A SYNOPSIS ON CONSUMERS PERSPECTIVES TOWARDS CREDIT CARDS OF ICICI AND SBI

SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENT FOR THE AWARD OF THE DEGREE OF MASTER OF BUSINESS ADMINISTRATION SUBMITTED BY

NEETU RANI MBA/11/08

UNDER THE GUIDANCE OF

Mrs. NEHA ARORA

(FACULTY OF MANAGEMENT STUDIES)

DEPARTMENT OF MANAGEMENT STUDIES

BHAGWAN MAHAVEER INSTITUTE OF ENGINEERING AND TECHNOLOGY (SONEPAT), HARYANA AFFILIATED TO DEENBANDHU CHHOTU RAM UNIVERSITY OF SCIENCE AND TECHNOLOGY, MURTHAL

INTRODUCTION
The demand for credit cards is growing over time. The Indian payment card market is displaying tremendous potential both in terms of issue and usage of cards. Higher disposable incomes, exposure to new products and services, increased travel and growth of the entertainment sector has had an impact on the growth of the payment card industry. Expenditure by credit cards is estimated at more than that consumer spending on debit cards. Acceptance is a major driver for the market and the opening up of newer categories such as transactions at petrol pumps and telephone payments through cards is resulting in new card subscribers. So, it has become very important for the card providers to determine How a consumer feels about the services provided with card? How much importance do various features /attributes carry in minds of consumer? Does a consumer differentiate between various card providers like private and public bank? Since the business is largely concentrated in the metro cities, the average user holds 2 to 3 cards. This research has been carried out to understand the card industry that includes the types of providers like SBI and ICICI banks, types of cards, features of cards, acceptability of the card among the Indian consumer. It also involves finding consumer's perception towards different providers. Questionnaire has been used for this purpose. A comparison of various card providers has been made through graphical representation on a list of parameters, like credit period, credit limit, penalty charges, provided, security of money, cost involved and number of ATM's. The inferences are drawn for two banks ICICI Bank and State Bank of India. The study also shows that public bank like SBI scores on factors like low cost, penalty charges and long credit periods but a bank like ICICI is being considered as costly, but definitely provides better and efficient service in terms of additional features and benefits.

OBJECTIVES OF THE STUDY

Primary objective:
The primary objective is to study the consumers perspectives towards credit cards issued by SBI and ICICI.

Sub objectives:
To study out customer awareness about the credit cards. To study out customer perception about credit cards and state reasons for differences if any. To study the satisfaction level for current card holders. To understand the trends in Cards Industry in India. To do a comparative analysis of the services provided by SBI and ICICI regarding credit cards.

FOCUS OF THE STUDY

The main aim of the study is to know the behavior of consumers about credit cards with the special reference to ICICI bank and SBI bank. In this study, we have studied the attitude and satisfaction level of the customers of ICICI and SBI banks. As credit card gives the overdraft facilities and additional borrowing power. It can supplement the existing money supply and use of cash, which has wear tear risk. The use of credit is a substitute and replaces cash. Credit card increases the money on hand and accelerates the velocity of money to a greater extent. The number of members using credit card and the number of establishment ownering it after joining the scheme have increased vastly over the past few years. Many Indian banks have joined hand with international banks to provide this card facility on a worldwide based or a selected international centers. The ability to perceive the credit card is depending upon the services provided by issuing bank. As outcome of the results it is necessary to found that cardholder are using which banks cards and satisfied with the services or not.

SIGNIFICANCE OF THE STUDY

The objective is to have an understanding of the credit card industry and identify the various credit card providers and the services provided by them and to know the perception of consumer towards the various services. This study has been conducted for the purpose of removing hurdles in smooth service to cardholders. It is also helpful to banker and holder of credit card and in creating a workable system and procedure. The number of credit card users and number of service providers is also increasing at a vast speed. Each and every bank provides different type of services to customers. There is difference in credit limits and credit amount. So perception of customers varies according to their satisfaction level. To avoid the complexity association with digital cash and electronic cheques, consumers and vendors are also looking at credit card payment on the Internet as one possible time-tasted alternative. There is nothing new in the basic process. If consumer wants to purchase or services, they simply send their credit card detail to their service provider involved and the credit card organization will handle this payment like any other. Thus this study helps in understanding the perception of various customers towards various schemes or services of the banks like SBI and ICICI regarding their credit cards. It also helps in determining the attributes of various credit cards.

CONCEPTUALIZATION
Credit cards:A question crops in mind that, what is a credit card, what is its shape and size, how it is functional. A credit card is nothing but a plastic sheet of a visiting card, which carries a fixed amount of credit limit with it. It bears name of issuing bank validity data, some code numbers and signature of the credit card readable by computerized machine only. The credit card carries a credit limit that depends upon so many factors .The credit card holder can withdraw cash, purchase air/rail tickets, make purchase from shops, hotels etc as per need and pays as leisure. Credit cards are also called PLASTIC MONEY. The use of credit is a substitute and replaces cash. Credit card increases the money on hand and accelerates the velocity of money to a greater extent. As credit card gives the overdraft facilities and additional borrowing power, it can supplement the existing money supply and use of cash, which has wear tear risk.

Types of Credit Cards

A. Secured Credit Cards:Secured credit cards may be an option for someone who does not have a credit history yet like someone who has just moved into the country, or a young adult just out of school. If someone fall into the below average category of credit scores and payment histories, but want a second chance at rebuilding a good credit score for future the secured credit card category gives that opportunity. If a little comparison shopping is done before applying, it can be found a secured credit card that reports the payment history to the three credit bureaus- which is exactly what someone want them to do. This way, one can make payments on the card responsibly and be credited for new and improved financial habits through a repaired credit score.

B. Rewards Credit Cards:People who prefer to do most of their spending and purchasing on a credit card each month, and who are diligent about paying their balance off in full each month are the best candidates for a rewards card. In fact, a rewards card quickly becomes unrewarding if the user does not have financial discipline to pay it off in full each month, so weigh your decision carefully when considering a rewards card. C. Low or No Interest Credit Cards:During the low or no interest period on a credit card, more of the payment goes toward paying off the balance and less to the interest. If user can secure a balance transfer card with no interest, he can save a fortune in interest if the card that currently holds the balance has a high interest rate. Anyone who wants to pay existing debt down or keep their credit card purchases at reasonable interest rates would enjoy a low or no interest credit card

How credit card benefits the bank?

Credit card increases the customer base of the bank. Credit card increases credit portfolio of the bank. Credit card enhances the reputation of the bank in public. The business establishments, which accept these cards, also give some incentives or commission to bank, by which the bank gains.

How credit card benefits the card holder?

Cardholder can avoid carrying cash and risk of its losing. Cardholder enjoys a credit limit up to which he makes purchases per his need and pay at leisure. Cardholder gets some period of 30 to 45 days the outstanding overdraft. Credit cards serve as a status symbol. Money can be withdrawn at any time over the day and night. It provides free accidentals insurance cover.

Cards offered by SBI

1. Premium Cards SBI Signature Cards SBI Platinum Card SBI Advantage Signature Card

2. Exclusive Cards Bank of Maharashtra SBI Platinum Credit Card Tata Cards Bank of Maharashtra SBI Card

3. Classic Cards SBI Advantage Gold Card SBI Gold Credit Card SBI Advantage Plus Card

4. Travel & Shopping Cards Spice Jet SBI Card SBI Gold & More Card Yatra SBI Card

5. Corporate Cards SBI Platinum Corporate Card

Credit cards offered by ICICI 1. Gemstone Collection ICICI Bank Diamant Credit Card ICICI Bank Sapphiro Credit Cards ICICI Bank Rubyx Credit Cards ICICI Bank Coral Credit Card
2. Airline Jet Airways ICICI Bank Sapphiro Credit Cards Jet Airways ICICI Bank Rubyx Credit Cards Jet Airways ICICI Bank Coral Credit Cards ICICI Bank British Airways Premium Credit Card Account 3. Fuel ICICI Bank HPCL Platinum Credit Card 4. Secured ICICI Bank Instant Platinum Credit Card 5. Others ICICI Bank Platinum Identity Credit Card ICICI Bank VISA Signature Credit Card ICICI Bank British Airways Classic Credit Card Account ICICI Bank Instant Gold Credit Card ICICI Bank Platinum Credit Card ICICI Bank Classic Credit Card ICICI Bank EMI Credit Card ICICI Bank Future Gold Credit Card

ICICI Bank Titanium Credit Card

ICICI Bank HPCL Gold Credit Card

REVIEW OF EXISTING LITERATURE

Source 1:(http://www.time.com/time/business/article/0,8599,1897362,00.html May 12, 2012) The merchants core issue with the card programs is that they are paying for the card issuers rewards program. Issuers are happy to pay for the convenience of credit cards, even a premium since it is cheaper than cash handling. But, the system broke down when rewards started. By increasing the interchange fee for different card platforms, the issuer could briefly distinguish themselves with a better rewards program. But, once every card has rewards, they provide no incremental value to the issuer. Like any entitlement, it is very hard to make them go away. Small merchants are increasingly assessing convenience fees for small charges where they lose their entire profit. Some have begun charging a fee for nearly any charge, since the interchange for large purchases adds up fast (a $25 fee for a $1,000 payment justifies sending someone to the branch with a deposit). With the advent of remote deposit capture (didnt someone say checks are dead?), it only takes a minute to deposit a large check. The problem with the credit-card industry isn't just credit-card companies it's you too. This week the Senate takes up a bill that would seriously clamp down on some of the industry's most unsavory practices, a piece of legislation that President Obama has said he wants on his desk by the end of the month. The bill, which builds on rules issued by the Federal Reserve Board and other agencies at the end of last year, would do away with interest-rate hikes on existing balances, prohibit issuers from putting customer payments toward lower-rate balances first and abolish the practice of raising a customer's interest rate because he was late paying a bill to someone else. Credit-card companies, though, may not be the only ones we need to be protected from. Every penny of Americans' nearly $1 trillion in revolving debt started with someone some individual person whipping out a piece of plastic and making a decision to use it. We could consider that free will and just call it a day, but there's plenty of reason to believe the story isn't so simple.

Source 2:(http://articles.economictimes.indiatimes.com/2010-07-09/news/27594037_1_sbi-cardscredit-card-finance-charges Jul 9, 2012) MUMBAI: The RBI on Friday warned banks and financial institutions to strictly follow its guidelines on credit cards regarding transparency in charging interest rates and levying other fees on customers or face penal action. "All banks are once again advised to strictly adhere to the guidelines... both in letter and spirit," an RBI circular said, adding that the violation would invite penal action. RBI has issued fresh directives in view of the numerous complaints from credit card holders, especially with regard to excessive finance charges and issuance of unsolicited cards, it said. Besides, complaints like charging annual fee on what were being offered as free cards, issuance of loans over phone, disputes over wrong billing, difficulty in accessing the credit card issuers and poor response from the call centers, it said. Giving detailed guidelines for credit card operations, the RBI had earlier asked the banks to declare upfront the interest rate, various charges and the methodology of calculation of finance charges with illustrative examples. There should be transparency in levying differential interest rates, it had said, adding, the banks should publicize through their website and other means, the interest rates charged to various categories of customers. RBI had also asked banks to ensure that wrong bills are not raised and issued to customers. In case, a customer protests any bill, the bank should provide explanation and, if necessary, documentary evidence to the customer within a maximum period of sixty days with a spirit to amicably redress the grievances, the circular had said. There are host of banks, which issue credit cards, including ICICI Bank, HDFC Bank, SBI Cards, Punjab National Bank. Besides, many foreign banks like Standard Chartered, HSBC, and Citibank also offer them. There are about 1.9 crore credit card users in India.

Source 3:(http://www.zootweb.com/blog/index.php/nearing-credit-card/1222/ August 22, 2012) The future of the credit card industry is this: Issuers can fight to protect their current fees and kill the credit card in the process, or they can lower their fees and save the industry. Have you heard the story about the monkey whose hand was stuck in the cookie jar, then dies because it wont let go of the cookie? It can be hard to let go of what we think we have, but ignoring reality can be fatal. The market is already finding ways to bypass the card networks. If the networks dont voluntarily implement more reasonable pricing, they will soon have nothing left to fight about. It is difficult for participants in any market to work together for the mutual good, but in this case the card networks offer a unique opportunity. They can proactively reduce the most expensive platforms (like Signature rewards) to take the immediate pressure off merchants. Issuers can continue to offer premium cards with an annual fee to replace the differentiated income. If the card actually delivers value, the consumers will adapt and many will pay the fees. In time, merchant fees will be in line with the value they provide and issuers will be able to compete with transparent products that consumers value.

Source 4:(http://www.federalreserve.gov/publications/other-reports/credit-card-profitability-2012recent-trends-in-credit-card-pricing.html June 5, 2012) Aside from questions about the profitability of credit card operations, considerable attention has been focused on credit card pricing and how it has changed in recent years. Analysis of the trends in credit card pricing in this report focuses on credit card interest rates because they are the most important component of the pricing of credit card services. Credit card pricing, however, involves other elements, including annual fees, fees for cash advances and balance transfers, rebates, minimum finance charges, over the limit fees, and late payment charges. In addition, the length of the "interest free" grace period, if any, can have an important influence on the amount of interest consumers pay when they use credit cards to generate revolving credit. Over time, pricing practices in the credit card market have changed significantly. Today card issuers offer a broad range of card plans with differing rates depending on credit risk and consumer usage patterns. Moreover, most issuers have moved to variable rate pricing that ties movements in their interest rates to a specified index such as the prime rate. As noted, risk-based pricing has become a central element of most credit card plan pricing regimes and the current downturn and new credit card rules spurred changes in pricing in 2009 and 2010. In most plans, an issuer establishes a rate of interest for customers of a given risk profile; if the consumer borrows and pays within the terms of the plan, that rate applies. If the borrower fails to meet the plan requirements, for example, the borrower pays late or goes over their credit limit, the issuer may reprice the account reflecting the higher credit risk revealed by the new behavior. Regulations that became effective in February 2010 limit the ability of card issuers to reprice outstanding balances for cardholders that have not fallen at least 60 days behind on the payments on their accounts. Issuers may, however, reprice outstanding balances if they were extended under a variable-rate plan and the underlying index used to establish the rate of interest (such as the prime rate) changes. The new rules continue to provide issuers with considerable pricing flexibility regarding new balances. At present, the Federal Reserve collects information on credit card pricing through two surveys of credit card issuers.

Source 5:(http://money.msn.com/top-stocks/post.aspx?post=3bc89a31-a981-429b-ba4a9c024c0da3b6 Jan 13, 2012) The past year was an eventful one for the credit card industry. The Dodd-Frank financial reforms shook the industry with a cap on debit card interchange fees, although the decline in credit card default rates and delinquencies provided some comfort. Developments in mobile payments paved the way for growth in transaction volumes. This boosted the stocks of Visa (V), MasterCard (MA), and Discover Financial (DFS), which were up 44%, 66% and 30%, respectively, for the year. The most controversial issue last year was the government regulation of the debit card interchange fee. The Durbin Amendment to Dodd-Frank, which went into effect on Oct. 1, 2011, changed the fee from an average of 44 cents per transaction to 21 cents, with an additional amount to cover losses from fraud. The cap was intended to resolve a bitter issue for merchants who paid a significant portion for their profits to banks for transaction processing. However, it also had unintended consequences for consumers, such as banks dropping rewards for debit card purchases and proposing additional fees for debit card usage. Credit card defaults and delinquencies declined last year. Default rates fell as issuers closed risky accounts, cut credit limits on millions of accounts, and tightened lending standards. The tighter lending environment brought excessive credit card borrowing under control. Many cardholders have diligently paid down their balances and used other forms of payment to avoid high interest rate penalties. Smartphone users rejoiced when Google Wallet debuted last September. With mobile payments, consumers can make purchases or transfer money with their mobile phones. Credit card companies are busy convincing retailers to invest in the equipment necessary to link cell phone to cash registers. The retailers have been reluctant to embrace this new technology as the same fees associated with cards will apply to mobile payments. As a result we see this as a trend that will play out over a couple of years.

RESEARCH METHODOLOGY
Research Methodology means the procedure for conducting a systematic and planned approach to carry out research project for the purpose of achieving the objectives. A useful research is, therefore, compelled to follow certain basic scientific rules or steps and stipulation in designing, planning and executing the research.

Sample size:
The sample size is 50 credit card holders on the basis of random and convenience sampling.

Research design:
Descriptive as well as exploratory design has been used.

Data collection:
Primary data: Observation method Interview method Through questionnaire

Secondary data: Journals and Magazines Websites

Analysis techniques:
The source of analysis is the data provided by the questionnaires. Then a comparative analysis is done in order to determine perceptions of credit card services provided by SBI and ICICI Bank. Tables, Charts, diagrams are made to make graphical representation of the data collected from questionnaire.