1.1 RETAIL BANKING Service with a smile: Today’s finicky banking customers will settle for nothing less. The customer has come to realize somewhat belatedly that he is the king. The customer’s choice of one entity over another as his principal bank is determined by considerations of service quality rather than any other factor. He wants competitive loan rates but at the same time also wants his loan or credit card application processed in double quick time. He insists that he be promptly informed of changes in deposit rates and service charges and he bristles with ‘customary rage’ if his bank is slow to redress any grievance he may have. He cherishes the convenience of impersonal net banking but during his occasional visits to the branch he also wants the comfort of personalized human interactions and facilities that make his banking experience pleasurable. In short he wants financial house that will more than just clear his cheque and updates his passbook: he wants a bank that cares and provides great services. So, do banks meet these heightened expectations? Is there a gap that exists between the management perception and the customer perception with reference to the services offered in Retail Banking? 1.1.1What is Retail Banking? Retail banking is, however, quite broad in nature - it refers to the dealing of commercial banks with individual customers, both on liabilities and assets sides of the balance sheet. Fixed, current / savings accounts on the liabilities side; and mortgages, loans (e.g., personal, housing, auto, and 1
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1.1 RETAIL BANKING
Service with a smile: Today’s finicky banking customers will settle for nothing less. The
customer has come to realize somewhat belatedly that he is the king. The customer’s choice
of one entity over another as his principal bank is determined by considerations of service
quality rather than any other factor. He wants competitive loan rates but at the same time also
wants his loan or credit card application processed in double quick time. He insists that he be
promptly informed of changes in deposit rates and service charges and he bristles with
‘customary rage’ if his bank is slow to redress any grievance he may have. He cherishes the
convenience of impersonal net banking but during his occasional visits to the branch he also
wants the comfort of personalized human interactions and facilities that make his banking
experience pleasurable. In short he wants financial house that will more than just clear his
cheque and updates his passbook: he wants a bank that cares and provides great services. So,
do banks meet these heightened expectations? Is there a gap that exists between the
management perception and the customer perception with reference to the services offered in
Retail Banking?
1.1.1What is Retail Banking?
Retail banking is, however, quite broad in nature - it refers to the dealing of
commercial banks with individual customers, both on liabilities and assets sides of the
balance sheet. Fixed, current / savings accounts on the liabilities side; and mortgages, loans
(e.g., personal, housing, auto, and educational) on the assets side, are the more important of
the products offered by banks. Related ancillary services include credit cards, or depository
services. Today’s retail banking sector is characterized by three basic characteristics:
multiple products (deposits, credit cards, insurance, investments and securities);
multiple channels of distribution ( branch, internet); and
multiple customer groups (consumer, small business, and corporate).
1.1.2 Retail Banking in India:
Retail banking in India is not a new phenomenon. It has always been prevalent in India in
various forms. For the last few years it has become synonymous with mainstream banking for
many banks.
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The typical products offered in the Indian retail banking segment are housing loans,
consumption loans for purchase of durables, auto loans, credit cards and educational loans.
The loans are marketed under attractive brand names to differentiate the products offered by
different banks. As the Report on Trend and Progress of India, 2003-04 has shown that the
loan values of these retail lending typically range between Rs.20,000 to Rs.100 lakh. The
loans are generally for duration of five to seven years with housing loans granted for a longer
duration of 15 years. Credit card is another rapidly growing sub-segment of this product
group.
In recent past retail lending has turned out to be a key profit driver for banks with retail
portfolio constituting 21.5 per cent of total outstanding advances as on March 2004. The
overall impairment of the retail loan portfolio worked out much less then the Gross NPA ratio
for the entire loan portfolio. Within the retail segment, the housing loans had the least gross
asset impairment. In fact, retailing make ample business sense in the banking sector.
While new generation private sector banks have been able to create a niche in this regard, the
public sector banks have not lagged behind. Leveraging their vast branch network and
outreach, public sector banks have aggressively forayed to garner a larger slice of the retail
pie. By international standards, however, there is still much scope for retail banking in India.
After all, retail loans constitute less than seven per cent of GDP in India vis-à-vis about 35
per cent for other Asian economies — South Korea (55 per cent), Taiwan (52 per cent),
Malaysia (33 per cent) and Thailand (18 per cent). As retail banking in India is still growing
from modest base, there is a likelihood that the growth numbers seem to get somewhat
exaggerated. One, thus, has to exercise caution in interpreting the growth of retail banking in
India.
1.1.3 Drivers of retail banking business in India
Some of the basic reasons which led to the retail banking growth are as follows:
First, economic prosperity and the consequent increase in purchasing power has given
a fillip to a consumer boom. During the 10 years after 1992, India's economy grew
at an average rate of 6.8 percent and continues to grow at almost the same rate – not many
countries in the world match this performance.
Second, changing consumer demographics indicate vast potential for growth in
consumption both qualitatively and quantitatively. India is one of the countries having
highest proportion (70%) of the population below 35 years of age (young population). The
BRIC report of the Goldman-Sachs, which predicted a bright future for Brazil, Russia, India
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and China, mentioned Indian demographic advantage as an important positive factor for
India.
Third, technological factors played a major role. Convenience banking in the form of
debit cards, internet and phone-banking, anywhere and anytime banking has attracted many
new customers into the banking field. Technological innovations relating to increasing use of
credit / debit cards, ATMs, direct debits and phone banking has contributed to the growth of
retail banking in India.
Fourth, the treasury income of the banks, which had strengthened the bottom lines of
banks for the past few years, has been on the decline during the last few years. In such a
scenario, retail business provides a good vehicle of profit maximization. Considering the fact
that retail’s share in impaired assets is far lower than the overall bank loans and advances,
retail loans have put comparatively less provisioning burden on banks apart from diversifying
their income streams.
Fifth, decline in interest rates have also contributed to the growth of retail credit by
generating the demand for such credit.
1.1.4 Opportunities and Challenges of Retail Banking in India
Retail banking has immense opportunities in a growing economy like India. As the
growth story gets unfolded in India, retail banking is going to emerge a major driver. How
does the world view us? As already referred to the BRIC Report, talking India as an
economic superpower; A. T. Kearney, a global management consulting firm, recently
identified India as the "second most attractive retail destination" of 30 emergent markets.
The rise of the Indian middle class is an important contributory factor in this regard.
The percentage of middle to high income Indian households is expected to continue rising.
The younger population not only wields increasing purchasing power, but as far as acquiring
personal debt is concerned, they are perhaps more comfortable than previous generations.
Improving consumer purchasing power, coupled with more liberal attitudes toward personal
debt, is contributing to India's retail banking segment.
Global investors are attracted to India because of the growing number of well-educated,
English-speaking workers who are comfortable working in information technology. India's IT
work force will be augmented by a booming population of engineering students. Furthermore,
India's labor pool also serves as an expanding customer base for retail bank products and
services.
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The development of India's economy is boosting overall consumer purchasing power. The
percentage of middle to high income Indian households is expected to continue rising. The
younger, more educated population not only wields increasing purchasing power, but it is
more comfortable than previous generations with acquiring personal debt
The combination of the above factors promises substantial growth in the retail sector, which
at present is in the nascent stage. Due to bundling of services and delivery channels, the areas
of potential conflicts of interest tend to increase in universal banks and financial
conglomerates. Some of the key policy issues relevant to the retail banking sector are:
financial inclusion, responsible lending, access to finance, long-term savings, financial
capability, consumer protection, regulation and financial crime prevention. The challenges
for the industry and its stakeholders are as follows:
First, retention of customers is going to be a major challenge. According to a research
by Reichheld and Sasser in the Harvard Business Review, 5 per cent increase in customer
retention can increase profitability by 35 per cent in banking business, 50 per cent in
insurance and brokerage, and 125 per cent in the consumer credit card market. Thus, banks
need to emphasise on retaining customers and increasing market share.
Second, rising indebtedness could turn out to be a cause for concern in the future.
India's position, of course, is not comparable to that of the developed world where household
debt as a proportion of disposable income is much higher. Such a scenario creates high
uncertainty. Expressing concerns about the high growth witnessed in the consumer credit
segments, the Reserve Bank has, as a temporary measure, put in place risk containment
measures and increased the risk weight from 100 per cent to 125 per cent in the case of
consumer credit including personal loans and credit cards (Mid-term Review of Annual
Policy, 2004-05).
Third, information technology poses both opportunities and challenges. Even with
ATM machines and Internet Banking, many consumers still prefer the personal touch of their
neighbourhood branch bank. Technology has made it possible to deliver services throughout
the branch bank network, providing instant updates to checking accounts and rapid
movement of money for stock transfers. However, this dependency on the network has
brought IT departments additional responsibilities and challenges in managing, maintaining
and optimizing the performance of retail banking networks. Illustratively, ensuring that all
bank products and services are available, at all times, and across the entire organization is
essential for today’s retails banks to generate revenues and remain competitive. Besides, there
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are network management challenges, whereby keeping these complex distributed networks
and applications operating properly in support of business objectives becomes essential.
Specific challenges include ensuring that account transaction applications run efficiently
between the branch offices and data centres.
Fourth, KYC Issues and money laundering risks in retail banking is yet another
important issue. Retail lending is often regarded as a low risk area for money laundering
because of the perception of the sums involved. However, competition for clients may also
lead to KYC procedures being waived in the bid for new business. Banks must also consider
seriously the type of identification documents they will accept and other processes to be
completed. The Reserve Bank has issued detailed guidelines on application of KYC norms in
November 2004.
1.1.5 But how competitive are the players?
The entry of new generation private sector banks has changed the entire scenario. Earlier the
household savings went into banks and the banks then lent out money to corporates.
Now they need to sell banking. The retail segment, which was earlier ignored, is now the
most important of the lot, with the banks jumping over one another to give out loans. The
consumer has never been so lucky with so many banks offering so many products to choose
from. With supply far exceeding demand it has been a race to the bottom, with the banks
undercutting one another. A lot of foreign banks have already burnt their fingers in the retail
game and have now decided to get out of a few retail segments completely. The nimble
footed new generation private sector banks have taken a lead on this front and the public
sector banks are trying to play catch up. The PSBs have been losing business to the private
sector banks in this segment. PSBs need to figure out the means to generate profitable
business from this segment in the days to come.
1.1.6 What about the foreign giants?
The foreign banks have identified the wide opportunity but there are certain systematic risks
involved in operating in the Retail market for them. These include regulatory restrictions that
prevent them from expanding their branch network. So these banks often take the Direct
Selling Agent (DSA) route whereby low-end jobs like sourcing or transaction processing are
outsourced to small regional layers. However, as a McKinsey study points out actual write-
offs on NPAs show a strong negative correlation with sharing of positive information. On top
of this, the spend-now-pay-later “credit culture” in India is just not picking up. A swift legal
procedure against consumers creating bad debt is virtually nonexistent. Finally, the vast
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geographical and cultural diversity of the country makes credit policy formulation a tough job
All these add up to the unattractiveness too, of the Indian retail market to the foreign players.
Yet Citibank, HSBC and Standard Chartered—all in India for more than a century, and with
relatively large retail networks—seem to have no pressing need to acquire a local bank.
Established foreign banks have preferred to take over customers or businesses from other
foreign banks that want to leave. Thus HSBC, in recent years, has acquired customers from
France's BNP, Germany's Deutsche Bank and Japan's Bank of Tokyo-Mitsubishi. ABN Amro
took over Bank of America's retail business.
1.1.7 Reasons for the change over from Corporate Banking to Retail Banking:
• The financial sector reforms undertaken by the Government since the year 1991 have
accelerated the process of disintermediation which has encouraged blue chip corporate to
access cheaper funds to meet their working capital requirements directly from investors in
India and abroad through capital market instruments and external Commercial Borrowings
route thus by-passing Banks in the process. The deregulation of markets and interest rates
has lead to cut throat competition among Banks for corporate loans making them to lend even
at PLR or sub PLR and offer other valued services at comparatively cheaper rates to big and
high value corporates. In the process, most of the banks have experienced substantial
reduction in interest spreads and drain on their profitability.
• The introduction of stringent Asset Classification, Income Recognition and provisioning
norms has resulted in growing menace of NPAs in corporate loans which has affected the
asset quality, profitability and capital adequacy of banks adversely. The risks involved in
corporate loans are very high as corporates have to keep all their eggs in one basket. The risks
involved in retail Banking advances are comparatively less and well diversified as loan
amounts are relatively small ranging from Rs. 5000 to Rs. 100 lakh and repayable normally
in short period of 3- years except housing loans (where repayment period is long up to 15
years in some cases) and from fixed source of income like salaries.
• Whereas corporate loans give average return of just 0.5 to 1.5 percent only, the retail
advances offer attractive interest spread of 3to 4 percent, because retail borrowers are less
interest rate sensitive than the Corporates. Another reason for large interest spreads on retail
advances is that the retail customers are too fragmented to bargain effectively.
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• While corporate loans are subject to ups and downs in trade frequently, retail loans are
comparatively independent of recession and continue to deliver even during the sluggish
phase of economy.
• Retail Banking gives a lot of stability and public image to banks as compared to corporate
banking.
• The housing loans, which form the major chunk of retail lending and where NPAs are the
least, carry risk weight of just 50% for capital adequacy purposes. This is likely to come
down further as new Basel Capital Accord or (Basel II) norms are put in place from the year
2006. This offers added incentive to banks for lending to this retail segment as against
corporate lending where capital consumption is higher.
• The greater amount of consumerism in the country with upswing in income levels of
burgeoning middle class, which has propensity to consume to raise their standard of living, is
enlarging the retail markets. This market is growing 2 50 percent per year and boosting the
demand for credit from households. The potential is huge as present penetration level is just
over 2 percent in the country. Given the easy liquidity scenario in the country the growth rate
in this sector is likely to go up manifold in the years come. This offers great potential for
banks to enlarge their loan books.
• The Indian mindset is also changing and consumers prefer to improve their quality of life
even if it means borrowing for facilities like housing, consumer goods vehicles and
vacationing etc. Borrowing and lending is no longer considered a taboo. The peer pressure
and demonstration effect is further pushing up demand for housing loans, consumer products
and automobiles. The profiles of customers are fast changing from conservative dodos to
fashionable peacocks. All these developments give big push to Retail Banking activities.
• Retail Banking clients are generally loyal and tend not to change from one Bank to another
very often.
• Large numbers of Retail clients facilitate marketing, mass selling and ability to
categorize/select clients using scoring system and data mining. Banks can cut costs and
achieve economies of scale and improve their bottom-line by robust growth in retail business
volume.
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• Through product innovations and competitive pricing strategies Banks can foster business
relationship with customers to retain the existing clients and attract new ones.
• Innovative products like asset securitization can open new vistas in sustaining optimal
capital adequacy and asset liability management for banks.
• Retail Banking offers opportunities to banks to cross-sell other retail products like credit
card, insurance, mutual fund products and demat facilities etc. to depositors and investors.
1.1.8 Impact of Retail Banking:
The major impact of retail Banking is that, the customers have become the Emperors – the
fulcrum of all Banking activities, both on the asset side and the liabilities front. The hitherto
sellers market has transformed into buyers market the customers have multiple of choices
before them now for cherry picking products and services, which suit their lifestyles and
tastes and financial requirements as well. Banks now go to their customers more often than
the customers go to their banks.
• Retail Banking is transforming banks into one stop financial super markets.
• The share of retail loans is fast increasing in the loan books of banks.
• Banks can foster lasting business relationship with customers and retain the existing
customers and attract new ones. There is a rise in their service as well.
• Banks can cut costs and achieve economies of scale and improve their revenues and profits
by robust growth in retail business. Reduction in costs offers a win win situation both for
banks and the customers.
• It has affected the interface of banking system through different delivery mechanism
• It is not that banks are sharing the same pie of retail business, the pie itself is growing
exponentially. Retail Banking has fuelled a considerable quantum of purchasing power
through a slew of retail products.
• Banks can diversify risks in their credit portfolio and contain the menace of NPAs. Retail
banking allows bank to cross sell other products and services as it is far more easier to sell
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other products to the same customer rather than search for absolutely new ones. Cross selling
is one of the best avenues for relationship
• Banking and retention of customers. Banks can thus increase their business volume and
improve their bottom-line substantially.
• Re-engineering of business with sophisticated technology based products will lead to
business creation, reduction in transaction costs and enhancement in efficiency of operations.
1.1.9 Problems faced in Retail Banking:
• Retail Banking has all it’s attendant risks. It is highly sensitive .Banks got to move
cautiously. It is easy to enter, but difficult to get out. A systematic and a calculated approach
is the pre-requisite for success in the long run.
• Retail Banking is being introduced with the concept of serving customer with better and
innovative products with the latest technology and easy availability. It becomes so popular
and widely acceptable that more and more customers had started to use it. Now it becomes a
mass product. Customer database have tremendously increased and it becomes difficult to
manage them.
• To match the customer inflows and current customer requirements as well as service
standards, banks have to set up more branches, distribution channels and new trained staff as
well as improvement in back office operations also in very near future. This itself a time
bounded problem and banks have to do it as early as possible.
• Today’s competitive market customer has more than one options for his retail banking
needs. Every bank is providing more or less similar kind of products. So an unsatisfied
customer can easily switch over to another competitor’s bank. So banks need to be very
careful in handling the customers. They have to continually improve their service standards.
• Retail Banking is so wide accepted by the customer as well as very aggressively promoted
by the bankers that if the bankers do not take adequate care in distributing and recovering
advances, there are chances of increasing in NPAs in coming feature. And that would be an
alarming situation.
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1.1.10 Retail Banking Products Portfolio
A.Deposits:
There are many products in retail banking like Fixed Deposit, Savings Account, Current
Interpretation: The ranks analysed, using garatte ranking method, shows that the respondents
give their first preference to the interest rate offered by a bank when they go for availing a
loan; followed by the other attributes as shown in the table above.
TABLE 4.28:The various banks preferred for availing the loan.
Name of Banks Frequency PercentageFederal Bank 6 14.29ICICI 4 9.52SBI 3 7.14SBT 5 11.90SIB 19 45.24Tiruvalla East Co-opt Bank 3 7.14HDFC 2 4.76Total 42 100
CHART 4.17:
The various banks preferred for availing the loan
0 10 20 30 40 50
Federal Bank
ICICI
SBI
SBT
SIB
Tiruvalla East Co-opt Bank
HDFC
Pe
rce
nta
ge
Banks
Percent
Interpretation: The above data shows that out of the 42 respondents who has availed loan
45.2% has availed it from SIB, followed by 14.3% from Federal Bank, 11.9% from SBT and
the rest from other few banks as shown in the bank.
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TABLE 4.29: Reasons which influenced the customers choose a bank for the loan.
ReasonsFrequency Percent
Good customer service 9 21.43Low interest rate 10 23.81Quick processing 7 16.67Customer Satisfaction 2 4.76Simple Formalities 5 11.90Near to home/business/work place 6 14.28Promptness and knowledge of Staff 3 7.14Total 42 100
CHART 4.18:
Reasons which influenced the customers to choose a bank for the Loan
0
5
10
15
20
25
Percent
Reasons
Per
cen
tag
e
Good customer service Low interest rate
Quick processing Customer Satisfaction
Simple Formalities Near to home/business/work place
Promptness and knowledge of Staff
z
Interpretation: The above data shows that the attribute which the respondents give the first
preference for to choose a bank for availing a loan is lowest interest rate, followed by good
customer service, quick processing and so on.
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TABLE 4.30: Preferences of the respondents (ranks provided) towards the various loans from SIB.
Interpretation: : The ranks analyzed, using garatte ranking method, shows that the
respondents give their first preference to the personal loan offered by the bank, followed by
the gold loan and so on as shown in the table above.
TABLE 4.31: The other banks where the respondents have account with
Banks FrequencySBT 91Federal Bank 45ICICI 37SBI 31Axis Bank 23Others 85
Interpretation: The above data shows that the major competitor for the bank is State Bank of
Travancore, followed by Federal Bank, ICICI and others as shown in the table.
TABLE 4.32: Rating given to SIB’s customer service when compared to the other
bank’s the respondents have account with.
Ratings PercentAverage 15.28Good 40.28Very Good 25Excellent 19.44
CHART 4.19:
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0
10
20
30
40
50
Percentage
Average Good Very Good Excellent
Ratings
Rating given toSIB's Customer Service when compared to the other bank's.
Percent
Interpretation: The data above shows that 40.28% of the respondents have rated this attribute
to be good. So it is interpreted that the customer service of SIB is in par with other banks, the
respondents have account with.
TABLE 4.33: Rating given to SIB’s transaction speed when compared to the other
banks, the respondents have account with.
Ratings PercentageAverage 9.03Good 57.64Very Good 27.78Excellent 5.56
Interpretation: The data above shows that 57.64% of the respondents have rated this attribute
to be good. So it is interpreted that the transaction time of SIB is in par with other banks, the
respondents have account with.
TABLE 4.34: Rating given to SIB’s transaction cost when compared to the other banks,
the respondents have account with.
Ratings PercentagePoor 0.69Average 32.64Good 58.33Very Good 7.64Excellent 0.69
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Interpretation: The data above shows that 58.33% of the respondents have rated this attribute
to be good. So it is interpreted that the transaction cost of SIB is in par with other banks, the
respondents have account with.
TABLE 4.35: Rating given to SIB’s technology & innovation when compared to the
other banks, the respondents have account with.
Ratings PercentageAverage 26.39Good 54.86Very Good 15.97Excellent 2.78
Interpretation: The data above shows that 54.86% of the respondents have rated this attribute
to be good. So it is interpreted that the technology & innovation of SIB is in par with other
banks, the respondents have account with.
CROSS TABULATION
TABLE 4.36: Relationship between awareness of the internet services and the no: of
NRI customers .
Internet ServicesAwareness(No: of Respondents) NRI's
Transfer funds 50 29Bill/ Loan Payment 38 20DD/ Term Depo Request 34 21Getting Reminders 44 29None 99 2
Interpretation: The above data reveals that more than half of the respondents, aware of the
internet banking services, are NRIs. So, it can be interpreted that NRIs can be attracted more
by providing more innovative and technological user- friendly products.
TABLE 4.37 : Relationship between the income level of the respondents and the no: of
third party investors.
Income Level3rd Party Investors
5000-15000 315001-25000 925001-35000 7
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> 35000 15Total 34
Interpretation: The above data shows that the majority of the customers who have invested in
third party products are with income level of more than Rs.35000 per month. So it can be
interpreted that high income level customers, especially NRIs can be attracted more to
increase such investments.
TABLE 4.38 : Relationship between the no: of year the respondents are associated with
the bank and the privilege received.
No: of Years Privilege TotalYes No
15 years 1 7 813 years 1 4 510 Years 5 16 21Others 4 123 127Total 11 150
Interpretation: The data above clearly reveals that the bank has not given due care to provide
any privilege/ benefit for its regular/ long- term customers.
5.1 FINDINGS
27.3% of the respondents fall under the age category of 36- 45 years.
72% of the respondents are males.
40% of the respondents are graduates (UG).
61% of the respondents are with service as their occupation, followed by 20% of
pensioners.
34% of the respondents have Rs. 5000- 15000 as their income level per month.
27.33% of the respondents are associated with the bank from the past 10- 13 years.
Only 22.7% of the respondents have invested in third party products, whereas only
9.3% have availed loan from the bank.
48% of the respondents have rated the bank good with regard to the courtesy level of
the bank’s personnel/ staff.
40% of the respondents have rated the bank good with regard to the working hours of
the bank.
50.67% of the respondents have rated the bank good with regard to the bank staff’s
knowledge in answering/ solving the customers’ queries.
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50% of the respondents have rated the bank good with regard to the fastness, the
personnel show in responding/ attending to the customer.
50% of the respondents have rated the bank good with regard to the transaction time
taken for cash deposit.
38% of the respondents have rated the bank good with regard to the easiness the
customers found to open an account with the bank.
63.3% of the respondents have rated the bank good with regard to the product/ service
innovation in the past two years.
56% of the respondents have rated the bank, average, with regard to the promptness in
keeping the customers informed of deposit rates/ service charges ; whereas the
management rates it to be very good which reveals a gap existing in this service
between the two perspectives.
51.3% of the respondents have rated the bank very good with regard to the grievance
redressal system.
75.3% of the respondents have rated the bank very good with regard to the comfort
facilities it offers.
72.67% of the respondents have rated the bank very good with regard to the location
of the bank.
42% of the respondents have rated the bank average with regard to the quality of the
ATM services provided by the bank; whereas management rates it to be very good
which again reveals a gap existing in between the two perspectives.
42% out of the few who have availed loan from any of the bank have rated the bank’s
fastness in processing and disbursing loans to be good.
46% of the respondents have rated the bank average with regard to the interest rate
currently being offered. The management has rated this as good which shows a slight
gap existing and also that the interest rate offered by the bank is not much satisfactory
to the customers.
38.1% out of the 63 respondents who use the internet and mobile facilities have rated
bank’s this facility to be average. The management has rated this as very good which
shows a slight gap existing and also the dissatisfaction of the customers regarding this
service.
Only 46% of the respondents are aware of the facility such as requirement for cheque
book/ statement through the ATM.
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Only 30% and 23.3% of the respondents use the mobile and internet banking facility
of the bank respectively.
Interest rate offered by a bank is rated as the first attribute which a customer considers
to choose a bank before going for a bank loan.
The next preferred bank for availing loan after SIB is found to be State Bank of
Travancore and Federal Bank, the main reasons being lower interest rate and good
customer service.
Since 91 respondents out of the 150 has account with SBT; the main competitor for
the bank turn out to be SBT followed by Federal Bank and ICICI.
52.78% of the respondents rate SIB to be good w.r.t., attributes like customer service,
transaction cost, etc., when compared to the other competitor banks they have account
with; which shows that SIB is in par with those banks.
Majority of the respondents have found to have not received any privileges/ benefits
for being a regular/ long term customer of SIB.
5.2 SUGGESTIONS
46% of the respondents felt that the interest rates on loan were high and hence the
interest rates may be reduced to attract more customers.
Only 28% of the respondents being female, the bank can look forward to design few
more schemes to attract the female customers.
Only 22.7% of the respondents having been invested in the third party products the
bank can look for promoting the same. The bank also has a huge scope for this, with
high income group NRI customers, in the area.
Since a large number of the respondents are unaware of the services provided through
internet(66%)/ mobile(56.7%) banking; initiatives, such as posting a list of services
that are rendered to the customers inside the bank premises, demo of the services in
the bank website; can be done to make the customers aware, and use the services
provided through ATM, internet and mobile banking of the bank.
As the cross tabulation reveal, except one out of the few customers who have been
associated with the bank for the past 15-13 years have not been receiving any
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privilege. It is therefore suggested to give privilege to its long term customers so as to
retain them.
5.3 CONCLUSION
Customers always look for more user- friendly products and better interest rates when
compared to other banks they have account with, so, through product innovation and
competitive pricing strategy the bank can foster business relationship with its customers.
The gap analyzed can be minimized by better technology, customer service and also by
creating awareness about the various services; thereby increasing the customer base. So
as to retain the existing customers and to build up customer loyalty, Customer
Relationship Management should be given more importance.
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5.4 SCOPE FOR FURTHER RESEARCH
There is a wide scope to extend this study in the future. Future researchers may continue the
study by taking number of private or public sector banks, to bring about the potential of retail
banking industry.
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1. QUESTIONNAIRE ( For Customers).
I will be thankful to the respondents, if you will spare 4-5 minutes from your valuable time to answer this questionnaire, which will help, The South Indian Bank to reach upto your expectations in Retail Banking and also finish my project towards the partial fulfillment of MBA Degree.
1. Age: 25-35 yrs 36-45 yrs 46-55 yrs Above 55yrs
2. Gender: Male Female
3. Educational Qualification: School UG PG
4. Occupation: Student Service Business Pensioner House-wife
6. For how long are you associated with the SIB? ( in mth/ yrs) _____________ .
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7. In South Indian Bank, you have: Savings A/c Current A/c Has availed any loan Invested in any third party pdt like LIC, Mutual funds, etc.
Please use a tick mark against any one option to give your responses/ ratings, for the following questions:
E = Excellent VG = Very Good G = Good A = Average P = Poor
8. How do you rate the South Indian Bank :
E VG G A P(a) With regard to the courtesy level of the bank’s personnel/ staff.(b) With regard to the working hours of the bank.(c) With regard to; how well informed/ knowledgeable you feel the bank staff is in answering/ solving your questions/ queries.(d) With regard to; how fast the personnel are in responding/ attending to you.(e) With regards to the “Transaction time” taken forCash deposit.(f)With regards to the “Transaction time” taken forCash withdrawal.(g) With regards to the “Transaction time” taken to issue DD/Cheque/statements.(h) With regard to; how hassle free it was for you to open an account with the bank.(i) With regard to the product or service innovation in the past two years.(j) With regard to its promptness in keeping you informed of deposit rates/ service charges.(k) With regard to the bank’s grievance redressal system.(l) With regard to the bank’s facility in terms of the comfort facilities it offers.(m) With regard to the location of the bank.(n) With regard to the quality of the ATM services provided by the bank.(o)With regard to the debit & credit card services offered by the bank
(p) With regard to the fastness you feel it is in processing and disbursing loans.(q) With regard to the interest rates currently being offered.(r) With regard to the internet/mobile banking facility offered by the bank
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9. Please use a tick mark in the appropriate column to give your responses for the following statements:
a. I don’t face any problem in withdrawing cash from ATM.b. ATM services are useful for me to deposit cash & cheques.c. ATM services are useful for me to require my Cheque book.d. ATM services are useful for me to get the enquiry statement of my
account.Internet Banking
e. It helps me to make an instant fund transfer or schedule a transfer for the future date.
f. It helps me know the status of my Cheque.g. It helps me in bill payment.h. It helps me to get the interest details on deposit accounts.i. It helps me get alerts like Deposit maturing soon, loan repayment
alert, minimum balance alert...Mobile Banking
j. It is useful for me to get the balance in any of my accounts instantaneously.
k. It is useful for to inquire on the Status of a cheque issued by me.l. It helps me to locate the nearest SIB ATMs based on PIN Codem. It helps me get alerts like Deposit maturing soon, loan repayment
alert, minimum balance alert...n. I will be able to set my own time preferences for receiving
messages.
10. How many facilities out of the following are you aware of being provided through the ATM services of SIB? Withdrawal of Cash Deposit Cash/ Cheques Balance verification Requirement for Cheque Book/ Statement
11. How many facilities out of the following are you aware of being provided through the internet banking of SIB? To transfer funds from the bank to personalized transaction. Bill/Loan Payment DD/ Term Deposit Request Getting reminders/alerts. None of the above.
12. How many facilities out of the following are you aware of being provided through the mobile banking of SIB? A/c balance any time To know the cheque details Receiving reminders/ alerts. None of the above
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13. What are all the attributes you consider to choose a bank before going for a bank loan? (Rank them from 1= most preferred to 5= least preferred). Interest rates offered Security demanded Efficient Customer Service Repayment Period Eligibility for loan (like your age, income,etc.)
14. Which were the all the banks in your consideration set when you planned for availing a loan?__________________________________________________________________________________________________________________________________
15. Which bank did you finally prefer and what influenced you for that?Bank: _______________Reason: _____________________________________________
16. Which loan will you prefer the most to take from SIB?( Pls rank these from 1- most preferred to 6- least preferred) Gold Loan Educational Loan Personal Loan House Loan Vehicle Loan Agricultural Loan
17. Which are all the other banks you have account in, other than SIB?______________________________________________________________________________________________________________________________________
18. How do you rate SIB when compared to those banks, in the following attributes?E = Excellent VG = Very Good G = Good A = Average P = Poor
Attributes E VG G A PEfficient Customer ServiceTime SavingTransaction CostTechnology & Innovation
19. Did you receive any privileges/ benefits for being a regular/long-term customer of SIB?If Yes, what ___________________________________________________________
20. Did you find any drawbacks in the services of SIB?
Yes No
21. If Yes, please give some suggestions to serve you better.____________________________________________________________________________________________________________________________________________________________________________________________________
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22. Are you a Non Residential Indian?
Yes No
2. QUESTIONNAIRE (For Management).
Sir/Madam,I will be very much thankful to you if you will spare your 3-4 minutes from your valuable time to answer this questionnaire; which will help me to better perform the comparative study and to analyze the gap between the management and customers.
Please use a tick mark against any one option to give your response/ rating, for the following questions:
E = Excellent VG = Very Good G = Good A = Average P = Poor
1. How do you rate your South Indian Bank :
E VG G A P(a) With regard to the courtesy level of the bank’s personnel/ staff.(b) With regard to the working hours of the bank.(c) With regard to; how well informed/ knowledgeable you feel the bank staff is in answering/ solving the customer’s questions/
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queries.(d) With regard to; how fast the personnel are in responding/ attending to the customers.(e) With regard to the “Transaction time” taken forCash deposit.(f)With regard to the “Transaction time” taken forCash withdrawal.(g) With regard to the “Transaction time” taken to issue DD/Cheque/statements.(h) With regard to; how hassle free it is for your customers to open an account with the bank.(i) With regard to the product or service innovation in the past two years.(j) With regard to its promptness in keeping the customers informed of deposit rates/ service charges.(k) With regard to the bank’s grievance redressal system.(l) With regard to the bank’s facility in terms of the comfort facilities it offers.(m) With regard to the location of the bank.(n) With regard to the quality of the ATM services provided by the bank.(o)With regard to the debit & credit card services offered by the bank
(p) With regard to the fastness you feel it is in processing and disbursing loans.(q) With regard to the interest rates currently being offered.
(r) With regard to the internet/mobile banking facility offered by the bank.
2. How many percent of your customers do you feel are aware of all the facilities available through your retail banking services like:ATM Services: _____________Mobile Services: ____________Internet Services: ____________
3. How many percent do you feel are aware but are not using these facilities?Percent: _____________Reason: __________________________________________________________________________________________________________________
4. What are all the privileges/ benefits you provide for a regular/long-term customer of SIB?__________________________________________________________________
5. Which are all the banks according to you turning out to be your tough competitors?_____________________________________________________________________________________________________________________________________
6. What are all the measures you are taking to be ahead of your competitors?