A SUMMER TRAINING PROJECT REPORT

ON
“Comparative study of current account of ICICI with
SBI,OBC,ING Vysya, Standard Chartered and survey of ICICI
Bank presence in the market”

SUBMITTED IN PARTIAL FULFILLMENT OF THE

REQUIREMENT OF BACHELOR OF BUSINESS
ADMINISTRATION (BBA)
GURU JAMBHESHWAR UNIVERSITY, HISAR.

TRAINING SUPERVISOR SUBMITTED BY:-

MR. MANORANJAN HOTA VIKRAM SINGH
UNIT MANAGER ENROLLMENT NO. 05511242064

SESSION: 2005-2008

GURU JAMBHESHWAR UNIVERSITY

HISAR

1
 ACKNOWLEDGEMENT

The success of my research report would not hint at any one individual, but it was a
consolidated effort on the part of all who contributed to this report.

I express my sincere thanks to Mr. Manoranjan Hota, Unit Manager for providing me an

opportunity to undergo training at ICICI BANK. I am also grateful to him for giving me

guidance and support in the preparation of my summer project. It has been a wonderful

learning experience for me.

VIKRAM SINGH

2
 EXECUTIVE SUMMARY

TOPIC: - Comparative study of current account of ICICI with SBI, OBC, ING Vysya,
Standard Chartered and survey of ICICI Bank presence in the market.

I have done my summer internship in ICICI BANK. My whole summer internship was
divided into two sections.

In the first section of my summer internship I was into the hard-core selling of current
accounts and in the second section I have to analyze the behavior of the people who are
opening an account with ICICI.

The following project starts with an idea regarding the banking sector and also the profile
of ICICI. It also informs how an account can be made with the ICICI. The project
contains the comparison chart of ICICI with other banks like OBC, State Bank of India
and ING Vysya Bank, with respect to current accounts on the basis of 7 p’s of service
marketing. The comparison is followed by the survey and its analysis and at the end the
recommendations which could help ICICI to be more effective in the field of banking
sector.

3
 CONTENT

TOPIC PAGE NO.

1. INTRODUCTION 1-5

Banking sector in India

2. RESEARCH METHODOLOGY 6-24

 Objective of the Research

 Project Activity Sequence Chart
 Positioning
 Comparative Study of Current Account
o ICICI
o SBI
o OBC
o ING Vysya
o Std. Chartered
 Comparative Analysis
 Limitation

3. COMPANY PROFILE 25-36

4. DATA ANALYSIS & INTERPRETATION 37-61

5. CONCLUSION 62-63

6. RECOMMENDATION 64

7. ANNEXURES 65-67
 Questionnaire

8. BIBLIOGRAPHY 68

INTRODUCTION OF BANKS

4
Purpose:-

The Banking has undergone a sea change in the last couple decades and would certainly
see more changes with modern information technology making its way in the field of life.
All these changes have helped banking in improving delivery channels for its services
and products Phone Banking, Room service. Cash management is the example of these
new products. The ever increasing customer – expectations and the completion have
compelled bank to relook at its products and many innovative products like two – in –
one deposit are now offered by banks ever in India. In spite of these the core banking
remains the same.

Business of Banking:-

Banking in tradition sense is the business of accepting deposits of money from public for
the purpose of lending and investment. These deposits can have a distinct feature of being
withdrawal by cheques. Which no other financial institution can offer.

In addition to this Banks also offer various other financial services also with include:-

*Providing loans

*Collection of cheques, Bills of exchange

*Safe deposit lockers

*Investment services

*Issuing letters of credit and letter of guarantee

The business of Banking is highly regulated since Banks deal with money offered to them
by the public and ensuring the safety of this public money in one of the prime
responsibility of any bank. That is why Banks are expected to be prudent in their lending
and investment activities. The major regulation and acts that govern Banking business
are:-

*Banking regulation Act.

5
*Reserve bank of India Act.

*Foreign Exchange Regulation (Amendment) Act.

*Negotiable Instrument Act.

Bank lend money either for productive purpose to the individual firm corporate etc. or
buying housing property, cars, education and other consumer durables and for investment
purpose to individual and others. However Bank does not finance any speculative
activity. Lending is risk taking. Having prudent norm for lending should cover the risk.
The deposits of Banks are also assured of safety of their money by deploying some
percentage of deposits in statutory reserves like SLR and CRR.

FEW IMPORATANT FACTS RELATED TO BANKING

• Depository financial institution: a financial institution that accepts deposits and

channels the money into lending activities; “he cashed a check at the bank”; “that
bank holds the mortgage on my home”

• The essential function of a bank is to provide service related to the storing of

value and the extending of credit. The evolution of banking dates back to the
earliest writing, and continues in the presence where a bank is a financial
institution that provides banking and other financial services. Currently the term
bank is generally understood an institution that holds a banking license. Banking
licenses are granted by financial supervision authorities and provide rights to
conduct more fun.

• Financial institution servicing saving and checking accounts, placing loans and
dealing with negotiable instruments. Three major types of banks are commercial,
saving and saving and loan associations. All are subject to federal and local
regulations.

6
 • An organization, usually a corporation, chartered by a state or federal
government, which does most or all of the following: receives, pays interest on
them, makes loans, invests in securities, and collects checks.
• Money: At first sight the answer to this question seems obvious; the man or
woman in the street would agree on coins and banknotes, but would they accept
them from any country? What about cheques? They would probably be less
willing to accept them than their own country’s coins and notes but bank money
(i.e. anything for which you can write a cheques) actually accounts for by far the
greatest proportion by value of the total supply of money. What about I.O.U.s (I
owe you), credit cards and gold? The gold standard belongs to history but even
today in many rich people in different parts of the world rather keep some of their
wealth in the form of gold than in official, inflation-prone currencies. The
attractiveness of gold, from an aesthetic point of view, and its resistance to
corrosion are two of the properties which led to its use for monetary transaction
for thousands of years. In complete contrast, a form of money with virtually no
tangible properties whatsoever – electronic money – seems set to gain rapidly in
popularity.

• The Invention of Banking and Coinage: The invention of banking preceded that
of coinage. Banking originated in Ancient Mesopotamia where the royal places
and temples provided secure places for the safe-keeping of grain and other
commodities. Receipts came to be used for transfers not only to the original
depositors but also to third parties. Eventually private houses in Mesopotamia also
got involved in these banking operations and laws regulating them were included
in the code of Hammurabi.

In Egypt too the centralization of harvests in state warehouses also led to the
development of a system of banking. Written orders for the withdrawal of separate lots of
grain by owners whose crops had been deposited there for safety and convenience, or
which had been compulsorily deposited to the credit of the king, soon became used as a
more general method of payment of debts to other persons including tax gatherers, priests

7
and traders. Even after the introduction of coinage these Egyptian grain banks served to
reduce the need of precious metals which tended to be reserved for foreign purchase,
particularly in connection with military activities.

Banking Sector in India

The Banking system plays a crucial role in nation’s economy. Health of banking industry
is one of the most important pre conditions for sustained economy progress of any
country. The Reserve Bank of India (RBI) is the central Bank and monetary authority of
the country. It performs central Banking functions and controls all the other Banks in the
country. Nationalized Bank and SBI and its subsidiaries from the heart of the Indian
Banking Sector.

Bank also needs to learn the technique of Risk Management implying efficiency in debt
recovery and restructuring of weak banks. On the whole the Banking sector appears to
have a good future ahead given the current boom in the Indian economy and the overall
improvement in the efficiency of the Banks in recent times.

At this moment of time new private sector Banks like ICICI Bank, Indus land Bank,
Global Trust Bank, HDFC Bank, and foreign Banks have made services inroads in to
highly profitable end of banking business. They have used technology to provide quality
service through lower cost delivery mechanism. Banks are now foraying into net banking,
securities and customer finance, housing finance, treasury market, Merchant Banking and
insurance.

The economic reforms initiated in the aftermath of the 1991 crisis have blown winds of
change in every segment of the economy. The banking industry, one of the supporting pre
cursors to any rapidly growing economy has undergone a period of considerable change
since the 1990’s. The three sectors of the banking industry namely public, private and
foreign are the cornerstones of the changing banking industry.

The Indian banking sector has a massive geographical reach and the credit deposit (48%)
figures speak volumes of the inherent strength of this industry, until recently the lack of
competitiveness vis-à-vis global standards low technological level in operations. Over

8
satisfying, high NPAs and low levels of motivation had shackled the performance of the
banking industry.

Banks:-

*Accepts deposits of money from the public.

*Pays interest on the money deposited with it-lends or invests money.

*Repays the amount on demand-Allow the money deposited to withdrawn by cheques

and draft.

9
 RESEARCH METHODOLOGY

OBJECTIVE OF THE STUDY

Primary Objective:-
To search the prospective customer for ICICI Bank, and analyzing the current account of
different Bank.

Secondary Objective:-

1) To know the service polices about the current account of different Bank.
2) Customer satisfactory for ICICI Bank along with different Bank.

METHODOLOGY

Research Design:-
A research design is the specification of methods and procedure for acquiring the
information needed to structure or to solve problems. It is the overall operation pattern or
framework of the project that stipulates what information is to be collected from which
source, and be what procedures. “A research design is the arrangement of condition
for collection and analysis of data in a manner that aims to combine Relevance to
the research purpose with economy in procedure”. Design decision happens.

1. What is study about?

2. What is study being made?
3. Where will the study be carried out?
4. What type of data is required?
5. Where can the required data be found?
6. What will be the sample design?
7. Technique of data collection.
8. How will data be analyzed?

10
9. How can the customer can be persuaded for opening current with ICICI?
10. How to increase the market share of ICICI?
11. Who is the competitor of ICICI?

RESEARCH METHODOLOGY

Methodology that was adopted to work on the assign project of Comparative study of
current account of ICICI with SBI, OBC, ING Vysya, Standard Chartered and survey of
ICICI Bank presence in the market was divided in to two PARTS:-

1. Defining the problem and research objective.

2. Developing a research plan.

1. Defining the problem and research objective:-

The first step calls to define the problem and agree on the research objective.
An old adage say’s “ A problem well defined is half solved.”
The research to be done on this project was exploratory to gather the primary data to shed
light on the real nature of the problem and suggest possible new ideas.

2. Developing a research plan:-

The stages call for developing the most efficient plan for gathering the needed
information. Designing the research plan calls for the decision on data source, research
approaches, research instrument, sampling plan and contract method.

11
The decisions were taken on the basis of following attributes:-

Data Source >>Primary data

Research approaches >>Survey
Research instrument >>Questionnaire
Sampling plan >>Sample size
Contract method >>Direct interview

Tacking the above attributes in to consider the following decision is to be taken for
research plan.
*data source-
Primary data and information was collected form various Business entities of NOIDA
*Research Approaches-
The survey s conduct through the direct interview, Each and every day interaction was essential it
was involved interaction with bank managers and chief accounts of various entities.

METHOD OF COLLECTION OF DATA

While deciding the method of data collection to be used for the study, the research should keep in
mind two types of data Primary data and Secondary data. The Primary data are those data which
are collected afresh and for the fist time and thus happen to be original in character. The
Secondary data, on the other hand, are those which have already been collected by someone else
and which have already been passed away through then statistical process.
The researcher should have to decide which sort of data he would be his study and
accordingly have to select one or the other method of data collection i. e by Questionnaire or
through Observations
INSTRUMENT USED
In questionnaire method a set of redesigned question are prepared, the data is collected be
the researcher be directly asking question to the respondent, the questionnaire are of
many kinds such as
Structured, Nondisguised Questioning
Nonstructured, Nondisguised Questioning

12
Nonstructureed, Disguised Questioning
Structured, Disguised Questioning
Each of the types have advantages and disadvantages.
The overall advantages of Questionnaire method are,
It’s Versatility
It’s cheaper ness then Observation method

The overall disadvantages of questionnaire method are,

Unwillingness of Respondent to provide Information.
Inability of respondent to provide information.
The respondent may furnish report quite different from the fact,
The data which have been collocated is primary data and the method of data
collection used in this project is Questionnaire method
Here questionnaire method had been for the comparative study of current account of
different banks and also for the knowing the market potential of ICICI or you may say
that customer survey of ICICI. Questionnaire method has used for knowing the
grievances and to search prospective customer for ICICI.

The mints claimed on behalf of this method are as follows:-

1) There is low even when sample size is large.
2) It is free from the basis of the interview, answer are in the respondent’s own words.
3) Respondents have adequate time to give well through out answers.
4) Respondents, who are not easily approachable, can also be reached conveniently.
5) Large samples can be made use of and the results can be made more dependable and
reliable

13
 Project Activity Sequence Chart

START

Getting deeper Marketing of the product /

Knowledge of the Service
Product / service and the Designing the Questionnaire
Competitors

Constructing structured
Synopsis Preparation survey by giving
Presentation of bank to
Different prospect and
Doing personal selling to
them

Compile and analyze collected

data

Gather the idea of type of

question by the respondents
Prepare final report

14
POSITIONING

The way the service is designed will impact the image of the service in the mind of the
customer. In the similar way the image or the position that the organization chooses will
dictate to some extent the essential feature and design of the of the service process. Hence
the service design, specification and position and its relationship to service design
elements.

There is a tendency to assume that market position are established mainly through
advertising but this may be true for the products of the consumer package good, but for
service all the elements of the service marketing mix reinforce the chosen position.

POSITION OF SERVICE ON FIVE DIMENSIONS

 Reliability:
This dimension of position works up to the time reliability can be maintain as a
distinguishing characteristics among set of competitors. However in many cases
reliability is not a good distinguishing feature even though it is a critically important
quality dimensions e.g. banking services, telecommunication or airlines, reliability is the
basis requirement that they must meet for reaming in the race.

 Responsiveness:
The organization this is willing to respond to the customer desire for prompt, “willing to
help service “choose to focus on responsive in their positioning. Herein the standards are
based on customer requirement for responsiveness and customer perceptions of speed and
promptness, rather than on company definitions.

15
 Assurance
The third quality dimension, assurance is used for positioning in industries where trust
and confidence in the service provider are particularly critical. It is critically important in
industries like healthcare and insurance.

 Empathy
Firms can also position themselves on empathy, which builds on the customer’s desire for
caring. Individualized attentions. When companies pursue a course directed at mass
customization or segment of one positioning themselves on the empathy dimension.

 Tangibles
The final quality dimensions, tangibles, may be the focus of a positioning strategy.
Tangible are also the common positioning element for service like resorts, hotels and
restaurants. Because tangibles, particularly the physical environment, associated with a
service organization are so highly visible to customer, it is important that they be
designed consistent with the positioning strategy, whatever it is.

16
CUSTOMER’S BUYING BEHAVOUR

Five stage model of the customer buying process:

Problems
Recognition

↓
Information
Search

↓
Evaluation of
Alternative

↓
Purchase
decision

↓
Post Purchase
Behaviour

Problem Recognition

One should be identify the circumstance that a particular need. By gathering information
from a number of customers, one can identify the most frequent stimuli that space an
interest in a product category. One can than develop marketing strategies that trigger
consumer interest.

17
  Information Search
An aroused consumer will be inclined to search for more information. One can
distinguish between two levels of arousal. The wilder search state is called heightened
attention. At this level a person simply becomes more respective to information about a
product.
At the next level, the person mat enter an active information search; looking for reading
material, phoning friends and visitors stores to learn about the product.
Consumer information source fall into few groups;
Personal source: Family, friend, neighbors, and Acquaintances.
Commercial Sources: Advertising, Sales persons, Dealers, Packaging, Display.
Public Sources: Mass Media, Consumer rating and organization.
Experiential Source: Handing, Examining, and using the product.

Total Set → Awareness Set → Consideration Set → Choice Set → Decision

 Evaluation of Alternatives

There is no single process used by all customers or by one customer in all buying
situations. There are several decision evaluation process, i.e. they see the consumer as
forming judgment largely on a conscious and rational basis.
Some basis concept will help to understand consumer evaluation processes; firs, the
consumer is trying to satisfy a need. Second, the consumer is looking for certain benefits
from the product solution. Third the consumers see each product as a bundle of attributes
with varying abilities for delivering the benefits sough to satisfy this need.

18
  Purchase Decision

In the evaluation stage, the consumer forms preference among the brands in the choice
set. The consumer may also form an intention to the most preferred brand. However, two
factors can intervene between the purchase intention and the purchase decision.

POLICIES OF CURRENT ACCOUNT OF I CICI BANK

Quarterly Standard Classic Premium Gold Gold Plus Platinum

Average
Balance Rs. 10,000 Rs. Rs. 50000 Rs. Rs. 300000 Rs. 500000
(QAB) 2500 100000
DEMAND DRAFT CHARGES
DD pay Rs. 1/-per. Rs. 1/- per Rs. Free Free Free Free
order from Rs. 1000; 1000; min.Rs.
base min. 50/- per
Branches Rs. 50/-per Instrument
only Instrument

DD Payable Rs. 1/- per. Rs. 1/- per. Free up to Free Free Free
at Rs 1000; min. Rs 1000; min. Rs.
Category A Rs. 30/- per Rs. 30/- per 6lac per
Location Instrument Instrument day.
Above that
Rs.0.50/-
per Rs. 30/-
per
Instrument
DD Payable Rs. 1.50/- per Rs. 1.50/- per Free up to Free up to Free up to Free up to
at Rs. 1000; Rs. 1000; min. Rs. 4 lack Rs. 10lack Rs.12.5lack Rs.12.5lack
Category A min. Rs. 30/- per per day. per day. per day. per day.
Location Rs. 30/- per Instrument Above that Above Above that Above that
Instrument Rs. 0.60/- that Rs. Rs. 0.50/- Rs. 0.50/- per
per 0.50/- per per Rs. 1000/-
Rs. 1000/- Rs. 1000/- Rs. 1000/- Min. Rs. 30/-
Min. Rs. Min. Rs. Min. Rs. per
30/-per 30/-per 30/-per Instrument
Instrument. Instrument Instrument

19
ANY WHERE PAYMENT THROUGH MULTICITY CHEQUES / FUND TRASNFER

For payment Rs. 1/-per Rs. Rs. 0.9/-per Free Upto Free Free free
at 1000; min. Rs. Rs. 1000; Rs.20 Lac
Category 25/-per min. Rs. per month.
Location. Transaction 25/-per Above that
Transaction Rs. 0.60/-
Per Rs.
1000;
Min Rs.

25/-
Per
Transaction.

For payment Rs. 1.50/-per Rs. 1.25/-per Free Upto Free Upto Free Upto Free Upto
at Rs.1000; min. Rs.1000; Rs.15 Lac Rs.40 Lac Rs.60 Lac Rs.80 Lac
Category B Rs.25/-per min. Rs.25/- per month. per month. per month. per month.
Location Transaction per Above that Above that Above that Above that
Transaction Rs. 0.60/- Rs. 0.50/- Rs. 0.50/- Rs. 0.50/-
Per Rs. Per Rs Per Rs Per Rs
1000;min 1000;min 1000;min 1000;min
Rs. 25/-per Rs. 25/-per Rs. 25/-per Rs. 25/-per
Transaction Transaction Transaction Transaction

20
 PHONE BANKING

Balance Free Free Free Free Free Free

Inquire
and last 10
Transactions
Cheques Status Free Free Free Free Free Free
Request for the At no extra At no At no extra At no At no At no
Cheque Book Cost extra Cost extra extra extra
Cost Cost Cost Cost
Make a fixed At no extra At no At no extra At no At no At no
deposit Cost extra Cost extra extra extra
Cost Cost Cost Cost
Stop Payment At no extra At no At no extra At no At no At no
Request Cost extra Cost extra extra extra
Cost Cost Cost Cost
Request for the Free Free Free Free Free Free
email
statement
Hot listing of Free Free Free Free Free Free
Cards
Dial A DD# Courier Courier Courier At no At no At no
charges charges charges extra extra extra
applicable applicable applicable Cost Cost Cost

21
 INTERNET BANKING

Account Free Free Free Free Free Free

Related
Information
Request for a At no At no At no At no At no At no
cheque book extra extra extra extra extra extra
cost cost cost cost cost cost
Make a fixed At no At no At no At no At no At no
deposit extra extra extra extra extra extra
cost cost cost cost cost cost
Stop payment At no At no At no At no At no At no
request extra extra extra extra extra extra
cost cost cost cost cost cost

Fund Transfer within ICICI Bank

For Free Up to Free Up to Free Up to Free Free Free

paymen Rs.10 lac Rs.15 lac Rs. 20 lac
t at per day. per day. per day.
categor Above that Above that Above that
yA Rs. 0.20/- Rs. 0.20/- Rs. 0.15/-
location Per Rs. Per Rs. Per Rs.
1000/- 1000/- 1000/-
min. Rs. min. Rs. min. Rs.
5/-per 5/-per 5/-per
Transactio Transactio Transactio
n n n
For Rs. 0.20/- Rs. 0.20/- Free Up to Free Up to Free Up to Free Up to
paymen per per Rs. 10 lac Rs. 20 lac Rs. 30 lac Rs. 40 lac
t at Rs.1000/- Rs.1000/- per day. per day. per day. per day.
categor min. Rs.5/- min. Rs.5/- Above that Above that Above that Above that
yA per per Rs. 0.15/- Rs. 0.15/- Rs. 0.15/- Rs. 0.15/-
location Transactio Transactio Per Rs. Per Rs. Per Rs. Per Rs.
n n 1000/- 1000/- 1000/- 1000/-
min. Rs. min. Rs. min. Rs. min. Rs.
5/-per 5/-per 5/-per 5/-per
Transactio Transactio Transactio Transactio
n n n n

22
 STATE BANK OF INDIA

 14,000 BRANCHES IN INDIA.

 55 BRANCHES OVERSEAS.
(Documentation for opening current account is similar to the banks)

Minimum Balance-: 10,000 (If minimum balance goes below the limit Rs. 450
charged as penalty)

 No limitation of each cash deposit ( for more than 50,000 deposit PAN No.
required).
 Fund transfer charges Rs. 2.4/1000.
 Multicity Cheque available in 1100 branches(no charges).
 Anywhere access free.
 Demand Draft charges are similar as saving account holder.
 Internet Banking free.
 Phone Banking free.
 Mobile Banking (Going to started shortly)
 Account Statement every month on demand.
 Stop Payment Charges -: Rs. 100/Cheque.
 Cheque Return charges-: Rs. 50/Cheque.
 Current Account maintenance.

23
 ORIENTAL BANK OF COMMERCE

(Where every individual is committed)

Salient Feature of Oriental Bank of Commerce:

 No.1 in customer service.
 Non performance assets zero.
 No. 1 in % profit.(comparing last year)

Current Account can be opened by:

1. Individual (Sole proprietorship)

Documentation:

A. Address proof
B. PAN No.
C. Introducer (These are common for all types of account)
D. Photographs

2. Partnership
Partnership deed.

3. PVT. Ltd. Company-

A. Memorandum of Association,.
B. Article of Association.

4. Public Ltd. Company-

24
 A. Memorandum of Association
B. Article of Association.
C. Commencement of Business.

5. Trust-
A. Trust Deed.
B. Objective Letter.

6. HUF-

If owner will be directory of any firm then he can open Current Account
MINIUM BLANCE:
Urban-: 5000

Rural-: 500
(If the minimum balance goes below the limit Rs. 25 charged as penalty.)

 No limitation of cash deposit, for depositing 50,000 & above Pan No. is
necessary.
 Fund transfer facility through D.D, pay order, T.P.O. By cheque through
collection.
 Fund transfer charges out of station Rs. 3/1000+Rs. 20 postal charges.
 From one account to another account Rs. 10 & for other branch Rs.
10+postal charges
 Multicity cheque facility yet to be started.
 Anywhere access yet to be started.
 Tele Banking – Only for limited customer.
 Phone Banking – no
 Internet Banking – yet to be started.

25
26
 ING Vysya BANK

ING Yysya is a part of ING Group, the world’s fourth largest financial services
company & the twentieth largest global corporation. ING Bank serves customer in
over 60 countries.

• ING is a foreign bank.

• Oldest private sector bank. (75 yrs. Of existience)

Type of current account-:

Features Normal current account Orange current account

Minimum Balance 10,000 (QAB) 1,00,000 (QAB)

Penalty is balance go 750 (QAB) 3,000 (QAB)

below the
Limit
D.D Commission for Rs. Min. up to Rs. 28,000 Free up to Rs. 1.5
account after crores/month
Holder That Rs. 2/1000+service tax
Cheque book charge Rs. 2.5/leaf Rs. 2/leaf

Limitation of cash deposit ------------------------- No limit for deposit more

than 50.000 PAN No.
required.

Fund transfer Rs. 4/transfer Free of cost

Multicity Cheque Rs. 10/transfer No charges. (If balance

maintained.)

Anywhere Access N.A. Free

Account Statement charges Rs. 40/ 6 months Free of cost (Centralized)

But if taken from branches
then
Rs. 20/page.

27
 STANDARD CHARTERED BANK

The Chartered opened its first overseas branch in India, at Kolkota , on 12 April 1856.
eight years later the Klkota agent described the Bank’s credit locally as splendid and its
business as flourishing, particularlythe substantial turnover in rice bills with the leading
Arab firms. When the Chartered Bank first established itself in India, Kolkota was the
most important commercial city, and was the centre of the jute and indigo trades. With
the growth of the cotton trade and the opening of Suez Canal in 1869, Bombay tool over
from Kolkota as India’s main centre. Today the Bank and- branches in India are directed
and administrated from Mumbai (Bombay) Kolkota remaining as important trading and
banking centre.

To carter to drive financial needs, Standard Chartered offers a wide range of premium
banking products and service through its network of 66 branches in 24 cities across the
country.

As privileged customer, you can always be assured of a banking service that is flexible
enough to tailor-make a product suite to take care of your specific banking needs.

28
 Comparative Analysis

• The ICICI bank have a unique 8 to 8 service, which is not in the case
of other banks.
• It is the second largest bank of INDIA which it self is a achievement
in itself.
• All the facility provided be this bank is unique in itself and not
provide be other banks
• Service provide by this bank is the best through the service charges
are more than other banks.
• It’s account opening system is more complicated than other and takes
more time than other banks.

LIMITATION

• The data mentioned in this report can be used by the company to get an idea of
the customers only.
• The data mentioned in the project would only useful to know customer
satisfaction level.

29
 COMPANY PROFILE

INTRODUCTION TO ICICI BANK

ICICI Group

The Industrial Credit and Investment Corporation of India Limited now known as ICICI
Ltd. Was founded by the World Bank, The Government of India and representatives of
private industry on January 5, 1955. The objective was to encourage and assist industrial
development and investment in India. Over the years, ICICI has evolved into a
diversified financial institution. ICICI’s principal business include:

• Project Finance
• Infrastructure finance
• Corporate Finance
• Securitization
• Leasing
• Deferred Credit
• Consultancy services
• Custodial Services

The ICICI Group draws its strength from the core of its individual companies. Today, top
Indian Corporate look towards ICICI as a business partner for providing solutions to their
varied financial requirements. The Group also offers a gamut of personal finance
solutions to individuals. To led the financial services industry into the new millennium,
the Group is now truly positioned as a Virtual Universal Bank. The liberalization of the
Indian economy in the 1990s offered ICICI an opportunity to provide a wide range of
financial services. For regulatory and strategic reasons, ICICI set up specialized
subsidiaries in the areas of commercial banking, investment banking, non-banking

30
finance, investor servicing broking, venture capital financing and state level infrastructure
financing.

Leasing

Deferred Credit Securitization

Infrastructure ICICI Custodial Finance Universal Banking Services Project Finance

Consultancy Services Corporate Finance ICICI plans to focus on its retail finance
business and expects the same to contribute up to 15-20% of its turnover in the next five
years. It is trying to change the perception that it is a corporate oriented bank. The bank
hard selling its image as a retail segment bank has for the first times come up with an
advertisement that addresses its products at the individuals. This is to drive home the
point that the bank has products and services catering to all individuals. For this purpose
the network of ICICI Bank shall come into use. The parent plans to sell its products and
also raise retail funds through the banking subsidiary.

The ICICI Group comprises of

• ICICI Bank Limited, a commercial bank that provides both retail and wholesale
products.
• ICICI Securities and Finance Company Limited (ICICI Securities), an investment
bank that offers a wide range of fee based services with the support of ICICI
Brokerage services Limited (ICICI Brokerage)
• ICICI Credit Corporation Limited (ICICI Credit), a non-banking finance company
that provides a retail distribution channel for the group’s retail products,
supported by ICICI Capital Services Limited (ICICI Capital)
• ICICI Investors Services Limited (ICICI Services), offering quality investor
servicing
• ICICI Venture Funds Management Limited (ICICI Venture), a venture capital
company.

31
• ICICI International Limited, an off shore investment management company
• ICICI –KINFRA Limited (I-KIN), a company that offers infrastructure financing
and development assistance in Kerla.

ICICI BANK

ICICI bank is a commercial banking outfit set up by the ICICI Group. The Bank was
registered as a banking company on January 5, 1994 and received its banking license
from the Reserve Bank of India on May 17, 1994.

The Bank has an authorized capital of INR 300 crore (USD 75.96 million), of which
subscribed and paid-up capital is INR 165 crore (USD 41.78 million).

He first branch of ICICI Bank was started in Madras in June 1994. As of March 31,
1999, 64 branches were functional across the country. By this 36 more
branches/offices are expected to be added to the network.

The branches are fully computerized with state-of-the-art technology and systems. All
of them are fully networked through V-SAT (Satellite) Technology. The Bank is the
international SWIFT network since March 1995.

ICICI Bank offers a wide spectrum of domestic and international banking services to
facilitate trade, investment, cross-border business, and treasury and foreign exchange
services. This is in addition to a whole range of deposit services offered to individuals
and corporate bodies.

ICICI Bank’s Infinity was the first Internet banking service in the country, and a
prelude to banking in the next millennium. Currently the Bank has around 150,000
customers.

32
 Need for merger of ICICI Ltd. And ICICI Bank

The recent trend in world banking is towards mergers and acquisitions. This is evident
from the mergers occurring in Japan, United States and other parts of the world. The need
is being felt for stronger and fewer players, offering a wide gamut of services (universal
banking).

With competition becoming acute and foreign banks entering the Indian market steps
have to be taken to sustain growth in the Indian Banking sector.

Mergers are recognized as an imperative for the survival of banks. A merged banking
entity is, often greater than the sum of its parts. As banks across the globe have realized,
there are several variables that add unto synergies including economies of scale, market
share, financial muscle, larger cushions, consolidation etc.

The concept of mergers is not new to Indian banks. It has been on the reforms agenda
since 1991, when the Committee on the Financial System, headed by the Reserve Bank of
India’s former Governor chalked out a comprehensive blueprint for banking reforms. The
1997 report on bank has received an encouraging response. So, ICICI Bank has threat not
only from private and foreign banks but from public sector banks also.

Further with the emergence of customer satisfaction as a goal and intense competition as
a phenomenon in the banking sector, the banks to keep them ahead in the race need to
improve their services and innovate customer friendly products. In order to grow in this
sector the players will be on a lookout for mergers and acquisitions. As ICICI bank fits
into the overall strategy of ICICI Ltd., a defense strategy against any take-over attempt
would be to either increase the stakes of the parent or to merge the subsidiary with the
parent.

33
 Merger of ICICI Ltd and ICICI Bank

Mr. K. V. Kamath, CEO of ICICI Limited, has recently voiced the intentions of ICICI
Limited towards banking and ICICI Bank. ICICI Limited is endeavoring to forge a closer
relationship with ICICI bank. Mr. K. V. Kamath recently quoted in a leading daily “
Banking is dead. Universal banking is in offering with a whole range of financial
products and services. The basic idea is for banks to do business along with “banking”.
Bankers will have to emerge as businessman.

ICICI Bank is a focused banking company coping with the changing times of the banking
industry. So it can be a lucrative target for other players in the same line of operations.
However, when merged with ICICI Limited the attraction is reduced manifold
considering the magnitude of operations of the ICICI Limited.
In short we can classify the threat of takeover for ICICI Bank under the following
heads.
• De-Regulation
Markets regimented by regulation are integrating. Walls between
Financial Institutions (FIs) and Banks are crumbling. Banks are venturing
into diversified areas and the concept of universal banking is the concept
of the day.
• Globalization
Competition from abroad is also set to intensity. The foreign banks are
looking to expand beyond their narrow niches to acquire retail reach.
Restrictions on branch expansion of the foreign banks are being relaxed in
live with the commitment made to the World Trade Organization, under
the Financial Services Agreement, by India. The reach of existing banks
would enhance the foreign bank’s network, Given their undoubted
financial muscle and technical expertise, the foreign banks are likely to
dominate the new markets for derivative securities and loan syndication
that are bound to mature in the Indian economy. Unless Indian banks are
strengthened through a process of mergers, they will concede market share

34
 to the foreign banks. This increases the risk of takeover for ICICI Bank
and to consolidate its position, it may be advisable for the parent to merge
the subsidiary into the parent.
• Disinter mediation
As capital markets deepen and widen, the core banking functions come
under attack. And the number of alternative savings vehicle multiply,
limiting bank deposits growth. To survive, banks need to diversify into
non-investment based activities and concentrate on upcoming areas like
insurance, Internet banking and house financing. ICICI is a pioneer in
Internet banking thus making it a lucrative target for the other banks.
• Volatility
As markets mesh together, both locally and internationally, prices become
more volatile and risk mushrooms. A large capital-base provides the
necessary cushion to withstand nasty shocks. The Public sector banks’
dominance is eroding, forcing the former leaders to consider mergers to
regain their supremacy. With the regulators opting for stringent capital
adequacy requirements and the budgetary support through re-
capitalization dwindling, the poorly- capitalized public sector banks would
like to trigger off a merger wave. As higher levels of capital banking are
vital, which mergers can achieve, mergers are gaining popularity.
Suitability Test
The suitability test involves the following five analyses
1. Life Cycle analysis
2. Positioning analysis
3. Value Chain analysis
4. Portfolio analysis
5. Business profile analysis

35
 1. Life Cycle analysis

The question whether the merger will in the life cycle of the area of operation is
answered.
The days of aggressive growth are over. Faced with the worst ever scrutiny of their
balance sheets the banks are now hard-pressed to clean up their tarnished image. Indian
banking is under threat as never before. Americans typically prefer to invest mutual funds
rather than in bank deposits. With the introduction of cheque facility in money market
mutual funds in India, the next decade will see deposits being diverted from banks to
mutual funds. However, the pace of growth could be slow. While disinter mediation and
thinning spreads are already knocking crores off bank’ bottom lines, the entry of tele
banking, ATMs and Internet banking has also neutralized their sole competitive strength-
retail spread. But for true prosperity. Banks will have to do something more than embrace
technology. They have to look at opportunities beyond their current horizon of borrowing
and lending. Fee-based incomes would hold the key to customer retention. In this case as
ICICI Bank is a sister of the ICICI group carrying out related activities in the financial
sector? It has already ventured into new avenue likes Internet banking. Thus a positive
score for the merger in this analysis.

36
 2. Positioning

To ascertain whether the positing is viable, this analysis is undertaken. In the US, more
than 40% of bank revenues are from fee-based businesses. The same is the case in other
developed countries. The tend is packing up in Indian also
What’s IN What’s OUT
Objective Profitability Developmental & social
Interest Shareholder Priority sector
Strategies Pro-active Passive
Segment Target banking Mass banking
Business Fee based Fund based
NPA Mgt. Recovery mgt. cell credit monitoring cell
Concentration Investments Advance
HR policy Hire & Fire Job Security
Credit Rating Individual Corporate

As ICICI Bank is a leading private player emphasizing more on what’s in rather than
what’s out in the banking sector? Thus this merger is beneficial for the parties concerned.

37
 3. Value Chain Analysis

1. Does it improve value for money?

2. Does it exploit the core competence?

The answer to the first is positive that is reflected in the valuation annexed herewith. The
core competence of the first ICICI Group is financial service and ICICI Bank is a part of
this group dealing in commercial banking. Spreads in tradition lending businesses are
shrinking and are expected to align with international levels of 1.8-2% from the existing
2.8% over the next decade. Modern banks offer several advantages in terms of set- up
and running costs. They offer, on an average, a 50% cost benefits. The benefits of Net
Banking are evident. Besides convenience, costs per transaction are also low, just 10% of
traditional banking. ICICI Bank as ventured into these areas. Thus the merger of ICICI
Limited and ICICI Bank scores in this analysis also.

4. Portfolio Analysis
Does it strength the balance of activities?
As this bank is already a part of the portfolio of ICICI Limited and a larger stake would
not affect the balance of activities.

5. Business Profile Analysis

Will it lead to good financial performance?
As the functioning of ICICI Bank would not be largely affected by this merger and with
greater composition the financial performance of the entity is expected to be satisfactory.

38
 HISTORY AND CURRENT ACTIVITES

OF ICICI

ICICI Bank

ICICI Bank is a commercial banking outfit set up by the ICICI Group. The banking was
registered a banking company on January 5, 1994 and received its banking license from
the Reserve Bank of India on May 17, 1994,

The Bank has an authorized of INR 300 crore (USD 75.96 million), of which subscribed
and paid –up capital is INR 165 crore (USD 41.78 million).

ICICI Bank’s Infinity was the first Internet banking service in country, and a prelude to
banking in the next millennium.

Currently the Bank has around 150,000 customers.

ICICI Limited

The Industrial Credit and Investment Corporation Of India Limited (ICICI) was founded
by the World Bank, the Government of India and representatives of private industry on
January 5, 1995 to encourage and assist industrial development and investment in India.
Over the years, ICICI has evolved into a diversified financial institution. ICICI’s
principal business activities include medium- term and long-term project financial for the
infrastructure and manufacturing sectors, corporate finance to meet the treasury
requirements of Indian companies, lease finance as well as comprehensive range of
financial and advisory services.

39
For regulatory and strategies reasons, ICICI set up specialized subsidiaries in the areas of
commercial banking, investment banking, non-banking finance, investor servicing,
broking, venture capital financing and state-level infrastructure financing.

ICICI Bank is India’s second-largest bank with total assets of about Rs. 1,67,659 crore at
March 31, 2005 and profit after tax of Rs. 2,005 crore for the year ended March 31, 2005
(Rs. 1,637 crore in fiscal 2004). ICICI Bank has a network of about 560 branches and

Extension counters and over 1,900 ATMs. 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 specialized subsidiaries and affiliates in the areas of
investment banking, life and non life insurance, venture capital and asset management.
ICICI Bank set its international banking group in fiscal 2002 to cater to the cross border
needs of clients and leverage on its domestic banking strength to offer products
internationally. ICICI Bank currently has subsidiaries in the United Kingdom and
Canada, branches in Singapore and Bahrain and representative officers in the United
States, China, United Arab Emirates, Bangladesh and South Africa.
ICICI Bank’s equity shares are listed in India on the Stock Exchange, Mumbai and the
National Stock Exchange of India Limited and its American Depositary Receipts (ADRs)
are listed on the New York Stock Exchange (NYSE).

ICICI Bank was originally promoted in 1994 by ICICI Limited, an Indian financial
institution, and was its wholly-owned subsidiary, ICICI’s shareholding in ICICI Bank
was reduced to 46% through a public offering of shares in India in fiscal 1998, an equity
offering in the form of ADRs listed on the NYSE in fiscal 2000, ICICI Bank’s acquisition
of Bank of Madura Limited in an all-stock amalgamation in fiscal 2001, and secondary
market sales by ICICI to institutional investors in fiscal 2001 and fiscal 2002. ICICI was
formed in 1955 at the initiative of the World Bank, the Government of India and
representative of Indian industry. The principal objective was to create a development
financial institution for providing medium-term and long-term project financing to Indian
businesses. In the 1990s, ICICI transformed its business from a development financial

40
institution offering only pfoject finance to diversified financial service group offering a
wide variety of products and services, both directly and through a number of subsidiaries
and affiliates like ICICI Bank. In 1999, ICICI become the first Indian company and the
first or financial institution from non-Japan Asia to be listed on the NYSE.

41
 DATA ANALYSIS

The entire study is aimed to assessing the fund allocation & investment profile
of existing clients for the product SSA. It includes the analysis and
interpretation arrived at from the primary data collected according to the
research to facilitate the analysis.

Thus I would be going for a sectional data analysis in which I would analyze
each of the section then finally I would go for a final conclusion, which would
reflect the analysis of whole of the questionnaire as against each section.

.
The Questionnaire is been divided into Four parts first part is relating to
Organization Profile which discuses its nature of business its network branches
and the address, phone number just to review back if there are any changes in
the data base. This is nothing to relate with the objective of this project.

42
Fund Inflow Details:-
First Question was relating to Whether Grant is Received or not
In this 60% said yes &40% No

Grants Received % Respondant

Response Rate

80%
60%
60%
40%
40%
20%
0%
yes no
Response Options

Second question was relating to what type of account you have?

Platinum Standard
10% 20%
Gold
20% Classic
5%

Premium
45%

43
The third question was related to what type of constitution you have?

60%

50%
40%

30%

20%
10%

0%
Sole proprietorship Partnership Private Limited Public Limited

The fourth question was asking about most preferred banking mode of
transaction

70%
60%
50%
40%
30%
20%
10%
0%
ATM Mobile Net Phone

The fifth question is that have you got foreign currency reserves approval.
FCRA is about Foreign currency reserves for which a client is suppose to
take an approval from Government its being done through a bank thus
ICICI also has FCRA Accounts for some of its exiting clients

In this case 60% said Yes 40% No.

44
 Respondant Rate For FCRA Approval

Respondant Rate
80%
60%
60%
40%
40%
20%
0%
yes no
Respondant Response

Sixth Question was relating to approximately Grants/Inflows in Rupees

In this case 20% said >20,00,000,
35% said >than 20,00,0000 < 50,00,000&
Next 45% said < 1,00,00,000

Amount Of Grant Recieved In Ruppes

50% 45%
Response Rate

40% 35%
30% 20%
20%
10%
0%
1 2 3
Grant in Rupee s

1->20,00,000
2-20,00,000-50,00,000
3-<1,00,00,000

45
Analysis for this section: the questions in this section were prepared with the
objective of Understanding the in flow pattern of existing clients it could be
generally gathered from the respondents reply that the organizations having Grants
have quite potential as they have a flow of inflows quite regularly especially in
case of domestic as for the government grants were concerned they were quite
numerable but generally they are being received in good amount the case with
foreign grants is that they were very limited in number but huge in corpus size
thus a track has to be kept of them as those would give a good business to the bank
While mode of receiving the grants/donations suggested that if in cash, it was
utilized by the client and was not accounted in accounts as could be read through
there bank balances as provided bank. Where as those organizations, which
received a cheque or DD, tend to invest so it was in interest of bank to initiate and
be in constant touch with such clients.

While the clients having an FCRA with the bank are highly potential clients as
there transactions in normal course is some what a crore and it could be more
depending upon the nature of client.

46
Banking/Investment Details
In this section First Question was relating to whether Clients have separate
account for branches
70% said yes & 30% said No.

Respondant Having Seperate Account

For The Branches
Respondant

no 30%
Rate

yes 70%

0% 20% 40% 60% 80%

Respondant Response

Second Question was relating to total no. Of accounts hold for banking
purpose
In this case 24% said 1 account 36% said 2 accounts 18% said 3-5 accounts
22% said more than 5 accounts.

Respondant Rate For Holding No. Of Accounts

1Account
22% 24%
Accounts 2

3-5 Accounts

18% more than 5

Accounts
36%

47
Third Question was relating to whether respondents hold Fixed Deposit at
bank or not
In this case 70% said yes 30% said No

Respondants Response For Acquisition Of

FD'S
Respondant

100% 70%
Rate

50% 30%

0%
yes no
Respondant Response

48
Fourth Question in this part, was relating to percentage of unutilized fund in
FD’s

% Of Unutilized Fund In FDs

more than 70% 4%

Respondant
Response

6%
Less than 70% but more than 50%

Less than 50% but more than 20% 35%

Less than 20% 55%

0 0.1 0.2 0.3 0.4 0.5 0.6

Respondant Rate

In this case the results were: -

Less than 20% 55%

Less than 50% but more than 20% 35%
Less than 70% but more than 50% 6%
More than 70% 4%

49
Fifth Question was relating to average Deposits& Withdrawals by clients
(a)
1- represents 1to2 Deposits
2- represents 3 to 5 Deposits
3- represents more than 5 deposits

No. OF DEPOSITS
40%
40% 36%
30% 24%
Respondant
20%
Rate
10%
0%
1 2 3
Respondant Response

(b)
1-represents 1 to 2 withdrawals 60%
2-represents 3 to 5 withdrawals 32%
3-represents more than 5 withdrawals 8%

50
Sixth Question was divided into two parts
Q1(a).Are people satisfied with ICICI services If yes, then Q1(b)

Satasfaction Towards ICICI Services

Respondant Rate

100%
80%
60%
40%
20%
0%
yes no
Respondant Response

Q1(b).what makes people like ICICI

What makes people like ICICI

Product Door Step Facility

ATM
Facility 26%
37% 8 to 8 Banking

Door Step ATM Facility

8 to 8
Banking Facility
15% 22%

Product 26%
Door Step Facility 22%
8 to 8 Banking 15%
ATM Facility 37%
Seventh Question was relating to comfort ability towards changing accounts.

51
In this the general reply was in favor of ICICI bank as most of the clients preferred
to continue with services of ICICI bank

Very 18%
Moderately O.K. 12%
No, I will Not Change 70%

Comfortability Towards Shifting Of

Accounts
Respondants

70%
Response

2 12%
18% No,I will Not
Change
1 Moderately O.K.

0 0.5 1 Very

Response Rate

52
 IMPACT OF BUSINESS OF THE COMPANY ON ITS
INVESTMENT PATTERN
Our sample consists of companies selected from a range of industries, but due to
paucity of time, we were unable to adequately represent any particular industry.
Hence, it is difficult to estimate special characteristics of the investment pattern of
particular industries. However, the banking and insurance sectors show a distinct
pattern when compared to the other 15 companies. Following are some brief
comments about the same (some of these have been touched upon earlier in the
report).

a) For the 2 sectors, high return on investments was an equally important

consideration as safety in determining their investment portfolio. This is in
contrast to the sample average.

b) They invested both in long-term and short-term instruments again in contrast to

the sample average.

c) They had an additional consideration to keep in mind when making

investments, meeting statutory requirements and government guidelines with
respect to investment in GOI Securities. In fact, the 2 banks had the largest
exposure to GOI Securities (32%). They also made investments in other
instruments (not covered in our study) to meet government regulations. These
include advances and term lending, balance with RBI, and loans to State
Governments for Housing and Fire Fighting Equipment.

d) The investment portfolio of the 2 sectors was the most diversified across the
entire sample. These sectors were the only ones investing in the call market, in
corporate debentures, and in commercial paper. Such diversification was
necessary as well as profitable due to the large corpus in these sectors (more
than Rs. 3000 crores).

53
e) Surprisingly, mutual funds were not the major claimant of investments in this
sector. Oriental Insurance invested about 16% in MFs, while for the banks the
figure was even less than 1%. On the contrary, the insurance sector put
majority of its funds in equity, and the banks invested the largest proportion of
their funds in GOI Securities. The cause for the same lies in their objective of
high return and meeting government guidelines respectively. Also, the banks
had no funds invested in FDs.

IMPACT OF CORPUS OF THE COMPANY ON ITS

INVESTMENT PATTERN

In our sample, there were six companies with corpus less than Rs. 10 crores (small
investors), four companies with corpus between Rs. 10-50 crores (medium-size
investors), and seven companies with corpus more than Rs. 50 crores (large investors).
There was one company unwilling to reveal its corpus; it has, thus, been left out of the
succeeding analysis.

Following are the findings:

(a) The small investors invested only in MFs (only debt and liquid/STP funds) and FDs.
They did not have exposure to any other financial asset. On average, 71% of their
funds were invested in various kinds of MFs, and 29% were invested in FDs. Their
portfolio was not well diversified. 50% of these companies invested solely isn one
category of assets (MFs or FDs).

There seem to be three rasons for the above trend. Firstly, the relatively small corpus did
not give the companies adequate economies of scale to invest in a diversified portfolio
and generate gains. Secondly, these companies put greater value on safety and liquidity
as opposed to high return, in comparison with the large investors. Finally, majority of the
companies in this group invested for short periods of time.

(b) There was no significant trend in the investment pattern of medium-size investors.
Though MFs and Bank FDs remained the dominant investment avenue, this category

54
 of companies did show an inclination towards other assets, namely inter-corporate
deposits, corporate debentures, and equity. Even then funds of individual companies
were not invested in well-diversified portfolios; 50% of the companies put all their
funds in one financial asset (MFs or FDs). Safety continued to remain their first
priority, and all investments were made for the short-term.

(c) The large investors had the most well diversified portfolio from among the entire
sample of companies. More than 71% of the companies in this category had exposure
in four or more financial products. While MFs were still the most popular investment
option, firms in this category were investing less than 40% of their surplus funds in
this asset on average. The second-most popular option was investment in GOI
Securities (22%, in fact nearly all large investors invested some part of their funds
here), followed by direct exposure to equity (11%). FDs fell to the fourth position in
terms of proportion of funds invested in any asset (5%). These companies also
invested in corporate debentures, PSU bonds, commercial paper, inter-corporate
deposits, and call market (though, on average, investment in each asset class was less
than 3% of total funds).

Deeper analysis reveals three reasons for the above trend. Firstly, diversification was
feasible and profitable due to a relatively larger corpus. A large corpus generates
economies of scale and helps reduce the cost of investing in a large number of assets.
Secondly 71% of the companies in this category invested both for short-term and long-
term purposes. Hence, investments such as direct exposure to equity begin to look
attractive (equity markets tend to be volatile over a small period but give stable returns
over a longer period of time). Finally, this was the only category in which any company
rated high return on investment as a higher priority than safety. Two companies rated
return higher than safety, while three equally valued the 2 parameters. (It must be kept in
mind that the banking and insurance sector in represented in this category).

(Please refer to Graphs 3 and 4 for a pictorial presentation of the above analysis).

55
 % of Surplus Funds Invested
Co
nt
Ar ine
chie nt
al
s D
G ev
Ho r ee ic
nd tin e
a In

0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
gs di
Si
el an a
Lt
Po d d.
we G
ifts
rP Lt
Co ro d.
ns du
c t
or
tiu s
m Lt
No d.
Se
ida cu
Ca To irit
re ll B ies
er
La rid
un ge
ch Lt
er d.
DL (P
O F )L

56
rie Un td
nt Th ive .
al e r
H
Graph 3

sa
St
ru in du l
ct Lt
ur st d.
al an
En Ti
gin m
es
ee

Name of the Company

rs
Lt
d.
K&
Co
.
FDs
MFs
ICDs
Equity
Investment pattern for companies with corpus less than Rs.50 crore

GOI Secs
 % of Surplus Funds Invested
Jin
da
l M
en
th
ol
&
In
Sp ve
st
an m
en

0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
In ts
di
a Lt
Ho d.
Pu ldi
nja n gs
b
N Lt
d.
at
ion
Pu al
Bh nja Ba
ar b& nk
ti T S ind
O ele ba
rie -v nk
nt en
al tu
G Ins r es
od ur

57
fre an Lt
d.
Ta y c e
Ph C
Graph 4

ta ilip o.
En s Lt
er In d.
gy d ia
Re (P
se )L
ar td
.

Name of the Company

ch
In
st
itu
te
CP

FDs
Call

CDs

MFs
ICDs
Equity

T-Bills
Others

GOI Secs
Corp Debt
PSU Bonds
Investment pattern for companies with corpus more than Rs.50 crore
II. Demand for Distributors by Corporate Houses.

Demand for Distributors

8
No. of companies

0
through a distributor directly directly as well as
through a distributor
How does the company invest?

As can be seen clearly from the graph, 9 of the 18 companies depended completely on
distributors to make their investments, 5 invested directly, and the remaining 4 used
options, investing a proportion of their funds directly and employing the services of a
distributor to deploy the rest.

Further analysis suggests that demand for distributors depended directly on the
preference for investment in mutual funds. All the nine companies that invested through
a distributor were found to deploy the major chunk of their funds in MFs. 4 of the 5
companies that invested directly had no exposure at all to MFs and invested solely in FDs
(bank of inter-corporate). All 4 companies that invested directly as well as through a
distributor had but a minor exposure to MFs, and all belonged to the financial services
industry.

58
When questioned about their expectations from the distributors (incentive sharing,
services, research support, value addition to decision making), the response of the
concerned executives was mixed. On average, companies preferred superior research
support to better services, which in turn was preferred to attractive incentives, but the
preference was very marginal and not much must be made of this preference order.
Value addition to decision making was, no doubt, way below the other three in the
preference scale by a significant margin. One interesting observation is that most big
investors valued incentive sharing higher than research support. The reasons for the same
are not clear. It may be so since most big investors themselves have set up full-fledged in
house treasuries that have access to the latest market information and tools for research
analysis, reducing their dependence on distributors for the same. Many companies also
felt that all big distributors provided comparable research support, and so a choice
between them could be made only on the basis of the incentives offered.

Our study also aimed at determining the name of the distributor(s) that fulfilled the above
expectations in the most efficient manner. Few companies were willing to reveal the
names of their distributors and whom they preferred most. On the basis of the responses
given by those who were willing to reveal this information, Birla Sun Life seemed to be
the most popular distributor, followed by DSP Merrill Lynch. These two were closely
followed by ICICI Securities, JM Fixed Income, Bajaj Capital and SPA Capital (in no
particular order).

59
Comparison of services

Services IDBI ICICI Abn Amro BOP

Zero Balance Facility X   x

Telebanking   X 

Anywhere Banking    X

EFT    

   X
ATM
Loan Facility 80% 80% 75% 90%

Homebanking    

Sunday Banking  X  X

Computerized Pass Book X   x

Demat Facility    x

60
Quality of Service

Name of Bank Excellent Very Good Good Satisfactory

ICICI 60% 30% 10% -

HDFC 20% 30% 40% 10%

Bank of 30% 40% 20% 10%

Punjab

ICICI Bank 30% 20% 50% -

Staff members look receptive with pleasing personality

Name of Bank Yes. No Can't comment

IDBI Bank 100% - -

HDFC Bank 100% - -

Bank of Punjab 100% - -

ICICI Bank 100% - -

Compare your experience in ICICI with other banks

Name of Bank Excellent Very Good Good Satisfactory

IDBI 30% 70% - -

HDFC Bank 10% 60% 20% 10%

Bank of 20% 70% 10% -

Punjab

ICICI Bank 20% 50% 30% -

ANALYSIS

61
The banking industry in India is undergoing a sea change of activities.
Deregulation has brought in aggressive private participation. Global changes in
consumer attitude and technological advancements are forcing banks to adopt to a
new ‘avatar’. And the demand from customers for better services is adding
impetus to the change. Indian banks are rapidly moving towards offering newer
channels to the consumers. These include the Internet, ATMs, tele-banking and
mobile banking.

With homes getting computer enabled and Internet access becoming cheaper,
people will refuse to stay in line for their bill payments or to collect their bank
statements. The desire to bank from home will surge in turn forcing the banks to
deploy more transaction-enabled applications to the customers’ desktops. Banks
will now have to think of customers differently. They will be forced to cross-sell
their products through different channels. From product enhancement point of
view one of the biggest challenges is to identify paperless money including
electronic cash and smart card technologies.

62
 The digital divide
CAGR of
Particulars
Operating Income Net Profit
ICICI Bank 81.6% 44.8%
HDFC Bank 68.0% 37.9%
Global Trust Bank 27.3% 16.4%
UTI Bank 37.5% 75.2%
SBI 18.2% 5.0%
Corporation Bank 25.0% 18.0%
CAGR: Compounded Annual Growth

Measure of performance
HDFC Bank of
ICICI Corporation
Particulars SBI
Bank Bank
Bank India
Branches (x) 111 81 9,050 648 2,520
Employees/branch (x) 13.5 16.6 26.1 15.7 20.6
Deposits/employee (Rs m) 42.0 73.4 8.3 14.0 9.2
Deposits/branch (Rs m) 759.3 1,218.0 217.5 220.4 189.5
Operating profit/employee (Rs m) 2.0 1.4 0.3 0.5 0.2

63
 Key ratios
HDFC
ICICI Corporation Bank of
Particulars SBI
Bank Bank India
Bank
NPA level 0.8% 1.1% 6.4% 1.9% 8.6%
CAR 12.2% 19.6% 11.5% 12.8% 10.6%
Return on assets 1.0% 0.9% 0.8% 1.4% 0.3%
Return on equity 16.0% 9.2% 16.9% 20.3% 6.9%
Return on capital 4.1% 1.9% 1.6% 2.5% 0.5%

Private sector banks in India have taken a lead in introducing new technologies.
After online banking and ATMs, private banks have been quick to offer WAP
(Wireless Application Protocol) enabled mobile banking services. The passage of
Information Technology Bill will provide a boost to the online selling efforts of
the banks by giving legal recognition to electronic contracts and signatures. They
will continue to enjoy significant first mover advantage for a few more years due
to the enormous technology gap. The value-added products offered by private
sector banks have resulted in corporate clients migrating from the traditional banks
to new generation banks. Thus private banks have virtually created an exit barrier
by broadening their product range and effectively cross-selling them with the
latest available technology.
The public sector banks (PSBs) on the hand are also not lagging behind. SBI and
Corporation Bank have made an investment in technology improvement and are
planning to launch Net-banking products in the near future. However absence of
dynamic and proactive management, lack of autonomy for restructuring
operations, overstaffing and unwieldy branch network are dampening their growth
prospects.
Also in government banks prospects is hindered by capital adequacy ratio (CAR)
constraints and high non-performing assets (NPAs). Most of the PSBs have a CAR
of between 9-11 percent and need to raise capital over the next two or three years.

64
The government regulation requires them to lend to sectors where there is low
growth opportunity resulting in large NPAs. These hurdles make PSBs an
unattractive investment. For them raising capital is very difficult. Thus capital
constraints will not allow these banks to grow their assets in any significant way.
The only advantage they have is access to large pool of low cost saving and
current account deposits collected through their extensive branch network.
Apart from technological enhancement, banks globally are focusing on the retail
segment, which has emerged as a key area. Once again it is private sector banks
that are ahead. They have everything the foreign banks could offer, full range of
retail asset and liability products, a customer centric approach, reasonable service
charges and a wide distribution network. Focus on retail banking will help banks
in increasing their wafer thin spreads on lending to large corporates. It would also
give them an opportunity to build a low cost deposit base. Historically commercial
banks in India mostly focused on corporate and business loans (besides mandatory
priority sector lending). Retail lending presents a huge untapped potential as banks
largely ignored the segment so far.
Economic recovery during the last year boosted credit growth to a certain extent.
While incremental deposits of the banks during financial year 2000 declined by 14
percent to Rs 1,155 billion. Advances witnessed an astounding 50 percent jump to
Rs 448 billion. Also the year over year growth in the profits by 66 percent
indicates a good sign for banking companies.

A turnaround
Particulars FY98 FY99 FY00
Growth in operating income 11.3% 19.2% 15.5%
Growth in net profit 42.5% -23.9% 65.8%
% Change year over year
Source: CMIE

65
It is crystal clear from the above analysis that a handful of tiny new banks are out
to change India’s banking landscape. It initiated the build up of a modern, efficient
and customer friendly banking system. These banks are trying to consolidate their
place in the financial sector and provide a one-stop financial service supermarket
to their customers.
Mergers and acquisitions amongst the banks have been found as an effective
remedy for fragmentation. Mergers can prove to be very effective in strengthening
the Indian financial sector. Technology is helping the banks to grab market share
with superior product offering and most importantly in extending the distribution
reach. While the trigger for investment in PSBs could come with improvement in
productivity, reduction in NPA level, stabilising interest spreads, declining staff
strength and good earnings growth. Private banks on the other hand will continue
to enjoy higher valuations as long as they are able to change with the technology,
maintain lower levels of NPAs, higher capital base and sparkling profit growth.

66
 CONCLUSION

The Indian banking sector is witnessing a technology revolution. While the private sector
banks have taken a lead by rapidly offering newer channels to the consumers, public
sector banks are still lagging behind with operational inefficiencies.
Public sector banks have the government as a majority shareholder. Absence of dynamic
and proactive management, lack of autonomy for restructuring operations, overstaffing
and unwieldy branch network are dampening their growth prospects.
On the other hand with emphasis on service and technology, it is for the first time that
private banks are challenging the foreign banks. These banks are making heavy use of
technology to give good service on par with foreign banks but to a much wider audience.
Branch size has been reduced considerably by using technology and having less
manpower. Their technological edge and product innovation has seen them gaining
market share from the slower, less efficient government banks. Also focus on the non-
fund based income as a major source of revenue has enabled them to grow at a faster rate.
As can be seen from the table HDFC Bank and ICICI Bank have comparatively better
productivity ratios than the government banks due to their fast adaptation to technology
change.

Indian banks, traditionally just borrowers and lenders, have now started providing
complete corporate and retail financial services to its customers. Technology drive has
benefited the customers in terms of faster, improved, convenient banking services and
variety of financial products to suit their requirements. ATMs, phone banking, net
banking and mobile banking are changing trend in the sector. In plastic money segment,
customers have also got a new option of debit cards against the earlier popular credit
cards. Many banks have started capitalising on the recent capital market boom by
providing IPO finance to the investors. Retail financing is the other area where the banks
have started to concentrate. Thus private banks have virtually created an exit barrier by

67
broadening their product range and effectively cross-selling them with the latest available
technology.
The positive signs of improving banking scenario coupled with the thrusts made by most
of the banks towards technology and e-commerce has been reflected in the share prices
gains (HDFC Bank and ICICI Bank) in last one year. This was also led by their
comparatively better financial performance compared to public sector banks. Cleaner
loans and higher capital adequacy ratio (CAR) are allowing the private sector banks to
grow their assets in a significant way.

68
 RECOMMENDATIONS

1.FCRA clients are the HNI’s (High Net Worth Clients) for the bank hence a
special care Of such clients to be taken by bank in terms of regular follow up
timely feedback etc.

2.While bank could offer its services to the branch of the organization, as required
by certain organization to maintain a separate account for the branch, thus in that
case business would remain with ICICI only.

3.Attractive package in terms of interest rate could be offered by the bank to

initiate investments amongst clients.

4.While it could also initiate a client to invest in the ICICI mutual fund, as mutual
fund the most preferred other way of investment this would lead to cross – sales of
product as well as a way to keep client yours.

5.It could be noticed through the analysis that the clients receiving Grants are
potential to the bank but at same time clients receiving Foreign Grants are highly
potential to the bank. Thus its in benefit for the bank to be in touch with them for
generating Incremental business & could be taken as a criterion by the bank while
going for a prospective client.

6.Bank should focus on the Investment cycle of the organization and should
initiate investment at that time .

69
QUESTIONNAIRE

Name -: …......................................................................
Organization -: …………………………………………
Address -: ……………………………………………….
E-mail -: ….......................................................................
Phone No -: ……………………… Mobile -: ……………………….

1) What is your occupation?

a) Business b) Service c) Others (……………………)

2) What is the nature of your job?

………………………………………………………………………….
………………………………………………………………………….
……………………………

3) What is your approximate monthly income?

a) Less than Rs. 50, 000 b) Rs, 50,000 – Rs. 1,00,000

c) Rs. 1,00,000 – Rs. 2, 00, 000 d) More than Rs. 2, 00,000

4) What which bank(s) you have banking relation currently?

a) ICICI
b) HDFC
c) Standard Chartered Bank
d) SBI
e) OBC
f) ING Vysya
g) Other please specify …………………………………………….

5) Type of account you are having with the Bank(s).

a) Current Account b) Saving Account

c) Fixed deposits d) Others, specify

70
6) How long you been banking with the above mentioned Bank(s)?

a) Less than 1 year b) More than 1 yr. but less than 3 yrs.
c) More than 3 yrs. but less than 5 yrs. d) More than 5 yrs.

7) Which of the following services providing by your Bank(s) you frequently use?
a) ATMs
b) Phone Banking
c) International Debit Care
d) 8:00 a.m. to 8:00 p.m. Banking.
e) Internet Banking
f) Mobile Banking
g) Doorstep Banking
h) Any Where Access
i) Daily / Monthly / Quarterly Bank statement

8) How will you rate the service provided by Bank(s), you are presently banking
with?

a) Excellent b) Good d) Average

d) Below e) Poor

If you are ICICI Bank’s customer then proceed further -:

9) which factor influenced your decision while opening Current Account / Other
Account at here?

a) Recommended by Family / friend

b) Dissatisfaction from previous Bank
c) Responded to advertisement
d) Other (specify)………………………………………………..

71
10) Are you satisfied with the service provided by ICICI Bank, if not please specify?

…………………………………………………………………………………………
…………………………………………………………………………………………
…………………………………………………………………………………………
…………………………………………………………………………………………

11) Please give your valuable suggestion to make the services more convenient.

…………………………………………………………………………………………
………………………………………………………

12) What kind of account do you have?

(a) Standard (b) Classic (c) Premium (d) Gold (e) Platinum

13) Type of Constitution

(a) Sole proprietorship (b) Private Limited

(c) Partnership (e) Public Limited

14) Whether the grants received or not?

15) Which is the most preferred banking mode?

(a) ATM (b) Mobile (c) Net (d) Phone

16) Have you get foreign currency reserve approvals?

17) How much grants received?

18) Do you have separate account for different branches?

19) How many accounts do you have for banking purpose?

20) Do you have fixed deposits (FDR)?

72
 BIBLIOGRAPHY

 Beckett, A.; Hewer, P. and Howcroft, B. (2002), ‘An Exposition Of

Consumer Behaviour In The Financial Industry Services’, International
Journal of Bank Marketing, Volume 18, Issue 1, p 15

 Preeti Singh, Investment Management

 A.N. Shahbhag, In the Wonderland of Investment

 ‘Banking : The Network is the bank’, by Yogesh Sharma, Dataquest,

January 31, 2003

 ‘Race will end in survival of the fittest’, The Financial Express,

November 29, 2003.

The Times of India, 26 July, 2004.

‘The future is in e-banking’ by Mr. K.V. Kamath (Managing Director, ICICI),

April 14, 2002, Business Line.

‘RBI road map for banking’, The Indian Express, July 21,2004.

 Banking in India, by Dr A. K. Mishra (Professor & Chairman of Finance

Group at IIM Lucknow).

http://www.indiainfoline.com

http://www.icicibank.com

 http://www.sap.com

73
74