8/2/2019 Nanu Ram Full Ready
1/79
Object1
CHAPTER - 1
INTRODUCTION
A Bank is a financial institution that aspects deposits and channels those deposits into
lending activities. The banks primarily provide financial services to customers while the
main goal is enriching investors. Government restriction on financial activities by banks
vary over time and location. Banks are important players in financial markets and other
services such as investment funds and loans. In some countries such as Germany
banks have historically owned major stakes in industrial corporations while in other
countries such as the United states banks are prohibited form owing non-financial
companies. In Japan banks are usually the nexus of a cross-share holding entity known
as the keirestu in France prevalent, as most banks offer insurance services (and now
real estate services) to their clients.
The level of government regulation of the banking industry varies widely, with countries
such as Iceland, having relatively light regulation of the banking sector, and countries
such as China having a wide variety of regulations but no systematic process that can
be followed typical of a communist system.
The oldest bank still existence is Monte dei paschi di siena headquartered in siena, Italy
which has been operating continuously since 1472
1.1. Origin Of The Word Bank
The name bank derives from the Italian word banco "desk/bench", used during the
Reaissancc by Jewish Florentine bankers, who used to make their transactions above a
desk covered by a green tablecloth. However, there are traces of banking activity even
in times ancient, which indicates that the word 'bank' might not necessarily come from
the word 'banco'.
M.S. Ramaiah College of Arts, Science and Commerce Page 1
8/2/2019 Nanu Ram Full Ready
2/79
Object1
In fact, the word traces its origins back to the Ancient Roman Empire, where
moneylenders would set up their stalls in the middle of enclosed courtyards called
macella on a long bench called a bancu, from which the words banco and bank arederived. As a moneychanger, the merchant at the bancu did not so much invest money
as merely convert the foreign currency into the only legal tender in Romethat of the
Imperial Mint.
The earliest evidence of money-changing activity is depicted on a silver drachm coin
from ancient Hellenic colony Trapezus on the Black Sea, modern Trabzon. c. 350-325
BC, presented in the British museum in London. The coin shows a banker's table laden
with coins, a pun on the name of the city
1.1.1. Traditional bank practices
Banks act as payment agents by conducting checking or current accounts for
customers, paying cheques drawn by customers on the bank, and collecting cheques
deposited to customers' current accounts. Banks also enable customer payments via
other payment methods such as telegraphic transfer, EFTPOS, and ATM.
Banks borrow money by accepting funds deposited on current accounts, by accepting
term deposits, and by issuing debt securities such as banknotes and bonds. Banks lend
money by making advances to customers on current accounts, by making installment
loans, and by investing in marketable debt securities and other forms of money lending.
Banks provide almost all payment services, and a bank account is considered
indispensable by most businesses, individuals and governments. Non-banks that
provide payment services such as remittance companies are not normally consideredan adequate substitute for having a bank account.
Banks borrow most funds from households and non-financial businesses, and lend most
funds to households and non-financial businesses, but non-bank lenders provide a
significant and in many cases adequate substitute for bank loans, and money market
M.S. Ramaiah College of Arts, Science and Commerce Page 2
8/2/2019 Nanu Ram Full Ready
3/79
Object1
funds, cash management trusts and other non-bank financial institutions in many cases
provide an adequate substitute to banks for lending savings to
1.2. Role of banking
Commercial Role
The commercial role of banks is not limited to banking, and includes:
issue of banknotes issued by a banker and payable to bearer on demand)
processing of payments by way of telegraphic transfer, internet banking or other
means
issuing bank drafts and bank cheques
accepting money on term deposit
lending money by way of overdraft, installment loan or otherwise
providing documentary and standby tetters of credit (trade finance),
guarantees, performance bonds, securities underwriting commitments and other
forms of off-balance sheet exposures
safekeeping of documents and other items in safe deposit boxes
currency exchange
acting as a 'financial supermarket' for the sale, distribution or brokerage, with or
without advice, of insurance, unit trusts and similar financial products
1.1. Economic Function
The economic functions of banks include
1. Issue of money, in the form of banknotes and current accounts subject to cheque
or payment at the customer's order. These claims on banks can act as money
because they are negotiable anjj/or repayable on demand, and hence valued at
par. They are effectively transferable by mere delivery, in the case of banknotes,or by drawing a cheque that the payee may bank or cash.
2. Netting and settlement of payments - banks act as both collection and paying
agents for customers, participating in interbank clearing and settlement systems
to collect, present, be presented with, and pay payment instruments. This
M.S. Ramaiah College of Arts, Science and Commerce Page 3
8/2/2019 Nanu Ram Full Ready
4/79
Object1
enables banks to economise on reserves held for settlement ot payments, since
inward and outward payments offset each other. II also enables the offsetting of
payment tlows between geographical areas, reducing the cost of settlementbetween them.
3. Credit intermediation - banks borrow and lend back-to-back on their own account
as middle men.
4. Credit quality improvement - banks lend money to ordinary commercial and
personal borrowers (ordinary credit quality), but are high quality borrowers. The
improvement comes from diversification of the bank's assets and capital which
provides a buffer to absorb losses without defaulting on its obligations. However,
banknotes and deposits are generally unsecured; if the bank gets into difficulty
and pledges assets as security, to raise the funding it needs to continue to
operate, this puts the note holders and depositors in an economically
subordinated position.
5. Maturity transformation - banks borrow more on demand debt and short term
debt, but provide more long term loans. In other words, they borrow short and
lend long. With a stronger credit quality than most other borrowers, banks can do
this by aggregating issues (e.g. accepting deposits and issuing banknotes) and
redemptions (e.g. withdrawals and redemptions of banknotes), maintaining
reserves of cash, investing in marketable securities that can be readily converted
to cash if needed, and raising replacement funding as needed from various
sources (e.g. wholesale cash markets and securities markets).
1.4. Law Of Banking
Banking law is based on a contractual analysis of the relationship between the bank
(defined above) and the customerdefined as any entity for which the bank agrees to
conduct an account.
M.S. Ramaiah College of Arts, Science and Commerce Page 4
8/2/2019 Nanu Ram Full Ready
5/79
Object1
The law implies rights and obligations into this relationship as follows
1. The bank account balance is the financial position between the bank and thecustomer: when the account is in credit, the bank owes the balance to the
customer; when the account is overdrawn, the customer owes the balance to the
bank.
2. The bank agrees to pay the customer's cheques up to the amount standing to the
credit of the customer's account, plus any agreed overdraft limit.
3. The bank may not pay from the customer's account without a mandate from the
customer, e.g. a cheque drawn by the customer.
4. The bank agrees to promptly collect the cheques deposited to the customer's
account as the customer's agent, and to credit the proceeds to the customer's
account.
5. The bank has a right to combine the customer's accounts, since each account is
just an aspect of the same credit relationship.
6. The bank has a lien on cheques deposited to the customer's account, to the
extent that the customer is indebted to the bank.
7. The bank must not disclose details of transactions through the customer's
account unless the customer consents, there is a public duty to disclose, the
bank's interests require it, or the law demands it.8. The bank must not close a customer's account without reasonable notice, since
cheques are outstanding in the ordinary course of business for several days.
These implied contractual terms may be modified by express agreement between the
customer and the bank. The statutes and regulations in force within a particular
M.S. Ramaiah College of Arts, Science and Commerce Page 5
8/2/2019 Nanu Ram Full Ready
6/79
Object1
jurisdiction may also modify the above terms and/or create new rights, obligations or
limitations relevant to the bank-customer relationship.
Some types of financial institution, such as building societies and credit unions, may be
partly or wholly exempt from bank licence requirements, and therefore regulated under
separate rules.
The requirements for the issue of a bank licence vary between jurisdictions but typically
include:
1. Minimum capital
2. Minimum capital ratio
3. 'Fit and Proper* requirements for the bank's controllers, owners, directors, and/or
senior officers
4. Approval of the bank's business plan as being sufficiently prudent and plausible.
1.5. BANKING CHANNELS
Banks offer many different channels to access their banking and other services:
A branch, banking centre or financial centre is a retail location where a bank or
financial institution offers a wide array of face-to-face service to its customers.
ATM is a computerised telecommunications device that provides a financial
institution's customers a method of financial transactions in a public space
without the need for a human clerk or bank teller. Most banks now have more
ATMs than branches, and ATMs are providing a wider range of services to a
wider range of users. For example in Hong Kong, most ATMs enable anyone to
deposit cash to any customer of the bank's account by feeding in the notes andentering the account number to be credited. Also, most ATMs enable card
holders from other banks to get their account balance and withdraw cash, even if
the card is issued by a foreign bank.
M.S. Ramaiah College of Arts, Science and Commerce Page 6
8/2/2019 Nanu Ram Full Ready
7/79
Object1
Mail is part of the postal system which itself is a system wherein written
documents typically enclosed in envelopes, and also small packages containing
other matter, are delivered to destinations around the world. This can be used todeposit cheques and to send orders to the bank to pay money to third parties.
Banks also normally use mail to deliver periodic account statements to
customers.
Telephone banking is a service provided by a financial institution which allows its
customers to perform transactions over the telephone. This normally includes bill
payments for bills from major billers (e.g. for electricity).
Online banking is a term used for performing transactions, payments etc. over
the Internet through a bank, credit union or building society's secure website.
Mobile banking is a method of using one's mobile phone to conduct simple
banking transactions by remotely linking into a banking network.
Video banking Is a term used for performing banking transactions or professional
banking consultations via a remote video and audio connection. Video banking
can be performed via purpose built banking transaction machines (similar to an
Automated teller machine), or via a videoconference enabled bank branch.
1.6. Types Of Bank
Banks' activities can be divided into retail banking, dealing directly with individuals and
small businesses; business banking, providing services to mid-market business;
corporate banking, directed at large business entities; private banking, providing wealthmanagement services to high net worth individuals and families; and investment
banking, relating to activities on the financial markets. Most banks are profit-making,
private enterprises. However, some are owned by government, or are non-profit
organizations.
M.S. Ramaiah College of Arts, Science and Commerce Page 7
8/2/2019 Nanu Ram Full Ready
8/79
Object1
Central banks are normally government-owned and charged with quasi-regulatory
responsibilities, such as supervising commercial banks, or controlling the cash interest
rate. They generally provide liquidity to the banking system and act as the lender of lastresort in event of a crisis.
1.6.1. Types of retail banks.
Atm Al Rajhi Bank
M.S. Ramaiah College of Arts, Science and Commerce Page 8
8/2/2019 Nanu Ram Full Ready
9/79
Object2
National Cupper Bank. Salt Lake City 1911
National Bank of the Republic, Salt Lake City, 1908
M.S. Ramaiah College of Arts, Science and Commerce Page 9
8/2/2019 Nanu Ram Full Ready
10/79
Object2
Commercial bank
The term used for a normal bank to distinguish it trom an investment bank. After theGreat Depression, the U.S. Congress required that banks only engage in banking
activities, whereas investment banks were limited to capital market activities. Since the
two no longer have to be under separate ownership, some use the term "commercial
bank" to refer to a bank or a division of a bank that mostly deals with deposits and loans
from corporations or large businesses.
Community banks
Llocally operated financial institutions that empower employees to make local decisions
to serve their customers and the partners.
Community development banks
Regulated banks that provide financial services and credit to under-served markets or
populations.
Postal savings banks
Savings banks associated with national postal systems. Private banks: banks that
manage the assets of high net worth individuals.
Offshore banksBanks located in jurisdictions with low taxation and regulation. Many offshore banks are
essentially private banks.
Savings bank
In Europe, savings banks take their roots in the 19th or sometimes even 18th century.
Their original objective was to provide easily accessible savings products to all strata of
the population. In some countries, savings banks were created on public initiative: in
others, socially committed individuals created foundations to put in place the necessary
M.S. Ramaiah College of Arts, Science and Commerce Page 10
8/2/2019 Nanu Ram Full Ready
11/79
Object2
Infrastructure. Nowadays, European savings banks have kept their focus
on retail banking
Payments, savings products, credits and insurances for individuals or small andmedium sized enterprises. Apart from this retail focus, they also differ from commercial
banks by their broadly decentralised distribution network, providing local and regional
outreachand by their socially responsible approach to business and society.
Building societies and l.anriesbanks
Institutions that conduct retail banking.
Ethical banks
Banks that prioritize the transparency of all operations and make only what they
consider to be socially-responsible investments.
Islamic banksBanks that transact according to Islamic principles.
1.6.2. Types of investment banks
Investment banks "underwrite" (guarantee the sale of) stock and bond issues,
trade for their own accounts, make markets, and advise corporations on capital
market activities such as mergers and acquisitions.
Merchant banks were traditionally banks which engaged in trade finance. The
modern definition, however, refers to banks which provide capital to firms in the
form of shares rather than loans. Unlike venture capital firms, they tend not to
invest in new companies.
1.6.3. Both combined
M.S. Ramaiah College of Arts, Science and Commerce Page 11
8/2/2019 Nanu Ram Full Ready
12/79
Object2
Universal banks, more commonly known as financial services companies,
engage in several of these activities. These big banks are very diversified groups
that, among other services,
also distribute insurance hence the term bancassurance, a portmanteau word
combining "banque or bank" and "assurance", signifying that both banking and
insurance are provided by the same corporate entity. Other types of banks
Islamic banks adhere to the concepts of Islamic law. This form of banking
revolves around several well-established principles based on Islamic canons. All
banking activities must avoid interest, a concept that is Forbidden in Islam.
Instead, the bank earns profit and fees on the financing facilities that it extends to
customers.
1.7. Bank Of Economy
1.7.1. Size of global banking industry
Assets of the largest 1,000 banks in the world grew by 6.8% in the 2008/2009 financial
year to a record $96.4 trillion while profits declined by 85% to $115bn. Growth in assets
in adverse market conditions was largely a result of recapitalisation. EU banks held the
largest share of the total, 56% in 2008/2009. down from 61% in the previous year. Asian
banks' share increased from 12% to 14% during the year, while the share of US banks
increased from 11% to 13%. Fee revenue generated by global investment banking
totalled S66.3bn in 2009, up 12% on the previous year. The United States has the most
banks in the world in terms of institutions (7,085 at the end of 2008) and possibly
branches (82,000 This is an indicator of the geography and regulatory structure of the
USA, resulting in a large number of small to medium-sized institutions in its banking
system. As of Nov 2009, China's top 4 banks have in excess of 67,000 branches(ICBC:18000+, BOC:12000+,CCB:13000+,ABC:24000+) with an additional 140 smaller
banks with an undetermined number of branches. Japan had 129 banks and 12,000
branches. In 2004, Germany, France, and Italy each had more than 30,000 branches
more than double the 15,000 branches in the UK.
M.S. Ramaiah College of Arts, Science and Commerce Page 12
8/2/2019 Nanu Ram Full Ready
13/79
Object2
Financial sector reforms were initiated as part of overall economic reforms in the
country and wide ranging reforms covering industry, trade, taxation, external sector,
banking and financial markets have been carried out since mid 1991. A decade ofeconomic and financial sector reforms has strengthened the fundamentals of the Indian
economy and transformed the operating environment for banks and financial institutions
in the country. The sustained and gradual pace of reforms has helped avoid any crisis
and has actually fuelled growth. As pointed out in the RBI Annual Report 2001-02, GDP
growth in the 10 years after reforms i.e. 1992-93 to 2001-02 averaged 6.0% against
5.8% recorded during 1980-81 to 1989-90 in the pre-reform period. The most significant
achievement of the financial sector reforms has been the marked improvement in the
financial health of commercial banks in terms of capita! adequacy, profitability and asset
quality as also greater attention to risk management. Further, deregulation has opened
up new opportunities for banks to increase revenues by diversifying into investment
banking, insurance, credit cards, depository services, mortgage financing, securitization,
etc. At the same time, liberalization has brought greater competition among banks, both
domestic and foreign, as well as competition from mutual funds. NBFCs, post office, etc.
Post-WTO, competition will only get intensified, as large global players emerge on the
scene. Increasing competition is squeezing profitability and forcing banks to work
efficiently on shrinking spreads. Positive fallout of competition is the greater choice
available to consumers, and the increased level of sophistication and technology in
banks. As banks benchmark themselves against global standards, there has been a
marked increase in disclosures and transparency in bank balance sheets as also
greater focus on corporate governance.
1.8. Industrial Profile
1.8.1. Origin And Development Of The Industry
M.S. Ramaiah College of Arts, Science and Commerce Page 13
8/2/2019 Nanu Ram Full Ready
14/79
Object2
ING Vysya Bank Ltd.. is an entity formed with the coming together of erstwhile, Vysya
Bank Ltd, a premier bank in the Indian Private Sector and a global financial
powerhouse, ING of Dutch origin, during Oct 2002.
The origin of the erstwhile Vysya Bank was pretty humble. It was in the year 1930 that a
team of visionaries came together to form a bank that would extend a helping hand to
those who weren't privileged enough to enjoy banking services. It's been a long journey
since then and the Bank has grown in size and stature to encompass every area of
present-day banking activity and has carved a distinct identity of being India's Premier
Private Sector Bank.
In 1980. the Bank completed fifty years of service to the nation and post 1985; the Bank
made rapid strides to reach the coveted position of being the number one private sector
bank. In 1990. the bank completed its Diamond Jubilee year. At the Diamond Jubilee
Celebrations, the then Finance Minister Prof. Madhu Dandavate, had termed the
performance of the bank "Stupendous'. The 75th anniversary, the Platinum Jubilee of
the bank was celebrated during 2005. The long journey of seventy-five years has had
several milestones.
1.8.2. Growth And Present Status Of The Industry
The financial sector is in a process of rapid transformation. Reforms are continuing as
part of the overall structural reforms aimed at improving the productivity and efficiency
of the economy. The role of an integrated financial infrastructure is to stimulate and
sustain economic growth.
The USS 28 billion Indian financial sector has grown at around 15 per cent and hasdisplayed stability for the last several years, even when other markets in the Asian
region were facing a. crisis. This stability was ensured through the resilience that has
been built into the system over time. The financial sector has kept pace with the growing
needs of corporate and other borrowers. Banks, capital market participants and insurers
have developed a wide range of products and services to suit varied customer
M.S. Ramaiah College of Arts, Science and Commerce Page 14
8/2/2019 Nanu Ram Full Ready
15/79
Object2
requirements. The Reserve Bank of India (RBI) has successfully introduced a regime
where interest rates are more in line with market forces.
Financial institutions have combated the reduction in interest rates and pressure on
their margins by constantly innovating and targeting attractive consumer segments.
Banks and trade financiers have also played an important role in promoting foreign
trade of the country.
1.9. Banks
The Indian banking system has a large geographic and functional coverage. Presently
the total asset size of the Indian banking sector is USS 270 billion while the total
deposits amount to USS 220 billion with a branch network exceeding 66,000 branches
across the country. Revenues of the banking sector have grown at 6 per cent CAGR
over the past few years to reach a size of USS 15 billion. While commercial banks cater
to short and medium term financing requirements, national level and state level financial
institutions meet longer-term requirements. This distinction is getting blurred with
commercial banks extending project finance. The total disbursements of the financial
institutions in 2001 were USS 14 billion.
Banking today has transformed into a technology intensive and customer friendly model
with a focus on convenience. The sector is set to witness the emergence of financial
supermarkets in the form of universal banks providing a suite of services from retail to
corporate banking and industrial lending to investment banking. While corporate
banking is clearly the largest segment, personal financial services is the highest growth
segment.
The recent favorable government policies for enhancing limits of foreign investments to
49 per cent among other key initiatives have encouraged such activity. Larger banks will
be able to mobilize sufficient capital to finance asset expansion and fund investments in
technology.
M.S. Ramaiah College of Arts, Science and Commerce Page 15
8/2/2019 Nanu Ram Full Ready
16/79
Object2
1.10. Capital Market
The Indian capital markets have witnessed a transformation over the last decade. India
is now placed among the mature markets of the world. Key progressive initiatives inrecent years include:
The depository and share dematerialization systems that have enhanced the
efficiency of the transaction cycle I Replacing the flexible, but often exploited,
forward trading mechanism with rolling settlement, to bring about transparency.
The InfoTech-driven National Stock Exchange (NSE) with a national presence
(for the benefit of investors across locations) and other initiatives to enhance the
quality of financial disclosures. A Corporatization of stock exchanges.
The Securities and Exchange Board of India (SEBI) has effectively been
functioning as an independent regulator with statutory powers. I Indian capital
markets have rewarded Foreign Institutional Investors (Flls) with attractive
valuations and increasing returns.
The Murnbai Stock Exchange continues to be the premier exchange in the
country with an increase in market capitalization from USS 40 billion in 1990-
1991 to USS 203 billion in 1999-2000. The stock exchange has about 6.000
listed companies and an average daily volume of about a billion dollars. Many
new instruments have been introduced in the markets, including index futures.
index options, derivatives and options and futures in select stocks.
1.11. Insurance
With the opening ol the market, foreign and private Indian players are keen to convert
untapped market potential into opportunities by providing tailor-made products:
The presence of a host of new players in the sector has resulted in a shift in
approach and the launch of innovative products, services and value-added
M.S. Ramaiah College of Arts, Science and Commerce Page 16
8/2/2019 Nanu Ram Full Ready
17/79
Object2
benefits. Foreign majors have entered the country and announced joint ventures
in both life and non-life areas. Major foreign players include New York Life. Aviva.
Tokio Marine, Allianz, Standard Life. Lombard General. AIG, AMP and Sun Lifeamong others.
With competition, the erstwhile state sector companies have become aggressive
in terms of product offerings, marketing and distribution.
The Insurance Regulatory and Development Authority (IRDA) has played a
proactive role as a regulator and a facilitator in the sector's development.
The size of the market presents immense opportunities to new players with only
20 per cent of the country's insurable population currently insured.
The state sector Life Insurance Corporation (LIC>, the largest life insurer in 2000,
sold close to 20 million new policies with a turnover of USS 5 billion
The gross premium for the insurance sector was USS 13 billion for 2001-02.
There are four public sector and nine private sector insurance companies
operating in general/non-life insurance business with a premium income of over
USS 2.58 billion.
The market's potential has been estimated to have a premium income of USS 80
billion with a potential size of over 300 million people. The General Insurance
Corporation (GIC) (which covers the non-life sector) had a total premium incomeof USS 2 billion in 2001-02 This has the potential to reach USS 9 billion in the
next five years.
1.12. Venture Capital
M.S. Ramaiah College of Arts, Science and Commerce Page 17
8/2/2019 Nanu Ram Full Ready
18/79
Object2
Technology and knowledge have been and continue (o drive the global economy. Given
the inherent strength by way of its human capital, technical skills, cost competitive
workforce, research and entrepreneurship, India is positioned for rapid economic growthin a sustainable manner. To realize the potential, there is a need for risk tinance and
venture capital (VC) funding to leverage innovation, promote technology and harness
knowledge based ideas.
The Indian venture capital sector has been active despite facing a challenging
external environment in 2001 and a competitive market scenario.
There were 34 VCFs and 2 Foreign VCFs registered with SEBI in March 2002. A-
According to a survey conducted by Thomson Financial and Prime Database,
India ranked as the third most active venture capital market in Asia Pacific
(excluding Japan).
It recorded 115 deals in 2001 with average investment per deal amounting to
USS 7.9 million. 57 VCFs invested USS 908 million in 101 Indian companies
during 2001. 4 Disbursements for 2002 are expected to be USS 2 billion and are
estimated to reach USS 10 billion by 2007.
A. There is an increased interest in India: 70 VC funds operate in India with the
total assets under management worth about US$ 6 billion.
The amount has grown nearly twenty fold in the past five years. Most VCs
believe that 2002-03 will be driven by a relatively stable economy and new
initiatives that will boost the e-commerce sector, particularly on-line trading ande-banking sectors.
1.12. Future Of The Industry
The interplay between policy and regulatory interventions and management strategies
will determine the performance of Indian banking over the next few years. Legislative
M.S. Ramaiah College of Arts, Science and Commerce Page 18
8/2/2019 Nanu Ram Full Ready
19/79
Object2
actions will shape the regulatory stance through six key elements; industry structure and
sector consolidation; freedom to deploy capital; regulatory coverage; corporate
governance; labor reforms and human capital development; and support for creatingindustry utilities and service bureaus. Management success will be determined on three
fronts: fundamentally upgrading organizational capability to stay in tune with the
changing market: adopting value-creating MSA as an avenue for growth; and
continually innovating to develop new business models to access untapped
opportunities. Through these scenarios, we paint a picture of the events and outcomes
that will be the consequence of the actions uf policy makers and bank managements.
These actions will have dramatically different outcomes: the costs of inaction or
insufficient action will he high. Specifically, at one extreme, the sector could account for
over 7.7 per cent of GDP with over Ks. /,5QQ billion in market cap while at the other it
could account for just 3.3 per cent of GDP with a market cap of Rs. 2.400 billion.
Banking sector intermediation, as measured by total loans as a percentage of GDP.
could grow marginally from its current levels of -30 per cent to -45 per cent or grow
significantly to over 100 per cent of GDP. In all of Ihis, the sector could generate
employment to the tunc of 1.5 million compared to 0.9 million today. Availability of
capital would be a key factor the banking sector will require as much as Rs. 600
billion {USS 14 billion), in capital to fund growth in advances, non-performing loan (NPL)
write offs and investments in II and human capital up gradation to reach the high-
performing scenario.
Three scenarios con be defined to characterize these outcomes:
1.13. High Performance
In this scenario, policy makers intervene only to the extent required to ensure systemstability and protection of consumer interests, leaving managements free to drive far-
reaching changes. Changes in regulations and bank capabilities reduce intermediation
costs leading to increased growth, innovation and productivity. Banking becomes an
even greater driver of GDP growth and employment and large sections of the population
gain access to quality banking products. Management is able to overhaul bank
M.S. Ramaiah College of Arts, Science and Commerce Page 19
8/2/2019 Nanu Ram Full Ready
20/79
Object2
organizational stnictures, focus on industry consolidation and transform the banks into
industry shapers. In this scenario we witness consolidation within public sector banks
(PSBs) and within private sector banks. Foreign banks begin to be active in MSA,buying out some old private and newer private banks. Some M&A activity also begins to
take place between private and public sector banks. As a result, foreign and new private
banks grow at rates of 50 per cent, while PSBs improve their growth rate to 15 per cent.
The share of the private sector banks (including through mergers with PSBs) increases
to 35 per cent and that of foreign hanks increases to 20 per cent of total sector assets.
The shares of banking sector value add in GDP increases to over 7 7 per cent, from
current levels of 2.5 per cent. Funding this dramatic growth will require as much as Rs.
GOO billion in capital over the next few years.
1.14. Stagnation
In this scenario, policy makers intervene to set restrictive conditions and management is
unable to execute the changes needed to enhance returns to shareholders and provide
quality products and services to customers. As a result, growth and productivity levels
are low and the banking sector is unable to support a fast-growing economy. This
scenario sees limited consolidation in the sector and most banks remain sub-scale. New
private sector banks continue on their growth trajectory of 25 per cent. There is a
slowdown in PSB and old private sector bank growth. The share of foreign banks
remains at 7 per cent of total assets. Banking sector value add, meanwhile, is only 3.3
per cent of GDP.
M.S. Ramaiah College of Arts, Science and Commerce Page 20
8/2/2019 Nanu Ram Full Ready
21/79
Object3
CHAPTER - 2
RESEARCH DESIGN
2.1. Statement Of The Research Problem
In today's era of challenging competition, it is of an uttermost importance to gain a
cutting edgo over the competition, and develop a large market share. This is only
possible if there is a largo customer base for the company. The company must gain
confidence of the customers and provide services par excellence.
Every banking organization needs to maximize its customer base and to retain it. The present study is to find out the different and possible methods to attract the
customers towards the organization.
The study also focuses on the challenges being posed by different hanking sectors.
Therefore, undertaking the project helps in assessing the customer care lovol of ING
VYSYA BANK. The study is applied descriptive as well as diagnostic in nature. It also
tends to find the customer view about important aspects of the services. At tho same
time it was intended to find the customer view about the product and the quality of
service improvement. In short this problem can be defined as:
Are Customer satisfy with the service at ING VySya Bank?
2.2. Scope Of Study
As the competition level in the banking sector is ever increasing, it becomes
indispensable for the company (ING VYSYA BANK) to conduct the study on the
perception and satisfaction level of its customers. This study will help the company in
making its new strategies to satisfy its customer in the ways in which he or she wants to
be satisfied and to the company its position in the market.
M.S. Ramaiah College of Arts, Science and Commerce Page 21
8/2/2019 Nanu Ram Full Ready
22/79
Object3
The study on customer satisfaction has the geographical coverage limited to K.H. Road
only. This study will help the company to know in detail about the customer perception
and their attitude towards the company services and products. The company will gainthe feedback from the customer to improve its products and quality of service.
2.3. Statement Of Research Objectives
To evaluate the perception level of the customer.
To study the importance of customer management in bank sector service .
To analyze the expectations of bank customers.
To analyze the satisfaction level of customers of ING VYSYA BANK on the
following heads
Working environment
Customer care
Personal care of the customers
Bank timings
Overall services
Special schemes provided
To realize what are the requisites of the customers and how to go about
improving the quality of services.
2.4. Research Design And Methodology
Importance Of Service
Services are activities or benefits that one party offer to another that are essentially
intangible, inseparable, variable, perishable and do not result in ownership of anything.
Service sector dominates the Indian economy today, contributing more than half of our
national income.
Importance Of Banking
Banking can be defined as accepting for the purpose of lending or investment of
deposits from the public, repayable on demand or otherwise and withdraw able by
cheque, draft, and orders or otherwise. Banks are playing a crucial role in the economic
M.S. Ramaiah College of Arts, Science and Commerce Page 22
8/2/2019 Nanu Ram Full Ready
23/79
Object3
development of the country. Banking industry regulates mobilization and supply of
capital to trade and development.
Importance Of Customer Relationship Management
The aim of CRM is to produce high customer equity. Customer equity is the total of the
discounted lifetime values of all the firm's customers. The taste of creating strong
customer loyalty is called customer relationship management.
2.5. Measuring Customer Satisfaction In The Banking Industry
2.5.1. Introduction
Banking operations are becoming increasingly customer dictated. The demand for
'banking supermalls' offering one-stop integrated financial services is well on the rise.
The ability of banks to offer clients access to several markets for different classes of
financial instruments has become a valuable competitive edge. Convergence in the
industry to cater to the changing demographic expectations is now more than evident.
Bancassurance and other forms of cross selling and strategic alliances will soon alter
the business dynamics of banks and fuel the process of consolidation for increased
scope of business and revenue. The thrust on farm sector, health sector and services
offers several investment linkages. In short, the domestic economy is an increasing pie
which offers extensive economies of scale that only large banks will be in a position to
tap. With the phenomenal increase in the country's population and the increased
demand for banking services; speed, service quality and customer satisfaction are
going to be key differentiators for each bank's future success. Thus it is imperative for
banks to get useful feedback on their actual response time and customer service quality
aspects of retail banking, which in turn will help them take positive steps to maintain a
competitive edge.
The working of the customer's mind is a mystery which is difficult to solve and
understanding the nuances of what customer satisfaction is, a challenging task. This
exercise in the context of the banking industry will give us an insight into the parameters
of customer satisfaction and their measurement. This vital information will help us to
M.S. Ramaiah College of Arts, Science and Commerce Page 23
8/2/2019 Nanu Ram Full Ready
24/79
Object3
build satisfaction amongst the customers and customer loyalty in the long run which is
an integral part of any business. The customer's requirements must be translated and
quantified into measurable targets. This provides an easy way to monitor improvements,and deciding upon the attributes that need to be concentrated on in order to improve
customer satisfaction. We can recognize where we need to make changes to create
improvements and determine if these changes, after implemented, have led to
increased customer satisfaction. "If you cannot measure it, you cannot improve it." -Lord
William Thomson Kelvin (1824-1907).
2.6. The Need to Measure Customer Satisfaction
Satisfied customers are central to optimal performance and financial returns. In many
places in the world, business organizations have been elevating the role of the
customer to that of a key stakeholder over the past twenty years. Customers are viewed
as a group whose satisfaction with the enterprise must be incorporated in strategic
planning efforts. Forward-looking companies are finding value in directly measuring and
tracking customer satisfaction (CS) as an important strategic success indicator.
Evidence is mounting that placing a high priority on CS is critical to improved
organizational performance in a global marketplace.
With better understanding of customers' perceptions, companies can determine the
actions required to meet the customers' needs. They can identify their own strengths
and weaknesses, where they stand in comparison to their competitors, chart out path
future progress and improvement. Customer satisfaction measurement helps to
promote an increased focus on customer outcomes and stimulate improvements in the
work practices and processes used within the company.
When buyers are powerful, the health and strength of the company's relationship with its
customers - its most critical economic asset - is its best predictor of the future. Assets
on the balance sheet - basically assets of production - are good predictors only when
buyers are weak. So it is no wonder that the relationship between those assets and
M.S. Ramaiah College of Arts, Science and Commerce Page 24
8/2/2019 Nanu Ram Full Ready
25/79
Object3
future income is becoming more and more tenuous. As buyers become empowered,
sellers have no choice but to adapt. Focusing on competition has its place, but with
buyer power on the rise, it is more important to pay attention to the customer.
Customer satisfaction is quite a complex issue and there is a lot of debate and
confusion about what exactly is required and how to go about it. This article is an
attempt to review the necessary requirements, and discuss the steps that need to be
taken in order to measure and track customer satisfaction.
2.7. What constitutes Satisfaction?
The meaning of satisfaction: "Satisfied" has a range of meanings to individuals, but it
generally seems to be a positive assessment of the service.
The word "satisfied" itself had a number of different meanings for respondents! which
can be split into the broad themes of contentment/happiness, relief, achieving aims,
achieving aims and happy with outcome and the fact that they did not encounter any
hassle:
2.7.1. Happy
Content
Happy, pretty happy, quite happy
Pleased
Walked out of there feeling good
Walk out of there chuffed
Grateful the service has been OK
2.7.2. Relieved
Thank God for that
Phew
At ease
Can relax
M.S. Ramaiah College of Arts, Science and Commerce Page 25
8/2/2019 Nanu Ram Full Ready
26/79
Object3
Stress reduction
Secure -Safe
Go to the bank with a troubled mind and they sort it out for you
Sleep at night without worrying what's going to go on
Everything is sorted out in your mind and you're happy
Secure, you know the money has been sorted out
Knowing the money's going to be there
2.7.3. Achieving aims
Achieving your aim or goal
Getting what you went in /or
Achieve whatever it is you wanted to achieve
Come away with a proportion of what you want
Got what wanted in the end
Got what you went down for
Everything went according to plan, the way it should have done
Met expectations
To be unsatisfied is when you come out and you are still on the same level as
you were before
2.7.4. Achieving aims, and happy with outcome
Happy with the results
Happy with what you've got
When you walk out you're happy they've sorted everything out and quickly
Happy with outcome
Pleased with what's happened Content with what's been done for you
A feeling of happiness having achieved your goal
You go in there feeling down and the only v/ay you arc going to come out
satisfied is if they have been good to you
M.S. Ramaiah College of Arts, Science and Commerce Page 26
8/2/2019 Nanu Ram Full Ready
27/79
Object3
2.7.5. No hassle
Not frustrated
Everything goes smooth
No hassle
No problems
No hasslo getting there
Straightforward
Clearly then there is some variation in understanding of the term. Some of the
interpretations fit with the definitions used in much of the service quality and satisfaction
literature, where satisfaction is viewed as a zero state, merely an assessment that the
service is adequate, as opposed to "delight" which reflects a service that exceeds
expectations. However, most respondents have more positive interpretations of the
term. These questions allow us to identify priorities for improvement by comparing
satisfaction with stated (overt) importance, comparing satisfaction with modeled (covert)
importance (from identifying key drivers of overall satisfaction), as well as respondents'
own stated priorities.
2.8. Service Quality and Customer Satisfaction
There is a great deal of discussion and disagreement in the literature about the
distinction between service quality and satisfaction. The service quality school view
satisfaction as an antecedent of service quality - satisfaction with a number of individual
transactions "decay" into an overall attitude towards service quality. The satisfaction
school holds the opposite view that assessments of service quality lead to an overall
attitude towards the service that they call satisfaction. There is obviously a strong link
between customer satisfaction and customer retention. Customer's perception ofService and Quality of product will determine the success of the product or service in
the market.
If experience of tho service greatly exceeds the expectations clients had of the service
then satisfaction will be high, and vice versa.. In the service quality literature,
M.S. Ramaiah College of Arts, Science and Commerce Page 27
8/2/2019 Nanu Ram Full Ready
28/79
Object3
perceptions of service delivery are measured separately from customer expectations,
and the gap between the two provides a measure of service quality.
2.9. Expectations and Customer Satisfaction
Expectations have a central rolo in influencing satisfaction with services, and these in
turn are determined by a very wide range of factors lower expectations will result in
higher satisfaction ratings for any given level of service quality. This would seem
sensible; for example, poor previous experience with the service or other similar
services is likely to result in it being easier to pleasantly surprise customers. However,
there are clearly circumstances where negative preconceptions of a service provider will
lead to lower expectations, but will also make it harder to achieve high satisfaction
ratings - and where positive preconceptions and high expectations make positive ratings
more likely. The expectations theory in much of the literature therefore sooms to be an
over-simplification.
SpecialRequirementOf Customer
Customer Customer Property Focus
M.S. Ramaiah College of Arts, Science and Commerce Page 28
CUSTOMERSATISFACTION
8/2/2019 Nanu Ram Full Ready
29/79
Object3
Customer Customer Feed Back Grievances
TimelySupply
2.9.1. Sampling
The Random sampling method, to select a sample of 100 customers of the ING VYSYA
BANK, JAYANAGAR Branch.
2.10. The Methods Used For Data Collection Are
Primary Data
Secondary Data
2.10.1. Primary Data
Primary data are data's, which are original in nature, and are collected by the
researcher. The method used to collect the primary data was Survey Method. The
survey method included a structured questionnaire that was given to the respondent.
2.10.2. Secondary Data
Secondary data are data, which has been collected and compiled in advance for
another needed purpose. Secondary data is an important method to know the present
problem faced by the account holders in the field of ING VYSYA BANK.
2.11. Plan Of Analysis
Calculations have been done for interpretation such as percentages, averages
etc.
M.S. Ramaiah College of Arts, Science and Commerce Page 29
8/2/2019 Nanu Ram Full Ready
30/79
Object3
This data has been analyzed with the help of tables, graphs and charts obtained
from questionnaires.
The data collected from respondents through questionnaire are organized,
coded, processed and tabulated in order to create graphs and charts to make the
project understandable.-
2.12 Tools For Data Collection
The tool used for data collection is Primarily "Questionnaire method". The questions
contained:
2.12.1. Open Ended Questions
Where the respondent was given a chance to reply or give suggestions to the company.
This included Free Responses questions where the respondents were given the
freedom to give suggestions.
2.12.2. Close Ended Questions
Where the respondent was given a lesser chance to reply. This includes Multiple Choice
Questions where the respondents were given a number of alternatives. Scales
Respondents were given a scale whose positions range from "Highly Satisfied" to
"Highly Dissatisfied' area of survey. The area selected to find the satisfactory level was
in and around Kasturba Road.
2.12.3. Area of survey
The areas selected to find the satisfaction level were mostly big shops, showrooms,
restaurants, hotels, companies, etc. along with JAYANAGAR, J.P NAGAR, LAL BAGH,WILSON GARDEN ROAD, K.R ROAD, K.H. ROAD etc. those were nearby ING VYSYA
Bank JAYANAGAR Branch.
2.12.4. Sample Size
Samples sizes of 100 customers are taken from the area of survey.
M.S. Ramaiah College of Arts, Science and Commerce Page 30
8/2/2019 Nanu Ram Full Ready
31/79
Object3
2.12.5. Sample Unit
The sample was considered to be the Customers of ING VYSYA BANK
2.12.6. Sample Method
Non - profitability sampling i.e. convenient sampling method
2.13. Limitations Of The Study
The study was at the maximum extent restricted for the JAYA NAGAR Branch
only however area of survey was wider.
Since the study is based on primary data collected, any bias in the sources of the
data collected would have affected the outcome.
Since the study conducted comparatively on a small-scale sample, the outcome
may not be generalized.
As the study is only conducted in ING VYSYA BANK in a selected branch in
Bangalore, the out come of the study cannot be generalized for 'ING VYSYA
BANK'.
This being an academic study suffers from time and cost constraints.
2.14. Students Work Profile Roles
2.14.1. Role
The role of the trainee was that of a sales executive. The major duties of the trainee
were to ensure the selling of current account to the Pvt. Ltd and Public Ltd. companies,
hotels, transporter, shopkeepers, trust, and manufactures. Also the role of trainee was
to explain the features of four different type of current account to customers and collect
and verify the relevant documents from the interested customers, after verification of the
documents, trainee was supposed to logging and dispatch of application forms along
this the trainee was supposed to give answers of queries of the customers.
M.S. Ramaiah College of Arts, Science and Commerce Page 31
8/2/2019 Nanu Ram Full Ready
32/79
Object3
2.14.2. Responsibilities
The major responsibilities handled were: Opening of current accounts of various types of new as well as existing
customers.
Verifying the application forms and documents required for the opening of
account,
Processing and then logging of the application forms for account activation,
Answering to the customer queries and generating awareness about the various
new
features of the products.
Preparing of weekly management information system report as well as the
compilation
of database.
Preparing of customer feedback report about the services provided by ING
VYSYA BANK.
2.15. Description Of Live Experiences
When I started my work in IMG VYSYA BANK, it was very interesting and was helping
me to know about banking and customer's perception about ING VYSYA Bank. But after
one month it became challenging and tough for me, because it was not only the account
opening operations but also I had some difficult targets to achieve. My mentor had a lot
of expectations from me. On joining here after completing my 2nd semester. I had to
adjust to the environment very quickly as situations were very demanding, but it wasexciting for me because it was the only place where I thought. I can prove myself.
My working period started with training in ING VYSYA Bank's Training office at J AY AN
AGAR, after that I got placed at KORMANGALA Branch as a Senior Sales Executive.
There was some stiff competition. Therefore our first and foremost priority was to attract
M.S. Ramaiah College of Arts, Science and Commerce Page 32
8/2/2019 Nanu Ram Full Ready
33/79
Object3
customer to ING VYSYA Bank. Rigorous tele-calling and field work helped me to
convince customers.
After one month our performance was evaluated and our manager told us to improve.
Selling these products was an up hill task, but still we had to fulfill our target for every
month. Every month target for us is 10 accounts. After finishing up with the daily
appointments and commitments we had to report to the branch regarding daily
performance. We pitched the features of current accounts to customers who were
having either current account with any other bank or not having any current account (in
case of newly started business).
M.S. Ramaiah College of Arts, Science and Commerce Page 33
8/2/2019 Nanu Ram Full Ready
34/79
Object4
CHAPTER - 3
COMPANY PROFILE
3.1. Origin Of The Organization
In India, ING is present in all three fields of banking, insurance and asset management
in the form of ING. ING Vysya Life Insurance and ING Investment Management
respectively. The presence in all three fields signifies the importance that the group
attaches to the Indian markets and the group's operations here, as well as its bullish
future outlook on the country. ING and ING Vysya Life Insurance are headquartered at
Bangalore, while the corporate office of ING Investment Management is situated at
Mumbai. The synergies arising out of the three distinct but complimentary businesses
are bound to be an asset to the group in the changing market dynamics of the future.
The first such signs are already visible on the horizon with combined products being
successfully launched by the different entities of the group in conjunction with each
other.
3.2. Growth And Development Of The Organization
ING VYSYA BANK Ltd. provides its 1.5 million customers with a variety of full-serviceretail banking products including deposits and loans, mutual funds, investments, debit
cards and credit cards. ING Vysya also provides credit services, cash management
services, foreign exchange and foreign trade services along with treasury, investment
and wealth management services.
3.2.1. Global Expertise
Although Profile has multicurrency and multilingual capabilities, some country specific
customization was required including recurring deposits, cash credits and overdrafts,
clearing, remittances, time deposit savings and statutory reporting. Upon full completion
of the rollout, ING Vysya will have centralized information and the ability to offer
integrated banking services across several delivery channels on a 24x7 basis
throughout India. The experience Fidelity has gained from Project Amula will
M.S. Ramaiah College of Arts, Science and Commerce Page 34
8/2/2019 Nanu Ram Full Ready
35/79
Object4
undoubtedly help additional Indian banks that seek to migrate legacy systems to an
updated, modern architecture
3.2.2. Reduced Time To Market
The need for innovative new products and compatibility with modern delivery channels
was a compelling force behind ING Vysya's decision to install Profile. The ING Vysya
team decided to start with a core banking solution as a platform on which products and
services could be deployed quickly. Profile's electronic product manufactunng capability
was attractive to the bank because it reduced time-to market for new products. In the
future. ING Vysya plans to expand its product offerings into northern India through
ATMs and the Internet. Using Profile, the new banking platform supports current
accounts, monthly minimum low-balance savings accounts, fixed deposit accounts and
two new products - overdraft cash credit accounts and cumulative deposit accounts.
3.2.3. Increased Efficiency
At the heart of the Profile system is a database engine that provides efficient message
formatting. For ING Vysya, this translates to reduced bandwidth requirements and little
system overhead. This saves the bank on hardware configuration costs and decreases
end of day processing time. Before Profile was installed, the bank's processing time
depended on the size of the branch and them systems in the branch. In addition, the
system was decentralized and therefore relied on trial balances that were forwarded
every two weeks. With Profile in place, ING Vysya branches now have financial by the
next morning. In addition, end of day processing is now accomplished in only 90
minutes
The data center in Bangalore is connected to 12 distribution points through two Mbpsleased lines with ISDN back-up and Cisco 7500 routers. Each distribution point is, in
turn connected to its group of branches through 64Kbps leased lines with ISDN/PSTN
back-up. The data recovery center is located in Hyderabad and is connected to a data
center in Bangalore on 2X4Mbps leased lines as well as to all distribution points. Data
M.S. Ramaiah College of Arts, Science and Commerce Page 35
8/2/2019 Nanu Ram Full Ready
36/79
Object4
replication between the main data center and the disaster recovery center occurs twice,
daily.
3.2.4. Opportunies For Rowth
India offers substantial growth opportunities for ING, driven by a strong economy,
favorable demographics and an increasing openness to international firms. The
economic outlook is excellent, with annual GDP growth forecasts at 8%-9% in the
coming years (graph 1). In addition, India has a growing consumer class, largely under
the age of 30, which is characterized by a rising income and a reduced aversion to debt.
Importantly, India has the fastest real growth rate of credit to the private sector in Asia,
indicating a rapid financial deepening (see graph-2).
3.2.5. Geography
Although more concentrated in affluent, southern India. ING Vysya has more than 480
branches located throughout the country including metro, urban, semi-urban and rural
centers spread over 15 states of India.
3.2.6. Growing Revenues
ING VYSYA deployed Profile as part of an aggressive business plan to modernize the
banks retail and corporate banking operations in south India. The bank expects to
achieve a percent rise of 300 in revenues from treasury operations as a result of timely
information from the new. centralized architecture
3.2.7. Increased Automation
At the beginning of 2000, ING Vysya was still performing partial or fully manual
processing in over half its branches. With the installation of Profile, the bank reducedthe amount of staffing required to process transactions by15 percent.
ING has established strong positions in developing markets, largely built on organic
greenfield operations and strategic acquisitions that together provide excellent long-
term growth potential. India is one of these markets and ING is the only foreign bank in
M.S. Ramaiah College of Arts, Science and Commerce Page 36
8/2/2019 Nanu Ram Full Ready
37/79
Object4
the country with a substantial stake in a local bank, ING VYSYA. Active in retail and
wholesale banking, life insurance and asset management. ING VYSYA aims to achieve
organic growth through capturing share in this fast growing market by providingexcellent customer service and by focusing on target segments and core products. The
Self Bank concept perfectly fits within this strategy and provides ING VYSYA with a
unique platform for future growth.
3.3. Present Status Of The Organization
Company Profile: ING VYSYA Bank Limited
Ticker: 531807
Exchanges: OTH BOM
2010 Sales: 21,035,000,000
Major Industry: Financial
Sub Industry: Commercial Ranks
Country: INDIA
Employees: 9,850
3.3.1. Business Description
ING VYSYA Bank Limited. The Group's principal activity is to provide banking services
in India. The banking services of the Group include retail banking, corporate banking,
commercial banking, treasury management and rural banking. The Group also offers
dematertalization and other financial services. Other financial services include housing
finance, insurance products, mutual funds etc. The Group operates through 446 branch
offices including 39 extension counters and 203 ATMs in India
3.4. Functional Departments Of The Organization
M.S. Ramaiah College of Arts, Science and Commerce Page 37
8/2/2019 Nanu Ram Full Ready
38/79
Object4
The bank has three key business areas:
3.4.1. Wholesale Banking ServicesHere our target market is primarily large, blue-chip companies and to a lesser extent,
emerging mid-sized corporate. For these corporate, we provide a wide range of
services, including working capital finance, trade services, transactional services, cash
management, etc. We are a lending provider of structured solutions, which combine
cash management services with vendor and distributor finance, for facilitating superior
supply chain management for our corporate customers. We are also recognized as a
leading provider of cash management and transactional banking solutions to mutual
funds, stock exchange members and banks.
3.4.2. Retail Banking Services
The objective of the Retail Bank is to provide our target market customers a full range of
financial products and banking services, giving the customer a one-stop window for all
his/her banking requirements. The products are backed by world-class service and
delivered to the customers through the growing branch network, as well as through
alternative delivery channels like ATMs. Phone Banking. Net Banking and Mobile
Banking. The HDFC Bank Preferred program for high net worth individuals, the HDFC
Bank Plus and the Investment Advisory Services programs have been designed
keeping in mind needs of customers who seek distinct financial solutions, information
and advice on various investment avenues. We have a wide array of retail loan products
including Auto Loans, Loans against Securities, Personal Loans and Loans for Two-
wheelers. We are also a leading provider of Depository Services to retail D M NA
customers. Further we are one of the leading players in the "merchant acquiring"
business with a large number of Point-of-sale (POS) terminals for debit / credit cardsacceptance at merchant establishments.
3.4.3. Treasury Operations
Within this business, the bank has three main product areas -
M.S. Ramaiah College of Arts, Science and Commerce Page 38
8/2/2019 Nanu Ram Full Ready
39/79
Object4
a) Foreign Exchange and Derivatives,
b) Local Currency Money Market &
c) Debt Securities and Equities.
With the liberalization of the financial markets in India, corporate need more
sophisticated risk management information, advice and product structures. These are
provided through the bank's Treasury team. The Treasury business is responsible for
managing the returns and market risk on the bank's investment portfolio.
3.5. Organization Structure And Chart
The Organizational Structure
ING VYSYA BANK Board of Directors comprises of eminent individuals with a wealth of
experience in public policy, administration, industry and commercial banking. Senior
executives M.S.RAMA IAH COLLEGE OF ARTS, SCIENCE & COMMERCE
representing HDFC are also on the Board. Senior banking professionals with substantial
experience In India and abroad head various business functions and report to the
Managing Director. Given the professional expertise of the management team and the
overall focus on recruiting and retaining the best talent in the industry, the bank believes
that its people are a significant competitive strength.
With the liberalization of the financial markets in India, corporate need more
sophisticated risk management information, advice and product structures. These are
provided through the bank's Treasury team. The Treasury business is responsible for
managing the returns and market risk on the bank's investment portfolio.
The following groups support the above business groups:
Audit & Compliance
Credit & Market Risk
M.S. Ramaiah College of Arts, Science and Commerce Page 39
8/2/2019 Nanu Ram Full Ready
40/79
Object4
Finance, Administration & Legal
Human Resources
Information Technology
Operations
3.6. Systems & Technology
The Bank uses state-of-the-art technology for both internal and external customers.
3.6.1. Banking Applications
In terms of software, the Corporate Banking business is supported by UBS, while the
Retail Banking business by Finware. These world-class systems have been specially
customized for HDFC Bank by i-tlex Solutions Ltd. which is a Citigroup company. The
Bank also uses various other systems to support other infrastructure -
These systems are open, scalable and web-enabled.
3.6.2. Lotus Notes
Lotus Notes is the system that HDFC bank uses for internal communication.
3.6.3. Facilities Management
Wipro is the company appointed to give HDFC Bank the on-site support required at
different locations / cities.
Our website is: wwwJngvysvabank.com
Surfing through the site map put up on the bank's web-site would give a good idea on
the range of products and services offered by the bank. Amongst others, the site listspast financial results of the bank, awards and accolades won by the Bank. Etc.
ORGANIZATION CHART
M.S. Ramaiah College of Arts, Science and Commerce Page 40
Chairman
http://wwwjngvysvabank.com/http://wwwjngvysvabank.com/8/2/2019 Nanu Ram Full Ready
41/79
Object4
________________________________________
_________________________________________________________________________
3.7. Products and Services Profile of The Organization Competitors
Services and Product offered by the main competitors are as follows:
3.7.1. ICICI Bank's Corporate Salary Accounts
M.S. Ramaiah College of Arts, Science and Commerce Page 41
Managing Directorand CEO
Joint Managing Director
( Domestic Bankin )
Joint Managing
Director
Executive
Director
Executive
Director
Executive
Director
Executive
Director
Sr. General Manager
General Manager
8/2/2019 Nanu Ram Full Ready
42/79
Object4
ICICI offers salary accounts to all the employees of the companies maintaining
an account with bank, with Average Quarterly Balance of Rs. Zero.
One can issue free DD & Pay Orders on any of the ICICI locations, though there
is a limit of Rs.25000 per day for such transactions.
Bank also provides each account holder with all the modern day banking facilities
such as Net, Phono. Mobile and ATM banking services. Bank provides ATM cum
International Debit Card.
Opening charges for a Dcmat a/c and a/c maintenance charges for the first yearare waived off for all corporate salary account holders.
ICICI bank offers a separate reimbursement a/c linked with salary account in
which employer can pay in all reimbursement such as travel, food and other petty
cash expenses to its employees. Separate annual statement is provided for the
account thereby helping the account holder in better tax planning.
ICICI provides its preferred saving a/c The ICICI Select to top three executives of
the company opting for the salary a/c offered by the bank.
Any balance over and above Rs.10000 (in multiples of Rs.5000) is transferred to
high interest rate earning FD a/c called Quantum Optima.
Citibank's Corporate Salary Accounts
Citibank offers Zero balance savings accounts to all the employees of the
companies maintaining an account with the bank.
It provides a/c holder with all the latest banking facilities such as Internet. Phone,
3.7.2. City Banks Corporate Salary Account
Bank provides ATM cum International Debit Card to all a/c holders*.
M.S. Ramaiah College of Arts, Science and Commerce Page 42
8/2/2019 Nanu Ram Full Ready
43/79
Object4
The bank delivers DD at the mailing address for a charge within 24hrs. The DD
can be requested online or through phone.
Citibank has an alliance with New India Assurance to provide health insurance to
all the a/c holders with 50% discount on premiums.
One can avail an overdraft up to twice his salary, subject to maximum of
Rs.50000 at interest rate ot 2.33% per month.
Citibank provides no free Demat a/c service.
3.7.3. Standard Chartered Bank's Corporate Salary Account
Standard Chartered bank offers Zero balance account to all the employees of
any company that wants to maintain its corporate salary accounts.
The bank also provides each a/c holder with all the modern day facilities such as
Net, Phone, Mobile and ATM cum International Debit card to all the a/c holders.
Under a special offer scheme, the bank allows 4 free withdrawal per month, fro
any Visa ATM whereas other banks charge for the same
Those account holders, who maintain an Average Quarterly Balance of more
than Rs. 10000 over a period of time, are offered free credit cards.
3.7.4. UTI Bank's Corporate Salary Accounts
UTI offers salary account to all trie employees of the companies maintaining an
account with the bank.
M.S. Ramaiah College of Arts, Science and Commerce Page 43
8/2/2019 Nanu Ram Full Ready
44/79
Object4
No minimum balance is required. That is the customers can open account with
zero balance.
One can issue free DD and pay orders on any of the UTI bank locations withoutany limit on the amount and number of transactions.
The bank does not install Cheque Drop box at any.of the companies.
The bank also provides each a/c holder with all the modern day facilities such as
Net, Phone, Mobile and ATM cum International Debit card to all the a/c holders
Bank provides each a/c holder with computerized Passbook.
Demat account-opening charges waived for all customers.
3.8 Market Profile Of The Organization
ING VYSYA Bank Limited. The Group's principal activity is to provide banking services
in India. The banking services of the Group include retail banking, corporate banking,
commercial banking, treasury management and rural banking. The Group also offers
dematerialization and other financial services. Other financial services include housing
finance, insurance products, mutual funds etc. the Group operates through 446 branch
offices including 39 extension counters and 203 ATMs in India
M.S. Ramaiah College of Arts, Science and Commerce Page 44
8/2/2019 Nanu Ram Full Ready
45/79
Object5
3.8.1. Current Account Product
ORANGE CURRENT ACCOUNT
ADVANTAGE CURRENT ACCOUNT
COMFORT CURRENT ACCOUNT
GENERAL CURRENT ACCOUNT
3.8.2. Current Accounts
These accounls ate piiinaiily meant lo include a sense of transaction for the transaction
of business because you cannot do daily transaction through ^aviitfj account. It is
mandatory to have a current account for business.
General Current Account
Comfort Current Account
Advantage Current Account
Orange Current Account
M.S. Ramaiah College of Arts, Science and Commerce Page 45
8/2/2019 Nanu Ram Full Ready
46/79
Object5
3.8.3. Savings Account
These accounts are primarily meant to inculcate a sense of saving for the future,
accumulating funds over a period of time. Whatever your occupation, we are confidentthat you will find the perfect banking solution. Open an account in your name or
register for one jointly with a family member today.
Orange Saving
Advantage Salary
Orange Salary
Solo
Saral
General
Freedom
ING Formula Savings Account
3.8.4. Term Deposit
Fixed Deposits
Cumulative Deposit
Akshnya
Tax Advantage Deposit
3.8.5. Demat Account
3.8.6. Loans
Personal Loan
Home Lone
Home Equity Loan NR1 Loan
Model Policy
3.8.7. Wealth Management
M.S. Ramaiah College of Arts, Science and Commerce Page 46
8/2/2019 Nanu Ram Full Ready
47/79
Object5
Wealth Management Process
ING Positive Policy
Investment Products
3.8.9. NRI Services
3.8.10. Access Point
ATM Branch
Customer Service Line
Net Banking
Self Banking
SMS
3.8.11. Cards
Credit Cards
Debit Cards
Term & Conditions
Card Member Agreement
Fair Practice Code for Credit Card Operation
DAS's Code of Conduct
Master Circular on Credit Card Operations of Banks
Debit Collection Standard in India
3.8.12. Easy Banking
3.8.13. Internet Banking
M.S. Ramaiah College of Arts, Science and Commerce Page 47
8/2/2019 Nanu Ram Full Ready
48/79
Object5
Current Functionalities
Become mib@nk User
Log into mib@nk
Minimum Requirements
Online Security Guidelines
3.8.14. Phone Banking
3.8.15. Mobile Banking
3.8.16. ATM Kiosks
3.8.17. Payment Services
Electronic Fund Transfer
RTGS
NEFT
Smratsery
Collection Service
Doorstep Banking Service
3.8.17. Interest Rates
Domestic & NRO Term Deposit Rates
NRE Deposit Rates
FCNR RFC Rates
3.8.18. Aqri
Term Loan
Short Term Loan
3.8.19. Business
Sme
M.S. Ramaiah College of Arts, Science and Commerce Page 48
8/2/2019 Nanu Ram Full Ready
49/79
8/2/2019 Nanu Ram Full Ready
50/79
Object5
4.1. Analysis Of Data
Table No. 4.1
Table Showing Awareness of The Business Person (Of Sole Proprietor &
Partnership Firm) About Current Account Having Following
Monthly Business Income
(N=80)
Monthly Business Income No. Of Respondents Percentage
Less Than Rs 50.000 0 0%
Rs 50.000 - Rs 3,00,000 19 23%
More Than Rs 3.00,000 61 77%
TOTAL 80 100%
Graph No. 50
The Monthly Distribution Of The Business Income
Analysis
The above table shows that there are no respondents who have a monthly business
income of less than Rs 50.000. there are 23% of the respondents who fall under Rs
50.000 -Rs 3,00,000 household income and 77% fall under the more than Rs 3,00.000
business income category.
Interpretation
The table clearly shows that the majority of the respondents have more than Rs
3,00.000 of monthly business income that is 77%.
Table No. 2
M.S. Ramaiah College of Arts, Science and Commerce Page 50
8/2/2019 Nanu Ram Full Ready
51/79
Object5
Table Showing the Customers Responses about Customer Care In
Ing Vysya Bank(N=80)
VARIABLES RESPONDENTS PERCENTAGE
HIGHLY SATISFIED 10 12%
SATISFIED 50 63%
NEUTRAL 16 21%
DISSATISFIED 4 4%
HIGHLY DISSATISFIED 0 0%TOTAL 80 100%
Graph No. 51
M.S. Ramaiah College of Arts, Science and Commerce Page 51
8/2/2019 Nanu Ram Full Ready
52/79
Object5
Analysis
The above table shows that out of 100 respondents 12% are highly satisfied with the
Customer Care of the ING VYSYA Bank 63% of them are satisfied and 21% are
neutral, moreover 4% of them are dissatisfied and none of them are highly dissatisfied.
Interpretation
In today's world customer care is one of the most important criteria as it helps the
Organization to retain its or add market shares. Therefore, HDFC should work towards
the 4%,
Dissatisfied customers either by training the employees or making the procedure
customer friendly. The major problem amongst this unsatisfied group was
miscommunication between tele caller of customer care services and customer about
the charge details of the product and some delay in response.
TABLE NO. 3
TABLE SHOWING THE RESPONSES OF CUSTOMERS ABOUT OVERALL
SERVICE PROVIDED BEFORE AND AFTER CURRENT ACCOUNT OPENING:
VARIABLES RESPONDENTS PERCENTAGE
HIGHLY SATISFIED 7 8%
SATISFIED 48 61%
NEUTRAL 17 22%
M.S. Ramaiah College of Arts, Science and Commerce Page 52
8/2/2019 Nanu Ram Full Ready
53/79
Object5
DISSATISFIED 7 9%
HIGHLY
DISSATISFIED
0 0%
TOTAL 80 100%
Graph No. 53
Chart Showing Satisfaction Level Regarding Overall Services Provided Before
And After Opening Of Current A/C
ANALYSIS
As per the above (able it can analyzed that only 8% of the respondents are highly
satisfied with the overall services provided by ING VYSYA Bank. 61% of them are
satisfied while 72% of them are on the neutral side, 9% of them are dissatisfied and
none are highly dissatisfied.
INTERPRETATION
Hence the table clearly shows that the 9% of the customers are not satisfied with the
overall services provided by the Bank but on the same side its a good sign that 61% of
them are satisfied. These 9% clients are dissatisfied because of reasons such as:
1. Long time taken in case of new password generation when the clients request
for it.
2. Miscommunication by the sales executives about the feature and charges
before opening the account.
3. Delay in account activation due to approval taking.
M.S. Ramaiah College of Arts, Science and Commerce Page 53
8/2/2019 Nanu Ram Full Ready
54/79
Object5
Table No. 4
Table Showing The Customer Satisfaction Level With Special Schemes Of
Current Account Provided
VARIABLES RESPONDENTS PERCENTAGE
HIGHLY SATISFIED 22%
SATISFIED 44 55%
NEUTRAL 26 33%
DISSATISFIED 8 10%
HIGHLY DISSATISFIED 0 0%
TOTAL 80 100%
ABOUT CURRENT ACCOUNT SPECIAL SCHEME
GRAPH NO. 4
M.S. Ramaiah College of Arts, Science and Commerce Page 54
8/2/2019 Nanu Ram Full Ready
55/79
Object5
ANALYSIS
The above table shows that 2% of the respondents are highly satisfied with the special
schemes of current account provided in ING VYSYA Bank. 55% of the respondents are
satisfied, whereas 33% are on the neutral side and 10% of the customers are
dissatisfied, none are highly dissatisfied.
INTERPRETATION
Hence. ING VYSYA Bank has only 2% of the customers who are highly satisfied with
the special schemes of current account provided in the ING VYSYA Bank should
introduce many more special schemes as 10% of the respondents are dissatisfied.
Table 5
Table Showing Market Share Of Ing Vysya
VARIABLE MARKET SHARE 1 MARKET SHARE 2
ING VYSYA 18000 19000
HDFC 20000 20000
ICICI BANK 23000 23000
TOTAL 61000 62000
M.S. Ramaiah College of Arts, Science and Commerce Page 55
8/2/2019 Nanu Ram Full Ready
56/79
Object5
Graph No. 56
Chart Showing The Market Share Of Ing Vysya Bank
MARKET
SHARE
ANALYSIS
After doing market analysis and review of banking sector, we came to know that ING
VYSYA BANK LTD is growing steadily with firm commitment and higher level of
customer satisfaction. As comparison shows ING VYSYA BANK is second largest
organization and next to ICICI BANK. But still having better performance as compares
to others and hence we can predict better growth in future.
INTERPRETATION
ING has put together 65-strong team focusing on (small-and-medium enterprises)
SMEs. It now has a long list of between 1,500 and 2,000 clients and its SME lending
now accounts for 14 per cent of the bank's total asset portfolio. That's more than Rs2,
500crore (Rs25 billion) and it's growing at 50 per cent annually.
Table - 6
Profession Of The Respondent
(N=80)
PROFESSIONNO. OF
RESPONDENTS %
M.S. Ramaiah College of Arts, Science and Commerce Page 56
8/2/2019 Nanu Ram Full Ready
57/79
Object5
Salaried 45 56
Self Employed 17 22
Professional 18 22
TOTAL 80 100
(SOURCES Primary Data)
Graph 6
Table 7
Preference Of The Respondents With Regard To The Institution Providing
A.T.M's And Internet Banking.
(N=80)
INSTITUTION NO. OF PERSONS %
ING Vysya Bank 8 10
ICICI 16 20
CITIBANK 23 28
HDFC 13 16
M.S. Ramaiah College of Arts, Science and Commerce Page 57
8/2/2019 Nanu Ram Full Ready
58/79
Object5
HSBC 8 10
OTHERS 7 8
PROSPECTIVE 6 8
TOTAL 80 100
(SOURCES Primary Data)
Graph 7
Interpretation
Hence we see that most of the respondents prefer City banks and ICICI with regard
to ATM's and internet banking.
Table - 8
Channel Usage By Bank Customers
(N=80)
CHANNEL NO. OF PERSON %
BRANCH 16 28
M.S. Ramaiah College of Arts, Science and Commerce Page 58
8/2/2019 Nanu Ram Full Ready
59/79
Object5
ATM 37 46
INTERNET BANKING 12 14
MAIL 2 2
TELE-BANKING 8 10
TOTAL 80 100
(SOURCES Primary Data)
Grapha - 8
Interpretation
From the above, we find majority of the people go in for ATM's and then to the
Branch.
Table 9
Type Of Accounts Maintained By Bank Customer
(N=80)
TYPE OF ACCOUNTS NO. OF PERSON %
SAVINGS 32 40
M.S. Ramaiah College of Arts, Science and Commerce Page 59
8/2/2019 Nanu Ram Full Ready
60/79
Object5
FIXED DEPOSIT 10 12
RECURRING DEPOSIT 3 4
OVERDRAFT 7 8
CASH CREDIT 0 0
CURRENT 29 36
TOTAL 80 100
(SOURCES Primary Data)
Graph 9
M.S. Ramaiah College of Arts, Science and Commerce Page 60
8/2/2019 Nanu Ram Full Ready
61/79
Object6
Interpretation
Hence it is clear those majo