Comparative Analysis of Loan Preference in Public and Private Banks

“COMPARATIVE ANALYSIS OF LOAN PREFERENCE BY CUSTOMERS IN PRIVATE AND PUBLIC
BANKS”
WINTER SESSION
2016-18

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A PROJECT REPORT
Submitted in partial fulfillment of the requirements for
qualifying
Master of Business Administration
In
Finance
GUIDE: SUBMITTED BY
Shakti Prasad Tiwari Nittu Sharma
MBA (Marketing)
UNDER SUPERVISION OF:

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Bonafide certificate
I, Ms. Nittu Sharma, Roll No.1254503745, certify that the Project Report entitled
―Comparative Analysis of loan preference by customers in private and public
banks.” is done by me and it is an authentic work carried out by me at ―APAR
INDIA COLLEGE OF MANAGEMENT AND TECHNOLOGY” 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.
Nittu Sharma
14 Oct 2017
Certified that this project report titled ―Comparative Analysis of loan preference
by customers in private and public banks.” is the bonafide work of Ms. Nittu
Sharma who carried out the project work under my supervision.
Shakti Prasad Tiwari
Mob(9430434342)
―

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Acknowledgement
I would like to humbly acknowledge the contributions made
by several persons without whose valuable support, this
Project could not have taken the present shape.
I would first of all like to thank our patron, Mr. Raj Kumar
Jain (Founder & Chairman) & Mr. Apar Jain
(Director). Now I would also like to thank our teacher and
guide Ms. Preeti kukreja and all our faculty members without
whose timely support and guidance this project on the subject
of “COMPARATIVE ANALYSIS OF LOAN PREFERENCE
BY CUSTOMERS IN PRIVATE AND PUBLIC BANKS”
would not have been successful.
In this moment of deep thought and reflection, I would pay
humble salute to my parents who have taken pains unknown
and unperceivable day and night to bring us up and polish
my future to attain the desired goal.
Submitted By:
Nittu Sharma
(15484745)

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Executive Summary
The study was mainly conducted to understand ―Comparative Analysis of loan
preference by customers in private and public banks.‖ This project talked about
the Customer Satisfaction of how products and services provide by any banks to
meet the expectations of a customer. The project was divided into different
sections.
Firstly, the project comprises of the brief information in order to survive in this
competitive environment and provide continual customer satisfaction, the
banking services providers are required to frequently increase the quality of
services. It also recovers a brief description about the objectives and scope of
the study and the tools and techniques that has been applied or used in the
project.
Afterwards the project gives brief descriptions of the past studies that have been
conducted by various other researchers in the same field and also about the
techniques that they have used in the project. Different journals or research
papers of researchers has been analyzed before conducting the research or study
to make concepts more clear.
Now, the project has been divided into two parts which are data presentation in
which data was presented and factor analysis has been calculated using Ms-
Excel and SPSS and in second part data analysis has done to describe the
analysis and interpretation of the data which are collected through the
questionnaire and the internet website.
After data analysis and data presentation, the project explained about the finding
that has been found after analyze the data and also it comprises of limitations
and scope of the study that has been done.
In last part or section the project comprises of the recommendations that can
help the customer in taking decisions while he have to take loan or not and also
it can help in future study or research.

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TABLE OF CONTENTS
S. No Topic Page No
1 Certificate (s) 2.
2 Acknowledgement 3.
3 Executive Summary 4.
4 List of Tables 6.
5 List of Figures 7.
6 Chapter-1: Introduction 11.
7 Chapter-2: Literature Review 27.
8 Chapter-3: Data Presentation & Analysis 36.
9 Chapter-4: Summary and Conclusions 48.
10 Chapter-5: Recommendations 53.
11 Bibliography 54.
12 Appendix 72.

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LIST OF TABLES
Table No Title Page No
3.1 Reliability Statistics 39.
3.2 Gender 39.
3.3 Annual Income 41.
3.4 Education Qualification 42.
3.5 Occupation 43.
3.6 Type of loan 44.
3.7 Total Variance Explained 45.
3.8 Identification of factors related variable 46.
9 Respondents View On the type of Loan 72.
10 Communalities 73.
11 Component Matrix 77.
12 Important factors in component matrix 78.

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LIST OF FIGURES
Figure
No
Title Page No
3.1 Gender 40.
3.2 Annual Income 41.
3.3 Education Qualification 42.
3.4 Occupation 43.
3.5 Type of loan 44.

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ABSTRACT: The bank system is facing challenges with stiff competition and
advancement of technology. It becomes imperative for service providers to meet
or exceed the target customers‘ satisfaction with quality of services expected by
them. Hence, the present research attempted to study customers‘ perception of
quality of services, both transaction based and IT enabled in terms of its
constituent factors in public sector, private sector and foreign banks. Also
through the present study, we would gauge the extent of IT adoption in public
sector, private sector and foreign banks in this e-age. The present investigation
was planned with the objective to assess the extent of use of services especially
the IT enabled services in these banks and to analyze the constituent factors
affecting customer satisfaction with the quality of services. The present study
was conducted in public sector, private sector and foreign banks of Delhi.
Multistage random sampling was used for selection of sample. The study was
proposed to be conducted in five zones (East, West, North, South, and Central)
of Delhi. One branch of the above banks in any zone of Delhi was selected
randomly. While selecting the branch, care was taken to see that branch should
provide at least five IT enabled services. This step was followed to have Intra
Bank comparison. The study shows that the customers of nationalized banks
were not satisfied with the employee behavior and infrastructure, while
respondents of private and foreign banks were not satisfied with high charges,
accessibility and communication.

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Following are the types of Banks:
Nationalized Banks:
Nationalized banks dominate the banking system in India. The history of
nationalized banksin India dates back to mid-20th century, when Imperial Bank
of India was nationalized (under the SBI Act of 1955) and re-christened as State
Bank of India (SBI) in July 1955.
Private Banks in India:
Initially all the banks in India were private banks, which were founded in the
pre-independence era to cater to the banking needs of the people. In 1921, three
major banks i.e.Banks of Bengal, Bank of Bombay, and Bank of Madras,
merged to form Imperial Bank of India
State Bank of India:
The State Bank of India, the country‘s oldest Bank and a premier in terms of
balance sheetsize, number of branches, market capitalization and profits is today
going through amomentous phase of Change and Transformation – the two
hundred year old Public sector behemoth is today stirring out of its Public
Sector legacy and moving with an agility to givethe Private and Foreign Banks a
run for their money.The bank is entering into many new businesses with
strategic tie ups – Pension Funds,General Insurance, Custodial Services, Private
Equity, Mobile Banking, Point of SaleMerchant Acquisition, Advisory Services,
structured products etc – each one of theseinitiatives having a huge potential for

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growth.The Bank is forging ahead with cutting edge technology and innovative
new banking models,to expand its Rural Banking base, looking at the vast
untapped potential in the hinterland and proposes to cover 100,000 villages in
the next two years.It is also focusing at the top end of the market, on whole sale
banking capabilities to provideIndia‘s growing mid / large Corporate with a
complete array of products and services. It isconsolidating its global treasury
operations and entering into structured products andderivative instruments.
Today, the Bank is the largest provider of infrastructure debt and thelargest
arranger of external commercial borrowings in the country. It is the only Indian
bank to feature in the Fortune 500 list.
ICICI Bank:
ICICI Bank is India‘s second-largest bank and the largest private bank in the
country, having more than US$50 billion in assets. The Bank has a network of
2,044 branches and about5, 546 ATMs in India and presence in 18 countries.
ICICI Bank provides a wide range of banking products and financial services —
investment banking, life and non-life insurance, venture capital and asset
management to corporate and retail customers through a variety of delivery
channels and specialized subsidiaries and affiliates. Customers of all the groups
under the ICICI umbrella are served through roughly614 branches and global
services provided through 14 international offices. ICICI hasincubated Financial
Information Network & Operations Pvt. Ltd. (FINO)

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Chapter-1: Introduction
Banks play a role of considerable economic significance as intermediaries in
mobilizing public savings and channelizing the flow of funds for productive
purposes, keeping on the process of the economic growth of the country.
Realizing the importance of the role of the banks in economic development,
Government of India/Reserve Bank of India took several major initiatives after
the country attained independence to gear the banking system to serve
the national objective.
One of the most momentous of such initiatives was the substitution of private
ownership by public ownership, through the medium of an ordinance, of the 14
largest commercial banks in the private sector on 19 July 1969. This has
popularly come to be known as nationalization of these banks without which it
would not have been possible to transform the class banking into mass banking
and align bank credit to serve the planned priorities and social needs. Branch
expansion programmes formulated by the Reserve Bank of India aimed at
making available necessary banking facilities in all parts of the country
specially the unbanked rural and semiurban areas. This was perceived as
essential for implementation of project for rural development and upliftment of
economically weaker sections and also spreading the banking habit even in the
remote areas of the country.

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Banks assisted in the rehabilitation of sickly weak industrial units and in the
prevention of unemployment, which would result from the closure of industrial
units for want of credit.
Measures thus mentioned substantially contributed to the channelising of the
bank credit to the various sectors of the economy which involved inter alia, flow
of credit to sectors, which were hitherto neglected or the so called ‗priority
sectors‘.
Currently, overall banking in India is considered as 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. Well- computerized
foreign banks are beginning to compete seriously with the nationalized banks.
They aim at a profitable and wealthy part of the market and, in contrast to the
nationalized banks, do not recognize any social responsibilities to small
account holders or to a rural and semi urban clientele. Almost 80% of the
businesses are still controlled by Public Sector Banks (PSBs). PSBs are still
dominating the commercial banking system.
The bank system is facing the challenges with stiff competition and
advancement of technology, the services provided by banks have become more
easy and convenient. The competitive character has been promoted by
facilitating the entry of foreign banks.

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The country is flooded with foreign banks and their ATM stations. Efforts are
being put to give a satisfactory service to customers. Phone banking and net
banking are introduced. The entire system has become more convenient and
swift. Time is given more importance than money.
Customer Satisfaction is a measure of how products and services provide by any
organization meet the expectations of a customer. It varies from person to
person and service to service. A customer can be defined as a user or potential
user of banking services. A customer would include an account holder, or a
person carrying out casual business transactions with a bank. The efficiency of a
banking sector depends upon how best it can deliver services to its target
customers. In order to survive in this competitive environment and provide
continual customer satisfaction, the banking services providers are required to
frequently increase the quality of services. In banking business it is seen that
only 5% increase in customer retention can extend 35% profitability.
In the developing country like India international banks are coming to market,
which are competing with local banks irrespective with that they are private
sector banks or public sector banks. Various banks are available with new
offers, schemes, and services with wide range of products.

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Customer has range of choices where proper information can be gathered at
cheap cost, and can take the advantage of such competitiveness. In the era of
globalization customer has more rights to choose right product according their
profile, opportunities available for their money.
In order to survive in this competitive environment and provide continual
customer satisfaction, the providers of banking services are now required to
continually improve the quality of services. The globalization of Indian
economy has truly called for much more disciplined approach on the part of
Indian banking sector to improve the overall quality of customer services
through smart use, absorption and adoption of flexible and appropriate
information technology. It is seen that 5% increase in customer retention can
increase profitability by 35% in banking business, 50% in insurance and
brokerage, and 125% in the consumer credit card market. Therefore, banks are
now stressing on retaining customers and increasing market share (Chothani et
al. 2004).
A favorable climate for excellent service manifests itself in employee behavior,
for example, being attentive to customers, speaking favorably about the
organization and its services. With frequent employee-customer contact,
customers are more often exposed to such positive behaviors, which in turn,
affect customer satisfaction.

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To sum up, the adoption of technology in banks is increasing with the growing
use of Internet, electronic commerce, and various other banking innovations.
Evolution of technology in banks is taking place at an enormous pace and it is
only question of time before banks commit themselves on full-scale technology
up gradation, aiding their growth and adding their competitive features. The
computer and the communication age is opening up a flood of new opportunities
that are redefining the very concept of traditional banking. It is for the
individual banks to reinvest themselves and reconfigure their business processes
and practices in tune with the growing customer expectations in an ever
increasing competitive environment. There is no way, a bank can remain
lukewarm to new technology products and yet hope to grow because it is a
choice of survival or extinction.
The objective is to seek and measure the level of customer satisfaction and
services rendered in the banking industry in India. As a matter of fact, many
banks subscribe to the fact that high customer satisfaction will lead to greater
customer loyalty which, in turn, leads to future revenue. For that matter, many
organizations (including banks) that resorted to having superior service quality
have been found to be market leaders in terms of sales and long-term customer
loyalty and retention.
Public and private bank offer various types of bank loans to loan seekers to
satisfy them, especially those having a good track record of repaying their bills

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and a stable job get these loans passed easily. The person have proof of
identity and income to get bank loans and certain bank loan types may also
require collateral such as a car or home equity loan.
The first important thing is to know what the different types of bank loans are.
There is a difference between any two kinds of bank loans. For example, there is
a difference between secured and unsecured bank loan types.
A) Personal Bank Loans
These are the kinds of bank loans which are provided to an individual, rather
than to a group or business. The personal bank loans are further divided into
many different categories like secured and unsecured loans.
B) Unsecured Personal Loans
These types of bank loans allow a borrower to get a check or cash and pay it
back in fixed installments over a certain fixed period of time.
C) Secured Personal Loans
The secured personal loans issue cash or a check to the loan seeker. The loan
seeker has to provide the bank with interest in collateral such as a savings
account or a property in case the loan doesn‘t get repaid.
D) Mortgage Loans
These types of bank loans allow the loan recipients to live in a home while
paying it off over time.

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To meet the changing preferences of the customers and to stay ahead of
competitors, bankers are bound to provide quality and efficient services. Banks
can enhance customer service by leveraging on technology, maintenance of
efficient service delivery standards and business process re-engineering. The
government is embarking on measures such as the recently launched economic
reform, different financial liberalization measures and restructuring of financial
institutions. All the measures have the aim of promoting a competitive
environment and efficient banking services to the public. The financial sector is
also improving, with flexible interest and exchange rates that are market-
determined.
People who face customers directly and are the first ones to know what
customer actually needs. As a service provider their role becomes very
important in shaping bank‘s perception in customer‘s mind. As services can
make or break a customer, much emphasis is laid upon service delivery by most
of the banks. The link between service quality and customer satisfaction has
been subjected to intense scrutiny by a few service quality researchers. As
survival of the fittest has become the order of today, every bank is trying woe
the best customer who is common for all. Retaining the existing customers and
attracting new ones has become all the more difficult especially for public sector
banks (Bhatt, 1990).At this backdrop, a study on bank‘s perception in the mind

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of customers and comparative analysis of services of private and public sector
bank sounds interesting. Such analysis will provide the banks with a quantitative
and qualitative estimate of their services as perceived by their customers.
Public and private bank offer various types of bank loans to loan seekers to
satisfy them, especially those having a good track record of repaying their bills
and a stable job get these loans passed easily. The person have proof of
identity and income to get bank loans and certain bank loan types may also
require collateral such as a car or home equity loan.
Banks are not in need to scratch from the beginning, they can market the
product among their customers itself. It is the most important advantage to the
banks in this competitive world. Customers preferences are changing day by day
and they have the choice to obtain the loan products from any distribution
channel. Increased competition makes it difficult for banks to retain their
customers. Providing multiple services at one place to the customers enhanced
the satisfaction level of customers. The satisfaction levels of the customers were
measured on the basis of five variables; Customer benefit, Convenience,
Acquisition cost, Value added services and Customers trust.
In the developing country like India international banks are coming to market,
which are competing with local banks irrespective with that they are private
sector banks or public sector banks. Various banks are available with new
offers, schemes, and services with wide range of products.

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Customer has range of choices where proper information can be gathered at
cheap cost, and can take the advantage of such competitiveness. In the era of
globalization customer has more rights to choose right product according their
profile, opportunities available for their money.
In the current trend, customer satisfaction plays a major role in all parts of the
services. This research work is used to predict the over-all customer satisfaction
and dissatisfaction with banking services with help of loan services, bank
deposits, insurance services and value added services and how gender and
income influence the kind of loans offered by banks. An assessment was made
to understand the relationship between marital status and changes recommended
to commonly accepted services. This study helps to identify the customers‘
preferences and satisfaction of banking services.
Customer is king in market‖ by Adam Smith suggest that in this competitive era
of service industry customer hold power to choose the best and having
maximum opportunity with wide range of product with the variety of services
with different schemes. Now the king means customer must be satisfied to retain
and create brand loyalty converting in to brand equity, which is like asset for the
any of the service provider.

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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 known 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.
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 €860 billion) and
bank credit of 52604.59 billion (US$840 billion or €670 billion). The net profit
of the banks operating in India was 1027.51 billion (US$16 billion or
€13 billion) against a turnover of 9148.59 billion (US$150 billion or
€120 billion) for the fiscal year 2012-13.

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1.1 Growth opportunities for Indian banks
We are living in exciting times. Revolutionary things are happening as a matter
of routine in the normally placid and sanguine world of Banking. Even 20 years
ago who could have thought of the myriad changes brought on by
computerisation in the working of Indian banking, the impact of implementation
of reforms and prudential norms. Unlike many of the emerging economies
where financial reforms were conducted as a result of the banking crises, ours
was initiated with the knowledge that the real sector reforms carried out to
mitigate the 1991 balance of payments crisis cannot be sustained without
reforming the financial sector. It was aided, no doubt, by the relative
macroeconomic stability during the period and Gradualism –successful
sequencing, an outcome of the democratic polity where popular consensus is
crucial. If Indian economy has displayed remarkable resilience through the
global crisis, it was not only due to strong domestic fundamentals in terms of
domestic demand and investments but also due to its strong financial sector. In
spite of the volatility in capital flows, inflation, intermittent challenges due to
global developments like recession in USA, Euro debt crisis and other factors,
the underlying momentum of massive urbanisation, technology transformation
underway, substantial investment in infrastructure and the regulatory changes
like Aadhaar, the Unique identification program and the promotion of Business
Correspondents can support robust growth over the long term. The growth

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opportunities for Indian banks emanates from the fact that India is in the unique
position of leveraging the demographic dividend it rides on, growing affluent
middle class population, large chunk of population without banking access, and
great scope for financial deepening . Confluence of these opportunities not only
promises long term growth prospects but also provides a wide canvas for banks
to innovate for covering untapped sections.
In the current scenario, customer satisfaction is of utmost importance. This
research work is used to analyze the over-all customer satisfaction and
dissatisfaction with banking services in terms of loan services and value added
services pertaining to loans provided by the banks. This study helps to identify
the customers‘ preferences and satisfaction of banking services provided for
taking loan by and draws a comparison of the services provided by the private
and public banks.
1.2 Objectives
 To study the banking services and customer satisfaction of public and
private sector banks in Delhi.
 To know in which service quality dimension the bank is performing well
and in which dimension it needs improvement.
 To analyze and compare the loan perceptions of the customers in public
and private sector banks.

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 To evaluate the level of awareness towards loan products and services.
 To assess various aspects of services provided by the public sector,
private sector and foreign banks.
 To assess the extent of use of services especially the IT enabled services
in these banks.
 To determine and compare the extent of customer‘s satisfaction with
quality of banking services on the basis of different constituent factors.
1.3 Scope of the Study
This study will help in understanding the analysis customer in public and private
bank and also the services provided by the bank in Delhi and also focusing on
key factors based on loan perception of the customer in public and private sector
bank. The area of study is restricted to Delhi and NCR.
A number of surveys are conducted in the main cities of India like Bangalore,
Chennai and Delhi but the customers of the big cities differ with the customers
of small cities in attitude, usage pattern and recall etc., therefore the present
work has been undertaken in the Shivamogga district the most people are being
in use of banking services. This study is mainly confined to the customer
preference and satisfaction towards banking services only, who have been using

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the particularly ATM, and mobile banking in Shivamogga district of Karnataka
state.
1.4 Research Methodology
Research methodology deals with a systematic and scientific methods that can
be adopted to solve research problems. Methodology is a crucial step in any
research because it directly influences the whole research and its findings.
The present study will be carried out to gain an insight into the customer
satisfaction level with the quality of services provided by public sector, private
sector and foreign banks.
Research design
For obtaining information, about customer satisfaction in providing loan
services through banking via a survey conducted at a sample of the general
consumer population. The survey questionnaire is design and distributed to
target respondent randomly. Targeted respondents are the general public and
data is collected from a large population. Thus, the survey questionnaires are
designed to apply to a heterogeneous population, where targeted respondents
come from the general open public (from difference genders, races, age groups,
marital status education backgrounds, designations and professionalisms). The
survey questionnaires were conducted via face to face interviews so as to ensure
that the survey encompasses a broader geographical area.

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Data collection
The study bases itself on primary data collected by using the SERVQUAL
model for ascertaining the service quality of retail banking in India. The
information has been elicited through a field survey by means of a well designed
questionnaire comprising of queries on the various service quality attributes and
their dimensions as identified and contained in the SERVQUAL. One additional
attribute has been added to the original SERVQUAL. This relates to
ascertainment of ATM Service Quality which is one of the most important
factors that reflects the service quality of banks in retail segment. The
questionnaire has been administered on a randomly selected sample of
customers availing retail banking services from the private and public sector
Indian banks. The spread of survey covers nine districts of the State of Uttar
Pradesh, Uttarakhand and Delhi
A blow-up of the methodology adopted for primary data collection is presented
below.
This study is an empirical study; it is based on the primary and secondary data.
Primary Data - The primary data relating to the level of preferences and
satisfaction customer of the banks about the services offered by commercial
banks were collected from persons having their accounts in any public sector
bank or private sector bank by interviewing them directly by the researcher with
the help of a questionnaire.

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Secondary Data - Secondary data were obtained from different brochures of
banks, websites of banks, magazines and journals.
Sampling Method
The personal judgment method has employed for the selection of banks, where
banks services has been chosen for the study. By using simple random method
75 customers has selected from banks. This sample pack of 150 customers, has
duly calculate on the base of sampling proportion. In the present research the
stratified and area sampling are used for collection of primary data.

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Chapter-2: LITERATURE REVIEW
Private sector Banks seem to have satisfied its customers with good services and
they have been successful in retaining their customers by providing better facilities
than Public sector Banks. But, still Private Banks need to go a long way to become
customer‘s first preference. In an economy of innovative technologies and changing
markets, each and every service quality variable has become important. New
financial products and services have to be continuously introduced in order to stay
competent and Private Banks need to concentrate more on their credit facilities and
insurance services since customers do not have a very good opinion about these
facilities being offered by Private Banks also Public sector banks enjoy the trust of
the customers, which they have been leveraging to stay in the race however they
need to improve their service quality by improving their physical facility,
infrastructure and giving proper soft skill trainings to their employees.
Geiger's (1975) carried out study to establish the needs of customers. Social status
of the bank's customers and the perception that the customers had of banks were
studied along with customers judgment of the range of services that the banks had
to offer, the effectiveness of various advertising and other sales promoting
measures, and the customers' will to save and other habit.

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Meidan (1976) thinks about 90% of the respondents banked at the branch nearest to
their home place and place of work. Convenience, in terms of location, was found
to be the single most important factor for selecting a bank.
Lewis and Booms (1983), service quality is ‗a measure of how well the service
level delivered matches customer expectations. Delivering quality service means
conforming to customers‘ expectations on a consistent basis‘. The most common
explanation of the difference between service quality and customer satisfaction is
highlighted by Bateson (1992).
Cronin and Taylor (1992), suggested that service quality is antecedent of customer
satisfaction and that customer purchase intentions are related more closely to levels
of satisfaction than to perceptions of service quality.
Hallowell Roger (1996) studied customer satisfaction in banks in providing
products and services and found banks should target and serve only those customers
whose needs it can meet better than its competitors in a profitable manner. By
adopting this strategy customers will be retained for longer periods, consume
multiple products; recommend the bank to their friends.

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B. K. Tiwary (2000), In the banking sector it is necessary to increased adoption of
technology to better meet customer requirements, improve efficiencies, reduce costs
and ensure customer delight and it was the private sector and foreign banks which
established the technological revolution in Indian banking and considering the fact
that in the new economy, mind share leads to market share and mind share is
influenced not only by the promotions and advertisements but more importantly on
favorable customer perception which in turn is based on satisfaction with regard to
products, services and interaction
Vijay M. Kumbhar (2001), The private sector banks are providing more satisfied
services then public sector banks and the customer perception about Productivity,
Security and Sensitivity, Cost Efficiency, Problem Handling, Compensation and
Contact services related to service is very less in both the public sector and privates
sector banks, Therefore both kinds of banks should be aware about these facets of
service to improve customers‟ satisfaction.
Campbell (2007) focused on the relationship between nonperforming loans (NPLs)
and bank failure and argued for an effective bank insolvency law for the prevention
and control of NPLs for developing and transitional economies as these have been
suffering severe problems due to NPLs.

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Rayappan and shunmghan (2008) have used factor analysis tool of customer
satisfaction with demographic profile of the customer.
Keerthe and Vijayalkshmi (2009) analysed perception level of the customer with
their demographic profile.
Kumber and at al. (2009) reviewed the Indian banks are changing towards modern
banking system. Modernization in banking is changing banking services, products
and operational methods of banking. All these developments are lead to facilities to
customers delight as well as operational efficiency of banks and reducing
operational expenses of banking services
Kumar and Rajesh (2009) covered that working performance of the bank must be
improved and derived that the factors which brings satisfaction to customer are
modernization and technological advancement.
Trivedi and Aggrawal (2009) has focused on five major dimension to measure
customer satisfaction towards bank, viz., tangibility, assurance, responsiveness,
empathy, and reliability. Rayappan and shunmghan (2008) have tested regression of
customer satisfaction with demographic profile of the customer. Bharathe et al
(2008) have found that inaccuracy in transaction nak charges, staff attitude;

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complaint handling, system and procedure are some of the factors which derive
dissatisfaction to the customers.
Keerthe and Vijayalkshmi (2009) analysed perception level of the customer with
their demographic profile.
Dutta et al, (2009) conducted a study to investigate perception of expectations of
customers across all the banks in India. It was found that foreign banks were the
most preferred banks followed by private banks and public banks.
Puja et, al, (2009) Private sector Banks seem to have satisfied its customers with
good services and they have been successful in retaining their customers by
providing better facilities than Public sector Banks. But, still Private Banks need to
go a long way to become customer‘s first preference. In an economy of innovative
technologies and changing markets, each and every service quality variable has
become important. New financial products and services have to be continuously
introduced in order to stay competent and Private Banks need to concentrate more
on their facilities and services since customers do not have a very good opinion
about these facilities being offered by Private Banks also Public sector banks enjoy
the trust of the customers, which they have been leveraging to stay in the race

32
however they need to improve their service quality by improving their physical
facility, infrastructure and giving proper soft skill trainings to their employees.
Santhiyavalli and at al. (2011) emphasis that the service quality of banking
industry. Banking operations are driven by the market, and the customer is seen as a
consumer of the bank and not of any particular branch of the bank. Along with
technology, banking services have also evolved, and the delivery of various banking
products are carried out through the medium of high technology at a fraction of the
cost to the customer.
Selvaraj (2011) measured and analyzed the awareness level of the customers
towards services provided by the Banks of India. He found that 70% of the sample
respondents had low level of awareness towards the services provided by the bank.
It may be due to the fact that the study area was mostly covered by rural areas. The
bank has to initiate necessary measures to increase the awareness level through
conducting awareness programs in the rural areas and the bank has to concentrate
more on promotional activities.
Sarkar (2011) proved this statement ―If there is any secret of success, it lies in the
ability to get the other person‘s point of view, and seeing things from his angle‖ -
Henry Ford by comparison studies between two private sector banks services.

33
Swami (2012) stipulates the facts related to banking products. Customer service is
perhaps the most important dimension of 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.
Sumedha Kalia and Urvashi Kalra (2012) investigated various factors
influencing customer‘s perception and satisfaction level towards E-Banking. They
found that, lack of knowledge, inadequate legislations and security concerns are the
major reasons for not using E-Banking. They suggested that, banks should provide
―demo‖ on their website for new users to know about online banking services and
facilities of experts to increase awareness in the minds of customers to use e
banking safely.
Ravi and Kundan basavaraj (2013) analyzed the customer preference and
satisfaction towards banking services both private and public banks in Delhi
district. The authors found business and vehicle loans are fast moving than other
services and overall satisfaction resulted at 50%. Further, overall satisfaction on
bank deposit schemes resulted positively while other services of banking still need
to be given attention by focusing on customer issues. They authors suggested that,
bankers should work towards 100% customer satisfaction that automatically fosters
customer delight and to sustain customers on a long term basis.

34
The implementation of globalization, government policies and liberalization has
made the banking industry very competitive by providing various products and
services to the customers. The various services offered by the banks can be utilized
by the customers only when they are made aware of these services. The banker and
customer have to know about one another. The banker has to understand the
customers‘ needs and in the same way, the customer has to know about the carious
services offered by the banks. Increased level of awareness among the customers
leads to increased preferences. The purpose of this study was to investigate the
awareness and satisfaction level of customers towards various loans.
To develop and to sustain business any of the banks must have quality of customer
service that can link up cordial relation with the customer and result in to the
satisfaction to the customer. In the present research an efforts has done to measure
satisfaction level of the customers by comparing various factors that can impact on
satisfaction of customer to bank located in Delhi. The main focus is done on
whether private bank bring more satisfaction then public sector banks to the people
residing in Delhi, and what are those factors which are considered when people say
they are satisfied.
This paper is aims at carrying out the comparative analysis of loan preference by
customers in private and public bank. Since banking service sector is one of the
most upcoming sectors in the Indian Market. It has proven to be one of the leading
and fastest growing sectors of the Indian Economy.

35
Theoretical Description
Customer Satisfaction: is a measure of how products and services provide by any
organization meet the expectations of a customer. It varies from person to person
and service to service. A customer can be defined as a user or potential user of
banking services. Quality expectation and the valuation of services received are
slightly more in the private sector banks as compared with the public sector banks.
The effects for tactic since sectorial differentiation become very blurry as a result of
increasing correspondence between services and struggle from linked and additional
industries. Service quality is one of main elements of customer satisfaction and their
intention to purchase. However, the customers of public and private sector banks
different in terms of their perception of service quality. Private Banks have been
observed to be higher on dimensions of service quality: effectiveness and
convenient while, the nationalized banks are better on the dimensions of price and
consistency.
Private bank customers are more satisfied with the services then public banks.
Managers in the banking sector undertake significant efforts to conduct customer
satisfaction surveys and it is appears that customers are saying that they expect
good products and quality to their banks and that may the only thing important to
them .This project makes an attempt to identify various factors affecting perception
of the customers regarding the loan products and services.

36
Chapter-3: DATA PRESENTATION AND ANALYSIS
The study has been conducted on the basis of primary data and was descriptive
in its nature. Primary data obtained by interacting with various people, getting
the questionnaires filled by them. The data was collected by means of
questionnaire and was classified and analyzed carefully. Questionnaire was
constructed innovatively and systematically distributed to respondents in the
study field. In this research, the questionnaire was formed. The questions were
mostly close-ended questions. Open-ended question has been used only for
deriving suggestions from the respondents.
TABLE 1: CLASSIFICATION OF TABLE ON THE BASIS OF CUSTOMERS’ BANK
DETAILS AND NO. OF YEARS OF EXPERIENCE
Characteristics Name of the Bank No. of Respondents Percentage
Customers account
holding banks
details
SBI
ICICI
76
74
50.67
49.33
No. of years
experience with
respective account
holding bank
Above 12 years
10- 2 years
7-9 years
4-6 years
1-3 years
18
15
43
52
22
12.00
10.00
28.67
34.67
14.67
Table reveals the details about the customers having accounts in specific banks
and the number of years of having transactions with two banks. It is highlighted
that 50.67% of the respondents have their account in State Bank of India (SBI),

37
49.33% of the respondents in ICICI bank. another inferred that 34.67% of the
respondents have 4-6 years of experience with the same bank, followed by 7-9
years of bank transaction experiences as assigned by 28.67% experience of the
respondents had 1-3 years of experience while a very minimal 14.67% of the
respondents with their respective banks.
TABLE 2: CLASSIFICATION OF TABLE ON THE BASIS PREFERENCES AND
SATISFACTION LEVEL OF VALUE ADDED SERVICES
Value Added
Services
Good Moderate Poor Total
ATM 28 16 02 46
Locker Services 14 06 01 21
Mobile Banking 24 02 0 26
Net Banking 15 02 0 17
Others 29 11 0 40
110 37 03 150
More banks are offering similar value added services such as mobile banking
(customer convenience), SMS banking (account balance, last few transactions,
cheque-book requests and updated interest rate charges). For examples, ICICI
bank uses immobile (mobile banking platform) for paying utility bills, insurance
premiums, and account transactions to other banks. SBI mobile banking moves
are similar to that of ICICI bank and it allows its customers to pay telephone

38
bills, fund transfer, utility bills, recharge of mobile SIM cards, etc. Nevertheless
the commonly used value added services are: ATM (46 users) locker facilities
(21 users), mobile banking (26 users), net banking (17 users) and tele-banking,
online fund transfers, 24*7 customer care, etc., are categorized as others (only
40 users) and successful reach of these services are highly influenced by factors
like customer needs, wants, expectations, preferences, knowledge about usage
of value added services as well as length of value added services offered by
bankers. Respondents were asked to rank the level of satisfaction of the five
commonly known and used value added services (refer table 5). ATM was
ranked first, rank two was assigned to other value added services like tele
banking, 24*7 customer care, SWIFT operations, NRI accounts, E-ticketing, E-
taxing, credit cards, debit cards, etc. table 5 shows that rank 3 goes to mobile
banking as it indicates increase in usage of mobiles day by day for the various
purposes while chances of usage of net banking was low, due to confusion, poor
internet literacy, fear of online theft, no training on this aspect etc hence it was
given the last rank.
Factor Analysis: Since the questionnaire used in this research has various set of
questions focusing on different factors for over-all customer satisfaction and
dissatisfaction with banking services in terms of loan services and services
pertaining to loans provided by the banks. Therefore, factor analysis is
conducted separately on each of sets within the questionnaire. Significant

39
factors from each of these sets have been calculated and from these factors, a
significant factor of the entire questionnaire is calculated.
The researcher has used Cronbach‘s Alpha reliability test to evaluate the
reliability of the questionnaire for the survey study. The analysis was done using
SPSS.
Reliability Statistics
Cronbach's
Alpha
No. of
Items
.788 30
TABLE 3.1
Reliability Assessment Analysis
As statistics tells more the Alpha value near to 1 more will be the reliability.
The above table reveals that the Cronbach’s Alpha value = .788. Therefore
based on the Alpha value it can be decided that the framed questionnaires are
more reliable with each other and the questionnaire survey can be conducted by
using the questionnaire.
Gender
Freque
ncy
Percent Valid
Percent
Cumulative
Percent
Valid
Male 65 65.0 65% 65.0
Female 35 35.0 35% 100.0
Total 100 100.0 100%
TABLE 3.2- GENDER

40
Figure no.3.1 Gender
Interpretation
Table no-3.2 and figure no-3.1, shows that the total numbers of respondents are
100. In the first column of the table no.-3.2 numerical value is assigned for male
and numerical value is assigned for females. The total numbers of male and
female are 65 and 35 respectively out of 100(the total sample size of the
respondents). The study of table reveals that in this study more than 65%
respondents are male. The table shows that the majority of people who take the
loan from the banks are males.
65%
35%
GENDER
male
female

41
Annual Income
Frequency Percent Valid
Percent
Cumulative
Percent
Less than 50000 8 8.0 8% 8.0
50000 - 100000 28 28.0 28% 36.0
100000 - 250000 46 46.0 46% 82.0
Above 250000 18 18.0 18% 100.0
Total 100 100.0 100%
TABLE No.3.3- ANNUAL INCOME
Figure no.3.2 Annual Income
Interpretation
100. In the table 46% of respondents whose annual income lies between 100000-
250000, 28% of respondents annual income is 50000- 100000, 18% of respondents
annual income is above 250000 and 8%respondents is less than 50000. The table
states that the majority of people who take the loan from the banks their annual
income lies between 100000-250000.
8%
28%
46%
18%
Annual Income
Less than 50000
50000 - 100000
100000 - 250000
Above 250000

42
Education qualification
Percent
Cumulative
Percent
Valid
Under
Graduate
2 2.0 2% 2.0
Graduate 10 10.0 10% 12.0
Post
graduate
86 86.0 86% 98.0
Any
other
2 2.0 2% 100.0
Total 100 100.0 100%
Table no. 3.4- Education Qualification
Figure No.-3.3 Education Qualification
Interpretation
100. In the table 86% of respondents are post graduate, 10% of respondents are
graduate and 2% of respondents are undergraduate and others. The table states that
the majority of people who take the loan from the banks are the post graduate.
2%
10%
86%
2%
Education Qualification
Under Graduate
Graduate
Post graduate
Any other

43
Occupation
Percent
Cumulative
Percent
Business 34 34.0 34% 34.0
Public Sector
Service
12 12.0 12% 46.0
Private Sector
Service
30 30.0 30% 76.0
Self employed 12 12.0 12% 88.0
Others 12 12.0 12% 100.0
Total 100 100.0 100%
Table no.3.5-Occupation
Figure no.3.4 Occupation
Interpretation
100. In the table 34% of respondents occupation is business, 30% of respondents
occupation is private sector service, 12% of respondents occupation is public
sector services, self-employed and others. The table states that the majority of
people who take the loan from the banks whose occupation is business.
34%
12%
30%
12%
12%
Occupation
Business
Public Sector Service
Private Sector Service
Self employed
Others

44
Type of loan
Percent
Cumulative
Percent
Personal
Loan
42 42.0 42% 42.0
Housing
Loan
23 23.0 23% 65.0
Education
loan
14 14.0 14% 79.0
Other 21 21.0 21% 100.0
Total 100 100.0 100%
Table 3.6-Type of Loan
Figure no.-3.5 Type of loan
Interpretation
100. In the table 42% of respondents are interested in taking personal loan, 23%
of respondents are interested in taking housing loan, 21% of respondents are
interested in taking other type of loan and 14%respondents are taking education
loan. The table states that the majority of people who take the loan from the
banks are the personal loan.
42%
23%
14%
21%
Type of Loan
Personal Loan
Housing Loan
Education loan
Other

45
Total Variance Explained
Compon
ent
Initial Eigenvalues Extraction Sums of Squared
Loadings
Total % of
Variance
Cumulative
%
Total % of
Variance
Cumulative
%
1 4.701 17.410 17.410 4.701 17.410 17.410
2 2.374 8.792 26.202 2.374 8.792 26.202
3 2.077 7.693 33.895 2.077 7.693 33.895
4 1.997 7.396 41.291 1.997 7.396 41.291
5 1.841 6.819 48.110 1.841 6.819 48.110
6 1.552 5.748 53.858 1.552 5.748 53.858
7 1.396 5.171 59.029 1.396 5.171 59.029
8 1.319 4.884 63.914 1.319 4.884 63.914
9 1.143 4.233 68.147 1.143 4.233 68.147
10 1.094 4.053 72.199 1.094 4.053 72.199
Table no.-3.7 Total Variance Explained
Interpretation
Eigen value for each component in the table is a variance of the factor extracted.
Kaiser's rule of retaining factors with Eigen values larger than 1.00 was used in
this analysis. As the Eigen values for the first ten principal components with
Eigen values of 4.701, 2.374, 2.077, 1.997, 1.841, 1.552, 1.396, 1.319,1,143,
and 1.094 are retained.
Variance for each of the components is extracted. Component 1 to 10 are
17.410, 8.792, 7.693, 7.396, 6.819, 5.748, 5.171, 4.884, 4.233, 4.053 table
above, of the variance is explained by two factors extracted.

46
Identification of factor related variable
Factor Name Variables
Factor
loadings
Services and offers Ambience of bank
Location of the bank
courteousness of sales executives
Goodwill of the bank
Schemes /benefits/offers
Personalized service offer
Is responsive to my need
.441
.583
.504
.617
.587
.538
.587
Documentation
process
Interest on loan
Quality of service
Clarity of documentation required to be
submitted
Customer service offer
Network (large/small)
.548
.467
.541
.352
-460
Services charged Fees or commission charged
Sales executive keeping to commitment made
.544
.540
Transparency of
information
Transparency of information .505
Bank
Infrastructure
Infrastructure of bank
Transparency of process
.519
.-414
Services offer Online service offer
Degree to which advisor know me
.-390
. 307
Time for
processing loan
Time for processing loan .409
Repayment time Time for repayment
Allow access ,any time where I need
.389
.521

47
Bank creditability Interest on loan
Helpline / call centers
Creditability of bank
.418
.-341
.311
Always deliver on
what they promise
Always deliver on what they promise -399
DATA ANALYSIS
The chapters describe the analysis and interpretation of the data which are
collected through the questionnaire and the internet website. Above analysis
shows that customer satisfaction vary according to the nature of the services and
in this case, highest customer satisfaction is shown in such areas like price
charged by banks is nominal, convenient location of bank branches & staff
attitude toward problem solving of customers. When the private sector banks are
compared with public sector banks, public bank customers were more satisfied
with their bank because of convenient locations and technology which were not
even seen in private sector banks. But when we talk about private sector banks
customers of public sector banks were more satisfied with reputation, reliability
and the prices which public sector banks impose on services.

48
Chapter-4: SUMMARY AND CONCLUSION
4.1 Findings
The world of banking has assumed a new dimension at dawn of the 21st
century with the advent of tech banking, thereby lending the industry a stamp of
universality. In general, banking may be classified as retail and corporate
banking. Retail banking, which is designed to meet the requirement of
individual customers and encourage their savings, includes payment of utility
bills, consumer loans, credit cards, checking account and the like. Corporate
banking, on the other hand, caters to the need of corporate customers like bills
discounting, opening letters of credit, managing cash, etc. Metamorphic changes
took place in the Indian financial system during the eighties and nineties
consequent upon deregulation and liberalization of economic policies of the
government. India began shaping up its economy and earmarked ambitious plan
for economic growth. Consequently, a sea change in money and capital markets
took place. Application of marketing concept in the banking sector was
introduced to enhance the customer satisfaction the policy of privatization of
banking services aims at encouraging the competition in banking sector and
introduction of financial services. Consequently, services such as Demat,
Internet banking, Portfolio Management, Venture capital, etc, came into
existence to cater to the needs of public. An important agenda for every banker
today is greater operational efficiency and customer satisfaction.

49
The major findings are as follows:
a) This study shows that public sector banks are providing better products and
services as compared to private sector banks
b) As per the study more of the respondents were interested in taking personal
loan from the bank.
c) This study shows that private sector banks are providing better infrastructure
facilities as compared to public sector banks
d) As per the study most of the respondents are the post graduates who take
education loan.
4.2 Limitations
Every project has its own limitations. Limitations are extent to which the
process should not exceed. Limitations of this project are:
a) The project was time constrained by time limit of two months.
b) The study was confined to Delhi region. The geographical area could be
increased.
c) The study contained only 30 observed variables which could be increased to
50 variables to enhance the qualitative aspects.
d) The study was based on 100 respondents which was quite small sample size
for such kind of study.
e) The study was not confined to specified bank.

50
4.3 Suggestions
Finally some suggestions for the company are as follows:
a) The banks should adopt the modern methods of banking services like internet
banking, credit cards, ATM, etc.
b) The banks should plan to introduce new schemes for attracting new
customers and satisfying the present ones.
c) The banks should plan for expansion of branches.
d) The banks should improve the customer services of the bank to a better
extent.
e) The study can be conducted to a broader geographical area.
f) The study should be conducted on specified bank.
4.4 Conclusion
The study is aimed at measuring the customers‘ preference and satisfaction
levels for two basic services offered by private and public bank in Shivamogga
district. Business and vehicle loans are fast moving than other services and
overall satisfaction resulted at 50%. Further, overall satisfaction on bank deposit
schemes resulted positively while other services of banking still need to be
given attention by focusing on customer issues. New innovative schemes,
strategies to cater to non users other services have to be adopted. A study or
future research is recommended on all verticals of banking services. In value
added services customer preference for net banking was least ranked and if the

51
bankers with to increase net banking traffic, bankers should take maximum
efforts to educate the customers by offering on line training instead of handing
out instruction manuals. Finally, if they want to sustain customers on a long
term basis, bankers should work towards 100% customer satisfaction that
automatically fosters customer delight.
Various traditional and IT enabled banking services used by customers are
studied in the present paper. In addition, customer satisfaction was also
measured with various dimensions. It is observed that cheque deposit and
cheque clearance were the most common banking services used by the
customers of all six banks. While the charges levied by the bank on different
services were perceived higher by the customers in private and foreign banks in
comparison to nationalized banks. A small number of respondents were using IT
enabled services other than ATM. Security, lack of facility, improper awareness
and so on were found to be the reasons for not using IT enabled services. The
customers of nationalized banks were not satisfied with the employee behavior
and infrastructure, while respondents of private and foreign banks were not
satisfied with high charges, accessibility and communication. The study shows
that only a few respondents made complain to their respective banks. The nature
of complain was mostly delay in transaction and extra charges.

52
Hence, the study throws light on different aspects and drawback of services of
the nationalized, private and foreign banks. Training on stress management and
public dealing should be imparted to the employees of nationalized banks.
Nationalized banks need to improve their infrastructure and ambience to
compete with private and foreign banks in India. Branches of private and
foreign banks should be increased for easy accessibility.

53
Chapter-5: RECOMMENDATION:
The following recommendations to the bank based on observation, analysis and
interpretation of the collected data from the respondents.
a) Bank should focus on the quality of products so that the customer will keep
stay with the bank services. .
b) The bank has to provide customer support services about the benefits they get
out of loan they borrowed.
c) Bank should keep their prices low so that the consumer can purchase more of
loan.
d) The bank should launch various benefits programs to increase the level of
awareness.

54
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61
Questionnaire
I Ruchi Sharma, student ―APAR INDIA COLLEGE OF MANAGEMENT
AND TECHNOLOGY‖ of want your kind attention towards my questionnaire,
with the objectives of comparative analysis of loan preference by customer in
Private and Public bank.
Name: Age:
Contact no: Gender:
Address:

62
Descriptive research has been conducted to gain an insight into consumers
perceived service quality, offered by banks with respect to five dimensions of
SERVQUAL scale. A structured questionnaire based on SERVQUAL scale
(Persuraman et.al. 1985) has been used for data collection for this research with
some modification. The modified questionnaire maintains the number of
dimensions of SERVQUAL to five, but substitutes the dimension of ‗Empathy‘
by ‗ATM Service Quality‘. Thus, the five dimensions of questionnaire comprise
Tangibles, Reliability, Responsiveness, Assurance and ATM Service Quality.
The design and structure of the questionnaire is simple, study specific
unambiguous and capable of seeking objective type of answers through marking
a tick only. The queries that elicit information about the perception of customers
under five dimensions have a direct bearing as the hypotheses of this study.
Each of the five dimensions asks questions specifically related to the
dimensions. The customers have been requested to rate the service quality
variables at five point scale on the basis of their perceived service quality and
their satisfaction level towards the banks. Against every question in each
statement, five options of answers are given, i.e ‗Strongly Agree‘; ‗Agree‘;
‗Neutral‘; ‗Disagree‘ and ‗Strongly Disagree‘. Each respondent is advised to
tick the option that represents the perception most truly and faithfully.

63
ADMINISTRATION OF QUESTIONNAIRE:
The universe for collection of data consists of the customers of private and
public sector banks spread all over India. Their full coverage being not possible
on account of restraints by a host of factors, a representative sample of
respondents as well as the geographical area as explained under ‗Sample‘
technique has been taken for administrating the questionnaire. The sample
consists of 500 respondents (bank customers) and the geographical area covered
comprised of nine big cities of three States in the Northern Region of India and
includes the Capital city of Delhi which alone represents the respondents from
all parts of India. Besides Delhi, the other cities are Aligarh, Agra, Lucknow,
Moradabad, Mathura, Noida, Dehradun and Kanpur.
The mode of administration of questionnaire on respondents is through direct
personal investigation. It is blended with ‗Convenience‘ of respondents. Since
the sample population of bank customers comprised of educated persons who
could read, understand and tick their perceptions in the boxes provided for
answers in the questionnaire at their convenient time, they were handed over
questionnaire to be collected from them at the pre-fixed time and date. Yet,
while getting back the questionnaire discussions and clarification were made to
help get the perceptions expressed by the respondents as they really felt. Larger
number of respondents approached, however, obliged by filling the
questionnaire face to face. Thus, the direct investigation method adopted for this

64
study reassures that the information collected is more accurate, reliable, and
trustworthy in reflecting the results of this research.
RESPONSE:
Customers of the banks gave a highly encouraging response. About 600
questionnaires have been distributed out to cover the sample size of 500 out of
which 497 completely filled questionnaire have been received from the different
customers of the banks. The response has, thus been more than 80 percent.
Moreover, the respondents took very cooperative and sincere interest and care of
appropriately ticking their perceptions on the scale of preference provided in the
questionnaire and returned the questionnaire duly and completely. This made the
quality of data better and reliable.

65
Q.1.What is your annual income?
o Less than Rs50,000 
o Rs 50000 - 100,000 
o Rs 100,000 - 250,000 
o Above 250,000 
Q.2 Education Qualification
o Under graduate. 
o Graduate. 
o Post graduate. 
o Any other. 
Q.3 Occupation
o Business. 
o Public sector service. 
o Private sector service. 
o Self Employed 
o Other 

66
Specific Information : -
Q.1Which bank do you trust to deal with your Finance? Why?
Q.2 If you have to take a loan, which bank sector will you prefer?
o Public 
o Private 
o Indifferent 
Q.3 Have you ever taken any loan? If yes, from which Bank?
o No 
o Yes 
Q.4What type of loan taken?
o Personal loan 
o Housing loan
o Education loan
o Other 

67
Q.5 What are the sources of information that you consider while choosing the Bank
loan. Kindly rate the following sources on a scale of 1 to 5.
Tick-mark () against the preference
1= very important 2=important 3=most important 4=average least important 5=
least important. (Mark your preference)
1. VI 2.I 3.MI 4.ALI 5.LI
 Internet. 1. 2. 3. 4. 5.
 Leaflet. 1. 2. 3. 4. 5.
 Magazine. 1. 2. 3. 4. 5.
 Friends/Relatives. 1. 2. 3. 4. 5.
 Mailers. 1. 2. 3. 4. 5.
 Agents. 1. 2. 3. 4. 5.
Q.6 Kindly tick-mark () your feeling, about the importance of following factors
that you consider, while taking a loan: on a scale of 1 to 5. (1= extremely important
2=very important 3= somewhat important 4= somewhat unimportant 5= Not at all
important).
1. EI 2.VI 3.SI 4.SUI 5.NAI
 Interest on loan.
1.  2.  3.  4.  5. 

68
 Time for processing loan.
1.  2.  3.  4.  5. 
 Ambience of bank.
1.  2.  3.  4.  5. 
 Infrastructure of bank.
1.  2.  3.  4.  5. 
 Time for repayment.
1.  2.  3.  4.  5. 
 Fee/commission charged.
1.  2.  3.  4.  5. 
 Promptness to resolve problem faced.
1.  2.  3.  4.  5. 
 On line service offer.
1.  2.  3.  4.  5. 
 Location of bank.
1.  2.  3.  4.  5. 
 Knowledge of representative.
1.  2.  3.  4.  5. 
 Courteousness of sales executives.
1.  2.  3.  4.  5. 

69
 Quality of services.
1.  2.  3.  4.  5. 
 Clarity of documentation required to be submitted.
1.  2.  3.  4.  5. 
 Transparency of process.
1.  2.  3.  4.  5. 
 Goodwill of the bank.
1.  2.  3.  4.  5. 
 Schemes/Benefits/Offers.
1.  2.  3.  4.  5. 
 Help line / Call centers.
1.  2.  3.  4.  5. 
 Customer service offers.
1.  2.  3.  4.  5. 
 Personalized service offers.
1.  2.  3.  4.  5. 
 Transparency of information.
1.  2.  3.  4.  5. 
 Degree to which my advisor know me.
1.  2.  3.  4.  5. 

70
 Always deliver on what they promise.
1.  2.  3.  4.  5. 
 Allows access, anytime, anywhere I need.
1.  2.  3.  4.  5. 
 Is responsive to my need.
1.  2.  3.  4.  5. 
 Sales executives keeping to commitments made.
1.  2.  3.  4.  5. 
 Creditability of Bank.
1.  2.  3.  4.  5. 
 Network (large /small).
1.  2.  3.  4.  5. 
 Any other factor. ________________________________

Q.7 Kindly tick-mark () your feeling, about the importance of following factors
that you consider, will be satisfied for taking a loan: on a scale of 1 to 5. (1=
strongly agree 2=somewhat agree 3=neutral 4= somewhat disagree 5= strongly
disagree).
 Overall how satisfied are you with our customer service representative.
1.  2.  3.  4.  5. 

71
 There are sufficient information available on the website to so solve my
problem.
1.  2.  3.  4.  5. 
 The quality of service you received.
1.  2.  3.  4.  5. 
 The process for getting the problem resolved.
1.  2.  3.  4.  5. 
 The service representative handled my call quickly.
1.  2.  3.  4.  5. 
Q.8.a Is there any difficulty in the loan process?
Yes  No 
Q.8.b If yes , what is the difficulty?
_________________________________________________________________
Q.9.a. Any changes required in the loan process?
Yes  No 
Q.9.b. If yes, then give suggestions?
_________________________________________________________________
Q.10 Please provide any closing comments? if any.
________________________________________________________________

72
APPENDIX- B
TYPE OF
LOAN
Gender Q1_annual income Q2_Education qualification
Male
Femal
e
Less
than
50000
50000 -
100000
10000
0 -
25000
0
Above
25000
0
Under
Graduat
e
Graduat
e
Post
graduat
e
Any
other
Personal
Loan
27 10 4 11 16 6 0 2 35 0
41.5% 28.6% 50.0% 39.3% 34.8% 33.3% 0.0% 20.0% 40.7% 0.0%
Housing
Loan
16 8 2 4 14 4 0 4 20 0
24.6% 22.9% 25.0% 14.3% 30.4% 22.2% 0.0% 40.0% 23.3% 0.0%
Educatio
n loan
12 4 2 4 6 4 2 0 12 2
18.5% 11.4% 25.0% 14.3% 13.0% 22.2% 100.0% 0.0% 14.0% 100.0
%
Other 10 13 0 9 10 4 0 4 19 0
15.4% 37.1% 0.0% 32.1% 21.7% 22.2% 0.0% 40.0% 22.1% 0.0%
Total 65 35 8 28 46 18 2 10 86 2
100.0% 100.0
%
100.0
%
100.0% 100.0
%
100.0
%
100.0% 100.0% 100.0% 100.0
%
TYPE OF
LOAN
Q3_occupation
Busines
s
Public
Sector
Servic
e
Private
Sector
Servic
e
Self
employe
d Others
Personal
Loan
18 0 11 4 4
52.9% 0.0% 36.7% 33.3% 33.3%
Housing
Loan
4 6 8 4 2
11.8% 50.0% 26.7% 33.3% 16.7%
Educatio
n loan
4 4 8 0 0
11.8% 33.3% 26.7% 0.0% 0.0%
Other 8 2 3 4 6
23.5% 16.7% 10.0% 33.3% 50.0%
Total 34 12 30 12 12
100.0% 100.0
%
100.0
%
100.0% 100.0
%
Table no.-9 Respondents views on type of loan
Interpretation:
In the above Tables shows the percentage of taken a loan according to their
annual income.
The table represents the data of type of loan on the basis of various demographic
factors like age, sex, qualification, income, and occupation. In this table it can
analyses easily that most of the business people are interested in taking a
personal loan. While public sector service and private sector service people are

73
interested in taking a educational loan and self employed people are interested
in taking other type of loan.
Communalities
Initial Extraction
Q6_1 interest on loan 1.000 .763
Q6_2 time for processing loan 1.000 .763
Q6_3 ambience of bank 1.000 .711
Q6_4 infrastructure of bank 1.000 .696
Q6_5 time for repayment 1.000 .692
Q6_6 fees or commission charged 1.000 .732
Q6_7 promptness to resolve the problem 1.000 .672
Q6_8 online service offer 1.000 .716
Q6_9 location of the bank 1.000 .732
Q6_10 knowledge of representative 1.000 .853
Q6_11 courteousness of sales executives 1.000 .587
Q6_12 quality of service 1.000 .735
Q6_13 clarity of documentation required to be submitted 1.000 .647
Q6_14 transparency of process 1.000 .785
Q6_15 goodwill of the bank 1.000 .661
Q6_16 schemes /benefits/ offers 1.000 .774
Q6_17 Helpline/ call centers 1.000 .800
Q6_18 customer service offer 1.000 .659
Q6_19 personalized service offer 1.000 .721
Q6_20 transparency of information 1.000 .796
Q6_21 degree to which advisor know me 1.000 .640
Q6_22 always deliver on what they promise 1.000 .824
Q6_23 allow access , any time , any where I need 1.000 .828
Q6_24 is responsive to my need 1.000 .707
Q6_25 sales executive keeping to commitment made 1.000 .585
Q6_26 creditability of bank 1.000 .668
Q6_27 network(large / small) 1.000 .747
Table no.-10 Communalities
Interpretation:
The output is a table of communalities which shows how much of the variance
in the variables has been accounted for by the extracted actors.

74
Total Variance Explained
Component Initial Eigen values Extraction Sums of Squared Loadings
Total % of Variance Cumulative % Total % of Variance Cumulative %
1 4.701 17.410 17.410 4.701 17.410 17.410
2 2.374 8.792 26.202 2.374 8.792 26.202
3 2.077 7.693 33.895 2.077 7.693 33.895
4 1.997 7.396 41.291 1.997 7.396 41.291
5 1.841 6.819 48.110 1.841 6.819 48.110
6 1.552 5.748 53.858 1.552 5.748 53.858
7 1.396 5.171 59.029 1.396 5.171 59.029
8 1.319 4.884 63.914 1.319 4.884 63.914
9 1.143 4.233 68.147 1.143 4.233 68.147
10 1.094 4.053 72.199 1.094 4.053 72.199
11 .972 3.602 75.801
12 .825 3.054 78.855
13 .734 2.719 81.574
14 .703 2.604 84.177
15 .592 2.192 86.369
16 .544 2.016 88.385
17 .481 1.781 90.166
18 .457 1.694 91.860
19 .434 1.607 93.467
20 .392 1.453 94.920
21 .305 1.128 96.048
22 .283 1.049 97.098
23 .234 .866 97.963
24 .176 .651 98.615
25 .165 .612 99.227
26 .136 .505 99.732
27 .072 .268 100.000

75
Table no.-11 Total Variance Explained
Interpretation
Eigen value for each component in the table is a variance of the factor extracted.
Kaiser's rule of retaining factors with eigen values larger than 1.00 was used in
this analysis. As the eigen values for the first ten principal components with
Eigen values of 4.701, 2.374, 2.077, 1.997, 1.841, 1.552, 1.396, 1.319,1,143, and
1.094 are retained.
Variance for each of the components is extracted. Component 1 to 10 are 17.410,
8.792, 7.693, 7.396, 6.819, 5.748, 5.171, 4.884, 4.233, 4.053 table above, of the
variance is explained by two factors extracted.

76
Interpretation:
The scree plot is a graph of the Eigen values against all the factors. The graph is
useful for determining how many factors to retain. The point of interest is where the
curve starts to flatten. It can be seen that the curve begins to flatten between factors
2 and 3.

77
Component Matrix
Table no. - 12Component Matrix
Interpretation:
Component (Factor) Matrix table shows the loadings of the variables on the factors
extracted. The higher the absolute value of the loading, the more the factor
contributes to the variable. The gap on the table represent loadings that are less than
0.5, this makes reading the table easier.

78
Important factors in component matrix table
Table no. - 13 important factors of component matrix

79
Interpretation:
Component (Factor) Matrix table shows the loadings of the variables on the factors
extracted. The higher the absolute value of the loading, the more the factor
contributes to the variable. The gap on the table represent loadings that are less than
0.5, this makes reading the table easier.

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