comparision of publick sector bank and private sector bank

8/10/2019 comparision of publick sector bank and private sector bank

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KALOL INSTITUTE OF MANAGEMENT Page 1

A

Research Proposal

On

A study to find out impact of HRD Climate on Job Satisfaction of employees

working in Pharmaceutical sector within Ahmedabad

Submitted to

(Kalol Institute of Management)

IN PARTIAL FULFILLMENT OF THE

REQUIREMENT OF THE AWARD FOR THE DEGREE OFMASTER OF BUSINESS ASMINISTRATION

In

Gujarat Technological University

UNDER THE GUIDANCE OF

Ms. Salma Ganchi

Assistant Professor

Submitted by

Ravi Patel -137250592112

Jay Patel - 1372505921080

[Batch: 2012-14]

MBA SEMESTER III

(Kalol Institute of Management)MBA PROGRAMME

Affiliated to Gujarat Technological University

Ahmedabad

Nov-Dec, 2014


2/37KALOL INSTITUTE OF MANAGEMENT Page 2

Introduction of banking sector

1.1 Introduction

A bank is a financial institution that provides banking and other financial services to their customers. A bank igenerally understood as an institution which provides fundamental banking services such as accepting deposits

and providing loans. There are also nonbanking institutions that provide certain banking services without

meeting the legal definition of a bank. Banks are a subset of the financial services industry. A banking system

also referred as a system provided by the bank which offers cash management services for customers, reportin

the transactions of their accounts and portfolios, through out the day. The banking system in India, should not

only be hassl free but it should be able to meet the new challenges posed by the technology and any other

external and internal factors. For the past three decades, Indias banking system has several outstandingachievements to its credit. The Banks are the main participants of the financial system in India. The Banking

sector offers several facilities and opportunities to their customers. All the banks safeguards the money and

valuables and provide loans,credit, and payment services, such as checking accounts, money orders, and

cashiers cheques. The banks also offer investment and insurance products. As a variety of models for

cooperation and integration among finance industries have emerged, some of the traditional distinctions

between banks, insurance companies, and securities firms have diminished. In spite of these changes, banks

continue to maintain and perform their primary roleaccepting deposits and lending funds from these deposit

1.2 Need of the Banks

Before the establishment of banks, the financial activities were handled by money lenders and individuals. At

that time the interest rates were very high. Again there were no security of public savings and no uniformity

regarding loans. So as to overcome such problems the organized banking sector was established, which was

fully regulated by the government. The organized banking sector works within the financial system to provide

loans, accept deposits and provide other services to their customers. The following functions of the bank

explain the need of the bank and its importance:

To provide the security to the savings of customers.

To controlthe supply of money and credit

To encourage public confidence in the working of the financial system, increase

savings speedily and efficiently.

To avoid focus of financial powers in the hands of a few individuals and


3/37



1961 : Insurance cover extended to deposits.

1969 : Nationalisation of 14 major Banks.

1971 : Creation of credit guarantee corporation.

1975 : Creation of regional rural banks.

1980 : Nationalisation of seven banks with deposits over 200 Crores. 23

1.3.1 Nationalisation [3]

By the 1960s, the Indian banking industry has become an important tool to facilitate the development of the

Indian economy. At the same time, it has emerged as a large employer, and a debate has ensured about the

possibility to nationalise the banking industry. Indira Gandhi, the-then Prime Minister of India expressed the

intention of the Government of India (GOI) in the annual conference of the All India Congress Meeting in a

paper entitled " Stray thoughts on Bank Nationalisation" . The paper was received with positive enthusiasm.Thereafter, her move was swift and sudden, and the GOI issued an ordinance and nationalised the 14 largest

commercial banks with effect from th midnight of July 19, 1969. Jayaprakash Narayan, a national leader of

India, described the step as a " Masterstroke of politi cal sagacity" Within two weeks of the issue of the

ordinance, the Parliament passed the Banking Companies (Acquisition and Transfer of (Undertaking) Bill, and

it received the presidential approval on 9 August, 1969.

A second step of nationalisation of 6 more commercial banks followed in 1980. The stated reason for the

nationalisation was to give the government more control of credit delivery. With the second step of

nationalisation, the GOI controlled around 91% of the banking business in India. Later on, in the year 1993, th

government merged New Bank of India with Punjab National Bank. It was the only merger between

nationalised banks and resulted in the reduction of the number of nationalised banks from 20 to 19. After this,

until the 1990s, the nationalised banks grew at a pace of around 4%, closer to the average growth rate of the

Indian economy. The nationalised banks were credited by some; including Home minister P. Chidambaram, to

have helped the Indian economy withstand the global financial crisis of 2007-2009.

1.3.2 Liberalisation [3]

In the early 1990s, the then Narsimha Rao government embarked on a policy of liberalisation, licensing a smal

number of private banks. These came to be known as New Generation tech-savvy banks, and included Global

Trust Bank (the first of such new generation banks to be set up), which later amalgamated with Oriental Bank

of 24 Commerce, Axis Bank(earlier as UTI Bank), ICICI Bank and HDFC Bank. This move along with the



rapid growth in the economy of India revolutionized the banking sector in India which has seen rapid growth

with strong contribution from all the three sectors of banks, namely, government banks, private banks and

foreign banks. The next stage for the Indian banking has been setup with the proposed relaxation in the norms

for Foreign Direct Investment, where all Foreign Investors in banks may be given voting rights which could

exceed the present cap of 10%, at present it has gone up to 49% with some restrictions. The new policy shook

the banking sector in India completely. Bankers, till this time, were used to the 4-6-4 method (Borrow at 4%;Lend at 6%; Go home at 4) of functioning. The new wave ushered in a modern outlook and tech-savvy method

of working for the traditional banks. All this led to the retail boom in India. People not just demanded more

from their banks but also received more. Currently (2007), banking in India is generally fairly mature in terms

of supply, product range and reach-even though reach in rural India still remains a challenge for the private

sector and foreign banks. In terms of quality of assets and capital adequacy, Indian banks are considered to

have clean, strong and transparent balance sheets as compared to other banks in comparable economies in its

region. The Reserve Bank of India is an autonomous body, with minimal pressure from the government. Thestated policy of the Bank on the Indian Rupee is to manage volatility but without any fixed exchange rate-and

this has mostly been true. With the growth in the Indian economy expected to be strong for quite some time-

especially in its services sector-the demand for banking services, especially retail banking, mortgages and

investment services are expected to be strong.

In March 2006, the Reserve Bank of India allowed Warburg Pincus to increase its stake in Kotak Mahindra

Bank (a private sector bank) to 10%. This is the first time an investor has been allowed to hold more than 5% i

a private sector bank since the RBI announced norms in 2005 that any stake exceeding 5% in the private sector

banks would need to be voted by them. In recent years critics have charged that the non-government owned

banks are too aggressive in their loan recovery efforts in connection with housing, vehicle and 25 personal

loans. There are press reports that the banks' loan recovery efforts have driven defaulting borrowers to suicide.

1.3.3 Government policy on banking industry (Source:-The federal Reserve Act 1913 an

The Bank ing Act 1933)

Banks operating in most of the countries must contend with heavy regulations, rules enforced by Federal and

State agencies to govern their operations, service offerings, and the manner in which they grow and expand

their facilities to better serve the public. A banker works within the financial system to provide loans, accept

deposits, and provide other services to their customers. They must do so within a climate of extensive

regulation, designed primarily to protect the public interests. The main reasons why the banks are heavily

regulated are as follows:



To protect the safety of the publics savings.

To control the supply of money and credit in order to achieve a nations broad

economic goal.

To ensure equal opportunity and fairness in the publics access to credit and other

vital financial services.

To promote public confidence in the financial system, so that savings are madespeedily and efficiently.

To avoid concentrations of financial power in the hands of a few individuals and

institutions.

Provide the Government with credit, tax revenues and other services.

To help sectors of the economy that they have special credit needs for eg.

Housing, small business and agricultural loans etc. 26

1.3.4 Law of banking [3]

Banking law is based on a contractual analysis of the relationship between the bank and customerdefined as

any entity for which the bank agrees to conduct an account. The law implies rights and obligations into this

relationship as follows:

The bank account balance is the financial position between the bank and the customer: when the account is in

credit, the bank owes the balance to the customer; when the account is overdrawn, the customer owes the

balance to the bank.

The bank agrees to pay the customer's cheques up to the amount standing to the credit of the customer's

account, plus any agreed overdraft limit.

The bank may not pay from the customer's account without a mandate from the customer, e.g. cheques drawn

by the customer.

The bank agreesto promptly collect the cheques deposited to the customer's account as the customer's agent,

and to credit the proceeds to the customer's account.

The bank has a right to combine the customer's accounts, since each account isjust an aspect of the same

credit relationship.

The bank has a lien on cheques deposited to the customer's account, to the extent that the customer is indebte

to the bank.

The bank must not disclose details of transactions through the customer's accountunless the customer

consents, there is a public duty to disclose, the bank's interests require it, or the law demands it.



The bank must not close a customer's account without reasonable notice, since cheques are outstanding in the

ordinary course of business for several days. These implied contractual terms may be modified by express

agreement between the customer and the bank. The statutes and regulations in force within a particular

jurisdiction may also modify the above terms and/or create new rights, obligations or limitations relevant to th

bank-customer relationship. 27

1.3.5 Regulations for Indian banks [4]

Currently in most jurisdictions commercial banks are regulated by government entities and require a special

bank license to operate. Usually the definition of the business of banking for the purposes of regulation is

extended to include acceptance of deposits, even if they are not repayable to the customer's orderalthough

money lending, by itself, is generally not included in the definition. Unlike most other regulated industries, the

regulator is typically also a participant in the market, i.e. a government-owned (central) bank. Central banks

also typically have a monopoly on the business of issuing banknotes. However, in some countries this is not th

case. In UK, for example, the Financial Services Authority licenses banks, and some commercial banks (such

as the Bank of Scotland) issue their own banknotes in addition to those issued by the Bank of England, the UK

government's central bank. Some types of financial institutions, such as building societies and credit unions,

may be partly or wholly exempted from bank license requirements, and therefore regulated under separate

rules. The requirements for the issue of a bank license vary between jurisdictions but typically include:

Minimum capital Minimum capital ratio

'Fit and Proper' requirements for the bank's controllers, owners, directors, and/or senior officers

Approval of the bank's business plan as being sufficiently prudent and plausible.

1.4 Classification of Banking Industry in India [1] [2] [9] [13]

Indian banking industry has been divided into two parts, organized and unorganized sectors. The organizedsector consists of Reserve Bank of India, Commercial Banks and Co-operative Banks, and Specialized

Financial Institutions (IDBI, ICICI, IFC etc). The 28 unorganized sector, which is not homogeneous, is largely

made up of money lenders and indigenous bankers.

An outline of the Indian Banking structure may be presented as follows:-

1. Reserve banks of India.

2. Indian Scheduled Commercial Banks.



a) State Bank of India and its associate banks.

b) Twenty nationalized banks.

c) Regional rural banks.

d) Other scheduled commercial banks.

3. Foreign Banks

4. Non-scheduled banks.5. Co-operative banks.

1.4.1 Reserve bank of India

The reserve bank of India is a central bank and was established in April 1, 1935 in accordance with the

provisions of reserve bank of India act 1934. The central office of RBI is located at Mumbai since inception.

Though originally the reserve bank of India was privately owned, since nationalization in 1949, RBI is fullyowned by the Government of India. It was inaugurated with share capital of Rs. 5 Crores divided into shares of

Rs. 100 each fully paid up. RBI is governed by a central board (headed by a governor) appointed by the centra

government of India. RBI has 22 regional offices across India. The reserve bank of India was nationalized in

the year 1949. The general superintendence and direction of the bank is entrusted to central board of directors

of 20 members, the Governor and four deputy Governors, one Governmental official from the ministry of

Finance, ten nominated directors by the government to give representation to important elements in the

economic life of the country, and the four nominated director by the Central Government to represent the four

local boards with the headquarters at Mumbai, Kolkata, Chennai and 29

New Delhi. Local Board consists of five members each central government appointed for a term of four years

to represent territorial and economic interests and the interests of cooperative and indigenous banks.

The RBI Act 1934 was commenced on April 1, 1935. The Act, 1934 provides the statutory basis of the

functioning of the bank. The bank was constituted for the need of following:

- To regulate the issues of banknotes.

- To maintain reserves with a view to securing monetary stability

- To operate the credit and currency system of the country to its advantage.

Functions of RBIas a central bank of India are explained briefly as follows:

Bank of I ssue:

The RBI formulates, implements, and monitors the monitory policy. Its main objective is maintaining price

stability and ensuring adequate flow of credit to productive sector.

Regulator-Supervisor of the financial system:



RBI prescribes broad parameters ofbanking operations within which the countrys banking and financial

system functions. Their main objective is to maintain public confidence in the system, protect depositors

interest and provide cost effective banking services to the public.

Manager of exchange control:

The manager of exchange control department manages the foreign exchange, according to the foreign

exchange management act, 1999. The managers main objective is to facilitate external trade and payment andpromote orderly development and maintenance of foreign exchange market in India.

I ssuer of currency:

A person who works as an issuer, issues and exchanges or destroys the currency and coins that are not fit for

circulation. His main objective is to give the public adequate quantity of supplies of currency notes and coins

and in good quality.30

Developmental role:

The RBI performs the wide range of promotional functions to support national objectives such as contests,coupons maintaining good public relations and many more.

Related functions: There are also some of the related functions to the above mentioned main functions. They

are such as, banker to the government, banker to banks etc.

Banker to government performs merchant banking function for the central and the

state governments; also acts as their banker.

Banker to banks maintains banking accounts to all scheduled banks.

Controll er of Credit:

RBI performs the following tasks:

It holds the cash reserves of all thescheduled banks.

It controls the credit operations of banks through quantitative and qualitative

controls.

It controls the banking system through the system of licensing, inspection and

calling for information.

It acts as the lender of the last resort by providing rediscount facilities to

scheduled banks.Supervisory Functions:

In addition to its traditional central banking functions, the Reserve Bank performs certain non-monetary

functions of the nature of supervision of banks and promotion of sound banking in India. The Reserve Bank

Act 1934 and the banking regulation act 1949 have given the RBI wide powers of supervision and control over

commercial and co-operative banks, relating to licensing and establishments, branch expansion, liquidity of

their assets, management and methods of working, amalgamation, reconstruction and liquidation. The RBI is



authorized to carry out periodical inspections of the banks and to call for returns and necessary information

from them. The nationalisation of 14 major Indian scheduled banks in July 1969 has imposed new

responsibilities on the RBI for directing the growth of banking and credit policies towards more rapid

development of the economy and realisation of certain desired social objectives. The supervisory functions of

the RBI have helped a great deal in improving 31 the standard of banking in India to develop on sound lines

and to improve the methods of their operation.Promotional Functions:

With economic growth assuming a new urgency since independence, the range of the Reserve Banks

functions has steadily widened. The bank now performs a variety of developmental and promotional functions

which, at one time, were regarded as outside the normal scope of central banking. The Reserve bank was asked

to promote banking habit, extend banking facilities to rural and semi-urban areas, and establish and promote

new specialized financing agencies.

1.4.2 Indian Scheduled Commercial Banks

The commercial banking structure in India consists of scheduled commercial banks, and unscheduled banks.

Scheduled Banks:

Scheduled Banks in India constitute those banks which have been included in the second schedule of RBI act

1934. RBI in turn includes only those banks in this schedule which satisfy the criteria laid down vide section

42(6a) of the Act. Scheduled banks in India means the State Bank of India constituted under the State Bank

of India Act, 1955 (23 of 1955), a subsidiary bank as defined in the s State Bank of India (subsidiary banks)

Act, 1959 (38 of 1959), a corresponding new bank constituted under section 3 of the Banking companies

(Acquisition and Transfer of Undertakings) Act, 1980 (40 of 1980), or any other bank being a bank included in

the Second Schedule to the Reserve bank of India Act, 1934 (2 of 1934), but does not include a co-operative

bank. For the purpose of assessment of performance of banks, the Reserve Bank ofIndia categories those

banks as public sector banks, old private sector banks, new private sector banks and foreign banks, i.e. private

sector, public sector, and foreign banks come under the umbrella of scheduled commercial banks.32

Regional Rural Bank:

The government of India set up Regional Rural Banks (RRBs) on October 2, 1975 [10]. The banks provide

credit to the weaker sections of the rural areas, particularly the small and marginal farmers, agricultural

labourers, and small enterpreneurs. Initially, five RRBs were set up on October 2, 1975 which was sponsored

by Syndicate Bank, State Bank of India, Punjab National Bank, United Commercial Bank and United Bank of



India. The total authorized capital was fixed at Rs. 1 Crore which has since been raised to Rs. 5 Crores. There

are several concessions enjoyed by the RRBs by Reserve Bank of India such as lower interest rates and

refinancing facilities from NABARD like lower cash ratio, lower statutory liquidity ratio, lower rate of interest

on loans taken from sponsoring banks, managerial and staff assistance from the sponsoring bank and

reimbursement of the expenses on staff training. The RRBs are under the control of NABARD. NABARD has

the responsibility of laying down the policies for the RRBs, to oversee their operations, provide refinancefacilities, to monitor their

performance and to attend their problems.

Unscheduled Banks:

Unscheduled Bank in India means a banking company as defined in clause (c) of section 5 of the Banking

Regulation Act, 1949 (10 of 1949), which is not a scheduled bank.

1.4.3 NABARDNABARD is an apex development bank with an authorization for facilitating credit flow for promotion and

development of agriculture, small-scale industries, cottage and village industries, handicrafts and other rural

crafts. It also has the mandate to support all other allied economic activities in rural areas, promote integrated

and sustainable rural development and secure prosperity of rural areas. In discharging its role as a facilitator fo

rural prosperity, NABARD is entrusted with:

1. Providing refinance to lending institutions in rural areas

2. Bringing about or promoting institutions development and

3. Evaluating, monitoring and inspecting the client banks

33

Besides this fundamental role, NABARD also:

Act as a coordinator in the operations of rural credit institutions

To help sectors of the economythat they have special credit needs for eg.

Housing, small business and agricultural loans etc.

1.4.4 Co-operative Banks [10]

Co-operative banks are explained in detail in SectionII of this chapter

1.5 Services provided by banking organizations [2]

Banking Regulation Act in India, 1949 defines banking as Acceptingfor the purpose of lending or

investment of deposits of money from the public, repayable on demand and withdrawable by cheques, drafts,

orders etc. as per the above definition a bank essentially

performs the following functions:-



Accepting Deposits or savings functions from customers or public by providing bank account, current

account, fixed deposit account, recurring accounts etc.

The payment transactions like lending money to the public. Bank provides an effective credit delivery system

for loanable transactions.

Provide the facility of transferring of money from one place to another place. For performing this operation,

bank issues demand drafts, bankers cheques, money orders etc. for transferring the money. Bank also providethe facility of Telegraphic transfer or tele- cash orders for quick transfer of money.

A bank performs a trustworthy business for various purposes.

A bank also provides the safe custody facility tothe money and valuables of the general public. Bank offers

various types of deposit schemes for security of money. For keeping valuables bank provides locker facility.

The lockers are small compartments with dual locking system built into strong cupboards. These are stored in

the banks strong room and are fully secured.

Banks act on behalf of the Govt. to accept its tax and non-tax receipt. Most of the government disbursementslike pension payments and tax refunds also take place through banks. 34 There are several types of banks,

which differ in the number of services they provide and the clientele (Customers) they serve. Although some o

the differences between these types of banks have lessened as they have begun to expand the range of products

and services they offer, there are still key distinguishing traits. These banks are as follows:

Commercial banks, which dominate this industry, offer a full range of services for individuals, businesses, and

governments. These banks come in a wide range of sizes, from large global banks to regional and community

banks.

Global banks are involved in international lending and foreign currency trading, in addition to the more typica

banking services.

Regional banks have numerous branches and automated teller machine (ATM) locations throughout a multi-

state area that provide banking services to individuals. Banks have become more oriented toward marketing an

sales. As a result, employees need to know about all types of products and services offered by banks.

Communi ty banks are based locally and offer more personal attention, which many individuals and small

businesses prefer. In recent years, online bankswhich provide all services entirely over the Internethave

entered the market, with some success. However, many traditional banks have also expanded to offer onlinebanking, and some formerly Internet-only banks are opting to open branches.

Savings banks and savings and loan associati ons, sometimes called thrift institutions, are the second largest

group of depository institutions. They were first established as community-based institutions to finance

mortgages for people to buy homes and still cater mostly to the savings and lending needs of individuals.

Credit uni ons are another kind of depository institution. Most credit unions are formed by people with a

common bond, such as those who work for the same company or belong to the same labour union or church.


13/37



Reserve Bank of India is the Central Bank of our country. It was established on 1stApril 1935 under the RBI

Act of 1934. It holds the apex position in the banking structure. RBI performs various developmental and

promotional functions. It has given wide powers to supervise and control the banking structure. It occupies the

pivotal position in the monetary and banking structure of the country. In many countries central bank is known

by different names.

For example, Federal Reserve Bank of U.S.A, Bank of England in U.K. and Reserve Bank of India in India.

Central bank is known as a bankers bank. They have the authority to formulate and implement monetary and

credit policies. It is owned by the government of a country and has the monopoly power of issuing notes.

2. Commercial Banks:

Commercial bank is an institution that accepts deposit, makes business loans and offer related services tovarious like accepting deposits and lending loans and advances to general customers and business man. These

institutions run to make profit. They cater to the financial requirements of industries and various sectors like

agriculture, rural development, etc. it is a profit making institution owned by government or private of both.

Commercial bank includes public sector, private sector, foreign banks and regional rural banks:

a. Public sector banks:

It includes SBI, seven (7) associate banks and nineteen (19) nationalised banks. Altogether there are 27 public

sector banks. The public sector accounts for 90 percent of total banking business in India and State Bank of

India is the largest commercial bank in terms of volume of all commercial banks.

b. Private sector banks:

Private sector banks are those whose equity is held by private shareholders. For example, ICICI, HDFC etc.

Private sector bank plays a major role in the development of Indian banking industry.

c. Foreign Banks:

Foreign banks are those banks, which have their head offices abroad. CITI bank, HSBC, Standard Chartered

etc. are the examples of foreign bank in India.



d. Regional Rural Bank (RRB):

These are state sponsored regional rural oriented banks. They provide credit for agricultural and rural

development. The main objective of RRB is to develop rural economy. Their borrowers include small and

marginal farmers, agricultural labourers, artisans etc. NABARD holds the apex position in the agricultural and

rural development.

3. Co-operative Bank:

Co-operative bank was set up by passing a co-operative act in 1904. They are organised and managed on the

principal of co-operation and mutual help. The main objective of co-operative bank is to provide rural credit.

The cooperative banks in India play an important role even today in rural co-operative financing. The

enactment of Co-operative Credit Societies Act, 1904, however, gave the real impetus to the movement. The

Cooperative Credit Societies Act, 1904 was amended in 1912, with a view to broad basing it to enable

organisation of non-credit societies.

Three tier structures exist in the cooperative banking:

i. State cooperative bank at the apex level.

ii. Central cooperative banks at the district level.

iii. Primary cooperative banks and the base or local level.

4. Scheduled and Non-Scheduled banks:

A bank is said to be a scheduled bank when it has a paid up capital and reserves as per the prescription of RBI

and included in the second schedule of RBI Act 1934. Non-scheduled bank are those commercial banks, which

are not included in the second schedule of RBI Act 1934.

5. Development banks and other financial institutions:

A development bank is a financial institution, which provides a long term funds to the industries for

development purpose. This organisation includes banks like IDBI, ICICI, IFCI etc. State level institutions like

SFCs SIDCs etc. It also includes investment institutions like UTI, LIC, and GIC etc.



List of publick sector bank

Allahabad Bank

Andhra Bank

Bank of Baroda

Bank of India

Bank of Maharashtra

Bhartiya Mahila Bank

Canara Bank

Central Bank of India

Corporation Bank

Dena Bank

IDBI Bank Limited

Indian Bank

Indian Overseas Bank

Oriental Bank of Commerce

Punjab & Sind Bank

Punjab National Bank

State Bank of India

Syndicate Bank

UCO Bank

Union Bank of India

United Bank of India

Vijaya Bank
http://www.iba.org.in/meminfo.asp?id=13&cid=1http://www.iba.org.in/meminfo.asp?id=14&cid=1http://www.iba.org.in/meminfo.asp?id=15&cid=1http://www.iba.org.in/meminfo.asp?id=16&cid=1http://www.iba.org.in/meminfo.asp?id=17&cid=1http://www.iba.org.in/meminfo.asp?id=208&cid=1http://www.iba.org.in/meminfo.asp?id=18&cid=1http://www.iba.org.in/meminfo.asp?id=19&cid=1http://www.iba.org.in/meminfo.asp?id=20&cid=1http://www.iba.org.in/meminfo.asp?id=21&cid=1http://www.iba.org.in/meminfo.asp?id=32&cid=1http://www.iba.org.in/meminfo.asp?id=23&cid=1http://www.iba.org.in/meminfo.asp?id=24&cid=1http://www.iba.org.in/meminfo.asp?id=25&cid=1http://www.iba.org.in/meminfo.asp?id=27&cid=1http://www.iba.org.in/meminfo.asp?id=33&cid=1http://www.iba.org.in/meminfo.asp?id=6&cid=1http://www.iba.org.in/meminfo.asp?id=34&cid=1http://www.iba.org.in/meminfo.asp?id=35&cid=1http://www.iba.org.in/meminfo.asp?id=36&cid=1http://www.iba.org.in/meminfo.asp?id=37&cid=1http://www.iba.org.in/meminfo.asp?id=4&cid=1http://www.iba.org.in/meminfo.asp?id=4&cid=1http://www.iba.org.in/meminfo.asp?id=37&cid=1http://www.iba.org.in/meminfo.asp?id=36&cid=1http://www.iba.org.in/meminfo.asp?id=35&cid=1http://www.iba.org.in/meminfo.asp?id=34&cid=1http://www.iba.org.in/meminfo.asp?id=6&cid=1http://www.iba.org.in/meminfo.asp?id=33&cid=1http://www.iba.org.in/meminfo.asp?id=27&cid=1http://www.iba.org.in/meminfo.asp?id=25&cid=1http://www.iba.org.in/meminfo.asp?id=24&cid=1http://www.iba.org.in/meminfo.asp?id=23&cid=1http://www.iba.org.in/meminfo.asp?id=32&cid=1http://www.iba.org.in/meminfo.asp?id=21&cid=1http://www.iba.org.in/meminfo.asp?id=20&cid=1http://www.iba.org.in/meminfo.asp?id=19&cid=1http://www.iba.org.in/meminfo.asp?id=18&cid=1http://www.iba.org.in/meminfo.asp?id=208&cid=1http://www.iba.org.in/meminfo.asp?id=17&cid=1http://www.iba.org.in/meminfo.asp?id=16&cid=1http://www.iba.org.in/meminfo.asp?id=15&cid=1http://www.iba.org.in/meminfo.asp?id=14&cid=1http://www.iba.org.in/meminfo.asp?id=13&cid=1


17/37


list of Private Sector Banks is as follows:

Old Private Sector Banks New Private Sector Banks

1. Bank of Rajasthan Ltd. Bank of Punjab Ltd. (since merged withCenturian Bank)

2. Catholic Syrian Bank Ltd. 2. Centurian Bank of Punjab (since merged withHDFC Bank)

3. City Union Bank Ltd. 3. Development Credit Bank Ltd.

4. Dhanalakshmi Bank Ltd. 4.HDFC Bank Ltd.

5. Federal Bank Ltd. 5.ICICI Bank Ltd.

6. ING Vysya Bank Ltd. 6.IndusInd Bank Ltd.

7. Jammu and Kashmir Bank Ltd. 7.Kotak Mahindra Bank Ltd.

8. Karnataka Bank Ltd. 8.Axis Bank (earlier UTI Bank)

9. Karur Vysya Bank Ltd. 9. Yes Bank Ltd.

10. Lakshmi Vilas Bank Ltd.


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Introduction of Axis Bank

Government of India allowed new private banks to be established.Axis Bank Ltd. has been

promoted by the largest and Axis Bank established in 1993 was the first of the new private banks

to have begun operations in 1994 after the the best Financial Institution of the country, UTI. The

Bank was set up with a capital of Rs. 115 crore, with UTI contributing Rs. 100 crore, LICRs.

7.5 crore and GIC and its four subsidiaries contributing Rs. 1.5 crore each.Axis Bank is one of

the first new generation private sector banks to have begun operations in 1994. The Bank was

promoted in 1993, jointly by Specified Undertaking of Unit Trust of India (SUUTI) (then known

as Unit Trust of India),Life Insurance Corporation of India (LIC), General Insurance Corporation

of India (GIC), National Insurance Company Ltd., The New India Assurance Company Ltd., The

Oriental Insurance Company Ltd. and United India Insurance Company Ltd. The shareholding of

Unit Trust of India was subsequently transferred to SUUTI, an entity established in 2003.Erstwhile Unit Trust of India was set up as a body corporate under the UTI Act, 1963, with a

view to encourage savings and investment. In December 2002, the UTI Act, 1963 was repealed

with the passage of Unit Trust of India (Transfer of Undertaking and Repeal) Act, 2002 by the

Parliament, paving the way for the bifurcation of UTI into 2 entities, UTII and UTIII with

effect from 1st February 2003. In accordance with the Act, the Undertaking specified as UTI I

has been transferred and vested in the Administrator of the Specified Undertaking of the Unit

Trust of India (SUUTI), who manages assured return schemes along with 6.75% US64 Bonds,

6.60% ARS Bonds with a Unit Capital of over Rs. 14167.59 crores.

The Bank has strengths in both retail and corporate banking and is committed to adopting the

best industry practices internationally in order to achieve excellence.

Axis Bank entered a deal in November 2010 to buy the investment banking and equities units of

Enam Securities for $456 million. Axis Securities, the equities arm of Axis Bank, will merge


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with the investment banking business of Enam Securities.As per the deal, Enam will demerge its

investment banking, institutional equities, retail equities and distribution of financial products,

and nonbanking finance businesses and merge them with Axis Securities.

Services offered by the bank:

Personal Banking

Corporate Banking

NRI Banking

Priority Banking VBVOnline purchases using Credit Card

VBV / MSCOnline purchases using Debit Card

Awards /Achievements:

Axis bank was awarded Best bank award in the private sector category at NDTV Profit

Business Leadership Awards 2008. Axis Bank was awarded Best Debt HouseIndia award at Euromoney 2008.

The bank was honoured Best Bond House in India award at The Finance Asia 2008.

Axis Bank was awarded Best Domestic Debt House award at the Asia Money 2008.

Business World ,Best Bank AwardsFastest Growing Large Bank

Business Today,Best Bank AwardsIndia's Best Bank, India's Fastest Growing Bank, India's

Most Consistent Bank

ET Intelligence GroupBest Bank 2009

NDTV Profit Business Leadership Awards 2009Best bank Private Sector

Forbes Fab 50The Best of Asia Pacific's Biggest Listed Company

FE Best Banks AwardBest New Private Sector bank,Rank 1 TalismaCustomer

Appreciation Award 2009

D & B Best Bank AwardsBest Private Bank


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Lafferty AwardBest Annual ReportIndia

1.Bank of the YearIndiaThe Banker Awards 2011

2.Best Bank in the Private SectorNDTV Profit Business Leadership Awards 2011

3.Best BankOutlook Money Awards 2011

4.The Best Domestic BankIndiaThe Asset Triple A Country Awards 2011

5.Fastest Growing BankBloomberg UTV Financial Leadership Awards 2012

6.Most Productive Private Sector BankFIBAC 2011 Banking Awards

7.3rd Strongest Bank in AsiaPacific Region by Asian Banker

8.Brand Excellence Award2011(BFSI Sector)Star News

9.Most Preferred Bank amongst retail consumersCLSA survey on personal banking trends

10.Best Bond House India2011 by Finance Asia

11.Best Risk Master award(Private Sector Category)FIBAC 2011 Banking Awards 1.Bank of the YearMoney Today FPCIL Awards 201213

2.Best BankCNBCTV18 Indias Best Bank and Financial Institution Awards 2012

3.Best BankRunner UpOutlook Money Awards 2012

4.Consistent PerformerIndias Best Banks 2012 Survey by Business Today & KPMG

5.Fastest Growing Large BankDun & BradstreetPolaris Financial Technology Banking

Awards 2012

6.Fastest Growing Large BankBusinessworld Best Banks Survey 2012

7.Best Domestic Bond HouseThe Asset Triple A Country Awards 2012Our Bank has

been honored with this award for the third year in a row.

8.India Bond House of the yearIFR ASIACountry Awards 2012

9.Deal Maker of the Year in Rupee BondsBusinessworld Magna AwardsIndia's Best Deal

Makers 2012

10.The Best Emerging Bullion Dealing Bank9th India International Gold Convention

201112

11.Best Acquiring Institution in South AsiaVisa LEADER Award at Visas 2012

APCEMEA Security Summit, Bali

12.Gold Shield for Excellence in Financial Reporting in the Private Banks category201112

ICAI (Institute of Chartered Accountants of India)


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1.Axis Bank voted for Most Trusted Private Sector Bank in the country in the Most Trusted

Brands survey 2013 by Brand Equity.

2.Axis Bank ranked no. 1 bank in INDIA in both Primary & Secondary market of corporate

bondsThe Asset Benchmark Research

3.Best Debt House in IndiaEuromoney Awards for Excellence 2013

4.Axis Bank ranked No 1 company to work for in the BFSI sector 'The Best Companies to

Work for' survey by Business Today

5.Consistent PerformerIndias Best Banks 2013 Survey by Business Today & KPMG

6.Runner up for Best Bank categoryOutlook Money Awards 2013

7.Fastest Growing Large BankBusiness WorldPWC Survey of Indias best banks 2013

8.Banking frontiers Finnoviti 2013 Awards for FxConnect

9.Ranked No 1 in the IT Biz Awardlarge enterprises category by Express IT Awards10.Innovation for 2013 for Ladies First card under the Most Innovative Broad Based Product

Offering categoryIBA Innovations Award

11.Axis Bank featured in Asia's Fab50 companies for 2013 by Forbes Asia

12.Gold Shield for second year in a row for Excellence in Financial Reporting in the Private

Banks category201213ICAI (Institute of Chartered Accountants of India)

13.Second Runners Up for Best Financial Inclusion Initiative amongst Private Sector Banks

IBA Banking Technology Awards 2013

14.Second Runners Up for Best Technology Bank of the Year amongst Private Sector Banks

IBA Banking Technology Awards 2013

15.Second Runners Up for Best Risk Management & Security Initiative amongst Private

Sector BanksIBA Banking Technology Awards 2013

16.Second Runners Up for Best Internet Bank amongst Private Sector BanksIBA Banking

Technology Awards 2013

Fastest Growing Large BankBW Businessworld Magna Awards 2014


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Introduction of Bank of Baroda

Bank of Baroda (BoB) was founded by Maharaja Sayajirao Gaekwad in July 1908. It started with

a paid up capital of Rs 10 lakh. Bank of Baroda is a pioneer in various customer centric

initiatives in the Indian banking sector. Bank is amongst first in the industry to complete an all

inclusive rebranding exercise wherein various novel customer centric initiatives were undertaken

along with the change of logo. The initiatives include setting up of specialized NRI Branches,

GenNext Branches and Retail Loan Factories/ SME Loan Factories with an assembly lineapproach of processing loans for speedy disbursal of loans.

Ever since its rebranding in 2005, bank has consistently promoted its major strengths viz. large

international presence; technological advancement and superior customer service etc. Bank had

introduced the sub brand BARODA NEXTState of the ArtStraight from the Heart to showcase


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how it has utilized technology to nurture long term relationships for superior customer

experience. The sub brand has been reinforced by alternate delivery channels such as internet

banking, ATMs, mobile banking etc and robust delivery outfits like Retail Loan Factories, SME

Loan Factories, City Sales Office etc. Bank?s constant endeavor to strengthen its

branch/ATM network combined with well informed staff offering personalized service at its

various touch points have enhanced customer interactions and satisfaction. Thus the Bank has

firmly positioned itself as a technologically advanced customercentric bank.

Business

Retail bankingIt offers products and services such as deposits, loans, credit and debit cards,

demat services, remittances, ECS (electronic clearing services, government business, etc.

Rural and agri bankingIt offers products and services such as deposits, agricultural loans,

lockers services, etc to rural customers and agricultural sector.Corporate bankingIt provides project finance, film finance, foreign currency loans, working

capital finance, treasury products, etc to the corporate sector.

SMEBoB also offers products and services to SME sector.

Wealth Management It provides wealth management services to companies in areas of

insurance and mutual funds. In insurance it offers services to HDFC and National Insurance

Company. In mutual funds it provides services to UTI, Birla Sun Life, Reliance Mutual Fund,

Sundaram BNP Paribas, Franklin Templeton Investments and Baroda Pioneer Asset

Management Company.

Bank's subsidiaries

Domestic

BOBCARDS Ltd.

BOB Capital Markets Ltd.

Nainital Bank Ltd.

Overseas

Bank of Baroda (Botswana) Ltd.

Bank of Baroda (Kenya) Ltd.

Bank of Baroda (Uganda) Ltd.


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Bank of Baroda (Guyana) Ltd.

Bank of Baroda (New Zealand) Ltd

Bank of Baroda (Tanzania) Ltd

Bank of Baroda (Trinidad & Tobago) Ltd.

Bank of Baroda (Ghana) Ltd.

Overseas Representative Offices

Bank of Baroda (Thailand)

Bank of Baroda (Malaysia)

Bank of Baroda (Australia)

Domestic Associate

Baroda Pioneer Asset Management Company Ltd

India First Life Insurance Company Limited

Baroda Uttar Pradesh Gramin Bank

Baroda Rajasthan Gramin Bank

Baroda Gujarat Gramin Bank

NanitalAlmora Kshetriya Gramin Bank

JhabuaDhar Kshetriya Gramin Bank

Overseas Associate

IndoZambia Bank Ltd. (Lusaka)

Awards

Bank of BarodaBest Public Sector Bank: MCX and CNBC?TV18,India?s No. 1 Business medium presented for the first time, the ??India Best

Banks and Financial Institutions Awards? to felicitate India?s best

financial professionals for their contribution in building a robust financial system.


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Bank of Baroda receives Award for performance under SME: Bank of Baroda, known for

innovative approach in financing SMEs nationwide has received National Award for

performance under implementation of PMEGP scheme during 201011 in Central Zone.

Bank of Baroda receives Award for Best Initiatives in Inclusive Banking: In FIBAC Banking

Awards 2011, held at Mumbai, Bank of Baroda was given a special award for ??Best

Initiatives in Inclusive Banking.? The award recognizes the Bank's contribution to

reach multiple segments of industry and the general population, increasing the reach of formal

bankinga key national priority.

Bank of Baroda Wins Dun & Bradstreet Award: Dun & Bradstreet (D&B), the

world?s leading provider of global business information, knowledge and insight,

announced and presented the ??Dun & BradstreetPolaris Software Banking Awards

2011? in Mumbai. Bank of Baroda receives Skoch Award: Bank of Baroda has received Financial Inclusion

Award 2011 instituted by Skoch Consultancy Services. The award has been given to the bank

for an endeavour to tap the potential asset of unskilled unemployed youth of India to impart

them training by setting up Baroda Swarojgar Vikas Sansthan (BSVS)Baroda RSETI

Centres

Bank of Baroda bags Bank of the year 2010 (for India): Bank of Baroda was awarded with the

'Bank of Year 2010India' in The Banker Awards 2010 of 'The Banker' Magazine, UK.

Bank of Baroda bags three awards from ABCI: Bank of Baroda bagged three awards from

Association of Business Communicators of India in an award function held at Mumbai.

Bank of Baroda bags the Best Bank 2010 Award: Bank of Baroda has been conferred upon

Best Bank 2010 award by the prestigious financial magazine, Business India in recognition of

its consistent performance.

Bank of Baroda has been conferred upon Best Bank 2010 award by the prestigious financial

magazine, Business India in recognition of its consistent performance: Bank of Baroda bags

Dalal StreetDSIJ PSU Award: Bank of Baroda bags Dalal StreetDSIJ PSU Award.

Bank of Baroda bags four Awards of ABCI for the year 2009

Bank of Baroda receives Millennium National Rajbhasha Shield

Bank of Baroda receives ??Bank of the year?? Award

Bank awarded for its 'Global Business Development'


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It is vital system for developing economy for the nation.

Banks can play a dynamic role in delivery and purchase of consumerdurables

BASIC COMPARISION

II. ProductivityProductivity is the ratio of what is produced to what is required to produce. In the banking scenario productivity can be

measured by profit per employee, business per employee. Productivity is a very important measure of efficiency of

banks because it means that the firm can meet its obligations to employees, shareholders, and governments (taxes

and regulation), and still remain competitive in the market place.

These ratios can be misleading as banks can improve these ratios by reducing their number of their employees

during the time of recession. This is evident since asset base and profit levels declined during 2009-10 for new

private sector banks but still the above ratios is showing a continuous increasing trend.

III. Capital adequacy ratio

Capital Adequacy signifies the banks ability to maintain capital with the nature and extent of all types of risk and

the ability of management to identify, measure, monitor and control these risks. It also tells about the ability of bank

to absorb a reasonable amount of loss and comply with statutory Capital requirements. Currently Reserve Bank of

India (RBI) prescribes banks to maintain Capital Adequacy Ratio (CAR) of 9% with regard to credit risk, market

risk and operational risk on an ongoing basis, as against 8% prescribed in BASEL framework.


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The Capital Adequacy ratio (BASEL-II) of new private sector banks is way above RBIs minimum requirement of

9%. This shows that private banks are in comfortable position to absorb losses since they have more capital to cover

for their risk weighted assets and they have less risky assets in their portfolio for a fixed capital base.

IV. Growth of bank

Every bank aspires to grow and its growth can be judged by various parameters like growth in balance sheet size i.e.

asset base, total income and many others.

% Growth in Balance Sheet Size % Growth in Total Income2010 2011 2010 2011

New PrivateSector Banks

10.86% 23.51% -2.19% 14.63%

Public SectorBanks

17.93% 19.21% 12.46% 16.71%

The public sector banks asset base and income grew at an increasing rate in the last 2 years whereas new private

sector banks faced many fluctuations mainly due to recession. But the growth of these banks was phenomenal

during 2010-11 that shows their ability to recover faster after such a phase.

V. Asset Quality

Asset Quality reflects the amount of existing credit risk associated with the loan and investment portfolio as well as

off-balance sheet activities. The asset quality of banks can be judged by the non-performing assets (NPA) ratio.


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However there is huge difference in asset qualities of public & new private sector banks because the public sector

banks have higher NPAs in services sector. The NPAs in other sectors like Agriculture, Industry and Personal Loansare almost similar for these banks. The asset quality of a bank directly affects its credit rating.

The Off-Balance Sheet (BS) activities under the purview of New Private Sector banks are astoundingly large as

compared to public sector banks, being the liability of these banks on outstanding derivative contracts like Interest

rate swaps, currency options and interest rate futures. This makes their business highly susceptible to market risk.

VI. Efficiency of management

Several indicators are used to measure the efficiency of the management for example ratio of non-interest exp tototal assets which explains the management controls on operating expenses. Similarly efficiency ratios like Asset


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Turnover ratio can be used to assess how efficiently company is using its assets to earn the revenue

The efficiency ratios of new private sector banks are better than public sector banks which eventually lead to

enhanced bottom line. The asset turnover of both sectors banks is decreasing over the last 3 years which is mainly

due to a combination of decrease in non-interest income and increase in asset base.

VII. Earnings


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The above two graphs signifying the new private sector banks have better ratios since: a) The interest expense is less

as compared to interest income due to better asset liability management. b) The share of fee income is more in total

income which reflects that banks have other options to earn money like in exchanges, commissions, brokerages etc.

VIII. Liquidity

The inadequacy of liquidity in a bank causes liquidity risk is two-dimensional: risk of being unable to fund portfolio

of assets at appropriate maturity and rates (liability dimension) and the risk of being unable to liquidate assets in a

timely manner at a reasonable price (asset dimension).


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The credit deposit (C-D) ratio of any bank signifies the proportion of loan-assets created by banks from the deposits

received, higher the ratio, better it is for the banks. Similarly higher is the investment deposit (I-D) ratio good it is

for the banks as it increases the opportunity of earning but on the other hand may also create liquidity problems.

Therefore it is essential for the banks to have a stock of short-term investments to ensure higher liquidity.

Chapter : 2 litracture review

1)Title:An insight into service attributes in banking sector

Author:Prabhakaran and Satya

Published year:2003

Abstract:

Customer satisfaction has been considered the essence of success in todays highly competitive

banking industry. Prabhakaran and Satya (2003) mentioned that the customer is the king.

Heskettetal. (1997) argued that profit and growth are stimulated primarily by customer loyalty.

Ndubisi (2005), Gee et al. (2008) and Pfeifer (2005) pointed out that the cost of serving a loyal

customer is five or six times less than a new customer. Several researchers including Tariq andMoussaoui (2009), Han et al. (2008) and Ehigie (2006) found that loyalty is a direct outcome of

customer satisfaction. Generally speaking, if the customers are satisfied with the provided goods

or services, the probability that they use the services again increases (East, 1997). Also, satisfied

customers will most probably talk enthusiastically about their buying or the use of a particular

service; this will lead to positive advertising (File and Prince, 1992; Richens, 1983). On the other


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hand, dissatisfied customers will most probably switch to a different brand; this will lead to

negative advertising (Nasserzadeh et al., 2008). The significance of satisfying and keeping a

customer in establishing strategies for a market and customer oriented organization cannot be

ignored (Kohli and Jaworski, 1990).

2)Title:A Multiple Item Scale for Measuring Customer Perceptions of Service Quality

Author:Tse and Wilton

Published year:1998

Abstract:

According to Tse and Wilton (1988) Customer satisfaction is, the consumers response to the

evaluation of the perceived discrepancy between prior expectations and the actual performance

of the product perceived after its consumption. The service quality variables identified byParasuraman et al., (1994) are reliability, responsiveness, competence, accessibility, courtesy,

communication, credibility, security, understanding and tangibility. Alfred and Addam (2001)

investigated attitudes using fifteen service quality variables. In the present study, the service

quality in retail banking is studied using variables drawn from the reviews (Cronin and Taylor

1992; Zillur Rahman, 2005; Verma and Vohna 2000; Mushtag A Bhat, 2005). (Satya, 2003)

(Wilton, 1988)

3)Title:Journal of Business and Management

Author:Tiwary

Published year:2012

Abstract:

In the banking sector it is necessary to increased adoption of technology to better meet customer

requirements, improve efficiencies, reduce costs and ensure customer delight and it was the

private sector and foreign banks which established the technological revolution in Indian banking

and considering the fact that in the new economy, mind share leads to market share and mind

share is influenced not only by the promotions and advertisements but more importantly on

favorable customer perception which in turn is based on satisfaction with regard to products,

services and interaction ( (Tiwary, 2012)).


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4)Title:Determining the relative importance of critical factors in delivering service quality of

banks: an application of dominance

analysis in SERVQUAL model

Author:Vijay M. Kumbhar

Published year:July-Aug. 2012

Abstract:

The private sector banks are providing more satisfied ATM services then public sector banks and

the customer perception about Productivity, Security and Sensitivity, Cost Efficiency, Problem

Handling, Compensation and Contact services related to ATM service is very less in both the

public sector and privates sector banks, Therefore both kinds of banks should be aware about

these facets of ATM service to improve customers satisfaction (Vijay M. Kumbhar).

5)Title:Services Marketing, International edition

Author:Rengasamy et

Published year:2005

Abstract:

The entry of information technology into the banking industry has created a revolution and it has

prompted commercial banks of India to design world-class customer service systems and

practices, to meet thegrowing customer needs. It is interesting to note that the results are

consistent with the previousstudiesconducted on customer service aspects, and it has been

observed that the foreign and the new generation privatesector banks are serving the customers

better (Rengasamy et, al).

6)Title:A Multiple Item Scale for Measuring Customer Perceptions of Service Quality

Author: Parasuraman, Valerie Zeithaml and Berry

Published year:

Abstract:

To measure customer satisfaction with different aspects of service quality, Parasuraman, Valerie

Zeithaml and Berry developed a survey research instrument called SERVQUAL. It is based on


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Research Methodology

Research Design

Research ApproachQuantitative Approach will be used for the purpose of this study.Research TypeDescriptive type of research will be preferred.

Sources of Data

Both Primary and Secondary data will be used to gather information for the purpose of this

study. Secondary data has been and will be collected through Magazines, Library, Websites, and

Books whereas Primary data will be collected through Survey Method.

Data Collection Tool:

A structured questionnaire will be used as a data collection Instrument.

Sample Design

Sample Type: Non Probability

Sample Method: Convenience Sampling

Sample Size -200Sample Unit- customer who are using bank services in Gandhnagar.

Scope of the study:

The study will aim at finding out the Impact of private sector bank and public sector bank on

Satisfaction of customer who use the service of selected bank within Ghandhinagar.

Probable Data Analysis and Findings:

There will be a significant relationship between HRD climate and Job Satisfaction and any

positive change in HRD climate will lead to high level of Satisafction. The Positive HRD

Climate will have a strong influence on overall Organization Effectivemess.


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comparision of publick sector bank and private sector bank

Documents