ACKNOWLEDGMENT

Any accomplishment requires the effort of many people and this work is not different. We owe
the debt of gratitude to our project guide, Dr. Meghna Aggarwal, Assistant professor,Amardeep
Singh Shergill Memorial college,Mukandpur under whose guidance we were able to complete
our project successfully. Her valuable advice and guidance at various stages of the project will
always be cherished.
Our project Study of Customers Perceptions Towards Services of Commercial Banks has
provided us a great opportunity to get knowledge about the topic and various related aspects to it
in detail. We wish to express our thanks to Dr Gurjant Singh , Principal ASSM College
Mukandpur and all the members of Department of Business Management in ASSM College for
their remarkable guidance and support and to all those who contributed to this work at every
stage and helped us accomplish the project successfully.

CONTENTS
1.
2.
3.
4.
5.
6.
7.
8.
9.

INTRODUCTION
REVIEW OF LITERATURE
PROFILE OF SELECTED BANKS
RESEARCH METHODOLOGY
SCENARIO
DATA ANALYSIS
CONCLUSION
REFRENCES
QUESTIONNAIRE

Executive summary
The study focuses on customers perception about the services provided by commercial banks in
a developing economy India. It compares and contrasts the four groups of banks in India with
respect to the types of services provided by the commercial banks. It seems to be significant
variation with respect to the level of services offered by the four groups of banks. It identifies the
factors that discriminate the four groups of banks. The customers in developing economies seem
to keep the technological factors of services such as core service and systematization of the
service delivery as the yardstick in differentiating efficient and inefficient services while the
human factors seem to play a lesser role in discriminating the four groups of banks.

Chapter 1
1.1 Introduction
There seems to be no unanimity amongst the economists about the origin of the word BANK .
According to some economists, the word Bank has been derived from the German word
BANC which means a joint stock firm. While other says that it has been derived from the
Italian word BANCO which means a heap or mound. As a matter of fact, at the time of
establishment of bank of Venice in 1157, the Germans were influencial and hence, perhaps the
word Banc or Banco was used by Italians to donate the accumulation of securities or money
with a joint stock firm which later on with the passage of time came to be known as Bank.
There is still another group of people who believe that the word bank has been derived
from the Greek word BANQUE which means a bench. In the olden days Jews entered into
money transactions sitting on benches in a market place. When a banker was not in a position to
meet his obligations, the bank on which he was carrying on the money business was broken into
pieces and he was taken as Bankrupt. Thus, both the words Bank or Bankrupt are said to have
their origin from the word Banque.
However, the first view of the origin of the word Bank from the word banc or Banco
seems to be more convincing since it was used in the establishment of the Bank of Venice which
is supposed to be the most ancient bank. As a matter of fact, it was originally not a bank in the
modern sense but simply an office for the transfer of pubic debt.
1.2 Indian Banking System:
The first bank in India, called The General Bank of India was established in the year 1786. The
East India Company established The Bank of Bengal (1809), Bank of Bombay (1840) and Bank
of Madras (1843). The next bank was Bank of Hindustan which was established in 1870. These
three individual units (Bank of Calcutta, Bank of Bombay, and Bank of Madras) were called as
Presidency Banks. Allahabad Bank which was established in 1865, was for the first time
completely run by Indians. Punjab National Bank Ltd. was set up in 1894 with head quarters at
Lahore. Between 1906 and 1913, Bank of India, Central Bank of India, Bank of Baroda, Canara
Bank, Indian Bank, and Bank of Mysore were set up. In 1921, all presidency banks were
amalgamated to form the Imperial Bank of India which was run by European Shareholders. After
that the Reserve Bank of India was established in April 1935. At the time of first phase the
growth of banking sector was very slow. Between 1913 and 1948 there were approximately 1100
small banks in India. To streamline the functioning and activities of commercial banks, the
Government of India came up with the Banking Companies Act, 1949 which was later changed
to Banking Regulation Act 1949 as per amending Act of 1965 (Act No.23 of 1965). Reserve
Bank of India was vested with extensive powers for the supervision of banking in India as a
Central Banking Authority.

After independence, Government has taken most important steps in regard of Indian
Banking Sector reforms. In 1955, the Imperial Bank of India was nationalized and was given the
name "State Bank of India", to act as the principal agent of RBI and to handle banking
transactions all over the country. It was established under State Bank of India Act, 1955. Seven
banks forming subsidiary of State Bank of India was nationalized in 1960. On 19th July, 1969,
major process of nationalization was carried out. At the same time 14 major Indian commercial
banks of the country were nationalized. In 1980, another six banks were nationalized, and thus
raising the number of nationalized banks to 20. Seven more banks were nationalized with
deposits over 200 Crores. Till the year 1980 approximately 80% of the banking segment in India
was under governments ownership. On the suggestions of Narsimhan Committee, the Banking
Regulation Act was amended in 1993 and thus the gates for the new private sector banks were
opened. The following are the major steps taken by the Government of India to Regulate
Banking institutions in the country:Year

Major steps taken by the Government of India to Regulate Banking

institutions

1949

Enactment of Banking Regulation Act.

1955

Nationalization of State Bank of India.

1959

Nationalization of SBI subsidiaries.

1961

Nationalization of SBI subsidiaries.

1969

Nationalization of 14 major Banks

1971

Creation of credit guarantee corporation.

1975

Creation of regional rural banks.

1980

Nationalization of seven banks with deposits over 200 Crores.

Source: RBI

1.3Banking Sector in Post- Liberalization Era

In the early 1990s, the then Narsimha Rao government embarked on a policy of liberalization,
licensing a small number of private banks. These came to be known as New Generation techsavvy banks, and included Global Trust Bank (the first of such new generation banks to be set
up), which later amalgamated with Oriental Bank of Commerce, Axis Bank(earlier as UTI
Bank), ICICI Bank and HDFC Bank. This move along with the rapid growth in the economy of
India revolutionized the banking sector in India which has seen rapid growth with strong
contribution from all the three sectors of banks, namely, government banks, private banks and
foreign banks. The next stage for the Indian banking has been setup with the proposed relaxation
in the norms for Foreign Direct Investment, where all Foreign Investors in banks may be given
voting rights which could exceed the present cap of 10%, at present it has gone up to 49% with
some restrictions.
The new policy shook the banking sector in India completely. Bankers, till this time, were
used to the 4-6-4 method (Borrow at 4%; Lend at 6%; Go home at 4) of functioning. The new
wave ushered in a modern outlook and tech-savvy methods of working for the traditional banks.
All this led to the retail boom in India. People not just demanded more from their banks but also
received more. In 2007, banking in India is generally fairly mature in terms of supply, product
range and reach-even though reach in rural India still remains a challenge for the private sector
and foreign banks. In terms of quality of assets and capital adequacy, Indian banks are
considered to have clean, strong and transparent balance sheets as compared to other banks in
comparable economies in its region. The Reserve Bank of India is an autonomous body, with
minimal pressure from the government. The stated policy of the Bank on the Indian Rupee is to
manage volatility but without any fixed exchange rate-and this has mostly been true. With the
growth in the Indian economy expected to be strong for quite some time-especially in its services
sector-the demand for banking services, especially retail banking, mortgages and investment
services are expected to be strong. In March 2006, the Reserve Bank of India allowed Warburg
Pincus to increase its stake in Kotak Mahindra Bank (a private sector bank) to 10%. This is the
first time an investor has been allowed to hold more than 5% in a private sector bank since the
RBI announced norms in 2005 that any stake exceeding 5% in the private sector banks would
need to be voted by them. In recent years critics have charged that the non-government owned
banks are too aggressive in their loan recovery efforts in connection with housing, vehicle and
personal loans. There are press reports that the banks' loan recovery efforts have driven
defaulting borrowers to suicide.
1.4 Profiles of selected Banks
Researchers have selected four commercial banks viz. ICICI Bank , HDFC Bank , OBC Bank,
PNB Bank for their present study. These banks are selected on the basis of convenience sampling
due to paucity of resources and all the researchers are residing in rural area.
1. ICICI Bank

ICICI Bank is India's second-largest bank with total assets of Rs. 4,062.34 billion (US$ 91
billion) at March 31, 2011 and profit after tax Rs. 51.51 billion (US$ 1,155 million) for the year
ended March 31, 2011. The Bank has a network of 2,774 branches and about 10,021 ATMs in
India, and has a presence in 19 countries, including India.
ICICI Bank offers a wide range of banking products and financial services to corporate
and retail customers through a variety of delivery channels and through its specialised
subsidiaries in the areas of investment banking, life and non-life insurance, venture capital and
asset management.
The Bank currently has subsidiaries in the United Kingdom, Russia and Canada, branches
in United States, Singapore, Bahrain, Hong Kong, Sri Lanka, Qatar and Dubai International
Finance Centre and representative offices in United Arab Emirates, China, South Africa,
Bangladesh, Thailand, Malaysia and Indonesia. Our UK subsidiary has established branches in
Belgium and Germany.
ICICI Bank's equity shares are listed in India on Bombay Stock Exchange and the
National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are
listed on the New York Stock Exchange (NYSE).

Present
Scenario
ICICI Bank has its equity shares listed in India on Bombay Stock Exchange and the National
Stock Exchange of India Limited. Overseas, its American Depositary Receipts (ADRs) are listed
on the New York Stock Exchange (NYSE). As of December 31, 2008, ICICI is India's secondlargest bank, boasting an asset value of Rs. 4158 crore and profit after tax Rs. 1956 crore, for the
nine months, that ended on December 31, 2012.
Branches
&
ATMs
ICICI Bank has a wide network both in Indian and abroad. In India alone, the bank has 1,420
branches and about 4,644 ATMs. Talking about foreign countries, ICICI Bank has made its
presence felt in 18 countries - United States, Singapore, Bahrain, Hong Kong, Sri Lanka, Qatar
and Dubai International Finance Centre and representative offices in United Arab Emirates,
China, South Africa, Bangladesh, Thailand, Malaysia and Indonesia. The Bank proudly holds its
subsidiaries in the United Kingdom, Russia and Canada out of which, the UK subsidiary has
established
branches
in
Belgium
and
Germany.
Personal Banking

Deposits
Loans
Cards

 Investments
Insurance
Demat Services
Wealth Management
NRI Banking
Money Transfer
Bank Accounts
Investments
Property Solutions
Insurance
Loans
Business Banking
Corporate Net Banking
Cash Management
Trade Services
FX Online
SME Services
Online Taxes
Custodial Services

2. Housing Development Finance Corporation Limited (HDFC) Bank

Housing Development Finance Corporation Limited, more popularly known as HDFC Bank Ltd,
was established in the year 1994, as a part of the liberalization of the Indian Banking Industry by
Reserve Bank of India (RBI). It was one of the first banks to receive an 'in principle' approval
from RBI, for setting up a bank in the private sector. The bank was incorporated with the name
'HDFC Bank Limited', with its registered office in Mumbai. The following year, it started its
operations as a Scheduled Commercial Bank. Today, the bank boasts of as many as 1412
branches
and
over
3275
ATMs
across
India.
Amalgamation
In 2002, HDFC Bank witnessed its merger with Times Bank Limited (a private sector bank
promoted by Bennett, Coleman & Co. / Times Group). With this, HDFC and Times became the
first two private banks in the New Generation Private Sector Banks to have gone through a
merger. In 2008, RBI approved the amalgamation of Centurion Bank of Punjab with HDFC
Bank. With this, the Deposits of the merged entity became Rs. 1,22,000 crore, while the
Advances were Rs. 89,000 crore and Balance Sheet size was Rs. 1,63,000 crore.

Tech-Savvy
HDFC Bank has always prided itself on a highly automated environment, be it in terms of
information technology or communication systems. All the braches of the bank boast of online
connectivity with the other, ensuring speedy funds transfer for the clients. At the same time, the
bank's branch network and Automated Teller Machines (ATMs) allow multi-branch access to
retail clients. The bank makes use of its up-to-date technology, along with market position and
expertise,
to
create
a
competitive
advantage
and
build
market
share.
Capital
Structure
At present, HDFC Bank boasts of an authorized capital of Rs 550 crore (Rs5.5 billion), of this
the paid-up amount is Rs 424.6 crore (Rs.4.2 billion). In terms of equity share, the HDFC Group
holds 19.4%. Foreign Institutional Investors (FIIs) have around 28% of the equity and about
17.6% is held by the ADS Depository (in respect of the bank's American Depository Shares
(ADS) Issue). The bank has about 570,000 shareholders. Its shares find a listing on the Stock
Exchange, Mumbai and National Stock Exchange, while its American Depository Shares are
listed on the New York Stock Exchange (NYSE), under the symbol 'HDB'.
Personal Banking
Savings Accounts
Salary Accounts
Current Accounts
Fixed Deposits
Demat Account
Safe Deposit Lockers
Loans
Credit Cards
Debit Cards
Prepaid Cards
Investments & Insurance
Forex Services
Payment Services
Net Banking
Insta Alerts
Mobile Banking
Insta Query
ATM
Phone Banking
NRI Banking

Rupee Savings Accounts

Rupee Current Accounts
Rupee Fixed Deposits
Foreign Currency Deposits
Accounts for Returning Indians
Quick remit (North America, UK, Europe, Southeast Asia)
India Link (Middle East, Africa)
Cheque Lock Box
Telegraphic / Wire Transfer
Funds Transfer through Cheques / DDs / TCs Mutual Funds
Private Banking
Portfolio Investment Schemes
Loans
Payment Services
Net Banking
Insta Alerts
Mobile Banking
Insta Query
ATM
Phone Banking

3. Oriental Bank of Commerce (OBC)

Established on 19th February 1943 in Lahore, Oriental Bank of Commerce (OBC) is one of the
public sector banks in India. Its modest beginning is creditable to its founder Late Rai Bahadur
Lala Sohan Lal, the first Chairman of the OBC. Within four years of coming into existence, the
country partitioned, the Bank shifted its Registered Office from Lahore to Amritsar. The Oriental
Bank of Commerce was nationalized on 15th April 1980, and paved its way to count amongst the
strongest banks in India.
OBC has a network of 530 branches and 505 ATM's spread throughout India, out of which 490
branches offer centralized banking solutions. With High Capital Adequacy Ratio, Oriental Bank
of Commerce is known be a consistent profit-making bank. It offers various services and
products, like current/ savings account, general loans, educational loans, agricultural loans, etc,
for the benefit of customers. For its effective services, the National Institute of Bank
Management
(NIBM)
rated
OBC
Bank
as
"Customer
Friendly"
Bank.
OBC
India
Gramin
Project:
OBC's Gramin Project aims to reduce poverty & to identify the reasons which are responsible for

the failure or success. OBC is implementing a Gramin Project in Dehradun District (UP) and
Hanumangarh District (Rajasthan). This Scheme has a unique feature of disbursing small loans,
ranging from Rs. 75 onwards. The OBC has various Agriculture Loan Schemes for farmers, such
as, Composite Credit Scheme for Agricultural Leading, Overdraft Facility to Farmers, Advance
against Warehouse Receipts to Farmers & Purchase of Land for Agriculture Purposes,
Agriculture
Clinic
&
Agriculture
Business
Centers.
Comprehensive
Village
Development
Programme
On 13 April 1997 at the occasion of Baisakhi, OBC launched another unique scheme, 'The
Comprehensive Village Development Programme' in three villages of Punjab. After the success
of this scheme in these villages, the Bank extended the programme to more villages. Today, it
covers 10 villages in Punjab, 4 in Haryana and 1 in Rajasthan. This programme focuses on
providing a comprehensive and integrated package, which offers finance to the villagers.
Special
Services
For
Women
Oriental Bank of Commerce has also implemented 14 point action plan for strengthening the
credit delivery to women. Under this scheme bank provide various loans to women, such as,
Oriented Mahila Vikas Yojana, Scheme for Professional & self Employed Women, Scheme for
Beauty Parlor/ Boutiques/ Saloons/Tailoring, Scheme for Financing Working Women, etc.
4. Punjab National Bank (PNB)
Punjab National Bank (PNB) is the second largest government-owned commercial bank in India.
Having more than 3.5 crore customer, Punjab National Bank has one of the largest branch
networks in India. The bank's assets for financial year 2012 were about 6,79,823 crore.
Following

services

are

provided

by

PNB

bank

to

its

customers.

Savings Fund Account - Total Freedom Salary Account, PNB Prudent Sweep, PNB Vidyarthi
SF
Account,
PNB
Mitra
SF
Account Current Account - PNB Vaibhav, PNB Gaurav, PNB Smart Roamer
Fixed Deposit Schemes - Spectrum Fixed Deposit Scheme, Anupam Account, Mahabachat
Schemes,
Multi
Benefit
Deposit
Scheme Credit Schemes - Flexible Housing Loan, Car Finance, Personal Loan, Credit Cards
Social Banking - Mahila Udyam Nidhi Scheme, Krishi Card, PNB Farmers Welfare Trust
Corporate
Banking
- Gold
Card
scheme
for
exporters,
EXIM
finance
Business Sector - PNB Karigar credit card, PNB Kushal Udhami, PNB Pragati Udhami, PNB
Vikas
Udhami.
Apart from these, the PNB also offers locker facilities, senior citizens schemes, PPF schemes and
various
E-services.

Awards and Distinctions

Ranked among top 50 companies by the leading financial daily, Economic Times.
Ranked as 323rd biggest bank in the world by Bankers Almanac (January 2006), London.
Earned 9th place among India's Most Trusted top 50 service brands in Economic TimesA.C Nielson Survey.
Included in the top 1000 banks in the world according to The Banker, London.
Golden Peacock Award for Excellence in Corporate Governance - 2005 by Institute of
Directors.
FICCI's Rural Development Award for Excellence in Rural Development 2005
PNB
Overseas
Offices
PNB has a banking subsidiary in the United Kingdom, as well as branches in Hong Kong and
Kabul.
It
has
representative
offices
in Almaty,
Shanghai,
and
Dubai.
Organization of the study:
The present study has been divided into the six chapters. The first chapter has been entitled as
Introduction, which in corporates an introduction about the subject and also a brief profile of
the selected banks. A comprehensive review of literature undertaken by the researcher has been
incorporated in the second chapter. Research Methodology used for the present study has been
explained in the third chapter. In the fourth chapter , Global scenario of the banking sector has
been explained in detail. On the basis of the survey conducted , the researchers has presented the
data in tabular and graphical forms in the chapter five. The last chapter incorporates summary
and recommendations.
1.5 Limitation of the study:
Following are some limitations or problems that are being faced during the project:

Less time period: As the time period was too less for training. In a short time period, it is
very difficult to get the knowledge about each & everything related to the project.
Lack of knowledge: Conducting the research makes it very difficult to perform the task
without any problem. As it was the first research project. The lack of experience made the
task difficult.
Lack of resources: Due to paucity of money and time , the scope of study was limited to
village Mukandpur and city Banga.
Lackadaisical approach of customers: Due to unenthusiastic nature of respondents, the
sample size was not large enough.

Unwilligness attitude: Due to illiteracy and lack of research aptitude, the respondents
were reluctant to disclose their views regarding their banking habits.

Chapter 2

2.1Review of literature
Huseyin et.al (2005) tried to measure the service quality perceptions of Greek Cypriot bank
customers and examined the relationship between service quality, customer satisfaction and
positive word of mouth in the light of changing bank market dynamics due to EU accession. The
study concluded that the expectations of bank customers were not met where the largest gap was
obtained in the responsiveness-empathy dimension.
Tsung-Chi Liu and Li-Wei Wu (2007) examined the effects of locational convenience, one-stop
shopping convenience, firm reputation, firm expertise, and direct mailings on both customer
retention and cross-buying. The mediating roles of satisfaction and trust in the relationships
between service attributes, customer retention, and cross-buying are also examined. The results
indicated that banks can use different service attributes to influence customer retention and crossbuying. Trust and satisfaction play different mediating roles in the relationships between service
attributes, customer retention, and cross-buying.
Ahmad Jamal, Kamal Naser, (2002) is of the view that ,understanding the antecedents to and
outcomes of customer satisfaction is a critical issue for both academics and bank marketers.
Previous research has identified service quality, expectations, disconfirmation, performance,
desires, affect and equity as important antecedents of customer satisfaction. The current paper
reports findings from a survey which looked into the impact of service quality dimensions and
customer expertise on satisfaction. A sample of 167 respondents took part in this study. Findings
indicate that both core and relational dimensions of service quality appear to be linked to
customer satisfaction. Findings also indicate that expertise is negatively related to satisfaction.
The paper discusses implications for bank managers.
Service quality is a critical issue in the service industry and of particular importance for financial
service providers who characteristically offer products that are homogeneous in nature
(Stafford et al., 1998). Service business success has been associated with the ability to
deliver superior service (Gale, 1990). If we want to manage something, it should be
measured first. Without measurement, managers cannot be sure of whether service quality
gaps exist or not (Christopher et al., 2006) and, of course, measurement is needed to
determine whether goals for improvement are being met after changes have been
implemented (Christopher et al.,2006).
In general, it is difficult to measure and quantify service quality. The main purpose of measuring
service quality is to ensure whether service is provided as per the expectations of the customers.
Zeithaml et al. (1990) suggest that the criteria used by customers in molding their expectations
and perceptions fit in five dimensions of service quality: tangibles, reliability, responsiveness,

assurance and empathy. According to Parasuraman et al. (1988), service quality has become a
great competitor and the most powerful competitive weapon, which many leading service
organizations possess.
In this paper, we present the development of a theoretical framework for measuring the
efficiency of banking services taking into account physical and human resources, service quality
and performance. Expenditures on quality improvement efforts and the impact of service quality
on financial outcomes have long intrigued researchers. Banks have traditionally focused on how
to transform their physical resources to generate financial performance, and they inadvertently
ignored the mediating intangible factor of service quality. A theoretical framework on the
optimization triad of resource, service quality and performance is proposed here, thereby linking
the marketing variables to the financial metrics. A measure for the return on quality is developed
as the ratio of the potential improvements in financial performance by enhancement of service
quality to the observed performance figures. Empirical results obtained from a study of 27 Indian
public sector banks and their customers allow us to measure the impact of service quality on
financial performance, optimal level of service quality that can be generated using existing
resources and the opportunity cost for sub-optimal service delivery. Banks delivering better
service are shown to have better transformation of resource to performance using superior
service delivery as the medium. Our results confirm the linkage between resource, service
quality and performance for services.
The Journal of Nepalese Business Studies Internet banking is becoming is increasingly becoming
popular because of convenience and flexibility. The present paper explores the major factors
responsible for internet banking based on respondents perception on various internet
applications. It also provides a framework of the factors which are taken to assess the internet
banking perception.
Conclusion:
The various studies have discussed varying aspects of banking sector which in totality covers a
vast number of issues concerning this sector. It is also evident from the above review of literature
that there is a gap in the various studies as no comprehensive study has been undertaken
exclusively with regard to study of customers perceptions towards commercial banking
services bearing this idea in mind, the researchers have undertaken the present study.

Chapter 3

3.1Research Methodology
This chapter deals with the need, significance, objectives, selection of representative sample and
methodology for data collection. Various research tools and technique are used for data analysis
and interpretation thereof for the scientific investigation of the problem.
3.2Need and significance of the study:
The Indian Economy has witnessed global developmental experience of expanding services,
industry, sectors and contracting agriculture sectors over the last 15 years and the trend still
continues. India is also looking for ways of improving competitive conditions in its financial
sector to raise efficiency by attracting more foreign financial flows. The banking sector in India
is very important for the above stated reasons.
3.3 Objectives of the study:
1. To study the customers perceptions towards services provided by the public and the
private sector banks.
2. To study the customers opinions towards the IT enabled services.
3. To determine the successful ways of attracting and retaining the customers.
4. To study the demographic profile of the banking customers.
5. To identify the determinants of service quality which are very vital to banking industry.
3.4 Universe and Sample of the study
Four banks are selected for the present study of which two are public sector banks viz. Punjab
National Bank and Oriental Bank of commerce and other two are private sector banks viz HDFC
and ICICI Bank . These banks are selected on the basis of convenience sampling.
3.5 Sample and sampling technique
For the present study, 200 respondents were selected which comprised 50 respondents each from
HDFC Bank, ICICI Bank, OBC Bank and PNB Bank. The reason for selecting equal number of
respondents from each company was to keep uniformity of sample size and data analysis.
3.6 Research instrument and method of data collection
The study being empirical in nature relied both on primary and secondary data to achieve the
objectives. Secondary data was collected from various journals and books. Primary data for the
research was collected with the help of self administrated questionnaires that was specially
designed to achieve the objective of the study. The respondents of the present study were limited

to city Banga and village Mukandpur. The reasons for selecting respondents from these two areas
was easy access to the respondents and due to the paucity of resources.
3.7 Statistical tools used:
The data of present study was analysed by using various statistical tools such as pie-charts , bar
graphs, percentages are being used for the study. Descriptive analysis was used to explain the
profile of selected commercial banks.

Chapter 4
4.1Global Scenario and Indian Banking System
Since the Lehman Brothers declared bankruptcy in 2008, incidences, every now & then, have
sustained the concerns over global financial stability. While most emerging market economies
(EMEs), including India, have recovered from global financial crisis, advanced countries
continue to be plagued with growth figures looking dismal. Euro zone crisis seems to be
spreading across the EU countries following ripple effect, political turmoil persists in Middle
East & North African (MENA) region, economic stagnation in US augurs no imminent respite
from the worsening global situation. Indian banks, however, not only emerged unscathed from
the global financial crisis but continued to manage growth with resilience during 2010-11.

Presently, domestic demand stays constrained on account of slower pace of growth &
high level of commodity prices but favorable demographics & growth potential of Indian
economy are expected to mitigate the dampening effect in the long run. As per Census
2011, about 40 % of households still do not avail banking facilities . Banks with their
forward looking strategies, improved customer relationship, diversification of revenue
sources etc are expected to continue their impressive performance. 24.3 Development of
Banking In India - Historical Perspective: In India, the modern banking system was
initiated with the establishment of the Presidency Bank of Bengal in 1806, and the
Presidency bank of Madras in 1840.However, the post independence period witnessed the
massive growth in the Indian banking sector. Reserve Bank of India, was nationalized on
January 1, 1949 under the terms of the Reserve Bank of India Act,1948 . In 1949, the
Banking Regulation Act was enacted which empowered the Reserve Bank of India to
regularize, control and inspect the banks in India. The Banking Regulation Act also
provided the number of new banks or branches of an existing bank would be opened with
a license from the Reserve Bank of India.

The RBI acts as banker, both to the central government and state governments. It
manages all the banking transactions of the government involving the receipt and
payment of money. In addition, RBI remits exchange and performs other banking
operations. RBI provides short-term credit to the central government. Such credit helps
the government to meet any shortfalls in its receipts over its disbursements. RBI also
provides short term credit to state governments as advances.

The issue department of RBI is dedicated to issuing currency. All the currency issued is
the monetary liability of RBI that is backed by assets of equal value held by this
department. Assets consist of gold, coin, bullion, foreign securities, rupee coins, and the
governments rupee securities.

Before Nationalization of Banks, despite control and regulation by Reserve Bank of

India, banks in India except the State Bank of India continued to be owned and 322
operated by private personnel. But by that time the Indian Banking Industry had grown in
size and employed a large number of people thus became an important tool for the
development of Indian economy. In order to ensure more equitable and purposeful
distribution of credit on July 19, 1969 the Government of India issued an ordinance and
nationalized 14 largest commercial Banks. In April 1980 six more commercial banks
were nationalized. With nationalization of these banks the Government of India
controlled an overwhelming majority of the banking business in India.

Besides the above developments, financial institutions were established for meeting the
specialized needs. These include Industrial Development Bank of India (IDBI), Industrial
Credit and Investment Bank of India for meeting the long term financial needs of the
large scale operations. Similarly for meeting the requirements of the Small Scale
Industries (SSIs), State Financial Corporation (SFC), Small Industries Development
(SIDC) and Small Industries Development Bank of India (SIDBI) have been established.
The National Bank for Agriculture and Rural Development (NABARD), Land
Development Bank (LDB), Regional Rural Bank (RRB) etc. has been established for
taking care of the credit needs in the agriculture sector.

During 1990s India started opening up with changes in the economic policies and
introduction of new institutional mechanisms of economic liberalization and financial
sector reforms. The government, initially licensed small number of private banks which
increased over the years. Now, 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.

Scheduled Commercial Banks: The banks, which carry on business of banking in India
and which are included in the second schedule to the Reserve Bank of India Act, 1934 are
known as Scheduled Banks.

These include the State Bank of India, other Indian Banks and Foreign Banks.

(i)

State Bank of India: The State Bank of India was formed in July, 1955 after the
nationalization of the Imperial Bank of India.

(ii)

Other Indian Banks: Indian banks are those who have their registered offices in India.
These include Private Sector Banks, Associates of State Bank of India, 19
nationalized and Regional Rural Banks.

(iii)

Foreign Banks: Foreign banks are those who have their registered offices outside
India.
Changing Face of Indian Banking : From traditional banking practices during the British
Rule to reforms period , nationalization to privatization and to the present trend of
increasing number of foreign banks, Indian banking sector has undergone significant
transformation. The move from old to new business environment has created newer
demands on Indian bank like enhanced work flow, full customer access to banking
transactions through electronic mode etc. In the emerging scenario of fierce competition
backed by twin force of deregulation and technology, the degree of competition in the
Indian financial Sector has increased to unprecedented level. Hence the operational
efficiency of banks has achieved immense significance for their survival in the present
scenario. In contrast to earlier 4-6-4 method (Borrow at 4%; Lend at 6%; Go home at 4)
of functioning, modern outlook and tech-savvy methods of working for traditional banks
has been ushered. All this has led to the retail boom in India. People are not just
demanding more from their banks but also receiving more. With easy credit facilities the
banks are transforming the consuming propensity of Indians with everything from
microwave owens to houses on sale at easy monthly installments EMIs. Using
information technology, banks have upgraded their systems to provide better customer
services. Automatic Teller Machines (ATMs) dispensing any time money are visible in
most localities of big cities and consumers are increasingly responding to banking
transactions without visiting the banks. Online and mobile banking has brought the banks
virtually to their doorsteps. However, all this has exposed the banks to new kinds of risks.
The familiarity between bank employees and customers has become increasingly remote.
Though the banks distribute various back end and front end operations to minimize risk
and use highly secure socket layers SSLs, digital certificates and facilities like virtual key
boards to reduce the risks in online transactions, attacks like phishing and pharming have
been on the rise.

4.2Reserve Bank of India

Origin of the Reserve Bank of India is explained as follows:

1926: The Royal Commission on Indian Currency and Finance recommended creation of
central bank for India

1927: A bill to give effect to the above recommendation was introduced in the Legislative
Assembly, but was later withdrawn due to lack of agreement among various sections of
people.

1933: The White Paper on Indian Constitutional Reforms recommended the creation of a
Reserve Bank. A fresh bill was introduced in the Legislative Assembly.

1934: The Bill was passed and received the Governor Generals assent

1935: The Reserve Bank commenced operations as Indias central bank on April 1 as a
private shareholders bank with a paid up capital of rupees five crore (rupees fifty
million).

1942: The Reserve Bank ceased to be the currency issuing authority of Burma (now
Myanmar).

1947: The Reserve Bank stopped acting as banker to the Government of Burma.

1948: The Reserve Bank stopped rendering central banking services to Pakistan.

1949: The Government of India nationalized the Reserve Bank under the Reserve Bank
(Transfer of Public Ownership) Act, 1948.

Starting as a private shareholders bank, the Reserve Bank was nationalized in 1949. It then
assumed the responsibility to meet the aspirations of a newly independent country and its
people. The Reserve Banks nationalization aimed at achieving coordination between the
policies of the government and those of the central bank.
4.3 Functions of the Reserve Bank of India
The functions of the Reserve Bank of India today can be categorized as follows:

Monetary policy

Regulation and supervision of the banking and non-banking financial institutions,

including credit information companies

Regulation of money, forex and government securities markets as also certain

financial derivatives

Debt and cash management for Central and State Governments

Management of foreign exchange reserves

Foreign exchange managementcurrent and capital account management

Banker to banks

Banker to the Central and State Governments

Oversight of the payment and settlement systems

Currency management

Developmental role

Chapter5
Customers response towards services of commercial banks
On the basis of conducted survey on the customers of the given banks, data analysis and
interpretation is done as follows:
Table 5.1: Duration of hiring banking services
Duration
Less than 1 year
Between 1-2 years
Between 2-3 years
Between 3-4 years
More than 4 years

ICICI
bank
HDFC OBC
PNB
8%
40
44
16
16%
16
16
40
28%
8
12
16
28%
20
0
4
20%
16
28
24

Source: Primary Data

Figure 5.1: Duration of hiring bank services

Source: Primary Data

In Figure 5.1, X- axis shows the duration (in years) of hiring banking services and Y-axis shows
percentage of selected respondents .The above figure and table 5.1 shows that highest

percentage of respondents are related to the bank for the time less than one year with the
percentage 8%, 40%, 44% and 165 in ICICI, HDFC, OBC and PNB bank respectively.

Figure 5.2 Types of bank accounts available to the customers

Column1
Current
Saving
Loan
Demat

ICICI
8
92
0
0

HDFC OBC
PNB
4
20
20
96
80
76
0
0
4
0
0
0

Source: Primary Data

Figure:5.2

Source: Primary Data

In above chart , X-axis includes to the type of accounts and Y-axis shows number of respondents
(in percentage) correspondent to X-axis. In all four banks,shown in the above table and figure,
the highest number of customers have saving account as compare to current account, demat
account and loans. 92%, 96%, 80% and 765 of the respondents in the ICICI, HDFC, OBC and
PNB bank respectively are accessing saving account in their bank.

Figure 5.3 Services accessed by the customers

Column1
Deposit/Withdrawal
Loans
Credit cards
ATM
Net banking
Telebanking
Money tranfer/draft
Any other

ICICI HDFC OBC

PNB
80
92
92
80
4
0
12
8
12
8
8
4
92
76
76
80
24
16
12
24
16
4
4
8
0
8
32
20
0
0
0
0

Source: Primary Data

Figure: 5.3

Source: Primary Data

In the above graph, services are taken along X-axis and number of respondents (in percentage)
That has an access on the services of banks taken along Y-axis. ATM and Deposit/Withdrawal are
most popular services that have an access as shown in the given table and figure 5.3.

Figure 5.4 Satisfaction level of the customers for the interest rates given by the bank

Column1
Very satisfied
Satisfied
Neutral
Unsatisfied
Very unsatisfied
No Response

ICICI HDFC OBC

PNB
12
8
16
8
56
48
72
68
12
20
12
24
12
24
0
0
4
0
0
0
4
0
0
0

Source: Primary Data

Figure: 5.4

Source: Primary Data

In the above chart, customer satisfaction level is taken along X-axis and number of respondents
(in percentage) along Y-axis. In the given table and figure, most of the customers of the
respective banks are satisfied with the services of a bank with the 56%, 48%, 72% and 68% of
satisfaction level in the ICICI, HDFC , OBC and PNB bank respectively.

Figure 5.5 Frequency of using online services

Column1
Always
Often
Seldom
Never

ICICI
4
32
38
32

HDFC OBC
PNB
8
4
4
12
20
16
16
28
16
64
48
64

Source: Primary data

Figure: 5.5

Source: Primary Data

In the above chart, responses of the customers are taken along X-axis and number of respondents
(in percentage) is taken along Y-axis. In the given table and figure, higher numbers of
respondents do not use online services with the percentage 32%, 64%, 48% and 64% in the
ICICI, HDFC, OBC and PNB bank respectively and very less number of respondents uses online
services always with the percentage 4%, 8%, 4% and 4% in the ICICI, HDFC, OBC and PNB
bank respectively.

Figure 5.6 Frequency of visit by the respondents in the banks

Column1
Once in a week
Once in 2 weeks
Once in a month
After a month
No response

ICICI HDFC OBC

PNB
32
8
4
12
28
16
12
4
24
28
48
16
16
44
28
68
0
4
8
0

Source: Primary Data

Figure: 5.6

Source: Primary Data

In the above chart, time lag of the customers are taken along X axis and number of
respondents(in percentage) is taken along Y axis. The above table and figure shows that large
number of respondents visit the bank after one month with the percentage 245,28%, 48% and
16% in the ICICI, HDFC, OBC and PNB bank respectively and least number of respondents visit
once in a week with the percentage 32%, 8%, 4% and 12% in the bank ICICI, HDFC, OBC and
PNB bank respectively. The percentage of respondents with no response

Figure 5.7 Reason for hiring services of this particular bank

Column1
Satisfactory interest
rates
Provides better services
Good infrastructure
facility
Personal contacts in
bank
No response

ICICI

HDFC

OBC

PNB

16
52

8
24

12
24

4
44

16

28
0

52
0

36
24

52
4

Source: Primary Data

Figure: 5.7

Source: Primary Data

In the above chart, reasons of preferring banks by the respondents are taken along X axis and
number of respondents (in percentage) is taken along Y axis. The above table and figure shows
that most of the customers prefers the bank because bank provides better services and maintains
personal contacts with the customers. 28%, 52%, 36% and 52% of the respondents are using the
banking services in the ICICI, HDFC, OBC and PNB Bank respectively.

Figure 5.8 Customer opinion regarding the opening an accout was easy or it was difficult.
Column1
Yes, to certain extent
No, it was easy

ICICI HDFC OBC

PNB
16
12
12
20
84
88
88
80

Source: Primary Data

Figure: 5.8

Source: Primary Data

In the above chart, response of the customers that how many feel about the procedure to open an
account is difficult is taken along X-axis and number of respondents (in percentage) is taken
along Y-axis. According to the given table and figure, large numbers of customers (80%) feel that
procedure to open an account in bank is not easy and 20% of respondents feel that it is an easy
task.

Figure 5.9 Opinion regarding the fulfillment of the banking needs of the respondents
Column1
Yes
No

ICICI HDFC OBC

PNB
80
92
92
84
20
8
8
16

Source: Primary Data

Figure; 5.9

Source: Primary Data

In the above chart, responses of the respondents are taken along X axis and number of
respondents (in percentage) is taken along Y axis. According to the given table and figure,
large number of people (90%) accept that bank caters all their banking needs and 20% of
respondents think that banks not caters their all banking needs.

Figure5.10 Opinion regarding the teller friendly nature of the bank

Column1
Yes
No
No response

ICICI HDFC OBC

PNB
72
80
80
88
28
20
12
12
0
0
8
0

Source: Primary Data

Figure: 5.10

Source: Primary Data

In the above chart, responses of the respondents are taken along X-axis and number of
respondents (in percentage) is taken along Y-axis. According to the given table and figure,
highest number of respondents are agree the friendly nature of the dealer in the bank with the
percentage 72%, 80%, 80% and 88% in the ICICI, HDFC, OBC and PNB respectively.

Figure 5.11 Alternative bank services being used by the respondents

Column1
Yes
No

ICICI HDFC OBC

PNB
80
68
76
68
20
32
24
32

Source: Primary Data

Figure: 5.11

Source: Primary Data

In the above chart, responses of the respondents are taken along X-axis who uses services of
alternative banks and number of respondents (in percentage) is taken along Y-axis. According to
the given table and figure, 80%, 68% , 76% and 68% of the respondents are using the services of
the alternative banks in the ICICI, HDFC, OBC and PNB bank respectively, while 20%, 32%,
24% and 32% of the respondents are not using the services of the alternative bank in the ICICI,
HDFC, OBC and PNB bank respectively.

Figure 5.12 Opinion regarding the charges charged by the bank

Column1
Yes
No

ICICI HDFC OBC

PNB
36
48
16
24
64
52
84
76

Source: Primary Data

Figure: 5.12

Source: Primary Data

In the above chart, responses of the respondents related to the unnecessary charges for not
maintaining minimum balance in your account are taken along X-axis and number of
respondents(in percentage) is taken along Y-axis. According to the given table and figure, 36%,
48%, 16% and 24% of the respondents in the bank ICICI, HDFC, OBC and PNB respectively are
of the view the that the banks charges unnecessary for not maintaining the minimum balance in
their accounts, while 64%, 52%, 84% and 76% of the respondents in the bank ICICI, HDFC ,
OBC and PNB are of the view that the bank dont charge unnecessary for not maintaining
minimum balance in their accounts.

Figure 5.13 Respondents views regarding the recommendations of bank to their relatives ,
friends , associates
Column1
Yes
No

ICICI HDFC OBC

PNB
84
60
80
80
16
40
20
20

Source: Primary Data

Figure: 5.13

Source: Primary Data

In the above chart, responses of the respondents are taken along X-axis regarding the
recommendation of banks to friends, relative and associates and number of respondents (in
percentage) is taken along Y-axis. According to the given table and figure, 84%, 60%, 80% and
80% of the respondents in the bank ICICI, HDFC, OBC and PNB are of the view that they will
recommend this bank to their relatives, associates, etc. , while 16%, 405, 20% and 20% of the
respondents from the bank ICICI, HDFC, OBC and PNB respectively are of the view thet they
will not recommend this bank to their relatives , associates etc.

Figure 5.14 Ranking given by the respondents to their bank

Column1
1(Low)

ICICI
2
3
4

5(High)

0
8
32
48
12

HDFC OBC
PNB
0
0
4
24
12
16
40
52
48
36
24
28
0
12
4

Source: Primary Data

Figure: 5.14

Source: Primary Data

The above chart shows the percentage of respondents in on X-axis and response of the
respondents is shown on Y-axis regarding the rating of the bank according to the services
provided to them. According to the given table and figure, highest number of the respondents
have chosen the option 3 as their response, while less number of the respondents have chosen the
option 1.

Chapter6
6.1 Conclusion and Recommendations
The Indian Economy has witnessed global developmental experience of expanding services,
industry, sectors and contracting agriculture sectors over the last 15 years and the trend still
continues. India is also looking for ways of improving competitive conditions in its
financial sector to raise efficiency by attracting more foreign financial flows.
The first bank in India, called The General Bank of India was established in the year 1786. The
East India Company established The Bank of Bengal (1809), Bank of Bombay (1840) and
Bank of Madras (1843). The next bank was Bank of Hindustan which was established in
1870. These three individual units (Bank of Calcutta, Bank of Bombay, and Bank of
Madras) were called as Presidency Banks.
In the early 1990s, the then Narsimha Rao government embarked on a policy of liberalization,
licensing a small number of private banks. These came to be known as New Generation techsavvy banks, and included Global Trust Bank (the first of such new generation banks to be set
up), which later amalgamated with Oriental Bank of Commerce, Axis Bank(earlier as UTI
Bank), ICICI Bank and HDFC Bank. This move along with the rapid growth in the economy of
India revolutionized the banking sector in India which has seen rapid growth with strong
contribution from all the three sectors of banks, namely, government banks, private banks and
foreign banks. The next stage for the Indian banking has been setup with the proposed relaxation
in the norms for Foreign Direct Investment, where all Foreign Investors in banks may be given
voting rights which could exceed the present cap of 10%, at present it has gone up to 49% with
some restrictions.
The present study has been divided into the six chapters. The first chapter has been entitled as
Introduction, which in corporates an introduction about the subject and also a brief profile of
the selected banks. A comprehensive review of literature undertaken by the researcher has been
incorporated in the second chapter. Research Methodology used for the present study has been
explained in the third chapter. In the fourth chapter , Global scenario of the banking sector has
been explained in detail. On the basis of the survey conducted , the researchers has presented the
data in tabular and graphical forms in the chapter five. The last chapter incorporates summary
and recommendations.
Objectives of the present study:
1. To study the customers perceptions towards services provided by the public and the
private sector banks.
2. To study the customers opinions towards the IT enabled services.

3. To determine the successful ways of attracting and retaining the customers.

4. To study the demographic profile of the banking customers.
5. To identify the determinants of service quality which are very vital to banking industry.

Four banks are selected for the present study of which two are public sector banks viz. Punjab
National Bank and Oriental Bank of commerce and other two are private sector banks viz HDFC
and ICICI Bank . These banks are selected on the basis of convenience sampling. For present
study, 200 respondents were selected which comprised 50 respondents each from HDFC Bank,
ICICI Bank, OBC Bank and PNB Bank. The reason for selecting equal number of respondents
from each company was to keep uniformity of sample size and data analysis.
The study being empirical in nature relied both on primary and secondary data to achieve the
objectives. Secondary data was collected from various journals and books. Primary data for the
research was collected with the help of self administrated questionnaires that was specially
designed to achieve the objective of the study. The respondents of the present study were limited
to city Banga and village Mukandpur. The reasons for selecting respondents from these two areas
were easy access to the respondents and due to the paucity of resources.
The data of present study was analyzed by using various statistical tools such as pie-charts, bar
graphs, percentages are being used for the study. Descriptive analysis was used to explain the
profile of selected commercial banks.
Highest percentage of respondents are related to the bank for the time less than one year with the
percentage 8%, 40%, 44% and 165 in ICICI, HDFC, OBC and PNB bank respectively.
In all four banks,shown in the above table and figure, the highest number of customers have
saving account as compare to current account, demat account and loans. 92%, 96%, 80% and
765 of the respondents in the ICICI, HDFC, OBC and PNB bank respectively are accessing
saving account in their bank.
ATM and Deposit/Withdrawal are most popular services that have an access as shown in the
given table and figure 5.3.
Most of the customers of the respective banks are satisfied with the services of a bank with the
56%, 48%, 72% and 68% of satisfaction level in the ICICI, HDFC , OBC and PNB bank
respectively.
Higher numbers of respondents do not use online services with the percentage 32%, 64%, 48%
and 64% in the ICICI, HDFC, OBC and PNB bank respectively and very less number of
respondents uses online services always with the percentage 4%, 8%, 4% and 4% in the ICICI,
HDFC, OBC and PNB bank respectively.

Large number of respondents visit the bank after one month with the percentage 245,28%, 48%
and 16% in the ICICI, HDFC, OBC and PNB bank respectively and least number of respondents
visit once in a week with the percentage 32%, 8%, 4% and 12% in the bank ICICI, HDFC, OBC
and PNB bank respectively. The percentage of respondents with no response .
Most of the customers prefers the bank because bank provides better services and maintains
personal contacts with the customers. 28%, 52%, 36% and 52% of the respondents are using the
banking services in the ICICI, HDFC, OBC and PNB Bank respectively.
Large numbers of customers (80%) feel that procedure to open an account in bank is not easy
and 20% of respondents feel that it is an easy task.
Large number of people (90%) accept that bank caters all their banking needs and 20% of
respondents think that banks not caters their all banking needs.
Highest number of respondents are agree the friendly nature of the dealer in the bank with the
percentage 72%, 80%, 80% and 88% in the ICICI, HDFC, OBC and PNB respectively.
80%, 68% , 76% and 68% of the respondents are using the services of the alternative banks in
the ICICI, HDFC, OBC and PNB bank respectively, while 20%, 32%, 24% and 32% of the
respondents are not using the services of the alternative bank in the ICICI, HDFC, OBC and
PNB bank respectively.
36%, 48%, 16% and 24% of the respondents in the bank ICICI, HDFC, OBC and PNB
respectively are of the view the that the banks charges unnecessary for not maintaining the
minimum balance in their accounts, while 64%, 52%, 84% and 76% of the respondents in the
bank ICICI, HDFC , OBC and PNB are of the view that the bank dont charge unnecessary for
not maintaining minimum balance in their accounts.
84%, 60%, 80% and 80% of the respondents in the bank ICICI, HDFC, OBC and PNB are of the
view that they will recommend this bank to their relatives, associates, etc. , while 16%, 405, 20%
and 20% of the respondents from the bank ICICI, HDFC, OBC and PNB respectively are of the
view that they will not recommend this bank to their relatives , associates etc.
Highest numbers of the respondents has chosen the option 3 as their response, while less number
of the respondents has chosen the option 1.
6.2 Recommendations for Bank Managers:

6.2 References
Huseyin Arasli, Salime Mehtap-Smadi, Salih Turan Katircioglu, (2005) "Customer service
quality in the Greek Cypriot banking industry", Managing Service Quality, Vol. 15 Iss: 1, pp.41
56
Tsung-Chi Liu and Li-Wei Wu (2007), Customer retention and cross-buying in the banking
industry: An integration of service attributes, satisfaction and trust,Journal of Financial
Services Marketing, Vol. 12, pp. 132145.
G.S. Sureshchandar, Chandrasekharan Rajendran, R.N. Anantharaman, (2003) "Customer
perceptions of service quality in the banking sector of a developing economy: a critical
analysis", International Journal of Bank Marketing, Vol. 21 Iss: 5, pp.233 242
Ahmad Jamal, Kamal Naser, (2002) "Customer satisfaction and retail banking: an assessment
of some of the key antecedents of customer satisfaction in retail banking", International
Journal of Bank Marketing, Vol. 20 Iss: 4, pp.146 160
A Mukherjee, P Nath and M Pal
Bradford University School of Management, UK, XLRI Jamshedpur, India,Indian Institute of
Management, Calcutta, IndiaCorrespondence: A Mukherjee, Bradford University School of
Management, Bradford, West Yorkshire BD9 4JL, UK.
The Journal of Nepalese Business Studies Vol. V, No. 1, 2008, December Page: 101-111