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  1. 1. 1 “ACOMPARATIVESTUDYBETWEENPRIVATESECTORBANKSAND PUBLICSECTORBANKSWITHRESPECTTOCACHARDISTRICT” A Thesis Submitted in Partial Fulfilment of the Requirements for the Degree of Master of Business Administration Deepanjan Das MBA-12-122 Underthesupervisionof Mr.ShubrangshuBaruah Department of Management Studies NATIONAL INSTITUTE OF TECHNOLOGY SILCHAR (2012-2014)
  2. 2. 2 DECLARATION Thesis Title: A Comparative Study between Private Sector Banks and Public Sector Banks with respect to Cachar District Degree for which the Thesis is submitted: Master of Business Administration I declare that the presented thesis represents largely my own ideas and work in my own words. Where others ideas or words have been included, I have adequately cited and listed in the reference materials. The thesis has been prepared without resorting to plagiarism. I have adhered to all principles of academic honesty and integrity. No falsified or fabricated data have been presented in the thesis. I understand that any violation of the above will cause for disciplinary action by the Institute, including revoking the conferred degree, if conferred, and can also evoke penal action from the sources which have not been properly cited or from whom proper permission has not been taken. ---------------------------- (Signature) Deepanjan Das MBA-12-122 Date:
  3. 3. 3 CERTIFICATE ________________________________________________________________ This id to certify that the work contained in the thesis entitled “A Comparative Study between Private Sector Banks and Public Sector Banks with respect to Cachar District” is a bona fide work of Deepanjan Das (MBA-12-122) and Bishwadip Das (MBA-12-108) for the award of Masters of Business Administration, which has been carried out in the Department of Management Studies, National Institute of Technology, Silchar under my supervision and this work has not been submitted elsewhere for a degree. May 2014 Mr.Shubrangshu Baruah Silchar Assistant Professor Department of Management Studies NIT Silchar, India
  4. 4. 4 Acknowledgements I take this opportunity to render my deep sense of gratitude to my supervisor, Mr ShubhrangshuBaruah,Assistant Professor, Department of Management Studies for his constant and valuable guidance in the truest sense throughout the course of the work. It was his encouragement and support from the initial to the final level enabled me to develop an understanding of the topic. Every time I had a problem, I would rush to him for his advice, and he would never ever let me down. His timely suggestions helped me to circumvent all sorts of hurdles that I had to face throughout my work. I am deeply indebted for his motivation and guidance. I would also like to extend my sense of gratitude to Mr.Ashim Kumar Das, Head, Department of Management Studies for his constant motivation and inspiration. Thanks go out to all our friends as they have always been around to provide useful suggestions, companionship and created a peaceful research environment. I wish to acknowledge the continuous support and blessings of my parents which made this work possible. Although they were physically far away from me, their immense faith and wish is gratefully acknowledged. Finally I believe this research experience will greatly benefit my career in the future. DeepanjanDas
  5. 5. 5 Dedicated to Department of Management Studies National Institute of Technology, Silchar
  6. 6. 6 ExecutiveSummary TheobjectiveofthestudyistohaveacomparativestudyofthePSUBanksandPrivateSectorBanksinCachar DistrictandalsotofindoutthemostpreferredBankingSectoramongthem. For the above study a questionnaire was designed and the same was provided to the respondents for their valuableinputs.SomeoftheinputsweretakenfromQualtricsSurveySoftwareandotherswereprovidedinthe formofhardcopies. All the aspects of the study included introduction of the study, objective of the study, research methodology, literaturereview,datainterpretationandanalysis,findings,suggestionsandrecommendations. ThestudysuggeststhatinthispartofthecountrythePublicSectorBanksareaheadofthePrivateSectorBanks. The main reasons accordingtoourstudyarethetrust and reliabilityfactor (DICGC assurance ondeposits) and thelocationofthebranch(FinancialInclusionpolicyofReserveBankofIndia) The data collection of the study was mainly taken from primary source i.e. Questionnaire. And secondary sourcesofthedatai.e.internetandKiranPrakashanBooksandArihantBooks.
  7. 7. 7 Table of Contents List of Table (i) List of Figure (ii) Chapter 1: Page no. 1.1 Introduction to Banking……………………………………………….11 1.2 Banking in India………………………………………………………12 1.3 History of banking in India……………………………………………13 1.4 Adoption of Banking Technology…………………………………….19 1.5 Expansion of Banking Infrastructure…………………………………20 1.6 Types of Bank……………………………………………………….…24 1.7 Function of Commercial banks…………………………………….....27 1.8 Public Sector Banks…………………………………………………...27 1.9 Private Sector Banks………………………………………………......30 1.10 Business of Banking………………………………………………..31 Chapter 2: 2.1 Objectives of the Study…………………………………………...33 2.2 Literature Review………………………………………………....35 2.3 Research methodology…………………………………………....36 2.4 Personal details of Respondents………………………………......38 Chapter 3: 3.1 Limitations of the Study………………………………………….44 Chapter 4: 4.1 Data Interpretation and Analysis……………………………........46
  8. 8. 8 Chapter 5: Findings of the Study………………………………………………..55 Chapter 6: Suggestions given by the respondents………………………………60 Chapter 7: Recommendations …………………………………………………..63 Chapter 8: Conclusions………………………………………………………….66 Chapter 9: Annexure……………………………………………………………..68 References…………………………………………………………...72
  9. 9. 9 List of Tables Table no. Title Page no. Table 1 Branches and ATMs of Commercial Bank………….20 Table 2 Age of the respondents………………………………38 Table 3 Gender of the respondents…………………………...39 Table 4 Highest educational qualification …………………...40 Table 5 Occupation of the respondents………………………41 Table 6 Place of Domicile …………………………………....42 Table 7 Awareness regarding PSU and Private Banks……….43 Table 8 Banking Sector Preferred……………………………..47 Table 9 Types of Account……………………………………..48 Table 10 Preferred Banks………………………………………..49 Table 11 Reason for choosing a particular Banking Sector…….50 Table 12 Services Availed ……………………………………....51 Table 13 Satisfaction Level of Respondents…………………....52 Table 14 Reason for choosing PSU Bank………………………53 Table 15 Reason for choosing Private bank…………………….54
  10. 10. 10 List of Figures Figure no. Title Page no. Figure 1 Business of Banking…………………………...31 Figure 2 Functioning of a Bank…………………………32 Figure 3 Age of the respondents………………………...38 Figure 4 Gender of the respondents……………………..39 Figure 5 Highest educational qualification……………...40 Figure 6 Occupation of the respondents………………...41 Figure 7 Place of Domicile……………………………….42 Figure 8 Awareness regarding PSU and Private Banks….43 Figure 9 Banking Sector Preferred……………………….47 Figure 10 Types of Account……………………………….48 Figure 11 Preferred Banks…………………………………49 Figure 12 Reason for choosing a particular Banking Sector.50 Figure 13 Services Availed ………………………………..51 Figure 14 Satisfaction Level of Respondents………………52 Figure 15 Reason for choosing PSU Bank…………………53 Figure 16 Reason for choosing Private bank……………….54
  11. 11. 11 1.1 Introduction to Banking Bank is defined in many ways by various authors in the book son economics and commerce. It is very difficult to define a bank; because a bank performs multifarious functions may be defined in many ways according to their functions. The evolution of different types of banks, each specializing in a particular field, gives emphasis on each and every kind of bank. A general and comprehensive definition to cover all types of banking institutions would be unscientific and probably impossible. Each type of bank should have its own definition, explaining its specialized functions. Legislators have understood this difficulty and that is why the bill of exchange Act 1882 (England) defines “A bank includes a body of persons, whether incorporated or not, who carry on the business of banking” From this definition it is clear to us that any institution, which performs the various banking functions, may be termed as bank. But in practice it is found that many banking functions wary from time to time and country to country. It is not possible on the part of a single bank to perform all the banking functions at a time. So there originated numbers of specialized banks with the objective of performing one or more functions. As for example, Central Bank, Commercial bank, Industrial Bank, Agricultural Bank, Co-operative Bank etc., are seen in the practical field. Dr. Herbert L. Hart has defined a banker as “A banker is one who in the ordinary course of business honours cheques drawn upon him by persons for whom he receives money on current account” According to Sir John Paget “No one and nobody corporate and otherwise can be a banker who does not (i) take deposit accounts (ii) take current accounts (iii) issue and pay cheques drawn upon him(iv) collect cheques crossed and uncrossed for his customers” Hilton banking commission defines bank or banker in the following words: “Every person, firm or company using in the description or its title, bank or banker or banking and accepting deposits of money subject to withdrawal by cheque, draft or order” In view of the above definitions, a simple and short definition can be given as
  12. 12. 12 “Bank is an institution, which deals in money and credit” According to this precise definition a bank accepts deposits from public and makes advances and loans to them. In practice bank receives deposits of money in savings and current accounts at lower rate of interest or profit and gives on credit to needy persons and businessmen at a higher rate of interest or profit. It also transfers money for the clients from one city or country to another and also performs various other agency services for earnings. 1.2 Banking in India Banking in India in the modern sense originated in the last decades of the 18th century. The first banks were Bank of Hindustan (1770-1829) and The General Bank of India, established 1786 and since defunct. The largest bank, and the oldest still in existence, is the State Bank of India, which originated in the Bank of Calcutta in June 1806, which almost immediately became the Bank of Bengal. This was one of the three presidency banks, the other two being the Bank of Bombay and the Bank of Madras, all three of which were established under charters from the British East India Company. The three banks merged in 1921 to form the Imperial Bank of India, which, upon India's independence, became the State in 1955. For many years the presidency banks acted as quasi-central banks, as did their successors, until the Reserve Bank of India was established in 1935. In 1969 the Indian government nationalized all the major banks that it did not already own and these have remained under government ownership. They are run under a structure know as 'profit-making public sector undertaking' (PSU) and are allowed to compete and operate as commercial banks. The Indian banking sector is made up of four types of banks, as well as the PSUs and the state banks; they have been joined since the 1990s by new private commercial banks and a number of foreign banks. Banking in India was generally fairly mature in terms of supply, product range and reach- even though reach in rural India and to the poor still remains a challenge. The government has developed initiatives to address this through the State Bank of India expanding its branch network and through the National Bank for Agriculture and Rural Development with things like microfinance.
  13. 13. 13 Indian Banking Industry currently employees 1,175,149 employees and has a total of 109,811 branches in India and 171 branches abroad and manages an aggregate deposit of 67504.54 billion (US$1.1 trillion or €820 billion) and bank credit of 52604.59 billion (US$880 billion or €640 billion). The net profit of the banks operating in India was 1027.51 billion (US$17 billion or €12 billion) against a turnover of 9148.59 billion (US$150 billion or €110 billion) for the fiscal year 2012-13. 1.3 Historyof banking in India In ancient India there is evidence of loans from the Vedic period (beginning 1750 BC). Later during the Maurya dynasty (321 to 185 BC), an instrument called adesha was in use, which was an order on a banker desiring him to pay the money of the note to a third person, which corresponds to the definition of a bill of exchange as we understand it today. During the Buddhist period, there was considerable use of these instruments. Merchants in large towns gave letters of credit to one another. Colonial era During the period of British rule merchants established the Union Bank of Calcutta in 1829, first as a private joint stock association, then partnership. Its proprietors were the owners of the earlier Commercial Bank and the Calcutta Bank, who by mutual consent created Union Bank to replace these two banks. In 1840 it established an agency at Singapore, and closed the one at Mirzapore that it had opened in the previous year. Also in 1840 the Bank revealed that it had been the subject of a fraud by the bank's accountant. Union Bank was incorporated in 1845 but failed in 1848, having been insolvent for some time and having used new money from depositors to pay its dividends. The Allahabad Bank, established in 1865 and still functioning today, is the oldest Joint Stock bank in India, it was not the first though. That honour belongs to the Bank of Upper India, which was established in 1863, and which survived until 1913, when it failed, with some of its assets and liabilities being transferred to the Alliance Bank of Simla. Foreign banks too started to appear, particularly in Calcutta, in the 1860s. The Comptoird'Escompte de Paris opened a branch in Calcutta in 1860, and another in Bombay in 1862; branches in Madras and Pondicherry, then a French possession, followed. HSBC established itself in Bengal in 1869. Calcutta was the most active trading port in India, mainly due to the trade of the British Empire, and so became a banking centre.
  14. 14. 14 The first entirely Indian joint stock bank was the Oudh Commercial Bank, established in 1881 in Faizabad. It failed in 1958. The next was the Punjab National Bank, established in Lahore in 1895, which has survived to the present and is now one of the largest banks in India. Around the turn of the 20th Century, the Indian economy was passing through a relative period of stability. Around five decades had elapsed since the Indian Mutiny, and the social, industrial and other infrastructure had improved. Indians had established small banks, most of which served particular ethnic and religious communities. The presidency banks dominated banking in India but there were also some exchange banks and a number of Indian joint stock banks. All these banks operated in different segments of the economy. The exchange banks, mostly owned by Europeans, concentrated on financing foreign trade. Indian joint stock banks were generally under capitalized and lacked the experience and maturity to compete with the presidency and exchange banks. This segmentation let Lord Curzon to observe, "In respect of banking it seems we are behind the times. We are like some old fashioned sailing ship, divided by solid wooden bulkheads into separate and cumbersome compartments." The period between 1906 and 1911, saw the establishment of banks inspired by the Swadeshi movement. The Swadeshi movement inspired local businessmen and political figures to found banks of and for the Indian community. A number of banks established then have survived to the present such as Bank of India, Corporation Bank, Indian Bank,Bank of Baroda, Canara Bank and Central Bank of India. The fervour of Swadeshi movement lead to establishing of many private banks in Dakshina Kannada and Udupi district which were unified earlier and known by the name South Canara ( South Kanara ) district. Four nationalised banks started in this district and also a leading private sector bank. Hence undivided Dakshina Kannada district is known as "Cradle of Indian Banking". During the First World War (1914–1918) through the end of the Second World War (1939– 1945), and two years thereafter until the independence of India were challenging for Indian banking. The years of the First World War were turbulent, and it took its toll with banks simply collapsing despite the Indian economy gaining indirect boost due to war-related
  15. 15. 15 economic activities. At least 94 banks in India failed between 1913 and 1918 as indicated in the following table: Years Number of banks that failed Authorised Capital ( Lakhs) Paid-up Capital ( Lakhs) 1913 12 274 35 1914 42 710 109 1915 11 56 5 1916 13 231 4 1917 9 76 25 1918 7 209 1 Post-Independence The partition of India in 1947 adversely impacted the economies of Punjab and West Bengal, paralysing banking activities for months. India's independence marked the end of a regime of the Laissez-faire for the Indian banking. The Government of India initiated measures to play an active role in the economic life of the nation, and the Industrial Policy Resolution adopted by the government in 1948 envisaged a mixed economy. This resulted into greater involvement of the state in different segments of the economy including banking and finance. The major steps to regulate banking included: The Reserve Bank of India, India's central banking authority, was established in April 1935, but was nationalised on 1 January 1949 under the terms of the Reserve Bank of India (Transfer to Public Ownership) Act, 1948 (RBI, 2005b).
  16. 16. 16 In 1949, the Banking Regulation Act was enacted which empowered the Reserve Bank of India (RBI) "to regulate, control, and inspect the banks in India". The Banking Regulation Act also provided that no new bank or branch of an existing bank could be opened without a license from the RBI, and no two banks could have common directors. Nationalization in the 1960s Despite the provisions, control and regulations of the Reserve Bank of India, banks in India except the State Bank of India (SBI), continued to be owned and operated by private persons. By the 1960s, the Indian banking industry had become an important tool to facilitate the development of the Indian economy. At the same time, it had emerged as a large employer, and a debate had ensued about the nationalization of the banking industry. Indira Gandhi, the then Prime Minister of India, expressed the intention of the Government of India in the annual conference of the All India Congress Meeting in a paper entitled "Stray thoughts on Bank Nationalization."[7] The meeting received the paper with enthusiasm. Thereafter, her move was swift and sudden. The Government of India issued an ordinance ('Banking Companies (Acquisition and Transfer of Undertakings) Ordinance, 1969') and nationalised the 14 largest commercial banks with effect from the midnight of 19 July 1969. These banks contained 85 percent of bank deposits in the country.[7] Jayaprakash Narayan, a national leader of India, described the step as a "masterstroke of political sagacity." Within two weeks of the issue of the ordinance, the Parliament passed the Banking Companies (Acquisition and Transfer of Undertaking) Bill, and it received the presidential approval on 9 August 1969. A second dose of nationalisation of 6 more commercial banks followed in 1980. The stated reason for the nationalisation was to give the government more control of credit delivery. With the second dose of nationalisation, the Government of India controlled around 91% of the banking business of India. Later on, in the year 1993, the government merged New Bank of India with Punjab National Bank. It was the only merger between nationalised banks and resulted in the reduction of the number of nationalised banks from 20 to 19. After this, until the 1990s, the nationalised banks grew at a pace of around 4%, closer to the average growth rate of the Indian economy.
  17. 17. 17 Liberalization in the 1990s In the early 1990s, the then government embarked on a policy of liberalization, licensing a small number of private banks. These came to be known as New Generation tech-savvy banks, and included Global Trust Bank (the first of such new generation banks to be set up), which later amalgamated with Oriental Bank of Commerce, UTI Bank (since renamed Axis), ICICI Bank and HDFC Bank. This move, along with the rapid growth in the economy of India, revitalised the banking sector in India, which has seen rapid growth with strong contribution from all the three sectors of banks, namely, government banks, private banks and foreign banks. The next stage for the Indian banking has been set up with the proposed relaxation in the norms for foreign direct investment, where all foreign investors in banks may be given voting rights which could exceed the present cap of 10% at present. It has gone up to 74% with some restrictions. The new policy shook the Banking sector in India completely. Bankers, till this time, were used to the 4–6–4 method (borrow at 4%; lend at 6%; go home at 4) of functioning. The new wave ushered in a modern outlook and tech-savvy methods of working for traditional banks. All this led to the retail boom in India. People demanded more from their banks and received more. Current period All banks which are included in the Second Schedule to the Reserve Bank of India Act, 1934 are Scheduled Banks. These banks comprise Scheduled Commercial Banks and Scheduled Co-operative Banks. Scheduled Commercial Banks in India are categorised into five different groups according to their ownership and/or nature of operation. These bank groups are: State Bank of India and its Associates Nationalised Banks Private Sector Banks Foreign Banks
  18. 18. 18 Regional Rural Banks. In the bank group-wise classification, IDBI Bank Ltd. is included in Nationalised Banks. Scheduled Co-operative Banks consist of Scheduled State Co-operative Banks and Scheduled Urban Cooperative Banks. By 2010, banking in India was generally fairly mature in terms of supply, product range and reach-even though reach in rural India still remains a challenge for the private sector and foreign banks. In terms of quality of assets and capital adequacy, Indian banks are considered to have clean, strong and transparent balance sheets relative to other banks in comparable economies in its region. The Reserve Bank of India is an autonomous body, with minimal pressure from the government. With the growth in the Indian economy expected to be strong for quite some time-especially in its services sector-the demand for banking services, especially retail banking, mortgages and investment services are expected to be strong. One may also expect M&As, takeovers, and asset sales. In March 2006, the Reserve Bank of India allowed Warburg Pincus to increase its stake in Kotak Mahindra Bank (a private sector bank) to 10%. This is the first time an investor has been allowed to hold more than 5% in a private sector bank since the RBI announced norms in 2005 that any stake exceeding 5% in the private sector banks would need to be vetted by them. In recent years critics have charged that the non-government owned banks are too aggressive in their loan recovery efforts in connexion with housing, vehicle and personal loans. There are press reports that the banks' loan recovery efforts have driven defaulting borrowers to suicide. 1.4 Adoption of banking technology The IT revolution has had a great impact on the Indian banking system. The use of computers has led to the introduction of online banking in India. The use of computers in the banking sector in India has increased many fold after the economic liberalisation of 1991 as the country's banking sector has been exposed to the world's market. Indian banks were finding it
  19. 19. 19 difficult to compete with the international banks in terms of customer service, without the use of information technology. The RBI set up a number of committees to define and co-ordinate banking technology. These have included: In 1984 was formed the Committee on Mechanisation in the Banking Industry (1984) whose chairman was Dr. C Rangarajan, Deputy Governor, Reserve Bank of India. The major recommendations of this committee were introducing MICR technology in all the banks in the metropolises in India. This provided for the use of standardized cheque forms and encoders. In 1988, the RBI set up the Committee on Computerisation in Banks (1988) headed by Dr. C Rangarajan. It emphasized that settlement operation must be computerized in the clearing houses of RBI in Bhubaneshwar, Guwahati, Jaipur, Patna and Thiruvananthapuram. It further stated that there should be National Clearing of inter-city cheques at Kolkata, Mumbai, Delhi, Chennai and MICR should be made operational. It also focused on computerisation of branches and increasing connectivity among branches through computers. It also suggested modalities for implementing on-line banking. The committee submitted its reports in 1989 and computerisation began from 1993 with the settlement between IBA and bank employees' associations. In 1994, the Committee on Technology Issues relating to Payment systems, Cheque Clearing and Securities Settlement in the Banking Industry (1994) was set up under Chairman W S Saraf. It emphasized Electronic Funds Transfer (EFT) system, with the BANKNET communications network as its carrier. It also said that MICR clearing should be set up in all branches of all those banks with more than 100 branches. In 1995, the Committee for proposing Legislation on Electronic Funds Transfer and other Electronic Payments (1995) again emphasized EFT system. Total numbers of ATMs installed in India by various banks as on end June 2012 is 99,218. The New Private Sector Banks in India are having the largest numbers of ATMs, which is followed by off-site ATMs belonging to SBI and its subsidiaries and then by Nationalised banks and Foreign banks. While on site is highest for the Nationalised banks of India.
  20. 20. 20 Table no. 1 Branches and ATMs of Scheduled Commercial Banks as on end March 2005 Bank type Number of branches On-site ATMs Off-site ATMs Total ATMs Nationalised banks 33,627 3,205 1,567 4,772 State Bank of India 13,661 1,548 3,672 5,220 Old private sector banks 4,511 800 441 1,241 New private sector banks 1,685 1,883 3,729 5,612 Foreign banks 242 218 582 800 TOTAL 53,726 7,654 9,409 17,645 1.5 Expansion of Banking Infrastructure As per Census 2011, 58.7% households are availing banking services in the country. There are 102,343 branches of Scheduled Commercial Banks (SCBs) in the country, out of which 37,953 (37%) bank branches are in the rural areas and 27,219 (26%) in semi-urban areas, constituting 63% of the total numbers of branches in semi-urban and rural areas of the country. However, a significant proportion of the households, especially in rural areas, are still outside the formal fold of the banking system. To extend the reach of banking to those outside the formal banking system, Government and Reserve Bank of India (RBI) are taking various initiatives from time to time some of which are enumerated below: Opening of Bank Branches: Government had issued detailed strategy and guidelines on Financial Inclusion in October 2011, advising banks to open branches in all habitations of
  21. 21. 21 5,000 or more population in under-banked districts and 10,000 or more population in other districts. Out of 3,925 such identified villages/habitations, branches have been opened in 3,402 villages/habitations (including 2,121 Ultra Small Branches) by end of April, 2013. Each household to have at least one bank account: Banks have been advised to ensure service area bank in rural areas and banks assigned the responsibility in specific wards in urban area to ensure that every household has at least one bank account. Business Correspondent Model: With the objective of ensuring greater financial inclusion and increasing the outreach of the banking sector, banks were permitted by RBI in 2006 to use the services of intermediaries in providing financial and banking services through the use of Business Facilitators (BFs) and Business Correspondents (BCs). Business correspondents are retail agents engaged by banks for providing banking services at locations other than a bank branch/ATM. BCs and the BC Agents (BCAs) represent the bank concerned and enable a bank to expand its outreach and offer limited range of banking services at low cost, particularly where setting up a brick and mortar branch is not viable. BCs as agents of the banks, thus, are an integral part of the business strategy for achieving greater financial inclusion. Banks had been permitted to engage individuals/entities as BC like retired bank employees, retired teachers, retired government employees, ex-servicemen, individual owners of kirana/medical/fair price shops, individual Public Call Office (PCO) operators, agents of Small Savings Schemes of Government of India, insurance companies, etc. Further, since September 2010, RBI had permitted banks to engage "for profit" companies registered under the Indian Companies Act, 1956, excluding Non-Banking Financial Companies (NBFCs), as BCs in addition to individuals/entities permitted earlier. According to the data maintained by RBI, as in December, 2012, there were over 152,000 BCs deployed by Banks. During 2012- 13, over 183.8 million transactions valued at 165 billion (US$2.8 billion) had been undertaken by BCs till December 2012. Swabhimaan Campaign: Under "Swabhimaan" - the Financial Inclusion Campaign launched in February 2011, banks had provided banking facilities by March, 2012 to over 74,000 habitations having population in excess of 2000 using various models and technologies including branchless banking through Business Correspondents Agents (BCAs). Further, in terms of Finance Minister's Budget Speech 2012-13, the "Swabhimaan" campaign has been extended to habitations with population of more than 1,000 in North and to habitations which
  22. 22. 22 have crossed population of 1,600 as per census 2001. About 40,000 such habitations have been identified to be covered under the extended "Swabhimaan" campaign. Setting up of Ultra Small Branches (USBs): Considering the need for close supervision and mentoring of the Business Correspondent Agents (BCAs) by the respective banks and to ensure that a range of banking services are available to the residents of such villages, Ultra Small Branches (USBs) are being set up in all villages covered through BCAs under Financial Inclusion. A USB would comprise of a small area of 100 sq ft (9.3 m2 ) - 200 sq ft (19 m2 ) where the officer designated by the bank would be available with a laptop on pre- determined days. While the cash services would be offered by the BCAs, the bank officer would offer other services, undertake field verification and follow up on the banking transactions. The periodicity and duration of visits can be progressively enhanced depending upon business potential in the area. A total of over 50,000 USBs have been set up in the country by March, 2013. Banking Facilities in Unbanked Blocks: All the 129 unbanked blocks (91 in North East States and 38 in other States) identified in the country in July 2009, had been provided with banking facilities by March 2012, either through Brick Mortar Branch or Business Correspondents or Mobile van. As a next step it has been advised to cover all those blocks with BCA and Ultra Small Branch which have so far been covered by mobile van only. USSD Based Mobile Banking: National Payments Corporation of India (NPCI) worked upon a "Common USSD Platform" for all banks and telcos who wish to offer the facility of Mobile Banking using Unstructured Supplementary Service Data (USSD) based Mobile Banking. The Department helped NPCI to get a common USSD Code *99# for all telcos. More than 20 banks have joined the National Uniform USSD Platform (NUUP) of NPCI and the product has been launched by NPCI with BSNL and MTNL. Other telcos are likely to join in the near future. USSD based Mobile Banking offers basic Banking facilities like Money Transfer, Bill Payments, Balance Enquiries, Merchant Payments etc. on a simple GSM based Mobile phone, without the need to download application on a phone as required at present in the IMPS based Mobile Banking.
  23. 23. 23 Steps taken by Reserve Bank of India (RBI) to strengthen the Banking Infrastructure RBI has permitted domestic Scheduled Commercial Banks (excluding RRBs) to open branches in tier 2 to tier 6 cities (with population up to 99,999 as per census 2001) without the need to take permission from RBI in each case, subject to reporting. RBI has also permitted SCBs (excluding RRBs) to open branches in rural, semi-urban and urban centres in North Eastern States and Sikkim without having the need to take permission from RBI in each case, subject to reporting. Regional Rural Banks (RRBs) are also allowed to open branches in Tier 2 to Tier 6 centres (with population up to 99,999 as per Census 2001) without the need to take permission from RBI in each case, subject to reporting, provided they fulfill the following conditions, as per the latest inspection report: CRAR of at least 9%; Net NPA less than 5%; No default in CRR / SLR for the last year; Net profit in the last financial year; CBS compliant. Domestic SCBs have been advised that while preparing their Annual Branch Expansion Plan (ABEP), they should allocate at least 25% of the total number of branches proposed to be opened during the year in unbanked Tier 5 and Tier 6 centres i.e. (population up to 9,999) centres which do not have a brick and mortar structure of any SCB for customer based banking transactions. RRBs have also been advised to allocate at least 25% of the total number of branches proposed to be opened during a year in unbanked rural (Tier 5 and Tier 6) Centres). New private sector banks are required to ensure that at least 25% of their total branches are in semi-urban and rural centres on an ongoing basis.
  24. 24. 24 1.6 Types of Banks Central bank Development Bank Investment Bank Cooperative Credit Bank Regional Rural Bank Non Banking Financial Companies Central Bank The money market that acts as the central monetary authority of the country, serving as the government bank as well as the bankers’ bank is known as a central bank of the country. The main functions of central bank of a country are functions of note issue, bankers to government, banker’s bank etc.The RBI as the central bank of the country is the centre of the Indian financial and monetary system. It has been guiding, monitoring, and regulating, controlling, and promoting destiny of the IFS. It is quite young compared with such central banks as the Bank of England, Risks bank of Sweden, and the Federal Reserve Board of the U.S. Main Functions of The Reserve bank of India As the central banking authority of India, the reserve Bank of India performs the following traditional functions of the central bank:  It provides currency and operates the clearing system for the government and banks.  It formulates and implements monetary and credit policies.  It functions as the government’s and banker’s bank  It supervises the operations of credit institutions.  It regulates foreign exchange transactions.  It moderates the fluctuations in the exchange value of the rupee.
  25. 25. 25 In addition to the traditional functions of the central banking authority, the Reserve bank of India performs several functions aimed at developing the Indian financial system:  It seeks to integrate the unorganized financial sector with the organized financial sector.  It encourages the extension of the commercial banking system in the rural areas.  It influences the allocation of credit.  It promotes the development of new institutions. Development Banks A development bank may be defined as a financial institution concerned with providing all types of financial assistance to business units in the form of loans, underwriting, investment and guarantee operations and promotional activities-economic development in general and industrial development in particular.A development bank is basically a term lending institution. It is a multipurpose financial institution with a broad development outlook. The concept of development banks in a post independence phenomenon in India. With the end of II World War there was an urgent need for speed industrial development in India. The usual agencies that provided finance for large industries were inadequate. So the govt. of India came forward to set-up a series of financial institution to provide funds to industries. The industrial finance corporation of India, the first development bank was established in 1948. Subsequently many other institutions were set-up. Ex. IDBI, IFCI, SIDBI etc. Investment Banks Financial intermediaries that acquire the savings of people and direct these funds into the business enterprises seeking capital for the acquisition of plant and equipment and for holding inventories are called ‘investment banks’. Features:-Long term financing, Security, merchandiser, Security middlemen, Insurer, Underwriter Functions: - Capital formation, Underwriting, Purchase of securities, Selling of securities, Advisory services, Acting as dealer.
  26. 26. 26 Cooperative Banking Sector These banks play a vital role in mobilizing savings and stimulating agricultural investment.Co-operativecredit institutions account for the second largest proportion of 44.6% of total institutional credit of Rs.3854000 corer to agricultural and allied activities in the rural sector in 1998 to 99. Types of Co-operative Banking sector The co-operative sector is very much useful for rural people. The co-operative banking sector is divided into the following categories. State co-operative Banks Central co-operative banks Primary Agriculture Credit Societies Non Banking Finance companies According to RBI it means financial institutions which is a company and a non banking institution and which has as its principal business the receiving of deposits under any schemes or arrangement or in any other manner or lending in any manner. Merchant Banks Institution that render wide range of services such as the management of customer’s securities, portfolio management, counseling, insurance, etc are called ‘Merchant Banks’. Functions: - Sponsoring issues, Loan syndication, Servicing of issues, Portfolio, management, arranging fixed deposits, helps in merger& acquisition. Commercial Banks Commercial banks comprising public sector banks, foreign banks, and private sector banks represent the most important financial intermediary in the Indian financial system. The changes in banking structure and control have resulted dueto wider geographical spread and deeper penetration of rural areas, higher mobilization of deposits, reallocation of bank credit to priority activities, andlower operational autonomy for a bank management.
  27. 27. 27 The largest commercial Banks in India, (SBI), was set up in 1955 when the Imperial Bank was nationalized and merged with some banks of the princely states. In 1969, in one fell swoop, the fourteen largest privately – owned commercial banks were nationalized. Subsequently, several other privately – owned commercial banks were nationalized. As a result of these actions, public sector commercial banks, dominate the commercial banking scene in the country. 1.7 Functions of commercial banks Saving mobilization Special loans Bills discount Credit creation Agencies function General utility function 1.8 Public Sector Banks in Cachar District State Bank of India . 17 out of 20 nationalized banks except Andhra Bank , Bank of Maharashtra and BharatiyaMahila Bank. Regional rural banks, Assam GrameenVikasBank,sponsored by United Bank of India Regional rural Bank They are oriented towards meeting the needs of the weaker section of the rural population consisting of small and marginal farmers, agricultural laborerand small entrepreneurs. These banks were set up after the nationalization of banks in 1969. REGIONAL RURAL BANKS ACT, 1976 ACT NO. 21 OF 1976 [9th February, 1976.] An Act to provide for the incorporation, regulation and winding up of Regional Rural Banks with a view to developing the rural economy by providing, for the purpose of development of
  28. 28. 28 agriculture, trade, commerce, industry and other productive activities in the rural areas, credit and other facilities, particularly to the small and marginal farmers, agricultural laborers, artisans and small entrepreneurs, and for matters connected therewith and incidental thereto. Definition of Public Sector Bank Public Sector Banks (PSBs) are banks where a majority stake (i.e. more than 50%) is held by a government. The shares of these banks are listed on stock exchanges. There are a total of 21 PSBs in India.. Emergence of Public Sector Banks The Central Government entered the banking business with the nationalization of the Imperial Bank Of India in 1955. A 60% stake was taken by the Reserve Bank of India and the new bank was named as the State Bank of India. The seven other state banks became the subsidiaries of the new bank when nationalised on 19 July 1960.[2] The next major nationalisation of banks took place in 1969 when the government of India, under prime minister Indira Gandhi, nationalised an additional 14 major banks. The total deposits in the banks nationalised in 1969 amounted to 50 crores. This move increased the presence of nationalised banks in India, with 84% of the total branches coming under government control.[3] The next round of nationalisation took place in April 1980. The government nationalised six banks. The total deposits of these banks amounted to around 200 crores. This move led to a further increase in the number of branches in the market, increasing to 91% of the total branch network of the country. The objectives behind nationalisation where: To break the ownership and control of banks by a few business families, To prevent the concentration of wealth and economic power, To mobilize savings from masses from all parts of the country, To cater to the needs of the priority sectors.....
  29. 29. 29 List of PSU Banks in Cachar District Allahabad Bank Bank of Baroda Bank of India Canara Bank Central Bank of India Corporation Bank Dena Bank IDBI Bank Indian Bank Indian Overseas Bank Oriental Bank of Commerce Punjab National Bank Punjab & Sind Bank Syndicate Bank UCO Bank Union Bank of India United Bank of India Vijaya Bank State Bank of India
  30. 30. 30 1.9 List of Private sector Bank in Cachar District The private-sector banks in India represent part of the Indian banking sector that is made up of both private and public sector banks. The "private-sector banks" are banks where greater parts of stake or equity are held by the private shareholders and not by government. Banking in India has been dominated by public sector banks since the 1969 when all major banks were nationalised by the Indian government. However since liberalisation in government banking policy in 1990s, old and new private sector banks have re-emerged. They have grown faster and bigger over the two decades since liberalisation using the latest technology, providing contemporary innovations and monetary tools and techniques The private sector banks are split into two groups by financial regulators in India, old and new. The old private sector banks existed prior to the nationalisation in 1969 and kept their independence because they were either too small or specialist to be included in nationalisation. The new private sector banks are those that have gained their banking license since the liberalisation in the 1990s. List of Private Banks in Cachar District Axis Bank Federal Bank HDFC Bank ICICI Bank IndusInd Bank Yes Bank
  31. 31. 31 1.10 Business of Banking Figure no.1
  32. 32. 32 Figure no.2
  33. 33. 33 Chapter 2
  34. 34. 34 2.1 OBJECTIVES OF THE STUDY This study has been conducted with a variety of important objectives in mind. The following provides us with the chief objectives that have tried to achieve through the study. The extent to which these objectives have been met could judged from the conclusions and suggestions, which appear in the later of this study. The Chief Objectives of this study (with respect to Cachar District) are:- 1. To find the banking sector largely preferredby the customers. 2. To find out the factors which influences the customers to choose a bank. 3. To study the problems faced by the customers in public as well as private sector banks and also to compare between them.
  35. 35. 35 2.2 LITERATURE REVIEW A literature review provides an overview and a critical evaluation of a body of literature relating to a research topic or a research problem. It analyses a body of literature in order to classify it by themes or categories, rather than simply discussing individual works one after the other. A literature review often forms part of a larger research project such as within a thesis, or it may be an independent written work, such as a synthesis written paper. PURPOSE OF A LITERATURE REVIEW - A literature review situates our topic in relation to previous researches and illuminates a spot for our research. It accomplishes several goals –  Provides background for topic using previous research.  Shows we are familiar with previous, relevant research.  Evaluates the depth and breadth of the research with regards to our topic.  Determines relating questions or aspects of our topic in need of research. In our research the main source of information has been the questionnaire filled up by the respondents as well as the internet. The topic of our research “ comparative study of the PSU banks and private banks for Cachar district” has not been published earlier. So the main argument of the topic whether PSU banks or private banks rule in the Cachar district has been the main focus. The internet, questionnaire served by us to the respondents, website of particular banks have been the major source of information. Few worth literatures like kiranprakashan bank books, Arihants banking knowledge have been very valuable. The facts and figures have provided in these respective books and have been very helpful to us.
  36. 36. 36 2.3 RESEARCH METHODOLOGY Research is an art of scientific investigation. In other words research is a scientific and systematic search for pertinent information on a specific topic. The logic behind taking research methodology into consideration is that one can have knowledge regarding the method and procedure adopted for achievements of objective of the project. With the adoption of this others can also evaluate the results too. The methodology adopted for studying the objective of the project was surveying the bank account holders of the Cachar district. So keeping in view the nature of requirement of the study to collect all the relevant information regarding the comparison of public sector banks and the private sector banks direct personal interview method with the help of structured questionnaire was adopted for collection of primary data. Secondary data has been collected through the various magazines and newspaper and by surfing on internet and also by visiting the websites of Indian Banking Association. SAMPLE DESIGN – A sample design is a definite plan for obtaining a sample from a given population.It refers to the techniques or the procedures that the researchers would adopt in selecting items for the samples.Sampledesignmay as well lay down the number of items to be included in the sample i.e the size of the sample. Sample design is determine before data are collected. Here we select the population as sample in our sample design. The selected respondents should be as representatives of the total population. POPULATION – The persons holding bank accounts in the cachar district were taken into consideration. DATA COLLECTION Data was collected by using two main methods i.e. primary data and secondary data. PRIMARY DATA – primary data is the data which is used or collected for the first time and it is not used by anyone in the past. There are number of sources of primary data from which the information can be collected. We took the following resources for our research.
  37. 37. 37 a) QUESTIONNAIRE – This method of data collection is quite popular, particularly in case of big enquiries. Here in our research we set 15 simple questions and requested the respondents to answer these questions with correct information. SECONDARY DATA – Secondary data is the data which is available in readymade form and which has already been used by other people for various purposes. The sources of secondary data are newspaper, internet, websites of IBA, journals and other published documents. SAMPLE PLAN SAMPLE SIZE - Keeping in mind all the constraints the size of the sample of our study was selected as 80. SAMPLING UNIT – State bank of India, Tarapur branch in Cachar district. Due to nature of study we also visited various branches of SBI, UBI, ICICI, AXIS etc in Cachar district. SAMPLING TECHNIQUE – Stratified convenient sampling. All the bank account holders were taken into considerations. Research was conducted on clear assumptions that the respondents would give frank and fair answer in a pragmatic way without any bias. SAMPLING DESCRIPTION – In order to understand the nature and characteristics of various respondents in this study, the information was collected and analyzed according to their socio - economic background like education, occupation, age, gender, place of domicile etc .This descriptions show that these respondents that have been included in the study belong to different background and this in turn enhances the capability and accuracy of the study.
  38. 38. 38 2.4 PERSONAL DETAILS OF RESPONDENTS a) AGE – Figure no.3 Table no.2 PARTICULARS NO. OF RESPONDENTS BELOW 20 7 20-30 41 31-44 21 45 and above 11 ANALYSIS AND INTERPRETATION – From the above result we come to know that out of 80 respondents, 7 are below 20 years of age, 41 belongs to 20 – 30 years, 21 belong to 31 – 44, 11 belong to 45 and above years of age. This shows that majority of our respondents are young people between the age 20 to 30. AGE Below 20 20 - 30 31 - 44 45 and above
  39. 39. 39 b) GENDER – Figure no.4 Table no.3 PARTICULARS NO. OF RESPONDENTS MALE 56 FEMALE 24 ANALYSIS AND INTERPRETATION – From the above result it can be inferred that majority of our respondents are male, number being 56 as compared to 24 females in a total of 80. GENDER MALE FEMALE
  40. 40. 40 c) HIGHEST EDUCATIONAL QUALIFICATION – Figure no.5 Table no. 4 PARTICULARS NO. OF RESPONDENTS UPTO MATRIC 9 GRADUATE AND PROFESSIONAL 43 POST GRADUATE 23 ILLITERATE 5 ANALYSIS AND INTERPRETATION – From the above result it can be inferred that majority of our respondents are graduate and professionals, number being 43, while the second most respondents are post graduates with number being 23. Illiterates are 5 and up to metric level education are 9 in our total tally of 80 respondents. Highest educational qualification upto matric graduate and professional post graduate illiterate
  41. 41. 41 d) OCCUPATION – Figure no.6 Table no.5 PARTICULARS NO. OF RESPONDENTS BUSINESSMAN 14 GOVT. 37 STUDENT 22 OTHERS 7 ANALYSIS AND INTERPRETATION – The above result shows that 37 of our respondents are govt. employees while the second most respondents are students, number being 22.Businessman comprises 14 and others are 7 in our total respondents of 80. OCCUPATION BUSINESSMAN GOVT. STUDENT OTHERS
  42. 42. 42 e) PLACE OF DOMICILE – Figure no.7 Table no.6 PARTICULARS NO. OF RESPONDENTS URBAN 52 RURAL 28 ANALYSIS AND INTERPRETATION – From the above results it can be inferred that majority of our respondents are urban people, number being 52 out of 80, while rural people are 28. PLACE OF DOMICILE URBAN RURAL
  43. 43. 43 f) AWARE OF THE DIFFERENCE BETWEEN PSU BANKS AND PRIVATE BANKS Figure no.8 Table no.7 PARTICULARS NO. OF RESPONDENTS YES 41 NO 27 PARTIALLY 12 ANALYSIS AND INTERPRETATIONS – From the above result it can be said that regarding the awareness between public sector and private sector banks with respect to differences, the responses are mixed.41 respondents are aware of the differences which comprises 50 % of the tally while 27 people don’t know the difference between PSU banks and private banks. 12 are those who are not sure. AWARENESS YES NO PARTIALLY
  44. 44. 44 Chapter 3
  45. 45. 45 LIMITATIONS OF THE STUDY Due to constraints of time and resources the study is likely to suffer from certain limitations. Some of them are mentioned below so that the findings of the study are understood in proper perspective. The limitations of the study are – 1) Some of the respondents of the survey were unwilling to share information. 2) The research was carried out in a short period of time so. Therefore the sample size and other parameters were selected accordingly so as to finish the work in given time frame. 3) The information given by the respondents might be biased because some of them might not be interested in providing correct information. 4) The officials of the bank supported me a lot but did not have sufficient time to clear all the points elaborately. 5) Since the sample unit is a semi urban place i.e. Cachar district with less presence of private sector banks, hence the result is likely to tilt a bit towards the public sector banks.
  46. 46. 46 Chapter 4
  47. 47. 47 DATA ANALYSIS AND INTERPRETATION Analysis of data collected – 1) The respondents were asked about which banking sector services they avail. The result is as follow – Table no.8 BANKING SECTOR NO. OF RESPONDENT PUBLIC 62 PRIVATE 14 BOTH 4 ANALYSIS AND INTERPRETATION – Figure no.9 From the above pie – chart it can be inferred that majority of our respondents avail public sector banks.62 respondents out of 80 avail public sector services, which in itself is a very thumping number. The number of private sector respondents is 14 and both sector users are BANKING SECTOR PUBLIC PRIVATE BOTH
  48. 48. 48 minimal, number being 4. Hence it can inferred that public sector banks outweigh the private sector banks with respect to customer in this particular region of Cachar district. 2) They respondents were asked regarding the account that they are maintaining in their respective banks. Here is the result – Table no.9 ACCOUNT SAVING CURRENT FD SALARY NO. OF RESPONDENT 55 4 7 14 ANALYSIS AND INTERPRETATION – From the above results it can be inferred that majority of our respondents are availing saving bank account. Almost 70 % of our respondents are saving bank account holders. Saving bank account holders are 55 out of 80 while the next best account that is maintained in this part of country is salary account,14 out of 80,current account 4 and FD is 7. This means that in Cachar district majority of people prefer saving bank account. Figure no.10 TYPE OF ACCOUNT ACCOUNT SAVING CURRENT FD SALARY
  49. 49. 49 3) They respondents were asked regarding the Bank that they prefer the most – Table no.10 BANK PREFERRED NO. OF RESPONDENTS UBI 21 SBI 43 ICICI 5 AXIS 9 OTHERS 2 ANALYSIS AND INTERPRETATION – Figure no.11 From the above pie-chart it can be said that almost 50% of our respondents like SBI, which is a public sector bank, while the next best bank is UBI with 21 respondents which is again a public sector bank. ICICI is liked by 5 while AXIS is preferred by 9 followed by others at 2. Hence it can be safely inferred that out of 80 respondents 64 respondents prefer public sector bank which is a staggering 80 % of the total number of respondents. PREFERRED BANK UBI SBI ICICI AXIS OTHERS
  50. 50. 50 4) The respondents were asked regarding the reasons for choosing a particular bank. Here are the results – Table no.11 REASON NO. OF RESPONDENTS FRIENDLY BEHAVIOUR BY STAFF 4 TRUST/RELIABILITY 43 QUICK AND FAST SERVICES 9 LOCATION 24 ANALYSIS AND INTERPRETATION – Figure no.12 From the above pie-chart it can be inferred that almost 50% of our respondents i.e 43 out of 80 pick banks according to trust/reliability. The next best factor comes out to be location with 24 respondents. These two factors are the major hindrance in private sector banking that is why they are lacking the competition in this part of the country. They have less presence in rural areas while public sector banks have extensive reach and are following the financial REASON FRIENDLY BEHAVIOUR BY STAFF TRUST/RELIABILITY QUICK AND FAST SERVICES LOCATION
  51. 51. 51 inclusion policy of RBI. 4 respondents choose bank due to behavior towards customers and 9 respondents value the quick and fast services of the bank. 5) They respondents were asked regarding the services that they are availing from their respective banks – Table no.12 SERVICES AVAILING NO. OF RESPONDENTS ATM/DEBIT 66 MOBILE 3 INSURANCE 9 CREDIT CARD 2 ANALYSIS AND INTERPRETATION - Figureno.13 From the above analysis it can be inferred that majority of the respondents use automated teller machine (ATM) services that is being provided by all the banks except the RRBs. ATM users are 66 out of 80 respondents which is more than 80%. Mobile banking is used by 3 respondents; insurance services are availed by 9 respondents while credit card services are SERVICES ATM/DEBIT CARD MOBILE BANKING INSURANCE CREDIT CARD
  52. 52. 52 used by 2 respondents. This shows that in this part of country they are more concerned with the conservative way of using the bank and not ready to explore yet to other services. 6) The respondents were asked regarding their satisfaction level towards their bank – Table no.13 SATISFACTION LEVEL NO. OF RESPONDENTS PRIVATE SECTOR BANK 12 PUBLIC SECTOR BANK 53 BOTH 15 ANALYSIS AND INTERPRETATION – Figure no.14 From the above result it can be inferred that the customers of public sector banks are satisfied toward their banks with number being 53 while 12 respondents are satisfied towards their private sector bank. There are 15 respondents who like both. SATISFACTION LEVEL OF THE RESPONDENTS PRIVATE PUBLIC BOTH
  53. 53. 53 7) The respondents were asked regarding the factor for choosing the public sector banks – Table no.14 REASON FOR CHOOSING PSU BANK NO. OF RESPONDENTS FRIENDLY BEHAVIOUR BY STAFF 0 TRUST/RELIABILITY 43 QUICK AND FAST SERVICES 1 LOCATION 22 ANALYSIS AND INTERPRETATION – Figure no.15 From the above analysis it can be inferred that the PSU banks are chosen by respondents mainly due to 2 factors and that are Trust/Reliability and Location. Out of 66 respondents those two factors alone comprises 65 respondents which is a staggering number.Surprisingly not a single respondent gave the factor friendly behavior by staff towards the customers which puts PSU banks in bad light. Due to financial inclusion policy of RBI the PSU bank have wide range of coverage and thus are a step ahead of the private banks. Also the amount deposited by customers is insured by DICGC (deposit insurance and credit Guarantee Corporation) which is why trust factor is there in public sector banks. REASON FOR CHOOSING PSU BANK FRIENDLY BEHAVIOUR BY STAFF TRUST/RELIABILITY QUICK AND FAST SERVICES LOCATION
  54. 54. 54 8) The respondents were asked regarding the factors for choosing the private sector banks – Table no.15 ANALYSIS AND INTERPRETATION – from the above analysis it can said that out of the total 18 respondents, 50% of the respondents like private sector banks due to its quick and fast services while 33 % of the respondents like the friendly behavior of the staff towards the customers. Location is a factor for only 2 respondents while only one respondent have given the reply as trust/reliability. It is quite surprising to see the trust factor so less in private sector banks in these parts of country as the private sector deposits are also insured by DICGC but maybe it is the awareness factor which is lacking in these districts respondents. Figure no.16 REASON FOR CHOOSING PRIVATE BANK FRIENDLY BEHAVIOUR BY STAFF TRUST/RELIABILITY QUICK AND FAST SERVICES LOCATION REASON FOR CHOOSING PRIVATE BANK NO. OF RESPONDENTS FRIENDLY BEHAVIOUR BY STAFF 6 TRUST/RELIABILITY 1 QUICK AND FAST SERVICES 9 LOCATION 2
  55. 55. 55 Chapter 5
  56. 56. 56 FINDINGS OF THE STUDY  More number of people have account in public sector banks.  Majority of the respondents whether public sector or private sector banks have saving banks account in their respective banks.  People want a change in the behaviour of the staff towards customers in public sector banks.  There needs to be more awareness regarding the trust factor in private sector banks and the amount deposited there in this part of country.  People are more satisfied with the public sector banks in this part of country. The main reason for their satisfaction is Trust factor and the Location of the branch.  The private sector banks need to enhance the number of their branches and specially cover the rural area so as to attract more customers. In addition they need to create awareness among customers to enhance the trust factor in them.  The facility that was availed most was the ATM/Debit card facility whether in private sector bank or in public sector bank.  Majority of the respondents do not want to shift from their current bank.  The most favoured bank in this part of country is the SBI and UBI.
  57. 57. 57  From the above study it is clear that the respondents of public sector banks have chosen the respective banks due to adequate branches i.e. location and due to the trust factor.  From the above study it is clear that the respondents of private sector banks like them because of the friendly behaviour of the staff as well as the quick and fast services that is being provided.  As the public sector banks working under the financial inclusion policy of RBI hence they have got more number of customers because they have “ no frill account “ now a day’s called BSBDA (Basic saving bank deposit account)  From the above study it can be assured that BANCASSURANCE is still not a part in this part of the country. Negligible amount of respondents have shown their interest in this services along with mobile banking and credit card facility.  From the above study it can safely said that public sector banks wins over the private sector banks but they also need to improve a lot.
  58. 58. 58 FINDINGS OF THE STUDY WITH RESPECT TO THE OBJECTIVES . 1. To find the banking sector largely preferred by the customers. It has been found that in Cachar district the PSU Banks are more preferred as compared to Private Banks. The study suggests that out of the 80 respondents 62 of them have their accounts in PSU Banks, also 4 of them have accounts in both PSU and Private Sector Banks (refer to table no. 7 and graph no. 7). Also it has been found that SBI and UBI are the most preferred ones in this part of the country. Out of the 66 respondents 64 of them have accounts alone in SBI & UBI with 43 in SBI and 21 in UBI (refer to Table no. 9 and Graph no. 9). 2. To find out the factors which influences the customers to choose a bank. The main factors which influence the customers of Cachar district according to our study are Trust/Reliability and Location (refer to Table no. 10 and Graph no. 10). According to our study, out of the 80 respondents 43 of them voted for Trust/Reliability factor while 24 of them considered location as a very important factor. The other two factors quick and fast services and the friendly behaviour by staff attracted meagre response. Refer Table no. 13 and graph no. 13 the factors which influences the customers of this part of the country for PSU Banks are Trust/reliability and Location with 43 and 22 respectively. Refer Table no. 14 and Graph no. 14 the factors which influences the customers of this part of the country for Private Banks are quick and fast services and the friendly behaviour by staff.
  59. 59. 59 3. To study the problems faced by the customers in public as well as private sector banks and also to compare between them. For PSU Banks  The main problems faced by the customers in PSU banks are unfriendly behaviour of the staff towards them also the services provided to them are not quick enough. Refer to Table no. 13 and Table no. 13 For Private Banks  The main problems faced by the customers in PrivateBanks trust/reliability and location. Since the private sector banks do not have enough number of branches in this part of the country hence they are facing the problem of including large number of customers. The unawareness factor regarding the DICGC assurance to the private sector banks is what leading to lack of trust/reliability in them. Refer to table no. 14 and Graph no. 14
  60. 60. 60 Chapter 6
  61. 61. 61 SUGGESTIONS Based on the study conducted there are some of the suggestions given by the customers. These are the comments given by them regarding the improvement of banking services in India.  Banks should obey RBI norms and should provide facilities as per the norms. While the customers should be given prompt services and the bank officials should be willingly serving the customers.  Bank should increase rate of saving accounts  Bank should provide loans at a lower interest rate and education loan should be given with ease without much documentation.  Fair dealings with the customers. More contribution from the employee to the bank. The staff should be co-operative, friendly and must be capable of understanding the problem of customers.  Prompt dealing with permanent customer and speedy transaction without harassing the customers.  Each branch of each bank should be computerized even in rural areas for speedy transaction.  RTGS and NEFT can play a very important role in speedy transaction.  More ATM coverage should be provided for the convenience of the customers  No limit of cash withdrawals should be there on customers
  62. 62. 62  24 hour banking should be induced so as to facilitate the customers who don’t have time in the day time or in the week days. This will enhance the services  The charges for opening saving bank account in private bank are too high. This should be taken care off.  Customers generally complain that full knowledge regarding products and services are not given to them. Hence the bank should be fair enough in disclosing the proper terms and conditions of the product and services.  The branch should promote cooperation and coordination among employees which can enhance the rate of efficiency.  Knowledge of local language should be a must for employees of banks.  Maintenance of proper hierarchy should be there in the bank employees.  Customer relationship management in public sector banks should be given extra importance.
  63. 63. 63 Chapter 7
  64. 64. 64 RECOMMENDATION FOR PUBLIC SECTOR BANKS –  Bank staff should be customer friendly and highly motivated to serve the normal customers.  As far as possible the bank should reduce the documentation process while providing loan.  Computerization should be done in banks at all levels and the operators should be properly trained.  Token system should be introduced so as to reduce the waiting line in the bank.  Proper ambience in the banks can develop a healthy work culture.  Should be flexible in providing interest of the deposited money.  Quick services should be provided.
  65. 65. 65 FOR PRIVATE SECTOR BANKS –  24 hours banking should be introduced so as to facilitate the customers who don’t have time in day time or week days.  More ATM coverage should be provided for convenience of the customers.  Should reduce the amount while opening a new saving bank account.  Should maintain a proper recruitment policy like the PSU to attract genuine talent to work for the customers. Rather than recruiting on internal recommendation they should follow the IBPS for recruitment to get better talent and better services from their employees.  Should enhance the number of branches in rural areas to attract more customers.  Should advertise extensively regarding their operations and services to garner faith in them.
  66. 66. 66 Chapter 8
  67. 67. 67 CONCLUSION From the above study we can conclude that the people of Cachar have more faith on PSU Bank than Private sector Bank. The main reasons are as follows Since Cachar district is a semi-urban place, so there are less number of branches of private sector banks in this area and also the trust factor is less in case of private sector banks. Whereas for PSU Banks they are working under the financial inclusion policy of the RBI and thus have adequate number of branches in this place which Private Sector Banks do not. Hence with respect to this place it is the PSU Bank mainly SBI & UBI as revealed in our study which is far ahead of the Private Sector Banks with respect to customer base. Since, banking industry is bound to grow extensively in the next few years; it is up to the private sector banks to enhance the number of branches in the Cachar District to attract customers of the said place. For the PSU Bank in order to sustain the large customer base, they to change their view regarding the customer relationship management (CRM). Their employees need to change their behavior and attitude towards its customers in order to serve its customer whole heartedly and willingly.
  68. 68. 68 Chapter 9
  69. 69. 69 APPENDIX Questionnaire Format
  70. 70. 70
  71. 71. 71
  72. 72. 72 References Books :- KiranPrakashan Arihant’s “How to crack Banking Interviews Reports :- Report on Securities research on the ICICI Bank and SBI Report on “Indian Economic Survey 2012-2013” Websites :- www.iba.com www.kiranprakashan.com www.ibps.in