project regarding consumer awareness

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PROJECT REPORT ON Awareness of Consumer Regarding Banking SUBMITTED TO : In the partial fulfillment of the requirement for the degree of BACHELOR OF BUSINESS ADMINISTRATION Session: 2007-2010 SUBMITTED BY : Nitesh kumar Roll No. 7084241241 BBA 6 Semester 1

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Page 1: PROJECT Regarding Consumer Awareness

PROJECT REPORT

ON

Awareness of Consumer Regarding Banking

SUBMITTED TO:In the partial fulfillment of the requirement for the degree ofBACHELOR OF BUSINESS ADMINISTRATIONSession: 2007-2010

SUBMITTED BY: Nitesh kumar

Roll No. 7084241241 BBA 6 Semester

RIMT-INSTITUTE OF MANAGEMENT AND COMPUTER TECHNOLOGY

MANDI GOBINDGARH

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ACKNOWLEDGEMENT

Words often fail to express one’s inner feelings of indebtedness. To

start with it is my proud privilege to express my deepest gratitude

and sense of deep indebtedness from the core of my heart to Mr.

Hukam Chand Bansal Chairman of RIMT-IMCT, Mandi

Gobindgarh. I also want to thank to Mr. Surinder Singh Director of

RIMT-IMCT Mandi Gobindgarh.

At last but not least I would bow my head to “The Almighty” GOD

for His blessings which keeps me sailing against all the hazards of

this world and with whose grace and blessings, I have been able to

complete my project. I am also indebted to my family members

that it was due to their continuous support, love, help, inspiration

and loving emotions which helped me to make my project a grand

success.

Nitesh kumarR. No. 7084241241

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DECLARATION

I Nitesh kumar studying in RIMT, Mandi Gobindgarh do hereby

declare that this Dissertation Report relating to Consumer

awareness regarding banking has been prepared by me after doing

a research, as part of the requirements of the BBA Program of

Punjab Technical University (Batch of 2007 – 2010).

I further declare that this Dissertation Report has not been

submitted earlier to any other University or Institute for the award

of any Degree.

Nitesh kumarR. No. 7084241241

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Contents

Chapters Pages

1. Introduction 5 - 13 The Indian bank industry

What is bank all about

Types of bank account

How bank works

How do banks make money

2. Research 14-17 Research Objectives

Research Methodology

3. Data Analysis & Interpretation 18-31 Interpretations & Analysis

Findings

Limitations/Conclusion

Suggestions

5. Bibliography 32

6. Questionnaire 33-34

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CHAPTER 1 -INTRODUCTION

THE INDIAN BANKING INDUSTRY

The Indian Banking industry, which is governed by the Banking Regulation Act of India, 1949 can be broadly classified into two major categories, non-scheduled banks and scheduled banks.

Scheduled banks comprise commercial banks and the co-operative banks. In terms of ownership, commercial banks can be further grouped into nationalized banks, the State Bank of India and its group banks, regional rural banks and private sector banks (the old/ new domestic and foreign). These banks have over 67,000 branches spread across the country.

The first phase of financial reforms resulted in the nationalization of 14 major banks in 1969 and resulted in a shift from Class banking to Mass banking. This in turn resulted in a significant growth in the geographical coverage of banks. Every bank had to earmark a minimum percentage of their loan portfolio to sectors identified as “priority sectors”. The manufacturing sector also grew during the 1970s in protected environs and the banking sector was a critical source. The next wave of reforms saw the nationalization of 6 more commercial banks in 1980. Since then the number of scheduled commercial banks increased four-fold and the number of bank branches increased eight-fold.

After the second phase of financial sector reforms and liberalization of the sector in the early nineties, the Public Sector Banks (PSB) s found it extremely difficult to compete with the new private sector banks and the foreign banks. The new private sector banks first made their appearance after the guidelines

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permitting them were issued in January 1993. Eight new private sector banks are presently in operation. These banks due to their late start have access to state-of-the-art technology, which in turn helps them to save on manpower costs and provide better services.

During the year 2000, the State Bank of India (SBI) and its 7 associates accounted for a 25 percent share in deposits and 28.1 percent share in credit. The 20 nationalized banks accounted for 53.2 percent of the deposits and 47.5 percent of credit during the same period. The share of foreign banks (numbering 42), regional rural banks and other scheduled commercial banks accounted for 5.7 percent, 3.9 percent and 12.2 percent respectively in deposits and 8.41 percent, 3.14 percent and 12.85 percent respectively in credit during the year 2000.

Current Scenario

The industry is currently in a transition phase. On the one hand, the PSBs, which are the mainstay of the Indian Banking system, are in the process of shedding their flab in terms of excessive manpower, excessive non Performing Assets (NPAs) and excessive governmental equity, while on the other hand the private sector banks are consolidating themselves through mergers and acquisitions.

PSBs, which currently account for more than 78 percent of total banking industry assets are saddled with NPAs (a mind-boggling Rs 830 billion in 2000), falling revenues from traditional sources, lack of modern technology and a massive workforce while the new private sector banks are forging ahead and rewriting the traditional banking business model by way of their sheer innovation and

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service. The PSBs are of course currently working out challenging strategies even as 20 percent of their massive employee strength has dwindled in the wake of the successful Voluntary Retirement Schemes (VRS) schemes.

The private players however cannot match the PSB’s great reach, great size and access to low cost deposits. Therefore one of the means for them to combat the PSBs has been through the merger and acquisition (M& A) route. Over the last two years, the industry has witnessed several such instances. For instance, Hdfc Bank’s merger with Times Bank Icici Bank’s acquisition of ITC Classic, Anagram Finance and Bank of Madura. Centurion Bank, Induslandnd Bank, Bank of Punjab, Vysya Bank are said to be on the lookout. The UTI bank- Global Trust Bank merger however opened a pandora’s box and brought about the realization that all was not well in the functioning of many of the private sector banks.

Private sector Banks have pioneered internet banking, phone banking, anywhere banking, and mobile banking, debit cards, Automatic Teller Machines (ATMs) and combined various other services and integrated them into the mainstream banking arena, while the PSBs are still grappling with disgruntled employees in the aftermath of successful VRS schemes. Also, following India’s commitment to the W To agreement in respect of the services sector, foreign banks, including both new and the existing ones, have been permitted to open up to 12 branches a year with effect from 1998-99 as against the earlier stipulation of 8 branches.

Talks of government diluting their equity from 51 percent to 33 percent in November 2000 have also opened up a new opportunity for the takeover of even the PSBs. The FDI rules being more rationalized in Q1FY02 may also pave the way for foreign banks taking the M& A route to acquire willing Indian partners.

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Meanwhile the economic and corporate sector slowdown has led to an increasing number of banks focusing on the retail segment. Many of them are also entering the new vistas of Insurance. Banks with their phenomenal reach and a regular interface with the retail investor are the best placed to enter into the insurance sector. Banks in India have been allowed to provide fee-based insurance services without risk participation invest in an insurance company for providing infrastructure and services support and set up of a separate joint-venture insurance company with risk participation.

WHAT IS BANK ALL ABOUT

India has a well developed banking system. Most of the banks in India were founded by Indian entrepreneurs and visionaries in the pre-independence era to provide financial assistance to traders, agriculturists and budding Indian industrialists. The origin of banking in India can be traced back to the last decades of the 18th century. The General Bank of India and the Bank of Hindustan, which started in 1786 were the first banks in India. Both the banks are now defunct. The oldest bank in existence in India at the moment is the State Bank of India. The State Bank of India came into existence in 1806. At that time it was known as the Bank of Calcutta.

The role of central banking in India is looked by the Reserve Bank of India, which in 1935 formally took over these responsibilities from the then Imperial Bank of India. Reserve Bank was nationalized in 1947 and was given broader powers. In 1969, 14 largest commercial banks were nationalized followed by six next largest in 1980. But with adoption of economic liberalization.

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The commercial banking structure in India consists of: Scheduled Commercial Banks and Unscheduled Banks. Scheduled commercial Banks constitute those banks, which have been included in the Second Schedule of Reserve Bank of India (RBI) Act, 1934. RBI includes only those banks in this schedule, which satisfy the criteria laid down vide section 42 (6) (a) in Act.

Indian banks can be broadly classified into public sector banks, private banks (government doe not have a stake in these banks; they may be publicly listed and traded on stock exchanges) and foreign.

TYPES OF BANK ACCOUNTS

Bank Fixed Deposits

Bank Fixed Deposits are also known as Term Deposits. In a Fixed Deposit Account, a certain sum of money is deposited in the bank for a specified time period with a fixed rate of interest. The rate of interest for Bank Fixed Deposits depends on the maturity period. It is higher in case of longer maturity period.

Current Account

Current Account is primarily meant for businessmen, firms, companies, and public enterprises etc. that have numerous daily banking transactions. Current Accounts are cheque operated accounts meant neither for the purpose of earning interest nor for

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the purpose of savings but only for convenience of business.

Demat Account

Demat refers to a dematerialised account. Demat account is just like a bank account where actual money is replaced by shares. Just as a bank account is required if we want to save money or make cheque payments, we need to open a demat account

Recurring Bank Deposits

Under a Recurring Deposit account (RD account), a specific amount is invested in bank on monthly basis for a fixed rate of return. The deposit has a fixed tenure, at the end of which the principal sum as well as the interest earned during that period is returned to the investor in that particular time.

Savings Bank Account

Savings Bank Accounts are meant to promote the habit of saving among the citizens while allowing them to use their funds when required. The main advantage of Savings Bank Account is its high liquidity and safety.

How bank works?

Bank is an institution that deals in money and its substitutes and provides other financial services. Banks accept deposits and make loans and derive a profit from the difference in the interest rates paid and charged, respectively.

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Banks are critical to our economy. The primary function of banks is to put their account holders' money to use by lending it out to others who can then use it to buy homes, businesses, send kids to college.

When you deposit your money in the bank, your money goes into a big pool of money along with everyone else's, and your account is

Credited with the amount of your deposit. When you write checks or make withdrawals, that amount is deducted from your account balance. Interest you earn on your balance is also added to your account.

Banks create money in the economy by making loans. The amount of money that banks can lend is directly affected by the reserve requirement set by the RBI. The reserve requirement is currently 3 percent to 10 percent of a bank's total deposits. This amount can be held either in cash on hand or in the bank's reserve account with the Fed. To see how this affects the economy, think about it like this. When a bank gets a deposit of $100, assuming a reserve requirement of 10 percent, the bank can then lend out $90. That $90 goes back into the economy, purchasing goods or services, and usually ends up deposited in another bank. That bank can then lend out $81 of that $90 deposit, and that $81 goes into the economy to purchase goods or services and ultimately is deposited into another bank that proceeds to lend out a percentage of it.

In this way, money grows and flows throughout the community in a much greater amount than physically exists. That $100 makes a much larger ripple in the economy than you may realize!

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How do Banks make money?

Banks are just like other businesses. Their product just happens to be money. Other businesses sell widgets or services; banks sell money -- in the form of loans, certificates of deposit (CDs) and other financial products. They make money on the interest they charge on loans because that interest is higher than the interest they pay on depositors' accounts.

The interest rate a bank charges its borrowers depends on both the number of people who want to borrow and the amount of money the bank has available to lend. As we mentioned in the previous section, the amount available to lend also depends upon the reserve requirement the RBI Board has set. At the same time, it may also be affected by the funds rate, which is the interest rate that banks charge each other for short-term loans to meet their reserve requirements.

Loaning money is also inherently risky. A bank never really knows if it'll get that money back. Therefore, the riskier the loan the higher the interest rates the bank charges. While paying interest may not seem to be a great financial move in some respects, it really is a small price to pay for using someone else's money. Imagine having to save all of the money you needed in order to buy a house. We wouldn't be able to buy houses until we retired!

Banks also charge fees for services like checking, ATM access and overdraft protection. Loans have their own set of fees that go along with them. Another source of income for banks is investments and securities.

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Research Methodology

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CHAPTER-2 RESEARCH OBJECTIVES

RESEARCH OBJECTIVES

The research focused on major issues.

To study the awareness of the customer regarding banking.

The preference of the customer toward different kind of

banks

To know about the sources of information which influence

the behaviour of the consumers regarding selection of the

bank

To study the investment opinion of the consumer.

Are they know about the bank services and policies

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RESEARCH METHODOLOGY

The Research Methodology used by me for the purpose of this

project is as follows:-

Research Design:-

The research design used here for this project is exploratory

research. First a general know about of the schemes and services of

Banks. Then personal interactions with the consumers concerned

are made to figure out the results.

Data Collection Method:-

According to the needed research of the project; I pursued primary

data collection method. To ensure the accuracy of the results the

primary data collection method used is the questionnaire.

Sampling:-

The sampling units in my project are general consumers of

Khanna. The sample size was small by following the convenience

sampling method. There were queries for the persons interacted &

the questionnaire has been attached at last.

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Questionnaire : - The questionnaires are given to respondent

with no pressurization at all, i.e. he/she is free to provide the

information whatever the concern is. One thing to be kept in

mind those personal questions apart from name, address etc.

should not be included.

Sampling design, Procedure & Sample size : - A sample is

always a part of the desired universe & it should represent

each & every aspect of the study being conducted. The only

thing is that the sample being chosen is of relevance &

accurate source of information.

Sample size: - My sample size was 50 the respondent which I

select are shopkeeper’s business people and housewives

Sampling technique: - I choose respondent through my

convenience so here my sampling technique is convenience

sampling technique

Scope of the study: - The scope of my study is khanna I have

covered only one city for my research

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Data Analysis and

Interpretation

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DATA COLLECTED

1. Do you have a bank account?

Yes 50No 0Total 50

Out of 50 persons from which I asked this question 50 said that

they have a bank account.

The awareness about banking in Khanna is good

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2. Which bank do you prefer?

Out of 50 persons, 9 said that they prefer IDBI bank. 18

respondents said that they prefer ICICI bank.15 said that they

prefer HDFC bank remaining 8 said that they prefer AXIS bank

this is quite exciting but this type of figure may not be the

representative of the whole city as people were not very

cooperative in revealing about their experience towards banking.

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3. Why do you prefer?

It has been seen from the fact that ICICI still capturing the

market, rest competitors are trying their best to arise. In this 25

prefer the bank because of better services 12 prefer because of

more services 13 prefer because of good reputation It is the better

incentives, better services and better approach has made them to

get firmed in the market.

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4. How many person of your family have a bank account?

Out of 50 Persons 13 said that all the members of his family have a

bank account 27 said that one or two persons of his family have a

bank account remaining 10 said that none of his family have a

bank account

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5. Who influence your decision of choosing Bank?

As the chart reveals 20 persons are influenced by agents 13 are

influenced by advertisement 12 are influenced by friends

remaining 5 are influenced by others

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6. What percentage of salary do you invest in schemes?

As revealed by the chart 23 persons are interested in invest up to

5% in the bank account 17 are interested in invest up to 5% to 10%

7 are interested in invest up to 10% to 20% only remaining 3 are

interesting in invest more than 20%

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7. Do you think that bank services should be operated with mobile phones?

In our survey 36 persons are agreed to operate the banking on

mobile phones 14 persons are not agreed to operate banking on

mobile phones

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8. Do you have any other scheme along with the bank?

32 persons said they have also another scheme along with the bank

but 18 said that they have no other scheme along with the bank

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9.9. Are you aware of all banking services?Are you aware of all banking services?

Out of 50 people 38 said that they are fully aware about all the

bank services remaining 12 said that they are not fully aware about

the bank services

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DATA ANALYSIS AND INTERPRETATION

The research focussed on the awareness of consumers with regard

to different services and schemes of the Bank, the facilities,

benefits and investment options availed by them.

The research also focussed on registering complaints of the

customers and taking their suggestions for improvements. The

complaints put forward were discussed and necessary actions and

plans to rectify the same were laid. The possible suggestions given

by the respondents were also incorporated.

FINDINGS

This section has been equipped with all the related findings of the

researcher the researcher has tried and analyzed all the aspects

such as variables and factors given in the questionnaire. The

researcher has given all the findings individually.

The customers are satisfied with the performance of

their respective bank.

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Most of the consumers are aware about bank services.

Most of the respondents feel that their concerns were

resolved very well as and when required.

The schemes and the services are really good as per the

customers they are highly satisfied with the benefits and

features of the schemes.

LIMITATIONS

The area which I have covered does not show the

overall market

There was lack of time from the part of respondent

There may be some bias information provided by the

respondent

The size of the research may not be substantial

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SUGGESTIONS/ RECOMMENDATIONS

Less time should be taken in recording and completing

the transaction

The employee should tell their customer about the new

schemes launched by the bank

The quarries of the customer should be solved as soon

as possible

Banks are yet to adopt a purely customer-centric approach in the

country and the approach remains more focussed on products

offered by banks. Banks are now talking about moving to a

consumer-focussed approach in banking.

"Banking today is still function-centric and not customer-centric. In a customer-centric model that we all are aspiring to move to, employees will handle entire relationships and not specific products. This will result in deeper relationships, better cross-sell ratio and increased income from customers".

The key to success of this model would be to give clear ownership of accounts to relationship managers as well as incentive and disincentive mechanism based on measurable performance parameters.

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Inconsistent customer management processes, uneconomic sales and service model and insufficient sales force in terms of skills and time are the biggest value destructors for banks. On the other hand, segmentation of customers by value and not size, correct gauging of profits from each customer and resultant service differentiation by value are the key value generators in business.

"Most entities in India are certainly customer-focussed; however, what is missing totally is the focus on customer relationships. The focus of banks has to be such that they take a 360 degree view of the entire relationship each time there is a contact with the customer”

Customer relationship management (CRM) is not a technology solution, but a business strategy. This strategy should be owned by the organisation. Technology is just a tool to help enhance efficiency and performance of the strategy. "It is important that we remember that technology is just a facilitator and not the business".

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BIBLIOGRAPHY

The BIBLIOGRAPHY is very important as it is used in the project as Secondary data. As per the project which is entitled as “Consumer’s awareness regarding banking” is concerned.

The bibliography is given as follows.

WEBSITES:

www.google.com

en.wikipedia.org/wiki/ Bank

www.socialstudieshelp.com/Eco_ Bank _ Types .htm

RESEARCH METHODOLOGY – C.R KOTHARI.

Mohit gupta Navdeep agarwal

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QUESTIONNAIRE

Do you have a bank account?

Yes No

Which bank do you prefer?

IDBI HDFC

ICICI AXIS

Why do you prefer?

Better Services More Schemes

Good Reputation

How many persons of your family have bank accounts?

All None

One or two

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Name ___________Age ____________

Gender ____________Occupation __________Contact No.___________

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Who influence(s) your decision of choosing schemes?

Agent Friends

Advertisement Other

What percentage of your salary due you invests in schemes?

Up to 5% 6 to 10%

10 to 20 % More than 20%

Are you aware of all the banking policy?

Yes No

Do you think Bank accounts should be operated with mobile

phones?

Agree Disagree

Do you have any other scheme along with the bank?

Yes No

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