CHAPTER 1

INTRODUCTION

The word ‘bank’ seems to have been derived from the Italian word Banco.
Bank is an institution that provides facilities for safe keeping, lending and
transfer of money. The basic functions of banks are to accept deposits, lend
money and act as collecting and paying agents. Any organized institution
which performs these functions can be called a bank.
The present day banker has three ancestors __the merchant, the money
lender and the goldsmith. In The past merchant, because of his high and
widespread reputation, was able to collect to deposits from his customers.
His main business was not banking but he accepted deposits for the purpose
of financing his trade business. The documents issued by these merchant
bankers were accepted as title to money all over the then known world.
The second ancestor, the money lender, usually conducted business with his
own money. But if there is anyone to spare money, he accepted it for the
purpose of investment. The people entrusted money with him, because of his
special skill and experience in that line of the business. First he accepted the
money from his clients merely for lending on a commission basis. But, later
on, he found it more profitable to borrow at a lower rate of interest and lend
it at a higher rate at his own risk and initiative.
The goldsmith, the third ancestor of the modern banker, originated in
England. At a time when gold and silver were the money, the London
merchants deposited their surplus gold and silver in the Tower of London.
But in 1640 King Charles I, when he was hard-pressed for money, seized the
merchants’ gold in the Tower. The merchants, thus, lost confidence in the
Tower and began to deposit their gold with the goldsmiths in whom they had
confidence. The goldsmith issued receipts in return of the deposits. In the
beginning, the money was given for mere safe custody and the receipts
issued by them were used only for the withdrawal of deposits. But later on,
as they gained reputation, these receipts began to be exchanged in the
settlement of debts. So, these receipts are considered to be the forerunner of
the modern bank note. In the stage, the goldsmith made the deposits
transferable by the letters issued by the depositors. This led to the origin of
the modern cheque currency.
The present day banker combines all these functions of the three
predecessors. Like the merchant banker, he accepts deposits from his
customers; like the money lender, he lends money to the needy from funds
entrusted to him; and like the goldsmith, he accepts the valuable and money
for safe custody.
One of the most famous banks in the modern sense was the Bank of
Amsterdam, founded in 1609. In England modern Banking was practiced
since the establishment of the Bank of England in 1694. Throughout the 18th
and 19th centuries, banking developed rapidly with the expansion of industry
and trade. Each nation developed its own form of banking, reflecting the
nature of its people and its economic life. Today, every advanced nation has
a well developed banking system of its own and has established a large
number of banking institutions. Banks have become inseparable from the
economic life of the people of any nation. They play an important role in the
economic development of any country.

1.1HISTORY OF BANKING IN INDIA

In India, banking originated long ago. There are evidence of giving loans to
others even during the Vedic period. Banking was synonymous with money
lending. The Manusmrithi speaks of deposits, pledges loans and interest
rates. The money lenders and indigenous bankers played an important part in
the Indian society as purveyors of money and credit from times immemorial.
The money lenders provided loans to people in times of need mainly for
consumption purposes while the indigenous bankers extended credit for
financing trade and industry. The indigenous were for long the trusted
custodians of the deposits of the people and the royalty alike. Besides
meetings the requirements of royal treasuries, they were the main source of
finance for agriculture, industry and trade. But the importance of money
lenders and indigenous bankers was reduced to some extent with the
establishment of agency houses and presidency banks patronized by the
English East India Company towards the close of seventeenth century. It is
considered to be the birth of the modern banking in India.
1.2OBJECTIVE OF THE STUDY

The main object of the present study is to understand and gain knowledge
about Banking. In this study, strategies, objectives of different banks, have
been used as a tool to get a through knowledge of the subject. How to invest
money in different banks and get maximum return and also the comparison
between private banks and government banks.
 CHAPTER 2

THEORITICAL FRAMEWORK

This chapter presents an overview of the study with all the needed theory to
gain a through knowledge of the study.

2.1Meaning of Bank

A bank may be defined as a company which collects money from the public
in the form of deposits and lends the same to borrowers. According to the
Banking Regulations Act, 1949, “banking means the accepting, for the
purpose of lending or investment, of deposits of money from the public,
repayable on demand or otherwise, and withdrawal by cheque, draft, order
or otherwise.”
Banks are sometimes described as dealers in money and credit because
banks accept deposits from the public and lend money. When a bank accepts
deposits, it purchases money at a certain rate of interest. When it lends
money, it sells money at a higher rate of interest. The difference is its profit.
Thus, a bank is an institution which accepts deposits from the public and
advances loans. It purchases and sells money, and transacts other related
business. A bank is different from other financial institutions which may
accept deposits and make advances but cannot create credit.

2.2Types of Banks

Banks are of the following types:

1. Central Banks: The central bank of a country serves as the leader
of the banking and the money market. Every country has a central
bank which regulates money supply and credity with the help of the
government. It exercises supervision and control over all other banks
in the country. The Reserve Bank of India is the central banks of our
country. It acts as the bankers’ bank. It carries out the country
monetary policy. It occupies a central position in the banking system
of the country.
2. Commercial Banks: These are joint stock banks which receive
deposits from the public and business firms. They also provide short-
term and medium –term loans to customers. These banks carry on all
kinds of banking functions within the framework of the Banking
Regulation Act, 1949 in India. Commercial banks are classified into
two broad categories-scheduled and non-scheduled banks. Scheduled
banks are those included in the second schedule to the Reserve Bank
of India Act. Commercial banks not included in this schedule are
non-schedule banks.
In India commercial banks are owned and controlled by the
Government, private businessmen and foreign businessmen. State
Bank of India, Bank of Baroda are examples of public sector banks.
Global Trust bank, Bank of Rajasthan are examples of private sector
banks. State Bank of India is the largest commercial bank of our
country.
3. Industrial Development Banks: These Banks provide finance
to industrial concerns for medium-term and long time period. They
also purchase and underwrites shares and debentures of industrial
enterprises. They also provide managerial and technical advice and
assistance to industries. These banks are also called development
banks or developmental financial institutions. Industrial Development
Bank of India (IDBI), Industrial Credit and Investment Corporation
of India (ICICI), Industrial Finance Corporation Of India (IFCI), are
examples of industrial development banks in our country.
4. Merchant Banks: These banks perform merchant banking
functions such as underwriting of securities. They serve as issue
houses, underwriters, lead managers, brokers, etc., for companies
which issue shares and debentures. SBI Capital Markets is an
example of merchant banks.
5. Exchange banks: These banks provide foreign currency and other
related facilities to importers and exporters. They buy and sell foreign
exchange and specialize in financing foreign trade. They are also
called foreign exchange banks. These banks also render certain
services such as collecting and supplying information about the
foreign customers, remittance of funds from one country to another,
etc.
 6. Agricultural Rural Banks: These banks provide medium-term
and long-term loans to farmers against the security of the land. They
are, therefore, called Land Development Banks. Agricultural banks
also provide loans for permanent improvement in agricultural land.
Commercial banks, regional rural banks and agricultural cooperative
banks provide short term loans to farmers.
7. Cooperative Banks: These banks are organised by people with
limited means for their mutual benefit. These are organised and
managed on cooperative basis. They accept deposits from and grant
loans to their members at concessional rates of interest. Such bank
are found in rural and urban areas. There is a State Cooperative Bank
in every state of India with its branches at the district level. Delhi
State Cooperative Bank is an example.
8. Post office Savings Bank: Post offices serve as savings banks for
the benefit of general public. These banks accept various types of
deposits from the public and allow interest on these deposits.
Generally, restrictions are placed on the number and amount of
withdrawals during a month. Savings banks encourage savings and
thrift. They collect the small savings of people but do not advance
loans.
9. Indigeneous Banks: These are moneylenders in villages and
small towns. They accept deposits from and grant loans to farmers,
artisans and local traders. They also deal in hundies. They generally
charge high rates of interest. These bankers play an important role in
financing local trade and industry.

2.3Services of Banks in Modern Times

The modern banks provide their customers with a variety of new facilities in
addition to their traditional functions. Some of the additional facilities
provided are explained below in detail.

1. Teller System: Under the teller system, a separate counter is

opened through which transactions involving amounts not exceeding
certain limit are settled. This counter is enclosed in a cubicle and
officer of the bank, called the teller is put in charge of it. Sometimes,
 a panel of relief tellers are also maintained at the branches to act as
tellers in the absence of permanent tellers. The counter has provision
for a suitable drawer for the teller to keep cash with facility for
locking it up securely. The teller is also provided with a suitable cash
box. The teller counter is placed in such a way that the teller has a
easy access to the relative ledgers.
2. Credit Cards: Credit cards are the cards made of plastic which
carry a specimen of the holder’s signature. They have certain
information enclosed on them. When they are put into a press, the
information will be recorded on an invoice or other documents
Credit cards are designed to avoid use of either cash or cheques and to
give some measure of credit to the cardholder. They are used in place
of making cash payments for goods or services only in those
establishments which have agreed to accept them. The credit organiser
makes payment to the establishment concerned and once a month
sends an invoice to the credit card holder for all his purchases in the
previous month.
Generally, the bank which issues the credit card will be a member of a
payments brand. The Visa Cards, Master Cards, and Maestro Cards
are examples of such cards. These cards are linked to a global
payment system. The cards carry their symbols, by which the card
holder can make purchases anywhere in the world.
3. Debit Card: Debit card is more advanced than ATM and credit
cards as it can be used at specified retail or departmental stores in
addition to specified bank branches. It functions as both ATM card
and, sometimes, credit card. At the retail or departmental stores, it
doesn’t require the personal identification number (PIN). The money
for the transaction is immediately transferred from the cardholder’s
account electronically and it will appear in the monthly statement of
account.
This system requires a terminal known as the point of sale terminal
at every place of purchase. After making the purchases, the merchant
inserts the card into the machine and enters the amount of the
transaction. Immediately, the machine automatically checks the
balance in the account and reduces the amount of the transaction from
the balance. The merchant gets credit for all his transactions on the
next day.
 4. ATM Cards: ATM cards require the personal index numbers
entered to avail the services. ATMs provide quick and convenient
service to the customers by enabling them to have access to money
round the clock and also throughout the year. ATMs provide the
following services:
• They enable the banks to provide fast services in terms of
accessibility to cash 24 hours a day even on weekends and
holidays.
• We can avail new and crisp notes from them.
• The services of ATMs are available at convenient locations.
• They provide privacy in transactions.
• They help the banks in reducing crowd at bank’s counters.
Under this system, banks issue ATM cards to the customers for
transacting on the network. This card would contain some important
data such as the name of the cardholder, bank code, branch code, and
personal identification number (PIN).

2.4 COMMERCIAL BANKING STRUCTURE

The commercial banking structure in India is classified into:

• Scheduled commercial banks
• Non-scheduled commercial banks
As a result of the recent birth of new private sector banks, the existing
domestic banking system is reclassified as follows:
• Public sector banks
a) State Bank of India and its associates
b) Nationalised banks
• Private sector banks
a) Old Indian private sector banks
b) New Indian private sector banks
c) Foreign banks
 Reserve
Bank
Of India

Public Private
Sector Sector
Banks Banks
(1570 (620)

Indian
Regional
State SBI Nationali private Foreign
Rural
Bank of Associate sed Sector Banks
banks
India (1) Banks (7) Bank (19) Banks (29)
(130)
(33)

New
Old Indian
Indian Non-
Private
Private Scheduled
Sector
Sector Banks (4)
Banks (20)
Banks (90

Figure:2.1 Indian Commercial Banking System.

2.5 PUBLIC SECTOR BANKS

The public sector banks (PSBs) in the Indian commercial banking system
developed in four stages. The first stage was the nationalisation of the
Imperial Bank of India and the subsequent organization of the State Bank of
India on 1st July 1955. Later, eight former state associated banks were
reconstituted into seven and made the subsidiary of the State Bank of India.
The second stage in the development of public sector banking was the
nationalisation of 14 major Indian commercial banks on 19th July 1969.
Another important landmark was the establishment of a few commercial
banking institutions called Regional Rural Banks (RRBs0 in 1974. Again, on
the 15th April 1980, six more Indian banks were nationalised. On 4th
September 1993, the New Bank of India was merged with the Punjab
National Bank.
The banking sector in Indian has been characterised by the predominance of
public sector banks with more than 80% share in the total assets of
scheduled commercial banks. An analysis of the combined performance of
27 PSBs shows that the operating profits of these banks increased by 7.44%
from RS. 10,273.7 crore in 2004-2005to Rs. 49,899.35 crore in 2005-2006.
To enable the public sector banks to perform in a more competitive manner,
the Government of India has adopted the policy of providing autonomous
status to these banks subject to certain benchmarks.
Accepting the recommendations of the Narasimham Committee, the
Government proposed in the budget presented in the Lok sabha on 29th
February 2000 to reduce the minimum shareholding of the Government to
33%. However, it is assumed that the public sector character of the banks
would be retained by ensuring that the fresh issue of shares will be widely
held among the public. This is proposed to be done since the budget was
under serve strain and the capital has to be raised from the public.
A list of the public sector banks as on 31st March 2006 is given in Table:
 Table. Public Sector Banks

Nationalised Banks The State Bank Group

1. Allahabad Bank State Bank of India
2. Andhra bank
• State Bank of Bikaner
3. Bank of Baroda & Jaipur
4. Bank of India
5. Bank of Maharashtra
• State Bank of
6. Canara Bank Hyderabad
7. Central Bank of India
8. Corporation Bank
• State Bank of Indore
9. Dena Bank
10.Indian Bank • State Bank of Mysore
11.Indian Overseas Bank
• State Bank of Patiala
12.Oriental Bank of Commerce
13.Punjab & Sind Bank • State Bank of
Saurashtra
14.Punjab National Bank
15.Syndicate Bank
16.UCO Bank • State Bank of
Travancore
17.Union Bank of India
18.United Bank of India
Other Public Sector Banks
19.Vijaya Bank
2.6 INDIAN PRIVATE SECTOR BANKS

The private sector banks in India consist of (i) the old generation private
sector banks, (ii) new generation private sector banks and (iii) foreign banks.
So far, in addition to the 25 old private sector banks, as many as nine new
private sector banks have been established.

2.6.1 Old Generation Private Sector Banks

The old generation private sector banks constitute an important part of the
private sector banks. In the total assets of the private sector banks, the old
private sector banks constituted a predominant share of 62.9% during 1998-
99. The key strength of these banks lie in:
1. Their strong regional presence, contributing to better knowledge of
the economic activities in the region and, hence, the attendant
mitigation of credit risk.
2. Their ability to offer personalised services to customers arising out of
their comparative smaller size and scale of operations.
3. Better management control over their operations.

But the entrance of the new private sector banks has weakened the
competitive strength of the old private sector banks. They also have to face
competition from foreign banks, and a few rejuvenated public sector banks.
An analysis of the financial performance during the year 1998-99 was below
the average scheduled commercial banks.

A list of old private sector banks is given below:

1. ING Vysya Bank Ltd.
2. Federal Bank Ltd.
3. Jammu & Kashmir Bank
Ltd.
4. Bank of Rajasthan Ltd.
5. Karnataka Indian Bank Ltd.
6. South Indian Bank Ltd.
7. United Western Bank Ltd.
8. The Catholic Syrian Bank
Ltd.
9. Karur Vysya Bank Ltd.
10.Tamilnad Mercantile Bank
Ltd.
11.Lakshmi Vilas Bank Ltd.
12.Sangli Bank Ltd.
13.Dhanalakshmi Bank Ltd.
14.Bharat Overseas Bank Ltd.
 15.City Union Bank Ltd. 19.Ganesh Bank Of
16.Lord Krishna Bank Ltd. Kurundwad Ltd.
17.Nainital Bank Ltd. 20.SBI Comm. & International
18.Ratnakar Bank Ltd. Bank Ltd.

2.6.2 New Generation Private Sector Banks

The new generation private sector banks have been established on the basis
of the recommendations of the Narasimham Committee Report that “there
be no barriers to new banks being set up in private sector.” In recognition of
the need to introduce greater competition with a view to achieving higher
productivity and efficiency, the banking system was liberalized during the
early ‘90s. Accordingly, the Reserve Bank of India issued a set of guidelines
in January 1993 for the entry of new private sector banks. The guidelines are
as follows:

1. The bank should be registered as a public limited company under the

Companies Act, 1956.
2. It should obtain a licence from RBI under the Banking Regulation
Act, 1949 and be included in the second schedule to the Reserve Bank
of India Act, 1934.
3. While granting licence, preference may be given to those banks the
headquarters of which are proposed to be located in a centre which
does not have the headquarters of any other bank.
4. The voting right of an individual shareholder should be limited to the
ceiling limit of 1% (raised to 10% in February 1994).
5. The new bank shall not be allowed to have as a director any person
who is a director of any other banking company.
6. The bank will be governed by the provisions of the Reserve Bank of
India Act 1934, Banking Regulation Act 1949 and other relevant
statutes.

Capital Requirement

Anew private sector bank should have a minimum paid-up capital of Rs. 100
crore and the promoter’s contribution shall be 25% or 20% in case the
capital exceeds Rs. 100 crore and the shares of the bank should be listed in a
stock exchange. A new bank shall be subject to prudential norms in respect
of banking operations, accounting and other policies.
The guidelines issued by the Reserve Bank of India on 3 January, 2001
increased the initial capital of a new private sector bank to Rs. 200 crore
with a commitment to increase to Rs. 300 crore within three years.

Functions

The new private sector banks are permitted to do all the functions, a
commercial bank is permitted to do. The banks shall have to observe priority
sector lending targets as applicable, to other domestic banks. An entry
precondition was that they should commence their banking operations in the
country on a fully computerised platform.
This entry precondition gave a competitive advantage to these new
generation banks. They were able to catch a major share of the market by
resorting to an aggressive resource mobilisation effort. Their strong
technology background was a great enabler in building volumes and in-
service deliverance capabilities.
The following are the new private sector banks as on June 30, 2006:

1. Bank of Punjab Ltd. 5. ICICI Bank Ltd.

2. Centurion Bank of Punjab 6. Indus Ind Bank Ltd.
Ltd. 7. Kotak Mahindra Bank Ltd.
3. Development Credit Bank 8. UTI bank Ltd. (Now Axis
(DCB) Ltd. Bank)
4. HDFC Bank Ltd. 9. Yes Bank Ltd.
 CHAPTER 3

RESEARCH METODOLOGY

Research methodology discusses how a private sector bank is distinguished

from public sector bank. The present chapter is an attempt to discuss the
research methodology of SBI Bank (i.e. public bank) and ICICI Bank (i.e.
private bank).

STATE BANK OF INDIA

The State Bank of India (SBI) is the biggest commercial bank in India. Its
origin goes back to the 19th Century with the establishment of the Bank of
Calcutta on 2nd June 1806. After three years, it received its Charter and was
renamed as the Bank of Bengal on2nd January 1809. It was the first joint
stock bank in India sponsored by the Government of Bengal. Later, two
other banks were also established, viz. the Bank of Bombay and Bank of
Madras. They were established on 15th April 1840 and 1st July 1843,
respectively. These three banks were known as the Presidency Banks. The
Presidency Banks Act, which came into operation on 1st May 1876, brought
these under a common statute with similar restrictions on business.

History
The roots of the State Bank of India rest in the first decade of 19th century,
when the Bank of Calcutta, later renamed the Bank of Bengal, was
established on 2 June 1806. The Bank of Bengal and two other Presidency
banks, namely, the Bank of Bombay (incorporated on 15 April 1840) and
the Bank of Madras (incorporated on 1 July 1843). All three Presidency
banks were incorporated as joint stock companies, and were the result of
the royal charters. These three banks received the exclusive right to issue
paper currency in 1861 with the Paper Currency Act, a right they retained
until the formation of the Reserve Bank of India. The Presidency banks
amalgamated on 27 January 1921, and the reorganized banking entity took
as its name Imperial Bank of India. The Imperial Bank of India continued to
remain a joint stock company.
Pursuant to the provisions of the State Bank of India Act (1955), the Reserve
Bank of India, which is India's central bank, acquired a controlling interest
in the Imperial Bank of India. On 30 April 1955 the Imperial Bank of India
became the State Bank of India. The Govt. of India recently acquired the
Reserve Bank of India's stake in SBI so as to remove any conflict of interest
because the RBI is the country's banking regulatory authority.

Offices of the Bank of Bengal

In 1959 the Government passed the State Bank of India (Subsidiary Banks)
Act, enabling the State Bank of India to take over eight former State-
associated banks as its subsidiaries. On 13 September 2008, State Bank of
Saurashtra, one of its Associate Banks, merged with State Bank of India.
SBI has acquired local banks in rescues. For instance, in 1985, it acquired
Bank of Cochin in Kerala, which had 120 branches. SBI was the acquirer as
its affiliate, State Bank of Travancore, already had an extensive network in
Kerala.

Associate banks
SBI has five associate banks that with SBI constitute the State Bank Group.
All use the same logo of a blue keyhole and all the associates use the "State
Bank of" name followed by the regional headquarters' name. Originally, the
then seven banks that became the associate banks belonged to princely
states until the government nationalised them between October, 1959 and
May, 1960. In tune with the first Five Year Plan, emphasizing the
development of rural India, the government integrated these banks into State
Bank of India to expand its rural outreach. There has been a proposal to
merge all the associate banks into SBI to create a "mega bank" and
streamline operations.
The first step towards unification occurred on 13 August 2008 when State
Bank of Saurashtra merged with SBI, reducing the number of state banks
from seven to six. Then on 19 June 2009 the SBI board approved the merger
of its subsidiary, State Bank of Indore, with itself. SBI holds 98.3% in State
Bank of Indore. (Individuals who held the shares prior to its takeover by the
government hold the balance of 1.77 %.)
The acquisition of State Bank of Indore added 470 branches to SBI's existing
network of 12,448 and over 21,000 ATMs. Also, following the acquisition,
SBI's total assets will inch very close to the Rs 10-lakh crore mark. Total
assets of SBI and the State Bank of Indore stood at Rs 998,119 crore as on
March 2009. The process of merging of State Bank of Indore was completed
by April 2010, and the SBI Indore Branches started functioning as SBI
branches on 26 August 2010.
SBI's still surviving associate banks are:

 State Bank of Bikaner &  State Bank of Mysore

Jaipur  State Bank of Patiala
 State Bank of Hyderabad  State Bank of Travancore

CAPITAL STRUCTURE

The authorized capital of the State Bank of India is Rs. 20 crore divided into
shares of Rs. 100 each. The shares of the Imperial Bank of India were
transferred to the Reserve Bank of India and the shareholders were paid a
compensation of Rs. 1765-10annas of each fully paid share and Rs. 431-12-4
for each partly paid share. There is provision for ordinary shareholders to hold
share capital upto 45%. In other words, only the controlling amount is held by
the RBI.

MANAGEMENT
The central office of the State Bank of India is situated at Mumbai. It has local
offices in Mumbai, Kolkata and Chennai. The bank is administered by a Central
Board of Directors which consists of:
1. The chairman and a vice-chairman to be appointed by the Central
Government in consultation with the RBI and after consideration, except
in the case of first appointment of the recommendation made by the
Central Board.
2. Not more than two Managing Directors appointed by the Central Board
with the approval of the Central Government.
3. Six Directors to be elected by the shareholders other than RBI.
4. Eight Directors to be nominated by the Central Government in
consultation with RBI to represent, as far as possible, territorial and
economic interest in such a manner that not less than two of them have
special knowledge of the working of cooperative institutions and of the
rural economy and others should have experience in commerce, industry,
banking and finance.
5. One Director each to be nominated by the Central Government and the
RBI.

The Chairman, the Vice-Chairman and the Managing Directors hold office
for such term, not exceeding five years, as the Central Government may fix
when appointing them and are eligible for reappointment. The Directors
elected by the shareholders and nominated by the Central Government to
represent territorial and economic interests hold office for four years and are
eligible for reelection or renomination. Other nominated directors hold
office during the pleasure of the authority nominating them.

FUNCTIONS

The Imperial Bank of India was nationalised with the main objective of
setting up a strong state-partnered commercial bank with a large network of
branches spread all over the country. The then Union Finance Minister made
it clear that the Imperial Bank of India was nationalised not on ideological
grounds, but with the intention of acquiring control over a strategic section
of commercial banking with a view to develop credit facilities for areas of
the national economy not well served in this respect. The important
functions performed by the SBI are:
 1. Acting as agent of the Reserve Bank of India in places where the bank
has no branches.
2. Doing ordinary commercial banking business.
3. Providing agricultural credit.

PROGRESS OF THE STATE BANK OF INDIA

Branch expansion. The State Bank of India and its seven associate banks
constitute the second largest segment of the public sector banks. The bank
had a statutory obligation to open 400 new branches within a period of five
years from the date of its nationalisation. Actually, the bank exceeded the
limit during that period as it has launched upon an extensive programme of
branch expansion. At the end of June 1955, it had 477 offices. But at the end
of March 1992 it increased to 8627 offices. The total number of offices,
including the head offices of its subsidiary banks, has increased from 381 at
the end of 1960 to 4218 at the end of 1992. The majority of offices are
situated in rural and semi-urban areas. SBI and its associates with 12845
offices at the end of 1992 represent the biggest network of commercial bank
offices in the world. By the end of June 2006, its total number of branches
stood at 13844, of which 5331 were in the rural areas and 4345 were in the
semi-urban areas which account for 67.7% of the banks total offices. SBI
accounts for 20% of the total branches of the commercial banks.

Deposit mobilisation. The Stat Bank of India and its associates have made
intensive efforts towards deposit mobilisation. The aggregate deposits of the
bank rose from Rs. 58258 crore at the end of December 1992 and stood at
Rs. 154133 crores at the end of May 1999. SBI’s market share of aggregate
deposit was 21.2% during the same period. The aggregate deposits of the
State Bank Group was Rs. 542,409.12 crore at the end of March 2006 and
their market share increased to 78.4% during the same period. The total
advances of the State Bank Group were Rs. 371519.93 at the end of March
2006. Their share in the advances of all scheduled commercial banks rose to
53.70% during the same period.

Credit expansion. The advances of the SBI have not only risen steadily
over the years but also been deployed according to the national priorities as
determined by the Reserve Bank of India and the Union Government. The
total advances of the bank increased from Rs. 110 crore at the end of June
1955 to Rs. 75209 crore at the end of May 1999. Its share in the advances of
all scheduled commercial banks rose from 18% to about 20.4% during the
same period. The total advances of the State Bank Group were Rs.
371509.93 as at the end of March 2006. Their share in the advances of all
scheduled commercial banks rose to 53.70% the same period.
Industrial finance. SBI provides the following types of financial
assistance to industries:

1. Working capital finance. It is offered to meet the entire range of

short-term fund requirements that arise within a corporate’s day-to-
day operations. The working capital loans of SBI can help a
company in financing inventories, managing internal cash flows,
supporting supply chains, funding production and marketing
operations, providing cash support to business expansion and
carrying current assets.
2. Project finance. SBI extends terms loan for large industrial and
infrastructure projects. In general, the project finance covers
Greenfield industrial projects, capacity expansion at existing
manufacturing units, construction ventures or other infrastructure
projects. Capital intensive business expansion and diversification
as well as replacements of equipment may also be financed
through the project term loans.
3. Deferred payment guarantees. It is extended to industrial projects
for obtaining imported equipments.
4. Corporate term loans. SBI corporate term loans can support the
company in funding ongoing business expansion, repaying high
cost debt, technology upgradation, research and development
expenditure etc. The banks corporate term loans are generally
available for tenure of three to five years depending on the specific
needs of the company. These loans may carry fixed or floating
rates based on the exact requirement of the client and these rates
will be linked to the banks prime lending rate.
5. Structured finance. Under this scheme, SBI assembles unique
credit configurations to meet complex fund requirements of large
industrial and infrastructure projects. It is a combination of funded
and non-funded facilities like lease contracts.
Personal finance. The State Bank of India has a variety of schemes under
Personal Finance to satisfy the varying needs of the banking public. The
bank offers the following schemes with attractive rates of interest:

• Loan for ESOPS • Loan against Shares

• Housing loan • Loan against Debentures
• Easy travel loan • Medi-Plus scheme
• Car loan • Teacher-Plus scheme
• Educational loan • Sainik-Plus scheme
• Personal loan • Tribal-Plus scheme
• Property loan • Credit khazana
• Loan to pensioners • EMI calculator

SBI’S PERSONAL BANKING SERVICES

The State Bank of India offers a wide range of services in the Personal
Banking segment which are indexed below:

• eZ-trade@SBI
• SBI Vishwa Yatra Foreign Travel Card
• Pay Roll Cards
• ATM Services
• Gift Cards
• Gift Cheques
• Internet Banking
• Foreign Inward Remittance
• Locker
 INDUSTRIAL CREDIT AND INVESTMENT
CORPORATION OF INDIA Ltd. (ICICI)

ICICI Bank (formerly Industrial Credit and Investment Corporation of

India) is a major banking and financial services organization in India. It is
the third largest bank in India and the largest private sector bank in India by
market capitalization. The bank also has a network of 2,016 branches (as on
31 March 2010) and about 5,219 ATMs in India and presence in 18
countries, as well as some 24 million customers (at the end of July 2007).
ICICI Bank offers a wide range of banking products and financial services to
corporate and retail customers through a variety of delivery channels and
specialization subsidiaries and affiliates in the areas of investment banking,
life and non-life insurance, venture capital and asset management. (These
data are dynamic.) ICICI Bank is also the largest issuer of credit cards in
India. ICICI Bank's shares are listed on the stock exchanges
at BSE, NSE, Kolkata and Vadodara; its ADRs trade on the New York
Stock Exchange (NYSE).
The Bank is expanding in overseas markets and has the largest international
balance sheet among Indian banks. ICICI Bank now has wholly-owned
subsidiaries, branches and representatives offices in 19 countries, including
an offshore unit in Mumbai. This includes wholly owned subsidiaries in
Canada, Russia and the UK (the subsidiary through which the HiSAVE
savings brand is operated), offshore banking units in Bahrain and Singapore,
an advisory branch in Dubai, branches in Belgium, Hong Kong and Sri
Lanka, and representative offices in Bangladesh, China, Malaysia,
Indonesia, South Africa, Thailand, the United Arab Emirates and USA.
Overseas, the Bank is targeting the NRI (Non-Resident Indian) population in
particular.ICICI reported a 1.15% rise in net profit to Rs. 1,014.21 crore on a
1.29% increase in total income to Rs. 9,712.31 crore in September 2008 over
September 2007. The bank's CASA ratio increased to 30% in 2008 from
25% in 2007.
ICICI Bank is one of the Big Four Banks of India, along with State Bank of
India, Axis Bank and HDFC Bank — its main competitors.
HISTORY

ICICI Bank HQ at BKC Mumbai

In 1955, The Industrial Credit and Investment Corporation of India Limited
(ICICI) was incorporated at the initiative of World Bank, the Government of
India and representatives of Indian industry, with the objective of creating a
development financial institution for providing medium-term and long-term
project financing to Indian businesses. In 1994, ICICI established Banking
Corporation as a banking subsidiary. Formerly known as Industrial Credit
and Investment Corporation of India, ICICI Banking Corporation was later
renamed as 'ICICI Bank Limited'. ICICI founded a separate legal entity,
ICICI Bank, to undertake normal banking operations - taking deposits, credit
cards, car loans etc. In 2001, ICICI acquired Bank of Madura (est. 1943).
On 23 May ICICI Bank announced merger with Bank of Rajasthan with it
through share-swap in a non-cash deal that values the Bank of Rajasthan at
about Rs 3,000 crore. Each 118 shares of Bank of Rajasthan will be
converted into 25 shares of ICICI. It is said that this merger will also expand
ICICI Bank's branch network by 25%.
ICICI Bank is the largest private sector bank in India in terms of market
capitalization. It is also the second largest bank in India in terms of assets
with a total asset of Rs. 3,674.19 billion (US$ 77 billion) as on June 30,
2009. For the quarter ended on June 30, 2009, the total profit after tax has
been Rs. 8.78 billion. Formerly known as Industrial Credit and Investment
Corporation of India, ICICI Bank has an extensive network of 1,544
branches with about 4,816 ATMS located across India and in 18 other
countries. ICICI Bank serves over 24 Million customers throughout the
world. It is considered as one of the ‘Big Four Banks’ in India along with
State Bank of India, HDFC Bank and Axis Bank.

ICICI Bank provides a wide array of banking products and financial services
to its retail and corporate customers. It has a wide variety of delivery
channels and specialized affiliates and subsidiaries that ensure the flow of its
offerings in the areas like investment banking, venture capital, life and non-
life insurance and asset management. This bank is also India's largest credit
card issuer. The equity share of ICICI Bank is listed on various stock
exchanges like NSE, BSE, Kolkata Stock Exchange and Vadodara Stock
Exchange etc. Its ADRs are also listed on the New York Stock Exchange.

ICICI Bank also has the largest international balance sheet among all the
banks in India. It is also expanding its business in the overseas market at an
enviable pace. In September 2008, ICICI Bank recorded a 1.15% growth in
net profit over September 2007 to reach at Rs. 1,014.21 crores. The current
and savings account (CASA) ratio of the bank also went up from 25% in
2007 to 30% in 2008.

OBJECTS
The Corporation aims to encourage the establishment of new industries, to
assist the expansion and modernization of existing industries, and to provide
technical and managerial aid to increase production and employment. It
provides term loans in Indian and foreign currencies, underwrites issue of
shares and debentures, make direct subscriptions to these issues and
guarantees payments for credit made by others. ICICI provides a range of
wholesale banking products and services including project finance, corporate
finance, hybrid financial structures, syndication services, treasury-based
financial solutions, cash flow-based financial products, lease financing,
equity financing, risk management tools and advisory services.

ORGANISATION STRUCTURE
The organization structure of ICICI Bank is divided into five principal
groups:

1. Retail banking
2. Wholesale banking
3. Project finance and special assets management
4. International business
5. Corporate centre.
The ICICI Bank is now India’s second largest bank with total assets of about
Rs. 2513.89 billion and has a network of about 617 branches and extension
counters and over 2200 ATMs spread all over the country as on 31 March,
2006.

SUBSIDIARIES AND BRANCHES

ICICI Bank has branches and subsidiaries in the following countries:

Subsidiaries

United Kingdom Russia Canada

Branches
United States Singapore

Bahrain Hong Kong

Sri Lanka Qatar

Dubai
 International Finance
Centre
United Arab Emirates China
South Africa Bangladesh
Thailand Malaysia
Indonesia

CHANNELS
ICICI Bank has the following channels through which it offers its products
and services to its customers.

• Branches
• ATMs
• Internet Banking
• Mobile Banking
• Phone Banking

PRODUCTS AND SERVICES

ICICI Bank offers a host of products and services to its clients, which
include Deposits, Loans, Cards, Investments, Insurance, Demat, NRI
Services and Online Services etc.

Deposits

Following deposits are offered:

• Savings Account • Recurring Deposits

• Advantage Deposit • Tax-Saver Fixed Deposit
• Special Savings Account • Young Stars Savings
• Life Plus Senior Citizens Account
Savings Account • Child Education Plan
• Fixed Deposits • Bank@Campus
• Security Deposits • Salary Account
 • Advantage Woman • Rural Savings Account
Savings Account • People's Savings Account
• EEFC Account Self Help Group Accounts
• Resident Foreign Currency • Outward Remittance
(Domestic) Account Freedom Savings Account
• Privilege Banking • Family Banking
• No Frills Account

Loans

ICICI Bank offers following loan facilities:

• Home Loans • Commercial Vehicle

• Loan Against Property Loans
• Personal Loans • Loans Against Securities
• Car Loans • Loan Against Gold
• Two Wheeler Loans Ornaments
• Pre-approved Loans

Cards

ICICI Bank is India's largest issuer of credit cards. It also offers other types
of cards. The various cards offered by ICICI bank are as below:

• Consumer Cards • Prepaid Cards

• Credit Cards • Purchase Cards
• Travel Cards • Distribution Cards
• Debit Cards • Business Cards
• Commercial Cards • Merchant Services
• Corporate Cards

Investments

ICICI Bank facilitates a range of investment products including:

• ICICI Bank Tax Saving Bonds

 • Mutual Funds
• Government of India Bonds
• Initial Public Offers (IPO) by Corporates
• Foreign Exchange Services
• ICICI Bank Pure Gold
• Senior Citizens Savings Scheme, 2004

Insurance

ICICI Bank offers various types of insurance. Customers can choose from
the following:

• Home Insurance • Student Medical

• Health Insurance Insurance
• Health Advantage Plus • Motor Insurance
• Family Floater • Car Insurance
• Personal Accident • Two Wheeler Insurance
• Travel Insurance • Life Insurance
• Individual Overseas • ICICI Pru Life Time Gold
Travel Insurance • ICICI Pru Life State RP

NRI Services

Following services are offered to the NRIs:

• Money Transfer • Home Loans

• Bank Accounts • Insurance
• Investments • Loans Against FD
 CHAPTER 4
RESULTS

Conclusion
Promotion has different aspects for different industries, products and
services. Its final goal is to communicate positive word of mouth among
existing and potential customers about the corporate, product and service. In
banking the customers must be ensured that services provided by a particular
bank have been designed to give them maximum value of their money. In
brief, it can be said that in India wherever the dilemma of private and public
sector comes always two things are considered. Public sector is more
reliable but not so good in the quality and innovativeness. Private sector is
not considered so reliable, there may be hidden charges in the services and
false and misleading information in the advertising but they are better in the
service quality. Private sector banks must be more true and reliable first.
They have to win the hearts of the customers, after that they will be able to
win minds as well. In traditional tools of promotion both sectors' banks are
almost same. Private Sector banks are adopting more push strategies to
attract and catch the customers. This creates the difference between
promotional strategies adopted by Public and Private Sector Banks.
Table 1: Promotional Strategies by Public and
Private Sector Banks

Public Sector Private Sector

Promotional Tool Bank Bank
Advertising on
Television Yes Yes
Advertising in
Newspapers Yes Yes

Personal Selling/
Personal Contact No Yes
In Journals and
Magazines Yes Yes
Tele Calling by Sales
Persons No Yes
Outdoor Advertising
Hoardings etc Yes Yes
Schemes/Gifts/Prizes
for Customers No Yes
Pubic Relations/
Events/Programmes Yes Yes
Online Marketing/
E-Mail Yes But Few Yes
Pamphlets/Propaganda No Yes
Letter/Mail/ with
Relevant Material No Yes
Publishing News in
Newspapers Yes But Few Yes

Source: Interview of Bank Employees.

 Table 2: Types of Services availed by the
Customers.

Types of Services No. of Respondents Percentage

Availed
Saving Account 145 48.33
Current Account/
Overdrafts 85 28.33
Fixed Deposits 33 11
Loans 21 7
Others 16 5.34
Total 300 100

Source: Secondary Data.