Final College Project

A STUDY ON RETAIL BANKING IN INDIA
UNIVERSITY OF MUMBAI
LALA LAJAPAT RAI COLLEGE OF COMMERCE AND ECONOMICS MAHALAXMI, MUMBAI-34
A PROJECT ON A STUDY ON RETAIL BANKING IN INDIA
SUBMITTED BY : SWATI MACHCHA PROJECT GUIDE ON: PROF. ARUN POOJARI
PROJECT, 1, SEMESTER V BACHELOR OF COMMERCE (BUSINESS MANAGEMENT OF STUDIES)
ACADEMIC YEAR 2011-2012 SUBMISSION DATE:
CERTIFICATE
This is to certify that this project entitled A STUDY ON RETAIL BANKING IN INDIA done by miss.Swati.Machcha is an authentic work carried out by her at LALA LAJPAT RAI COLLEGE OF COMMERCE under my guidance. The matter embodied in this project work has not been submitted earlier for the award of any degree or diploma to the best of my knowledge and belief.
________________ (PROJECT GUIDE)
_________________ (BMS CO.ODINATOR)

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_____________________ (EXTERNAL CO.ODINATOR)
DECLARATION
I, hereby declare that this project entitled A STUDY ON RETAIL BANKING IN INDIA is done by me in the academic year of 2011. This project is an authentic work carried out by me at LALA LAJPAT RAI COLLEGE OF COMMERCE under my professors guidance. The matter embodied in this project work has not been submitted earlier for the award of any degree or diploma to the best of my knowledge and belief.
(STUDENT SIGN)
ACKNOWLEDGEMENT
With great pleasure, I thank Mr. ARUN POOJARI Professor of LALA LAJAPAT RAI COLLEGE OF COMMERCE AND ECONOMICS for being an inspiration in the completion of this project. I thank him for his invaluable help provided during the completion of this project. I also thank him for providing us guidance and numerous suggestions throughout the project.
I am also thankful to the librarians who gave us full support with the available resources.
I express my deep gratitude to all my friends and family members, whose efforts and creativity helped me in giving the final structure to the project work.
EXECUTIVE SUMMARY
The Indian retail finance market has witnessed a sea change during the last few years. Earlier, Indians were averse to the concept of availing credit to fund their purchases and believed in the concept of saving and then spending. However, today, there are a variety of consumer credit products being literally forced upon consumers by overzealous lenders, who have realized the huge latent potential of the burgeoning Indian consumers. This has gradually led to a shift in the psychology of Indian consumers, who no longer consider credit as a social stigma and are more than willing to fulfill their aspirations through the credit mechanism.
Until 10 years ago, mainly non-banking finance companies (NBFCs) and housing finance companies (HFCs) catered to the nascent Indian retail finance market, while commercial banks focused on corporate lending. Commercial banks, instead of lending to retail consumers directly, would provide funds to NBFCs and HFCs, which, in turn, would lend to retail consumers. The mid 90s saw several NBFCs mushrooming to exploit the huge potential of this market. As competition intensified, many NBFCs, in order to capture a share of this retail market pie, ignored the risks associated with the retail lending business and landed up burning their fingers. Consequently, the late 90sand early 2000 witnessed a number of NBFCs either shutting shop or curtailing their operations.
This report focuses on the retail asset finance market, which comprises mainly loans for housing, cars and utility vehicles (auto finance), commercial vehicles and two-wheelers. The retail asset finance market has grown between 1998-99 and 2003-04 at an annualized rate of 35 per cent (disbursements). The high growth rate between 1998-99and 2003-04 can be attributed to the fact that 5 years ago, the retail finance market was in its infancy, with few people availing credit to fund their purchases. Going forward, CRIS INFAC expects the retail finance market to grow at an annual rate of 18 per cent, from Rs 1,213 billion in 2003-04 to Rs 2,792 billion in 2008-09.
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INDEX
SERIAL NO.
1.
PARTICULARS
CHAPTER-I INTRODUCTION & RESEARCH
PAGE NO.
9
1.1
GENERAL INTRODUCTION
10
1.2
OBJECTIVE OF THE STUDY
11
1.3
SCOPE OF THE STUDY
12
1.4
METHODOLOGY OF THE STUDY
13
1.4.1
FORMATION OF PROBLEM
13
1.4.2 1.4.3
COLLECTION OF DATA RESEARCH INSTRUMENTS
14 15
1.4.4
MAKING SAMPLING PLAN
16
1.4.5 2 2.1
RESEARCH LIMITATIONS CHAPTER-II RETAIL BANKING AN INTRODUCTION
17 18 19
2.2
WHAT IS RETAIL BANKING
20
2.3
BENEFITS OF RETAIL BANKING

6
21
2.4
SCOPE FOR RETAIL BANKING IN INDIA
22
2.5
OBJECTIVES OF RETAIL BANKING
23-24
2.6
ADVANTAGE AND DISADVANTAGE OF RETAIL BANKING
25-27
2.7
OPPORTUNITIES
28
2.8
CHALLENGES TO RETAIL BANKING IN INDIA
29-30
2.9
STRATEGIES FOR INCREASING RETAIL BANKING BUSINESS
31-34
3 3.1
CHAPTER III EMERGING ISSUES IN HANDLING RETAIL BANKING
35 36-41
3.2 3.3
SOME CRITICAL ISSUES GROWTH DRIVERS OF RETAIL BANKING
42-48 49-50
3.4
FAVORABLE ROLE OF RBI CATALYST ROLE OF GOVERNMENT
51
3.5
52
4 4.1
CHAPTER IV INFORMATION TECHNOLOGY IN RETAIL BANKING

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53 54-55
4.2
TECHNOLOGY PROVIDES RETAIL BANKS WITH VARIOUS DELIVERY CHANNELS
56-58
4.3 4.4 4.5
FUTURE OF RETAIL BANKING RETAIL BANKING SERVICES OVERVIEW OF MAJOR CATEGORIES OF RETAIL OFFERING
59 60-61 62-79
4.6 4.7 5 5.1 5.2 5.3
LATEST HAPPENINGS ADVERTISING CHAPTER V RESPONDENTS PROFILE DATA ANALYSIS BANKS CONSIDERED FOR RETAIL OFFERINGS
80-86 87-92 93 94-95 96 97-99
5.4
AWARENESS OF BANKS THROUGH VARIOUS ADVERTISING MEDIUM
100-102
5.5
RELATION BETWEEN BASIC-BANKING AND RETAIL-BANKING CHOICES
103
CHAPTER VI CONCLUSION
104 105 106 107-109
ENCL:1 ENCL: 2
BIBLIOGRAPHY ANNEXURE
Chapter I: Introduction and research
1.1 GENERAL INTRODUCTION
The banking sector has under gone turbulent changes in the past few years. The financial sector reforms have brought in the entry of new private sector and foreign banks in the country. The conventional banking as outlined above has given way for professional and high-tech banking.
There has been a paradigm shift from the monopolies of public sector banks to competitive banking. Public sector banks can no longer remain complacent with their conventional products and services. With walk in business virtually being ruled out, banks are now scouting for quality consumers both for building their resources and assets There were times when the corporate clientele occupied the centre stage and the retail ones were pushed to the back seat. The slow down of the economy, sluggish industrial growth and slump in agricultural activities have pushed the commercial banks to look to the retail customers.
Retail banking has both pros and cons. In a situation like today, the bankers have very little option, but to chant the Retail Mantra
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1.2 OBJECTIVE OF THE STUDY

Top of mind awareness of consumers for banks offering various retail products.
Factor influencing their purchase decision.
To study the comparative influence of various mediums of advertisements in creating awareness amongst the consumers.
To find the immediate competitors in the minds of consumer for every retail product.
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1.3 SCOPE OF STUDY
The scope of study of this project is narrow. It mainly focused on the consumer Perception about various banks offering retail products The survey was conducted in the areas of south Bombay and it was filled in by:
Student Salaried Business Retired
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1.4 RESEARCH METHODOLOGY

An exploratory research was conducted in order to study the consumer Perception about various banks offering retail products and the banks they Opt for.
1.4.1 FORMATION OF PROBLEM
A problem statement is a clear concise description of the issues that need to be addressed by a problem solving team and should be presented to them (or created by them) before they try to solve the problem.
The statement of problem is:
Which type of consumer in the market utilizes more retail banking product.
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1.4.2 COLLECTION OF DATA
The research data was of two type Primary data and secondary data.
Primary data was collected through personal interview with respondents.
Secondary data was collected from Books, Magazines, Periodicals, Journals and websites.
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1.4.3 RESEARCH INSTRUMENTS
The instrument I have used in my research to find consumer observation about various banks offering retail products. I have made the questionnaire with 13 multiple choice questions. The questions ranged from being general to being specific about the retail banking services used by customers.
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1.4.4 MAKING SAMPLING PLAN
SAMPLING UNIT:
In this study sampling units are Student, Salaried, Business, and Retired. They were sampled throughout South Mumbai.
Sample Size
A random sample of 100 were administered with the questionnaire and responses collected.
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1.4.5 RESEARCH LIMITATIONS

The research study is limited to the geographical boundaries of South Mumbai. The respondents did not respond to all questions due to their personal bias. The study faces limitation in respect of time.
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Chapter II
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2.1 RETAIL BANKING AN INTRODUCTION
We dont want satisfied customerswe want delighted customers. It is the new marketing mantra today. The same applies to banking as well. Retail banking and rural banking were once considered as taboos by the leading foreign and domestic banks. But cut-throat competition, innovation and advanced technology have altogether changed the faced of banking sector. Now all banks have recognized the importance of retail banking.
In this that part of a bank that offers products and services primarily to individual customers, professional, self-employed individuals or small businesses. The focus is on creating products and services that meet the needs of the target customers and are profitable for the bank as well. Understanding retail banking will help in servicing your customer better as it would give you a perspective and insight into how such products are structured and specific requirements for each set of products.
The approach to retail banking products is more is more on a mass production basis wherein all risk and operations are based on and geared to cater to a large number of customers. This is therefore, significantly different from corporate banking or wholesale banking where focus is on large sized customer accounts rather than large numbers of customers. With the advent of ATMs, Anytime banking has come into picture. Satellites and telecom networks across the world have made Anywhere banking possible. Now it is the turn of Anyhow banking, and the leading bank of the next century will be the one which has all these three As.
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2.2 WHAT IS RETAIL BANKING
Retail banking can be crudely defined as the antonym of wholesale or bulk banking. It is nothing, but shared business. A deposit of Rs.1 lakh from single customer vs. small deposits of Rs. 10,000 each from 10 different customers. The corporate and retail divide is nothing but internal segmentations and the customer remains always a customer. Retail banking generally refers to offering financial services, products related to deposits and assets to individual customers for personal consumption.
Banks concentrate on various segments like professionals, housewives, pensioners, children, salaried class etc. Different types of products like recurring deposits, savings bank deposits, fixed deposits, credit cards, housing and consumer loans and educational loans are offered by banks to the above mentioned marked segments.
The domain of retail banking market has tremendous growth potential for banks and finance companies, as at present it is largely untapped. The penetration level is 2.5 to 3 % and is in a scenario when the requirements of the consumers are growing. In the past, people never believed in buying consumer goods on credit. But today the attitude is changing. The demand for consumer products has increased. Today, about 70% of consumer goods purchased are through finance schemes/loans as against 40% about 1 to 6 years ago. The home loans alone account for nearly two-third of the total retail portfolio of the bank.
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2.3 BENEFITS OF RETAIL BANKING
Traditional lending to the corporate are slow moving along with high NPA risk, treasure profits are now loosing importance hence Retail Banking is now an alternative available for the banks for increasing their earnings. Retail Banking is an attractive market segment having a large number of varied classes of customers. Retail Banking focuses on individual and small units. Customize and wide ranging products are available. The risk is spread and the recovery is good. Surplus deployable funds can be put into use by the banks. Products can be designed, developed and marketed as per individual needs.
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2.4 SCOPE FOR RETAIL BANKING IN INDIA

All round increase in economic activity
Increase in the purchasing power. The rural areas have the large purchasing power at their disposal and this is an opportunity to market Retail Banking.
India has 200 million households and 400 million middleclass population more than 90% of the savings come from the house hold sector. Falling interest rates have resulted in a shift. Now People Want To Save Less And Spend More.
Nuclear family concept is gaining much importance which may lead to large savings, large number of banking services to be provided are day-by-day increasing.
Tax benefits are available for example in case of housing loans the borrower can avail tax benefits for the loan repayment and the interest charged for the loan.
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2.5 OBJECTIVES OF RETAIL BANKING
The objectives of retail banking is to increase penetration by providing increasing level of services and increased access, by offering value added services to customers by packing them with retail banking products and services. The retail banking offers considerably better of3-4% compared to very thin spread available to banks in case of corporate clients.
SOME OF THE OBJECTIVES ARE
Assess way to leverage and scale to support aggressive growth. Identify cost savings to meet return on investment capital target. Improve service capability in order to integrate with corporate parent and leverage financial planning network. Retail banking clients are generally loyal and tend not to change from one bank to another very often. Interest spreads are wide, since customers are too fragmented to bargain effectively, credit risks tends to be well diversified, as loan amounts are relatively small.
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There is less volatility in demand and credit cycle than from large corporate. Large numbers of clients can facilitate marketing, mass selling and the ability to categorize/select clients using scoring systems /data mining. Provide cheap commercial deposits and consumer deposit growth. Drives overall deposits and loan growth through aggressive marketing. Continues to stress credit quality and ensure risk is appropriately priced.
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2.6 ADVANTAGES AND DISADVANTAGES OF RETAIL BANKING
ADVANTAGES
Retail banking has inherent advantages outweighing certain disadvantages. Advantages are analyzed from the resource angle and asset angle.
RESOURCE SIDE
Retail deposits are stable and constitute core deposits.
They are interest insensitive and less bargaining for additional interest.
They constitute low cost funds for the banks.
Effective customer relationship management with the retail customers built a strong customer base.
Retail banking increases the subsidiary business of the banks.
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ASSETS SIDE
Retail banking results in better yield and improved bottom line for a bank.
Retail segment is a good avenue for funds deployment. Consumer loans are presumed to be of lower risk and NPA perception. Helps economic revival of the nation through increased production activity. Improves lifestyle and fulfils aspirations of the people through affordable credit. Innovative product development credit. Retail banking involves minimum marketing efforts in a demand driven economy. Diversified portfolio due to huge customer base enables bank to reduce their dependence on few or single borrower Banks can earn good profits by providing non fund based or fee based services without deploying their funds
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DISADVANTAGES
Designing own and new financial products is very costly and time consuming for the bank. Customers now-a-days prefer net banking to branch banking. The banks that are slow in introducing technology-based products, are finding it difficult to retain the customers who wish to opt for net banking. Customers are attracted towards other financial products like mutual funds etc. Though banks are investing heavily in technology, they are not able to exploit the same to the full extent. A major disadvantage is monitoring and follow up of huge volume of loan accounts inducing banks to spend heavily in human resource department. Long term loans like housing loan due to its long repayment term in the absence of proper follow-up, can become NPAs. The volume of amount borrowed by a single customer is very low as compared to wholesale banking. This does not allow banks to to exploit the advantage of earning huge profits from single customer as in case of wholesale banking.
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2.7 OPPORTUNITIES
Retail banking has immense opportunities in a growing economy like India. As the growth story gets unfolded in India, retail banking is going to emerge a major driver.
The rise of Indian middle class is an important contributory factor in this regard. The percentage of middle to high-income Indian households is expected to continue rising. The younger population not only wields increasing purchasing power, but as far as acquiring personal debt is concerned, they are perhaps more comfortable than previous generations. Improving consumer purchasing power, coupled with more liberal attitudes towards personal debt, is contributing to Indias retail banking segment.
The combination of above factors promises substantial growth in retail sector, which at present is in the nascent stage. Due to bundling of services and delivery channels, the areas of potential conflicts of interest tend to increase in universal banks and financial conglomerates. Some of the key policy issues relevant to the retail-banking sector are: financial inclusion, responsible lending, and access to finance, long-term savings, financial capability, consumer protection, regulation and financial crime prevention.
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2.8 CHALLENGES TO RETAIL BANKING IN INDIA
The issue of money laundering is very important in retail banking. This compels all the banks to consider seriously all the documents which they accept while approving the loans.
The issue of outsourcing has become very important in recent past because various core activities such as hardware and software maintenance, entire ATM set up and operation (including cash, refilling) etc., are being outsourced by Indian banks.
Banks are expected to take utmost care to retain the ongoing trust of the public. Customer service should be at the end all in retail banking. Someone has rightly said, It takes months to find a good customer but only seconds to lose one. Thus, strategy of Knowing Your Customer (KYC) is important. So the banks are required to adopt innovative strategies to meet customers needs and requirements in terms of services/products etc. The dependency on technology has brought IT departments additional responsibilities and challenges in managing, maintaining and optimizing the performance of retail banking networks. It is equally important that banks should maintain security to the advance level to keep the faith of the customer. The efficiency of operations would provide the competitive edge for the success in retail banking in coming years.
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The customer retention is of paramount important for the profitability if retail banking business, so banks need to retain their customer in order to increase the market share. One of the crucial impediments for the growth of this sector is the acute shortage of manpower talent of this specific nature, a modern banking professional, for a modern banking sector.
If all these challenges are faced by the banks with utmost care and deliberation, the retail banking is expected to play a very important role in coming years, as in case of other nations.
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2.9 STRATEGIES FOR INCREASING RETAIL BANKING BUSINESS
Constant product innovation to match the requirements of the customer segments
The customer database available with the banks is the best source of their demographic and financial information and can be used by the banks for targeting certain customer segments for new or modified product. The banks should come out with new products in the area of securities, mutual funds and insurance.
Quality service and quickness in delivery
As most of the banks are offering retail products of similar nature, the customers can easily switchover to the one, which offers better service at comparatively lower costs. The quality of service that banks offer and the experience that clients have, matter the most. Hence, to retain the customers, banks have to come out with competitive products satisfying the desires of the customers at the click of a button.
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Introduction of new delivery channels
Retail customers like to interface with their bank through multiple channels. Therefore, banks should try to give high quality service across all service channels like branches, Internet, ATMs, etc.
Tapping of unexploited potential and increasing the volume of business
This will compensate for the thin margins. The Indian retail banking market still remains largely untapped giving a scope for growth to the banks and financial institutions. With changing psyche of Indian consumers, who are now comfortable with the idea of availing loans for their personal needs, banks have tremendous potential lying in this segment. Marketing departments of the banks be geared up and special training be imparted to them so that banks are successful in grabbing more and more of retail business in the market.
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Infrastructure outsourcing
This will help in lowering the cost of service channels combined with quality and quickness.
Detail market research
Banks may go for detail market research, which will help them in knowing what their competitors are offering to their clients. This will enable them to have an edge over their competitors and increase their share in retail banking pie by offering better products and services.
Cross-selling of products
PSBs have an added advantage of having a wide network of branches, which gives them an opportunity to sell third-party products through these branches.
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Business process outsourcing
Outsourcing of requirements would not only save cost and time but would help the banks in concentrating on the core business area. Banks can devote more time for marketing, customer service and brand building. For example, Management of ATMs can be outsourced. This will save the banks from dealing with the intricacies of technology.
Tie-up arrangements
PSBs with regional concentration can reap the benefit of reaching customers across the country by entering into strategic alliance with other such banks with intensive presence in other regions. In the present regime of falling interest and stiff competition, banks are aware that it is finally the retail banking which will enable them to hold the head above water. Hence, banks should make all out efforts to boost the retail banking by recognizing the needs of the customers. It is essential that banks would be imaginative in predicting the customers' expectations in the ever-changing tastes and environments. It is the innovative and competitive products coupled with high quality care for clients will only hold the key to success in this area. In short, bankers have to run very fast even to stay where they are now. It is the survival of the fastest now and not only survival of the fittest.
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CHAPTER III
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3.1 EMERGING ISSUES IN HANDLING RETAIL BANKING
KNOWING CUSTOMER
Know your Customer is a concept which is easier said than practiced. Banks face several hurdles in achieving this. In order to that the product lines are targeted at the right customers-present and prospective-it is imperative that an integrated view of customers is available to the banks. The benefits flowing out of cross-selling and upselling will remain a far cry in the absence of this vital input. In this regard the customer databases available with most of the public sector banks, if not all, remain far from being enviable.
What needs to be done is setting up of a robust data warehouse where from meaningful data on customers, their preferences, there spending patterns, etc. can be mined. Cleansing of existing data is the first step in this direction. PSBs have a long way to go in this regard.
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TECHNOLOGY ISSUES
Retail banking calls for huge investments in technology. Whether it is setting up of a Customer Relationship Management System or Establishing Loan Process Automation or providing anytime, anywhere convenience to the vast number of customers or establishing channel/product/customer profitability, technology plays a pivotal role. And it is a long haul. The Issues involved include adoption of the right technology at the right time and at the same time ensuring volumes and margins to sustain the investments. It is pertinent to remember that Citibank, known for its deployment of technology, took nearly a decade to make profits in credit cards. It has also to be added in the same breath that without adequate technology support, it would be well nigh possible to administer the growing retail portfolio without allowing its health to deteriorate. Further, the key to reduction in transaction costs simultaneously with increase in ability to handle huge volumes of business lies only in technology adoption.
PSBs are on their way to catch up with the technology much required for the success of retail banking efforts. Lack of connectivity, stand alone models, concept of branch customer as against bank customer, lack of convergence amongst available channels, absence of customer profiling, lack of proper decision support systems, etc., are a few deficiencies that are being overcome in a great way. However, the initiatives in this regard should include creating flexible computing architecture amenable to changes and having scalability, a futuristic approach, networking across channels, development of a strong Customer Information Systems (CIS) and adopting Customer Relationship Management (CRM) models for getting a 360 degree view of the customer.
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ORGANIZATIONAL ALIGNMENT
It is of utmost importance that the culture and practices of an institution support its stated goals. Having decided to take a plunge into retail banking, banks need to have a well defined business strategy based on the competitive of the bank and its potential. Creation of a proper organization structure and business operating models which would facilitate easy work flow are the needs of the hour. The need for building the organizational capacity needed to achieve the desired results cannot be overstated.
This would mean a strong commitment at all levels, intensive training of the rank and file, putting in place a proper incentive scheme, etc. As a part of organizational
alignment, there is also the need for setting up of an effective Corporate Marketing Division. Most of the public sector banks have only publicity departments and not marketing setup. A fully fledged marketing department or division would help in
evolving a brand strategy, address the issue of alienation from the upwardly mobile, high net worth customer group and improve the recall value of the institution and its products by arresting the trend of getting receded from public memory. The much needed tie-ups with manufacturers/distributors/builders will also facilitated smoothly. It is time to break the myth PSBs are not customer friendly. The attention is to be diverted to vast databases of customers lying with the PSBs till unexploited for marketing.
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PRODUCT INNOVATION
Product innovation continues to be yet another major challenge. Even though bank after bank is coming out with new products, not all are successful. What is of crucial importance is the need to understand the difference between novelty and innovation? Peter Drucker in his path breaking book: Management Challenges for the 21st Century has in fact sounded a word of caution: innovation that is not in tune with the strategic realities will not work; confusing novelty with innovation (should be avoided), test of innovation is that it creates value; novelty creates only amusement. The days of selling the products available in the shelves are gone. Banks need to innovate products suiting the needs and requirements of different types of customers. Revisiting the features of the existing products to continue to keep them on demand should not also be lost sight of.
PRICING OF PRODUCT
The next challenge is to have appropriate policies in place. The industry today is witnessing a price war, with each bank wanting to have a larger slice of the cake that is the market, without much of a scientific study into the cost of funds involved, margins, etc. The strategy of each player in the market seems to be: under cutting others and wooing the clients of others. Most of the banks that use rating models for determining the health of the retail portfolio do not use them for pricing the products. The much needed transparency in pricing is also missing, with many hidden charges. There is a tendency, at least on the part of few to camouflage the price. The situation cannot remain his way for long. This will be one issue that will be gaining importance in the near future.
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PROCESS CHANGES
Business Process Re-engineering is yet another key requirement for banks to handle the growing retail portfolio. Simplified processes and aligning them around delivery of customer service impinging on reducing customer touch-points are of essence. A
realization has to drawn that automating the inefficiencies will not help anyone and continuing the old processes with new technology would only make the organization an old expensive one. Work flow and document management will be integral part of process changes. The documentation issues have to remain simple both in terms of documents to be submitted by the customer at the time of loan application and those to be executed upon sanction.
ISSUE CONCERNING HUMAN RESOURCES
While technology and product innovation are vital , the soft issues concerning the human capital of the banks are more vital.The corporate initiatives need to focus on bringing around a frontline revolution. Though the changes envisaged are seen at the frontline, the initiatives have to really come from the back end. The top management of banks must be seen as practicing what preaches. The initiatives should aim at improved delivery time and methods of approach. There is an imperative need to create a perception that the banks are market-oriented.
This would mean a lot of proactive steps on the part of bank management which would include empowering staff at various levels, devising appropriate tools for performance measurement bringing about a transformation cant do to can do mind-set change
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from restrictive practices to total flexible work place, say. By having universal tellers, bringing in managerial controlling work place, provision of intensive training on products
and processes, emphasizing, coaching etiquette, good manners and best behavioural models, formulating objective appraisals, bringing in transparency, putting in place good and acceptable reward and punishment system, facilitating the placement of young /youthful staff in front-line defining a new role for front-line staff by projecting them as sellers of products rather than clerks at work and changing the image of the banks from a transaction provider to a solution provider.
RURAL ORIENTATION
As of now, action that is taking place on the retail front is by and large confined two metros and cities. There is still a vast market available in rural India, which remains to be trapped. Multinational Corporations, as manufacturers and distributors, have already taken the lead in showing the way by coming out with exquisite products, packaging and promotions, keeping the rural customer in mind. Washing powders and shampoos in Re.1 sachet made available through an efficient network and testimony to the determination of the MNCs to penetrate the rural market. In this scenario, banks cannot lack behind.
In particular PSBs, which have a strong rural presence, need to address the needs of rural customers in a big way. These and only these will propel retail growth that is envisaged as a key strategy for portfolio expansion by most of the banks.
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3.2 SOME CRITICAL ISSUES
CUSTOMER SERVICE
Customer service is perhaps the most important dimension of retail banking. While most public sector banks offer the same range of service with similar technology/expertise, the level of customer service matters the most in bringing in more business. Perhaps more than the efficiency of service, the approach and attitude Towards customer will make the difference.
Front line staffs have to be educated in this regard. A scheme of entrusting a group of important customers to the care of each employee/officer with a person to person knowledge and intimacy can be implemented all sundry advices/notices such as Dr. /Cr. advices. TDR maturity advices, etc. whether signed by employees or officers should be identifiable by the name of those signing, and inviting customers to contact them for further assistance in the matter.
A customer centred organization has to be built up, whose ultimate goal is to "own" a customer. Focused merchandizing through effective market segmentation is the need of the hour. A first step can be the organization of the various retail branches to enter for different market segments like up market individuals, traders, common customers.
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For the SIB (Small Industry and Business) sector banks, the focus should be on identifying efficient units and allocations of loans lo these units. These banks should Try merchant banking services in a scale. With agricultural output growing at a fast rate and mechanization setting in, banks should try to cater to the credit needs of the people involved in this profession. A wide network is absolutely imperative for this sector.
Separate branches/divisions should be opened for traders and similar government businesses. Special facilities for cash tendered in bulk and immediate issue of drafts, by extending facilities like "guarantee bond" system, will go a long way in mitigating problems faced by traders who are the major customers for drafts issue. Provision for cash counting machines in these branches will reduce the monotony of cashiers and unnecessary delays, thus resulting in better productivity and ultimately in improved customer
The personal segment is however the most important one. With the urban segment moving away because of disintermediation and competition from foreign banks, retail banks should focus in the rural/semi-urban areas that hold the maximum potential. Innovative schemes like "paper-gold" schemes can be introduced. In the urban areas, private banking to affluent customers can be introduced, through which advisory and execution services could be provided for a fee. Nationalized banks compare very poorly with the foreign banks when it comes to the efficiency in services. In order to improve the speed of service the bank should. o Improve the rapport between the controlling offices and the branches to ensure that decisions arc communicated fast. o Make sure that the officials as well as the staff are fully aware of the rules so that processing is faster.
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TECHNOLOGY
In the current scenario, the importance of technology cannot be understated for retail banks which entail large volumes, large queues and paperwork. But most of the banks are burdened with a large staff strength which cannot be done away with. Besides, in the rural and semi-urban areas, customers will not be at home in an automated, impersonal environment.
The objective would be to ensure faster and easier customer service and more usable information, instantly, economically and easily to all those who need it -customers as well as employees. Communication technology is especially needed for money transfer between the same city and also between cities. There are inordinate delays in India because of geographical and other factors. Modem technology can make it possible to clear any check anywhere in India within three days. Installation of FAX facilities at all the big branches will facilitate speedy transfer of payment advices. Computerization will be of great help in improving back-office operations. At present, 60% of India's rural branches can have PCs. These can be used for quick retrieval and report generation. This will also drastically reduce the time bank staffs spend in filling and filing returns.
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PRICE BUNDLING
Price bundling is a selling arrangement where several different products are explicitly marketed together to a price that is dependent on the offer. As banks are multi-product firms this strategy is more applicable to retail banking. Price bundling offers several economic and strategic benefits to a bank. It offers economies of, utilization of the existing capacities and reaching wider population of customers. Bank can get the benefits of information and transacting. In the process of extending variety of services, banks are acquiring enormous amount of customer information. If this information is systematically stored, banks can efficiently utilize this information in order to explore new segments and to cross-sell new services to these segments. Cross-selling opportunities and larger customer base can also be the motive for merger against usually stated advantage of cost savings. Price bundling can be used in order to lengthen the relationship with a customer. It will reduce the need of resources to be put on acquiring new customers and saves time of the bank. Among the strategic benefits, price bundling may cause less aggressive competition; it differentiates its products compared to rivals in the same market where the products are sold individually or in other kinds of bundles.
Retail banking offers many services and it gives an opportunity to the bank to combine different services in different kinds of bundles. In many cases demand for one service affects the demand for another service, for example current or savings account and payment services are highly related, and here price bundling is a better alternative than individual selling. Banks have to analyze the customer segment and bundle products The first step in price bundling decision is to select the customer segment. The bundle is targeted to choose a strategic objective. If there are two products (A and B) that are considered to be bundled together, the comprehensive strategic objectives for the
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Cross-selling
to
customers
that
only
buy
one
of
the
products.
Retaining
customers
that
already
buy
both
of
the
products.
Acquiring new customers when they buy neither product for the time being.
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INNOVATION
The scope for innovation in financial services is unlimited. Although banks have introduced a variety of deposit and loan products, the basic features of all these products are almost one and the same. Among the delivery channels, ATMs have emerged as ubiquitous money centers. Almost all banks have established their ATMs. India had only 400 ATMs, which increased to 3,600. Out of this 881 ATMs have Swadhan connectivity. It is projected that the number of ATMs will reach up to 35,000 by the end of. The question arises is, are they cash cows? The answer is certainly no. For most of the banks the overhead costs on these ATMs are far higher than the revenue generated by them. ATM operation costs are largely fixed in nature - the cost of the machine, its maintenance, replenishment of currency, and the satellite (network) connection. There should be a minimum number of transactions to cover these costs. Banks have to innovate wide range of services in addition to cash withdrawals. ATMs should allow customers to buy postal and revenue stamps, payment of bills, event tickets, sports tickets, etc. Banks can offer ATM screens for slide show advertising also. However, the advantage of the ATM has always been speed and convenience, probably on introduction of these new services customer has to spend more time at a point. ATMs can guide the customer also. For example, if a customer's account balance has reached to bare minimum the ATM can give a helpful suggestion that "we notice your balance is low, can we help with a loan?" ATMs can be either within the premises of a branch or at a remote place. On premises ATMs are highly immune to competition, but branches can reduce the staff, on installation of ATM. The scope for wider services through offpremises ATMs is very high; it provides great opportunity for fee revenue. The cost of maintenance of off-premises ATMs is higher in terms of replenishment, cash couriers, armed security etc. In the US, approximately 23 percent of ATMs are offering sale of
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postage stamps. It is the right time for banks to question themselves whether ATM is a service channel, sales channel, or branding opportunity.
The future of retail banking lies more in mobile banking. Mobile telephone market is penetrating, and mobile phones are ideal to utilize Internet banking services without customer accesses to PC. By a tacit acceptance India has around three million mobile phone users and this number is expected to reach to eight million by 2003. Smart card revolution will further change the face of retail banking. Smart cards can store information; carry out local processing on the data stored and can perform complex calculations. At present, India has around 3.4 million smart card users and it is estimated that by the end of 2004 it will reach 14.7 million.
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3.3 GROWTH DRIVERS OF RETAIL BANKING
The growth drivers of retail lending are analyzed as under:
MACRO-ECONOMIC FACTORS
Shift in the pattern of GDP from hitherto agriculture and manufacturing sectors to services sector with increase per capita income especially that of the younger generation. [India's industrial sector accounted for about 21.8% of GDP, where as the services sector accounted for around 56.1 of GDP in 2002-03 as per revised estimates released by Central. Statistical Organization].
The lower uptake in the non-retail sector has compelled bans to shift their focus on retail assets - specially housing finance- for deployment of funds for a longer period, which is considered as the safest within the retail portfolio. Housing loans and other retail loans are comparatively high yielding in terms of interest spread and safer, as risk is diversified among a large number of individuals across the geographic dimensions. The sector enjoys a privilege of lowest NPAs amongst all categories of banks.
Depressed stock and real estate markets as compared to those prevailing in 199293 to 1995-96 thereby diverting deposits to the banking sectors. Comparatively stable real estate prices during last 4/5 years have laid to spurt in demand for housing loans. Inflation continued to be under control. Keenness shown by the consumer goods/ automobile manufacturers to -push up finance schemes through market tie-up with banks with a view to increasing their marketing share.
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DEMOGRAPHIC / BEHAVIORAL FACTORS
Growing concept of nuclear families than the joint families necessitating need for housing units as well as other items of consumer durables. Increased number of dual income families resulting in higher income and savings. Increased demand for dwelling units due to gradual shift of population from rural/semi-urban centre to urban/metro centre for employment. Shift in the attitude of the Indian household from "save and buy' theory to a `buy and repay' principle. Increased middle-income segment and their income levels. Emergence of new sectors such as Information Technology, media, etc. In the economy that resulted in higher income opportunities and major impact on change in urban consumption pattern.
Awareness and sophistication in urban and semi-urban households for urban convenience. Social security and status have also contributed to higher demand for housing units, cars, etc.
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3.4 FAVORABLE ROLE OF RBI
Inclusion of housing loans within the priority sector. Direct finance up to Rs.10
lakhs in case of rural and semi-urban areas now form part of the priority sector advances. This promoted banks to go for housing loans in a big way as it helped them to attain their targets of priority sector lending. Reduction in risk weight age bank's extending loans for acquisition of residential house properties to 50 per cent from 100 per cent. Reduction in Capital Adequacy Ratio requirement has effectively doubled the credit disbursement capacity of banks. Banks have elongated repayment periods of retail loans years to 50/20 years besides quoting fixed/ variable rate of interests based on their asset liability management structure and study of behavioral pattern of demand and time deposits. Deregulation of interest rate with option to quote fixed/ variable interest rate. Continuous reduction in bank rate, which resulted in reduction in lending rates as well. South ward movement in CRR and SLR ratios increasing lending capacity of banks.
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3.5 CATALYST-ROLE OF GOVERNMENT
Tax exemptions for payment of interest on capital borrowed for purchase/ construction of house property and principle repayment. This made housing finance affordable and within the reach of common man. [It is important to note that the housing sector has been recipient of a large number of fiscal incentives in the last 6`h budgets]. These exemptions also changed the profile of the retail segment from hitherto cash transactions to book transactions. The Government could not ignore the importance of housing sector in overall development of the economy due to the following factors:
Housing construction activities can generate opportunities for employment. In the

present context of jobless GDP growth, this issue assumes important as the housing construction provides massive job opportunities for both unskilled and skilled man power.
Mass construction of houses will result in the benefits of the nation by the way of
healthy standard of leaving, motivation to save more and thereby providing sustainable economic recovery.
This would also lead to growth in related industries as well.
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CHAPTER IV
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4.1 INFORMATION TECHNOLOGY (I.T) IN RETAIL BANKING
The growth of information technology (IT) and its remarkable applications to banking and financial sector has greatly facilitated the growth of retail banking to a very large extent. When the banking sector reforms were introduced, the public sector banks were in advantageous position because of their wide network of physical branches in urban and rural areas, to compete with public sector banks, private and foreign banks adopted IT as a major cost effective tool in their expansion drive. Since the success of retail banking is measured based on the volume of customer base.
IT has made it possible for banks to reach and serve a large number of individual customers in the shortest possible time and also reduce the cost of banking transactions. According to ICICI bank officials, a physical transaction costs the bank Rs.30 -50, cheque transaction Rs. 13-17, while a debit transaction costs only Rs. 2-5. Wherefore , riding on the technological wave, private and foreign banks tried to capture the market in a big way. Private and foreign banks who were pioneer of applying IT in banking
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sector have laid more stress on virtual banking when compared to brick and mortar structure of the public sector banks. Private and foreign banks have state -of the art
websites which provides information to the customers about the banking products and services and also help them to avail these products and services through some easy
steps. Private and foreign banks are found to encourage their customers, to move over to virtual banking in a big way by offering and promotional schemes. These banks discourage physical branch by charging extra amount. In addition to websites, they have introduced ATMs, internet banking, phone banking, mobile banking, etc. in a big way by computerizing and networking their branches. IT has enabled the integration of ATM, internet, phone banking and mobile banking such that banking transactions are reflected irrespective of any convenient medium used by their customers. The development of software industry in India has helped the cause of these banks. Major Banks has tie-ups with software companies for developing the requisite software.
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4.2 TECHNOLOGY PROVIDES RETAIL BANKS WITH VARIOUS DELIVERY CHANNELS
Automated Teller Machines (ATM)
The trend in banking has evolved from a cash economy to cheque economy and thereon to the plastic card economy. One of the channels of banking services delivery is vide the ATM or the Automated Teller Machines, whose traditional and primary use is to dispense cash upon insertion of a plastic card and its unique PIN or Personal Identification Number. Current and savings account holders of a bank who hold a certain minimum balance in their accounts (determined by each bank as per their
56
policy) are issued an ATM card. The card is a plastic card with a magnetic strip with the account number of the individual. When the card is inserted into the ATM, the
machines sensing equipment identifies the account holder and asks for his/her identification code number. This is referred to, usually, as the PIN and is issued by the banks computers. This number is unknown to the banks staff and is secret and unique to that individual. When the person uses the ATM and it asks for the PIN, the cardholder identifies himself/herself by pressing the relevant number buttons on the machine. The machine then verifies the account number on the ATM card along with the secret code number stored in the ATM. When the matches found, the ATM pops a menu screen, which allows the user to transact almost all types of bank transactions.
MOBILE BANKING
All over the world, mobile phones have become one of the convenient means of carrying out banking transactions. In Korea, there are 3.3 million mobile phones users. But in India, very few people use mobile phones even for simple banking queries in spite of having 47 million mobile users base with nearly two million being added every month. This was due to low level of awareness, frauds and security problems, complex process etc. However, the various banks have entered into strategies tie-ups with mobile companies so that customers can avail banking services. For e.g., ICICI has signed Memorandum of understanding (MoU) with Reliance India mobile to provide services of mobile banking free of cost to those clients who have reliance handsets.
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INTERNET BANKING
One of the channels of service delivery to a banking customer is through the Internet. The access to account information as well as transaction is offered through the worldwide network of computers on the Internet. Every bank has special firewalls & its own security measures to protect the accounts from non- authentic use from unauthorized users. Data are encoded using algorithms with a 128 -bit key or, in some cases, with a 1,024-bit encryption. Each account holder is provided a PIN similar to that of the ATM or Phone banking PIN. The access to the account is allowed upon a match of the account details & PIN entered on the computer system. A higher level of security may be reached by an electronic finger-print. The finger print is taken before & after the transaction. Then both versions are compared. In case of any difference, the transaction is aborted.
TELE OR PHONE BANKING

Tele banking or phone banking service offered by banks to enable customers to access their accounts for information or transactions. Similar to the ATM PIN, a telephone PIN (T-PIN) is provided to each account holder. The customer can call the exclusive tele banking numbers and provide the details to identify himself/ herself to the automated voice. Typically, the bank account number and the T-PIN are asked for. Upon the respective numbers matching the computerized systems the customer is given access to his account to query or transact on his account. Though cash withdrawal and deposit are not enabled through this service many banks offer cash delivery or collection service to certain classes of customers.
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4.3 FUTURE OF RETAIL BANKING
Retail banking has significant past and glorious future over the years. Retail banking has proved as an effective tool not only to improve the bottom lines of the banks concerned but also to significantly contribute to the development of the individual consumers availing the services or products in particular and to the overall development of the society in general with the needs of the consumers ever multiplying. There is definitely a vast scope for the furtherance of the Retail Banking business. The society is made of the individuals and the environment surrounding him.
As development takes place in the society, the needs of the people grow faster than ever. The wealth creation and its professional management are yet another distinct advantage the society or nation can derive from Retail Banking. The depth of the untapped resources in the retail segment is not yet measured. These resources could be channelized for nation building. On the whole, looking ahead, the prospects of retail banking are brighter than ever and the bankers have to give continued thrust to this area of banking. Thus, with the consumers ever multiplying needs there is definitely a vast scope for the furtherance of the retail banking business. Operationally, there is a possibility that technology go beyond merely reducing the cost & improving the quality of current products. It may prove possible, even profitable, to combine functions in new ways.
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4.4 RETAIL BANKING SERVICE

A banks retail offering can be broadly categorized into Core service, facilitating service, and supporting service. Core service is the reason for being in the market, facilitating services are needed so that the core service can be used, and supporting services exactly discriminates the service package from the services of competitors
Categorization of retail bank services:

Core services Payment services Facilitating services Cash Foreign currency Requirement Traveler charges DD/Banker cheque IT EFT Current account and savings ATM card account Standing customer payments instruction for Credit cards from Debit cards making Services to senior citizens Telephone banking Telephone banking Internet banking Supporting services Making payment at door step
Interbranch/Interbank transfer Internet banking of funds Safety vault Loan products: consumer loan, Current account personal loan, housing loan, Saving account education loan. Time deposit account Delivery of loan at promised time period Interest rate option Conversion of excess balance
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Fixed/Floating Flexibility in pre-payment of loan Counselling on real estate markets Legal services for
documentation ECS for payment of loan installments Insurance product: Life Current account Saving account Time deposit account Safety vault Additional insurance facility for family members Counselling on post retirement savings.
insurance, pension scheme.
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4.5 OVERVIEW OF MAJOR CATEGORIES OF RETAIL OFFERING
Auto Finance
CUSTOMER PROFILE
Average customer age is less than 30 yrs.
Target customers can be classified into the following income groups
Vehicle category
Income Group (Rs.)
Profile
Two Wheelers
3000-8000
Young,
ambitious,
newly
employed or low salaried and Parents of young adults. Cars & other MPVs (personal Use) Cars,Three Wheelers & other MPVs (Business Use) Heavy Vehicles Businessman Employed & Self10000-20000 People with families, settled job, higher middle class, office going or businessman. Self-Employed, small
businessmen to enhance their services, to start new business.
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Major Influencers Dealers, DSA
Newly employed people are more attracted towards this loan as people like to have more in very short time.
More influence is amongst the people who aspire to buy a two or four wheeler for improving their social status.
Sector Analysis
Market size is Rs. 7500 crore next only to housing segment
About 75% of the vehicles especially the cars sold in the country are through Consumer loans schemes.
The factors that proper growth are : Low interest rates. Poor urban transport in many areas, increasing income levels . Even for second hand cars finance is available. Increase in GDP growth. Increased income levels and changing lifestyles. Nearly 3 lacs second hand cars have been financed. Default rate for car loans is around 1 %.
Infact on account of liberal financing by banks, production of passenger cars, motorcycles and scooters has registered good growth It will also provide a boost to the auto manufacturing sector.
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Competition
The sector offers intense competition among players. Major competitors in the sector include ICICI, SBI, HSBC, HDFC etc. Banks and NBFCs have tie up arrangements with the automobile dealers for making available vehicle finance. This has proved to be advantageous for customers also. They can complete all the formalities with less paper work at the auto dealers showroom itself without going to bank.
Market Leader
The auto finance market is led by ICICI. ICICI bank funds about 15 % of cars that are rolled out. ICICI banks retail portfolio as on September 30, 2002 was over Rs. 134.61 billion, as compared to combined retail portfolio of ICICI and ICICI bank of about Rs. 77.35 bn on March 31, 2002.Every bank has its unique segmentation and targeting strategy. Similarly ICICI also follows a segmentation strategy to divide its market into stratas. This helps them to decide upon their target audience and what are their wants and needs.
ICICIs Segmentation Strategy
The ICICI bank in India has adopted Life Stage Segmentation Strategy. This approach aims to minimize overlaps between two segments by categorizing customers into various segments based on the stage of life they have reached. The banks philosophy is to have product idea for every stage of an individuals
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life from childhood to retirement and the bank has a wide product range. ICICI is also adopting a strategy of creating a liability based product along with a asset based product and vice-versa.
Market Targeting Strategy:
Based on the Life Stage Segmentation Strategy ICICI has divided its market into various segments constituting people from different age group and income class. This has helped them to decide which segment is to be targeted for which retail offering. For eg: The target market for auto finance are people belonging to the age group of 28-35 yrs., having a settled job or business and belonging to middle class.
Consumer Credit
Consumer credit sector is growing at 15% Easy credit terms Consumer credit encompasses extension of loans for white goods, educational loans, finance for meeting travel, medical expenses etc. Demand for loans for acquisition of TV, cell phones, ACs, dish-washer, washing machine, fridge etc. is on the rise. There are nearly 12 lakh outlets contributing to Rs.14000 Cr to the GDP (about 1.2% of GDP) Further investments of Rs. 35000 Cr are in the pipeline. Banks also offer loans through tie-ups with corporates. Default rate is a bit high at 3%-4%. This explains the relatively higher rate of interest. Basic understanding of middle class drivers is a must. For unsecured loans, return is high and at the same time competition is low.
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Customer Profile
Customers in the income bracket of Rs. 3000 - 10000 p.m. Usually availed by young married couples but with the change in peoples perception about loans every strata of the society is getting attracted to Customers normally belong to middle class families. People aspiring to improve their standard of living are normally attracted towards this loan. Consumer loans are normally taken by people buying new houses, so the target customers are mostly those people who take housing loans.
Credit Cards:
Mention cards and most people will think of credit cards. Yet, popular as they are, credit cards, which are accepted as a payment device at over 20 million shops worldwide, really represent just one type of card. Other cards include debit cards, smart cards and charge cards. A smart card is used to store cash in an electronic form. A charge card carries all the features of credit cards except that you cannot defer your payment to the card company. A debit card is simply used as substitute for cash or check payments.
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Consumer profile
Credit card users generally belong to the income bracket of Rs. 90,000 p.a. and above. There is a large middle class segment who are prospective cardholders and cannot satisfy the normal criteria for issuance of cards. Most of the middle class people do not go for credit cards because they do not want to fall in the debit trap in view of their low income levels. There are about 5.5 bn cardholders in India but the average amount spent is very low. However, slowly people in India are getting acquainted with the plastic money culture. Traditionally used by rich people to avoid carrying heavy cash.
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Sector Analysis:
Card industry has migrated from paper-based to terminal-based as a part of risk administration. Tier-I cities are highly targeted by multiple issuers and acquirers. Many big players of the market are averse towards cities other than tier-I although tier-II cities have a potential of being a promising markets for credit cards. There are 6 million cards in use. The potential is anticipated at 40 million. Credit card culture pioneered by foreign banks initially like Citibank, StanChart etc. in our country. Payment habits have undergone a change. Credit cards have increased from 5 lacs in 1992 to 60 lacs in 2002 (avg. growth at 20-25 % p.a.) The average annual spending through credit cards is around Rs.18000 Cr. (which is less than 1% of total personal consumption spending in India, as compared to 30% in US. SBI, ICICI Bank has a card base of 9 lacs and 6 lacs respectively.) Credit cards in India are used more as a transactional investment rather than as a medium of servicing credit. It offers an attractive interest of 30% to 36%. Card business is popular on account of its wider acceptability Credit card usage also entitles holders for attractive bonus, incentives, loyalty points etc. The debit cards usage is also becoming popular with a card base of one million.
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Competition
Banks in India have realized that the credit card business need not remain an exclusive preserve of foreign banks like Citibank or Standard Chartered Bank. Card business is a very potential and fast growing market is nowhere near the market potential. State Bank of India, a late entrant has already issued 9 lakh cards. HDFC Bank, another late entrant has reached a card base of over 70,000.Citibank Suvidha credit card is also turning out to be a great success story. Other important players in the sector are HSBC, SBI, ICICI, UTI etc.
There is a case for reduction in the rate of interest on debit balances from present level of over 30% p.a. Interestingly, Andhra bank and HDFC bank rather than any other foreign banks have taken positive steps in this regard. The network of branches does not seem to be effectively utilized for marketing by Indian banks in credit card business. If only these banks becomes market savvy and exploit branches to the hilt in issuance of credit cards, there could be great success awaiting them.
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Segmentation
The potential segments which many banks have not explored so far are self- employed people and housewives. Self-employed people due to lack of proper identity (i.e. either salary certificate of PNR number) are still borrowing at a higher rate and banks are no t assessing the credit risk premiums properly.
Similarly, a suitable banking product is required, which makes the housewife to feel liberated and empowered. The survey of NCAER shows that rural India is gradually possessing variety of consumer durables and electronic goods. Banks have to design suitable products to meet the requirements of rural rich and rural poor. Census of 2001 shows that India has 423 towns (Eight Metros, 19 Mini Metros, 396 Towns), and that financial products are very rare for urban poor and low salaried persons.
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Housing Loan - Nesting becomes a lucrative business
If one were to study the sector-wise performance over the last five years, the housing finance industry has outperformed everyones expectations. Loan disbursals have grown at a CAGR of over 35% in the last five years. But the industry is still fragmented with a large number of players spread across different parts of the country. There are nearly 383 HFCs or housing finance companies in the country currently. This is apart from the numerous banks that have entered in to the fray. In this article we look at the nature of this industry, its trends, the major players involved and the prospects of the industry going forward. The housing finance industry is estimated to be worth nearly Rs 330 bn (FY02) and is estimated to have grown by nearly 28% compared to FY01. A huge deficit of nearly 40 m (FY02E) dwelling units is likely to ensure that the robust growth rates in this sector will continue in the future.
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CONSUMER PROFILE
Customers normally belong to age group of 25-35. The average consumer age is 31 years. These customers generally are in the income bracket of Rs. 8000/- p.m. and above. Normally availed by :
Newly married couples Families breaking up into nuclear families People aspiring to acquire higher status and improved standard of living. DINK - double income no kids i.e. both the husband and spouse earning Indian middle class forms the major chunk of the customer portfolio. Primary influencers in a housing loan decision are
Tangible Factors: Builders Housing Estate agents Banks Friends & Relatives
Intangible Factors: In India, owning a house has a high social regard. Insecurity of staying in rental houses. Sense of Belongingness.
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Industry in Transition
Demand for this category is picking up due to Steady fall in interest rates. Increased start-up salaries. Aspirational changes in lifestyle. More hassle-free. Offer of free insurance cover for various risks. Offer of various incentives in the form of low or no charges for pre-closure of loan-lower processing / administrative/ documentation charges; interest on reducing balance method; choice or option for fixed/floating interest rates etc. Income tax shelters on interest paid. Fall in interest rates has changed the way the salaried class view housing loans. The interest rates on housing loans have declined from average 17- 18% in 1994 to 7.25-8.5% now, thereby making loans cheaper. Earlier, houses would cost on an average 20 years of salary, which has now come down to just 8-10 years' salary. Changing demographics of the Indian populace has also played an important role in the development of this industry. The emergence of a new class of families called DINK or double income no kids has played its part.
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Competition
The key players are HDFC, LICHF, Canfin Home, SBI, ICICI, Bank of Baroda etc. There is very stiff competition in the matter of interest rates- rate cuts are announced at very frequent intervals. The market size is expected to grow to Rs.40, 000 Cr. Size of the loan varies from Rs. 2 lakhs to Rs. 1 Cr. Average tenure of housing loans is 15 years Lower default rate is a big attraction for banks to take-up to housing finance (default rate is just 0.5%). It provides a big impetus for housing construction activities also-growth in infrastructure industry. Transaction cost is also low. It is easier for banks to appraise/assess as they look into fewer aspects like background, employment, experience, number of dependants, previous track record, proof for pay, copy of IT returns, property documents and age of the property etc.
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Market Fragmentation
Before going any further, a brief view at the level of fragmentation in the industry is of significance. The graph above gives us the breakup of market share based on outstanding housing loans as on March 31, 2002. The split up pie of the market share indicates that HDFC is still the market leader followed by SBI. But in terms of the housing loan assets, LIC Housing Finance limited (LICHF) occupies second spot next to HDFC. What is significant is the fact that banks have stepped in to the domain of these HFCs and are capturing market share of the incremental loans disbursed. Currently, banks have garnered close to 35% share of the housing finance market by offering competitive rates of interest. Among banks, SBI and ICICI Bank have been the most aggressive as far as loan disbursals are concerned. We expect the trend to continue with banks gaining a larger share in incremental loan disbursals.
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New dynamics
An important development in the housing finance business has been the entry of new players. The relatively low risk in a housing portfolio has spurred new entrants in the last few years. Arguably, the most significant entrant has been ICICI Home Finance. Among non-banking finance companies, Sundaram Finance and Tata Finance launched housing finance subsidiaries in the recent past, while banks have shown increased interest in acquiring housing assets. Banks have always had subsidiaries handling housing finance, but in the recent past they seem to have taken a greater interest in building retail assets. Banks have a clear advantage in the field simply because they access the lowest cost funds in India. As things stand, a loan from a bank is less expensive than one from a housing finance company. Despite the overwhelming advantage that banks have, HFCs are unperturbed. The reasons range from a feeling that banks will lose interest in retail finance after a point to a belief that banks are not geared to servicing a big thrust into housing finance. In short, the HFCs believe banks cannot match them in a critical area service. Access to resources:
Another differentiator Dewan Housing and LIC Housing Finance both run operations with a profitability level of about 20 per cent. Despite that, Dewan is unlikely to grow at LIC Housing's pace in the current environment. LIC's superior pedigree and access to resources appears to have played a critical role in larger disbursements. For example, between 2000 and 2002, Dewan's housing loan disbursement grew from Rs 163 crore to Rs 200 crore. On the other hand, between 1999 and 2001, LIC Housing's disbursements to individuals grew from Rs 945 crore to Rs 1,597 crore.
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Changing Contours
The fast-changing environment has had a telling impact on HFCs. Following heightened competition, spreads (difference between interest income and expenditure) have declined over the last couple of years. HDFC feels that its current spread, of 1.8-2 per cent, is likely to hold firm. Competition has whittled down high margins and changed housing finance into a low margin, low-risk business.
With their geographical spread and customer knowledge, the HFCs are trying to tap new opportunities that have come up. Using their existing infrastructure to sell other financial products to retail customers has caught the fancy of the HFCs. The opening up of the insurance industry, in particular, seems to have triggered a determined move to diversify income stream. Even here, the bigger players are in a different league. For instance, a HDFC has the resource base to promote subsidiaries in most other areas of financial intermediation be it asset management, insurance or commercial banking. Smaller HFCs that have wide distribution networks can only hope to leverage their reach for a commission.
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Why Is It a safe Bet?
A house is generally the single largest investment an individual makes in a lifetime. Moreover, the emotional dimension of a house makes it intrinsically safer for a lender. Another factor that adds to the safety of the loan is that most borrowers have a significant level of personal money invested in a house. If they lose possession of a house, it would mean a lot of personal wealth slipping out. None of the factors that have thus far made home loans one of the safest deployment avenues is likely to change in the near future, thereby ensuring that the business remains one of the financial sector's safest. THE relatively negligible risk in housing finance is best illustrated through an example. HDFC, the market leader in housing finance, had aggregate bad loans of 0.81 per cent of its portfolio on March 31, 2001. At the other end of the spectrum, a much smaller company, Dewan Housing Finance, had aggregate bad loans of about 0.5 per cent in March 2002. Corporation Bank, one of the soundest banks in the country, had an aggregate bad loan of 5.4 per cent of gross advances in March 2001. Among non-banking financial companies (NBFCs), a tightly run company such as Cholamandalam Finance reported in June 2001 that 1.5 per cent of assets had problems. Thus, a portfolio of housing assets seems safer than a mixed portfolio that other financial intermediaries have.
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Kya Hoga Next??
Prospects of the housing finance industry look encouraging mainly due to the fact that the gap in demand and supply has not been corrected adequately. At the end of the ninth five-year plan period i.e. FY02, the shortfall in dwelling units was in the region of 40 m. In terms of dwelling units the Urban Affairs and Employment Ministry has stated that cumulatively India will have to add a minimum of 6.5 m houses per year to add 33 m houses in order to bridge the current gap. At present the supply of houses stands at close to 2.5 m per year. Apart from that the Indian economy may have reached a stage where interest rates may continue to remain soft over the long-term. This is likely to ensure a steady demand for housing loans.
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4.6 LATEST HAPPENINGS
Of late banks are coming up with innovative product offerings and promotion schemes to tie up old customers and attract new customers. Some of the innovative offerings are listed below: Standard Chartered ANZ
Has launched the Home Saver Account. Along with the Home Loan, your will get a FREE savings bank account into which you may deposit your monthly salary. The EMI for the loan will be automatically reduced from your account. The excess balance in your savings account will earn interest that will be adjusted against your future EMI payments. The bank claims that the effective interest rate gets reduced by upto 45% because of this scheme. Citibank
Offer loans with no guarantors. Most banks require that you present a
guarantor who will back you up if you default on your loan repayment. It can often be embarrassing to ask friends to stand guarantor as mostbanks do not accept relatives as guarantors.
Citibank gives home loans upto 90% of the property value, the highest from any bank (only Tata Hsg Fin. matched this offer)
Citibank offers a flexi-savings account to reduce your cost of borrowing. The bank will automatically open a Saving Account from which you can give standing instructions to deduct the EMI payments for the loan. You can then prepay the loan at any point in time
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and be given instant credit for the same, in case you get a large lump-sum annual bonus from your employer. Should you require money in an emergency at any point you can
avail of a overdraft on this savings account at an interest rate that is the same as that on your Home loan. This works out much cheaper than taking an over draft on a normal savings account.
Dewan Housing Finance and LIC Housing Finance Ltd. offers consumer loans to their existing Home Loan customers at a discount to market rates. The customer has to be a housing loan borrower for the period not less than 6 month with a good repayment record FREE DOUBLE PROTECTION PLAN in the form of Personal Accident Risk Cover and Property Insurance.
GIC Housing Fin.
Gives a free personal accident cover along with the loan. Oriental Bank of Commerce has started to offer a free property insurance cover of the value of property and a free accident cover of upto Rs. 5 lacs.
GICHFL gives Consumer loans for purchase of home equipment at the same interest rate as the home loan to customers at rates of interest that are the lower than other consumer loans. The total loan amount including the housing loan can be upto 90% of the value of the home. The tenure of the consumer loan is restricted to 5 years.
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HDFC
Offer Flexible (Customized) Repayment Schemes, keeping in mind the fact that each individual has a unique problem requiring unique solutions, HDFC has developed various repayment options like Step Up Repayment Facility, Flexible Loan Installment and Balloon Payment Scheme.
Pari Passu/ Second Mortgage Arrangements: HDFC has a tie-up with a large number of Public Sector Organizations and banks which enable us to offer loans to your employees with the flexibility of their spouse also availing a loan from his/her own employer.
Safe Document Storage Facilities: HDFC has state of art storage facilities, which are theft and fire proof, at various locations where loan and property documents are stored. In this way valuable documents are stored safely over the period of the loan and are released almost immediately after a customer repays his loan.
A customer, after availing of a loan can approach HDFC anytime thereafter to increase the Equated Monthly Installment which will help him repay the loan faster.
Home Conversion Loan offered to its existing customers who are interested in moving to a new house. Through this scheme customers can apply to have their existing loan transferred towards the purchase of the new home. Customers may also apply for an additional loan amount for the purchase of the new house. This gives the customer the option of selling their existing house, if they wish to, without having to repay their old loan. The fixed rate loan can be converted to floating without any penalty charges. However, you will be charged 2% if you refinance the loan from another company.
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Hudco
Will waive the last 2 EMI payments on the loan if the customer has a perfect repayment record with no bounced cheques. The loan amount initially taken must exceed Rs. 5 lacs and no prepayments where to have been made during the tenure of the loan. This is not available for the Floating rate loan.
There is a discounted start-up fee for Government employees. The Administrating fees stand reduced from0.7% to 0.5% only.
Free triple insurance - property cover, earthquake cover and personal accident cover. given free along with the loan ( not available for the Floating rate loan)
You can prepay the entire loan in any year without any prepayment penalty. Each prepayment has to be at least 10% of the outstanding loan. However, the floating rate loan has a 1% prepayment penalty.
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HSBC
Offers flexible interest rate loans that can be reset every year depending on the prevailing interest rates at that point. The new interest rate will be applicable for the rolling one year
Guarantor is required only for loans more than Rs. 10 lacs. Else no guarantor
You can prepay up to 25% of the outstanding loan in any year without paying a penalty. For amounts over that, 2% penalty levied.
ICICI
Launches a 30 year tenure home loan, the longest available
ICICI also launches a variable rate loan with a monthly rest basis versus the regular fixed rate loan that is on an annual rest basis
No guarantors are required for loans up to 20 years in most cases
No pre payment fees for any part payment as long as the loan is not fully retired, else 2% charge on pre paid amount. You can repay up to 33% of the outstanding loan in any year without paying penalty.
Free accident death cover for the owner
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Special 100% funding for select properties
Higher eligibility for self-employed professionals through segment-specific Schemes.
LIC Hsg Finance Ltd. will lower quoted interest rate by 0.5% for loans covered by a life insurance cover that is taken from LIC. The life cover must be taken for a minimum period that covers the tenure of the Home Loan.
SBI
Offers Home Loans with no start-up costs. Most banks charge as high as 2% as processing and administrative fees
Prepayment is 2% if the entire loan is pre paid else it is 0%. Avoid this penalty by prepaying up to 99% of your loan.
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Tata Hsg Finance
Offers Home Loans up to 90% of the value of the property and 100% in some new projects.
Prepayment penalty of 0% for up to 4 prepayments in each year. The entire loan can be retired without incurring any penalty.
Free accident and property insurance. The premium payable for a Tata AIG Single Premium Life Cover can also be included in the loan amount sanctioned.
IDBI Bank offers balance transfer scheme. If you have taken a fixed rate loan at a high rate of interest a few years back, then you can enter into an arrangement with IDBI bank to transfer the loan to them at the current lower rate of interest. You will also get free gifts to compensate you for the difference as the old and new EMI. The original EMI cheques will be used by IDBI to recover the loan amount from you over the remaining tenure of the loan. You will not get the benefits of any further fall in interest rates in this product.
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4.7 ADVERTISING
Private Indian Banks have managed to create a greater awareness about themselves over the last 2 years, according to the findings of the latest round of INVESTRACK (V), the fifth round of a syndicated study by ORG-MARG on the investment and banking habits and preference of the Indian investor. The sharp rise in the unaided recall of Private Indian banks is testament to the aggressive advertising and marketing drive of these players over the past one year
A reading of the list of top 10 banks in terms of recall shows a doubling of the number of Indian investors who are now aware of the Indian private banks like
ICICI Bank and HDFC Bank compared to two years ago. While recall for the other banks that are part of the top 10 remains largely unchanged, 51% of Indians are now aware of ICICI Bank and 42% are aware of HDFC Bank compared to 27% and 26% respectively when the last round of INVESTRACK was conducted.
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Advertising, in the retail banking industry, is an important medium of making the prospective consumers aware of the various products as also the players offering them. Although it has only a 6% influence (based on our primary research findings) in the purchase decision it plays a major role in induce a customer to include the advertised bank in his consideration list. Advertising by banks has been a recent phenomenon. Realizing that product advantages are not any more sustainable, banks are opting for advertising to gain strategic differentiation. An analysis of banks advertising brings out the following features: The following is the summary of a few banks advertising strategies:
A major chunk of total advertising spend belongs to the private & International banks. Another observation reveals that banks with less penetration have higher advertising spends. ICICI and HDFC head the fleet of banks in terms of their advertising spends. The advertisements have both factual as well as emotional appeal. The private banks focus on cashing upon emotional needs of a consumer whereas public banks stick to traditional advertising focusing only on the product features. Television and hoardings seem to be the preferred mode of advertisement across all banks. The international banks are striving to achieve a local appeal in a bid to woo consumers.
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ICICI
Positioning: The banks initial positioning was mainly on service factor and now this has changed to a customers interest focused and a friendly bank.
Message:
With the shift in positioning there has also been change in the message conveyed from service focused to customer interest focused. It is the first to sign up a celebrity Amitabh bachchan for its advertising. This conveyed a message of the bank being as popular and famous as the celebrity. Mr. Easy life the fictional character in the ICICI ads is the first brand icon associated with any bank. It is also the first bank to address the emotional appeal and attach it to the physical appeal.
Media : The general preference is for television, hoardings, newspapers, magazines, radio etc. ATMs also form an effective advertising tool as their mere presence makes the consumer aware of the bank. Besides this, ATM machines are also effectively utilized to cross-sell the banks retail offerings to its already existing customers.
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HSBC
Positioning:The banks positioning conveys an international appeal to the local consumer.
Message:The bank is trying to promote its global expertise to the Indian customers, i.e. service levels at par with international standards, anticipating customers growing needs and designing products accordingly.
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HDFC
Positioning: Positioning of the bank conveys Expertise service. It tries to address the financial needs of the consumers.
Message: The banks presence in the housing sector for a fairly long period is portrayed in its advertisements. They also focus on promoting the simplicity in work procedure, superior service. Their ads also strive to bring the bank out of the only housing image.
Media : The most preferred medium by the bank are hoardings and print media. They rely on word of mouth and goodwill which they have created through 25 years of service.
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The following table shows PUNCHLINES of some banks:-
BANKS
PUNCH LINE
CANARA BANK INDIAN BANK SBI BANK HDFC BANK HSBC BANK INDIAN OVERSEAS BANK DENA BANK ICICI BANK VIJAYA BANK FEDERAL BANK IDBI ORIENTAL BANK OF COMMERCE DHFL BANK
Service to grow, grow to services Poised for higher growth With u- all the way We understand your world The worlds local bank Good people to grow with The trusted family bank May I help you A friend you can bank with Your perfect banking partner Plan ahead. Get ahead Where every individual is commented The friendly housing loan people
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CHAPTER V
DATA ANALYSIS AND INTERPRETATION
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5.1 RESPONDENTS PROFILE
Data was collected from respondents across all age and income groups.Data relating to age was collected. This segmentation helped us to gain insights into the perception and preferences across all age groups. Based on the nature of retail banking products age groups were identified and classified as follows:
Majority of the respondents belonged to the age group of 25 40 years. The reason associated with it is that this group is the highest user of retail offerings.
Respondents earning Rs. 8000- 15000 constitute the major chunk of the
respondents using retail product. This income group qualifies almost all eligibility criteria of retail offerings.
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Retail products being also designed for students and retired people, they were considered for the survey. Salaried and businessmen being the major users of retail users of retail products.
Data Collection Tools Data was collected using Questionnaires. The Questionnaire consisted of suitable combination of Rating Scale, Ranking Scale and open ended Questions in the level of importance. An in depth interview was also conducted while administering the questionnaire.
Sources of Data Questionnaires were administered to people with experience of any retail offering, currently using or used in the past. Secondary Sources: Data was collected from the various websites from the internet as well as Journals of Marketing.
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5.2 DATA ANALYSIS
The respondents were asked to rank the following factors according to their preferences in the extent to which they influence their purchase decision. Majority of the respondents considered processing time to be the major influencing factor for making purchase decision while interest rate forms a close second. Time is the most valuable factor in todays world of hectic schedules, thats the reason why processing time is considered as most valuable factor in consideration list.
In our survey majority of the respondents had availed Vehicle loan followed by credit cards. In our survey majority of the respondents belong to the age group of 25-40 and majority of them are salaried people. This is the stage where people try to bring alive their aspirations of having their own home and vehicle and hence these loan constitute major chunk of retail product availed by the respondents.
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5.3 BANKS CONSIDERED FOR RETIAL OFFERINGS
Respondents were asked which banks they considered for purchasing a retail offering before selecting a specific bank. The responses for different retail products were as follows-
Majority of the respondents considered HDFC and ICICI for availing housing loan. 25 years of superior service has helped HDFC in creating goodwill in the mind of people and has helped the bank for consideration
ICICI has created a place of its own in the mind of customers by its heavy advertisement and superior service in every category of retail offering. ICICI
forms
the
major
chunk
in
the
consideration list for vehicle loan followed by HDFC. Through
aggressive
advertisements
and
superior service ICICI has created a major place in the consideration list.
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Majority of the respondents considered CITI BANK for credit cards followed by STAN CHART and HSBC. Being the first bank to launch credit cards and through aggressive advertisements in the past CITI BANK has created awareness amongst the customers and by providing superior service it CITI BANK still acquire major share in the consideration list.
SBI and HDFC form the major chunk for consideration in this category followed by SBI. Interest rates being the major factor for educational loan PSUs have the competitive edge due to low interest rate.
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SBI outrages other banks in the consideration list for educational loan. Low interest rates and an extensive presence in varied locations seem to be the primary reason for this.
99
5.4 AWARENESS OF BANKS THROUGH VARIOUS ADVERTISING MEDIUM
ICICI in general has a high level of awareness among the people owing to its extensive advertising. Among these, awareness through television is the highest level followed by newspapers.
Customers awareness of SBI through various
media was measured. SBI, being an old and experienced player, has immense awareness through the word of mouth media.
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HDFC being a private and an aggressive player, especially in the home finance arena, has taken the print media as its stalwart for awareness. The reason for the largest pie is that a large chunk of the TG is also an avid reader of newspapers and magazines.
The graph reveals that close to fifty percent of the awareness is about ICICI and HDFC. Customers do not seem to regard HSBC as a bank offering car loan owing to its limited advertising about this product.
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The personal loan market is a
relatively fragmented market with respect to awareness.
According to our survey HDFC is the clear market leader in the awareness paradigm. This area is also being aggressively invaded by many other players owing to the increased requirement for homes.
CITIBANK is also perceived to be a market leader, besides being one. A quarter share of the awareness pie of Others can be attributed to a gamut of the recent new launches as also the varied co-branded credit cards.
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5.5 RELATION BETWEEN BASIC-BANKINGAND RETAILBANKING CHOICES
The survey also tried to study, analyze and correlate respondents decision in selecting a bank for general banking purposes and for availing retail products. The findings revealed that people generally prefer PSU banks close to their locality to bank with whereas private banks and foreign banks have higher preference on the retail banking front. The reason associated with this behavior is the close proximity and long existence of PSU banks making them safe and trustworthy. Also people have had accounts with the PSU banks as private banks were non-existent earlier, and hence are reluctant to change their banks. However due to efficient service, short processing time, competitive rates and a caring attitude people have started to prefer private banks for meeting their retail needs.
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CHAPTER VI
104
CONCLUSION
The scenario is becoming highly competitive in every sphere of banking activity- more so u n respect of retail lending. Proceesing time and interest rates are major influencing factor for making purchase decision. As per survey ICICI and HDFC are to major brand name considered for housing, auto and personal loans. Awareness through television is the highest level followed by newspapers. The future of banking is dependent on technology, marketing, logistics. Banks have to prepare themselves for facing a soft interest regime. New kind of management skills are required to manage the retail lending portfolio. True to Infosys cult, bankers do need to understand that: Growth comes from repeat business Repeat business from relationships Relationship from customers Customers relationship based on trust Trust emanates from customers faiths/beliefs and, Lastly maintaining harmony with the environment.
105
ENCL 1:
BIBLIOGRAPHY
BOOKS:
Book on Everything you need to know to work in a Bank RETAIL BANKING Raghu Palat- Cortlandt Rand Consultancy Pvt.Ltd., - 2006 Commercial Banking (sep- 2003), ICFAI (Page no. 34-37 and 39) Banking and financial services- Renu sobti.
MAGZINES:
Professional banker (FEB-2006), ICFAI (Page no.53-55) Indian Banking special(2004), ICFAI (Page no. 72, 74)
WEBSITE:
(Retail banking) (Banking in India) www. Go2.com (Retail Banking in India) www.icfaipress.org ww.indiainfolinne.com www.wikipedia.com www.fotoshop.com www.indiainfoline.com www.rbi.org Professional Banker Websites of Banks Economic times
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ENCL 2
ANNEXURE
QUESTIONNAIRE
SURVEY ON PROJECT OF RETAIL BANKING IN INDIA
Name: Age: Income: Occupation: O Student O Salaried O Business O Retired
1. Which bank(s) do you bank with presently? ____________________________________
2. Rank the following factors according to their weightage in your purchase decision. Cost Processing time Goodwill Word of mouth Advertisement _________ _________ _________ _________ _________
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3. Which retail banking product have you availed? a) Housing Loan d) Personal Loan b) Car Loan c) Education Loan
e) Others, Please specify
_________________________________
4. Which banks did you consider in your decision making before buying this product? a) _______________________ b) _______________________ c) _______________________ d) _______________________
5. How did you become aware of them? (tick relevant)
Banks Television Newspapers Magazines Radio Word of mouth Billboards/Hoardings &
a)
b)
c)
d)
6. Which bank did you choose and why?
_____________________ Reason: _____________________________________________ _____________________________________________________ _____________________________________________________
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7. Are you satisfied with the banks service? Yes No
8. Would you suggest any improvement? ________________________________________________________ ________________________________________________________ ____________ 9. Which bank comes to mind when thinking about car loan ____________________________________
10. Which bank comes to mind when thinking about personal loan ____________________________________
11. Which bank comes to mind when thinking about housing loan. ____________________________________
12. Would you recommend your bank to someone else for the same product or any other product that your bank offers? Ye s No
13. Please recommend a retail product, not currently available, which ifoffered, will be readily availed by you. _____________________________________
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110
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A STUDY ON RETAIL BANKING IN INDIA

LALA LAJAPAT RAI COLLEGE OF COMMERCE AND ECONOMICS MAHALAXMI, MUMBAI-34

A PROJECT ON A STUDY ON RETAIL BANKING IN INDIA

SUBMITTED BY : SWATI MACHCHA PROJECT GUIDE ON: PROF. ARUN POOJARI

PROJECT, 1, SEMESTER V BACHELOR OF COMMERCE (BUSINESS MANAGEMENT OF STUDIES)

ACADEMIC YEAR 2011-2012 SUBMISSION DATE:

A STUDY ON RETAIL BANKING IN INDIA

________________ (PROJECT GUIDE)

_________________ (BMS CO.ODINATOR)

_____________________ (EXTERNAL CO.ODINATOR)

A STUDY ON RETAIL BANKING IN INDIA

A STUDY ON RETAIL BANKING IN INDIA

A STUDY ON RETAIL BANKING IN INDIA

A STUDY ON RETAIL BANKING IN INDIA

OBJECTIVE OF THE STUDY

SCOPE OF THE STUDY

METHODOLOGY OF THE STUDY

COLLECTION OF DATA RESEARCH INSTRUMENTS

MAKING SAMPLING PLAN

RESEARCH LIMITATIONS CHAPTER-II RETAIL BANKING AN INTRODUCTION

WHAT IS RETAIL BANKING

BENEFITS OF RETAIL BANKING

A STUDY ON RETAIL BANKING IN INDIA

SCOPE FOR RETAIL BANKING IN INDIA

OBJECTIVES OF RETAIL BANKING

ADVANTAGE AND DISADVANTAGE OF RETAIL BANKING

CHALLENGES TO RETAIL BANKING IN INDIA

STRATEGIES FOR INCREASING RETAIL BANKING BUSINESS

CHAPTER III EMERGING ISSUES IN HANDLING RETAIL BANKING

SOME CRITICAL ISSUES GROWTH DRIVERS OF RETAIL BANKING

FAVORABLE ROLE OF RBI CATALYST ROLE OF GOVERNMENT

CHAPTER IV INFORMATION TECHNOLOGY IN RETAIL BANKING

A STUDY ON RETAIL BANKING IN INDIA

TECHNOLOGY PROVIDES RETAIL BANKS WITH VARIOUS DELIVERY CHANNELS

4.3 4.4 4.5

4.6 4.7 5 5.1 5.2 5.3

80-86 87-92 93 94-95 96 97-99

AWARENESS OF BANKS THROUGH VARIOUS ADVERTISING MEDIUM

RELATION BETWEEN BASIC-BANKING AND RETAIL-BANKING CHOICES

104 105 106 107-109

A STUDY ON RETAIL BANKING IN INDIA

Chapter I: Introduction and research

A STUDY ON RETAIL BANKING IN INDIA

1.1 GENERAL INTRODUCTION

A STUDY ON RETAIL BANKING IN INDIA

1.2 OBJECTIVE OF THE STUDY

Factor influencing their purchase decision.

A STUDY ON RETAIL BANKING IN INDIA

1.3 SCOPE OF STUDY

Student Salaried Business Retired

A STUDY ON RETAIL BANKING IN INDIA

1.4 RESEARCH METHODOLOGY

1.4.1 FORMATION OF PROBLEM

The statement of problem is:

A STUDY ON RETAIL BANKING IN INDIA

1.4.2 COLLECTION OF DATA

Primary data was collected through personal interview with respondents.

A STUDY ON RETAIL BANKING IN INDIA

1.4.3 RESEARCH INSTRUMENTS

A STUDY ON RETAIL BANKING IN INDIA

1.4.4 MAKING SAMPLING PLAN

A STUDY ON RETAIL BANKING IN INDIA

1.4.5 RESEARCH LIMITATIONS