CHAPTER I

INTRODUCTION
1.5 LITERATURE REVIEW
Dei, Paschi and Siena (2007) in their study on The Value of Relationship Lending:
Small Banks in an Era of Consolidation speak about the importance of consolidation
in the banking industry as it has caused concern about the survival of small banks.
Empirical evidence shows that small banks are performing better than larger banks in
terms of loan growth and profitability. This paper tries to find the determinants of
such unexpected superior performance. The most important factor identified has been
the ability of smaller banks to lever on relationship lending. In fact, relationship
lending proves to be a good explanatory variable of small banks recent high loan
growth. Besides, being strongly local, that is being independent and cooperative,
matters whereas belonging to a large banking group does not improve small banks
performance. This article has limitations as it focuses only on the smaller bank
established in US and Italy. There is scope to identify the importance of relationship
lending in larger banks. Also a study on banks outside US may provide different
results.
Liang, Yao, Hwang and Wei-Hsiung Wu (2008) in their study The Impact of NonPerforming Loans on Banks Operating Efficiency for Taiwan Banking Industry, aim
to measure the influence of the rising non-performing loan ratio (NPLR) on Taiwans
banking industry. After taking into account the NPLR and the different classifications
of banks, the respective performances of different types of banks exhibit the following
variations and characteristics. In conclusion, the new private banks efficiency score
during 19961998 was higher than that of the old public banks and old private banks
before including the NPLR. However, after the occurrence of the Asian financial

crisis from 19971998 and its effect on the Taiwan economy, the new private banks
extended less credit to the enterprises, which caused the amount lent to decline
sharply and the operational efficiency to fall behind that of the old public banks. The
question of how to improve the transparency of the banks critical financial
information has become an important question on which further research can be
carried. Also other tools of measuring bank performance could have been inculcated
in the study.

Kalluru and Bhat (2008) in their study on An Empirical Analysis of Profitability

Determinants in Indian Commercial Banks During Post Reform Period, examined
the profitability determinants in Indian commercial banks by employing fixed and
random effects models for an unbalanced panel data of 87 commercial banks for the
period 1992-2006. Two alternative measures of bank profitability such as Returns on
Assets (ROA) and Returns on Capital (ROC) are used. The empirical results reveal
that the profitability of banks was affected not only by banks own characteristics but
also by industry structural variables and macroeconomic variables. The empirical
results, in general, reveal that inflation is negatively associated with the profitability
of Indian banks. The rate of interest is negatively associated with the profitability of
public sector banks and positively associated with private and foreign banks. The
empirical results also reveal that the growth rate of the economy is negatively
associated with the profitability of public sector banks. However, the determinants of
bank profitability vary significantly across the banks group thus the result from this
study cannot be generalized to the entire banking sector.

Lumsa, Meliciani and Sabato (2009) in their study on Banks Diversifcation, CrossSelling and the Quality of Banks attempt to model and empirically test the impact of
banks shift towards financial services on their screening activity and on the quality of
their loans. The researchers have successfully created a model where it is easier to sell
services to positively evaluated loan applicants. The article has also established a
relationship between screening efforts and size of banks where the larger the banks
income from services, the lower their optimal screening effort. This prediction is
consistent with the empirical evidence based on a panel of European banks and
showing that the quality of banks loans decreases with the share of commission
income. The negative relationship between income diversification and risk suggests
that banks have not been able to exploit efficiently information synergies between
screening and cross-selling and further research in this field should be done.

Stanton (2002) in his paper onTrends in relationship lending and factors affecting
relationship lending efficiency investigates the efficiency of relationship managers at
the Canadian Imperial Bank of Commerce (CIBC) one of Canada's largest banks.
Data envelopment analysis (DEA) efficiency scores are analyzed using regression.
The results demonstrate that managers are less efficient when facing larger numbers
of loans or smaller loans. Tests of relationships between efficiency and nonperforming
loans are conducted positively.

Berger and Udell (2002) in their study on Small Business Credit Availability and
Relationship Lending: The Importance of Bank Organizational structure explore the
relevance of banking relationships and its significance impact on its profitability.
Relationship lending' is one of the most powerful technologies available to reduce

information problems in small firm finance and a main subject of this paper. Under
relationship lending, banks acquire information over time through contact with the
firm, its owner, and its local community on a variety of dimensions and use this
information in their decisions about the availability and terms of credit to the firm.
Recent empirical evidence provides support for the importance of a bank relationship
to small businesses in terms of both credit availability and credit terms such as loan
interest rates and collateral requirements. It is generally left unspecified whether the
primary relationship is between the bank and the firm or between the loan officer and
the firm's owner, who within the bank acquires and stores the relationship
information, and how this information may be disseminated within the bank. Thus
further focus can be on the meaning, value and significance of this subject matter.

Lakshmi and Murugan (2009) in their empirical study on Bank Credit Facilities to
Small and Medium Enterprises focus on how banks are catering to the credit needs
of the SMEs A convenience sample survey of 150 SMEs across Chennai city was
conducted to analyze the awareness level regarding business credit facilities provided
by the banks. The study also examines the credit requirements of SMEs, as well as
difficulties faced by SMEs in availing bank finance. The study findings indicate that
most of the SMEs are availing cash credit facility from banks and are aware of the
bank credit facilities through their agents. In availing bank credit facility, simple
documentation has been ranked first, followed by low interest rate, quick financing,
reputation, period of repayment and service. The study also reveals that technology of
the bank has improved tremendously when compared to other aspects like employee
relations, adequate credit facilities and helping the rural people. In can be hence
concluded that the banks can explore various avenues to approach SMEs and

familiarize them with the various working capital financing options available in order
to increase their profitability.

Bloemer, Ruyter and Peter (2011) in their study on Investigating drivers of bank
loyalty: the complex relationship between image, service quality and satisfaction,
investigate how image, perceived service quality and satisfaction determine loyalty in
a retail bank setting at the global construct level, as well as the level of construct
dimensions. At the global level the results of a large-scale empirical study reveal that
image is indirectly related to bank loyalty via perceived quality. In turn, service
quality is both directly and indirectly related to bank loyalty via satisfaction. The
latter has a direct effect on bank loyalty. At the level of the dimensions underlying
aforementioned constructs, it becomes clear that reliability (a quality dimension) and
position in the market (an image dimension) are relatively important drivers of retail
bank loyalty.

Johnston (1997) in his study on Identifying the critical determinants of service

quality in retail banking: importance and effect, carefully pinpoints various factors of
service quality that play a significant role on banks profitability when viewed as a
part of behavioural finance. This paper provides managers with an empirically derived
framework to help them assess the likely impact of any service quality initiative. It
categorizes quality factors in terms of their relative importance and their effect on
satisfaction and dissatisfaction. The study is based on an analysis of over 200
customers in the UK banking industry and 100 interviews. Research suggests that
certain actions, such as increasing the speed of processing information and customers,
are likely to have an important affect in terms of delighting customers, however other

activities, such as improving the reliability of equipment, will lessen dissatisfaction

rather than delight customers. It also suggests that there are two areas where banks
could achieve a distinct advantage, genuine commitment and attentiveness by frontline staff. Thus bank resource must be diverted to such areas in order to enhance
loyalty, which contributed to profits indirectly.

Blanchard (1994) in his study on Quality in Retail Banking, describes how quality
assessment is significant to banks operations. Quality is increasingly being seen as a
key strategic differentiator within the financial services sector in the UK, with most
major players undertaking some form of quality initiative. The paper describes work
undertaken within TSB Bank plc. to determine both retail customer and staff
perceptions of those factors, which determine service quality. Initially identifies the
models developed by Parasuraman et al. as being the most appropriate for modeling
the data, but finds that although the service gap model provides an excellent basis for
analysis, the SERVQUAL model is of more limited value. It describes an alternative
basis for modeling service quality based on the three dimensions of process/outcome,
subjective/objective and soft/hard is described and modeled against the experimental
data. To conclude, the fast growing pace of behavioural finance includes customer
perception on service quality of banks as it indirectly influences the banks customer
base and thereby its profitability.

CHAPTER II
INDUSTRY AND COMPANY PROFILE

2.1 INDUSTRY PROFILE

The banking industry in India has a huge canvas of history, which covers the
traditional banking practices from the time of Britishers to the reforms period,
nationalization to privatization of banks and now increasing numbers of foreign banks
in India. Therefore, Banking in India has been through a long journey. Banking
industry in India has also achieved a new height with the changing times. The use of
technology has brought a revolution in the working style of the banks. Nevertheless,
the fundamental aspects of banking i.e. trust and the confidence of the people on the
institution remain the same. The majority of the banks are still successful in keeping
with the confidence of the shareholders as well as other stakeholders. However, with
the changing dynamics of banking business brings new kind of risk exposure.

2.1.1 Historical Background

Bank of Hindustan was set up in 1870; it was the earliest Indian Bank. Later, three
presidency banks under Presidency Bank's act 1876 i.e. Bank of Calcutta, Bank of
Bombay and Bank of Madras were set up, which laid foundation for modern banking
in India. In 1921, all presidency banks were amalgamated to form the Imperial Bank
of India. Imperial bank carried out limited number of central banking functions prior
to establishment of RBI. It engaged in all types of commercial banking business
except dealing in foreign exchange.

Reserve Bank of India Act was passed in 1934 & Reserve Bank of India (RBI) was
constituted as an apex body without major government ownership. The RBI was
nationalized on January 1, 1949 under the terms of the RBI (Transfer to Public
Ownership) Act, 1948. In 1949, the Banking Regulation Act was enacted which
empowered the RBI "to regulate, control, and inspect the banks in India." The
Banking Regulation Act also provided that no new bank or branch of an existing bank
could be opened without a license from the RBI.
By the 1960s, the Indian banking industry had become an important tool to facilitate
the speed of development of the Indian economy. The Government of India issued an
ordinance and nationalised the 14 largest commercial banks with effect from the
midnight of July 19, 1969. A second dose of nationalization of 6 more commercial
banks followed in 1980. The stated reason for the nationalization was to give the
government more control of credit delivery. With the second dose of nationalization,
the Government of India controlled around 91% of the banking business of India.
Later on, in the year 1993, the government merged New Bank of India with Punjab
National Bank. It was the only merger between nationalized banks and resulted in the
reduction of the number of nationalised banks from 20 to 19. In the early 1990s, the
then Narasimha Rao government embarked on a policy of liberalization. The next
stage for the Indian banking has been set up 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
74% 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 methods of

working for traditional banks. All this led to the retail boom in India. People not just
demanded more from their banks but also received more.
2.1.2 Structure of Indian Banking Industry
Reserve bank of India (Controlling Authority)

Development Financial institutions

IFCI IDBI ICICI

Commercial

NABARD NHB

Regional Rural

Banks

Banks

Public Sector Banks

SBI Groups

Nationalized Banks

Banks

IRBI

EXIM Bank

Land Development
Banks

ISIDBI

Co-operative
Banks

Private Sector Banks

Indian Banks

Foreign Banks

Organized banking was active in India since the establishment of the

General Bank of India in 1786. After independence, the Reserve Bank of
India (RBI) was established as the central bank and in 1955, the Imperial

Bank of India, the biggest bank at the time, was taken over by the
government to form state-owned State Bank of India (SBI). RBI had
undertaken an exercise to merge weak banks to strong banks and the total number of
banks Thus reduced from 566 in 1951 to 85 in 1969.With the objective of reaching
out to masses and meeting t he credit needs of all sections of people, the government
nationalized 14 large banks in 1969 followed by another 6 banks in 1980. This period
saw enormous growth in the number of branches and the banks branch network
became wide enough to reach the weakest sections of the society in a vast country
like India.
Sibs network of 9033 domestic branches and 48 overseas offices is considered to be
one of the largest for any bank in the world. The economic reforms unleashed by the
government in early nineties included banking sector too, to a significant extent. Entry
of new private sector banks was permitted under specific guidelines issued by RBI. A
number of liberalisation and de-regulation measures aimed at consolidation,
efficiency, productivity, asset quality, capital adequacy and profitability have been
introduced by the RBI to bring Indian banks in line with International best practices.
With a view to giving the state-owned banks operational flexibility and functional
autonomy, partial privatisation has been authorised as a first step, enabling them to
dilute the stake of the government to 51 per cent. The government further proposed, in
the Union Budget for the financial year 2000-01, to reduce its holding in nationalised
banks to a minimum of 33 per cent on a case by case basis. The banking system can
be broadly classified as organized and unorganized banking system. The unorganised
banking system comprises of

moneylenders, indigenous bankers, lending

pawnbrokers, landlords, traders, etc. Whereas the organised banking system

comprises of Scheduled Banks and Non- Scheduled Banks that are permitted by RBI

to undertake banking business

2.1.3 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 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 PSBs 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 Banks merger
with Times Bank Icici Banks acquisition of ITC Classic, Anagram Finance and Bank
of Madura. Centurion Bank, Indusind Bank, Bank of Punjab, Vysya Bank are said to
be on the lookout. The UTI bank- Global Trust Bank merger however opened a
pandoras 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, 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 Indias 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 has 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.
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.
Headwinds from international and domestic economic developments posed challenges
to the banking sector during the year 2011-12. While banks maintained their
profitability, their asset quality was impaired. As things stand, several initiatives are
under way to strengthen the regulatory and accounting frameworks aimed at
increasing the resilience of the institutions. However, higher capital standards, stricter

liquidity and leverage ratios and a more cautious approach to risk is likely to raise the
funding costs of banks. Compliance with Basel III stipulations along with the credit
needs of a growing economy will require banks to tap various avenues to raise capital.
Broad estimates suggest that for public sector banks, the incremental equity
requirement due to implementation of Basel III norms by March 2018 is expected to
be approximately `750-800 billion. Meeting these capital requirements will entail the
use of innovative and attractive market based funding channels by the banks. The
convergence with the International Financial Reporting Standards (IFRS) may also
place additional demands on the banks technical as well as human resources.
Considering the granularity of data required for effective supervisory review, efforts
should be to automate data flow from reporting entities through the adoption of
straight-through processing systems. With regard to financial inclusion, quantitative
coverage has improved, but meaningful financial inclusion through the evolution of
sustainable business and delivery models needs to be achieved. Notwithstanding the
multitude of challenges, the regulatory responses and the inherent strengths
underlying the Indian economy should ensure that the banking system continues to
play a positive role in supporting the financing needs of our growing economy.

2.1.4 Aggregate Performance of the Banking Industry

Performance of the Indian banking sector during 2011-12 was influenced by the
slowdown in the domestic economy. Consequently, balance sheet expansion of banks
was lower than the previous year. Major profitability indicators, i.e., return on assets
(RoA) and return on equity (RoE) dipped marginally. However, cost to income ratio
of banks improved during 2011-12, reflecting marginal gains in efficiency. Though
Indian banks remained well-capitalised, concerns about the growing non-performing
assets (NPAs) loomed large. Banks exposure to the stressed power and airline sectors
particularly added to deterioration in their asset quality. Though progress has been
made in expanding banking coverage, more efforts are needed to achieve meaningful
financial inclusion.
The empirical studies have found a strong relationship between economic growth and
financial development. Finance plays an important role in the economic growth. The
charts depict the performance of Bankex in last 10 year and Relative performance of
BSE Bankex & BSE Sensex in 2010-11. The performance of Bankex accelerated
during the period March 2002 to March 2008. The performance of bankex decelerated
during March 2008 March 2009 but thereafter it has shown increasing trend till
March 2011. The four-month period (November 2010-February 2011) was marked by
a consistent decline in all the indices caused by a number of global and domestic
developments. The Sensex declined by 12.4%, while the Bankex Index declined by
18.3%. Some of the global factors, such as increase in crude oil prices and high
commodity prices contributed to inflation in the domestic economy. High inflation
coupled with low growth rate in the Index of Industrial Production (IIP) and

tightening interest rates has caused some concerns.

2.1.5 Technological Developments

Technology has brought about strategic transformation in the working of banks. With
years, banks are also adding services to their customers. The Indian banking industry
is passing through a phase of customers market. The customers have more choices in
choosing their banks. With stiff competition and advancement of technology, the
service provided by banks has become more easy and convenient.
Internet Banking (E-Banking)
Internet banking (or E-banking) means any user with a personal computer and a
browser can get connected to his banks website to perform any of the virtual banking
functions. In internet banking system the bank has a centralized database that is webenabled. All the services that the bank has permitted on the internet are displayed in
menu. Any service can be selected and further interaction is dictated by the nature of
service. The traditional branch model of bank is now giving place to an alternative
delivery channels with ATM network. Once the branch offices of bank are
interconnected through terrestrial or satellite links, there would be no physical identity
for any branch.
Internet banking in India
The Reserve Bank of India constituted a working group on Internet Banking. The
group divided the internet banking products in India into 3 types based on the levels
of access granted. They are:

Information Only System: General purpose information like interest rates,

branch location, bank products and their features, loan and deposit calculations are
provided in the banks website.

Electronic Information Transfer System: The system provides customerspecific information in the form of account balances, transaction details, and
statement of accounts.

Fully Electronic Transactional System: This system allows bi-directional

capabilities. Transactions can be submitted by the customer for online update. This
system requires high degree of security and control

Automated Teller Machine (ATM): ATM is designed to perform the most

important function of bank. It is operated by plastic card with its special features. The
plastic card is replacing cheque, personal attendance of the customer, banking hours
restrictions and paper based verification.

Credit Cards/Debit Cards: The Credit Card holder is empowered to spend

wherever and whenever he wants with his Credit Card within the limits fixed by his
bank. Credit Card is a post paid card. Debit Card, on the other hand, is a prepaid card
with some stored value.

Smart Card: Banks are adding chips to their current magnetic stripe cards to
enhance security and offer new service, called Smart Cards. Smart Cards
allow thousands of times of information storable on magnetic stripe cards.

Core Banking Solutions

Core Banking Solutions is new jargon frequently used in banking circles. The
advancement in technology especially internet and information technology has led to

new way of doing business in banking. The technologies have cut down time,
working simultaneously on different issues and increased efficiency. The platform
where communication technology and information technology are merged to suit core
needs of banking is known as Core Banking Solutions. Here computer software is
developed to perform core operations of banking like recording of transactions,
passbook maintenance, interest calculations on loans and deposits, customer records,
balance of payments and withdrawal are done.
Real Time Gross Settlement (RTGS)
RTGS is an electronic settlement system of Reserve Bank of India without
involvement of papers. To facilitate an Efficient, Secure, Economical, Reliable and
Expeditious System of Fund transfer and clearing in the Banking sector throughout
India. Real time gross settlement systems (RTGS) are a funds transfer mechanism
where transfer of money takes place from one bank to another on a "real time" and on
"gross" basis.
Electronic Clearing Service
Electronic Clearing Service is another technology enhancement happened in the
banking industry. The customer willing to use this facility is required to fill in the
mandate form from the corporate/any utility service institution for ECS mode of credit
and debit. The customer needs to prepare the payment date and submit it to the
sponsor Bank and after that everything happened electronically. So customers can
there by make payments as well as receive all incomes electronically.
Mobile banking

Mobile banking (also known as M-Banking, mbanking, SMS Banking etc.) is a term
used for performing balance checks, account transactions, payments etc. via a mobile
device such as a mobile phone.
2.1.6 Governmental Policy
After the first phase and second phase of financial reforms, in the 1980s commercial
banks began to function in a highly regulated environment, with administered interest
rate structure, quantitative restrictions on credit flows, high reserve requirements and
reservation of a significant proportion of lendable resources for the priority and the
government sectors. The restrictive regulatory norms led to the credit rationing for the
private sector and the interest rate controls led to the unproductive use of credit and
low levels of investment and growth. The resultant financial repression led to
decline in productivity and efficiency and erosion of profitability of the banking
sector in general.

This was when the need to develop a sound commercial banking system was felt. This
was worked out mainly with the help of the recommendations of the Committee on
the Financial System (Chairman: Shri M. Narasimham), 1991. The resultant financial
sector reforms called for interest rate flexibility for banks, reduction in reserve
requirements, and a number of structural measures. Interest rates have thus been
steadily deregulated in the past few years with banks being free to fix their Prime
Lending Rates(PLRs) and deposit rates for most banking products. Credit market
reforms included introduction of new instruments of credit, changes in the credit
delivery system and integration of functional roles of diverse players, such as, banks,
financial institutions and non-banking financial companies (Nbfcs). Domestic Private
Sector Banks were allowed to be set up, PSBs were allowed to access the markets to

shore up their Cars.

2.1.7 Challenges faced by the Indian Banking Industry

Developing countries like India, still has a huge number of people who do not have
access to banking services due to scattered and fragmented locations. But if we talk
about those people who are availing banking services, their expectations are raising as
the level of services are increasing due to the emergence of Information Technology
and competition. Since, foreign banks are playing in Indian market, the number of
services offered has increased and banks have laid emphasis on meeting the customer
expectations.
Now, the existing situation has created various challenges and opportunity for Indian
Commercial Banks. In order to encounter the general scenario of banking industry we
need to understand the challenges and opportunities lying with banking industry of
India.
Rural Market
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 relative to other banks
in comparable economies in its region.
Consequently, we have seen some examples of inorganic growth strategy adopted by
some nationalized and private sector banks to face upcoming challenges in banking
industry of India. For example recently, ICICI Bank Ltd. merged the Bank of
Rajasthan Ltd. in order to increase its reach in rural market and market share

significantly. State Bank of India (SBI), the largest public sector bank in India has
also adopted the same strategy to retain its position. It is in the process of acquiring its
associates. Recently, SBI has merged State Bank of Indore in 2010.
Management of Risks
The growing competition increases the competitiveness among banks. But, existing
global banking scenario is seriously posing threats for Indian banking industry. We
have already witnessed the bankruptcy of some foreign banks.
According to Shrieves (1992), there is a positive association between changes in risk
and capital. Research studied the large sample of banks and results reveal that
regulation was partially effective during the period covered. Moreover, it was
concluded that changes in bank capital over the period studied was risk-based.
Wolgast, (2001) studied the Merger and acquisition activity among financial firms.
The author focused bank supervisors in context with success of mergers, risk
management, financial system stability and market liquidity. The study concluded that
large institutions are able to maintain a superior level of risk management .
Al-Tamimi and Al-Mazrooei (2007) examined the risk management practices and
techniques in dealing with different types of risk. Moreover, they compared risk
management practices between the two sets of banks. The study found the three most
important types of risk i.e. commercial banks foreign exchange risk, followed by
credit risk, and operating risk .
Sensarma and Jayadev (2009) used selected accounting ratios as risk management
variables and attempted to gauge the overall risk management capability of banks.
They used multivariate statistical techniques to summarize these accounting ratios.
Moreover, the paper also analyzed the impact of these risk management scores on
stock returns through regression analysis. Researchers found that Indian banks' risk

management capabilities have been improving over time. Returns on the banks' stocks
appeared to be sensitive to risk management capability of banks. The study suggest
that banks want to enhance shareholder wealth will have to focus on successfully
managing various risks .
Growth of Banking
Zhao, Casu and Ferrari (2008) used a balanced panel data set covering the period of
1992-2004 and employing a Data Envelopment Analysis (DEA)-based Malmquist
Total Factor Productivity (TFP) index. The empirical study indicated that, after an
initial adjustment phase, the Indian banking industry experienced sustained
productivity growth, which was driven mainly by technological progress. Banks'
ownership structure does not seem to matter as much as increased competition in TFP
growth. Foreign banks appear to have acted as technological innovators when
competition increased, which added to the competitive pressure in the banking
market. Finally, our results also indicate an increase in risk-taking behaviour, along
with the whole deregulation process.
It was found in the study of Goyal and Joshi (2011) that small and local banks face
difficulty in bearing the impact of global economy therefore, they need support and it
is one of the reasons for merger. Some private banks used mergers as a strategic tool
for expanding their horizons. There is huge potential in rural markets of India, which
is not yet explored by the major banks. Therefore ICICI Bank Ltd. has used mergers
as their expansion strategy in rural market. They are successful in making their
presence in rural India. It strengthens their network across geographical boundary,
improves customer base and market share .
Market Discipline and Transparency
According to Fernando (2011) transparency and disclosure norms as part of

internationally accepted corporate governance practices are assuming greater

importance in the emerging environment. Banks are expected to be more responsive
and accountable to the investors. Banks have to disclose in their balance sheets a
plethora of information on the maturity profiles of assets and liabilities, lending to
sensitive sectors, movements in NPAs, capital, provisions, shareholdings of the
government, value of investment in India and abroad, operating and profitability
indicators, the total investments made in the equity share, units of mutual funds,
bonds, debentures, aggregate advances against shares and so on .
Human Resource Management
Gelade and Ivery (2003) examined relationships between human resource
management (HRM), work climate, and organizational performance in the branch
network of a retail bank. Significant correlations were found between work climate,
human resource practices, and business performance. The results showed that the
correlations between climate and performance cannot be explained by their common
dependence on HRM factors, and that the data are consistent with a mediation model
in which the effects of HRM practices on business performance are partially mediated
by work climate .
Bartel (2004) studied the relationship between human resource management and
establishment performance of employees on the manufacturing sector. Using a unique
longitudinal dataset collected through site visits to branch operations of a large bank,
the author extends his research to the service sector. Because branch managers had
considerable discretion in managing their operations and employees, the HRM
environment could vary across branches. Site visits provided specific examples of
managerial practices that affected branch performance. An analysis of responses to the
banks employee attitude survey that controls for unobserved branch and manager

characteristics shows a positive relationship between branch performance and

employees satisfaction with the quality of performance evaluation, feedback, and
recognition at the branchthe incentives dimension of a high-performance work
system. In some fixed effects specifications, satisfaction with the quality of
communications at the branch was also important.
Global Banking
It is practically and fundamentally impossible for any nation to exclude itself from
world economy. Therefore, for sustainable development, one has to adopt integration
process in the form of liberalization and globalization as India spread the red carpet
for foreign firms in 1991. The impact of globalization becomes challenges for the
domestic enterprises as they are bound to compete with global players.
If we look at the Indian Banking Industry, then we find that there are 36 foreign banks
operating in India, which becomes a major challenge for Nationalized and private
sector banks. These foreign banks are large in size, technically advanced and having
presence in global market, which gives more and better options and services to Indian
traders.
Financial Inclusion
Financial inclusion has become a necessity in todays business environment.
Whatever is produced by business houses, that has to be under the check from various
perspectives like environmental concerns, corporate governance, social and ethical
issues. Apart from it to bridge the gap between rich and poor, the poor people of the
country should be given proper attention to improve their economic condition.
Dev (2006) stated that financial inclusion is significant from the point of view of
living conditions of poor people, farmers, rural non-farm enterprises and other
vulnerable groups. Financial inclusion, in terms of access to credit from formal

institutions to various social groups. Apart from formal banking institutions, which
should look at inclusion both as a business opportunity and social responsibility, the
author conclude that role of the self-help group movement and microfinance
institutions is important to improve financial inclusion. The study study suggested that
this requires new regulatory procedures and de-politicisation of the financial system.
Customer Retention
Levesque and McDougall (1996) investigated the major determinants of customer
satisfaction and future intentions in the retail bank sector. They identified the
determinants which include service quality dimensions (e.g. getting it right the first
time), service features (e.g. competitive interest rates), service problems, service
recovery and products used. It was found, in particular, that service problems and the
banks service recovery ability have a major impact on customer satisfaction and
intentions to switch.
Clark (1997) studied the impact of customer-employee relationships on customer
retention rates in a major UK retail bank. He revealed that employee and customer
perceptions of service quality are related to customer retention rates and that
employee and customer perceptions of service quality are related to each other.
Clark (2002) examined the relationship between employees perceptions of
organizational climate and customer retention in a specific service setting, viz. a
major UK retail bank. Employees perceptions of the practices and procedures in
relation to customer care at their branch were investigated using a case study
approach. The findings revealed that there is a relationship between employees
perceptions of organizational climate and customer retention at a microorganizational level. He suggested that organizational climate can be subdivided into

five climate themes and that, within each climate theme, there are several dimensions
that are critical to customer retention

2.1.8 Porters 5 force analysis of the Banking Industry

Banking is mainly a client oriented business. A high-quality of services to the client is
crucial for the growth and stability of any bank. A wider distribution and access of
financial services helps both consumers and producers to raise their welfare and
productivity. Such access is especially powerful for the poor as it provides them
opportunities to build savings, make investments, avail credit, and more important,
insure themselves against income shocks and emergencies. To survive in an
increasingly competitive environment, bank need to come up with various facilities
like Internet banking, mobile banking etc. With the onset of mobile banking, the
industry finds itself at the threshold of the next major technological leap.
Buyer Power - High bargaining power of customers on account of banks renders
uniform services to the clients. Now a days almost all banks would like to provide
requisite information very easily by way to Internet, Mobile banking to the clients
Supplier Power- Low bargaining power of suppliers on account of RBI regulatory
benchmarks. Banks have to meet numerous regulatory standards created by RBI
Competitive Rivalry- High competition of account of number of prominent public,
private, foreign along with cooperative banks
Availability of Substitutes - High menace from substitutes like NBFCs, Mutual
funds, Government securities and T-bills
Threat of new entrants - Low threat of new entrants on account of banking
regulations. Before setting up of a new bank, it is essential to take the consent of RBI.

2.1.9 SWOT Analysis of the Banking Industry

STRENGTH
Indian banks have compared favourably on growth, asset quality and profitability
with other emerging economies banks over the last few years.
Policy makers have made some notable changes in policy and regulation to help
strengthen the sector. These changes include strengthening prudential norms,
enhancing the payments system and integrating regulations between commercial and
co-operative banks.
Bank lending has been a significant driver of GDP growth and employment.
Extensive reach: the vast networking & growing number of branches & ATMs.
Indian banking system has reached even to the remote corners of the country.
In terms of quality of assets and capital adequacy, Indian banks are considered to
have clean, strong and transparent balance sheets relative to other banks in
comparable economies in its region.
Foreign banks will have the opportunity to own up to 74 per cent of Indian private
sector banks and 20 per cent of government owned banks.
WEAKNESS
PSUs need to fundamentally strengthen institutional skill levels especially in sales
and marketing, service operations, risk management and the overall organisational
performance ethic & strengthen human capital.
Old private sector banks also have the need to fundamentally strengthen skill

levels.
The cost of intermediation remains high and bank penetration is limited to only a
few customer segments and geographies.
Structural weaknesses such as a fragmented industry structure, restrictions on
capital availability and deployment, lack of institutional support infrastructure,
restrictive labour laws, weak corporate governance and ineffective regulations
Yogendra Sisodia (SMP 1033)beyond Scheduled Commercial Banks (SCBs), unless
industry utilities and service bureaus. Refusal to dilute stake in PSU banks: The
government has refused to dilute its
stake in PSU banks below 51% thus choking the headroom available to these banks
for raining equity capital.
OPPORTUNITY
The market is seeing discontinuous growth driven by new products and services
that include opportunities in credit cards, consumer finance and wealth management
on the retail side, and in fee-based income and investment banking on the wholesale
banking side. These require new skills in sales & marketing, credit and operations.
With increased interest in India, competition from foreign banks will only intensify.
Given the demographic shifts resulting from changes in age profile and household
income, consumers will increasingly demand enhanced institutional capabilities and
service levels from banks.
New private banks could reach the next level of their growth in the Indian banking
sector by continuing to innovate and develop differentiated business models to
profitably serve segments like the rural/low income and affluent/HNI segments;
actively adopting acquisitions as a means to grow and reaching the next level of
performance in their service platforms. Attracting, developing and retaining more

leadership capacity
Foreign banks committed to making a play in India will need to adopt alternative
approaches to win the race for the customer and build a value-creating customer
franchise in advance of regulations potentially opening up post 2009. At the same
time, they should stay in the game for potential acquisition opportunities as and when
they appear in the near term. Maintaining a fundamentally long-term value-creation
mindset.
Reach in rural India for the private sector and foreign banks.
With the growth in the Indian economy expected to be strong for quite some timeespecially in its services sector-the demand for banking services, especially retail
banking, mortgages and investment services are expected to be strong.
Reserve Bank of India (RBI) has approved a proposal from the government to
amend the Banking Regulation Act to permit banks to trade in commodities and
commodity derivatives.
THREATS
Threat of stability of the system: failure of some weak banks has often threatened the
stability of the system. Rise in inflation figures, which would lead to increase in
interest rates. Increase in the number of foreign players would pose a threat to the
PSB as well as the private player

2.2 COMPANY PROFILE

2.2.1 STATE BANK OF INDIA
2.2.1.1 A brief history of the company
State Bank of India is the largest banking and financial services company in India by
revenue, assets and market capitalisation. It is a state-owned corporation with its
headquarters in Mumbai, Maharashtra.
The bank traces its ancestry to British India, through the Imperial Bank of India, to
the founding in 1806 of the Bank of Calcutta, making it the oldest commercial bank in
the Indian Subcontinent. Bank of Madras merged into the other two presidency banks
Bank of Calcutta and Bank of Bombayto form the Imperial Bank of India, which
in turn became the State Bank of India. The Government of India nationalised the
Imperial Bank of India in 1955, with the Reserve Bank of India taking a 60% stake,
and renamed it the State Bank of India. In 2008, the government took over the stake
held by the Reserve Bank of India.
The business of the banks was initially confined to discounting of bills of exchange or
other negotiable private securities, keeping cash accounts and receiving deposits and
issuing and circulating cash notes. Loans were restricted to Rs.one lakh and the period
of accommodation confined to three months only. All commodities, including tea,
sugar and jute, which began to be financed later, were either pledged or hypothecated
to the bank. Indians were the principal borrowers against deposit of Company's paper,
while the business of discounts on private as well as salary bills was almost the
exclusive monopoly of individuals Europeans and their partnership firms. But the
main function of the three banks, as far as the government was concerned, was to help

the latter raise loans from time to time and also provide a degree of stability to the
prices of government securities.
2.2.1.2 Year of establishment and initial investment
The origin of the State Bank of India goes back to the first decade of the nineteenth
century with the establishment of the Bank of Calcutta in Calcutta on 2 June 1806.
Three years later the bank received its charter and was re-designed as the Bank of
Bengal (2 January 1809). A unique institution, it was the first joint-stock bank of
British India sponsored by the Government of Bengal. The Bank of Bombay (15 April
1840) and the Bank of Madras (1 July 1843) followed the Bank of Bengal. These
three banks remained at the apex of modern banking in India till their amalgamation
as the Imperial Bank of India on 27 January 1921.
2.2.1.3 Places of business
As of March 2012, it had assets of US$360 billion and 14,119 branches, including 173
foreign offices in 37 countries across the globe. Including the branches that belong to
its associate banks, SBI has 21,500 branches. SBI has 14 local head offices situated at
Chandigarh (Punjab & Haryana), Delhi, Lucknow (Uttar Pradesh), Patna (Bihar),
Kolkata (West Bengal), Guwahati (North East Circle), Bhubaneswar (Orissa),
Hyderabad (Andhra Pradesh), Chennai (Tamil Nadu), Trivandrum (Kerala),
Bengaluru (Karnataka), Mumbai (Maharashtra), Bhopal (Madhya Pradesh) &
Ahmedabad (Gujarat) and 57 Zonal Offices that are located at important cities
throughout the country.
SBI is a regional banking behemoth and is one of the largest financial institutions in
the world. It has a market share among Indian commercial banks of about 20% in
deposits and loans.

2.2.1.4 Present Management

Table 2.2.1.1 SBIs Management
Sr.

Name

No.
1
Shri Pratip Chaudhuri
Hemant

Designation

Under Section of SBI

Chairman

Act 1955
19 (a)

Shri

G. Managing Director

3
4
5
6
7
8
9

Contractor
Shri Diwakar Gupta
Shri A. Krishna Kumar
Shri. S.Visvanathan
Shri Dileep C. Choksi
Shri S. Venkatachalam
Shri D. Sundaram
Shri
Parthasarathy

10

Iyengar
Shri Jyoti

11
12
13

Mohapatra
Shri S. K. Mukherji
Dr. Rajiv Kumar
Shri Deepak Ishwarbhai

Director
Director
Director
Director

19 (cb)
19 (d)
19 (d)

14
15

Amin
Shri D. K. Mittal
Dr. Subir V. Gokarn

Director
Director

19 (e)
19 (f)

Managing Director
Managing Director
Managing Director
Director
Director
Director
Director

Bhushan Workmen

19 (b)
19 (b)
19 (b)
19 (b)
19 (c)
19 (c)
19 (c)
19 (c)

Employee 19 (ca)

2.2.1.5 Competitor profile

The major competitors of SBI in the public sector are as follows
Table 2.2.1.1 SBIs Competitor profile
Name

Market Cap.

Net

(Rs. cr.)

Interest
Income

Net Profit

Total Assets

Bank of Baroda

35,046.74

29,673.72

5,006.96

447,321.46

PNB
Canara Bank
Bank of India
Union Bank
IDBI Bank
Oriental Bank

28,635.16
20,916.25
18,476.56
15,131.84
14,190.46
10,325.43

36,428.03
30,850.62
28,480.67
21,144.28
23,369.93
15,814.88

4,884.20
3,282.72
2,677.52
1,787.13
2,031.61
1,141.56

458,194.01
374,160.20
384,535.47
235,984.44
290,837.23
178,130.17

Allahabad Bank

8,402.94

15,523.28

1,866.79

182,934.57

Indian Bank
Syndicate Bank

8,260.18
8,045.06

12,231.32
15,268.35

1,746.97
1,313.39

141,419.20
182,468.06

IOB
Corporation

6,870.12
6,640.63

17,897.08
13,017.78

1,050.13
1,506.04

219,648.17
163,560.42

Ban

2.2.1.6 Product profile

The Bank operates in four segments: Treasury, Corporate / Wholesale Banking, Retail
Banking and Other Banking Operations. The Treasury segment includes investments,
all financial markets activities undertaken on behalf of the Bank's customers, trading,
maintenance of reserve requirements and resource mobilization from other Banks and
financial institutions. The Corporate / Wholesale Banking segment includes lending,
deposit taking and other services offered to corporate customers. The Retail Banking
segment includes lending, deposit taking and other services offered to retail
customers. The Other Banking Operations segment includes para banking activities,
such as third-party product distribution and merchant banking.
2.2.1.7 Subsidiary companies under the same management

SBI has five associate banks; all use the same logo of a blue circle and all the
associates use the "State Bank of" name, followed by the regional headquarters' name:

State Bank of Bikaner & Jaipur

State Bank of Hyderabad

State Bank of Mysore

State Bank of Patiala

State Bank of Travancore

Apart from its five associate banks, SBI also has the following non-banking
subsidiaries:

SBI Capital Markets Ltd

SBI Funds Management Pvt Ltd

SBI Factors & Commercial Services Pvt Ltd

SBI Cards & Payments Services Pvt. Ltd. (SBICPSL)

SBI DFHI Ltd

SBI Life Insurance Co. Ltd.

SBI General Insurance

2.2.1.8 Collaboration/joint ventures
1.

SBI Life Insurance is a joint venture between the State Bank of India and BNP

2.

Paribas Cardif of France.

SBI owns 74% of the total capital and BNP Paribas Cardif the remaining 26%.
State Bank of India enjoys the largest banking franchise in India. Along with
its 7 Associate Banks, SBI Group has the unrivalled strength of over 14,500
branches across the country, arguably the largest in the world. BNP Paribas
Cardif is a wholly owned subsidiary of BNP Paribas.

3.

BNP Paribas Cardif is ranked 2nd worldwide in creditor's insurance offering

protection to over 35 million policyholders and net income in excess of Euro 1
billion. BNP Paribas Cardif has also been a pioneer in the art of selling
insurance products through commercial banks in France and in 35 more

4.

countries.
BI Macquarie Infrastructure Trust (SMIT or the Fund) is an unlisted fund
with INR 11,871 million of committed capital. SMIT is an unlisted private
equity style infrastructure fund and provides its investors (located in India)
with access to the growing number of investment opportunities available to the

5.

private sector in Indias infrastructure and infrastructure-like assets.

SMIT is managed by a joint venture established in 2008 between State Bank
of India (SBI), Macquarie Capital Group Limited (Macquarie) and
International Finance Corporation (IFC). The manager of SMIT is SBI
Macquarie Infrastructure Management Private Limited (SMIMPL or the

6.

Manager).
SBI Funds Management Pvt. Ltd. is a joint venture between 'The State Bank
of India' one of India's largest banking enterprises, and AMUNDI, one of the

7.

world's leading fund management companies.

SBI-SG Global Securities Services Pvt. Ltd (SBISGGSS), is a joint venture
between State Bank of India (SBI) and Societe Generale Securities Services
(SGSS). This Joint venture has been set up to offer high quality Custody
Services, Fund Accounting & Fund Administration, Risk Analysis &
Performance Measurement and Registrar & Transfer Agency Services to
domestic investors like Financial Institutions, Mutual Funds, Insurance
Companies, Pension Funds, Portfolio Management Services, Private Banks,
Corporates, Brokers and overseas investors like Global Custodians or Foreign
Institutional Investors in the Indian Securities Market.

8.

C-Edge, a venture between State Bank of India and TCS is making the same
technology available to rural banks and small cooperative banks at a fraction
of the cost. It is using the application service mode to make available to small
lenders Once the banks transfer all their customer information to the central
database their customers can withdraw money from ATMs and send money

9.

instantly to other branches.

In March 2001, SBI (with 74% of the total capital), joined with BNP Paribas
(with 26% of the remaining capital), to form a joint venture life insurance
company named SBI Life Insurance company Ltd. Now-a days SBI Life
Insurance Co. Ltd ranks among the top and most trusted Life Insurance
Companys in India and also abroad. In 2004 SBI DFHI Ltd(DISCOUNT AND
FINANCE HOUSE OF INDIA) was founded with its headquarter in
MUMBAI, MAHARASHTRA.SBI DFHI Ltd is primary dealer that trades in
Fixed income securities(treasury bills, state development loans, government
securities, non SLR bonds, corporate bonds) and Short Term Money Market
instruments(certificates of deposits, commercial paper, inter-corporate
deposits, call and money notice deposits).IT is an institution formed by RBI to
support the book building process in primary auctions of Government
securities and provide necessary depth and liquidity to the Secondary market
in Government securities.

2.2.1.9 Certifications/achievements/awards won

Best Online Banking Award, Best Customer Initiative Award & Best Risk
Management Award (Runner Up) by IBA Banking Technology Awards 2010

The Bank of the year 2009, India (won the second year in a row) by The Banker
Magazine

Best Bank Large and Most Socially Responsible Bank by the Business Bank Awards
2009

Best Bank 2009 by Business India

The Most Trusted Brand 2009 by The Economic Times

Most Preferred Bank & Most preferred Home loan provider by CNBC

Visionaries of Financial Inclusion By FINO

Technology Bank of the Year by IBA Banking Technology Awards

SKOCH Award 2010 for Virtual corporation Category for its e-payment solution

The Brand Trust Report: 11th most trusted brand in India.

2.2.1.10 SWOT analysis OF SBI

Strengths
1
2
3
4

SBI is the largest bank in India in terms of market share, revenue and assets
As per recent data the bank has more than 13,000 outlets and 25,000 ATMs
The bank has its presence in 32 countries engaging currency trade
The bank has a merged with State Bank of Saurashtra, State bank of Indore and
the bank is planning to go further acquisition in the current FY2012

5
6

SBI has the first mover advantage in commercial banking service

SBI has recently changed its vision and mission statements showing a sign of
inclination towards new age banking services

Weakness
7
8

Lack of proper technology driven services when compared to private banks

Employees show reluctance to solve issues quickly due to higher job security

9
10

and customers waiting period is long when compared to private banks

The banks spends a huge amount on its rented buildings
SBI has the largest number of employees in banking sector, hence the bank

spends a considerable amount of its income in employees salary

11

compensation
In spite of modernization, the bank still carries the perception of traditional bank

12

to new age customers

SBI fails to attract salary accounts of corporate and many government sector
employees salary accounts are also shifted to private bank for ease of
operations unlike before

Opportunities
13

SBIs merger with five more banks namely State Bank of Hyderebad, State bank
of Patiala, State bank of Bikaber and Jaipur, State of bank of Travancore and

14

State bank of Mysore are in approval stage

Mergers will result in expansion of market share to defend its number one

15

position
SBI is planning to expand and invest in international operations due to good

16

inflow of money from Asian Market

Since the bank is yet to modernize few of its banking operations, there is a
better scope of using advanced technologies and software to improve customer

17

relations
Young and talented pool of graduates and B schools are in rise to open new
horizon to so called old government bank

Threats
18

Net profit of the year has decline from 9166.05 in the year FY 2010 to 7,370.35
in the year FY2011. This shows the reduce in market share to its close

19
20

competitor ICICI
Other private banks like HDFC, AXIS bank etc
Other government banks like PNB, Andhra, Allahabad bank and Indian bank are
showing.Customer prefer to switch to private banks and financial service
providers for loans and mortgages, as SBI involves stringent verification
procedures and take long time for processing.

2.2.1.11 FUTURE
Yes Bank also has ambitious diversification plans, including a foray into retail
broking, the setting up of a mutual fund, and also an insurance venture the last
probably with an international partner. "We also have aspirations of setting up a
technology outsourcing subsidiary, and a micro-finance institution," notes Kapoor.
Though the bank's key team helps other companies to acquire firms abroad, Kapoor
says it has no plans to acquire banks or merge itself with other institutions. He sees
organic growth ahead, and does not want to dilute the bank's quality systems by
acquiring other banks. As with many new generation banks, Yes Bank has significant
fee-based activity. The bank also has the ability to effectively manage its capital, and
follows prudent risk management systems. The bank's mantra is to say 'yes' to offering
innovative financial solutions, to adopting international best practices, to providing
high standards of service, and to transparency in its operations.

2.2.2 YES BANK

2.2.2.1 A brief history of the company/business group
YES BANK, Indias new age private sector Bank, is a state-of-the-art high quality,
customer-centric, service-driven Bank catering to the Future Businesses of India.
An outcome of the professional & entrepreneurial commitment of its Promoter &
Founder, Dr. Rana Kapoor and his top management team, YES BANK is Indias
fourth largest private sector bank (by balance sheet dated March 31, 2012).Since its
inception in 2004, YES BANK has fructified into a Full Service Commercial Bank
that has steadily built Corporate and Institutional Banking, Financial Markets,
Investment Banking, Corporate Finance, Branch Banking, Business and Transaction
Banking, and Wealth Management business lines across the country, and is well
equipped to offer a range of products and services to corporate and retail customers.
YES BANK has adopted international best practices, the highest standards of service
quality and operational excellence, and offers comprehensive banking and financial
solutions to all its valued customers.
YES BANK has a widespread branch network of over 380 branches across 275 cities,
with 650+ ATMs and 2 National Operating Centres in Mumbai and Gurgaon.YES
BANK has been recognized amongst the Top and Fastest Growing Banks in various
Indian Banking League Tables by prestigious media houses and Global Advisory
Firms, and has received several national and international honours for our various
Businesses including Corporate Finance, Investment Banking, Treasury, Transaction

Banking, and Sustainable practices through Responsible Banking. The Bank has
received numerous recognitions for its world-class IT infrastructure, and payments
solutions, as well as excellence in Human Capital.The sustained growth of YES
BANK is based on the key pillars of Growth, Trust, Technology, Human Capital,
Transparency & Responsible Banking. YES BANK has a knowledge driven approach
to banking, and a superior customer experience for its retail, corporate and emerging
corporate banking clients. As the Professionals Bank of India, YES BANK has
exemplified creating and sharing value for all its stakeholders, and has created a
differentiated Banking Paradigm with the vision of Building the Best Quality Bank
of the World in Indiaby 2015
2.2.2.2 Year of establishment and initial investment
Yes Bank was incorporated as a Public Limited Company on November 21, 2003.Yes
Bank obtained its certificate of Commencement of Business on January 21, 2004.
Subsequently, in March 2004, the Bank achieved the mobilization of the initial
minimum paid up capital of Rs. 2,000 million. Further, the Promoters by their letter
dated March 29, 2004 made a final application for a banking licence under Section 22
(1) of the Banking Regulation Act, 1949 providing complete details of the capital
structure, the composition of Board of Directors, the proposed human resources,
information technology, premises and legal-policies and the business and financial
plan of the Bank. Yes Bank was promoted by Rana Kapoor and Ashok Kapur the nonexecutive chairman of the bank with the financial support of Rabobank Nederland,
and global private equity institutional investors including CVC Citigroup, AIF Capital
and ChrysCapital The Indian promoters have a 39 per cent stake in the bank,
Rabobank has 20 per cent, and foreign institutional investors about 18 per cent.

Kapoor says that there could be a further dilution in the promoters' equity stake, to
meet the growing capital requirements.

2.2.2.3 Brand Vision & Strategy

YES BANK is pursuing a Brand strategy to build one of the finest financial services
brands in India. YES BANK believes that differentiation begins with its service and
trust mark embedded in YES, which represents the Banks fundamental goal of
being a highly service-oriented Financial Institution. The endeavor at YES BANK is
to deliver an unprecedented Delightful Banking Experience to all its customers.The
name YES signifies :
The essence of the brand by conveying all the values and characteristics Attractive, Smart, Simple, Serious, Reliable, Trustworthy, Optimistic, Positive,
Efficient, Universal
Clutter breaking in the banking environment, and affirmative with target clients
across business and market segments
Brand Vision and Commitment
To be recognised as the Best Quality Bank of the World
To provide a Superior and Consistent Banking Experience to all its customers
To be a long term partner with all stakeholders particularly customers by creating &
sharing value
To be a solid and trusted financial trust mark backed by two professional promoters
and an exceptional management team

Brand Pillars The YES BANK brand is built around 5 Key Brand Pillars, which
epitomize the growing strengths of the Bank. All communication and advertising has
been created around these key brand pillars.
2.2.2.4 Founders profile
Dr. Rana Kapoor (born 9 September 1957) is the Founder, Managing Director & CEO
of YES BANK, which is the 4th largest private sector bank in India [2] , with its
registered office in Mumbai. He has been a professional entrepreneur, since 2003.
Dr. Rana Kapoor was born and was brought up in New Delhi. He completed his
schooling from Frank Anthony Public School in 1973 and went on to earn a
Bachelors degree (in Economics Honours) from Shri Ram College of Commerce,
University of Delhi (1977). He then obtained his MBA degree from Rutgers
University in New Jersey, U.S.A. (1980). Dr. Rana Kapoor received an Honorary
Fellowship from All India Management Association (AIMA), the Presidents Medal
from Rutgers University, a Doctorate in Science (Honoris Causa) from G.B. Pant
University of Agriculture & Technology, Indias foremost and oldest Agricultural
University, for his contribution to the Food & Agribusiness sector in INDIA. Rana
Kapoor currently resides in Mumbai, and is married to Bindu Kapoor. He has three
daughters, Radha, Raakhe and Roshini.
In 1980, Rana Kapoor joined Bank of America (BoA) as a Management Trainee. In
1990 he was presented the Eagle Pin by the Chairman of Bank of America. He
eventually went on to head the Banks Wholesale Banking business which included
several assignments in Asian countries.
In 1996, Rana Kapoor joined ANZ Grindlays Investment Bank (ANZIB) as General
Manager & Country Head. In 1998, Rana Kapoor was appointed CEO & Managing

Director, and main Managing Partner of Rabo India Finance (RIF) Pvt. Ltd. (a
corporate finance and investment banking organisation). He headed RIF as a foreign
joint venture financial services organization in partnership with Rabobank (AAA
rated) in India. [4] Rana Kapoor, his brother-in-law Late Ashok Kapur [5] and
Harkirat Singh made a proposal to the visiting team for two joint ventures: a nonbanking financial company and a bank. During the next year, Kapoor held secret
meetings with the Rabobank executives in India, Singapore and Holland. The NBFC
was set up 1997, with the three Indian partners chipping in with an equity capital of
Rs 9 crore each. In 2003, the three sold their stake for $10 million each, generating
the seed fund for the bank. In 2003, Rana Kapoor along with the Late Mr. Ashok
Kapur (brother-in-law) were granted a banking license by the Reserve Bank of India
(RBI) and set up YES BANK. He and Late Ashok Kapur [5] established Yes Bank
with the vision of "Building the Best Quality Bank of the world in India" by 2015.
Rana Kapoor and Late Ashok Kapoor [5] held 26% stake in Yes bank, while
Rabobank International held 20% stake.
Positions held

Member of the Government of India's Board of Trade

Member of the Managing Committee of the Indian Banks' Association (IBA)

Chairman of Banking Committee, Confederation of Indian Industry (CII), 200506

Honorary Consul for Cyprus in Mumbai/ Maharashtra state since 2002, Government
of Cyprus

Deputy Chairman, Indian Banks Association

Member, Managing Committee
2.2.2.5 Places of business

YES BANK has a widespread branch network of over 380 branches across 275 cities,
with 650+ ATMs and 2 National Operating Centres in Mumbai and Gurgaon.

2.2.2.6 Type/nature of businesses

Yes Bank Ltd is engaged in providing a range of banking and financial services. The
Bank operates in four segments: Treasury, Corporate / Wholesale Banking, Retail
Banking and Other Banking Operations. The Treasury segment includes investments,
all financial markets activities undertaken on behalf of the Bank's customers, trading,
maintenance of reserve requirements and resource mobilization from other Banks and
financial institutions. The Corporate / Wholesale Banking segment includes lending,
deposit taking and other services offered to corporate customers. The Retail Banking
segment includes lending, deposit taking and other services offered to retail
customers. The Other Banking Operations segment includes para banking activities,
such as third-party product distribution and merchant banking.
2.2.2.7 Total number of employees
As an entrepreneurial start-up venture, YES BANK is a congruence of diverse
cultures and individual work-styles. Our Diversity data is intended to provide a
snapshot of the key activities happening across the organization in the HCM space. In
addition to providing information, it ensures a focus on the areas being indexed and
measured. In April 2012, YES Bank had 325 branches, 378 ATMs and 4875
employees.
2.2.2.8 Product profile

The Bank operates in four segments: Treasury, Corporate / Wholesale Banking, Retail
Banking and Other Banking Operations. The Treasury segment includes investments,
all financial markets activities undertaken on behalf of the Bank's customers, trading,
maintenance of reserve requirements and resource mobilization from other Banks and
financial institutions. The Corporate / Wholesale Banking segment includes lending,
deposit taking and other services offered to corporate customers. The Retail Banking
segment includes lending, deposit taking and other services offered to retail
customers. The Other Banking Operations segment includes para banking activities,
such as third-party product distribution and merchant banking.
2.2.2.9 Competitor profile
Table 2.2.2.1 Competitor profile
Company

Market Cap

HDFC Bank
ICICI Bank
Kotak Mah. Bank
Axis Bank
IndusInd Bank
Yes Bank
Federal Bank
ING Vysya Bank
J & K Bank
Karur Vysya Bank
South Ind.Bank
City Union Bank
Karnataka Bank
Dev.Credit Bank

(Rs. in Cr.)
141,074.66
110,535.23
43,283.97
39,361.44
14,529.97
12,059.67
6,948.05
5,598.87
4,330.96
4,246.19
2,891.36
2,090.49
1,502.79
979.53

2.2.2.10 Collaboration/joint ventures

2008

P/E
25.65
15.91
38.80
8.84
16.92
11.48
8.46
11.37
4.99
8.00
6.54
7.07
5.37
15.02

P/B
4.71
1.83
5.45
1.73
3.22
2.58
1.22
1.44
1.06
1.57
1.17
1.68
0.58
1.22

EV/EBIDT

ROE

16.13
14.37
17.21
13.96
12.29
11.76
11.78
12.83
12.87
11.92
11.76
11.35
12.20
14.54

(%)
18.7
11.2
14.7
20.3
19.2
23.1
14.4
14.3
21.2
20.8
21.6
24.9
9.8
5.4

The UAE-based private bank, Mashreq, has entered into an alliance with YES Bank to
launch global Indian banking services across UAE. YES Bank ties up with Cisco for
voice-enabled phone banking -YES BANK received the Best Corporate Social
Responsibility Practice award at the Social & Corporate Governance Awards 2007.
These awards were instituted to recognize the need for new innovative strategies to
implement the CSR practice within the business focus of the Indian Corporate sector.
2009
SKS Microfinance seems to have signed a securitisation deal worth Rs 100 crore with
YES Bank. This deal would allow the bank to purchase 1,48,950 micro loans
extended to unbanked SC as well as ST and minorities' families identified by the
Reserve Bank of India as weaker sections. The transaction has been rated as `Very
Strong Safety' by CRISIL.
Yes Bank has signed a loan agreement with development finance institution DEG,
under which it will borrow a 5-year loan of euros 20-million. DEG (Deutsche
Investitions-und Entwicklungsgesellschaft mbH), is one of Europe's largest
development finance institutions.In 2010, YES Bank joined hands with handset maker
Nokia to offer mobile payment services that will enable consumers pay for goods and
services using their mobile devices.
2.2.2.11 Performance of Yes Bank stocks
Yes Bank has been consistenly showing a sharp increase in their stock prices. It has
grown over 89.4% in the past year itself.
2.2.2.12 Certifications/achievements/awards won
IN 2007 YES BANK received the Euromoney - Trade Finance Deal of The Year

award for a structured & innovative Rural Financing solution in providing loans to
over 2000 nomadic honey bee farmers in Jammu & Kashmir. The only Indian private
sector Bank to have won this award as the lead arranger out of a total of 367 deals
presented across 30 countries.
YES BANK was awarded the Most Innovative Bank in India at the New Economy
First Annual Banking and Finance Awards 2008 held in London and were announced
in the December 2008 issue of the International Magazine, New Economy. YES
BANK is the only Indian Bank to have won this award
2.2.2.13 SWOT analysis
STRENGHTS
The capital adequacy ratio of YBL at 17.9% is well above minimum requirements of
9% which supports the long term soundness and sustainability of its business.
YBL's annualised RoA has been at or above 1.5% over last 4 years and its annualised
RoE has been at or above 20% over last 4 years. This stands in testimony to the
banks lucrative business model. Over the years, YBL has brought down the cost to
income ratios to 36%-38%,, which is far below the industry average Cost to income
ratio of approx 45% and retains high profitability per employee as compared to peers.
WEAKNESSES
Although YBL has made significant strides over the last few years, it is still a very
small player in the banking space. It suffers from low market share as its network of
branches (~360) is still relatively smaller than its peers in both the public and private
sector.Being a new Bank in the industry, YBLs brand awareness among retail
customers is lower than its peers who have been in the business for a significantly

longer time. YBL also has a relatively lower Current and Saving Account (CASA)
base against its peers due to higher exposure to corporate banking.
OPPORTUNITIES
Savings rate deregulation by the RBI has offered YBL an opportunity to gain
significant savings account market share by offering better rates and services to
customers.
YBLs entry into new product or segments like retail assets offers significant potential
for the Bank to build on its expanding custom base. The ability to cross sell product to
retail customers would enhance profitability of the Bank over the long run.
The large middle class population of India, with increasing incomes and banking
needs along with a huge unbanked population below the age of 25 offers an enormous
retail opportunity for banks in India. Smaller towns and rural India still provide a
huge untapped potential for expansion
THREATS
The tight monetary policy adopted by the RBI with a view to tame inflation could
dampen corporate credit off take. Overall business could also be impacted due to
reduction in asset quality and rise in NPAs.
Expansion may lead to increase in costs and overall reduction in operating profit
accompanied by a decrease in quality of assets with exposure to retail in the future.
Recent regulatory changes including revised priority sector norms, adoption of
BASEL III norms could result in lower profitability for the banking system in general,
thereby also impacting YBL.

2.2.2.14 FUTURE
Yes Bank also has ambitious diversifica- tion plans, including a foray into retail
broking, the setting up of a mutual fund, and also an insurance venture the last
probably with an international partner. "We also have aspirations of setting up a technology outsourcing subsidiary, and a micro-finance institution," notes Kapoor.
Though the bank's key team helps other companies to acquire firms abroad, Kapoor
says it has no plans to acquire banks or merge itself with other institu- tions. He sees
organic growth ahead, and does not want to dilute the bank's quality systems by
acquiring other banks.
As with many new generation banks, Yes Bank has significant fee-based activity. The
bank also has the ability to effectively manage its capital, and follows prudent risk
management systems.
The bank's mantra is to say 'yes' to offering innovative financial solutions, to adopting
international best practices, to providing high standards of service, and to
transparency in its operations. It needs all that for a minnow to make its mark.

CHAPTER III
RESEARCH DESIGN
3.1 Title of the Study

A study on the customer perception of credit facilities and service quality of banks
with special reference to Yes Bank and SBI in Bangalore.
3.2 Statement of the problem
This project deals with the service quality analysis of the Yes Bank and SBI. With the
increasing competition in the market it has become essential for banks to not only
concentrate on their products but also on their service. This is a part of Behavioural
Finance where the customer behaviour indirectly affects profitability. Along with this
various factors influencing loans have been identified and their desirability must be
measured as extending loans forms a major part of the banks income.
3.3 Objectives of the study
1) To identify the various types of loans provided by the SBI and Yes Bank.
2) To identify the factors that influence the customers loan taking decisions and
measure their influence.
3) To understand the customer perception towards service quality of the two banks.
4) To know which service quality dimensions of the bank are performing well and
what needs to be improved.
5) To measure the desirability of the various service dimensions on the customer
perception of service quality for each bank.
6) To recommend measures that the bank can take to improve its service quality.

3.4 Scope of the study

This study falls under the subject of Behavioural Finance and therby has its
implications from it. Since the sample size of the study is only 200 and is limited to
Bangalore, the study can only be extended to the branch locations of the two banksYes Bank and SBI, in the city. Also customer perception may vary in different
geographical regions and communities.

3.5 Population and Sample

The population comprises of all customers who use the facilities of SBI and Yes Bank
But due to the time and cost constraint the following sampling is designed in order to
execute the survey.
Sample Area: Bangalore
Sample size: 100 Yes Bank customers
100 SBI customers
3.6 Sampling techniques
Convenience sampling method was used for data collection. It is a type of nonprobability sampling which involves sample being drawn from that part of the
population which is close to hand. Sometimes called grab or opportunity sampling,
this is the method of choosing items arbitrarily and in an unstructured manner from
the frame. The reasons for using this sampling type are twofold. First, it offers an easy
way to obtain the raw data for further analysis and secondly it saves time and costs
since the respondents can be randomly selected.

3.7 Data collection methods

Secondary data: Various websites, articles from magazines and news papers, books
were used for collecting secondary data.
Primary data: The primary data has been collected by the researchers by designing
structured questionnaire with the relevant question to the project study and
research.The data is collected from 200 bank customers of Yes Bank and SBI across
Bangalore city under convenience sampling method through mailed questionnaires.
Customers were self administered. Instructions were given to fill up the responses to

the items in the tools. The filled questionnaires were collected back. The
confidentiality of the responses was assured. After collection of the questionnaires,
scores were assigned and systematically pooled for further analysis.
3.8 Statistical tools for analysis
Based on the objectives of the research a survey instrument in the form of
questionnaire was prepared. Seven point Likert scale was used in order to identify the
respondents perceptions towards service quality and loan facilities. In order to
analyze the data Kolmogorav Smirnov Test (KS Test) is used. In statistics, the
KolmogorovSmirnov test (KS test) is a nonparametric test for the equality of
continuous, one-dimensional probability distributions that can be used to compare a
sample with a reference probability distribution (one-sample KS test), or to compare
two samples (two-sample KS test). The KolmogorovSmirnov statistic quantifies a
distance between the empirical distribution function of the sample and the cumulative
distribution function of the reference distribution, or between the empirical
distribution functions of two samples. The null distribution of this statistic is
calculated under the null hypothesis that the samples are drawn from the same
distribution (in the two-sample case).

3.9 Hypothesis
With respect to Loans
Null Hypothesis- The factors such as interest rates, collateral security requirement,
speed of execution, documentation requirements, attitude of employees, loan renewal
procedures and advertisements do not influence the customers loan taking decisions.
Alternate Hypothesis- The factors such as interest rates, collateral security
requirement, speed of execution, documentation requirements, attitude of employees,

loan renewal procedures and advertisements do influence the customers loan taking
decisions.
With respect to service quality
Null Hypothesis- Factors such as tangibility, reliability, responsiveness, assurance and
empathy do not influence the desirability of service quality of the two banks.
Alternate Hypothesis- Factors such as tangibility, reliability, responsiveness,
assurance and empathy do influence the desirability of service quality of the two
banks.

3.10 Limitations of the study

The study has the following limitations
22) Since the study is restricted to Bangalore, the findings cannot be generalised.
23) The sample size was a limiting factor.
24) Time and cost constraints.
25) The study was restricted to two banks, so the competitive scenario could not be
studied
26) All the answers given by the respondents have been assumed true.
CHAPTER IV
DATA ANALYSIS
4.1 SECTION I YES BANK Loan Products
1) Commercial Vehicle Loans
Minimum Eligibility Criteria
Individuals/Partnership ffirms with more than 2 years experience.
Existing owner of at least two commercial vehicles
Captive customers and transporters

Loan Amount
The loan amount depends on the applicants requirements and the Banks credit
policy
Funding can be extended up to 90% of the chassis value. Body funding can
be extended as a special requirement
Time required for loan sanctioning from submission of completed application
for and other documents, is 34 days. This may vary depending on the nature of loan
applied for, the loan amount, etc

2) Personal Loans - Car Loans

Minimum Eligibility Criteria
For Salaried Individuals

Minimum age of the applicant at the time of loan application : 21 years

Maximum age of the applicant at the time of loan maturity : 58 years

Minimum Annual Income : Rs 5 Lakhs, eligibility will be based on Latest 3

months salary slip / Form 16

Minimum working experience of 2 years

For Self Employed Individuals

Minimum age of the applicant at the time of loan application : 21 years

Maximum age of the applicant at the time of loan maturity : 65 years

Minimum Annual Income : Rs 5 Lakhs, eligibility will be based on Last 2 yrs ITR
OR One previous year ITR and Adv. Tax Challan of current year showing higher tax
paid than previous year

Minimum 3 years in same business

For Partnership Firms

Minimum Annual Income- Rs5 Lakhs, eligibility will be based on Audited Financials
for the last 2 years OR

Last 2 years ITR if Audited Financials are not available

Total 3 years in same business

For Pvt. Ltd. Co. / Ltd. Co.

Minimum Annual Income : Rs 5 Lakhs, eligibility will be based on Last 2 years ITR
& Audited financial statement

Total 3 years in same business

Product Features
1
2
3

LTV of upto 90% on select models

Min and max loan amount of Rs 1 Lac and Rs 100 Lakhs respectively
Min and max tenor 1 to 5 years

3) Personal Loans & Home Loan Services

Home Loans start from Rs. 5 Lakhs and are offered for a period upto 20 yrs.
Features & Benefits offered are:
Purchase of Plot
Self Construction on owned plot
Purchase of under construction flat
Purchase of built up house/ flat
Composite loan for purchase of plot and construction on the plot
Extension/Renovation of owned house/flat
Refinance within 6 months of purchasing a house

 Balance Transfer from other banks

4) Personal Loans - Loans Against Property

Eligibility

Salaried

- Min Age : 25 years

- Max Age : 58 years (As on the date of maturity of loan)

- Min Net Income : INR 3.00 Lakhs per annum

- No. of Years in Employment : Min 3 years in employment with minimum 1 year in

current organization

Self Employed Professionals

- Min Age : 25 years

- Max Age : 65 years (As on the date of maturity of loan)

- Min Cash Profit : INR 4.00 Lakhs per annum for the last 2 fiscal years

- No. of Years in Profession : Min 4 years for Doctors and CAs / Min 5 years
for others

Self Employed Businessmen / Retail SME Enterprises

- Min Age : 25 years

- Max Age : 65 years (As on the date of maturity of loan)

- Min Cash Profit : INR 4.00 Lakhs per annum for the last 2 fiscal years

- No. of Years in Business : Min 5 years in same line of business

Product Features

Loans up to INR 500 lakhs

Flexible repayment options, ranging from 12 months to 144 months

4.2 SECTION II SBI Loan Products

1) SBI Home Loans:
Purpose
Purchase/ Construction of House/ Flat
Purchase of a plot of land for construction of House
Extension/ repair/ renovation/ alteration of an existing House/ Flat
Purchase of Furnishings and Consumer Durables as a part of the project cost.
Eligibility
Minimum age 18 years as on the date of sanction

Maximum age limit for a Home Loan borrower is fixed at 70 years, i.e. the age by
which the loan should be fully repaid.
Availability of sufficient, regular and continuous source of income for servicing the
loan repayment.
Loan Amount
Table 4.2.1 SBI HOME LOAN AMOUNT
Loan Amount
Upto Rs. 30.00 lacs
Above Rs. 30.00 lacs
No fixed rate option in any limit

Linkage with Base Rate over the tenor of

the loan
0.25% above Base Rate
0.40% above Base Rate

bracket.
Base Rate= 9.70% p.a.
2) CAR LOAN:
Purpose
A new car, jeep or Multi Utility Vehicles (MUVs)
A used car / jeep (not more than 5 years old). (Any make or model).
Eligibility
To avail an SBI Car Loan, you should be :

Individual between the age of 21-65 years of age.

A Permanent employee of State / Central Government, Public Sector

Undertaking, Private company or a reputed establishment or

A Professionals or self-employed individual who is an income tax assessee or

A Person engaged in agriculture and allied activities.

Net Annual Income Rs. 100,000/- and above.

Loan Amount
Table 4.2.2 SBI CAR LOAN SCHEME
Tenure
For all tenures

Rate of Interest
For Term Loan and Overdraft:
0.75% above Base Rate, i.e. 10.45% p.a.

Table 4.2.3 SBI Two - Wheeler Loan SCHEME

Tenure
Up to 3 years

Rate of Interest
8.25% above Base Rate i.e. 17.95% p.a.

Table 4.2.4 SBI Used vehicle Loan SCHEME

Tenure
Up to 3 years
Above 3 yrs

Rate of Interest
7.25% above Base Rate i.e. 16.95% p.a.
7.50% above Base Rate i.e. 17.20% p.a.

Table 4.2.5 SBI Certified Pre-owned Car Loan scheme

Tenure
Up to 3 years
Above 3 yrs

3) EDUCATION LOAN:

Rate of Interest
6.00% above Base Rate i.e. 15.70% p.a.
6.50% above Base Rate i.e. 16.20% p.a.

A term loan granted to Indian Nationals for pursuing higher education in India or
abroad where admission has been secured.
Eligible Courses
All courses having employment prospects are eligible.

Graduation courses/ Post graduation courses/ Professional courses

Other courses approved by UGC/Government/AICTE etc.

Expenses considered for loan

Fees payable to college/school/hostel

Examination/Library/Laboratory fees

Purchase of Books/Equipment/Instruments/Uniforms

Caution Deposit/Building Fund/Refundable Deposit (maximum 10% tution

fees for the entire course)

Travel Expenses/Passage money for studies abroad

Purchase of computers considered necessary for completion of course

Cost of a Two-wheeler upto Rs. 50,000/-

Any other expenses required to complete the course like study tours, project work etc.

Loan Amount
Table 4.2.6 SBI Student Loan Scheme

Loan Amount
For loans upto Rs.4 lacs

Rate of Interest*
3.50% above Base Rate,

Above Rs.4 lacs and upto

currently 13.20% p.a.

3.75% above Base Rate,

Rs.7.50 lacs
Above Rs.7.50 lacs

currently 13.45% p.a.

1.75% above Base Rate,
currently 11.45% p.a.

*(0.50% concession in interest for girl student)

4) PROPERTY LOAN:
Purpose
This is an all purpose loan, i.e., the loan can be obtained for any purpose whatsoever.
If amount of loan is Rs.25.00 lacs and above then purpose of loan will have to be
specified along with an undertaking that loan will not be used for any speculative
purpose whatever including speculation on real estate and equity shares.
Eligibility
You are eligible if you are:
-An individual who is An Employee or A Professional, self-employed or an income
tax assesse or Engaged in agricultural and allied activities.
-Your Net Monthly Income (salaried) is in excess of Rs.12,000/- or Net Annual
Income (others) is in excess of Rs.1,50,000/-.

-The income of the spouse may be added if he/she is a co-borrower or a guarantor.

Maximum age limit: 60 years.
Loan Amount
Minimum: Rs.25, 000/Maximum: Rs.1 crore. The amount is decided by the following calculation: 24 times
the net monthly income of salaried persons (Net of all deductions including TDS) OR
2 times the net annual income of others (income as per latest IT return less taxes
payable)

5) LOAN AGAINST SHARES \ DEBENTURES:

Eligibility
This facility is available to our existing individual customers enjoying a strong
relationship with SBI. This loan could be availed either singly or as a joint account
with spouse in 'Either or Survivor'/ 'Former or Survivor' mode. It is offered as an
Overdraft or Demand Loan. The facility is available at 50 select centers.
Purpose

For meeting contingencies and needs of personal nature. Loan will be permitted for
subscribing to rights or new issue of shares / debentures against the security of
existing shares / debentures. Loan will not be sanctioned for
(i) speculative purposes
(ii) inter-corporate investments or
(iii) acquiring controlling interest in company / companies.
Loan Amount
You can avail of loans up to Rs 20.00 lacs against your shares/debentures.
Documents Required
You will be required to submit a declaration indicating:

Details of loans availed from other banks/ branches for acquiring shares/
debentures.

Deails of loans availed from other banks/ branches against security of shares/
debentures
4.3 SECTION III K S TEST WITH RESPECT TO LOANS

To understand the influence of various factors on customers while taking loans.

FACTOR 1- Interest Rates
Hypothesis
H1= There is a significant impact of interest rates on customers loan taking decisions.
Ho= There is no significant impact of interest rates on customers loan taking
decisions.

Table 4.3.1 K-S TEST Interest Rates Analysis.

Null
Observatio

Observation

Observed

Null

Hypothesis

Absolute

Proportion

Cumulativ

Hypothesi

Cumulative

Deviation

Proportion

Proportion

Proportio
n

14
24
25
67
70

0.07
0.12
0.125
0.335
0.35

0.07
0.19
0.315
0.65
1

0.2
0.2
0.2
0.2
0.2

0.2
0.4
0.6
0.8
1

-0.13
-0.21
-0.285
-0.15
0

INTERPRETATION
The table value at 2% level of significance is = 0.075. Since the Table value is greater
than the maximum absolute Deviation (0) the null hypothesis is rejected. Thus there is
a significant impact of interest rates on customers loan taking decisions.
FACTOR 2- Collateral security requirement
Hypothesis
H1= There is a significant impact of collateral security requirement on customers loan
taking decisions.
Ho= There is no significant impact of collateral security requirement on customers
loan taking decisions.
Table 4.3.2 K-S TEST Collateral security requirement Analysis.
Null

Observatio

Observatio

Observed

Null

Hypothesis

Absolute

Cumulative

Hypothesi

Cumulative

Deviation

Proportion

Proportion

Proportion

Proportio
n
21
35
44
43
57

0.105
0.175
0.22
0.215
0.285

0.105
0.28
0.5
0.715
1

0.2
0.2
0.2
0.2
0.2

0.2
0.4
0.6
0.8
1

-0.095
-0.12
-0.1
-0.085
0

INTERPRETATION
The table value at 2% level of significance is = 0.075. Since the Table value is greater
than the maximum absolute Deviation (0) the null hypothesis is rejected. Thus there is
a significant impact of collateral security requirement on customers loan taking
decision.
FACTOR 3- Attitude of bank employees
Hypothesis
H1= There is a significant impact of Attitude of bank employees on customers loan
taking decisions.
Ho= There is no significant impact of Attitude of bank employees on customers loan
taking decisions.
Table 4.3.3 K-S TEST Attitude of bank employees Analysis.
Null
Observatio

Observatio

Observed

Null

Hypothesis

Absolute

Cumulative

Hypothesi

Cumulative

Proportion

Proportion

Proportion

Deviation

Proportio
n
32
49
70
31
18

0.16
0.245
0.35
0.155
0.09

0.16
0.405
0.755
0.91
1

0.2
0.2
0.2
0.2
0.2

0.2
0.4
0.6
0.8
1

-0.04
0.005
0.155
0.11
0

INTERPRETATION
The table value at 2% level of significance is = 0.075. Since the Table value is lesser
than the maximum absolute Deviation (0.15) the null hypothesis is accepted. Thus
there is no significant impact of Attitude of bank employees on customers loan taking
decisions.
FACTOR 4- Documents Requirements
Hypothesis
H1= There is a significant impact of Documents Requirements on customers loan
taking decisions.
Ho= There is no significant impact of Documents Requirements on customers loan
taking decisions.
Table 4.3.4 K-S TEST Documents Requirements Analysis.
Null
Observatio

Observatio

Observed

Null

Hypothesis

Absolute

Cumulative

Hypothesi

Cumulative

Deviation

Proportion

Proportion

Proportion

Proportio
n
30
45
68
33
24

0.15
0.225
0.34
0.165
0.12

0.15
0.375
0.715
0.88
1

0.2
0.2
0.2
0.2
0.2

0.2
0.4
0.6
0.8
1

-0.05
-0.025
0.115
0.08
0

INTERPRETATION
The table value at 2% level of significance is = 0.075. Since the Table value is lesser
than the maximum absolute Deviation (0.115) the null hypothesis is accepted. Thus
there is a significant impact of Documents Requirements on customers loan taking
decisions.
FACTOR 5- Loan renewal procedure
Hypothesis
H1= There is a significant impact of Loan renewal procedure on customers loan
taking decisions.
Ho= There is no significant impact of Loan renewal procedure on customers loan
taking decisions.
Table 4.3.5 K-S TEST Loan renewal procedure Analysis.
Null
Observatio

Observatio

Observed

Null

Hypothesis

Absolute

Cumulative

Hypothesi

Cumulative

Deviation

Proportion

Proportion

Proportion

Proportio
n
26
38
54
46
36

0.13
0.19
0.27
0.23
0.18

0.13
0.32
0.59
0.82
1

0.2
0.2
0.2
0.2
0.2

0.2
0.4
0.6
0.8
1

-0.07
-0.08
-0.01
0.02
0

INTERPRETATION
The table value at 2% level of significance is = 0.075. Since the Table value is greater
than the maximum absolute Deviation (0.02) the null hypothesis is rejected. Thus
there is a significant impact of Loan renewal procedure on customers loan taking
decisions.
FACTOR 6- Speed of Processing Loans
Hypothesis
H1= There is a significant impact of Speed of Processing Loans on customers loan
taking decisions.
Ho= There is no significant impact of Speed of Processing Loans on customers loan
taking decisions.
Table 4.3.5 K-S TEST Speed of Processing Loans Analysis.
Null
Observatio

Observatio

Observed

Null

Hypothesis

Absolute

Cumulative

Hypothesi

Cumulative

Deviation

Proportion

Proportion

Proportion

Proportio

n
21
33
43
66
37

0.105
0.165
0.215
0.33
0.185

0.105
0.27
0.485
0.815
1

0.2
0.2
0.2
0.2
0.2

0.2
0.4
0.6
0.8
1

-0.095
-0.13
-0.115
0.015
0

INTERPRETATION
The table value at 2% level of significance is = 0.075. Since the Table value is greater
than the maximum absolute Deviation (0.015) the null hypothesis is rejected. Thus
there is a significant impact of Speed of Processing Loans on customers loan taking
decisions.
FACTOR 7-Advertisements
Hypothesis
H1= There is a significant impact of Advertisements on customers loan taking
decisions.
Ho= There is no significant impact of Advertisements on customers loan taking
decisions.
Table 4.3.5 K-S TEST Advertisements Analysis.
Null
Observatio

Observatio

Observed

Null

Hypothesis

Absolute

Cumulative

Hypothesi

Cumulative

Deviation

Proportion

Proportion

Proportion

Proportio
n

32
40
38
48
42

0.16
0.2
0.19
0.24
0.21

0.16
0.36
0.55
0.79
1

0.2
0.2
0.2
0.2
0.2

0.2
0.4
0.6
0.8
1

-0.04
-0.04
-0.05
-0.01
0

INTERPRETATION
The table value at 2% level of significance is = 0.075. Since the Table value is greater
than the maximum absolute Deviation (0) the null hypothesis is rejected. Thus there is
a significant impact of Advertisements on customers loan taking decisions.

4.4 SECTION IV K-S TEST FOR SERVICE QUALITY OF YES BANK

To understand the influence of various factors on service quality of Yes Bank
Factor 1-TANGIBILITY
Hypothesis
H1=There is a significant desirability or influence of the tangibility aspect on the
service quality of Yes Bank.

HO=

There is no significant desirability or influence of the tangibility aspect on the service

quality of Yes Bank.
Table 4.4.1 K-S Test Tangibility Analysis
Null
Observation

Observatio

Observed

Null

Hypothesis

Absolute

Cumulative

Hypothesi

Cumulative

Deviation

Proportion

Proportion

Proportion

Proportio

2
4.5
14.5
27.75
30.75
12.25
8.25
INTERPRETATION

0.02
0.045
0.145
0.2775
0.3075
0.1225
0.0825

0.02
0.065
0.21
0.4875
0.795
0.9175
1

n
1/7
1/7
1/7
1/7
1/7
1/7
1/7

1/7
2/7
3/7
4/7
5/7
6/7
7/7

-0.122857143
-0.220714286
-0.218571429
-0.083928571
0.080714286
0.060357143
0

Table Value at 2% level of significance is = 0.107. Since the Table value is greater
than the maximum absolute Deviation (.080) the null hypothesis is rejected. Thus
there is a significant desirability or influence of the tangibility aspect on the service
quality of Yes Bank.
FACTOR 2- RELIABILITY
Hypothesis
H1=There is a significant desirability or influence of the reliability aspect on the
service quality of Yes Bank.

HO=

There is no significant desirability or influence of the reliability aspect on the service

quality of Yes Bank.
Table 4.4.2 K-S Test Reliability Analysis
Null
Observation

Observatio

Observed

Null

Hypothesis

Absolute

Cumulative

Hypothesi

Cumulative

Deviation

Proportion

Proportion

Proportion

Proportio
1.4
4.4
14.4
33.8
29.6

0.014
0.044
0.144
0.338
0.296

0.014
0.058
0.202
0.54
0.836

n
1/7
1/7
1/7
1/7
1/7

1/7
2/7
3/7
4/7
5/7

-0.128857143
-0.227714286
-0.226571429
-0.031428571
0.121714286

9.8
6.6

0.098
0.066

0.934 1/7
1 1/7

6/7
7/7

0.076857143
0

INTERPRETATION
Table Value at 2% level of significance is = 0.107. Since the Table value is greater
than the maximum absolute Deviation (0.076) the null hypothesis is rejected. Thus
there is a significant desirability or influence of the reliability aspect on the service
quality of Yes Bank.

FACTOR 3- RESPONSIVENESS
Hypothesis
H1=There is a significant desirability or influence of the responsiveness aspect on the
service quality of Yes Bank.

HO=

There is no significant desirability or influence of the responsiveness aspect on the

service quality of Yes Bank.
Table 4.4.3 K-S Test Responsiveness Analysis
Null
Observatio

Observatio

Observed

Null

Hypothesis

Absolute

Cumulative

Hypothesi

Cumulative

Deviation

Proportion

Proportion

Proportion

Proportio
1
4.5
14.5
34.5
26.75
10.5

0.01
0.045
0.145
0.345
0.2675
0.105

0.01
0.055
0.2
0.545
0.8125
0.9175

n
1/7
1/7
1/7
1/7
1/7
1/7

1/7
2/7
3/7
4/7
5/7
6/7

-0.132857143
-0.230714286
-0.228571429
-0.026428571
0.098214286
0.060357143

8.25

0.0825

1 1/7

7/7

INTERPRETATION
Table Value at 2% level of significance is = 0.107. Since the Table value is greater
than the maximum absolute Deviation(0.098) the null hypothesis is rejected. Thus
there is a significant desirability or influence of the responsiveness aspect on the
service quality of Yes Bank.

FACTOR 4- ASSURANCE
Hypothesis
H1=There is a significant desirability or influence of the assurance aspect on the
service quality of Yes Bank.

HO=

There is no significant desirability or influence of the assurance aspect on the service

quality of Yes Bank.
Table 4.4.4 K-S Test Assurance Analysis
Null
Observatio

Observatio

Observed

Null

Hypothesis

Absolute

Cumulative

Hypothesi

Cumulative

Deviation

Proportion

Proportion

Proportion

Proportio
1
6.75
12.75
23
23.5
17.5
15.5

0.01
0.0675
0.1275
0.23
0.235
0.175
0.155

0.01
0.0775
0.205
0.435
0.67
0.845
1

n
1/7
1/7
1/7
1/7
1/7
1/7
1/7

1/7
2/7
3/7
4/7
5/7
6/7
7/7

-0.132857143
-0.208214286
-0.223571429
-0.136428571
-0.044285714
-0.012142857
0

INTERPRETATION
Table Value at 2% level of significance is =0.107. Since the Table value is greater than
the maximum absolute Deviation(-0.012) the null hypothesis is rejected. Thus there is
a significant desirability or influence of the assurance aspect on the service quality of
Yes Bank.

FACTOR 5- EMPATHY
Hypothesis
H1=There is a significant desirability or influence of the empathy aspect on the
service quality of Yes Bank.

HO=

There is no significant desirability or influence of the empathy aspect on the service

quality of Yes Bank.
Table 4.4.5 K-S Test Empathy Analysis
Null
Observatio

Observatio

Observed

Null

Hypothesis

Absolute

Cumulative

Hypothesi

Cumulative

Deviation

Proportion

Proportion

Proportion

Proportio
5
12.8
18.8
24.4
18.6
10.6
9.8

0.05
0.128
0.188
0.244
0.186
0.106
0.098

0.05
0.178
0.366
0.61
0.796
0.902
1

n
1/7
1/7
1/7
1/7
1/7
1/7
1/7

1/7
2/7
3/7
4/7
5/7
6/7
7/7

-0.092857143
-0.107714286
-0.062571429
0.038571429
0.081714286
0.044857143
0

INTERPRETATION
Table Value at 2% level of significance is = 0.107. Since the Table value is greater
than the maximum absolute Deviation(0.081) the null hypothesis is rejected. Thus
there is a significant desirability or influence of the empathy aspect on the service
quality of Yes Bank.

4.5 SECTION V K-S TEST FOR SERVICE QUALITY OF SBI

To understand the influence of various factors on service quality of SBI
FACTOR 1- TANGIBILITY
Hypothesis
H1=There is a significant desirability or influence of the tangibility aspect on the
service quality of SBI.
HO= There is no significant desirability or influence of the tangibility aspect on the
service quality of SBI.
Table 4.5.1 K-S Test Tangibility Analysis
Null
Observatio

Observatio

Observed

Null

Hypothesis

Absolute

Cumulative

Hypothesi

Cumulative

Deviation

Proportion

Proportion

Proportion

Proportio
0.75
4
17
32.75
25.25

0.0075
0.04
0.17
0.3275
0.2525

0.0075
0.0475
0.2175
0.545
0.7975

n
1/7
1/7
1/7
1/7
1/7

1/7
2/7
3/7
4/7
5/7

-0.135357143
-0.238214286
-0.211071429
-0.026428571
0.083214286

13
0.13
7.25
0.0725
INTERPRETATION

0.9275 1/7
1 1/7

6/7
7/7

0.070357143
0

Table Value at 2% level of significance is = 0.107. Since the Table value is greater
than the maximum absolute Deviation (0.083) the null hypothesis is rejected. Thus
there is a significant desirability or influence of the tangibility aspect on the service
quality of SBI.
FACTOR 2- RELIABILITY
Hypothesis
H1=There is a significant desirability or influence of the reliability aspect on the
service quality of SBI.
HO= There is no significant desirability or influence of the reliability aspect on the
service quality of SBI.
Table 4.5.2 K-S Test Reliability Analysis
Null
Observation

Observatio

Observed

Null

Hypothesis

Absolute

Cumulative

Hypothesi

Cumulative

Deviation

Proportion

Proportion

Proportion

Proportio
1.4
3.8
11.2
30.4
36.2
10.8
6.2

INTERPRETATION

0.014
0.038
0.112
0.304
0.362
0.108
0.062

0.014
0.052
0.164
0.468
0.83
0.938
1

n
1/7
1/7
1/7
1/7
1/7
1/7
1/7

1/7
2/7
3/7
4/7
5/7
6/7
7/7

-0.128857143
-0.233714286
-0.264571429
-0.103428571
0.115714286
0.080857143
0

Table Value at 2% level of significance is = 0.107. Since the Table value is greater
than the maximum absolute Deviation (0.080) the null hypothesis is rejected. Thus
there is a significant desirability or influence of the reliability aspect on the service
quality of SBI.

FACTOR 3- RESPONSIVENESS
Hypothesis
H1=There is a significant desirability or influence of the responsiveness aspect on the
service quality of SBI.
HO= There is no significant desirability or influence of the responsiveness aspect on
the service quality of SBI.
Table 4.5.3 K-S Test Responsiveness Analysis
Null
Observatio

Observatio

Observed

Null

Hypothesis

Absolute

Cumulative

Hypothesi

Cumulative

Deviation

Proportion

Proportion

Proportion

Proportio
2.25
4
15.5
33.5
28.5
9.5
6.75

INTERPRETATION

0.0225
0.04
0.155
0.335
0.285
0.095
0.0675

0.0225
0.0625
0.2175
0.5525
0.8375
0.9325
1

n
1/7
1/7
1/7
1/7
1/7
1/7
1/7

1/7
2/7
3/7
4/7
5/7
6/7
7/7

-0.120357143
-0.223214286
-0.211071429
-0.018928571
0.123214286
0.075357143
0

Table Value at 2% level of significance is = 0.107. Since the Table value is lesser than
the maximum absolute Deviation (0.123) the null hypothesis is accepted. Thus there is
no significant desirability or influence of the responsiveness aspect on the service
quality of SBI.

FACTOR 4- ASSURANCE
Hypothesis
H1=There is a significant desirability or influence of the assurance aspect on the
service quality of SBI.
HO= There is no significant desirability or influence of the assurance aspect on the
service quality of SBI.
Table 4.5.4 K-S Test Assurance Analysis
Null
Observatio

Observatio

Observed

Null

Hypothesis

Absolute

Cumulative

Hypothesi

Cumulative

Deviation

Proportion

Proportion

Proportion

Proportio
2.75
5.5
14.5
23.75
23
17.5
13

INTERPRETATION

0.0275
0.055
0.145
0.2375
0.23
0.175
0.13

0.0275
0.0825
0.2275
0.465
0.695
0.87
1

n
1/7
1/7
1/7
1/7
1/7
1/7
1/7

1/7
2/7
3/7
4/7
5/7
6/7
7/7

-0.115357143
-0.203214286
-0.201071429
-0.106428571
-0.019285714
0.012857143
0

Table Value at 2% level of significance is = 0.107. Since the Table value is greater
than the maximum absolute Deviation (0.012) the null hypothesis is rejected. Thus
there is a significant desirability or influence of the assurance aspect on the service
quality of SBI.

FACTOR 5- EMPATHY
Hypothesis
H1=There is a significant desirability or influence of the empathy aspect on the
service quality of SBI.
HO= There is no significant desirability or influence of the empathy aspect on the
service quality of SBI.
Table 4.5.5 K-S Test Empathy Analysis
Null
Observatio

Observatio

Observed

Null

Hypothesis

Absolute

Cumulative

Hypothesi

Cumulative

Deviation

Proportion

Proportion

Proportion

Proportio
6.2
14.8
20.8
22
16.4
10
9.8

INTERPRETATION

0.062
0.148
0.208
0.22
0.164
0.1
0.098

0.062
0.21
0.418
0.638
0.802
0.902
1

n
1/7
1/7
1/7
1/7
1/7
1/7
1/7

1/7
2/7
3/7
4/7
5/7
6/7
7/7

-0.080857143
-0.075714286
-0.010571429
0.066571429
0.087714286
0.044857143
0

Table Value at 2% level of significance is = 0.107. Since the Table value is greater
than the maximum absolute Deviation (0.087) the null hypothesis is rejected. Thus
there is a significant desirability or influence of the empathy aspect on the service
quality of SBI.

4.6 COMPARATIVE ANALYSIS OF SERVICE QUALITY

Modern looking equipment
Table 4.6.1 Response to Modern looking equipment
NUMBER OF

RATE

RESONDENTS
1
YES BANK
0
0
SBI

RATE

RATE

RATE

RATE

RATE

RATE

6
3

12
16

23
33

34
27

20
18

5
3

Graph 4.6.1 Modern looking equipment

Respondents

40
35
30
25
20
15
10
5
0

Yes Bank
SBI

Satisfaction Level

INTERPRETATION:
From the graph it is clearly seen that for Yes Bank and SBI most of the respondents
fall in satisfaction range. For Yes Bank highest frequency is observed in satisfactory
level, whereas for SBI highest frequency is observed in neither satisfied nor

dissatisfied range. Only 15% of the Yes Bank customers are dissatisfied compared to
19% of the SBI customers. So, for modern looking equipment Yes bank has more
number of satisfied responses as compared to SBI.

Visually appealing physical facilities

Table 4.6.2 Response to Visually appealing physical facilities
NUMBER OF

RATE

RESONDENTS
1
YES BANK
2
1
SBI

RATE

RATE

RATE

RATE

RATE

RATE

2
3

17
25

35
36

31
23

6
7

7
5

Graph 4.6.2 Visually appealing physical facilities

40
35
30
25

Respondents

20

15
Yes Bank
10

SBI

5
0
1

Satisfaction Level

INTERPRETATION:
For both the banks highest frequency of 35% is observed in neither satisfied nor
dissatisfied range i.e. level 4. 25% respondents for SBI are dissatisfied as far as
visually appealing physical facilities concerned, as seen in level 3. Yes bank has more
satisfied customers (31%), so for visually appealing physical facilities Yes bank has

good response as compared to SBI. Lastly, both SBI and Yes Bank have an equal
percentage of highly satisfied customers. Thus SBI must improve their physical
facilities in order to improve their service quality.
Neat-appearing employees
Table 4.6.3 Response to Neat-appearing employees
NUMBER OF

RATE

RESONDENTS
1
3
YES BANK
SBI
1

RATE

RATE

RATE

RATE

RATE

RATE

5
6

22
16

27
31

26
25

6
11

11
10

Graph 4.6.3 Neat-appearing employees

35
30
25
20

Respondents 15
Yes Bank
10

SBI

5
0
1

Satisfaction Level

INTERPRETATION:
From the graph, SBI respondents are showing more positive response then that of Yes
Bank respondents, as respondents falling in satisfied range is more in case of SBI then
that of Yes Bank. Also there are more numbers of respondents in moderate and
strongly agreed zone for SBI as compared to Yes Bank. And for Yes Bank there is
almost similar distribution of respondents in 3,4 and 5 level of satisfaction being 22%,

27% and 26% respectively. So for neat appearing employees SBI respondents has
more satisfaction level.

Visually appealing materials associated with the service

Table 4.6.4 Response to Visually appealing materials associated with the service
NUMBER OF

RATE

RESONDENTS
1
YES BANK
3
1
SBI

RATE

RATE

RATE

RATE

RATE

RATE

5
4

7
11

26
31

32
26

17
16

10
11

Graph 4.6.4 Visually appealing materials associated with the service

35
30
25
20

Respondents 15
Yes Bank
10

SBI

5
0
1

Satisfction Level

INTERPRETATION:
Here, for Yes Bank bank there are slightly more numbers of respondents i.e 32% as
compared to 26% of SBI which fall in satisfied range (level 5). Also most of the
respondents fall in neither dissatisfied nor satisfied and satisfied area for both the
banks. Here it is difficult to say that which bank is performing better in visually
appealing materials associated with the services as both banks have a positive
feedback. Only around 16% of the respondents fall in the dissatisfied range for both

the banks. Hence it can be concluded that the customers are well satisfied with the
visually appeal of the materials associated with the service.

Keeping promise to do something by a certain time

Table 4.6.5 Response to Keeping promise to do something by a certain time
NUMBER OF

RATE

RESONDENTS
1
YES BANK
0
1
SBI

RATE

RATE

RATE

RATE

RATE

RATE

3
1

14
12

32
28

35
38

9
14

7
6

Graph 4.6.5 Keeping promise to do something by a certain time

40
35
30
25

Respondents

20

15
Yes Bank
10

SBI

5
0
1

Satisfaction

INTERPRETATION:
Here from the graph it is clearly seen that respondents of SBI are having more
satisfaction than that of Yes Bank, as more numbers of respondents fall in satisfaction
level of 5, 6 and 7. For both the banks almost 30% of the respondents fall in neither
satisfied nor dissatisfied level and satisfied level. So for this factor both the banks are

relatively not performing well as per resondents. Thus both the banks need to work on
their promise delivery in time.

Showing sincere interest in solving a customers problems

Table 4.6.6 Response to showing sincere interest in solving customers problems
NUMBER OF

RATE

RESONDENTS
1
1
YES BANK
SBI
3

RATE

RATE

RATE

RATE

RATE

RATE

3
5

10
9

27
33

35
34

14
9

10
7

Graph 4.6.6 Showing sincere interest in solving a customers problems

40
35
30
25

Respondents

20

15
Yes Bank
10

SBI

5
0
1

Satisfaction

INTERPRETATION:
From the graph in can be clearly seen that Yes Bank is performing much better than
SBI. They have an equal response of around 34% in the leve 5 satisfaction range. But
24 % of Yes Bank respondents are highly satisfied comapared to 16% of SBI
respondents. 27% and 33% of Yes Bank and SBI respondents fall in the neither

satisfied nor dissatisfied range so both the banks can improve the level of satisfaction
by improving on this variable. There are lesser number of Yes Bank customers
dissatisfied than SBI. Thus SBI need more work on the employees concern and
genuine interst in customers.
Performing the service correctly the first time
Table 4.6.7 Response to Performing the service correctly the first time
NUMBER OF

RATE

RESONDENTS
1
2
YES BANK
SBI
0

RATE

RATE

RATE

RATE

RATE

RATE

5
4

12
8

34
27

26
36

13
17

8
8

Graph 4.6.7 Performing the service correctly the first time

40
35
30
25
20
Respondents
15
10
Yes Bank
5
0

SBI

Satisfaction

INTERPRETATION:
Here for SBI highest frequency of 36% is observed in satisfied level, whereas for Yes
Bank 34% are in neither dissatisfied nor satisfied level. So for performing the service
correctly the first time SBI respondents are

agreed compared to Yes Bank

respondents. 19% of Yes Bank respondents are dissatisfied compared to only a 12%
IN SBI. Also for this factor Yes Bank is underperforming compared to SBI.

Providing the service at the time the service was promised

Table 4.6.8 Response to providing the service at the time as promised
NUMBER OF

RATE

RATE

RATE

RATE

RATE

RATE

RATE

RESONDENTS
YES BANK
SBI

1
1
2

2
3
5

3
20
16

4
37
33

5
30
35

6
7
6

7
2
3

Graph 4.6.8 Providing the service at the time the service was promised
40
35
30
25

Respondents

20

Yes Bank

15

SBI

10
5
0
1

Satisfaction Level

INTERPRETATION:
From the graph, the responses are nearly similar for both Yes Bank as well as SBI. So
for providing the service at the time the service was performed both the bank has
similar kind of responses. Hence there is not so much difference in providing the
service at the time the service was performed. Also there are very few respondents for
both the banks which are highly or moderatley satisfied, so both the banks need to
improve satisfaction level on this factor, so satisfaction level of their customers will
improve.

Insisting on error-free records

Table 4.6.9 Response to Insisting on error-free records
NUMBER OF

RATE

RESONDENTS
1
3
YES BANK
SBI
1

RATE

RATE

RATE

RATE

RATE

RATE

8
4

16
11

39
31

22
38

6
8

6
7

Graph 4.6.9 Insisting on error-free records

45
40
35
30
25

Respondents 20

Yes Bank

15

SBI

10
5
0
1

Satisfaction Level

INTERPRETATION:
There is quite large difference among the respondents for insisting on error free
records, 38% SBI respondents are showing more positive response as compared to
22% of Yes Bank respondents. Also 27% of Yes Bank respondents are on
dissatisfaction level compared to 14% of SBI respondents. So respondents of SBI are
agreed with the statement as compared to AXIS respondents. Most Yes Bank
respondednts i.e. 39% fall in the neither satisfied nor dissatisfied range. For this factor
Yes Bank need improvement so satisfaction level of their customer will improve,
whereas for SBI they are performing well.

Employees telling customers exactly what services will be performed

Table 4.6.10 Response to Employees telling customers exactly what services will
be performed
NUMBER OF

RATE

RESONDENTS
1
1
YES BANK
SBI
1

RATE

RATE

RATE

RATE

RATE

RATE

2
3

12
10

39
44

31
33

5
6

10
3

Graph 4.6.10 Employees telling customers exactly what services will be

performed
50
40
30

Respondents 20

Yes Bank
SBI

10
0
1

Satisfaction Level

INTERPRETATION:
Here from the graph it is clearly seen that over 40% of the respondents for both the
banks are falling in satisfied and neither dissatisfied nor satisfied level. 31% of Yes
Bank respondents and 33 % of SBI respondents fall in the satisfied range showing an
equal repersentation. Also there are very few respondents which are moderately and
highly agreed with the statements for both the banks. But Yes Bank has considerably a
high number of highly satisfied customers, 10%. So for both the banks there is a
scope of improvement on this factor so satisfaction level of customers can be
improved.

Employees giving the prompt services to customers.

Table 4.6.11 Response to Employees giving the prompt services to customers.
NUMBER OF

RATE

RESONDENTS
1
YES BANK
0
3
SBI

RATE

RATE

RATE

RATE

RATE

RATE

4
5

15
16

35
27

26
35

12
8

8
6

Graph 4.6.11 Employees giving the prompt services to customers.

Respondents

40
35
30
25
20
15
10
5
0

Yes Bank
SBI

Satisfaction Level

INTERPRETATION:
Here for SBI highest frequency of 35% is observed in satisfaction level, whereas for
Yes Bank 35% is in neither dissatisfied nor satisfied level. So for employees giving
prompt service to customers SBI respondents are more agreed over Yes Bank
respondents. Here Yes Bank need improvement as there are less numbers of satisfied
respondents even though the number of highly satisfied customers are high(16%).
Employees always being willing to help customers.

Employees always being willing to help customers

Table 4.6.12 Response to Employees always being willing to help customers
NUMBER OF

RATE

RESONDENTS
1
YES BANK
1
3
SBI

RATE

RATE

RATE

RATE

RATE

RATE

6
4

13
20

30
33

30
22

13
11

7
7

Graph 4.6.12 Employees always being willing to help customers

35
30
25
20

Respondents 15

Yes Bank
SBI

10
5
0
1

Satisfaction Level

INTERPRETATION:
Here, an equal percentage of Yes Bank respondents 30% fall in the satisfied and
neither satisfied nor dissatisfied range. Also there are 20% of them who are highly
satisfied. SBI respondents are mainly falling in lower side of satisfaction level. Over
25% of the respondents are dissatisfied with this aspect of service quality. So, for the
statement employees always being willing to help customers Yes Bank respondents
are more agreed than of SBI respondents.

Employees are never too busy to respond to customers requests

Table 4.6.13 Response to Employees business to respond to customers requests
NUMBER OF

RATE

RESONDENTS
1
2
YES BANK
SBI
2

RATE

RATE

RATE

RATE

RATE

RATE

6
4

18
16

34
30

20
24

12
13

8
11

Graph 4.6.13 Employees are never too busy to respond to customers requests

Respondents

40
35
30
25
20
15
10
5
0

Yes Bank
SBI

Satisfaction Level

INTERPRETATION:
From the graph, SBI respondents are more in number in satisfaction level as
compared to Yes Bank respondents. Highest frequency of respondents for both Yes
Bank(34%) and SBI (30%) is fall in neither dissatisfied nor satisfied level. Also there
are quite more numbers of respondents for both the banks which are dissatisfied,
around 20%. So, for the statement that employees are never too busy to respond to
customers request SBI respondents are more agreed as compared to AXIS
respondents, the satisfaction level is well distributed for both the banks.
The behavior of employees instilling confidence in their customers
The behavior of employees instilling confidence in their customers

Table 4.6.14 Response to The behavior of employees instilling confidence in their

customers
NUMBER OF

RATE

RESONDENTS
1
YES BANK
1
3
SBI

RATE

RATE

RATE

RATE

RATE

RATE

6
4

13
20

28
33

30
21

13
10

9
9

Graph 4.6.14 The behavior of employees instilling confidence in their customers

35
30
25
20

Respondents 15

Yes Bank

10

SBI

5
0
1

Satisfaction Level

INTERPRETATION:
From the graph it is seen that, there are more number of respondents for SBI who are
satisfied as compared to Yes Bank respondents. Also most of the respondents for both
the banks are falling in neither dissatisfied nor satisfied and satisfied level. So for the
statement that the behavior of employees instilling confidence in their customers, SBI
respondents are more agreed as compared to Yes Bank respondents.

Customers feeling safe in their transactions

Table 4.6.15 Response to Customers feeling safe in their transactions

NUMBER OF

RATE

RESONDENTS
1
YES BANK
0
0
SBI

RATE

RATE

RATE

RATE

RATE

RATE

3
1

10
11

22
18

20
35

24
19

21
16

Graph 4.6.15 Customers feeling safe in their transactions

Respondents

40
35
30
25
20
15
10
5
0

Yes Bank
SBI

Satisfaction Level

INTERPRETATION:
Here, for SBI highest frequency of 35% respondents is observed in satisfied level,
whereas for Yes Bank 20% respondents are moderately satisfied level. But for Yes
Bank respondents they are nearly equally distributed in neither dissatisfied nor
satisfied to highly satisfied level, whereas for SBI in satisfied level there is quite large
peak of respondents. So for the statement customer feeling safe in there transactions
Yes Bank has more number of respondents which are moderate to highly satisfied
level and for SBI respondents in satisfied zone are more. Also here for Yes Bank
numbers of respondents in moderate and highly satisfied are more compared to SBI,
but due to large number of respondents in satisfied level for SBI lead them to more
stronger position.
Employees being consistently courteous with their customers
Table 4.6.16 Response to Employees being consistently courteous with their

customers
NUMBER OF

RATE

RESONDENTS
1
YES BANK
0
2
SBI

RATE

RATE

RATE

RATE

RATE

RATE

7
8

11
14

30
31

21
15

18
18

13
12

Graph 4.6.16 Employees being consistently courteous with their customers

35
30
25
20

Respondents 15

Yes Bank
SBI

10
5
0
1

Satisfaction Level

INTERPRETATION:
Here from the graph, respondents of both the banks have nearly the same type of
responses, except in level 5 i.e. satisfied where more number of Yes Bank respondents
are fall i.e 21%. For both the banks, there are more numbers of satisfied respondents
so both the banks are performing well on this criteria. 30% of the respondents are
highly satisfied with the service.So here for the statement employees being
consistently courteous with their customers, Yes Bank has slightly more number of
satisfied respondents.
Employee having the knowledge to answer customers questions
Table 4.6.17 Response to Employee having the knowledge to answer customers
questions

NUMBER OF

RATE

RESONDENTS
1
YES BANK
3
6
SBI

RATE

RATE

RATE

RATE

RATE

RATE

11
9

17
13

12
13

23
21

15
23

19
15

Graph 4.6.17 Employee having the knowledge to answer customers questions

25
20
15

Respondents 10

Yes Bank
SBI

5
0
1

Satisfaction Level

INTERPRETATION:
For this question the respondents are distributed all over the satisfaction scale for both
the banks. So here there are more number of dissatisfied respondents as well as more
number of satisfied respondents for both the banks. Highest frequency is observed in
level 5 i.e. satisfied respondents. But there are more number of respondents for SBI
who are agreed with statement hence for employees having the knowledge to answer
customers question SBI is ahead of Yes Bank.

Giving customers individual attention

Table 4.6.18 Response to Giving customers individual attention
NUMBER OF

RATE

RATE

RATE

RATE

RATE

RATE

RATE

RESONDENTS
1
YES BANK
2
4
SBI

6
9

16
19

31
29

24
21

12
12

9
6

Graph 4.6.18 Giving customers individual attention

35
30
25
20

Respondents 15

Yes Bank
SBI

10
5
0
1

Satisfaction Level

Graph 4.6.18 Giving customers individual attention

INTERPRETATION:
Here for Yes Bank there are only a slightly more numbers of respondents who are
agreed with the question as compared to SBI respondents. But here there is minor
difference in the responses of respondents for both the banks. The difference is only
of 3%. So level of satisfaction of respondents for both the banks is almost same for
this question. Both the banks need to convert low satisfied customers to more satisfied
customers by improving the performance of this factor.

Operating hours convenient to all their customers

Table 4.6.19 Response to Operating hours convenient to all their customers
NUMBER OF

RATE

RATE

RATE

RATE

RATE

RATE

RATE

RESONDENTS
1
YES BANK
7
5
SBI

13
16

18
17

23
27

16
15

11
9

12
11

Graph 4.6.19 Operating hours convenient to all their customers

30
25
20

Respondents

15

Yes Bank

10

SBI

5
0
1

Satisfaction Level

INTERPRETATION:
There are more numbers of satisfied respondents for Yes Bank as compared to SBI.
But the difference is less than 3%. Highest frequency of respondents for both the
banks is at level 4 i.e. neither dissatisfied nor satisfied, being approximately 25%.
Also there are around 35% respondents on dissatisfied level for both the banks
compared to other factors, so they have to improve in this factor.

Employees giving customers personal attention

Table 4.6.20 Response to Employees giving customers personal attention
NUMBER OF

RATE

RATE

RATE

RATE

RATE

RATE

RATE

RESONDENTS
1
YES BANK
8
13
SBI

15
18

17
19

23
14

19
15

11
11

7
10

Graph 4.6.20 Employees giving customers personal attention

25
20
15

Respondents 10

Yes Bank
SBI

5
0
1

Satisfaction Level

INTERPRETATION:
For this question the respondents are distributed all over the satisfaction scale for
both the banks. So here there are more number of dissatisfied respondents as well as
more number of satisfied respondents for both the banks. Here from the graph, we can
say that SBI has more number of respondents who are dissatisfied as compared to Yes
Bank respondents. Also highest frequency of respondents for Yes Bank is at level 4
i.e. neither dissatisfied nor satisfied, whereas for SBI it is at level 3 i.e. dissatisfied. So
for employees giving customers personal attention Yes Bank has better response as
compared to SBI. Also for both the banks there are quite large numbers of repondents
who are not agreed with statement.
Having the customers best interests at heart
Table 4.6.21 Response to Having the customers best interests at heart

NUMBER OF

RATE

RESONDENTS
1
3
YES BANK

RATE

RATE

RATE

RATE

RATE

RATE

15

23

22

17

12

SBI

17

24

20

14

12

Graph 4.6.21 Having the customers best interests at heart

30
25
20

Respondents

15

Yes Bank

10

SBI

5
0
1

Satisfaction Level

INTERPRETATION:
Here almost 50% the respondents for both the banks are fall in dissatisfaction zone.
Also highest frequency is observed in level 3 i.e. dissatisfied being 23% for Yes Bank
and 24% for SBI. This is in condradiction to the fact that 12% of the customers are
hifhly satisfied. So as far as for this question both the banks have negative response
and they need to improve it tremendously.

The employees understanding the specific needs of customers

Table 4.6.22 Response to The employees understanding the specific needs of
customers
NUMBER OF

RATE

RATE

RATE

RATE

RATE

RATE

RATE

RESONDENTS

YES BANK
SBI

5
5

15
14

20
25

23
20

17
17

11
9

9
10

Graph 4.6.22 The employees understanding the specific needs of customers

30
25
20

Respondents

15

Yes Bank

10

SBI

5
0
1

Satisfaction Level

INTERPRETATION:
For this question the respondents are distributed all over the satisfaction scale for both
the banks. So here there are more number of dissatisfied respondents as well as more
number of satisfied respondents for both the banks. But for SBI there are 25% of
repondents which are falling in level 3 i.e. dissatisfied and for Yes Bank 23% of
respondents are falling in level 4. 17% of respondents who are satisfied with the
performance of both the banks. Over 20% of the respondents are highly satisfied also.
So for this question Yes Bank has comparatively good response. But both the banks
have below average response and need a lot of imrovement for this aspect.
CHAPTER V
FINDINGS AND CONCLUSION
5.1 MAJOR FINDINGS OF THE STUDY

From the analysis presented it can be concluded that all the aspects of service qualitytangibility, reliability assurance, empathy and responsiveness have a significant
desirability or influence on the service quality of Yes Bank and SBI.
Yes Bank has more satisfaction level of respondents for dimensions tangibility and
empathy; whereas SBI has more satisfaction level of respondents for remaining
three dimensions i.e. reliability, responsiveness, and assurance.
Most of the respondents for both the banks are less satisfied as far as visually
appealing physical facilities concerned and neat appearing employees are
concerned. The difference in score was more for SBI, so Yes Bank was lagging
more on reliability dimension.
Insisting on error-free records the difference in score was huge for SBI in
comparison to Yes Bank. Also there is moderate difference in score for performing
the service correctly the first time for SBI over Yes Bank. Hence Yes Bank needs to
improve on these two factors as far as reliability dimension is concerned. For these
three factors keeping promise to do something by certain time, providing the
service at the time the service was promised and, performing the service correctly
the first time both the banks can improve the level of satisfaction as there were less
number of respondents who were satisfied.
For employees telling customers exactly what services will be performed
difference is so large for SBI over Yes Bank so Yes Bank has to focus on this factor
to improve score on responsiveness dimension.
Whereas for SBI they are almost performing well on responsiveness dimension, but
they need improvement on employees always being willing to help customers.
Employees telling customers exactly what services will be performed and employees
are never to busy to respond to customers request for these two questions both the
banks had less satisfaction of customers so by focusing on this to factors they can
improve satisfaction level.

 Both the banks are performing nearly same on dimension assurance, as there was
slight difference in the score. Customers feeling safe in their transaction for this
question, Yes Bank has more number of respondents which were moderate to highly
satisfied level and for SBI respondents in satisfied zone were more but there were
less number of respondents in moderate to highly satisfied level so due to more
numbers of respondents in satisfied level, score of SBI is more.
SBI has to improve in all the aspects for the dimension empathy as Yes Bank is
performing well on this dimension. Mainly they have to focus on giving customers
individual attention and employees giving customers personal attention as they were
more lagging behind in these factors in comparison of Yes Bank.
The results of the Konglomorov Smirov test to understand the influence of various
factors on customers while taking loans indicate that factors such as interest rates,
collateral security requirement, speed of execution, documentation requirements
loan renewal procedures and advertisements have a significant influence on
customer choice. While factors like attitude of bank employees do not have any
significant impact on choice.

5.2 RECOMMENDATIONS
Yes Bank:

Yes Bank needs to improve on mainly these three factors i.e. Promise, Doing it
right and Competency as these factors are more important for banking industry and

they are lagging on these factors as compared to SBI.

Yes Bank should maintain these four factors i.e. Promptness, Willingness,
Competency and Understanding as in these factors either Yes Bank is performing

well or doing up to the mark and these four factors are important for banking
industry.
Yes Bank should deemphasize on factor Appearance and Approachable as in these

factors they are performing well, but these factors have less importance as
compared to other factors.
Yes Bank should concentrate on insisting on error free records, on performing the

service correctly the first time and employees telling customers exactly what
services will be performed.
SBI:

SBI should improve its performance on Understanding and Credibility as these

factors are important for banking industry and they are lagging in these two

factors.
SBI should concentrate on employees always being willing to help customers, on
giving customers individual attention, on employees giving customers personal

attention.
As SBI is performing poorly in all the aspect of empathy dimension, so SBI
should concentrate on this dimension more.
SBI should maintain these five factors i.e. Appearance, Promises, Doing it right,
Competency, and Approachable in these factors either SBI is performing well or

doing up to the mark and these four factors are important for banking industry.
SBI should deemphasize on factor Promptness as in this factor they are
performing well, but these factors have less importance as compared to other
factors.

Yes Bank and SBI:

Both the banks should increase satisfaction level of their customers by mainly

focusing on following factors:

Keeping promise to do something by certain time.
Providing services at the time the service was promised.

Performing the services correctly the first time.

As on above factor, most of the respondents show neither satisfied nor dissatisfied,

so by improving this factors satisfaction level can be improve.

Also both the companies must improve their loan renewal methods and speed of
execution in order to sell their loan products.

5.3 CONCLUSION
This research explored the customer perception toward the credit facilities and
service qualities of banks. It can be seen that factors such as interest rates, collateral
security requirement, speed of execution, documentation requirements loan renewal
procedures and advertisements have a significant influence on customer perception
while procuring loans. It is important to note that all factors are relevant though one
may be more influential than the other. Since the study attempted to quantify
qualitative data there is scope for further research in this area using quantitave
financial techniques.
Also, the research conducted proves the growing relevance and impact of the service
quality dimensions on the customers choices and that Banks need to maintain these in

order to retain and attract more customers who in turn effect their profitability. There
is more scope to conduct research in this area of Behavioral Finance, specifically by
relating the service quality with loan taking decisions by customers.