EXECUTIVE SUMMARY The Project report is prepared on Retail Banking at HDFC Bank. It is on a research to find out weather people of Rajkot city prefer to deal with private sector banks or nationalized banks. It is also to find out the reasons why they deal with their bank and the most frequently services by them This was basically to find out for what reason they deal with particular bank and to know their level of satisfaction with the services of their bank. I have collected the research by collecting the primary data. This research was conducted with the employees of private and government sector, businessman, professionals and students in equal numbers. This report gives a brief idea about the banking industry and the tough competition faced by the banks. Secondly it gives an overview of the company, its history, its products, its various marketing strategy and much more. Then the main part of the project comes wherein the research and the analysis is included. Stratified random sampling was adopted where the people of various occupations were selected at random from different part of the city. The sampling size selected was 50. Data analysis was done as per the questions through various techniques as per requirement. Finally findings and the data collected concluded that the most preferred - 1 -
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EXECUTIVE SUMMARY
The Project report is prepared on Retail Banking at HDFC Bank. It is on a
research to find out weather people of Rajkot city prefer to deal with private sector
banks or nationalized banks. It is also to find out the reasons why they deal with their
bank and the most frequently services by them
This was basically to find out for what reason they deal with particular bank
and to know their level of satisfaction with the services of their bank.
I have collected the research by collecting the primary data. This research was
conducted with the employees of private and government sector, businessman,
professionals and students in equal numbers.
This report gives a brief idea about the banking industry and the tough
competition faced by the banks. Secondly it gives an overview of the company, its
history, its products, its various marketing strategy and much more.
Then the main part of the project comes wherein the research and the analysis
is included. Stratified random sampling was adopted where the people of various
occupations were selected at random from different part of the city. The sampling size
selected was 50.
Data analysis was done as per the questions through various techniques as per
requirement. Finally findings and the data collected concluded that the most preferred
bank was HDFC Bank, and the most people were highly satisfied with the services of
HDFC Bank where ATM was the most frequently used services. It was found that for
what reason private and government employees, students, professionals and
businessman deal with the bank and how frequently they visit the bank. Through this
research the company can know the choice of different occupational groups and the
research for how satisfied they are with the bank they deal with. They can also know
the most frequently used services so that they can improve further improve it or
encourage the use of their services.
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INTRODUCTION AND HISTORY OF
BANKING
Without a sound and effective banking system in India it cannot have a healthy
economy. The banking system of India should not only be hassle free but it should be
able to meet new challenges posed by the technology and any other external and
internal factors.
For the past three decades India's banking system has several outstanding
achievements to its credit. The most striking is its extensive reach. It is no longer
confined to only metropolitans or cosmopolitans in India. In fact, Indian banking
system has reached even to the remote corners of the country. This is one of the main
reason of India's growth process.
The government's regular policy for Indian bank since 1969 has paid rich dividends
with the nationalization of 14 major private banks of India.
Not long ago, an account holder had to wait for hours at the bank counters for getting
a draft or for withdrawing his own money. Today, he has a choice. Gone are days
when the most efficient bank transferred money from one branch to other in two days.
Now it is simple as instant messaging or dial a pizza. Money have become the order
of the day.
The first bank in India, though conservative, was established in 1786. From 1786 till
today, the journey of Indian Banking System can be segregated into three distinct
phases. They are as mentioned below:
Early phase from 1786 to 1969 of Indian Banks
Nationalizations of Indian Banks and up to 1991 prior to Indian banking sector
Reforms.
New phase of Indian Banking System with the advent of Indian Financial &
Banking Sector Reforms after 1991.
To make this write-up more explanatory, I prefix the scenario as Phase I, Phase II and
Phase III.
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Phase I
The General Bank of India was set up in the year 1786. Next came Bank of Hindustan
and Bengal Bank. The East India Company established Bank of Bengal (1809), Bank
of Bombay (1840) and Bank of Madras (1843) as independent units and called it
Presidency Banks. These three banks were amalgamated in 1920 and Imperial Bank
of India was established which started as private shareholders banks, mostly
Europeans shareholders.
In 1865 Allahabad Bank was established and first time exclusively by Indians, Punjab
National Bank Ltd. was set up in 1894 with headquarters at Lahore. Between 1906
and 1913, Bank of India, Central Bank of India, Bank of Baroda, Canara Bank, Indian
Bank, and Bank of Mysore were set up. Reserve Bank of India came in 1935.
During the first phase the growth was very slow and banks also experienced periodic
failures between 1913 and 1948. There were approximately 1100 banks, mostly small.
To streamline the functioning and activities of commercial banks, the Government of
India came up with The Banking Companies Act, 1949 which was later changed to
Banking Regulation Act 1949 as per amending Act of 1965 (Act No. 23 of 1965).
Reserve Bank of India was vested with extensive powers for the supervision of
banking in India as the Central Banking Authority.
During those day’s public has lesser confidence in the banks. As an aftermath deposit
mobilization was slow. Abreast of it the savings bank facility provided by the Postal
department was comparatively safer. Moreover, funds were largely given to traders.
Phase II
Government took major steps in this Indian Banking Sector Reform after
independence. In 1955, it nationalized Imperial Bank of India with extensive banking
facilities on a large scale especially in rural and semi-urban areas. It formed State
Bank of India to act as the principal agent of RBI and to handle banking transactions
of the Union and State Governments all over the country.
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Seven banks forming subsidiary of State Bank of India was nationalized in 1960 on
19th July, 1969, major process of nationalization was carried out. It was the effort of
the then Prime Minister of India, Mrs. Indira Gandhi. 14 major commercial banks in
the country were nationalized.
Second phase of nationalization Indian Banking Sector Reform was carried out in
1980 with seven more banks. This step brought 80% of the banking segment in India
under Government ownership.
The following are the steps taken by the Government of India to Regulate Banking
Institutions in the Country:
1949 : Enactment of Banking Regulation Act.
1955 : Nationalisation of State Bank of India.
1959 : Nationalisation of SBI subsidiaries.
1961 : Insurance cover extended to deposits.
1969 : Nationalisation of 14 major banks.
1971 : Creation of credit guarantee corporation.
1975 : Creation of regional rural banks.
1980 : Nationalisation of seven banks with deposits over 200 crore.
After the nationalisation of banks, the branches of the public sector bank India rose to
approximately 800% in deposits and advances took a huge jump by 11,000%.
Banking in the sunshine of Government ownership gave the public implicit faith and
immense confidence about the sustainability of these institutions.
Phase III
This phase has introduced many more products and facilities in the banking sector in
its reforms measure. In 1991, under the chairmanship of M Narasimham, a committee
was set up by his name which worked for the liberalization of banking practices.
The country is flooded with foreign banks and their ATM stations. Efforts are being
put to give a satisfactory service to customers. Phone banking and net banking is
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introduced. The entire system became more convenient and swift. Time is given more
importance than money.
The financial system of India has shown a great deal of resilience. It is sheltered from
any crisis triggered by any external macroeconomics shock as other East Asian
Countries suffered. This is all due to a flexible exchange rate regime, the foreign
reserves are high, the capital account is not yet fully convertible, and banks and their
customers have limited foreign exchange exposure.
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DEVELOPMENTS IN BANKING SECTOR
During the year 2003-04, the banking sector witnessed strong growth in deposits and
advances. The aggregate deposits of scheduled commercial banks (SCBs) grew by
17.5 per cent compared to 13.4 per cent in 2002-03. Credit and investments by SCBs
increased by 15.3 per cent and 25.1 per cent, respectively in 2003-04 compared to
16.1 per cent and 23.3 per cent respectively in 2002-03. These developments coupled
with a decline in gross NPAs enabled SCBs to improve their financial performance,
despite a lower income growth consequent upon low interest rates. Ratio of net profits
to total assets of SCBs improved marginally from 1.0 per cent to 1.1 per cent. Ratio of
operating profits to total assets improved from 2.4 per cent in 2002-03 to 2.7 per cent
in 2003-04. The total income of SCBs increased by 6.6 per cent to Rs. 1,83,767 crore
in 2003-04 as compared to an increase of 14.0 per cent in 2002-03.
Banks and consumer finance
Private banks are on an ascending trend. In 2003-04, they made huge inroads into the
over Rs 1,00,000 crore ($21.5 billion) retail business market that has so far been
dominated by PSU banks.
Banks such as ICICI Bank, HDFC Bank, UTI Bank and IDBI Bank registered
a 62 per cent growth and offered retail loans worth over Rs 11,743 crore ($2.5
billion) in FY04. On the other hand, PSU banks such as SBI, PNB, Canara
Bank, Bank of Baroda and Bank of India together posted 36 per cent growth in
personal loans at over Rs 80,813 crore ($17.4 billion).
PSU banks showed a growth figure of 50.44 per cent in the home loans
category at over Rs 40,000 crore ($8.6 billion), but private banks surged ahead
of them with 58 per cent growth at Rs 3,437 crore ($742 million).
In consumer durable loans, private banks listed a marginal growth of 7.72 per
cent at Rs 291 crore ($62.8 million) during the year, while PSU banks
recorded nearly a 15 per cent drop in credit at Rs 1,838 crore ($396.8 million).
Private Banks grew significantly in the rest of the personal loan category at 67
per cent (Rs 8,015 crore or $1.7 billion), while PSU banks witnessed 26.84 per
cent (Rs 4,801.55 crore or $1 billion) in 2003.
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An annual survey of India's best banks places a local concern, Mumbai-based HDFC
Bank, as the country's No. 1 pick in the large-bank category. But other names on the
list will no doubt be familiar to U.S. investors -- especially a number of global players
that Standard & Poor's considers attractive.
HSBC Holdings (HBC; S&P investment rank 3 STARS, hold)) moved to No. 2
among the large banks, from No. 7 a year earlier. Citigroup (C; 5 STARS, strong
buy), a multinational with scale and size but limited exposure to India, dropped to the
sixth slot, from its No. 2 showing a year earlier.
"India is a bastion of growth where financial-services firms are looking to leverage
and allocate capital," says U.S.-based S&P equity analyst Mark Hebeka, noting he
expects expansion in dynamic emerging markets in general in 2006 and beyond. "We
view the larger firms as having an advantage due to their ability to invest more capital
and sustain longer periods of building," Hebeka explains. "We view their diverse
product offerings and the many relationships that most currently have as competitive
advantages as well."
Hebeka views the rapid development of businesses in India as offering strong
potential for commercial lending, as well as a large retail base with growing wealth
and buying power. Some banks can't expand fast enough. JPMorgan, which admitted
it was strapped for human resources in India, said it plans to expand in India by hiring
4,500 employees on the subcontinent over the next two years.
Half of India's population of roughly 1.2 billion is under the age of 25. So for at least
the next 20 years, India will have a growing population of people in their prime
working years -- unlike emerging-market rival, China, which has a rapidly aging
population. Many businesses appear likely to benefit from the boom, including
financial services. There were close to 300 foreign, public-sector, and regional banks
-- up from about 60 in 1997 -- doing business in India last year. Not surprisingly, it
was a year in which total bank loans alone grew about 30%, and consumer lending
grew 8%.
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India's low interest-rate environment is spurring a borrowing boom among the nation's
consumers. As a result, Indians are buying homes, cars, and other products at rates
never before seen on the subcontinent. India, which bills itself as the world's fastest-
growing democracy, has a growing consumer base -- the latest estimates place its
middle class between 250 million and 300 million strong. That's an eye-catching
number for growth-minded global banks.
There's still room for Indian consumers to increase their debt load, according to a
2004 report by Merrill Lynch . Indian household debt was a mere 4% of gross
domestic product -- the lowest among a group of south Asian countries including
South Korea and Taiwan, each of which reported household debt exceeding 60% of
GDP, and Malaysia and Thailand, with 25% each.
What's evident is that India, along with China and the rest of South Asia, is one of the
fastest-growing consumer bases for credit-, debit-, and cash-card services from Visa,
MasterCard, and American Express (AXP; 3 STARS). The $150 billion credit-card
market in Asia is projected by Boston Consulting Group to grow at about 15% to 20%
yearly for the next three years.
Private Banking boom: However, the size of the Indian credit-card market is
estimated to be about $4 billion and growing at 35% yearly, according to GE Money,
which was formed when GE Capital, the finance arm of conglomerate General
Electric (GE; 3 STARS) partnered in 1998 with State Bank of India, provider of a
quarter of all loans in India. GE Money states that it has experienced double-digit
growth since then. In January, the company reached a big milestone, signing its 2-
millionth cardholder.
GE's goal is to have $10 billion in consumer-finance assets on the Asian subcontinent
by 2010. In August, 2005, Vishal Pandit, the head of GE Money, claimed to have the
equivalent of $1.3 billion in Indian consumer-finance assets. He said he also plans to
make acquisitions to increase growth after 2009, when foreign-investment rules for
banking investment are scheduled to be relaxed.
India is the second-largest new-growth market for private banking -- after China -- in
terms of the number of wealthy households
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MAJOR PLAYERS
STANDARD CHARTERED BANK
Standard Chartered Bank in India is the largest international banking Group in India.
The Combined Balance Sheet (as at March 31, 2001) of SCB India is Rs. 24515.9 cr.
The key businesses of Standard Chartered Bank in India include consumer banking -
primarily credit cards, mortgages, personal loans and wealth management - and -
wholesale banking, where the Bank specializes in the provision of cash management,
trade, finance, treasury and custody services.
BANK OF INDIA
Bank of India, founded on 7th September in the year 1906 was nationalized along
with 13 other banks in July 1969. Then its paid-up capital was Rs.50 lakh with only
50 employees and the only office in Mumbai.
Today Bank of India has been spread with 2594 branches including 93 specialized
branches controlled by 48 Zonal Offices.
Bank of India was the first fully computerized branch among the nationalized banks
with ATM facility at the Mahalaxmi Branch, Mumbai is the year 1989.
It is an association that has blossomed into a joint venture with BSE, called the BOI
Shareholding Ltd. to extend depository services to the stock broking community.
CANARA BANK IN INDIA
Canara Bank in India has a history of nine decades and is the largest public sector
banks in India. Canara Bank India has a deposit advance base of Rs.640 bn and Rs
332 bn (figure in the year 2002).
Canara Bank of India has a total of 47,843 employees and is spread with 2409
branches throughout the country. Canara Bank India has an exposure to petroleum,
engineering, infrastructure, factoring, investment management, venture capital, home
finance and securities.
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CENTRAL BANK
Central Bank of India (CBI) was established in 1911. This was the first Indian
commercial bank to be wholly owned and managed by Indians. The establishment of
the Central Bank of India was the ultimate realization of the dream of Sir Koradji
Pochkhanawala, founder of the Bank. Sir Pherozesha Mehta was the first Chairman of
a truly 'Swadeshi Bank'.
Among the Public Sector Banks, Central Bank of India can be truly described as an
All India Bank, due to distribution of its large network in 27 out of 28 States as also in
4 out of 7 Union Territories in India. Central Bank of India holds a very prominent
place among the Public Sector Banks on account of its network of 3146 branches and
275 extension counters at various centers throughout the length and breadth of the
country.
In view of its large network of branches as also number of savings and other
innovative services offered, the total customer base of the Bank at over 25 million
account holders is one of the largest in the banking industry.
ALLAHABAD BANK
Allahabad Bank is the oldest public sector bank in India with branches all over India.
Allahabad Bank India was established in the year 1865. Apart from serving to
domestic customers, Allahabad Bank NRI section also provides a wide range of
attractive Deposit Schemes to Non-Resident Indians.
Allahabad Bank has more than 1800 branches all over the country. In Uttar Pradesh
alone Allahabad Bank has approximately 600 branches and approximately 500 in
West Bengal. Allahabad Bank also has 7 days banking branches. They are as under:
UTI BANK
UTI Bank India, the first bank to begin operations as new private banks in 1994 after
the Government of India allowed new private banks to be established. UTI Bank was
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jointly promoted by the Administrator of the specified undertaking of the Unit Trust
of India (UTI-I), Life Insurance Corporation of India (LIC) and General Insurance
Corporation Ltd. Also with associates viz. National Insurance Company Ltd., The
New India Assurance Company, The Oriental Insurance Corporation and United
Insurance Company Ltd.
AMERICAN EXPRESS BANK
American Express India was established in 1921 providing high quality travel and
financial services. American Express in India is the largest company to have wide
network of travel locations in the country.
American Express Card division also tops upon other credit card issuer. American
Express Credit Cards in India is of basic two varieties, namely International Gold
Amex Card and International Green Amx Card.
CITIBANK
Citibank India is since 1902. Citibank India was the first bank to lend actively to
individuals. Citibank is the largest Consumer Finance lender in the world.
With Citibank online banking one can enjoy the following services from anywhere in
the world. For Citibank online banking one has to log on to www.citibank.co.in
Redeem your rewards points
Pay Bills Online
Send Demand Draft anywhere in India
Get statements by e-mail
Register for Instant alerts
Mobile Banking
Citibank online Security Tips
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CORPORATION BANK
Since 1906, Corporation Bank in India is dedicated to give vast, varied and versatile
services to the nation with a comfort and zeal stealing the common say in the Banking
Sector, "The Bank of Pride". Close to hit the mark '100 years at your service',
Corporation Bank India has regularly tried to keep a personal touch with customers.
Corporation Bank India is one of the well-run Public Sector Bank in India. The key
factor of the success of Corporation Bank India is its young and dynamic manpower
which gives service with efficiency and dedication. Even in this era of technology and
stiff competition, Corp Bank is rapidly growing confidence among its clients.
HSBC BANK
HSBC Bank is the largest bank in Hong Kong and second largest group in the world
after Citicorp. Before moving its headquarter to London in 1990, it was headquartered
in Hong Kong. HSBC India is having branches in Ahmedabad, Bangalore, Chennai,
From the data that was collected regarding the frequency of using the bank by the respondents it was found that private employees and government employees mostly use the bank on monthly basis. Most businesssman uses bank daily, most professionals and students use it weekly.
And from the data collected it can also be interpreted that most of the people uses their on monthly basis.
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TYPE OF THE BANK WITH WHICH THE RESPONDENTS WOULD LIKE TO DEAL WITH.
From the above given graph we could see that most of the respondents would like to deal with the private banks rather than the nationalized banks. There are 35 respondents out of 50 who prefers to deal with private banks.
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RANKING OF DIFFERENT BANKS OF RAJKOT CITY BY THE RESPONDENTS BASED ON THEIR OVERALL PERFORMANCE.
The respondents were asked to rank the banks on the basis of their overall performance. Above given is the data that was collected. It was found that most of the respondents ranked 1 to HDFC Bank followed by ICICI Bank with a minimal difference of just 3 votes. Most of them ranked 2 to ICICI Bank. Most of them ranked 3 to Bank of Baroda .
THE BANKS WITH WHICH MOST OF THE RESPONDENTS DEAL WITH
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From the above collected data we can say that majority of the respondents deal with HDFC Bank followed by ICICI Bank. Since the difference between the votes for 2 banks is very minimal, we can say that ICICI Bank proves to be a tuff competitor for the HDFC Bank.
THE REASONS FOR DEALING WITH A PARTICULAR BANK.
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On asking the respondents regarding the reasons for dealing with a particular bank the respondents showed the above shown results.It can be seen from the graph that private employees , businessman and professionals mostly look for services while dealing with a particular bank.whereas, it has been found that government employees and students would look for the convenient location first and then for the services. However overally we can interpret that most of the respondents gives the bank services as their prior preference for dealing with a particular bank and secondly the location of the bank.
MOST FREQUENTLY USED SERVICES OF THE BANK.
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When the respondents were asked about the MOST frequenlty used service by them form their banks we came up with the above shown graph. It shows very distinctively that maximum number of respondents use the ATM/debit card services of the bank. Secondly, few customers would mostly use liability products. However, some of the serices like phone banking, insta alert, etc are NOT MOSTLY used by the respondents.
ARE THE RESPONDENTS SATISFIED WITH THE BANKS THEY DEAL WITH?
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On inquiring about the satisfaction level of the respondents with the banks with which they deal with, we got the above results. From the graph thus formed we can interpret that the level of satisfaction by the respondents dealing with HDFC Bank is maximum as out of 16 respondents dealing with HDFC Bank 8 of them are highly satisfied whereas in IDBI Bank 2 out of 4 are highly satisfied.
WOULD THE RESPONDENTS CHANGE THE BANK WITH WHICH THEY ARE CURRENTLY DEALING?
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From the above graph we can see that out of the 50 respondents there were 33 of them who are satisfied with the banks with which they deal. But, there were 17 of them who for some or the other reason would like to change the bank with which they deal regularly.
REASONS FOR THE CHANGE OF BANK.
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From the above graph we can interpret that out of 17 respondents who would like to change their bank, maximum of them wanted to change as they were unsatisfied with the services provided by their bank.And the second reason for which they would like to change the bank is because of the inconvenient location of the bank.
SUGGESTIONS
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On the basis of the analysis of the research done they were few
recommendations for the company by the respondents.
When the respondents were asked for what reason they would change the bank
they deal with, most of them were of the opinion that they would change if :
1)They are dissatisfied with the services for that the company should fulfill the
expectations of the customers and try to lend best services.
2)Inconvenient location was another reason to consider as the customers who
are frequently visiting the bank for them it becomes difficult if the location is
not in the city area.
These were reasons for which a person can change their bank. So the bank
should try to open branches at prime locations and provide the best of the services to
have competitive advantage.
3).Most of the people use ATM services more frequently.
a).So bank should open more ATM’s at various locations for
customer’s convenience
b).People also use liability products such as savings account and fixed
deposits considering that the bank should give interest at competitive
rates to attract more people.
People should be provided with the true information for all the products of the bank
when they apply for it the false information can lead to bad reputation of the company
and the staff attitude towards the customers should be very polite and satisfying .This
is helpful to sustain in the competitive era .
CONCLUSION
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Liberalisation has really changed the banking industry. It is no longer enough for
banks to just manage money efficiently; they also have to manage customers, who
now have a wide choice of alternatives. The future promises to be even more exciting,
interesting and challenging, thanks to technology.
No longer will banks, or any large organisation, treat customers as a group and
segment them into just some demographic and psychographic profiles. The Internet
has enabled us to talk to each customer as an individual, with different needs and
requirements. Products will need to be developed to meet those needs, and services
will become the crucial diffrentiator. For years, customers were part of the banks’
Fixed Assets; now they have moved into the Current Assets category, and it will be a
task keeping them there.
From the research we can derive many useful conclusions like:
1) Most of the people deal with private sector banks.
2) Mostly the businessman visit the bank daily otherwise private employees visit
it monthly or fortnightly.
3) Most of the people use ATM morefrequently followed by liability products
and loans.
4) Most of the people deal with HDFC Bank followed by ICICI Bank and Bank
of Baroda.
5) Most of the customers of HDFC Bank IDBI Bank are highly satisfied.
6) Most of the customers deal with the bank due to the services provide to the m