SECONDARY DATA

m Overall Banking Scene

m Profile of some selected banks highlight with their marketing strategies

m Consumer Complaints and grievances

m Changing Banking Environment 4 CHAPTER FOUR: SECONDARY DATA

Introduction: The researcher has collected a wide secondary data quantitative and qualitative data to study the banking scene and have an insight into marketing practices, of banks in this changing environment. The researcher has gone through a number of articles, and other statistics from magazines, RBI bulletins, newspapers, and consumer journal of consumer court cases etc. The data is divided into five parts:

1. Overall banking scene

2. Profile of some selected banks, and their marketing strategies.

3. Consumer complaints

' 4. Changing banking environment

4.1 Overall banking scene Scheduled commercial Banks constitute those banks, which have been included in the Second Schedule of Reserve Bank of India (RBI) Act, 1934. RBI in turn includes only those banks in this schedule that satisfy the criteria laid down. Some co-operative banks are scheduled commercial banks albeit not all co-operative banks are. At the same time, this status also subjects the bank to certain conditions and obligation towards the reserve regulations of RBI. This sub sector can broadly be classified into1:

(1) Public Sector Banks which include the.

a. State Bank of India and its Associates. b. Nationalized bank.

(2) Private Sector Banks consisting Indian private sector banks (which, in turn, decompose into old i.e. banks existing prior to 1991, and the new i.e. banks established after 1991).

109 (3) Foreign Banks. For example: Citibank NA, HSBC Bank, Bank of America National Trust & Savings Assn, and The Bank of Tokyo- Mitsubishi LTD etc. Figure (4-1): No. Of Commercial Banks from 1991 to 2004

1991 1995 1997 1999 2001 2002 2003 2004 • J Source: RBI, Report on Trend and progress of Banking in India 2003/2004

Observation: (Figure 4-1) has shown that the total number of banks has been increased in period (1991-1999) because the new private banks and foreign banks have entered. During (1999-2004) the total number of banks has been reduced, this is the result of the amalgamation between banks.

Deposits Mobilization: The deposit mobilization function of commercial banks is of vital importance in a developing country like India. For one thing, by attracting deposits from the public, the banking system serves to raise the rate of saving thereby encouraging the growth of capital ceded for the economy's development. Secondly, the Reserve Bank of India can direct deposits with banks towards the most desirable investments. In the absence of an easy access to the banks, these deposits could have gone to agencies lying outside the control of the RBI. Thirdly, such a connection of the rural masses with the banks amounts a vital link between the unorganized sector and the organized sector.

110 Figure (4-2) Growth of Deposits and Credit For All Commercial Banks

1600000 14000001 1200000 10000001" 800000 I Deposits 600000 I Credit 400000 200000 0 1990/91 1994/95 1998/99 2001/02 2003/04

During the period from 1990-91 to 2003-04, aggregate deposit with banks have gone up from Rs 201199 corers to Rs 1542284 corers. Similarly, aggregate credit with banks has gone up from Rs 121865 corers in 1990-91 to Rs 865594 corers in 2003-04.

The percentages of aggregate deposits in banks have come up from (7%) to (52%). Showing more than seven times growth. Similarly the percentages of aggregate credit with banks have come up from (6%) to (40%), showing more than six times growth (Figure 4-2). This result of the customer's orientation and attractive marketing strategies using by the commercial banks in India.

Observations

1. The budgetary policy of deficit financing followed by the government throughout this period resulted in greater cash holdings with the banks. This gave an opportunity to the banks for more credit-creation. Loans, as we know, create deposits and increase in loans sanctioned meant so many more accounts and more deposits.

2. As a result of planned economic development, various sectors of the economy were expanding. Their credit needs were growing. With a widened net of branches, it was possible for the banks to examine closely the proposals submitted by the promising businessmen and

111 extend finance to them. The now agrarian technology involved more capital inputs, which were now available from the banks. The overall climate thus was investment-friendly and buoyant. This logically led to rapid growth of bank deposits.

4.1.1 Performance of the Banks in India: The impact of banking sector reforms on the performance of the banks in India is reflected in the prudential indicators on capital adequacy, asset quality, profitability and productivity, etc. of these banks based on the information available in the past Reports on the Trend and Progress of Banking in India and other publications of RBI is detailed below.

4.1.1.1 Capita] Adequacy The average CRAR of all banks increased from 9.23% as on March 31, 1994 to 12.78% as on March 31, 2003. Remarkably, as on March 31, 2003, out of the 23 banks in the public sector, 22 had CRAR of more than 10%, which is significantly higher than the prescribed norm of 9%. It may be seen from Table (4-1) that, among the bank groups, although the new private sector banks started at the high level of 25.9% in 94-95 alongside the old private sector banks with a low of 8.8%, the CRAR of all the bank groups converged between 10% to 15% in March, 2003. This shows that the banks have been able to build up the capital cushion over the years to support the anticipated growth in their risk weighted assets and the risk has been diversified across all banks. Table (4-1): Capital to Risk Weighted Assets Ratio (CRAR)

Year 93-94 94-95 96-97 97-98 98-99 01-02 02-03

Public Sector Banks 7.71 9.48 10.1 11.6 11.3 11.76 12.68

Old Private Sector Banks 7.41 8.80 11.7 12.3 12.1 12.52 13.02

New Private Sector NA 25.90 15.3 13.2 11.8 12.27 11.62 Banks

Foreign Banks 9.56 11.10 10.4 10.3 10.8 12.94 15.21

All Banks 9.23 11.30 10.4 11.5 11.3 12.01 12.78

112 4.1.1.2 Profitability The reform measures have also resulted in the improvement in the profitability of banks. Table (4-2) shows that the Return on Assets (ROAs) of all banks rose from 0.39 in the year 1991-92 to 1.0 in 2002-03. The profitability of public sector banks was affected in the initial years of reforms due to the increased provisioning requirement, etc., thus pushing the ROA to negative, but the banks showed resilience in subsequent years. Despite recording of operating loss by as many as eight public sector banks in the first year of reforms on account of application of prudential norms, by 2003 none of the public sector bank reported net loss, thus staging a remarkable turnaround in performance. Although the ROAs of the old private sector banks, new private sector banks and foreign banks showed significant fluctuations over the period, it may is observed that the ROAs of all the bank groups converged between approximately 1 and 2 in 2002-2003. The steady rise in profits have been attributed to the increase in the trading profits of banks in a declining interest rate scenario, the reduction in the establishment costs in view of the Voluntary Retirement Schemes introduced by them, etc.

Table (4-2): Return on Assets of Banks

Year 91-92 93-94 97-98 99-00 00-01 01-02 02-03

Public Sector Banks 0.28 -1.15 0.77 0.57 0.42 0.7 0.96

Old Private Sector Banks 0.57 0.56 0.8 0.81 0.62 1.1 1.17

New Private Sector Banks NA NA 1.55 0.97 0.81 0.5 0.9

Private Sector Banks 0.57 0.56 1.04 0.88 0.71 0.66 0.99

Foreign Banks 1.57 1.51 0.96 1.17 0.93 1.32 1.57

All Banks 0.39 -0.08 0.82 0.66 0.5 0.8 1.00

113 4.1.1.3 Productivity The banking sector reforms also emphasized the need to undertake a review of the available manpower resources and rationalize the requirements by drawing a realistic plan in order to decrease the operating cost and improve profitability. Various steps taken by the banks, including Voluntary Retirement Scheme (VRS), which was introduced in consultation with the Government of India, has resulted in significant improvement in the Business per Employee of public sector banks. In 1998-99, the business Per Employee of PSBs was Rs. 94.64 lakh which increased to Rs. 188 lakh by 2002 mainly due to VRS and other measures taken by banks such as branch rationalization, IT initiatives, etc.

Observations:- Performance of the Banks in India

1. The position of public sector banks in the Indian banking system continues to be predominant as these banks account for nearly three- fourths of assets and income

2. From the position of net loss in the mi-1990s, in recent years the share of public sector banks in the profit of the commercial banking system has become broadly commensurate with their share of assets, indicating a broad convergence of profitability across various bank groups.

3. It is observed that the progress of commercial banking in India was very fast. But during (1999-2004) the total number of banks has been reduced, this is the result of the amalgamation between banks.

4. Innovative and attracting schemes for attracting middle and lower income group are an important reason for growth in deposits.

5. Branch expansion programmes carried banking services to the doorsteps of the people. Those who never had an opportunity of keeping their savings in a bank, for the first time got such an opportunity. They naturally seized it promptly.

6. The market discipline imposed by the listing of most public sector banks has also contributed to this improved performance.

114 7. Public sector bank managements are now more attuned to the market consequences of their activities. 8. Public sector enjoyed monopoly for a very long period, whatever public sector did, whether good or bad, created certain challenges and opportunities for private financial service sector in India.

9. With the entry of private and foreign banks, banking field has been come competitive.

10. New private banks have targeted non fund-based income as a major source of revenue, with their level of contingent liabilities kept much higher than those of either public sector banks, or the old private banks.

11. Foreign banks have access to international networks and product development, they import ideas and systems and adapt them to the local environment.

115 4.2 Profile of some selected banks and their marketing strategies

Introduction

There are many commercial banks operating in Pune. The profiles and information about some selected banks and their marketing strategy in brief is explained below. The information is collected from annual reports of banks, websites, newspapers and magazines. Observations of each bank are given separately and on the basis of those observations, a common conclusion is drawn.

4.2.1 State Bank of India History The origins of the State Bank of India date back to 1806 when the Bank of Calcutta (Later called the Bank of Bengal) was established. In 1921 the Bank of Bengal and two other presidency banks (Bank of Madras and Bank of Bombay) were amalgamated to form the Imperial Bank of India. IN 1955, the Reserve Bank of India acquired the controlling interests of the Imperial Bank of India and State Bank was created by an Act of Parliament to succeed the Imperial Bank of India. Over the years the bank has expanded rapidly and today commands one fifth of the Indian Banking business, Under the State Bank of India (subsidiary banks) Act.1959the State Bank of India took over eight former state associated banks as its subsidiaries. As a result of merger of two of these subsidiaries got merged with each other and remaining 7 banks remained subsidiaries of the State Bank of India. Today the State Bank Group comprising State Bank of India, seven associates, a banking subsidiary and eight non-banking subsidiaries is a market leader. This SBI group got diversified in activities into insurance credit cards, factoring leasing, mutual funds, merchant banking, home finance, securities trading etc. In 2000-01 the bank launched India Millennium Deposit (IMD) that was remarkably successful. The bank mobilized Rs.2571crores which in return helped the country in meeting the challenge of rising price provided strong support to the Rupee and reinforcing the country's self confidence in

116 the aftermath of US sanction. The bank is having nearly 9000 branches with global deposit of Rs.2, 96,123crores2.

State Bank of India: is the Biggest Bank in India. With Rs 318619 crore in deposits and average working funds of Rs 375804 crore, the State Bank of India stands tall in the industry. The closest competitors aren't a third as big as SBI. ICICI Bank is the second biggest as far as average working funds are concerned, but that stacks up to just Rs 106593 crore. SBI, which accounts for 18 percent of all deposits with commercial banks in India, is able to mop up such large amounts in low-cost deposits because of its sheer reach: it has 13635 branches spread all over the country. Can SBI hold on to its top slot? for the next few years, easily. There are other bigger banks ICICI Bank, for one that is growing aggressively. Last year, while SBI'S deposits grew 7 percent, those of new private banks swelled at 29.6 percent. Add to it the coming mergers and acquisitions (M&AS), and SBI'S position will come under threat. However says A. K. Purwar, Chairman and Managing Director, SBI: "We have good size and excellent geography in India, and we would be interested in exploring acquisitions overseas"3.

The Bank's Mission "To retain the Bank's position as the premier Indian financial services group, with the world class standards and significant global business, committed to excellence in customer, shareholder and employee satisfaction, and to play a leading role in the expanding and diversifying financial services sector, while continuing emphasis on its development banking role"4.

Information Technology and Customer Service Several IT projects have been launched to carry the mission forward. The target for computerization of branches was exceeded by having 666 fresh installations this has taken the number of computerized branches to 3, 701, which constitutes nearly 41% of total branches in number and 82% of business volumes. A project to computerize all the remaining Bank's branches, which are largely concentrated in semi-urban and rural areas, by the year 2004, has been undertaken. This endeavourer will help the Bank achieve the aim of 100% computerization of its branches.

117 'Anytime, Anywhere Banking' is fast becoming a reality for the Bank's customers. At the end of the year 2003-04, the Bank had a spread of 1600 ATMs of which 852 located in 176 centers were networked. The IT Policy envisages networking of all the ATMs soon, including those installed by its Associate Banks. "Online SBI "the Bank's Internet Banking facility, initially introduced for retail customers, has been extended to corporate customers also and is now available at 531 branches. A state -of -the -art Core Banking Solution identified by the Bank and an integrated trade finance solution are being customized for Bank's operations. The Bank is committed to commence partial rollout of these solutions in the Year 2003-04, followed by a full-scale rollout in all the circles of the Bank. The implementation will be carried out with the help of a dedicated countrywide network, which is already being laid out for integrating various IT products and deliveries. This project is one of its kinds in terms of reach and complexity5.

Business hours have been extended and collection of financial instruments has been speeded up. The bank's website also has been redesigned to provide a wide rang of comprehensive information with a view to providing the customers services at one point of contact, the Bank introduced, during the year, single window operation to its computerized branches with the target of completing the job by end-March 2004. The Bank had taken the necessary steps like loading specific software and providing training to the staff in these branches. Before the year-end, over 250 branches were put on single window.

Product Range Personal Banking State Bank of India offers a wide range of services in the Personal Banking Segment, which are indexed here. SBI products are designed with flexibility to suit customer's personal requirements.

- Deposit Schemes - Personal Finance - Services Deposit Schemes

118 - Current Account. - Savings Bank Account. - Term Deposits. Personal Finance State Bank of India has a variety of schemes under Personal Finance to satisfy varying needs of the banking public. The Bank offers the following schemes with attractive rates of interest:

SBI Term Deposits SBI Loan For Pensioners

SBI Recurring Deposits Loan Against Mortgage Of Property

SBI Housing Loan Loan Against Shares & Debentures

SBI Car Loan Rent Plus Scheme

SBI Educational Loan Medj-Plus Scheme

SBI Personal Loan Rates Of Interest Services ATM: The Bank's ATM network includes 1600 ATMs in India. The Bank continues to expand this network rapidly. Customers can transact free of cost at the ATMs of the State Bank Group.

After HDFC and UTI Bank, SBI has opened its network to Indian Bank and Andhra Bank under bilateral sharing arrangements to provide the largest reach and convenience of "Anywhere - Anytime" banking to its customers at ATMs. SBI ATM cardholder now has access to 7,000 ATMs, as also the customers of these banks. This has resulted in a new revenue stream. The agreement with VISA and Master Card International for acquiring ATM transactions has resulted in another revenue generation stream.

Internet Banking; The Internet banking service of the State Bank of India is located at www.onlinesbi.com through which the customers who have enrolled themselves for Internet banking can check account balances, view their accounts, request cheque books, drafts and Bankers cheques, stop cheque payment and issue standing instructions and also transfer funds to other accounts at the Branch.

119 E-PAY: (E-Pay) will let customer to pay his Telephone, Mobile, Electricity, Insurance and Credit Card bills electronically over bank Online SBI website.

New Products: Loan for Earnest Money, Gaveshak Plus, Prashasan Plus, Nursing Plus and Gram Nivas. The Bank also entered into tie-ups with many corporates as also State governments for financing their employees. Among the commercial products and services, new products launched included Kanakdhara Deposit Scheme, Pravasi Plus Scheme, Fast Track-Channel Financing, SBI Credit Khazana, Capgains Plus Scheme, Rent Plus Scheme, Transport Plus and SBI Vishwa Yatra Foreign Travel Card.

Agricultural banking SBI branches have covered a whole gamut of agricultural activities like crop production, horticulture, plantation crops, farm mechanization, land development and reclamation, digging of wells, tube wells and irrigation projects, forestry, construction of cold storages and godowns, processing of agriculture-products, finance to agriculture-input dealers, allied activities like dairy, fisheries, poultry, sheep-goat, piggery and rearing of silk worms. The branch also has farmer's meet in villages to explain to farmers about various schemes offered by the bank. To give special focus to agriculture lending Bank has set up agriculture business unit. Bank has also agriculture specialists in various disciplines to handle projects/ guide farmers in their agriculture ventures. Advances are given for very small activity covering poorest of the poor to hitch activities involving large fund outlays.

SBI to Focus on Relationship Banking State Bank of India is identifying a mass affluent segment of customers for whom it has designed 'SBI Vishesh', a new bundled product- service proposition. This scheme will be rolled out in some selected branches and these branches will find customers of Primary segment by scanning the existing database for transaction history. Customers, to be eligible for thes scheme, should satisfy certain criteria like having a deposit of Rs. 5 lakh or more; home loan borrowers with limit of Rs. 10 lakh or more; but with a

120 deposit of Rs. 2 lakh or more; and car loan borrowers having limits of Rs. 5 lakh or more but with a depoit of Rs. 2 lakh or more etc.

Major benefits of the scheme include extended business for easy/quick transactions, priority allotment of lockers and discounted locker service charges and demat account facility with concessional annual charges at 50% of the actuals at branches where Depository services are available6.

Branch Expansion The number of branches of the SBI bank has increased substantially during this period (1994-2004). The number of Bank branches was 8847 as at the end of 1994/95, 8888 as at the end of 1996/97, 8982 as at the end of 1998/99, 9085 as at the end of 2002/03, and 9093 as at the end of 2003/04.

Further, SBI bank has some branches operation in anther countries like Bahrain, Japan, USA and Mauritius.

Table (4-3): State Bank of India Financial Highlights:7

For the year 1994/95 1996/97 1998/99 2002/03 2003/04

Total Income (Rs crore) 12250 17594 22392 36827 38073 Total Expenditure (Rs. crore) Net profit (Rs) 11534 16264 21364 33722 34392 -Deposits (Rs crore). 715.50 1329.30 1027.8 3105.0 3621.0 Percentage 85122 110701 169042 270560 318619 -Advances (Rs crore). (0.08) (0.12) (0.18) (0.28) (0.34) Percentage 48530 62233 82360 120806 157934 -Number of Branches (0.10) (0.13) (0.17) (0.26) (0.34) (Including Foreign Branches) 8847 8888 8982 9085 9093

Growth of Deposit: The Bank's deposits grew from Rs. 85122 crore as the end of March 1995 to Rs. 110701 crore as at the end of March 1997, a growth of Rs. 25579 crore, while during March 1999, March 2002 and March 2004 the growth was Rs. 58341 crore, Rs. 101518 crore and Rs. 48059 crore (Figure 4-1).In 1995, deposits claimed (8%) of the total deposits. This percentage

121 increased to (34%) in 2004. This shows that the percentage of deposits has practically more than three times growth. This performance is certainly good.

Figure (4-3): Deposits of State Bank of India (94/95 - 2003/04)

Deposits (Rs crore)

State Bank of India

Growth of Advances Advances grew from Rs. 48530 crore as the end of March 1995 to Rs. 62233 crore as at the end of March 1997, a growth of Rs. 13703, and advances grew from Rs. 120806 crore as the end of March 2002 to Rs. 157934 crore as at the end of March 2004, a growth of Rs. 37120 crore.

In 1995, advances claimed (10%) of the total advances. This percentage increased to (34%) in 2004. This shows that the percentage of advances has more than three times growth.

Figure (4-4): Advances of State Bank of India

Advances (Rs crore)

State Bank of India

122 Observation 1. The State Bank of India is pursuing an aggressive IT Policy with the objective of achieving efficiency in internal operations, meeting customer / market expectations and facing competition effectively,

2. 'Anytime, Anywhere Banking' is fast becoming a reality for the Bank's customers

3. SBI Bank technology initiatives benefit the Bank's customers immensely. They now have access to various innovative and value- added facilities like Telebanking, Remote Login, electronic payments systems, computerized drafts and term deposits and enquiry terminals at select branches.

4. Financial performance is improving.

5. The bank is doing well in foreign market.

6. SBI has specific polices for rural customers.

7. Bank is working hard to fulfill its mission to retain the bank's position as the premier Indian financial services group.

8. State Bank of India offers a wide range of services in the Personal Banking Segment. State Bank of India is introducing new products to provide wide choice to customers. 9. SBI is the market leader, but on front of mobilization of deposits it is loosing to private sector banks, as their rate of deposit mobilization is much higher.

State Bank of India employees went on strike in the month of April 2006 this caused lot of inconvenience to customers; there were letters in the newspapers expressing anger against bank. On local radio also people were interviewed many of them said that they are going to close account with state bank of India.

123 4.2.2 Bank of Maharashtra

History The Bank was registered on 19-6-1935. The bank started functioning on 8-2-1936. It got nationalized in 1969. In 1954 the Banthia Bank Ltd. Was merged with the Bank. In 1961 the Bank of Nagpur Ltd., Bank of Konkan Ltd. And Bharat Industrial Bank Ltd. was merged with the Bank. The bank celebrated Diamond Jubilee year in 1995. It is having the responsibility of convenor of SLBC for Maharashtra State8. The bank got autonomy in 1998 as a result of excellent performance.

Information Technology Update The Bank has attained a level of 96.25 percent of the business captured on computers as at the end of March 2004. The total number of mechanized branches as of 31st March 2004 was 659.

The Bank has installed VSAT (Very Small Aperture Terminal) at 30 controlling offices, which has enabled immediate connectivity and transfer of information among these centres. The connectivity between 504 branches and 30 Regional Offices through 'MAHANET' is in advanced stage of implementation. 15 Branches in PUNE City are offering Any Branch Banking (ABB) services.

The Bank has already implemented the Negotiated Dealing System- Public Debt Office system and centralized Funds Management System of Reserve Bank of India and is in the process of implementing the other payment and settlement systems like Structured Financial Messaging System and Real Time Gross Settlements.

Eight ATMs of the Bank in Mumbai are under BANCS (Banks ATM Network & Consumer Services- earlier SWADHAN). This connectivity will shortly be extended to all ATMs of the Bank. Tele-banking and remote access facilities are made available at 83 and 41 branches respectively. The Bank has initiated the steps for establishing its own Data Centre at PUNE. It has already planned the road map in implementing the Core Banking Solution (CBS) in the Bank.

124 Bank has drafted a detailed policy on Information System Security. The Bank has conducted in-house development of software relating to the functions of Regional Offices, Service Branch, Branch Inspection and web enabled intranet application9.

Customer Service Bank has a full-fledged grievances redressal machinery to deal with the complaints. Complaint Management Cell has been established in Central Office and each Regional Office for redressal of grievances. Quarterly meetings of Central office Customer Service Committee are held regularly. During the year bank has received 831 complaints and the some have been redressed. To assist the customers, Lobby Managers are appointed in 70 branches. Toll free telephones have been installed at 10 major cities. The bank has implemented 78 recommendations of Goiporia Committee. Customer mobilization month was celebrated in all regions.

The Bank is the coordinator for customer service center for public sector banks in PUNE. Four meetings were held with all the bankers during the year in which complaints of customers were discussed and redressal mechanisms were worked out with definite time limit10.

Marketing and Publicity Marketing and publicity of Bank's products such as deposit schemes, services, loan schemes are made through various media such as electronic media, press, hoardings, posters and banners. Bank also participates in exhibitions by hiring and banners. Bank also participates in exhibitions by hiring stalls, distributing brochures, pamphlets etc. Up to date and latest information on the Bank's products and services is available on the website of the bank. Conducting customer meets at each branch of the Bank on various occasions has strengthened direct contact with the customers.

Bank always takes lead in carrying out the socio-economic projects such as cleanliness drive, health camps and city beautification. Bank has sponsored various academic, health and sports related events and supports promotion of art and culture in the society11.

125 Product Range The Bank has implemented a number of innovative schemes in addition to the various programmers sponsored by Government / RBI /NGOs etc.

Mahabank Family Banking Card - Bank's Unique Scheme The scheme offers a bouquet of concessions and free services on a range of products and services to a "Family" having term deposits of Rs.LOOIakh with the Bank through attractive family-banking card. The benefits to cardholders include free ATM cards, free credit cards, free remittance facility by DD/MT between accounts of family members, waiver of processing charges & concession in interest rates on home loans, consumer loans & other personal loans, free facility for payment of bills through Bank's Mahabillpay scheme. Concession in consultation charges for preparation of Will & formation of Public charitable and Family Trusts through Maharashtra Executor & Trustee Company (METCO), special discounted rates for premium of Householders' Insurance & Med claim policies through the Oriental Insurance Co., free Green line Emergency Medical Card to all the cardholders besides Mahabank Family Overdraft facility upto Rs.lOOIakh.

Housing Loan to Public To promote housing in rural and urban parts of India, Bank has taken housing as a thrust area and has been lending under the Housing Loan to Public Scheme, on a priority basis. The scheme is a simplified one and is customer friendly. Housing loans are also made available to NRIs.

Model Educational Loan Scheme With the objective of ensuring that no deserving student is denied an opportunity to pursue higher education on financial grounds, the Bank implemented a Model Educational Loam scheme, As of March 2004; Bank has provided loans to 3,567 students to the tune of Rs. 4450crore.

Retail Financing Retail lending has been identified as a thrust area by the Bank. Individuals who are salaried persons, professionals, businessmen and pensioners are provided consumer / personal loams, under the Bank's

126 various loan products, for purchase of consumer durables, two / four wheeler vehicles and also for other personal needs.

Aadhar Scheme for pensioners Bank has introduced a special scheme called 'Aadhar' for catering to the personal credit needs of the pensioners. This scheme has evoked an encouraging response from the pensioners as it has enabled them to meet their financial needs for medical expenses, travel plans etc. Bank's finance under the scheme stood at Rs.31.54crore benefiting 13,988 pensioners.

Mahabank Salary Gain Scheme Bank has recently introduced Mahabank Salary Gain scheme to meet the short-term needs of salaried class. It envisages meeting the needs of salaried class who may find temporary shortage of funds, till credit of salary in their account. The eligible borrowers are granted accommodation by way of overdraft to meet their pressing needs.

Mahabank Kisan Credit Card (MKCC) This scheme has gained popularity in rural areas where it is being propagated successfully and vigorously. Bank has issued 1, 12,400 Kisan Credit Cards to the farmers with credit limit of Rs 310.55crore.

Finance to Non-conventional Sources of Energy Bank has been implementing the scheme for financing non- conventional sources of energy in keeping in line with the Government's focus by providing interest rate subsidy in respect of loans given for purchase of solar water heaters since September 1998. During the year Bank has sanctioned 1766 systems with loans amounting to Rs.6.43 crore under the scheme.

1 Laghu Udhyami Credit Card Scheme 2. Mahabank Swarojgar Credit Card Scheme (MSCC) 3. Maha-Entrepreneur 4. Women Empowerment 5. Micro Finance 6. Rural Development Centre

127 7. Mahabank Agricultural Research and Rural Development Foundation (MARDEF) 8. Mahabank Self-Employment Training Institute (M-SETI) 9. Gramin Mahila Va Balak Vikas Mandal (GMVBVM)

Salient Features of ATM Card • Round the clock cash withdrawal facility upto Rs.20, 000/- from any of the ATMs, while on-line subject to availability of balance in the account. . Withdrawal upto Rs.3000/- while off-line. • Deposit of cash / cheque for cardholders of the respective branches. • Registration of request for chequebook / statement of account for cardholders of the respective branches. • No hassle / delay even during business hours. • No annual membership charges, entry fee, etc. Cash withdrawal facility upto Rs. 3,000/- per month from any of our branches in India. • Audio Assistance available in Marathi, Hindi and English for the convenience of the cardholders.

Branch Branches Network With the opening of 34 new branches and up-gradation of 10 extension counters into full-fledged branches during 2003-04, the total branch network as on 31.3.2004 comprises of 1276 branches and 30 Extension counters spread over 22 states and 2 union territories. The branch network includes 15 specialized branches in the area of foreign exchange, industrial finance, small-scale industry and hi-tech agriculture. During the last year, the Bank has covered one more state by opening a branch in the state of Assam12.

128 Table (4-4): Bank of Maharashtra Finan

Particulars March March March

1991/92 1995/96 1998/99 2

Income 4614947 6261502 12416292 165

Expenditure 4574543 6669527 11897436 156

Profit / loss 40404 - 5342495 518856 901

Deposits 33736153 53416950 109285238 134

(0.04) (0.07) (0-13) (0.1

Borrowings 1857260 2440275 1362009 395

Investments 15417041 28318971 56866488 747

Advances 18176595 23440353 40618381 525

(0.08) (0-07) (0.12) (0.1

129 Figure (4-5): Deposits of Bank of Maharashtra 1991-2005

350000000 , 300000000 ' 250000000 200000000 150000000 100000000 50000000 0 91/92 95/96 98/99 2000/01 2002/03 2004/05

Growth of Deposits Financial position of Maharashtra Bank through deposits reflects an increasing trend of deposits. Deposits have increased from 33736153 (1991/92) to 53416950 (1995/96), 109285238 (1998/99), 134065498 (2000/01), 191306297 (2002/03) and 288441742 (2004/05).

In 1991, the deposits were (4%) of the total deposits. This percentage has come up to (36%) in 2002. This percentage shows practically more than five times growth.

Figure (4-6): Advances of Bank of Maharashtra 1991-2005

140000000 120000000 100000000 80000000 60000000 40000000 20000000 0 91/92 95/96 98/99 2000/01 2002/03 2004/05

130 Growth of Advances:

Also financial position of Bank of Maharashtra as measured through advances, reflects an increasing trend of advances. Similarly advances have also increased from 18176595 (1991/92) to 23440353 (1995/96), 40618381 (1998/99), 52522066 (2000/01), 82551222 (2002/03) and 130616428 (2004/05).

In 1991, advances claimed (8%) of the total advances. This percentage increased to (38%) in 2002, showing more than four times growth. This means that the performance of bank is certainly commendable. Observations 1. The Bank of Maharashtra has implemented a number of innovative schemes in addition to the various programmers sponsored by Government / RBI /NGOs etc. Financial position of Maharashtra Bank trough deposits reflects an increasing trend of deposits since 1990.

2. Bank is adapting the latest-tech has computerized operations, installed ATM; has web sites.

3. Bank has wide product mix to satisfy a requirement of varies customers groups including farmers.

4. Bank is offering new products from time to time.

5. Bank is providing increasing attention to advertising and publicity.

6. Bank is using latest technology for improved operational efficiency and customer convenience.

7. Bank has wide branch network spread in urban and rural area.

8. Performance is improving in terms of deposits and advances.

9. Bank has a separate mechanism to handle complaints of customers.

131 4.2.3 BANKOFBARODA Bank of Baroda was established on 20th July 1908 by Kail. Srimant Maharaja Sayajirao Gaekwad II of Baroda State. In 1910 bank's first branch was opened in Ahmedabad, which was followed by a branch in Mumbai in 1919. In 1930s the bank the first sate deposit lockers were provided at Barods. Banks overseas expansion started in 1953 with the opening of its first branch at Mombasa (Kenya). In 1957 the bank opened in branch London. The bank was nationalized in 1969. Now the bank it's a leading bank with a large number of branch network in other countries. It has around 65 branches in 16 countries, which are contributing one fifth of the bank's net profit. And it is well-diversified bank, which undertakes activities like mutual fund management bank, credit card, depositing services, primary dealership, money finance etc. At the beginning the bank worked for the "Baroda State" as the treasury. In 1969 the bank got nationalized. The bank has diversified in business into the over on of merchant banking, housing finance, credit card, Manual Funds, etc.

In 1995-96 the bank came out with issue of unsecured redeemable subordinated bonds of Rs. 300 crores & the issue was over subscribed. In 1996-97 the bank came out with a public share issue of Rs. 850 crores & in 2001 the bank implemented VRS scheme and granted VRS to 6527 staff. In the recent past the bank is using services of an internationally known management consultancy firm to restructure itself so as to make it slimmer & effective. The bank acts as co-coordinator of SLBC in Rajasthan and UP. The bank of Baroda, at the end of 31.2.03 had 2715 branches in India and 38 branches in other countries. Indian branch are managed by at least over 40,000 states.

IT Infrastructure: The Bank's technology initiatives are clearly focused on the customer. The Business Transformation Programme, encompassing technology, is being implemented by the Bank with a view to providing the customer, convenience banking on 24X7 basis, at major centers in India and abroad, through deployment of Core Banking Solution with integrated delivery channels like ATM, Internet, Phone, Mobile, Kiosk, Call Center.

132 Branch Computerization: Bank has computerized operations at 2697 branches in India, out of which 516 branches have been brought under computerization through cluster approach.

ATM Network • The Bank's interconnected ATM network in India now stands at 535 across 203 centers.

• The Bank's plans are to extend this network in stages in future. The Bank also plans to deploy low cost ATMs at Rural centers.

• Bank's Debit Card holders can use their card at over 15,000 VISA ATMs in India and over 8,50,000 ATMs around the world. Bank's Debit Cards are also accepted 1,00,000 Points of Sales (POS) across the country and 13 million POS terminals around the world.

• Master Card holders and holders of VISA cards issued by other banks can also access their accounts through our Bank's ATM network.

Information based Internet & Mobile Banking (SMS) services These services are offered to customers at over 585 branches across 139 centers. SMS and WAP-based Mobile Banking Services are also provided to the customers of these branches, using mobile phone. Customers can get a single view of their accounts across various branches; can obtain account view for 2 months as also send request for chequebook. Web-based Lending Process Automation for Corporate and Retail lending Operations: Bank of Baroda is the first Public Sector Bank in India to implement a Web-Based Lending Automation System for its Corporate and Retail Lending Operations. The system is now implemented at over 520 branches in India, of which 321 branches are covered under Central Processing Cell cluster

Product Range: Deposits: - Fixed Deposits - Current Deposits

133 - Savings Deposits Retail Loans: - Housing Loan - Housing Loans to NRIs/PIOs - Home Improvement Loan - Education Loan - Car Loan - Two wheeler Loan - Consumer Durables Loan - Personal Loan Credit Cards Debit Cards Services - Baroda Health - Multi City cheque - Baroda Money Express - Collection Services - Government Business - Internet Mobile Banking - Bill Payment - Senior Citizens - Lockers

Product Innovation During the last year, -5- assets products were introduced • Baroda Home improvement Loan • Baroda Festival Loan • Baroda Professional Loan • Baroda Eco-friendly Gas Kit Loan • Baroda Loan for Executive Development Branch Network Bank of Baroda has an extensive network of over 2700 branches spanning the length and breadth of the country. There is a branch in the vicinity of everyone in need of a banking solution.

134 With a customer centric approach of being operational 24 hours a day, across 20 countries, the bank branches are the last door you will have to knock while on the lookout for an answer to your queries.

Human Resources (HR) Through enrichment of job knowledge, skills up-gradation & competency building and -28728- employees have been trained during the year by conducting -1356- in-house training programmes at its various training centers/institutes besides in-company training programmes in collaboration with external bodies/consultants for targeted audience. The Bank also deputed -639- officials to reputed external institutions in the country and overseas for various management & behavioral programmes13.

Table (4-5) Bank of Baroda Financial Highlights Particulars 2000 2001 2002 2003 2004 2005

Capital 2943277 2943379 2943392 2943424 2945258 2945274

Deposits 512757189 539857818 618044637 663663655 729673238 813334643

(13%) (14%) (16%) (17%) (19%) (21%)

Borrowings 9362724 3686652 6926524 6253308 8751089 16408337

Advances 243929107 274206771 336629867 353480816 356008822 434003839

Investments 185565017 198571185 238331342 301793831 380188104 370744411

Growth of Deposits Financial position of Baroda Bank through deposits reflects an increasing trend of deposits (Figure 4-7). Deposits have increased from 512757189 (2000) to 539857818 (2001), 618044637 (2002), 663663655 (2003), 729673238 (2004) and 813334643 (2005).

In 2000, the deposits were (13%) of the total deposits. This percentage has come up to (21%) in 2002. This percentage shows practically two times growth

135 Figure (4-7): Deposits of Bank of Baroda

900000000 800000000 700000000 600000000 500000000 400000000 300000000 200000000 100000000 0 2000 2001 2002 2003 2004 2005

Observations:

1. Bank is adopting customer's centric approach.

2. Bank is introducing new products, from time to time.

3. Bank is giving special attention to advertising and publicity (has changed logo spending increasingly on TV advertising is using celebrities like cricket captain Rahul dravid)

4. Bank training focuses on developing competent and highly dedicated work force. Training of bank focuses on the all-round development of people.

5. Bank has pioneered and focused HR initiatives towards creating a vibrant workplace, reskilling and competency building, enhancing employee motivation and for overall growth and development of the institution. These HR initiatives have mostly been driven from the topmost level with a Baroda level steering committee on HR being the key driver.

4.2.4 CANARA BANK History The Bank was founded on 1st July 1906 in Mangalore as Canara Hindu Permanent Fund Ltd., by A. Subba Rao Pai and a group of small businessmen and professionals of South Canara District. The Canara Hindu Permanent Fund Ltd. became Canara Bank Ltd. in 1910. It was nationalized in 1969. The bank took over as many as 11 banks 1961 to 1985. In 1987 the bank floated 3 subsidiaries to undertake activities like Housing Finance, mutual fund and merchant banking, leasing, stock broking etc. In 1989 the bank floated a subsidiary to undertake activities of venture capital. In 1991 the bank floated a subsidiary to undertake factoring related activity. In 1996 the bank floated another subsidiary to undertake activities like primary dealership in government securities related market. In addition to that the bank has floated RRBs in Karnataka, Uttar Pradesh and Kerala. In 2000-01 it implemented Voluntary Retirement Scheme VRS. In 2001 the bank implemented the same year the bank also introduced Sabbatical Lease Scheme, during the year 2002-03, the bank went for its IPO to raise capital worth Rs. 110 crore. The bank has a tie up arrangement with an insurance companies Aiva to market its insurance product.

Corporate Cash Management Services (CCMS) is: Corporate Cash Management Services (CCMS), an innovative service offered by Canara Bank for speedy collection of cheques and other instruments, places corporate on a faster-track. In more ways than one-such as definite funds flow, better cash management and deployment of funds, better monitoring of funds flow, optimum allocation of funds and effective planning of investment functions.

What is CCMS? An innovative service specifically tailored to meet the requirements of Corporate/Business houses/Partnership firms Speedy collection of outstation cheques and other instruments Pooling of funds at designated centers More importantly, providing funds to the Corporate as per their need Customized MIS reports, Product Range Deposits: - Savings account - Current account - Fixed deposits - NRI deposits - Recurring deposits

137 Loans & Advancces: - Retail lending products - Loans to traders - Education loan Ancillary services: - Depository services - Safe deposit - Sate custody services Card services - CanCard VISA - CanCard Master - CanCard VISA international (gold) Consultancy services - Tax assistance - Estate & will - Trustee services - Contact details

Canara Bank HRD SYSTEMS HRD Concepts/Systems Practiced in the Bank A number HRD initiative are in vogue in the Bank. More emphasis is given for four HRD initiatives viz Quality Circle, Study Circle, Brain Storming Sessions and Staff Meetings. Quality Circles • Quality Circle is a time-tested tool of Total Quality Management (TQM), which promotes team spirit, cohesive quality work culture, commitment, and involvement of employees. • The bank has 538 active Quality Circles, which took up projects on varied subjects, many of which were on areas of corporate concern. • Every year Circle level and Apex level Quality Circle Contests are conducted. 23 teams participated in the Apex level contest for the year 2003-04. Besides this Bank's teams are also participating in Chapter level, National level and international level contests organized and coordinated by QCFI, Hyderabad. For the year 2004-05, two of the

138 Quality Circle teams have been sent for the International Convention on Quality Circles held at Changwon, Korea. Study Circle • Concept of Study Circle aims at self-development of employees by kindling the desire to acquire/update knowledge, information and experience. • Guest lectures/PowerPoint presentation/Group discussions, etc., are arranged on topics of general interest by inviting experts in the field. • Study circle meets are conducted once in two months in administrative offices and once in a quarter in the branches. • During the year 2004-2005, 2627 study circle meets were conducted in the bank. Brain Storming Sessions • This is a technique for generating ideas and suggestions on topics of relevance and also to provide alternate solutions to problems by simulative thinking and imaginative power of cross section of employees. • Corporate Topics are selected for each quarter and BSS are conducted in administrative offices / branches on the topic during every quarter. • During the year 2004-05, 3225 Brain storming sessions were held in the bank.

Staff Meetings • Staff Meeting aims at group synergy, team building, open culture, family feeling and talent recognition, which individually and cumulatively benefit the organization. • Goals / targets set for the unit / bank is discussed in the monthly Staff Meetings conducted at all branches / units and action plan is drawn in achieving the goals set. • During the year all the branches/offices and units under administrative offices have conducted staff meetings each month.

139 Anywhere Banking Anywhere banking is a technology-based, customer-friendly service designed to provide greater convenience to bank customers. With Anywhere Banking facility, once customer has an account with any of the select branches, he can operate it from any other designated branch across 85 cities. With anywhere banking customer has a host of facilities to make banking with bank a pleasure.

Individuals / joint account holders (operated severally) maintaining Current / SB / OD Accounts • Withdrawal of cash • Remittance of cash • Transfer of funds • Balance enquiry • Issue of mini statement • Depositing local cheques for collection • Purchase of Demand Draft. Firms/ Companies / Other Bodies maintaining Current / OD / OCC Accounts • Transfer of funds between accounts; from one Anywhere Banking branch to another Anywhere Banking branch • Depositing of local cheques for collection and crediting to the respective account at any Anywhere Banking branch

Branch Expansion The number of branches of the Canara bank has increased substantially during this period (1995-2005). The number of Bank branches was 2192 as at the end of 1995/96, 2262 as at the end of 1996/97, 2312 as at the end of 1997/98, 2379 as at the end of 98/99, 2405 as at the end of 2000/01, 2409 as the end of 201/02, 2424 as at the end of 02/03, 2469 as at the end of 2003/04 and 2513 as at the end of 2004/05 (Table 4-3).

140 Table (4-6): Canara Bank Financi

(Rs. in Crore)

1995- 1996- 1997- 1998- 1999- 2000- 96 97 98 99 2000 01

Number of Branches 2192 2262 2312 2379 2397 2405

Capital 485 485 578 578 578 578

Deposits 26243 31445 38045 41959 48001 59070 6

(5%) (6%) (7%) (7%) (9%) (10%) (

Advances (Net) 13096 14413 16825 19530 23547 27832

Total Income 3382 3869 4431 5319 5687 6536

Total Expenditure 3129 3721 4228 5094 5451 6251

Operating Profit 651 654 673 957 923 1131

Net Profit 253 147 203 225 236 285

141 Figure (4-8): Deposits of Bank of Canara

1995/96 1999/2000 2003/04

Growth of Deposit: The Bank's deposits grew from Rs. 26243 crore as the end of March 1995/96 to Rs. 38045 crore as at the end of March 1997/98, a growth of Rs, 48001 crore as 99/2000, while during March 2001/02, March 2003/04 and March 2004/05 the growth was Rs. 64030 crore, Rs. 86345 crore and Rs. 96908 crore.

In 1995, deposits claimed (5%) of the total deposits. This percentage increased to (17%) in 2005. This shows that the percentage of deposits has practically more than three times growth. This performance is certainly good Highlight: Bank is the most profitable bank of the year 200514 Observations 1. The present stature of the Bank is due to its strong fundamentals and quality customer orientations. 2. Profit making since inception, the Bank today epitomizes a perfect blend of commercial and social banking. 3. The Bank has already carved a niche in providing IT-based services. With 100% computerization of the branches. 4. The bank provides a wide array of services, such as, Networked ATMs, Anywhere Banking, Telebanking, Remote Access Terminals Internet & Mobile Banking, Debit Card etc. 5. The bank also provides services like corporate cash management advisory services, agricultural consultancy services, and credits cards etc. 6. Bank is introducing new products from time to time.

142 7. Bank is adapting new technology, for operation of efficiency and customer convenience.

4.2.5 DENA BANK History The Bank was established by Seth Devakaran Nanji on 26th May, 1938. As Devakaran Nanji Banking Co. (P) Ltd. The bank changed its name as Dena Bank on 26th May 1966. It was in nationalized 1969. In 1980 the bank shifted its administrative office to more spacious office at Maker Tower, Cuffe Parade, Mumbai. In 1987-88 the bank celebrated its Golden Jubilee to mark the 50 years of end-dedicated service to the public. In 1988 Dena Bank introduced Credit Card. In 1997 Dena Bank introduced Smart Card. In 1996 Dena Bank went Public with a public issue of Rs. 180 crore and it was oversubscribed. In 1997-98 Dena Bank celebrated Diamond Jubilee on completion of 60 years. In 1996 Dena Bank raised capital worth Rs. 180 crs., by a public issue. In 2003 Dena Bank issued a 'Dena Bank Debit Card'. Dena Bank has been a pioneer bank in various products and Schemes. In recent part for bank has completed successfully the turnaround and started showing profits.

Milestones • One among six Public Sector Banks selected by the World Bank for sanctioning a loan of Rs.72.3 crores for augmentation of Tier-ll Capital under Financial Sector Developmental project in the year 1995. • One among the few Banks to receive the World Bank loan for technological upgradation and training. • Launched a Bond Issue of Rs.92.13 crores in November 1996. • Maiden Public Issue of Rs.180 Crores in November 1996. • Introduced Tele banking facility of selected metropolitan centers. • Dena Bank has been the first bank to introduce: • Minor Savings Scheme. • Credit card in rural India known as "DENA KRISHI SAKH PATRA" (DKSP). • Drive-in ATM counters of Juhu, Mumbai. • Smart card at selected branches in Mumbai. • Customer rating system for rating the Bank Services.

IT Infrastructure Branch Computerization

• 100% Branches are computerized.

• All Metro and Urban Branches are computerized.

• All 11-service branches are fully computerized.

• All AD branches dealing with foreign exchange business are fully computerized.

• All branches handling Government business viz. direct Taxes etc. are computerized.

• 88 TBC branches have bilingual data processing capabilities.

• Kiosks at various branches providing the following facilities: Passbook printing, accounts details inquiry, inquiry about Bank's different schemes etc.

Products Range

Deposit Schemes: - Dena savifix - Dena samruddhi - Dena freedom deposit Loan Schemes: - Dena Niwas - Dena Vidya laxmi - Dena auto finance - Dena mortgage Services: - Any branch banking - Multi-city cheque - Facility - Internet bank - Dena cards

144 - Dena ATM - Dena Billpay - Mobile banking - Telebanking

DENANET is integrated with Indian Financial Network (INFINET) of RBI- IDRBT.

DENA NET is continuously monitored on 24 x 7 basis by a facility management team.

ATM Installations

• More than 200 ATMs have been installed by Bank all over India.

• All ATMs are connected through DENA NET and Electra ATM switch enabling cardholders of any of these ATMs to transact through other ATMs in the network, which in turn is connected to other domestic and international ATM networks.

• Bank has tied up with Corporation Bank, CashTree group of Banks (BOI, UBI, Syndicate Bank, Indian Bank, Union Bank, Bank of Rajasthan), and Cashnet group of Banks ( Standard Chartered, IDBI, Centurian Bank, Bank of Punjab, Corporation Bank, Dhanalakshmi Bank, UTI Bank, Citi Bank, DCB ) for mutual ATM sharing arrangement.

• Bank's ATM switch is connected to VISA Network, thus enabling Bank's customers to use ATM & POS terminals of VISA network through Visa Electron Debit Card issued by the Bank

Dena BillPay: Dena BillPay has been pilot launched in Mumbai in 25 branches. It is an extremely convenient service that enables you to pay your various bills directly from your Dena Bank account without the need for standing in long queues.

The service provides for three convenient payment modes:

145 AutoPay - which acts as a standing instruction to debit the account up to a ceiling.

PhonePay - wherein the customer gets SMS alert for bills and issues payment instructions.

Internet - where the customer gets alert on E-mail and schedules /confirms payment.

Dena m-banking: Dena m-banking offers customers an easy, hassle free means to access banking information with the help of Mobile phones 24 hours a day, 7 days a week. Now our customers can get the required information regarding their bank account by using SMS facility from their mobile phones. Presently m-banking provides facilities like

• Balance Inquiry • Mini Statement of accounts • Status of the cheques issued.

Presently this service is operational in more than 80 branches.

ATM/DEBIT Cards At present more than 250 branches (including ATM branches and non- ATM branches) covering more than 75 ATM centres are technologically enabled to issue ATM & Debit cards.

More than 2.3 Lac ATM and Visa electron Debit cards have been issued to the customers so far.

Apart from any VISA enabled ATMs & POS terminals, these cards can be used at any of the Corporation Bank's ATM as well as ATMs belonging to CashTree group of Banks (BOI, UBI, Syndicate Bank, Indian Bank, Union Bank, Bank of Rajasthan), and Cashnet group of Banks (Standard Chartered, IDBI, Centurian Bank, Bank of Punjab, Corporation Bank, Dhanalakshmi Bank, UTI Bank, Citi Bank, DCB)

Multi-City Cheque Facility

By availing this facility, the customer will get the AT PAR chequebooks wherein cheques can be drawn at par on any of the ABB branches.

146 Payments can be made directly without taking a demand draft or telegraphic transfer. Payee of the cheque gets payment locally as a clearing cheque. Presently this service is available at more than 130 Branches.

Any Branch Banking (ABB) Any Branch Banking facility enables customers to access their account from different centres as per their needs. A customer can now get a statement of his last 5 transactions, make balance inquires, cash deposits and cash withdrawals, transfer funds, Cash Management Services, Multi City Check from his account to another account through more than 130 branches.

Branches Networking Bank has set up its own network "DENANET" using 415 leased lines, 109 VSATs, dial-up lines and 157 ISDN Backup for ATMs connecting 781 branches and 34 offices spread over 100 centers.

Table (4-7): Dena Bank Financial Highlights

Particulars 2002 2003 2004 2005

Income 3529560 4369954 6174115 3111804

Deposits 153546850 164912588 183491774 200960945

Borrowings 2662477 2282114 3083704 3349823

Investments 76480618 85003753 97364178 96969519

Advance 75229623 84356040 94117888 113085870

147 Figure (4-9): Deposits of Dena Bank

250000000

200000000

150000000

100000000 -

50000000

0 2002 2003 2004 2005

Growth of Deposit: The Bank's deposits grew from Rs. 153546850 as the end of March 2002 to Rs. 164912588 as at the end of March 2003, a growth of Rs. 183491774 as the end of March 2004, and Rs 200960945 as the end of March 2005.

Observation: 1. Dena Bank has been a pioneer bank in various products and Schemes. 2. In recent past for bank has completed successfully the turnaround and started showing profits. 3. Bank competence is recognized by world banks. 4. Bank Introduced Tele banking facility of selected metropolitan centers. 5. Bank is making innovative efforts in new product introduction. 6. Bank has been extensively computerized. 4.2.6 ICICI Bank LTD History Following the Government of India decision, on the basis of Narasimham Committee recommendation, to permit entry of new commercial bank in Private Sector. ICICI and erstwhile SCICI jointly promoted ICICI Banking Corporation Ltd. In January 1994. In September 1999 the name of the Bank was changed as ICICI Bank Ltd. Meanwhile in 1997 SCICI was merged with the ICICI and as a result of that the bank became 100 percent subsidiary of ICICI only, as it is the major stakeholder. In 2001 Bank of Madura was amalgamated with ICICI Bank. In 2001-02 ICICI got merged with ICICI Bank along with ICICI Personal Financial services Ltd, And ICICI Capital Services Ltd. Now ICICI bank is the second largest commercial bank in India.15

ICICI Bank: is the second biggest bank in India. Last year the bank added 10,000 retail customers every single day of the year, or a mind boggling 3.4 million customers, taking the tally of its customers to 10 million. When the year began, it had a presence in 600 cities across the country; before the year is rung out, it will be present in 1000. Consider this: ICICI Bank leads in every single retail segment it is present in, be it mortgages, auto loans, personal loans or credit cards. Its share of total deposits grew by 18.82 percent last year. And with Rs 106593 crore in average working funds, it is second only to the public behemoth, the State Bank of India16. Further, ICICI bank has some branches operation in anther countries like Bahrain, Canada, Russia, Singapore, Sri lank U.K, and U.S.A.

Information Technology It offers also a secure and user-friendly platform for force trading through the Internet that makes it easy for customers to get live prices for the deals and transact from virtually anywhere in the world.17

149 Product Range:18

Deposits Products: Savings Account: So now customer can bank at his convenience, without the stress of waiting in queues.

Senior Citizen Services: The bank has special services for senior citizen ... The Senior Citizen Services from ICICI Bank has several advantages that are tailored to bring more convenience and enjoyment in his life.

Young Stars: It's really important to help children learn the value of finances and money management at an early age. Banking is a serious business, but bank make banking a pleasure and at the same time children learn how to manage their personal finances.

Fixed Deposits: Safety, Flexibility, Liquidity and Returns. A combination of unbeatable features of the Fixed Deposit from ICICI Bank

Recurring Deposits: Through ICICI Bank Recurring Deposit customer can invest even small amounts of money every month that ends up with a large saving on maturity. So he enjoys twin advantages- affordability and higher earnings.

Loans Products

• Home loan • Personal Loan • Car Loan • Two wheeler loan • Commercial Vehicle Loan • Loans against Securities • Farm Equipment Loans • Construction Equipment Loans • Office Equipment Loans • Medical Equipment Loans

Cards Credit Card

o Debit cum ATM Card

150 o Travel Card

Retail Banking • Commercial Vehicle Financing. • Salary Accounts. • Roaming Current Accounts. • Investment Products. • Private Banking. • NRI Services. • Demat services. • Bill Payment Services. • E-Cheques. • Branch Banking. • ATM Services. • Internet Banking. • Phone Banking.

Human Resources

At March 31.2004 ICICI Bank had 13,609 employees. In fiscal 2004, to continue its focus of talent management, in India and across other geographies where it is present, involves enhancing its talent pool through recruitment and capability development to support its commitments to its stakeholders19

151 Table (4-8): ICICI Bank Financial Highl

Particulars March March March

1995 1996 1998

Income 286851 1358601 3447499

Expenditure 267080 1193499 2945292

Profit / loss 19771 165173 502392

Deposits 3306139 7279453 26290239

(0.003) (0.006) (0.02)

Borrowings 72139 2109460 1922251

Investments 1449590 2627701 10233918

Advances 1225885 6507526 11278715

(0.0001) (0.005) (0.009)

152 Figure (4-10): Deposits of ICICI Bank 1995-2004 Deposits of ICICI Bank

800000000 700000000 600000000 500000000 400000000 300000000 200000000 100000000 0 1995 1996 1998 2000 2003 2004

Growth of Deposits The Bank's deposits growth (Figure 4-10) reveals an increasing trend from 3306139 (1995) to 7279453 (1996), 26290239 (1998), 98660180 (2000), 481693063 (2003), and 681085845 (2004).

In 1995, deposits of bank were as low as (0.003). This percentage has come up to (52%) in 2004 i.e.

Figure (4-11): Advances of ICICI Bank 1995-2004

Advances of ICICI Bank

700000000 600000000 500000000 h 400000000 300000000 200000000 100000000 0 _ET3 1995 1996 1998 2000 2003 2004

Growth of Advances: The Bank's advances have increased from 1225885 as the end of March 1995 to 6507526 (1996), 11278715 (1998), 36573439(2000), 532794144 (2003) and 620955196 (2004).

153 In 1995, advances were as low as (0.0001) of the total advances. This percentage increased to (51%) in 2004, showing more than fifty percent growth of total advances in the year 2004 only.

Observations: 1. Bank is gaining increasing popularity as is reflected in increasing trend in deposits. 2. Bank has a wide product mix. 3. Bank tries to offer maximum customer convenience with wide spread ATM network. 4. Bank has been successful in winning confidence of customers as within a short span it has very wide customer bane.

1. ICICI Bank offers wide variety of Deposit Products to suit customers' requirements. 2. ICICI Bank offers a power packed Savings Account with a host of convenient features and banking channels to transact through. 3. ICICI Bank is at the forefront of usage of technology in the financial services sector in India. 4. ICICI Bank focus on technology emphasis has enhanced level of customer services like 24/7 accesses and multi-channel banking; cost efficiency through automation. 5. ICICI Bank uses a combination of physical and electronic delivery channels to maximize customer choice and convenience. 6. Bank makes systematic efforts for customer communication.

4.2.7 The HDFC Bank LTD History The Bank is one of the new private sector banks, which came into existence in August 1994 when the RBI allowed new banks in Private Sector on the basis of the recommendations of Narasimham Committee. It started operation in 1995. The bank is involved wholesale banking, retail banking and treasury operation. It has nearly 480 ATMs as on 31-3-2002. The bank has been awarded with several awards from various institutions for its performance.20 The Bank at present has a network of over 468 branches and

154 over 1054-networked ATMs spread over 212 cities across the country; all branches are linked on an online real-time basis.

HDFC Bank is at the top of the best banks list last year (2004/05) and once again this year (05/06), has reduced its non-performing assets (NPAs) as a percentage of total advances form 0.4 percent to 0.16 percent. The bank's balance sheet size has grown to Rs 42,307 crore, with a net profit growth of 31.45 percent and business growth of 41.42 percent. The growth is not just in retail, where it is adding nearly 90,000 new customers every month, but also in the corporate or wholesale segment, which continues to clip at an impressive 10 to 15 percent21.

Capital structure The authorized capital of HDFC Bank is Rs.450 crore (Rs.45 billion). The paid-up capital is Rs.282 crore (Rs.28.2 billion). The HDFC Group holds 24.2% of the bank's equity while about 13.1% of the equity is held by the depository in respect of the bank's issue of American Depository Shares (ADS/ADR Issue). The Indian Private Equity Fund, Mauritius (IPEF) and Indocean Financial Holdings Ltd., Mauritius (IFHL) (both funds advised by J P Morgan Partners, formerly Chase Capital Partners) together hold about 5.5% of the bank's equity. Roughly 27.5% of the equity is held by Flls, NRIs/OCBs while the balance is widely held by about 214,000 shareholders. The shares are listed on The Stock Exchange, Mumbai and the National Stock Exchange. The bank's American Depository Shares are listed on the New York Stock Exchange (NYSE) under the symbol "HDB".

Distribution Network Customers in 90 locations are also serviced through Phone Banking. The Bank's expansion plans take into account the need to have a presence in all major industrial and commercial centers where its corporate customers are located as well as the need to build a strong retail customer base for both deposits and loan products. Being a clearing/settlement bank to various leading stock exchanges, the Bank has branches in the centers where the NSE/BSE have a strong and active member base.

155 The Bank also has a network of over 1054-networked ATMs across these cities. Moreover, all domestic and international Visa/MasterCard, Visa Electron/Maestro, Plus/Cirrus and American Express Credit/Charge cardholders can access HDFC BANK'S ATM network22.

Product Range Savings Account: Apart from the usual facilities, customer get a free ATM Card, Interbranch banking, NetBanking, BillPay, PhoneBanking, Debit Card and MobileBanking, among others. HDFC Bank Preferred: A preferential Savings Account customer is assigned a dedicated Relationship Manager, who is his one-point contact. Customer also get privileges like fee waivers, enhanced ATM withdrawal limit, priority locker allotment, free Demat Account and lower interest rates on loans, to name a few. Sweep-In Account: A fixed deposit linked to customer Savings Account. So, even if his Savings Account runs a bit short, he can issue a cheque (or use his ATM Card). The money is automatically swept in from his fixed deposit into his Savings Account. Super Saver Account: Gives customer an overdraft facility up to 75% of his Fixed Deposit. In an emergency, he can access his funds while his Fixed Deposit continues to earn high interest. HDFC Bank Plus: Apart from Regular and Premium Current accounts bank also have HDFC Bank Plus, a Current Account and then some more. Customer can transfer up to Rs. 50 lakh per month at no extra charge, between the four metros. He can also avail of cheque clearing between the four metros, get cash delivery/pickup upto Rs. 25,000/-, home delivery of Demand Drafts, at-par cheques, outstation cheque clearance facility, etc. Demat Account: Conduct hassle-free transactions on customer shares. He can also access his Demat Account on the Internet.

Innovative services Phone Banking: 24-hour automated banking services with 39 PhoneBanking numbers available.

156 Now HDFC bank account is now just a phone call away. Through Phone Banking customer can: - Check the account balance. - Check the last 5 transactions in your account. - Enquire on the cheque status. - Have a mini statement (last 9 transactions) faxed across to customer. - Request for a chequebook / Account statement. - Enquire on your fixed deposits. - Open a Fixed deposit. - Request for Demand Draft / Managers Cheque. - Transfer funds amongst your linked accounts. - Pay utility and HDFC Bank credit Card bills. - Do a stop cheque payment - Report loss of your ATM / Debit Card. - Product information. - Enquire on the Interest / Exchange rates.

ATM: 24-hour banking: Apart from routine transactions, customer can also pay his utility bills and transfer funds, at any of ATMs across the country his entire round. Inter-citvlnter-branch Banking: Access the account from any of HDFC bank 468 branches in 212 cities. NetBanking: Access the bank account from anywhere in the world, at anytime, at your own convenience. You can also view your Demat Account through NetBanking. With NetBanking, you can view your account balance but also open a Fixed Deposit, transfer funds, pay your electricity, telephone or mobile phone bills and much more. OneView: Tired of logging in to different banks one after the other to check account balances. Bored going from page to page to access your account details. It is time you registered for OneView. For the first time in India, this convenient service brings together your online bank accounts (including those of family members), in one place, in total security.

157 Now, OneView puts it all on one screen for you, so that tracking and managing your online accounts becomes quicker and easier than ever before. Giving you a complete picture of your finances across multiple accounts. Use of OneView t (a single window access to):

1. Current/Savings account balances 2. Current/Savings account transaction history 3. Fixed deposit summary 4. Saving/Fixed deposit summary 5. Citibank Credit Card 6. Citibank Credit Card transaction history 7. Hdfcbank Demat Profile 8. Hdfcbank Demat Holdings 9. Hdfcbank Demat Status

It will provide the comprehensive information you need at one place.

International Debit Card: An ATM card customer can shop with all over the country and in over 140 countries with. He can spend in any currency, and pay in Rupees. Presenting the HDFC Bank Easyshop International Debit Card that lets customer shop and does much more than he could do with him ATM Card. It replaces cash, so when he goes shopping, he no longer need to carry cash with him. This card can be used in India and abroad at merchant locations such as shops and restaurants and to withdraw cash from a widespread network of ATMs. The value of the payment made or cash withdrawn is instantly debited from his account. What's more, while all his purchases and cash withdrawals are in the currency of the country he is in, his account is debited in Rupees! MobileBankina: Customer accesses his account on his mobile phone screen at no airtime cost. Use SMS technology to conduct his banking transactions from his cell phone.

In today's business environment, with so many deadlines to fulfill, appointments to meet and meetings to attend, customer is hard pressed for

158 time. Doesn't he wish he could do all his activities while traveling from one meeting to another?

As a leading private sector bank in India, HDFC Bank presents Mobile Banking service. Now customer can access his bank account and conduct a host of banking transactions and inquiries through Mobile Banking service. He can check your balance, stop a cheque payment, or even pay your utility bills. Mobile Banking service gives customer account information and real­ time transaction capabilities from the mobile phones at a true "anywhere, anytime, anyhow" convenience. BillPay: Pay your telephone, electricity and mobilephone bills through ATMs, Internet, phone or mobile phone. No more standing in long queues or writing cheques.

Loans for every need Personal Loans: Take a loan of up to Rs. 3 lakh for a wedding, education, purchase of a computer or an exciting holiday.

New Car Loans and Used Car Loans: Finance up to 90% of the cost of a car, new or used! And the loans come to you with easy documentation and speedy processing at attractive interest rates.

Loans Against Shares: Get an overdraft up to Rs. 10 lakh at an attractive interest rate against physical shares, up to 50% of the market value of your shares. In case of Demat Shares, you can get a Loans Against Shares of up to 65% of the market value of your shares, till Rs. 20 lakh.

Two Wheeler & Consumer Loans: To help you buy the best durables for your home.

Demat Account: Protect your shares from damage, loss and theft, by maintaining your shares in electronic form. You can also access your demat account on the Internet.

Current Account: Get a personalized chequebook, monthly account statements, inter-branch banking and much more.

159 Mutual Funds: Apart from a wide choice of mutual funds to suit your individual needs, you benefit from expert advice on choosing the right funds based on in-depth market analysis.

International Credit Card: Get an option of Silver, Gold, or Health Plus Credit card, accepted worldwide from a world-class bank. If you have outstanding balance on your other credit card, you can transfer that balance to this card at a lower interest rate.

NRI Services: A comprehensive range, backed by unmatched features and world-class service, ensures NRIs all the banking support they need. Forex Facilities: Avail of foreign currency, travelers cheques, foreign exchange demand drafts, to meet your travel needs.

Insurance: HDFC Bank now brings customer Life Insurance and Pension Solutions like Risk Cover Scheme, Savings Scheme, Children's Plan and Personal Plan from HDFC Standard Life Insurance Co. Ltd.

Business Strategy23: Bank's mission has been to be "a world class Indian bank" - benchmarking us against international standards and best practices in terms of product offerings, technology, service levels, risk management and audit & compliance. The objective is to build sound customer franchises across distinct business so as to be a preferred provider of banking services for target retail and wholesale customer segments and to achieve a healthy growth in profitability, consistent with the Bank's risk appetite. HDFC bank is committed to do this while ensuring the highest levels of ethical standards, professional integrity and regulatory compliance.

Bank's business strategy emphasizes the following:

• Increase its market share in India's expanding banking and financial services industry by following a disciplined growth strategy and delivering high quality customer service. • Leverage its technology platform and open scaleable systems to deliver more products to more customers and to control operating costs.

160 • Maintain its current high standards for asset quality through disciplined credit risk management. • Develop innovative products and services that attract its targeted customers and address inefficiencies in the Indian financial sector. • Continue to develop products and services that reduce our cost of funds, and • Focus on high earnings growth with low volatility.

Human Resources Given the Bank's significant expansion in terms of geography as well as in terms of products and business volumes, The Bank's staffing increased substantially during the year, in particular in the retail banking business. The Bank continues to focus on training its employees on a continuing basis, both on the job and through training programs conducted by internal and external faculty. The Bank has consistently believed that broader employee ownership of its shares has a positive impact on its performance and employee motivation. The Bank's Employee Stock Option Scheme therefore, extends to all levels and has covered over 85% employees so far24.

161 Table (4-9): HDFC Bank Financial Hig Particulars 1995 1996 1997 1998 1996 1997 1998 1999

Net Interest Income 2923 7456 10325 14690

Net Revenues 4201 10333 16440 21397

Profit after fax 2028 4050 6315 8240

Deposits 68570 127907 219174 291511

(0.01) (0.02) (0.03) (0.04)

Advances 36862 57526 84198 140056

(0.01) (0.02) (0.03) (0.05)

Investments 31428 772972 112133 190380

Earnings per share (Rs) 1.04 2.03 3.16 4.12

Return on Average Network 9.62% 17.42% 23.87% 26.41%

162 Figure (4-12): Deposits of HDFC Bank 1995/96-2002/03

Deposits

95/96 96/97 98/99 2000/01 2002/03 HDFC Bank

Growth of Deposits The Bank's deposits grew from Rs. 68570 crore at the end of March 1995/96 to Rs. 219174 crore as at the end of March 1997/98, a growth of Rs. 150604 crore, while during March 1999/2000, and March 2002/2003 the growth was Rs. 551261 crore and Rs. 472226 crore.

In 1995, deposits claimed (1%) of the total advances. This percentage increased to (33%) in 2003, showing more than thirty percent growth of the total deposits in last year only 2003. This result of customer orientation, which has helped bank in increasing the deposits

Figure (4-13): Advances of HDFC Bank 95/96-2002/03

Advances

95/96 96/97 98/99 2000/01 2002/03 HDFC Bank

163 Growth of Advances Advances grew from Rs. 36862 crore at the end of March 1995/1996 to Rs. 140055 crore at the end of March 1998/1999, a growth of Rs. 103193, and advances grew from Rs. 336227 crore at the end of March 1999/2000 to Rs. 1175486 crore at the end of March 2002/2003, a growth of Rs. 839259 crore.

In 1995, the advances of bank were as low as (1%). This percentage has come up to (0.40) in 2003 i.e., it has been increased by forty percent of total advances in last year 2003.

Observation: 1. Bank is the most favored bank of customers. 2. Bank makes special efforts for customer convenience. 3. HDFC Bank has launched several-products/services which are useful to bank customer viz. Phone Banking, Internet Banking, International debit card, cheque box facility, portfolio investment scheme, Depository services, write-in-tax advisory services, Bill payment facility. 4. Bank has presence mainly in cities and towns. 5. HDFC Bank is using information technology as a strategic tool for its business operations, to gain competitive advantage and to improve overall productivity and efficiency of the organization. 6. Customer orientation has helped bank in increasing income and profits. 7. Bank has been successful in retaining its rank-best bank of India.

164 4.2.8 Citibank NA History: Citibank has its presence in India since 1902-03. When it established a branch in Calcutta in 1902 in 1985 the bank started consumer banking in India covering auto loans, personal loans. It is a leading bank in many areas of banking like credit cards and it is known for banking innovations. It is offering telebanking service. It has 18 branches. Business India had selected this bank as the best bank in India during 2001-02. Citibank continued launching innovative products like Credit Cards, personal loan secularization. Citibank has a plan to expand its branch network in years to come25.

Citibank: is the most productive bank. Citibank is a lean mean machine that pumps bucket-loads of profits. Productivity as measured by business per branch (Rs 1681.9 crore), operating profit per employee (Rs 60 lakh) and operating profit per branch (Rs 61.7 crore) are significantly higher than the next most productive bank: ABN Amro. One of the main reasons for the bank's high productivity is its small number of employees; just 2018 spread over 25 branches. That apart, it leverages technology to lower costs and increase customer stickiness. But it's not just profits. The bank has improved overall performance to make a comeback on the list to the # 2 position from # 7 last year26.

Product Range27

Products: - Credit Cards - CitiGold Wealth Management - Personal Banking - Suvidha Savings Account - Financial Planning - Personal Loans / Ready Cash

Online Services - Redeem Your Rewards Points - Pay Bills online - Send Demand Draft anywhere in India

165 Get statement by email - Register for Instant alerts - Mobile Banking - Online Security Tips

Innovative Services

The touch screen kiosk The touch screen kiosk is a self-service banking terminal. Customer can access his banking / credit card account at this terminal. All Citibank ATM / Debit / Credit Card customers can access the kiosk.

Customer have to swipe his ATM / Debit / Credit card against the card reader at the kiosk and enter ATM PIN. (The welcome screen on the kiosk indicates how the card is to be swiped).

Cash Delivery & Cheque Pick up Customer can order cash up to Rs. 5 lakh per day. He does not have to visit the branch or ATM to withdraw cash or deposit cheques. Just he calls CitiPhone and bank will deliver cash and pick up his cheques for deposit to his Account.

Citibank Relationship Manager Customer is just a call away from his Citibank Relationship Manager - the trusted advisor for all his financial needs. From Investment Counseling to complete Financial Management, his Relationship Manager is with him every step of the way. He will provide every possible assistance to customer to maximize his returns and provide him with solutions that are specially customized for him. He will also advise customer on how to make the most of Citibank's banking services.

Citibank Online Internet Banking A service perfectly in tune with customer needs, he gets connected from anywhere, any time, and his business becomes a window to a complete range of services offered by Citibank Business Account. With Citibank Online Internet Banking, customer can access his Statement of Accounts online, order Chequebooks and drafts. Transfer funds across his Citibank Accounts,

166 issue stop payments on cheques. Pay his utility bills, Citibank Card bills, shop online with e-shopping on our website.

24-Hour CitiPhone With CitiPhone customer can do business with us at his convenience from the comfort of his home or office, any time during the day or night. He can call and ask for a draft, enquire about balance in his Account and transfer funds. He can also make utility payments and issue stop payment on cheques.

167 Table (4-10): Citibank NA Financial Hig

Balance Sheet

As on 31st March 2003 During th

Rs. In Crore

Liabilities Assets Income

Capital 167.46 Investments 7035.93 Int.lncome 1979

Reserves 1959.65 Advances 12628.69 Other Inc. 755

Deposits 17742.50 Total 25239.58 Total 2735

Borrowings 3388.44

Total 25239.58 Observation: 1. Bank is very conscious about branch productivity. 2. Bank gives special attention to customer convenience, and building relationship with customers. 3. Bank is pioneer is innovative efforts for customer convenience.

169 4.2.9 HSBC BANK

History The HSBC's Bank presence in India dates back to 1853. When the Mercantile Bank of India, China and London was established in Mumbai. Now the Hongking & Shanghai Banking Corporation Ltd. Is a principal member of HSBC Group with 9500 offices in 79 countries, as on 30th June 2001 and it is know as one of the largest banking group. In India the bank has 33 branches, in important cities like Ahmedabad, Bangalore, Chandigarh, Chennai, coimbatore, Gurgaon, Hyderabad, Kolkata, Mumbai, New Delhi, Noida, Pune, Trivandrum, Vishakapattanam, etc. The bank has a network of 150 ATMs at branches and off branch ATMs at convenient location across the country. In 2000-01 the bank entered Domestic gold business in India, opening branches in Ahmedabad, Chandigarhand Pune. In the same year bank started Internet banking and debit card in India. The bank has got prizes in foreign exchange business, custodian services, customer service, etc. The bank has introduced Internet banking services, and lunched debit cards. Business Today-KPMG survey for year 2002-03 considered this bank as one of the safest bank. In 2002-03 the bank opened branches in Ludhiana and Jaipur. In 2002-03 the bank has launched scholarships programme for India28.

HSBC Bank Highlight: is the safest bank in India for the second year in a row. The key parameters considered assessing safety are capital adequacy ratio (CAR) and loan loss cover or the provisions for non-performing assets (NPAS) as a percentage of NPAS. HSBC has a CAR of 14.5 percent (12.9 percent for the industry) and loan loss cover of 83.8 percent. HSBC'S NPAS as a percentage of net advances are less than one, as against an industry average of 2.9 percent last year29.

Product Range

Deposit Products HSBC Premier: is one-to-one relationship banking, which will dramatically change, and simplify the way customer handle his finances today. Managing his financial portfolio will be more convenient with the range of highly

170 personalized, comprehensive, timesaving and rewarding facilities and services.

Power Vantage: Advantages so special, they almost seem unfair. Having a Power Vantage account entitles customer to bank exclusive attention and many reserved privileges. So exclusive, in fact, they almost seem unfair.

• Unlimited free transactions (cash withdrawals and balance enquiries) at over 2500 HSBC and VISA ATMs in India, using customer PowerVantage Debit card. • Dedicated Service Desk and Teller Counters to assist customer with his banking needs. • Financial Planning Services to assist customer in planning his future investments and insurance needs. • Free chequebook with Cheques Payable at Par (CPP): in all cities where HSBC branches. • 24-hour banking access through Phone banking and Internet banking.

Savings account: Convenience banking • Withdraw cash up to Rs. 25,000 per day. • Customer can use his Debit card for purchases up to Rs. 10,000 per day. • With 24-hour Phonebanking, customer can make balance enquiries, transfer funds, request a chequebook or statement and much more, with just one phone call. • With Internet banking, customer can access his account from anywhere in the world. He can Check his balance, transfer money and do much more, all with the click of the mouse.

Fixed deposit: Customer convenience and flexibility due to a range of maturities offering competitive interest rates.

SmartMoney account: Flexibility of a Savings account with the interest of a fixed deposit. Customer SmartMoney account is a two-in-one account with an overdraft facility against your fixed deposit. He can withdraw 90% of the fixed deposit linked to the Savings / Current account, without breaking his fixed

171 deposits. He are charged interest on the amount that he withdraw and only for the time he utilize the overdraft.

Cluster deposits: HSBC's Cluster deposit lets customer enjoy the best of both worlds. Not only does his money earn interest at a fixed deposit rate, but he also get the liquidity of a Savings / Current account.

Certficate of deposit: The Certificate of deposit (CD) facility works just like a fixed deposit, but has the additional features of (a) being negotiable, and (b) issued in dematerialized form. They are issued at a discount to face value.

Debit cards: The Debit card represents the future of money and gives customer unlimited access to his Savings / Current accounts with HSBC.

NRI Services: as a Non-resident Indian, customers have special financial needs in India and abroad. HSBC has a range of banking and other financial services to cater to these needs.

HSBC Investments HSBC Systematic Investment Plan: (SIP) is an investment vehicle that allows customer to invest fixed amounts of money at regular intervals of time (monthly or quarterly) in a mutual fund scheme for a continuous pre-defined period, just like a recurring deposit account with a bank or a post office.

HSBC SIP allows the investor to invest a fixed amount every month or quarter for purchasing units of schemes at prevailing NAV based prices. SIP can be activated by giving post-dated cheques for the duration of the SIP or by using an auto debit facility where a fixed amount is debited from your bank account on a monthly / quarterly basis.

Other: 1. In India HSBC bank has 33 branches, in important cities like Ahmedabad, Bangalore, Chandigarh, Chennai, coimbatore, Gurgaon, Hyderabad, Kolkata, Mumbai, New Delhi, Noida, Pune, Trivandrum, Vishakapattanam, etc. 2. The HSBC bank has a network of 150 ATMs at branches and off branch ATMs at convenient location across the country. 3. In 2000-01 the bank entered Domestic gold business in India, opening branches in Ahmedabad, Chandigarhand Pune.

172 4. In the same year bank started Internet banking and debit card in India. 5. The bank has got prizes in foreign exchange business, custodian services, customer service, etc. 6. The bank has introduced Internet banking services, and lunched debit cards. 7. Business Today-KPMG survey for year 2002-03 considered this bank as one of the safest bank. In 2002-03 the bank opened branches in Ludhiana and Jaipur. 8. In 2002-03 the bank has launched scholarships programme in India for students. 9. HSBC Bank provides 24-hour banking access through Phone banking and Internet banking. 10. With HSBC bank, customer can use his debit card for purchases up to Rs. 10.000 per day and he can withdraw cash up to Rs. 25,000 per day.

173 Table (4-11): HSBC Bank Financial Hig Balance Sheet

As on 31st March 2003 During th

Rs. In Crore Liabilities Assets Income Capital 715.03 Investments 8869.55 Int.lncome 14

Reserves 1583.21 Advances 8202.14 Other Inc. 48

Deposits 1280.21 Total 20909.74 Total 19

Borrowings 3171.73

Total 20909.74 Observations: 1. HSBC focuses on urban market segment. 2. Convenience in special way-many innovative facilities and products with innovative features are introduced by the bank. 3. Bank has been outstanding in customer service, foreign exchange business, and custodian service.

4.2.10 The Cosmos Co-operative Bank LTD.

History

• Established in 1906, The Cosmos Co-operative Bank Ltd (Cosmos Bank) is one of the oldest Urban Co-operative Bank in the country, reputed for its quality services. • Today, the Cosmos Bank is one of the leading Multi-state Scheduled Co-operative Banks. • The bank has carved a niche in the Urban Banking Sector with its Rich Heritage, Integrity, Adherence to the Prudent Banking Practices, Technology savvy customer services. • Has attained Multi-Faceted Growth not only in terms of Financial Indicators/Standards but also in overall expansion of activities. • The bank had a tie up arrangement with HDFC ATM facility. • The bank is adopting new technologies including creation of data center at H.O., net working of branches, installments of ATMs, making use of electronic fund transfer system, etc.

Setup - Financial & Geographical:

Financial setup of the bank as on 31st March, 2006 was Rs. 5201 crs, comprising of Deposits of Rs. 3367 crs and Advances Rs. 1834 crs .

Cosmos Bank operates through 57 branches and 13 Extension Counters in India spread across 5 States and in 11 Major Cities, which are as follows:

• Maharashtra: Mumbai, Pune, Nagpur, Aurangabad, Nashik, Baramati. • Madhya Pradesh: Indore.

175 • Andhra Pradesh: Hyderabad. • Kamataka: Bangalore. • Gujarat: Surat, Ahmedabad

Achievements • Successful implementation of a Centralized Banking System, this enabled customers services such as anywhere Banking, depository services, ATM, etc. • Introduction of 7-day branch working. • Introduction of 8 - hour cash counters. • Being the 1st Co-operative Bank to have a dress code for its employees. • Being the 1st Co-operative Bank to have cordial relationship with employees through internal employees' union. • Appointment as an authorized agent to sell RBI Savings Bonds. • Authorization to promote General Insurance Business.

Technology Advancement • Cosmos bank is the first Urban Co-operative Bank to implement Centralized Banking System. • All 57 Branches, 13 Extension Counters, All Regional Offices and The Head Office are interconnected through the Data Center situated at Head Office and have gone live on 'FINACLE'.

This system has brought umpteen benefits to the Bank's customers, such as: -Anytime banking through bank ATM network. Installation of a total of 48 ATMs at each of bank Branches/ Extension Counters as well as offsite locations is in process. Many of these ATMs have already been commissioned. - Multi-city Cheque Book Facility - Collection & credit of cheques 'At Par' in 11 cities. - Facility to transfer funds instantaneously to any A/C in any of bank branch network.

176 - Periodic interest on Fixed Deposits is disbursed through the Electronic Clearing Scheme (ECS) Table (4-12) Financial Highlights of Cosmos Co-operative Bank LTD30 (Rs. In crores)

Particulars 2003 2004 2005

Share Capital 34 37 39.75

Deposits 2263 2483 2851.28

Advances 1193 1402 1581.27

Investments 1235 1279 1507.18

Profit 30 71 39.79

No. Of Branches 41 41 41

Observations: 1. The bank is adopting new technologies including creation of data center at H.O., net working of branches, installments of ATMs, making use of electronic fund transfer system, etc. 2. Bank achieved Successful implementation of a Centralized Banking System, this enabled customers services such as anywhere Banking, depository services, ATM, etc. 3. Cosmos bank is the first Urban Co-operative Bank to implement Centralized Banking System.

Overall Observations: Following observations are drawn from the secondary data on banks profiles: 1. Before 1990 range of products offered by banks was very limited, mainly restricted to current account, saving account, fixed deposits of different duration; loans mainly for business purposes. 2. Product strategy of banks has been changing due to pressure of competition leading to wider product base targeting different market segments like term deposits, recurring deposits, minor saving

177 schemes, saving schemes for senior citizens, sweep in account, supersaver account, different types of loans-personal, housing, educational and loans for specific groups like farmer, women, farm equipment loan, construction equip loan, medical equip loan, car loan, other products like crediting card, and debiting cards. 3. Some banks have introduced Flexi-Deposit Schemes or Deposit sweep Facilities whereby the customers are allowed to keep large sum for a minimum period of six months at the applicable rate and a facility of withdrawal from the deposit is allowed with least penalty so that the depositors enjoy the benefit of term deposit and also at the same time avail the benefit of withdrawal in the case of necessity31. 4. In spite of limited freedom banks are trying to be innovative by introducing floating rates or combining deposit and loan schemes. 5. Place mix is taken care of by substantial branch expansion and establishment of ATM counter at specific distance interval. 6. Banks are making increasing efforts on staff training for improving their efficiency and making their customers friendly. 7. Banks have adapted the latest technology for customer convenience, e.g. e-banking, ATM, Tele-banking. 8. Technology driven products such as debit cards, credit cards, tele banking, mobile phone banking, internet banking, fax, e-mail, help desk services etc., have given more access to customers to communicate their needs instantly and transact their business promptly.

Conclusions Following conclusions are drawn from the observation of secondary data on banks profiles: 1. Banks in India are responding to the changing environment by introducing new products from time to time in other elements of marketing mix. 2. Performance of banks is improving but public sector banks are losing the market share to private and foreign banks. 3. Foreign banks are concentrating on urban segment.

178 4. Banks are using IT to their advantage as for customer convenience.

5. Banks are changing marketing strategies in the light of increasing competition. 6. Banks are making increasing efforts to fulfill increasing expectation of customers. 7. Banks are adapting with the latest technologies for operational efficiency as well as customer convenience. 8. Banks, especially public sector banks are offering different products for different segments.

4.3 Consumer complaints and grievances The researcher has studied a few cases filed by customers against the banks, and also newspaper articles for a deeper insight into the nature of the complaints. Brief information about a few cases filed by customers in consumer courts, and newspaper article is given below32: 1. The complainant had made a fixed deposit of Rs. 50000 on 22.10.1999 and it matured on 23.5.2002. The interest payable on this amount was @ 8.5% per year. Some allegation of defalcation was made against the bank therefore; the maturity amount of the complainant was not paid on the date of its maturity.

2. The complainant pledged certain jewels and raised a loan from the opposite party. The opposite party, on the ground that the loan amount was not paid back in time by the complainant, auctioned the jewels and, therefore the complaint was make by the complainant claiming return of jewels and compensation of Rs. 1 lakh.

3. The essentials of the complaint are that the complainant on 8.5.2003 deposited two cheques in State Bank of Patialar for crediting in his saving bank account No. 2190. However, the above-mentioned cheques were not credited to his account.

4. Account closed- Bank instead of paying balance, put the money in its own account without seeking instructions, issued banker's cheque for same amount-withdrawal slip not honoured until passbook surrendered, Bank failed to show any provision of surrendering of

179 passbook by consumer or account holder in case he seeks withdrawal of money from his account on closure of his account.

5. Cheque lost in transit- initially a complaint was filed with the allegation that the complainant opened a S.B. account No. 5804 in canara bank, by moving an application for opening of the S.B. account. Consequently the complainant deposited a cheque No. 82/127818 drawn on state bank of India. Ultimately the amount of the said cheque was not credited in the account of the complainant and his meetings with bank authorities were not fruitful.

6. Cheque fraudulently and dishonestly tampered by changing amount of Rs. 8000 to Rs. 18000 despite visible alteration, cheque cleared by bank.

7. Customer lodged complaint against Banking services- wrongful dishonour of cheque, cell phone disconnected due to non-payment of bill-procedural guidelines of mechanized cheque processing MICR technology regarding reconciliation of clearing difference rule not followed by bank, dishonour of cheque due to such discrepancy for which complainant not concerned.

8. The brief fact of the case is that complainant had savings bank account at P.N.B. Bhojpur. The complainant is a businessman and he was operating his account regularly. On 19.12.2002, he went to the bank for withdrawal of the amount but the bank refused to honor his cheque. The complainant met the manger of the bank but he did not disclose him the reasons for not honoring his cheque. This caused immense loss to the complainant in his business and thereafter he filed the complaint.

9. Banking services- dishonor of cheques signed in Sanskrit language, complainant signing and filling up cheques in Sanskrit for the last 4/5 years, all previous cheques were being cleared, complainant signed the cheques in Hindi also, but cheques were not accepted.

10. Report on newspaper article: "Mr. Sharma wanted to open DMAT account, he approached the bank in which he had saving account bank insisted on many Formalities and took long time. So he approached another bank. The bank made him open a saving account, but for dement same experience he had"33.

Observations: 1. Customers do have complaints against the banks; serious complaints are taken to courts of low. 2. Complaints are mainly related to cheques non-payment, non- collection, cheques written in Hindi etc. and certain procedural matters like collection of dues from customers, closing of account. 3. Complaints reflect deficiencies in service, which are indicators of dissatisfaction. Conclusions 1. Customers have complaints and grievances against banks, which are indicators of dissatisfaction. 2. Mechanism for handling complaints and grievances is ineffective and inadequate.

4.4 Changing Banking Environment The researcher has gone through a number of articles in newspapers, magazines and journals etc. Summary of few articles about changing banking environment in India is given below. The summary highlights increasing competition in banking sector, extensive use of IT, changing expectations of customers and their grievances against certain aspects of banking services.

Title: Troubled at the Top Sugata Ghosh The Economic Times, Tuesday 12 August 2003 A fast-changing business environment and investors' newfound fancy for bank stocks can push Indian bank managements, as well as their CEOs to do things that they've never done before. The money trail, it seems, wouls be a tightrope walk for those at the helm.

181 Though not as apparent, things are changing even on deposits or the liability side of banks' books. The unattractive returns on banks deposits have driven investors to post offices, Relief Bonds and debt mutual funds.

Title: ATM technology promises more R Subramanyam The Economic Times, Tuesday 12 August 2003 As ATMs remove time and place barriers, banks find in them an ideal way to provide customer satisfaction, which is their number one agenda. This apart, the added attraction of ATMs is their lower transaction cost. Cost per transaction at ATMs is around Rs 15 compared to Rs 36 it would cost the bank to complete a transaction in a branch.

It is boom time for automatic teller machine (ATM) vendors in India. With banks loosening their purse strings for technology, ATMs are right on top of the shopping list. While MNC and private sector banks were the first to embrace ATMs, they are now a part of the retail strategy of all types of banks, including the small ones.

As ATMs remove time and place barriers, banks find in them an ideal way to provide customer satisfaction, which is their number one agenda. This apart, the added attraction of ATMs is their lower transaction cost. Cost per transaction at ATMs is around Rs 15 compared to Rs 36 it would cost the bank to complete a transaction in a branch. Bankers predict that in the near future, ATMs will become a vital marketing and branding channel helping them to retain and acquire customers. Mr Deepak chandnani, managing director, NCR corporation India says that the total installed base for ATMs in India is around 10000 and they have shown a 60% CAGR in the last few years. The potential for growth is big as India lags behind many countries in ATM adoption.

Title: Credit where it's you: When Two Become One Mayur Shetty The Economic Times Pune, Wednesday 29 September 2004 According to Dominic Price, MD, JP Morgan, there are a number of constructive reasons for consolidation in the banking sector. These include

182 increased efficiencies resulting from economies of scale in technology expenditure and reduced intermediation costs, for instance. Larger banks are able to provide a fuller range of products and services and have a grater ability to access the local and international capital markets in order to meet increasing capital adequacy requirements, stemming both from natural growth and the demands of Basel II. They are also able to compete internationally and with international players in the domestic market in India.

Title: HDFC's Q2 net profit rises 22% to Rs 248 crore on higher volumes ET Mumbai Bureau The Economic Times, Tuesday 26 October 2004 Housing Development Finance Corporation's net profit for the second quarter ended September 03-04, is up 22% to Rs 248.1 crore, against Rs 203.2 crore in the corresponding quarter of last fiscal. The growth comes on the back of higher volumes, with the company maintaining growth in its loan sanctions and disbursements at 30% and 28% respectively.

An increase in the affordability of housing due to tax breaks, low interest rates and steady real estate prices have caused an explosion in home loan business. HDFC managing director Keki Mistry daid, "Disbursements have gone up partly because of an increased in the size of average loans, which stands at around Rs 5 lakh now."

Title: The Client Squeeze Sugata Ghosh The Economic Times, Tuesday 7 December 2004 Demanding lifestyle, paltry pension and anxieties of old age could drive households to look for better avenues to grow their savings. And good corporate borrowers that bankers scramble for, would tap the mutual funds, insurance companies and the overseas bond market to raise their debt.

Under WTO, it could only be a matter of time before foreign banks are allowed to enter in a big way. And till that happens M&A could help state- owned Indian banks overcome the stigma of size.

183 Title: Living Another Day N S Ramnath The Economic Times, Tuesday 7 December 2004 One of the questions doing the banking sector is whether traditional strengths of old private banks can withstand today's regulatory and competitive pressures.

The term 'old private banks' refers to commercial banks, which were not nationalized in 1969 in the first round of bank nationalization. These banks have distinct characteristics from 'new private banks', which came into existence in mid-1990s post economic reforms.

Senior managers of old private banks have always argued that these distinct characteristics their existence for a long time, personal relationship with clients and community bonds have helped these institutions carve a niche in the market. And a niche, they said, will continue to exist for a long time to come. But two forces might undermine these strengths. One is regulatory pressure, especially RBI's impending adoption of the Basel II norms, which will create serious implications for capital requirements.

The other force is competition. New private sector banks, which till now attracted customers highlighting their efficiency, a product of investment in information technology, have turned their focus on personal relationships too. Public sector banks also, backed by larger branch network, stronger balance sheets and perception of being safer, have intensified competition.

Title: Banking on the consumer Mayur Shetty The Economic Times, Tuesday 7 December 2004 Form foreign to home-grown, every bank is singing the retail tune, and with good reason: retail lending is all set to explode. 'Mass Consumers' have been growing at a compounded annual rate of 48% & the share of home loans as a percentage of GDP too is shooting up.

Until the turn of the century retail business meant saving account deposits for most banks. Of course foreign banks, which were restricted from providing large-scale corporate loans, did provide loans to rich individuals,

184 but these activities were more on the fringes of banking. Occasionally, the government got banks to give funds to farmers through loan meals but there was never an institutionalized process for credit delivery to the retail sector either in the rural or urban areas. When banks spoke about retail loans they had in mind advances to small businesses.

After the year 2000 two major things happened that gave a major boost to retail lending in India. A tech inspired stock market rally saw billions of dollars flowing into the country even as the country was facing an industrial slowdown. The surplus liquidity pushed down interest rates and banks were left desperately seeking avenues to lend. Around this time the government, in order to give a boost to housing and core sector industries such as cement and steel, decided to exempt interest expenses upto Rs 105 lakh from income tax. This was also the time when term lending institution ICICI decided to merge with its subsidiary ICICI Bank, creating the second largest commercial bank in India. One of the pre-conditions for ICICI's merger was that the merged entity would rapidly meet the priority sector-lending requirement.

Title: Mint Road makes foreign retunes easier for banks.

BS Banking Bureau in Mumbai March 12, 2005 Indian Banks have ambitions expansion and acquisition plans, e.g. SBI. Bank of India, Baroda Bank as per changing guidelines of RBI.

RBI takes note of small depositors P. Devarajan Business Line: Internet Edition, Friday, Apr. 29, 200534 One never thought the RBI in its Annual Policy Statement, 2005-06, will script the sad tale of the ordinary depositor and minor inequities. It is interesting to read and should be stuck up at every bank branch. The Policy devotes 4 pages on "Interests of the depositors," starting with a citation of Section 5(ca) of the Banking Regulation Act, 1949 where banking policy has been defined as "any policy which is specified from time-to-time by the RBI in the interest of the banking system or in the interest of monetary stability or sound economic growth, having due regard to the interests of the

185 depositors, the volume of deposits and other resources of the bank and the need for equitable allocation and the efficient use of these deposits and resources." The Policy quotes a report of the Committee on Procedures and Performance Audit on Public Services which submits: "The bank's offerings are generally opaque - what is not charged is mentioned but what is charged is not mentioned - high hidden costs appear rampant and unjustified, thus banks enjoy undue enrichment. If a small customer goes to a bank and has a technical problem, anecdotal evidence suggests that he runs into enormous difficulties. The Committee notes with some sadness that there is substance in the widespread impression among the small depositor community that one needs to know someone higher-up for getting his/her job done. Intense depositor loyalty is the only plank on which the Indian bank systems are surviving. The banks have to understand that depositors are at the end of the tether and banks providing poor customer service will be punished by switching loyalty." Switching loyalty does not arise, as all banks heartily dislike ordinary depositors. The RBI talks of getting several representations on bank ripping of depositors. Some of the complaints are: charges for balance enquiry; cheque status verification, signature verification, address confirmation, photograph verification, punitive service charges for non-maintenance of minimum balance in savings accounts, transaction charges for reorder of cheque book and for cash transactions at the branch beyond a stipulated number, and diversion of customers to usage of ATMs including payment for cash transactions."

Title: Changing Faces of Indian Banking S Bhaskaran

Professional Banker: The ICFAI University Press, October 2005 R.B.I's policy of total deregulation of interest rate on deposits except savings and also deregulation of lending rates except for those less than Rs. 2 lakhs, allowing the commercial banks to undertake project financing, applying strict norms on asset classification and income recognition have

186 necessitated the commercial banks to innovate and fight for survival. Further, entry of new generation private sector banks coupled with latest technological support also contributed to innovation in the banking services.

With almost all the banks adopting technology upgradation in the operational environment, Anywhere, Anytime Banking, Net-Banking, Tele- Banking are the buzzwords of the commercial banks to win-over the depositors. To facilitate utility payments like telephones, mobile payments, electricity, property and water taxes direct debit services or Electronic Clearing Services, have been introduced. Banks have been permitted to undertake currency swaps and options to provide hedging mechanisms to their clients.

Title: Customer Service in Commercial Banks in the New Era N Vijaya Ratnam and V Suguna Kumari, Professional Banker, The ICFAI University Press, December 2005 The customer choice and awareness have been increasing tremendously during the decade due to more openness of economy, the advent of information technology and media revolution, besides hectic competition for specific customer segments. As markets become increasingly competitive, customers can now go elsewhere, if they don't get what they want. Continuous improvement, gaining the competitive edge, increased market share and higher profits are not possible unless business can find new ways of maintaining the legality of the existing customer. There is a phenomenal change and paradigm shift towards customer focus over the past five decades.

Title: Foreign banks to take country roads Priti patnaik and MK Venu The Economic Times Pune, Monday 27 March 2006 In a move that will give a fillip to the under-banked areas in the country, the government is considering a proposal to allow foreign banks to set up shop in rural markets. And, the proposed relaxation in the policy is already beginning to attract players. Citibank could well turn out to be the trend-setter in the new regime by setting up branches in rural areas. It has

187 applied for 60 new branch licenses, of which at least 50% will cater to rural markets.

This is a major shift from the stated policy. "It is proposed to go beyond the existing World Trade Organization (WTO) commitment of a minimum of 12 branches in a year for new and existing foreign banks and to follow a more liberal policy for under-banked areas," a source in the government told ET.

As many as 32 foreign banks operate in India through 215 branches, the network will be doubled if these banks are given the mandated 12 branch licenses each under the new proposal.

Title: RBI warns banks to make fees, penalties public by May 31 The Economic Times, Wednesday 17 may 2006 In a notification issued to banks on Tuesday, the Reserve Bank of India has issued an ultimatum to banks to display on their respective websites, the user charges in the format prescribed by the regulator by May 31. In addition to the website, some of the basic charges pertaining to savings accounts have to be published in the bank branches as well. The ultimatum issued by the RBI followed continuing complaints from the public about 'unreasonable and non-transparent' service charges being levied by banks. The RBI has also given a format for reporting the charges. The format includes an exhaustive list of transactions, which includes services like signature attestation and issue of a duplicate pass book.

Private banks www.finance.indiamart.com/investment in india/private sector banks.html Private banking in India was practiced since the begining of banking system in India. The first private bank in India to be set up in Private Sector Banks in India was Induslnd Bank. It is one of the fastest growing Bank Private Sector Banks in India. IDBI ranks the tength largest development bank in the world as Private Banks in India and has promoted a world class institutions in India.

The first Private Bank in India to receive an in principle approval from the Reserve Bank of India was Housing Development Finance Corporation

188 Limited, to set up a bank in the private sector banks in India as part of the RBI's liberalisation of the Indian Banking Industry. It was incorporated in August 1994 as HDFC Bank Limited with registered office in Mumbai and commenced operations as Scheduled Commercial Bank in January 1995.

Foreign banks

www.finance.indiamart.com/imvestment in india/foreign banks in india.html Foreign Banks in India always brought an explanation about the prompt services to customers. After the set up foreign banks in India, the banking sector in India also become competitive and accusative.

New rules announced by the Reserve Bank of India for the foreign banks in India in this budget has put up great hopes among foreign banks, which allows them to grow, unfettered. Now foreign banks in India are permitted to set up local subsidiaries. The policy conveys that forign banks in India may not acquire Indian ones (except for weak banks identified by the RBI, on its terms) and their Indian subsidiaries will not be able to open branches freely. Please see the list of foreign banks in India till date.

Title: Change in IT Scenario http:/Avww.rbi.org.in/scripts/BTCDisplay.aspx?pg=BTCComEnv.htm The banks have undergone changes as far as the implementation of IT is concerned. They have moved from manual systems to batch processing systems, batch processing systems to on-line systems and now striving for real time systems. They have moved from centralized computing to decentralized computing in which each business unit can now take care of its computing requirement. The focus of use of computers has moved from back office to front office where most of the computerized operations are providing customer interface in order to improve customer service. Thus, the computerization has refocused the predominance of its applications from business orientation to customer orientation.

The computer operations which were mainly on stand alone environment about a decade back have taken the advantage of data communication and networking technology to share the data and computer

189 resources and provide anywhere and anytime services. The online systems make the data and information available to the decision maker at the press of a button. The MIS, which was predominantly used for performance reporting, is now being extensively used for decision-making. The IT supported tools like Decision Support Systems (DSS), Expert Systems, Data Warehousing and Data Mining, etc play an important role in designing an Executive Information System (EIS)

Banks are changing marketing strategy to face changing environment Example of Baroda Bank is given below: The Red iff Interview/Anil Khandelwal, Chairman, Bank of Baroda November 25, 2005

Bank of Baroda is spending about Rs 80 crore (Rs 800 million) on a high-profile rebranding campaign, including Rs 5 crore (Rs 50 million) on the brand ambassador, Indian cricket team's captain, Rahul Dravid. In an interview with Rajendra Palande and Abhijit Lele, the bank's chairman, Anil Khandelwal, apoke about the rationale behind the brand relaunch exercise and how it has put pressure on the bank to change. Excerpts:

Bank of Baroda has suddenly become a very visible brand. Rahul Dravid is all over promoting the brand. What prompted you to launch a campaign on such a scale?

BoB has 2,800 branches and 25 million customers but it didn't appear to be a dynamic, throbbing bank. We wanted to change the perception about the bank. That's what made us conceptualise positioning the brand as among the premier financial institutions. The roping in of Rahul Dravid as our brand ambassador was an offshoot of the urge to present the bank as a charismatic frontrunning financial entity.

How have things changed?

Most banks are talking about how their NPAs have reduced and the sizzling growth in loan books. But only BoB is making noise about customers and customer service. It's a reflection of how the organisation is changing.

What was wrong with the earlier brand image?

190 The earlier BoB brand had no recall value. People had a very cluttered image of the bank. Now that's a thing of the past. The BoB brand now generates a very bright image and it now is highly recallable.

Is there any change in the way you function?

The challenge was to enlist prime customers, a lot that's now being pampered by private sector banks. So we had to take customer convenience initiatives. As many as 350 branches now work from 8 am to 8 pm. We also added 400 ATMs in the last four months and converted eight branches to offer 24-hour banking. The advertisement campaign says it all. We have Dravid saying: "sab kuch badal raha hai... hamara bank bhi badal raha hai. (Everything's changing ... our bank is also changing)."

What else is being done to improve customer service?

Customer-centric initiatives make the second phase of changes in the banking industry. The first phase involved the efforts to reduce NPAs and the retail lending boom. BoB is now turning into a very sensitive and a caring bank. We've now made the staff accountable for any lacunae in customer service. The days of our front office staff saying "kal aana or baad mein aana" are things of the past. We are working towards a cultural transformation in customer service.

Why was the punch-line "India's International Bank" added to the campaign?

As an Indian Bank, we have 59 offices in 20 countries. We laid a greater stress on saying "India's International Bank" to spur the bank into adopting international best practices in all its business areas. This was to tell the employees that expectation levels have been raised.

Has this worked?

In the first 45 days of the Rahul Dravid campaign, our marketing staff enrolled 12.6 lakh (1.26 million) more customers and mobilised Rs 650 crore (Rs 6.5 billion) of savings account deposits. This was the result of BoB executives stepping out of their offices for business. We are recharging the bank's frontline. Dravid is not just a mascot or a cosmetic creation for the

191 bank. There is tremendous pressure on us for speedy changes. Students and professionals would not look at BoB earlier. Now, they are getting attracted.

Your advertisements say you are an international bank. But are there any plans to really grow globally?

Our international operations have a 52-year-old footprint. In the UAE, only BoB has a presence. We have six branches there. We are also present in Kenya, Uganda, Mauritius, Fiji, Hong Kong, Singapore, Malaysia and Bangkok. We are opening our eighth branch in the UK. We now want to set up shop in Bangladesh, Canada, New Zealand, Male and Trinidad and Tobago. Our target is to increase the share of international operations to 20 per cent in total income from the current 15 per cent and in net profit to 30 per cent from 25 per cent.

But you still serve the Indian population overseas?

We have moved from ethnic to broad-based banking. We'll also be launching credit and debit cards in the UK. The new initiatives in the UK will help us retain customers and also acquire new savvy customers. BoB has also launched a global syndication centre in the UK, which also provides acquisition finance. One of the recent examples is Bharat Forge.

The finance minister has shortlisted BoB as one of the acquirers in the planned consolidation among public sector banks. So can we expect your bank to soon announce a merger?

The finance minister has rightly listed BoB as one of the eight public sector banks which should be acquiring other public sector banks. The government is keen on consolidation and we fully support the plan. But the government needs to clear the road. Once it facilitates the climate, public sector banks will make the necessary moves.

What kind of an organisational structure do you see evolving in the bank?

The management structure should subserve the purpose. We need to improve response time at all levels - branches, regional offices, zonal offices and corporate office. We can do away with zonal offices. We now have

192 truncated zonal offices. We have cut 50 per cent of duplication at zonal and regional offices by what we call the empowering of regional offices. The regional managers are now empowered.

Retail lending is growing at a breezy pace. How will it impact the organisational structure?

We now have a retail general manager. All the zonal managers report to him. The retail general manager has a deputy general manager to help him at the corporate office. Eventually, banks have to become retail organisations and corporate banking will be a part of this.

Right now, it's the other way round - retail banking being a part of corporate focused banks. Nearly 70 per cent of India's population is under 35 years and considering the rapid urbanization and rising incomes, the scope for retail banking is tremendous. Retail loans are just 7 per cent of the GDP in India. It's 55 per cent in South Korea and 35 per cent the Asian region

Observations: Bank is changing marketing strategy to face the changing environment e.g. by changing logo spending more on advertising, changing image from national banks to international banks.

Observations: 1. Government policy towards banking sector has been changing after 1990; policy changes were initiated after Narasimham Committee report aiming at improving productivity and efficiency of banks and creating competitive environment. 2. Entry deregulation and branch deliencsing have cleared the road for private sector banks and foreign banks. 3. The competition amongst banks has increased due to entry of new private sector banks and foreign banks. 4. Foreign Banks in India always brought an explanation about the prompt services to customers. After the entry of foreign banks in India, the banking sector in India also become competitive and accusative. 5. Banks products are facing tough competition from other and more attractive investment avenues like stock purchases, real estate postal savings.

193 6. Developments in Communication Technology: The synergy between computer and communication technology has really changed the banking scenario. 7. In recent years, the banking industry has been undergoing rapid changes, reflecting a number of underlying developments. Internet, wireless technology. 8. Entry of new generation private sector banks coupled with latest technological support also contributed to innovation in the banking services. 9. The customer choice and awareness have been increasing tremendously during the decade due to more openness of economy, the advent of information technology and media revolution, besides hectic competition for specific customer segments. 10. Banking has become more technology based; technology is used for operational efficiency as well as improved customer service. The focus of use of computers has shifted from back office to front office. 11. According to the Fiance Ministry Indian Public Sector Banks like State Bank of India, its subsidiaries and all similar nationalized banks will have autonomy to operate and compete freely with Private and Foreign banks, and also to open branches in foreign countries.

Conclusions: 1) Government policy towards banking sector has been changing after 1990; policy changes were initiated after Narasimham Committee report aiming at improving productivity and efficiency of banks and creating competitive environment. 2) Entry deregulation and branch deliencsing have cleared the road for private sector banks and foreign banks. 3) The competition amongst banks is increasing (will continue to increase) due to entry of new private sector banks and foreign banks. 4) Banks products are facing tough competition from other and more attractive investment avenues like stock purchases, real estate postal savings.

194 5) Customers' expectations are changing due to increasing educational and income level, information exposure, wider choice for parking funds and selection of banks. Changes in expectations can be described as follows: i. Quick and efficient service ii. Convenience in banking in terms of bank location, timings etc. iii. Service at competitive rates. iv. Privacy of transactions. v. Money withdrawal facility at any time of the day. vi. Choice to interact with bank through alternate delivery channels like e-banking, telebanking. 6) Banking has become more technology based; technology is used for operational efficiency as well as improved customer service. The focus of use of computers has shifted from back office to front office.

Changing Scenario in Indian banking can be summarized as follow:

Before 1991 After 1991

Seller's market Buyer's market Protected markets Open market Not many global brands Increase in number of global brands Friendly competition Cut-throat competition Patient customers Demanding customers Limited choice for customers Increasing choice for customers Limited TV promotion Extensive TV Promotion Cost plus pricing Competitive price-cutting Limited role of service Increase role of services Slower marketing reflexes Quicker marketing reflexes Speed @ will Turbo speed Fundamental standalone system Enterprise system [ERP/CRM/SCM] IT- competitive advantage IT-Enabler Gaining new customers Retaining existing customers

195 Monologue Dialogue Transaction Relationship Standard of living Quality of life Source: Professional Banker: The ICFAI University Press, December 2005. Paradigm shift has taken place towards the customers over a period of time. Decade Focus on customer

1950-1960 Serving the customer 1960-1980 Satisfying the customer 1980-1990 Pleasing the customer 1990-2000 Delighting the customer 2000 and beyond Retaining the customer Source: Professional Banker: The ICFAI University Press, December 2005.

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2 - Indian Banks' Association, Indian Banking Year Book 2003.

3 - Lbid P.44

4 - State Bank of India, Annual Report 2003 - 2004.

5 - State Bank of India, Annual Report 2002 - 2003.

6 - Professional Banker, The ICFAI University Press, October 2005, P. 6.

7 - State Bank of India, Annual Report 91-92, 93-94, 94-95, 96-97, 98-99, 2002-03, 2003-04.

8 - Indian Banks' Association, Indian Banking Year Book 2003.

9 - Bank of Maharashtra, Annual Report 2003-2004.

10 - Bank of Maharashtra, Annual Report 2003-2004.

11 - Bank of Maharashtra, Annual Report 2003-2004.

12 - Bank of Maharashtra, Annual Report 2003-2004.

13 - Annual Report of Baroda Bank- Director's Report, 2005. 14 - www.canbankindia.com 15 - Indian Banks' Association, Indian Banking Year Book 2003. 16 - Lbid, P.84

196 17 - ICICI Bank, Annual Report 2003-2004.

18 - ICICI Bank, Annual Report 2003-2004.

19 - ICICI Bank, Annual Report 2003-2004.

20 - Indian Banks' Association, Indian Banking Year Book 2003.

21 - India's Best Banks: The business today-KPMG survey of the best banks in India,

Business Today, January, 2005, P. 76.

22 - www.hdfcvank.eom/about%20us/about%20us.htm#top

23 - HDFC Bank, Annual Report 2002-2003.

24 - HDFC Bank, Annual Report 2002-2003.

25 - Indian Banks' Association, Indian Banking Year Book 2003.

26 - Lbid P. 46

27 - http-www. Online. Citibank.co.in-portal-citi_home_center

28 - Indian Banks' Association, O.P.Ci t, P 494

29 - Lbid, P.46 30 www.cosmosbank.com 31 (S Bhaskaran, "Changing Faces of Indian Banking", Professional Banker: The ICFAI University Press, October 2005) 32 - Consumer Protection Judgments, D.L.T. Publications (P) Ltd. 2005 Vol. 1, ILS Law Collage. 33 The Indian Express, Thursday, May 25,2006 34 - http://www.blonnet.com/2005/04/29/stories/2005042901820600.htm

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