of the loan and a EMI is calculated which the borrower
5. Simple documentation:
With minimal eligibility and nil collateral requirements, the personal loans from banks in India require
minimal documentation. A proof of identity, income proof and residence proof will suffice in most
cases.
32
6. Big loan amounts:
Depending on a borrower's repayment capacity, banks in India are willing to give a personal loan
ranging from Rs. 25000 to Rs. 2000000. This makes a personal loan an ideal choice to meet big
budget requirements.
33
Drawbacks of Personal Loans in India:
1. High interest rates:
Personal loans are unsecured loans. In most of the cases banks won't ask for a collateral, security
or guarantee before issuing any personal loan, so it becomes a risky proposition for banks. To offset
this risk, banks provide personal loans at higher interest rates. Secondly, personal loan interest
rates also vary from person to person. How much of a risk banks consider you will determine the
terms and interest rates on your personal loan. A person with good existing loan repayment record,
serving in a reputed public sector, government, MNC, or blue chip company is more likely to get a
low interest rate personal loan than one who deviates from the standard norms. A low risk borrower
can get a personal loan at 16% interest rates while it can climb up 30% or more for others.
2. Not available to everyone:
Banks enforce strict employment, income and residence criteria before issuing any personal loan.
They'll only put their money where they find that the risk involved is minimal. So, a larger
percentage of applicants are rejected in case of personal loans.
34
3. No part prepayments:
Prepayment of personal loan can be done as a whole. Banks in India generally do not allow part
prepayment of any personal loan. Moreover, there is a prepayment penalty of 2-5 percent on the
outstanding amount, which has to be paid to the bank while making any prepayments.
BANKING SERVICES IN INDIA
35
BROKER
DEBITHELP
CREDIT LOANS
LOAN
LIFEINSURANC
EPOLICY
SAVINGACCOUN
T
FIXEDDEPOSIT
E
CHECKING
ACCOUNT
BANKINGSERVICES
Indian banking sector analysis
The Indian banking sector is the growing banking industries. Their product quality and their
services in India. This report helps clients to analyze the leading-edge opportunities critical to the
success of the banking Industry in India. Detailed data and analysis helps an investor, financial
service providers, and global banking players navigate the evolving market of banks in India.
These are the some important point regarding the Indian banking sector
analysis are listed below:
The nationalized banks have more branches than any other types of banks in India. Now
there are about 33,627 Branches in India, as on March 2005.0
The Investments of scheduled commercial banks also saw an increase from Rs 8, 04,199
crore in March 2005 to Rs 8,43,081 crore in the same month of 2006
India's retail-banking assets are expected to grow at the rate of 18% a year over the next
four years (2008-2012).
The retail loan to drive the growth of retail banking in future.
The housing loan account for major chunk of retail loan.
36
37
KEY PRODUCT ANALYZED
NOTE…. This diagram is showing the ‘Banking Key Products’ such as Deposits, Retail credit, Credit card, Debit card, Internet banking.
38
Retail Credit
CreditCards
Debit Card
Internet Banking
Deposits
Key product
Analyzed
Banking in India today:-
The entire banking sector has undergone a restructuring during recent years as a result of recent
development. The new technologies have added to the competition. The IT revolution has made it
possible to provide easy and flexibility in operation to customer thus making life simpler and easiest.
The rapid strides in information technology have, infect, redefined the role and structure of banking
in India. Further, due to the exposure to global trend s after information explosion lead by more
products from their bank. The financial market has turned in to a buyers market. Banks are also
coping and adapting with time and are trying to become one stopped financial super market.
Private sector Banks have pioneered internet banking, phone banking, anywhere banking,
mobile banking, debit cards, Automatic Teller Machines (ATMs) and combined various other
services and integrated them into the mainstream banking arena, while the Private Sector Banks
are still grappling with disgruntled employees in the aftermath of successful VRS schemes. Also,
following India’s commitment to the WTO agreement in respect of the services sector, foreign
banks, including both new and the existing ones, have been permitted to open up to 12 branches a
year with effect from 1998-99 as against the earlier stipulation of 8 branches .Meanwhile the
economic and corporate sector slowdown has led to an increasing number of banks focusing on the
retail segment. Many of them are also entering the new vistas of Insurance. Banks with their
phenomenal reach and a regular interface with the retail investor are the best placed to enter into
the insurance sector. Banks in India have been allowed to provide fee-based insurance services
without risk participation invest in an insurance company for providing infrastructure and services
support and set up of a separate joint-venture insurance company with risk participation.
The Indian has finally worked up to the competitive dynamics of new Indian market and is
addressing the relevant issues take on the multifarious challenges of globalization. Bank that
employ IT solutions are perceived to be futuristic and proactive players capable of meeting the
multifarious requirement of large customer base. Private Banks have been fact on the uptake and
are reorienting their strategies using the Internet as a medium.
The Indian banking has come from a long from being a sleepy business institution to a highly
proactive and dynamic entity this transformation has been largely brought by the large dose of
liberalization and economic reforms that allowed exploring new business opportunities rather than
generating revenues form conventional streams.
The Indian Industry has confidently hit the growth trial that pick in activity is best reflected in the
banking sector which after all is as candid a mirror of a country’s economy as you could ever find.
39
Most of the Indian financial intermediaries have been keeping pace with the deepening market
economy, riding the opportunity that come along with reforms even as they brace themselves for
increased competition both foreign and private by strengthening prudential norms and leveraging
technology to ensure that growth engine hums smoothly along.
The essential function of a bank is to provide services related to the storing of value and the
extending credit. The evolution of banking dates back to the earliest writing, and continues in the
present where a bank is a financial institution that provides banking and other financial services.
Currently the term bank is generally understood an institution that holds a banking license. Banking
licenses are granted by financial supervision authorities and provide rights to conduct the most
fundamental banking services such as accepting deposits and making loans. There are also
financial institutions that provide certain banking services without meeting the legal definition of a
bank, a so called non-bank. Banks are a subset of the financial services industry.
The word bank is derived from the Italian bank, which is derived form German and means bench.
The terms bankrupt and “broke” are similarly derived from banker Rota, which refers to an out of
business bank, having its bench physically broken. Money lenders in Northern Italy originally did
business in open areas, or big open rooms, with each lender working from his own bench or table.
Typically, a bank generates profits from transaction fees on financial services or the interest spread
on resources it holds in trust for clients while paying them interest on the asset.
Branches of various banking:
State bank of India branches:
State Bank of India (SBI) is India's largest commercial bank. SBI has a vast domestic network of
over 9000 branches (approximately 14% of all bank branches) and commands one-fifth of deposits
and loans of all scheduled commercial banks in India.
I.C.I.C.I. bank branches:
ICICI Bank is India's second-largest bank. The Bank has a network of about 573 branches and
extension counters and over 2,000 ATMs. ICICI Bank was originally promoted in 1994 by ICICI
Limited, an Indian financial institution, and was its wholly-owned subsidiary
40
Hdfc bank branches:
Hdfc bank branches was incorporated in August 1994 in the name of 'HDFC Bank Limited', with its
registered office in Mumbai, India. The Bank commenced operations as a Scheduled Commercial
Bank in January 1995.
The Housing Development Finance Corporation Limited (HDFC) was amongst the first to receive an
'in principle' approval from the Reserve Bank of India (RBI) to set up a bank in the private sector, as
part of the RBI's liberalization of the Indian Banking Industry in 1994.
Headquartered in Mumbai, HDFC Bank, has a network of over 531 branches spread over 228 cities
across India. All branches are linked on an online real-time basis. Customers in over 120 locations
are serviced through Telephone Banking. The Bank also has a network of about over 1054
networked ATMs across these cities. HDFC Bank's ATM network can be accessed by all domestic
and international Visas / MasterCard Punjab National Bank was established in 1895 at Lahore. PNB
has the distinction of being the first Indian bank to have been started solely with Indian capital. In
1969, Punjab National Bank was nation
Impact of globalization on banking service in india
Business environment of global bank:
Global Bank has undergone a series of substantial changes in the last 10 years, starting with
the deregulation of the U.S. financial services industry in the late 1990s. Seeking to rapidly expand
its portfolio, the bank undertook a series of mergers and acquisitions. Global Bank now has over
200 branches across the western United States, and offers a complete line of integrated financial
services, including:
Lending. This includes credit cards, consumer loans (such as, auto and line of credit),
mortgage, and home equity.
Investing. This includes certificates of deposit, trust services, brokerage services (including
securities), annuities, individual retirement accounts, and mutual funds. Financial planning. This includes comprehensive financial planning services, including
retirement, education, tax, and estate planning, including both future planning and plan
execution services.
41
Technical environment of global bank
In the mid-1980s Global Bank had a single mainframe system, accessed through IBM 3270
terminals in each branch. Due to numerous acquisitions, the fragmentation of technology within its
divisions, and the natural evolution of technology, the technical environment at Global Bank have
changed substantially since then. It now consists of multiple different back-end systems, with a
middleware component to facilitate communication between them. The 3270 terminals have been
replaced with personal computer clients that run multiple applications and perform terminal emulation
to communicate with the back-end systems. During this time, Global Bank also invested heavily in
technology to provide additional Channels for customer communication, including Automated teller
machines , Telephone banking services, Internet banking
Global Bank networking environment
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2. INTRODUCTION TO THE ORGANIZATION:-
COMPANY PROFILE
ICICI Bank is India's second-largest bank. The Bank has a network of about 573 branches and
extension counters and over 2,000 ATMs. ICICI Bank was originally promoted in 1994 by ICICI
Limited, an Indian financial institution, and was its wholly-owned subsidiary.ICICI was formed in
1955 at the initiative of the World Bank, the Government of India and representatives of Indian
industry. The objective was to create a development financial institution for providing medium-term
and long-term project financing to Indian businesses.
In the 1990s, ICICI transformed its business from a development financial institution offering only
project finance to a diversified financial services group offering a wide variety of products and
services, both directly and through a number of subsidiaries and affiliates like ICICI Bank.
In 1999, ICICI become the first Indian company and the first bank or financial institution from non-
Japan Asia to be listed on the NYSE. In 2001, ICICI bank acquired Bank of Madura Limited
ICICI Bank set up its international banking group in fiscal 2002 to cater to the cross border needs of
clients and leverage on its domestic banking strengths to offer products internationally. ICICI Bank
currently has subsidiaries in the United Kingdom, Canada and Russia, branches in Singapore and
Bahrain and representative offices in the United States, China, United Arab Emirates, Bangladesh
and South Africa…Today, ICICI Bank offers a wide range of banking products and financial services
to corporate and retail customers through a variety of delivery channels and through its specialized
subsidiaries and affiliates in the areas of investment banking, life and non-life insurance, venture
capital and asset management.
ICICI Bank is India's second-largest bank with total assets of Rs. 3,744.10 billion (US$ 77 billion) at
December 31, 2008 and profit after tax Rs. 30.14 billion for the nine months ended December 31,
2008. The Bank has a network of 1,438 branches and about 4,644 ATMs in India and presence in
18 countries. ICICI Bank offers a wide range of banking products and financial services to corporate
and retail customers through a variety of delivery channels and through its specialized subsidiaries
43
and affiliates in the areas of investment banking, life and non-life insurance, venture capital and
asset management. The Bank currently has subsidiaries in the United Kingdom, Russia and
Canada, branches in United States, Singapore, Bahrain, Hong Kong, Sri Lanka, Qatar and Dubai
International Finance Centre and representative offices in United Arab Emirates, China, South
Africa, Bangladesh, Thailand, Malaysia and Indonesia. Our UK subsidiary has established branches
in Belgium and Germany.
ICICI Bank's equity shares are listed in India on Bombay Stock Exchange and the National Stock
Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York
Stock Exchange (NYSE).
ABOUT ICICI BANK:
ICICI was established by the Government of India in the 1960s as a Financial Institution (FI, other
such institutions were IDBI and SIDBI) with the objective to finance large industrial projects. ICICI
was not a bank - it could not take retail deposits; and nor was it required to comply with Indian
banking requirements for liquid reserves. ICICI borrowed funds from many multilateral agencies
(such as the World Bank), often at concessional rates. These funds were deployed in large
corporate loans.
At the time of the reverse merger, there were rumours that ICICI had a large proportion of Non
Performing Loans ("NPA", as they are known in India) on its books - in particular to the steel
industry. Since 2002, there has been a general revival in Indian industry (and metal based industry
in particular). It is widely believed that the All this changed in 1990s. ICICI founded a separate legal
entity - ICICI Bank which undertook normal banking operations - taking deposits, credit cards, car
loans etc. The experiment was so successful that ICICI merged into ICICI Bank ("reverse merger")
in 2002.proportion of NPAs has come down to prudent levels (even if it were high earlier).
ICICI Bank now has the largest market share among all banks in retail or consumer financing. ICICI
Bank is the largest issuer of credit cards in India It was the first bank to offer a wide network of
ATM's and has a large network of ATM's.
ICICI Bank now has the largest market value of all banks in India, and is widely seen as a
sophisticated bank able to take on many global banks in the Indian market.
The Bank is expanding in overseas markets and has the largest international balance sheet among
Indian banks. The international banking business was set up in 2002 to implement a focused
strategy for the overseas market. The Bank now has wholly-owned subsidiaries, branches and
44
representatives offices in 18 countries, including an offshore unit in Mumbai. This includes wholly
owned subsidiaries in UK, Canada and Russia, offshore banking units in Singapore and Bahrain;
advisory branch in Dubai, branches in Sri Lanka, Hong Kong and Belgium; and rep offices in the
US, China, United Arab Emirates, Bangladesh, South Africa, Indonesia, Thailand and Malaysia. The
bank is targeting the NRI (Non Resident Indian) population for expanding its business.
ICICI Bank was originally promoted in 1994 by ICICI Limited, an Indian financial institution, and was
its wholly-owned subsidiary. ICICI's shareholding in ICICI Bank was reduced to 46% through a
public offering of shares in India in fiscal 1998, an equity offering in the form of ADRs listed on the
NYSE in fiscal 2000, ICICI Bank's acquisition of Bank of Madura Limited in an all-stock
amalgamation in fiscal 2001, and secondary market sales by ICICI to institutional investors in fiscal
2001 and fiscal 2002. ICICI was formed in 1955 at the initiative of the World Bank, the Government
of India and representatives of Indian industry. The principal objective was to create a development
financial institution for providing medium-term and long-term project financing to Indian businesses.
In the 1990s, ICICI transformed its business from a development financial institution offering only
project finance to a diversified financial services group offering a wide variety of products and
services, both directly and through a number of subsidiaries and affiliates like ICICI Bank. In 1999,
ICICI become the first Indian company and the first bank or financial institution from non-Japan Asia
to be listed on the NYSE.
After consideration of various corporate structuring alternatives in the context of the emerging
competitive scenario in the Indian banking industry, and the move towards universal banking, the
managements of ICICI and ICICI Bank formed the view that the merger of ICICI with ICICI Bank
would be the optimal strategic alternative for both entities, and would create the optimal legal
structure for the ICICI group's universal banking strategy. The merger would enhance value for
ICICI shareholders through the merged entity's access to low-cost deposits, greater opportunities
for earning fee-based income and the ability to participate in the payments system and provide
transaction-banking services. The merger would enhance value for ICICI Bank shareholders
through a large capital base and scale of operations, seamless access to ICICI's strong corporate
relationships built up over five decades, entry into new business segments, higher market share in
various business segments, particularly fee-based services, and access to the vast talent pool of
ICICI and its subsidiaries. In October 2001, the Boards of Directors of ICICI and ICICI Bank
approved the merger of ICICI and two of its wholly-owned retail finance subsidiaries, ICICI Personal
Financial Services Limited and ICICI Capital Services Limited, with ICICI Bank. The merger was
approved by shareholders of ICICI and ICICI Bank in January 2002, by the High Court of Gujarat at
Ahmadabad in March 2002, and by the High Court of Judicature at Mumbai and the Reserve Bank
of India in April 2002. Consequent to the merger, the ICICI group's financing and banking
operations, both wholesale and retail, have been integrated in a single entity.
45
FOREWORD:
Liberalization and Globalization have shrunk the world into a global village. Rapidly moving world
economy has intertwined the geographically divided countries into single thread. Opening up of the
economy for the rest of the world would shape our industries and companies by the same economic
forces as else where in the world. Industries and companies thus have to work in a competitive
market place, where there is no guarantee that every business must make money. Dynamic market
condition and global economic slowdown have forced an individual to become more cautious about
investment of each penny saved.
In such time of uncertainty and insecurity, banks come to investor’s rescue by offering safe and
revenue yielding investment avenues. Modifying their deposit products and developing new and
innovative schemes with advanced services modern banks have there by made banking more
closer and easier in individual’s life.
Privatisation waves in last decade of twentieth century have changed the face of baking in service
industry. Plethora of private banks flooded in to the market. ICICI bank one, amongst them, come
up ahead leaving other private banks one, amongst them, come up ahead leaving other private
banks behind by serving e-age-banking of customers. This report unveils the growth story of ICICI
bank, throws light on unknown aspects of banking and would unfolds the hidden facts about the
bank.
This report served as a mean to share our personal experiences while working on this project,
which provided us platform where we were face-to face to practical aspects of theoretical
knowledge gained so far.
46
ICICI BANK - THE UNIVERSAL BANK
47
Assets> Rs.1, 25,000
Crores Second largest Bank in India
Rated by Moody’s above
sovereign rating
Globally held (ADR, FII stake)
First Indian Bank to be
listed on NYSE
Icici bank history:
Industrial Credit and Investment Corporation of India) India's largest private sector bank in market
capitalization and second largest overall in terms of assets. ICICI Bank has total assets of about
USD 79 Billion (end-Mar 2007), a network of over 950 branches and offices, about 3500 ATMs, and
24 million customers (as of end July '07). ICICI Bank offers a wide range of banking products and
financial services to corporate and retail customers through a variety of delivery channels and
through its specialised subsidiaries and affiliates in the areas of investment banking, life and non-life
insurance, venture capital and asset management. ICICI Bank's equity shares are listed in India on
stock exchanges at Kolkata and Vadodara, the Stock Exchange, Mumbai and the National Stock
Exchange of India Limited and its ADRs are listed on the New York Stock Exchange (NYSE).
The World Bank, the Government of India and representatives of Indian industry form ICICI
Limited as a development finance institution to provide medium-term and long-term project
financing to Indian businesses in 1955.
1994 ICICI establishes ICICI Banking Corporation as a banking subsidiary.ICICI Banking
Corporation is renamed as 'ICICI Bank Limited'
1999 ICICI becomes the first Indian company and the first bank or financial institution from non-
Japan Asia to list on the NYSE.
2001 ICICI acquired Bank of Madura (est. 1943). Bank of Madura was a Chettiar bank, and had
acquired Chettinad Mercantile Bank (est. 1933) and Illanji Bank (established 1904) in the 1960s.
2002 The Boards of Directors of ICICI and ICICI Bank approve the merger of ICICI, ICICI
Personal Financial Services Limited and ICICI Capital Services Limited, with ICICI Bank. After
receiving all necessary regulatory approvals, ICICI integrates the group's financing and banking
operations, both wholesale and retail, into a single entity. Also, ICICI Bank bought the Shimla
and Darjeeling branches that Standard Chartered Bank had inherited when it acquired Grindlays
Bank.
2002 ICICI establishes representative offices in NY and London.
2003 ICICI opens subsidiaries in Canada and the United Kingdom (UK), and in the UK it
establishes alliance with Lloyds TSB. It also opens an Offshore Banking Unit (OBU) in
Singapore and representative offices in Dubai and Shanghai.
2004 ICICI opens a rep office in Bangladesh to tap the extensive trade between that country,
India and South Africa.
2005 ICICI acquires Investitsionno-Kreditny Bank (IKB), a Russia bank with about US$4mn in
assets, head office in Balabanovo in the Kaluga region, and with a branch in Moscow. ICICI
Bank offers a high-interest (5.4% gross) internet savings account to UK customers. Also, ICICI
establishes a branch in Dubai International Financial Centre and in Hong Kong.