COMPARATIVE STUDY OF CUSTOMER’S

SATISFACTION

TOWARDS HDFC BANK

AND

STATE BANK OF INDIA

1

DECLARATION

Hereby we declare that the project report entitled “COMPARATIVE STUDY OF

CUSTOMER’S SATISFACTION TOWARDS HDFC BANK AND STATE BANK OF

INDIA” submitted for the degree of Master of Business Administration, our original

work and the project report has not formed the basis for the award of any diploma,

degree, associate ship, fellowship or similar other titles. It has not been submitted to any

other university or institution for the award of any degree or diploma.

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ABSTRACT

The present study was undertaken to know the preference of the customers towards

HDFC Bank and State Bank of India (SBI). The main problem of the customers is

they are not well aware of the services provided by their banks. The study also force

on the customer perception that how the banking service can be improved. In our

study we have used both primary sources of data as well as secondary sources of

data. During project we came to know that both the banks are highly preferred by the

customers but their preference is different up to some extent towards the service of these

banks.

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ACKNOWLEDGEMENT

No serious and lasting achievement or success one ever achieves without the friendly

guidance and cooperation of so many people involved in work.

Foremost of all, I express my gratitude to the Almighty for his blessings and for vesting

wisdom in all my wishes.

A feeling of elation insists us on expressing our heartiest gratitude to Mr.Amit

Mahendroo, who allowed doing our project under his supervision.

I place our thanks to all those who spared their time and made it convenient for us to

complete the research. We deeply acknowledge their concern for our research. Last but

not the least, we also wish to red cord our gratitude for any person, our memory has

failed to recall, who rendered his/her/their support and services.

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TABLE OF CONTENTS

Chapter 1Banking Industry

1.1 Introduction to banking Industry 7-10

1.2 Banking system in India 10-12

1.3 Private Sector Bank 12-17

1.4 Public Sector Bank 17-18

Chapter 2Company Profile

2.1 Overview on State Bank Of India 9-24

2.2 Services provided by State Bank Of India 24-25

2.3 SWOT analysis of SBI 25-26

2.4 Overview on HDFC Bank 26-34

2.5 Services provided by HDFC Bank 34-36

2.6 SWOT analysis of HDFC Bank 36-37

Chapter 3 3.1 Objectives 383.2 Scope 38

3.3 literature review 38-41

3.4 Research Methodology 41-42

3.5 Limitations of the study 42Chapter 4 Data Analysis and Findings

4.1 State Bank Of India bank analysis 43-56

4.2 HDFC Bank analysis 57-71

4.3 Comparative analysis 72-83

Chapter 5 5.1 5.1Suggestions and recommendations 845.2 5.2 Assumptions 84

Appendix

6.1 Questionnaire 85-88

6.2 Bibliography 88

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Chapter 1

BANKING INDUSTRY

1.1Introduction to Indian Banking System

History of Banking in IndiaWithout a sound and effective banking system in India it cannot have a healthy economy.

The banking system of India should not only be hassle free but it should be able to meet

new challenges posed by the technology and any other external and internal factors.

For the past three decades India's banking system has several outstanding achievements

to its credit. The most striking is its extensive reach. It is no longer confined to only

metropolitans or cosmopolitans in India. In fact, Indian banking system has reached even

to the remote corners of the country. This is one of the main reasons of India's growth

process.

The government's regular policy for Indian bank since 1969 has paid rich dividends with

the nationalization of 14 major private banks of India

Not long ago, an account holder had to wait for hours at the bank counters for getting a

draft or for withdrawing his own money. Today, he has a choice. Gone are days when the

most efficient bank transferred money from one branch to other in two days. Now it is

simple as instant messaging or dials a pizza. Money has become the order of the day.

The first bank in India, though conservative, was established in 1786. From 1786 till

today, the journey of Indian Banking System can be segregated into three distinct phases.

They are as mentioned below:

• Early phase from 1786 to 1969 of Indian Banks

• Nationalization of Indian Banks and up to 1991 prior to Indian banking sector

Reforms.

• New phase of Indian Banking System with the advent of Indian Financial &

Banking Sector Reforms after 1991.

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To make this write-up more explanatory, I prefix the scenario as Phase I, Phase II and

Phase III.

Phase IThe General Bank of India was set up in the year 1786. Next came Bank of Hindustan

and Bengal Bank. The East India Company established Bank of Bengal (1809), Bank of

Bombay (1840) and Bank of Madras (1843) as independent units and called it Presidency

Banks. These three banks were amalgamated in 1920 and Imperial Bank of India was

established which started as private shareholders banks, mostly Europeans shareholders.

In 1865 Allahabad Bank was established and first time exclusively by Indians, Punjab

National Bank Ltd. was set up in 1894 with headquarters at Lahore. Between 1906 and

1913, Bank of India, Central Bank of India, Bank of Baroda, Canara Bank, Indian Bank,

and Bank of Mysore were set up. Reserve Bank of India came in 1935.

During the first phase the growth was very slow and banks also experienced periodic

failures between 1913 and 1948. There were approximately 1100 banks, mostly small. To

streamline the functioning and activities of commercial banks, the Government of India

came up with The Banking Companies Act, 1949 which was later changed to Banking

Regulation Act 1949 as per amending Act of 1965 (Act No. 23 of 1965). Reserve Bank of

India was vested with extensive powers for the supervision of banking in India as the

Central Banking Authority.

During those day’s public has lesser confidence in the banks. As an aftermath deposit

mobilization was slow. Abreast of it the savings bank facility provided by the Postal

department was comparatively safer. Moreover, funds were largely given to traders.

Phase II

Government took major steps in this Indian Banking Sector Reform after independence.

In 1955, it nationalized Imperial Bank of India with extensive banking facilities on a

large scale especially in rural and semi-urban areas. It formed State Bank of India to act

as the principal agent of RBI and to handle banking transactions of the Union and State

Governments all over the country.

Seven banks forming subsidiary of State Bank of India was nationalized in 1960 on 19th

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July, 1969, major process of nationalization was carried out. It was the effort of the then

Prime Minister of India, Mrs. Indira Gandhi. 14 major commercial banks in the country

were nationalized.

Second phase of nationalization Indian Banking Sector Reform was carried out in 1980

with seven more banks. This step brought 80% of the banking segment in India under

Government ownership.

The following are the steps taken by the Government of India to Regulate Banking

Institutions in the Country:

• 1949: Enactment of Banking Regulation Act.

• 1955: Nationalization of State Bank of India.

• 1959: Nationalization of SBI subsidiaries.

• 1961: Insurance cover extended to deposits.

• 1969: Nationalization of 14 major banks.

• 1971: Creation of credit guarantee corporation.

• 1975: Creation of regional rural banks.

• 1980: Nationalization of seven banks with deposits over 200 crores.

After the nationalization of banks, the branches of the public sector bank India rose to

approximately 800% in deposits and advances took a huge jump by 11,000%.

Banking in the sunshine of Government ownership gave the public implicit faith and

immense confidence about the sustainability of these institutions.

Phase III

This phase has introduced many more products and facilities in the banking sector in its

reforms measure. In 1991, under the chairmanship of M Narasimham, a committee was

set up by his name which worked for the liberalizations of banking practices.

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 is introduced.

The entire system became more convenient and swift. Time is given more importance

than money.

The financial system of India has shown a great deal of resilience. It is sheltered from any

crisis triggered by any external macroeconomics shock as other East Asian Countries

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suffered. This is all due to a flexible exchange rate regime, the foreign reserves are high,

the capital account is not yet fully convertible, and banks and their customers have

limited foreign exchange exposure

1.2 Banking system in India

The Indian banking can be broadly categorized into nationalized (government owned),

private banks and specialized banking institutions. The Reserve Bank of India acts a

centralized body monitoring any discrepancies and shortcoming in the system. Since the

nationalization of banks in 1969, the public sector banks or the nationalized banks have

acquired a place of prominence and has since then seen tremendous progress. The need to

become highly customer focused has forced the slow-moving public sector banks to

adopt a fast track approach. The unleashing of products and services through the net has

galvanized players at all levels of the banking and financial institutions market grid to

look anew at their existing portfolio offering. Conservative banking practices allowed

Indian banks to be insulated partially from the Asian currency crisis.Indian banks are now

quoting al higher valuation when compared to banks in other Asian countries (viz. Hong

Kong, Singapore, Philippines etc.) that have major problems linked to huge Non

Performing Assets (NPAs) and payment defaults. Co-operative banks are nimble footed

in approach and armed with efficient branch networks focus primarily on the ‘high

revenue’ niche retail segments.

The Indian banking has finally worked up to the competitive dynamics of the ‘new’

Indian market and is addressing the relevant issues to take on the multifarious challenges

of globalization. Banks that employ IT solutions are perceived to be ‘futuristic’ and

proactive players capable of meeting the multifarious requirements of the large customers

base. Private banks have been fast on the uptake and are reorienting their strategies using

the internet as a medium The Internet has emerged as the new and challenging frontier of

marketing with the conventional physical world tenets being just as applicable like in any

other marketing medium.

The Indian banking has come from a long way from being a sleepy business institution to

a highly proactive and dynamic entity. This transformation has been largely brought

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about by the large dose of liberalization and economic reforms that allowed banks to

explore new business opportunities rather than generating revenues from conventional

streams (i.e. borrowing and lending). The banking in India is highly fragmented with 30

banking units contributing to almost 50% of deposits and 60% of advances. Indian

nationalized banks (banks owned by the government) continue to be the major lenders in

the economy due to their sheer size and penetrative networks which assures them high

deposit mobilization. The Indian banking can be broadly categorized into nationalized,

private banks and specialized banking institutions.

The Reserve Bank of India act as a centralized body monitoring any discrepancies and

shortcoming in the system. It is the foremost monitoring body in the Indian financial

sector. The nationalized banks (i.e. government-owned banks) continue to dominate the

Indian banking arena. Industry estimates indicate that out of 274 commercial banks

operating in India, 223 banks are in the public sector and 51 are in the private sector. The

private sector bank grid also includes 24 foreign banks that have started their operations

here. Under the ambit of the nationalized banks come the specialized banking

institutions. These co-operatives, rural banks focus on areas of agriculture, rural

development etc., unlike commercial banks these co-operative banks do not lend on the

basis of a prime lending rate. They also have various tax sops because of their holding

pattern and lending structure and hence have lower overheads. This enables them to give

a marginally higher percentage on savings deposits. Many of these cooperative banks

diversified into specialized areas (catering to the vast retail audience) like car finance,

housing loans, truck finance etc. in order to keep pace with their public sector and

private counterparts, the co-operative banks too have invested heavily in information

technology to offer high-end computerized banking services to its clients.

TYPES OF BANKSCentral Bank

The Reserve Bank of India is the central Bank that is fully owned by the Government. It

is governed by a central board (headed by a Governor) appointed by the Central

Government. It issues guidelines for the functioning of all banks operating within the

country.

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http://www.rbi.org.in/home.aspx

Co-operative Sector

The co-operative sector is very much useful for rural people. The co-operative banking

sector is divided into the following categories.

a. State co-operative Banks

b. Central co-operative banks

c. Primary Agriculture Credit Societies

Development Banks/Financial Institutions

• IFCI

• IDBI

• ICICI

• IIBI

• SCICI Ltd.

• NABARD

• Export-Import Bank of India

• National Housing Bank

• Small Industries Development Bank of India

• North Eastern Development Finance Corporation

1.3 PRIVATE SECTOR BANKS

a. Old generation private banks

b. New generation private banks

c. Foreign banks operating in India

d. Scheduled co-operative banks

e. Non-scheduled banks

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Private Sector Banks

1. HDFC Bank

2. ICICI Bank

3. Federal Bank

4. ING Vysya Bank

5. Axis Bank (formerly UTI Bank)

6. Yes Bank

7. Bank of Rajasthan

8. Bharat Overseas Bank

9. Catholic Syrian Bank

10. Centurion Bank of Punjab

11. City Union Bank

12. Development Credit Bank

13. Dhanalakshmi Bank

14. Ganesh Bank of Kurundwad

15. IndusInd Bank

16. Jammu & Kashmir Bank

17. Karnataka Bank Limited

18. Karur Vysya Bank

19. Kotak Mahindra Bank

20. Lakshmi Vilas Bank

21. Nainital Bank

22. Ratnakar Bank

23. SBI Commercial and International Bank

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24. South Indian Bank

25. Amazing Mercantile Bank

26. Punjab National Bank

27. Rupee Bank

28. Saraswat Bank

29. Tamilnad Mercantile Bank

30. Thane Janata Sahakari Bank

31. Bassein Catholic Bank

After nationalization of 14 commercial banks in 1969, no new private banks were

licensed by RBI in the country, though there was no legal bank on entry of private sector

banks. The Narsimha committee report of 1991, has envisaged a larger role for private

sector banks. In recognition of need to introduce greater competition with a view to

achieving higher productivity and efficiency of banking system. RBI issued few

guidelines in Jan 1993 for entry of private sector banks. It prescribed of minimum paid up

capital of Rs.100 crores for new bank and shares to be listed at stock exchanges new bank

after being granted license under Banking Regulation Act, shall be registered as Public

ltd. Company under companies Act 1956. Subsequently nine new commercial banks have

been granted license to start banking operations. The new private sector banks have been

very aggressive in business expansion and are also reporting higher profit levels taking

advantage of technical and skilled manpower. In certain areas, these banks have been out

crossed the other group of banks including foreign banks.

GUIDELINES FOR PRIVATE SECTOR BANKS

The RBI issued guidelines regarding the formation and functioning of private sector

banks in January 1993. These guidelines are as follows:

The banks shall be governed by the provisions of The Reserve Bank of India Act,

1934 The Banking Regulations Act, 1949 other relevant statuaries.

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Private sector banks are required to be registered as public limited companies in

India.

The authority to grant a license lies with the RBI.

The shares of banks are required to be listed on stock exchanges.

Preference will be given to those banks whose headquarters are proposed to be

located in a center that does not have headquarters of any other bank.

Maximum voting rights of an individual shareholder would be limited to 1% of

total voting rights.

The new bank would not be allowed to have as its director any person who is

already a director in a banking company.

The bank will be subject to prudential norms in respect of banking operations,

accounting policies and other policies, as laid down by RBI. The bank will be

required to adhere to the following: Minimum paid up share capital of Rs. 1 bln.

Promoters' contribution as determined by the RBI Capital adequacy of 8% of the

risk weighted assets Single borrower and group borrower exposure limits in force

Priority sector lending Export credit Loan policy within overall policy guidelines

laid down by the RBI.

The banks will be free to open branches anywhere once they satisfy the capital

adequacy and prudential accounting norms.

The banks would not be allowed to have investments in subsidiaries, mutual funds

and portfolio investments in other companies in excess of 20% of the banks' own

paid up capital and reserves.

The banks would be required to use modern infrastructural facilities in office

equipment, computer, telecommunications etc.

MAJOR PLAYERS IN PRIVATE SECTOR BANKS

ICICI Bank: ICICI Banking is commercial Banking arm of ICICI group. It received its

banking license from RBI on may 17 may 1994 and its branch was started in Madras in

June 1994. ICICI Bank has a network of about 560 branches and extension counters and

over 1,900 ATMs. ICICI Bank offers a wide range of banking products and financial

services to corporate and retail customers through wide variety of delivery channels and

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through its specialized subsidiaries and affiliates in the areas of investment banking,life

and non-life insurance, venture capital and asset management. ICICI Bank set up its

international banking group in fiscal 2002 to cater to cross border needs of clients and

leverage on its domestic banking strengths to offer product internationally. ICICI Bank’s

equity shares are listed in India on the Stock Exchange, Mumbai and the National Stock

Exchange of India Limited and its American Depositary Receipts are listed on New York

Stock Exchange. It is the first bank to start Internet banking service in India. In 1999,

ICICI become the first Indian Company and the first bank or financial institution from

non-Japan Asia to be listed on NYSE.

IDBI Bank: IDBI Ltd., the tenth largest development bank in the world has promoted

world class institutions in India. IDBI promoted IDBI bank to mark the formal foray of

the IDBI group into commercial Banking. IDBI begun with an equity capital base of

Rs.1000 million, commenced its first branch at Indore in November 1995. The birth of

IDBI took place after RBI issued guidelines for entry of new private sector banks in

January 93. IDBI bank deployed Finacle, the e-age banking solution from Infosys tio

consolidate its position, meet challenges and quickly seize new business opportunities.

IDBI bank become the first to offer mobile refill/recharge using sms, launch of “ATM

next”, which provide online information about News, cricket scores, emergency numbers,

bank’s products on ATMs.

UTI Bank: UTI Bank was the first of the new private banks to have brgun operations in

1994, after the government of India allowed new private banks to be established. The

Bank was promoted jointly by the Administrator of the specified undertaking of the

United Trust of India(UTI-I), Life Insurance Corporation of India(LIC) and General

Insurance Corporation Ltd. and its associates viz.National Insurance Company Ltd.,The

New India Assurance Corporation, The Oriental Insurance Corporation and United

Insurance Company Ltd. The bank today is capitalized to the extent of Rs.278.12 crores

with public holding at 56.18 %. The bank’s registered office is at Ahmedabad and its

central office is at Mumbai. The bank has wide network of more than 350 branch offices

and Extension Counters. The Bank has network of over 1657 ATMs providing 24hrs a

day banking convenience to its customers. The bank was setup with capital of Rs.115

crore, with UTI contributing Rs.100 crore, LIC-Rs.7.5 crore and its four subsidiaries

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contributing Rs. 1.5 crore each.

HDFC Bank: HDFC Bank is headquartered in Mumbai. The Bank at present has an

enviable network of over 495 branches spread over 218 cities across India. All branches

are linked on an online real-time basis. Customers in over 120 locations are also serviced

through Telephone Banking. The Bank’s expansion plans take into account the need to

have a presence in all major industrial and commercial centres where its corporate

customers are located as well as the need to build a strong retail customer base for both

deposits and loan products. Being a clearing/settlement bank to various leading stock

exchanges, the Bank has branches in the centres where the NSE/BSE have a strong and

active member base. The authorized capital of HDFC Bank is Rs.450 crore (Rs.4.5

billion). The paid-up capital is Rs.309.9 crore (Rs.3.09 billion). The HDFC Group holds

22.2% of the bank’s equity and about 19.5% of the equity is held by the ADS Depository.

The Bank has made substantial efforts and investments in acquiring the best technology

available internationally, to build the infrastructure for a world class bank.

1.4 Public Sector Banks

a. State Bank of India and its associate banks called the State Bank Group

b. 20 nationalized banks

c. Regional rural banks mainly sponsored by public sector banks

Public Sector Banks (Nationalized banks):

1. State Bank of India (SBI)

2. State Bank of Bikaner & Jaipur

3. State Bank of Hyderabad

4. State Bank of Indore

5. State Bank of Mysore

6. State Bank of Patiala

7. State Bank of Saurashtra

8. State Bank of Travancore

9. Bank of India

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10. Canara Bank

11. Central Bank

of India

12. Corporation bank

13. Indian Bank

14. Indian overseas bank

15. Syndicate Bank

16. UCO Bank

17. Allahabad Bank

18. Andhra Bank

19. Bank of Baroda

20. Bank of Maharashtra

21. Dena Bank

22. Oriental Bank of Commerce

23. Punjab & Sind Bank

24. Union Bank

of India

25. United Bank of India

26. Vijaya Bank

27. IDBI Bank

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Chapter 2: Company Profile

2.1 Overview of SBIEVOLUTION OF SBI

The origin of the State Bank of India goes back to the first decade of the nineteenth

century with the establishment of the Bank of Calcutta in Calcutta on 2 June 1806. Three

years later the bank received its charter and was re-designed as the Bank of Bengal (2

January 1809). A unique institution, it was the first joint-stock bank of British India

sponsored by the Government of Bengal. The Bank of Bombay (15 April 1840) and the

Bank of Madras (1 July 1843) followed the Bank of Bengal. These three banks remained

at the apex of modern banking in India till their amalgamation as the Imperial Bank of

India on 27 January 1921.

Primarily Anglo-Indian creations, the three presidency banks came into existence either

as a result of the compulsions of imperial finance or by the felt needs of local European

commerce and were not imposed from outside in an arbitrary manner to modernise

India's economy. Their evolution was, however, shaped by ideas culled from similar

developments in Europe and England, and was influenced by changes occurring in the

structure of both the local trading environment and those in the relations of the Indian

economy to the economy of Europe and the global economic framework.

Establishment

The establishment of the Bank of Bengal marked the advent of limited liability, joint-

stock banking in India. So was the associated innovation in banking, viz. the decision to

allow the Bank of Bengal to issue notes, which would be accepted for payment of public

revenues within a restricted geographical area. This right of note issue was very valuable

not only for the Bank of Bengal but also its two siblings, the Banks of Bombay and

Madras. It meant an accretion to the capital of the banks, a capital on which the

proprietors did not have to pay any interest. The concept of deposit banking was also an

innovation because the practice of accepting money for safekeeping (and in some cases,

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even investment on behalf of the clients) by the indigenous bankers had not spread as a

general habit in most parts of India. But, for a long time, and especially upto the time that

the three presidency banks had a right of note issue, bank notes and government balances

made up the bulk of the investible resources of the banks.

The three banks were governed by royal charters, which were revised from time to time.

Each charter provided for a share capital, four-fifth of which were privately subscribed

and the rest owned by the provincial government. The members of the board of directors,

which managed the affairs of each bank, were mostly proprietary directors representing

the large European managing agency houses in India. The rest were government

nominees, invariably civil servants, one of whom was elected as the president of the

board.

Business

The business of the banks was initially confined to discounting of bills of exchange or

other negotiable private securities, keeping cash accounts and receiving deposits and

issuing and circulating cash notes. Loans were restricted to Rs.one lakh and the period of

accommodation confined to three months only. The security for such loans was public

securities, commonly called Company's Paper, bullion, treasure, plate, jewels, or goods

'not of a perishable nature' and no interest could be charged beyond a rate of twelve per

cent. Loans against goods like opium, indigo, salt woollens, cotton, cotton piece goods,

mule twist and silk goods were also granted but such finance by way of cash credits

gained momentum only from the third decade of the nineteenth century. All commodities,

including tea, sugar and jute, which began to be financed later, were either pledged or

hypothecated to the bank. Demand promissory notes were signed by the borrower in

favour of the guarantor, which was in turn endorsed to the bank. Lending against shares

of the banks or on the mortgage of houses, land or other real property was, however,

forbidden.

Indians were the principal borrowers against deposit of Company's paper, while the

business of discounts on private as well as salary bills was almost the exclusive

monopoly of individuals Europeans and their partnership firms. But the main function of

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the three banks, as far as the government was concerned, was to help the latter raise loans

from time to time and also provide a degree of stability to the prices of government

securities.

Major change in the conditions

A major change in the conditions of operation of the Banks of Bengal, Bombay and

Madras occurred after 1860. With the passing of the Paper Currency Act of 1861, the

right of note issue of the presidency banks was abolished and the Government of India

assumed from 1 March 1862 the sole power of issuing paper currency within British

India. The task of management and circulation of the new currency notes was conferred

on the presidency banks and the Government undertook to transfer the Treasury balances

to the banks at places where the banks would open branches. None of the three banks had

till then any branches (except the sole attempt and that too a short-lived one by the Bank

of Bengal at Mirzapore in 1839) although the charters had given them such authority. But

as soon as the three presidency bands were assured of the free use of government

Treasury balances at places where they would open branches, they embarked on branch

expansion at a rapid pace. By 1876, the branches, agencies and sub agencies of the three

presidency banks covered most of the major parts and many of the inland trade centres in

India. While the Bank of Bengal had eighteen branches including its head office, seasonal

branches and sub agencies, the Banks of Bombay and Madras had fifteen each.

The eight banking subsidiaries are:

1-State Bank of Bikaner and Jaipur (SBBJ)

2-State Bank of Hyderabad (SBH)

3-State Bank of India (SBI)

4-State Bank of Indore (SBIR)

5-State Bank of Mysore (SBM)

6-State Bank of Patiala (SBP)

7-State Bank of Saurashtra (SBS)

8-State Bank of Travancore (SBT)

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HISTORY

Presidency Banks Act

The presidency Banks Act, which came into operation on 1 May 1876, brought the three

presidency banks under a common statute with similar restrictions on business. The

proprietary connection of the Government was, however, terminated, though the banks

continued to hold charge of the public debt offices in the three presidency towns, and the

custody of a part of the government balances. The Act also stipulated the creation of

Reserve Treasuries at Calcutta, Bombay and Madras into which sums above the specified

minimum balances promised to the presidency banks at only their head offices were to be

lodged. The Government could lend to the presidency banks from such Reserve

Treasuries but the latter could look upon them more as a favour than as a right.

Bank of Madras

The decision of the Government to keep the surplus balances in Reserve Treasuries

outside the normal control of the presidency banks and the connected decision not to

guarantee minimum government balances at new places where branches were to be

opened effectively checked the growth of new branches after 1876. The pace of

expansion witnessed in the previous decade fell sharply although, in the case of the Bank

of Madras, it continued on a modest scale as the profits of that bank were mainly derived

from trade dispersed among a number of port towns and inland centres of the presidency.

India witnessed rapid commercialisation in the last quarter of the nineteenth century as its

railway network expanded to cover all the major regions of the country. New irrigation

networks

in Madras, Punjab and Sind accelerated the process of conversion of subsistence crops

into cash crops, a portion of which found its way into the foreign markets. Tea and coffee

plantations transformed large areas of the eastern Terais, the hills of Assam and the

Nilgiris into regions of estate agriculture par excellence. All these resulted in the

expansion of India's international trade more than six-fold. The three presidency banks

were both beneficiaries and promoters of this commercialisation process as they became

involved in the financing of practically every trading, manufacturing and mining activity

in the sub-continent. While the Banks of Bengal and Bombay were engaged in the

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financing of large modern manufacturing industries, the Bank of Madras went into the

financing of large modern manufacturing industries, the Bank of Madras went into the

financing of small-scale industries in a way which had no parallel elsewhere. But the

three banks were rigorously excluded from any business involving foreign exchange. Not

only was such business considered risky for these banks, which held government

deposits, it was also feared that these banks enjoying government patronage would offer

unfair competition to the exchange banks which had by then arrived in India. This

exclusion continued till the creation of the Reserve Bank of India in 1935.

AWARDS

Chairman Mr. O P Bhatt, has been declared the CNN-IBN Indian of the Year 2007 in the

Business category ahead of Vijay Mallya and the Ambanis .

After much deliberation, the jury voted for the maverick banker Shri O P Bhatt, at the

helm of the State Bank of India since 2006, as the CNN-IBN's businessman of the Year.

He has been credited with doing the impossible.

Shri Bhatt took over at a time when India's largest bank was faced with tough

competition from fast growing private players. The mammoth challenge was to arrest

SBI's falling market share, raise funds for expansion and look for new avenues of growth.

In another daring move, Shri Bhatt has started the merger of all seven associate banks

with the parent bank. Once the merger is completed, the combined entity will have a

balance sheet of over 8 lakh crore rupees, and a countrywide network of 14,000 branches

- enough to take on global banks looking to penetrate the Indian market after 2009.

Bhatt is the only SBI chairman since liberalisation who has been given a five year term.

He is setting himself some tough targets. One of the targets is to up SBI's market share by

one per cent every year. Under him the bank is also looking at new business streams like

general insurance, pension funds & mobile banking.

It's a vision to make SBI a truly global bank and the man behind that dream is CNN-

IBN's Indian of the Year in the Business category for 2007.

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BEST BANK OF THE YEAR 2008

State Bank of India was adjudged the Best Bank of the Year 2008 by London based ‘The

Banker’ magazine of Financial Times Group.

This award is decided on the basis of intensive research and analysis of financials and

performance of prominent Banks, and clearly SBI emerged as the winner & Best Bank in

the country.

This year’s Annual Bank of the year 2008 awards presentation was held at the Ballroom

of The Dorchester Hotel, London on 26th of November 2008 in an impressive ceremony

attended by CEOs & Heads of commercial Banks from over 116 countries

2.2 PRODUCTS AND SERVICES PROVIDED BY SBI

• Savings Accounts

• Current Accounts

• Fixed Deposits

Loans

Personal Loans

Home Loans

Two Wheeler Loans

New Car Loans

Used Car Loans

Overdraft Against Car

Express Loans

Gold Loan

Educational Loan

Loan Against Securities

Loan Against Property

Loans Against Rental Receivables

Cards

23

Credit Cards

Debit Cards

Access Your Bank

NetBanking

ATM

2.3 SWOT analysis:

Strengths:

1.BRAND NAME: SBI Bank has earned a reputation in the market over the

period of time(Being the oldest bank in India tracing history back to 1806)

2.Market Leader: SBI is ranked at 380 in 2008 Fortune Global 500 list, and

ranked 219 in 2008 Forbes Global 2000. With an asset base of $126 billion and its

reach, it is a regional banking behemoth.

3.Wide Distribution Network: Excellent penetration in the country with more

than 10000 core branches and more than 5100 branches of associate banks

(subsidiaries).

4. Diversified Portfolio: SBI Bank has all the products under its belt, which help

it to extend the relationship with existing customer. SBI Bank has umbrella of

products to offer their customers, if once customer has relationship with the bank.

Some Products, which SBI Bank is offering are: Retail Banking Business Banking

Merchant Establishment Services (EDC Machine) Personal loans & Car loans

Insurance Housing Loans

Government Owned: Government owns 60% stake in SBI. This gives SBI an

edge over private banks in terms of customer security.

5. Low Transition Costs-SBI offers very low transition costs which attracts small

customers.

Weaknesses:

1.The existing hierarchical management structure of the bank, although strength

in some respects, is a barrier to change.

24

2.Though SBI cards are the 2nd largest player in the credit card industry, it has

the highest non performing assets (NPAs) in the industry, which stand out to be at

16.28 % (Dec 2007).

3. Modernisation: SBI lags with respect to private players in terms of

modernisation of its processes, infrastructure, centralisation, etc.

Opportunities:

1. Merger of associate banks with SBI: Merger of all the associate banks (like

SBH, SBM, etc) into SBI will create a mega bank which streamlines operations

and unlocks value.

2. Planning to add 2000 branches and 3000 ATMs in 2008-2009. This will further

increase its reach.

3. Increasing trade and business relations and a large number of expatriate

populations offers a great opportunity to expand on foreign soil.

Threats:

1. Advent of MNC banks: Large numbers of MNC banks are mushrooming in

the Indian market due to the friendly policies adopted by the government. This

can increase the level of competition and prove a potential threat for the market

share of SBI bank.

2. Consumer expectations have increased many folds in last few years and the

bank has not been responsive enough to meet them on time.

3. Private banks have started venturing into the rural and semi-urban sector, which

used to be the bastion of the State Bank and other PSU banks

4. Employee Strike: There was an employee strike in the year 2006 which

disrupted SBI’s activities. This can be repeated in the future.

2.4 Overview of HDFC BANK

HDFC Bank began operations in 1995 with a simple mission: to be a "World-class Indian

Bank". They realized that only a single-minded focus on product quality and service

excellence would help them to get there.

25

HDFC Bank, one amongst the firsts of the new generation, tech-savvy commercial banks

of India, was set up in august 1995 after the Reserve Bank of India allowed setting up of

Banks in the private sector. The Bank was promoted by the Housing Development

Finance Corporation Limited, a premier housing finance company (set up in 1977) of

India. Net Profit for the year ended March 31, 2006 was up 30.8% to Rs 870.8 crores.

Branch network

Currently (2007), HDFC Bank has 583 branches located in 263 cities of India, and all

branches of the bank are linked on an online real-time basis. The bank offers many

innovative products & services to individuals, corporates, trusts, governnments,

partnerships, financial institutions, mutual funds, insurance companies. The bank also has

over 1471 ATMs. In the next few month the number of branches and ATMs should go up

substantially.

Recognition

Over a decade of its operations, HDFC Bank has been recognized, rated and awarded by

a number of organizations, which includes: Best Domestic Bank in India in The Asset

Triple A Country Awards 2005, 2004 and 2003. “Company of the Year” Award in The

Economic Times Awards for Corporate Excellence 2004-05.

Asiamoney's Awards for Best Domestic Commercial Bank as well as Best Cash

Management Bank - India in 2005. The Asian Banker Excellence in Retail Banking Risk

Management Award in India for 2004. Finance Asia “Best Bank - India” in 2005, "Best

Domestic Commercial Bank – India” in 1999, 2000 and 2001 respectively and “Best

Local Bank – India” in 2002 and 2003.

Business Today “Best Bank in India” in 2003 and 2004. “Best Overall

Local/Domestic Bank India” in the Corporate Cash Management Poll conducted by

Asiamoney magazine. Selected by Business World as "one of India's Most Respected

Companies" as part of The Business World Most Respected Company Awards 2004. In

2004, Forbes Global named HDFC Bank in its listing of Best under a Billion, 100 Best

Smaller Size Enterprises in Asia/Pacific and Europe. In 2004, HDFC Bank won the

26

award for “Operational Excellence in Retail Financial Services” -India as part of the

Asian Banker Awards 2003. In 2003, Forbes Global named HDFC Bank in its ranking of

“Best Under a Billion, 200 Best Small Companies for 2003”. The Financial Express

named HDFC Bank the “Best New Private Sector Bank 2003” in the FE-Ernst & Young

Best Banks Survey 2003.

Outlook Money named HDFC Bank the “Best Bank in the Private Sector” for the year

2003. NASSCOM and economictimes.com have named HDFC Bank the ‘Best IT User in

Banking’ at the IT Users Awards 2003.

Euromoney magazine gave HDFC Bank the award for "Best Bank – India” in 1999,

“Best Domestic Bank” in India in 2000, and “Best Bank in India” in 2001 and 2002.

Asiamoney magazine has named us “Best Commercial Bank in India 2002” For its use of

information technology, HDFC Bank has been recognized as a “Computerworld Honors

Laureate” and awarded the 21st Century Achievement Award in 2002 for Finance,

Insurance & Real Estate category by Computerworld, Inc., USA. Its technology initiative

has been included as a case study in their online global archives. Business India named

HDFC Bank “India’s Best Bank” in 2000. In 2000, Forbes Global named HDFC Bank in

its list of “The 300 Best Small Companies” in the world and as one of the “20 for 2001”

best small companies in the world.

Profile

The Housing Development Finance Corporation Limited (HDFC) was amongst

the first to receive an 'in principle' approval from the Reserve Bank of India (RBI) to set

up a bank in the private sector, as part of the RBI's liberalisation of the Indian Banking

Industry in 1994. The bank was incorporated in August 1994 in the name of 'HDFC Bank

Limited', with its registered office in Mumbai, India. HDFC Bank commenced operations

as a Scheduled Commercial Bank in January 1995.

Business focus

HDFC Bank's mission is to be a World-Class Indian Bank. The objective is to

build sound customer franchises across distinct businesses so as to be the preferred

provider of banking services for target retail and wholesale customer segments, and to

achieve healthy growth in profitability, consistent with the bank's risk appetite. The bank

is committed to maintain the highest level of ethical standards, professional integrity,

27

corporate governance and regulatory compliance. HDFC Bank's business philosophy is

based on four core values Operational Excellence, Customer Focus, Product Leadership

and People

Corporate Details

The Housing Development Finance Corporation Limited ( HDFC ) was amongst the

first to receive an 'in principle' approval from the Reserve Bank of India (RBI) to set up a

bank in the private sector, as part of the RBI's liberalization of the Indian Banking

Industry in 1994. Incorporated in August 1994 as HDFC Bank Limited , as of December

31, 2006, the bank had a India network of 684 branches in 316 cities in India and over

1663 ATM's.

Activities

HDFC Bank mainly provides three kinds of banking services:

• Personal Banking

• NRI Banking

• Wholesale Banking

The following are the products and services provided by the HDFC bank

• HDFC Bank provides loans like Personal Loans , Home Loans , Educational

Loans , Two Wheeler Loans , New car Loans, Used Car Loans, Overdraft Against

Car, Express Loans, etc.

• HDFC Bank provides Credit, Debit and Prepaid Cards to help you meet your

financial objectives.

• HDFC Bank provides facilities like Mutual Funds , Insurance , General & Health

Insurance, Bonds , Financial Planning, Knowledge Center, Equities &

Derivatives, Mudra Gold bar.

If you need to deal in foreign currency and keep tabs on exchange rates every now and

then, transfer funds to India, make payments etc., HDFC Bank has a range of products

and services that you can choose from to transact smoothly, efficiently and in a timely

manner.

With HDFC Bank 's payment services, you can bid goodbye to queues and paper work.

HDFC 's range of payment options make it easy to pay for a variety of utilities and

services.

28

HDFC Bank has designed two programs to make banking easier for the customers and

they are

• HDFC Bank Preferred Programme

• HDFC Bank Classic Programme.

HDFC Bank offers Private Banking services to high net worth individuals and

institutions.

HDFC Bank offers you quick, economical and convenient options to remit and transfer

funds to India.

Corporate Banking reflects HDFC Bank 's strengths in providing our corporate clients in

India, a wide array of commercial, transactional and electronic banking products.

HDFC Bank acts as an active medium between the government and the customers by

means of various services.

Performance

Profit & Loss Account : Year ended March 31, 2007

For the year ended March 31, 2007, the Bank earned total income of Rs.8,405.3 crores as

against Rs.5,599.3 crores in the corresponding period of the previous year. Net revenues

(net interest income plus other income) for the year ended March 31, 2007 were

Rs.5,225.8 crores, up 42.4% over Rs.3,669.8 crores for the year ended March 31, 2006.

Net Profit for year ended March 31, 2007 was Rs.1,141.5 crores, up 31.1%, over the

corresponding year ended March 31, 2006.

Organization

Mr. Aditya Puri is the Managing Director of HDFC Bank .

Contact Details

Registered address: HDFC Bank House ,

Senapati Bapat Marg, Lower Parel,

Mumbai - 400 013,

India.

29

HDFC BANK AND CENTURION BANK OF PUNJAB MERGER

Merger of Centurion Bank of Punjab with HDFC Bank at share swap ratio of 1:29. The

Scheme of Amalgamation envisages a share exchange ratio of one share of HDFC Bank

for twenty nine shares of Centurion Bank of Punjab.

The combined entity would have a nationwide network of 1,148 branches (the largest

amongst private sector Banks) a strong deposit base of around Rs. 1,200 billion and net

advances of around Rs. 850 billion. The balance sheet size of the combined entity would

be over Rs. 1,500 billion.

The share exchange ratio approved by the respective Boards was based on the

recommendations made by M/s Dalal & Shah, Chartered Accountants, and Ernst &

Young Private Ltd. who acted as independent joint valuers to the transaction.

The draft Scheme of Amalgamation, the due diligence report and any other matters as

required will be considered by the Board of HDFC Bank in their meeting scheduled on

February 28, 2008. The Board of CBOP will meet on the same day in order to consider

the draft Scheme of Amalgamation and any other matters as required.

HDFC Bank’s Board noted that in the event of the merger of Centurion Bank of Punjab

with HDFC Bank being approved at its meeting on February 28, 2008, it would consider

making a preferential offer to its promoter Housing Development Finance Corporation

(HDFC), to enable HDFC to maintain its percentage shareholding in the merged entity.

HDFC Bank’s Board also noted that Mr. Rana Talwar has been offered a seat on the

Board as non executive director and Mr. Shailendra Bhandari will be invited to join the

Board as Executive Director.

Commenting on the proposed merger, Mr. Deepak Parekh, Chairman, HDFC said, “We

were amongst the first to get a banking license, the first to do a merger in the private

sector with Times Bank in 1999, and now if this deal happens, it would be the largest

merger in the private sector banking space in India. HDFC Bank was looking for an

appropriate merger opportunity that would add scale, geography and experienced staff to

its franchise. This opportunity arose and we thought it is an attractive route to supplement

30

HDFC Bank’s organic growth. We believe that Centurion Bank of Punjab would be the

right fit in terms of culture, strategic intent and approach to business.

Distribution network

HDFC Bank is headquartered in Mumbai. The Bank at present has an enviable

network of over 684 branches spread over 316 cities across India. All branches are linked

on an online real-time basis. Customers in over 120 locations are also serviced through

Telephone Banking. The Bank's expansion plans take into account the need to have a

presence in all major industrial and commercial centres where its corporate customers are

located as well as the need to build a strong retail customer base for both deposits and

loan products. Being a clearing/settlement bank to various leading stock exchanges, the

Bank has branches in the centres where the NSE/BSE have a strong and active member

base.

The Bank also has a network of about over 1,740 networked ATMs across these cities.

Moreover, HDFC Bank's ATM network can be accessed by all domestic and international

Visa/MasterCard, Visa Electron/Maestro, Plus/Cirrus and American Express

Credit/Charge cardholders.

HDFC Bank operates in a highly automated environment in terms of information

technology and communication systems. All the bank's branches have online

connectivity, which enables the bank to offer speedy funds transfer facilities to its

customers. Multi-branch access is also provided to retail customers through the branch

network and Automated Teller Machines. The Bank has made substantial efforts and

investments in acquiring the best technology available internationally, to build the

infrastructure for a world class bank. In terms of software, the Corporate Banking

business is supported by Flexcube, while the Retail Banking business by Finware, both

from i-flex Solutions Ltd. The systems are open, scaleable and web-enabled.

The Bank has prioritized its engagement in technology and the internet as one of its key

goals and has already made significant progress in web-enabling its core businesses. In

each of its businesses, the Bank has succeeded in leveraging its market position, expertise

and technology to create a competitive advantage and build market share.

AWARDS

31

2008

CNN-IBN

'Indian of the Year (Business)'

Nasscom IT User Award 2008

'Best IT Adoption in the Banking Sector'

Business India

'Best Bank 2008'

Forbes Asia

Fab 50 companies in Asia Pacific

Asian Banker Excellence in Retail Financial Services

Best Retail Bank 2008

Asiamoney

Best local Cash Management Bank Award voted by Corporates

Microsoft & Indian Express Group

Security Strategist Award 2008

World Trade Center Award of honour

For outstanding contribution to international trade services.

Business Today-Monitor Group survey

One of India's "Most Innovative Companies"

Financial Express-Ernst & Young Award

Best Bank Award in the Private Sector category

Global HR Excellence Awards - Asia Pacific HRM

Congress:

32

'Employer Brand of the Year 2007 -2008' Award - First Runner up, & many more

Business Today

'Best Bank' Award

2007

Dun & Bradstreet – American Express Corporate Best Bank Award 2007

'Corporate Best Bank' Award

The Bombay Stock Exchange and Nasscom Foundation's Business for Social

Responsibility Awards 2007

'Best Corporate Social Responsibility Practice' Award

Outlook Money & NDTV Profit

Best Bank Award in the Private sector category.

The Asian Banker Excellence in Retail Financial Services Awards

Best Retail Bank in India

Asian Banker

Our Managing Director Aditya Puri wins the Leadership Achievement Award for

India

2.5 PRODUCTS AND SERVICES PROVIDED BY HDFC BANK

Savings Accounts

Regular Savings Account

Savings Plus Account

33

SavingsMax Account

No Frills Account

Retail Trust Account

Salary Accounts

Payroll

Classic

Regular

Premium

Defence Salary Account

Kid's Advantage Account

Pension Saving Bank Account

Family Savings Group

Current Accounts

Plus Current Account

Trade Current Account

Premium Current Account

Regular Current Account

Reimbursement Current Account

RFC - Domestic Account

Fixed Deposits

Regular Fixed Deposit

Super Saver Account

Sweep-in Account

Loans

Personal Loans

Home Loans

Two Wheeler Loans

New Car Loans

Used Car Loans

34

Overdraft Against Car

Express Loans

Gold Loan

Educational Loan

Loan Against Securities

Cards

Credit Cards

Silver Credit Card

Gold Credit Card

Platinum Plus Credit Card

Debit Cards

EasyShop International Debit Card

EasyShop Gold Debit Card

EasyShop International Business Debit Card

Access Your Bank

NetBanking

MobileBanking

ATM

PhoneBanking

2.6 SWOT analysis

STRENGTH1. Right strategy for the right products

2. superior customer service vs competitiors

3. great brand image

4. high degree of customer satisfaction

35

5. good place to work

6. lower response time with efficient & effective service

7. dedicated work force making a long term career in the field

WEAKNESSES1. Customer service staff need training

OPPORTUNITIES1) Profits margins will be good

2) Could extent to overseas broadly.

3) Could seek better customer deals

THREATS11 Legislation could impact

11 great risk involved

11 very high competition prevailing in the industry

11 lack of infrastructure in rural areas could constrain

investment.

36

Chapter 3

3.1 OBJECTIVES OF THE STUDY

1. To know preference of customers regarding public sector banks and private sector

banks.

2. to analyze which facility influences the customer most while selecting Bank,

3. to compare the various services provided by these banks and

4. to make aware about the various services provided by the bank.

3.2 SCOPE OF THE PROJECT

Personal visit to the branches of SBI and HDFC banks was done to collect the first hand

information. Study is done with the special reference to the area, Chandigarh City.

3.3 LITERATURE REVIEW

1. Denise K. Conroy in his study titled (Customer satisfaction measures in the public

sector: what do they tell us?) attempts to devise customer satisfaction measures,

according to him there are a number of factors which can affect the interpretation of

results - the nature of the customer, service provision, service quality and, for the public

37

sector, the extent to which consumer sovereignty exists. Resources may be better directed

towards setting and maintaining high levels of standard of service. This study addresses

the difficulties and highlights the complex nature of a customer or service beneficiary

who can be, at the same time, a taxpayer, voter, recipient of financial benefits, with

expectations of the public sector and its delivery agent, yet cannot choose another

provider.

2.Harry Nowka, Southwestern Oklahoma State University,

Nancy Buddy, Southwestern Oklahoma State University,

Robert Reeder, Southwestern Oklahoma State University and

Daniel Hart, Southwestern Oklahoma State University in their study titled (Customer

responses: A COMPARATIVE STUDY) wants to determine various variables which

influence customers of a bar and grill. This comparative analysis includes customer

responses with comparisons made to the major competitor's customer responses, student

customer responses, and responses of a panel of non customers assembled to assess

potential customer responses. This study indicates that location can be a significant

deterrent to expansion of the customer base. The personality of the owner can have a

positive impact on customer flow. Analysis of spending patterns indicates that food and

pool were underutilized. The male/female ratio was a determinate of customer flow.

3. Dawn Iacobucci, Amy Ostrom, Kent Grayson in their study titled(Distinguishing

Service Quality and Customer Satisfaction: The Voice of the Consumer) presents

two studies that rely on divergent methodologies to examine whether or not quality and

satisfaction have distinct antecedent causes, consequential effects, or both (i.e., whether

or not they should be considered a single construct, or distinct, separable constructs).

They focus on consumers’ understanding and use of the words quality and satisfaction; in

both studies, respondents report whether or not they think quality and satisfaction differ,

38

and if so, on what dimensions or under what circumstances. In the first study, they use

the qualitative “critical incident” technique to elicit service attributes that are salient to

respondents when prompted to consider quality and satisfaction as distinct. they code the

responses to these open-ended survey questions to examine whether quality can be teased

apart from satisfaction, from the respondents’ (consumers’) perspective. In the second

study, to triangulate on the qualitative data, they experimentally manipulated a number of

service attributes drawn from both the first study and from the literature to see whether or

not they have differential impacts on judgments of quality and satisfaction. They did not

presuppose that quality and satisfaction differ—rather, they asked respondents to make a

judgment either of quality or of satisfaction, defining the term as they saw fit.

4. Antreas D. Athanassopoulos in his study titled (Customer Satisfaction Cues To Support Market Segmentation and Explain Switching Behavior) examined the

customer satisfaction cues in retail banking services in Greece. The study proposes an

instrument of customer satisfaction that contains service quality and such other attributes

as price, convenience, and innovation. The proposed framework of customer satisfaction

was verified empirically yielding four distinct facets for business customers and five for

individual customers. The performance implications of the customer satisfaction

instrument are also explored. What is shown is that customer segments, in fact, yield

statistically different satisfaction scores, which verifies the managerial value of customer

segmentation practices. Finally, the facets of customer satisfaction as explanatory cues

for the switching behavior of individual and business customers were tested successfully.

5. Rengasamy Elango and Vijaya Kumar Gudep in their study titled(A Comparative Study on the Service Quality and Customer Satisfaction among Private, Public and

Foreign Banks) focuses on the service quality and customer satisfaction among the

private, public and foreign banks in India. An analysis is carried out to examine the level

of awareness among customers and to identify the best sector which provides qualitative

customer service. This becomes relevant in the context of recommendations of various

committees constituted by the Government of India and the RBI, from time to time, to

39

suggest measures to improve customer service systems of the public sector commercial

banks of India. A well-structured questionnaire is used to collect the views of respondents

across the three banking sectors. The survey instrument includes various dimensions,

pertaining to the quality of customer services in terms of banking personnel, convenient

working hours, Web-based services, error free value-added services and efficient

grievance redressal mechanism etc. Apart from the basic statistical tools such as

measures of central tendency, The authors also use `factor analysis' and the `One-way

Anova' classification. The idea behind this is to extract the relevant factors and analyze

whether there is any significant difference with respect to service quality within the three

banking sectors. The results indicate that the level of awareness among the customers

improved significantly during the study period. It is interesting to note that the results are

consistent with the previous studies conducted on customer service aspects, and it has

been observed that the foreign and the new generation private sector banks are serving

the customers better. This has larger implications on the public sector commercial banks

in India with respect to customer service delivery aspects. It is high time the public sector

commercial banks made efforts to revamp their approach towards customers, so as to

perform better and derive competitive advantage in the long run.

3.4 RESEARCH METHODOLOGY

It describes the data collection method, the sampling plan, the tools of investigation,

planning and testing of questionnaire and the limitations of the study. The study requires

the data to be collected from two different sources i.e. the primary source and the

secondary source. The primary data is collected with the help of structured questioners

which is being modified & reliable and the secondary data through the various journals,

newspapers and websites.

Data Source:

(a) Primary Data: Primary data was collected by means of questionnaires

(b) Secondary data: Secondary data collected by referring to various books,

newspapers, magazines, journals and internet (details in bibliography)

Research Design

40

Present study enquired and brought forward the results concerning the set objectives

specified before which relates to description of the state of affairs as a result it clearly

states that it was a DESCRIPTIVE STUDY, which included fact finding enquiries of

different kinds.

Sampling Design

Universe: - The universe was finite in this study, since the population of Patiala City is

certain and can be counted.

Sampling Unit: - The sampling unit is an individual (non-staff member) who is having

account in SBI and HDFC Banks.

Sample Size: - The sample size for the study was 70 individuals, non-staff members of

SBI and HDFC Banks, Chandigarh Out of which 35 belongs to SBI and 35 belongs to

HDFC bank.

Sampling Procedure: - Due to the time and resource constraints the convenience

sampling technique was used. The individuals were selected according to convenience to

fill the questionnaires.

Research Instrument used: Questionnaires.

3.6 LIMITATIONS

Though every effort was made to make the report authentic in every sense, yet there are

few factors which might have their influence on the final report.

1. There was time shortage. Time provided to us was very short which make it

difficult for us to conduct survey at wider range.

2. Sometimes respondents did not respond well to all the questions in the

questionnaire.

3. Low cooperation from the bank executives make to struggle more, due to which

we were forced to restrict our sample size to 80.

4. Some biasness might have occurred in analysis. Because of lack of expert

knowledge.

41

5. Best efforts were made to incorporate all-important variables in study, yet chances

of some of variables not appearing in study are not ruled out.

6. Frequent developments in this sector can be a major reason of limitation in the

study

7. Biasness in views of respondents can’t be ruled out

8. Resistance to change sometimes affects view of respondents.

Chapter 4.1

FINDINGS

DATA ANALYSIS

STATE BANK OF INDIA42

Sample Size 35

SAMPLE SIZE

SBI 35

HDFC 35

43

1. AGE GROUP AND DISTRIBUTION OF MALE AND FEMALE CUSTOMERS

DEALING WITH SBI

(a) Age Group

AGE NO. OF PERSONSLESS THAN 25 525-35 835-45 645-55 1255 & ABOVE 4

44

NO. OF PERSONS

(a)Gender

GENDERNO. OF

PERSONSMALE 28FEMALE 7

45

2. OCCUPATION OF THE CUSTOMERS OF SBI

OCCUPATION NO. OF

46

PERSONSSERVICE 15BUSINESMAN 6PROFESSIONAL 3STUDENT 8HOUSEWIFE 3

3. DISTRIBUTION OF THE INCOME OF THE CUSTOMERS OF SBI

INCOME NO. OF PERSONSNIL 8LESS THAN 50000 550000-150000 7150000-300000 5300000-500000 6

47

500000-ABOVE 4

4. MOST IMPORTANT REASON FOR CHOOSING SBI

FACTORSNO. OF

PERSONSI have a traditional bank account with the same bank 12The brand name of the bank 4The excellent service offered by this bank 5ATM service 7

48

Net banking facility 3Location advantage 4

5. ACCOUNT FACILITY AVAILING IN THE SBI

FACILITY NO. OF PERSONSSavings account 18Current account 5Fixed deposit 12NRI account 0

49

6. NO. OF YEARS, CUSTOMERS DEALING SBI

YEARSNO. OF PERSONS

Less than 1 year 71 to 2 years 123 to 5 years 7More than 5 years 9

50

7. REASON FOR TYPICALLY VISITING THE BANK BRANCH

REASONS NO. OF

51

PERSONSTo make a deposit 14To get advice for investment options 2To inquire about a balance 7To withdraw cash 12

8. HOW WOULD YOU RATE THE FOLLOWING BANKING SERVICE

QUALITY ON SCALE OF 1-5 PROVIDED BY BANK WHERE 1-EXCELLENT,

2-GOOD, 3 ABOVE-AVERAGE, 4-AVERAGE, 5-BELOW AVERAGE

ACCESS

COMMUNICATIO

NConfiden

tiality CourtesyReliabilit

y SecurityResponsiveness

Waiting time

52

EXCELLENT 13 7 15 12 14 17 9 5

GOOD 9 11 10 9 9 12 7 6ABOVE

AVERAGE 6 13 6 7 4 4 12 4

AVERGE 5 3 3 5 5 1 5 9BELOW

AVERAGE 2 1 1 2 3 1 2 11

9. WHICH FACILITY SATISFIES YOU MOST

FACILITY NO. OF PERSONSATM 13Loan 7Early cheque clearance 2Preparation of drafts 3Interest package 3Net banking 3Phone banking 4

53

10. IF YOU ARE PROVIDED WITH BETTER SERVICES BY OPTIONAL

BANK. WOULD YOU LIKE TO MOVE TO OTHER BANK

YES 6NO 29

54

11. OVERALL SATISFACTION OF THE CUSTOMERS WITH THE

PERFORMANCE OF SBI

SATISFCTIONNO. OF

PERSONSEXCELLENT 8GOOD 6SATISFACTORY 18AVERAGE 3BELOW AVERAGE 0

55

SATISFACTION LEVEL

Chapter 4.2

56

FINDINGSDATA ANALYSIS

HDFC BANK

Sample Size 35

57

SAMPLE SIZE

HDFC 35

SBI 35

1. AGE GROUP AND DISTRIBUTION OF MALE AND FEMALE CUSTOMERS

DEALING WITH HDFC

58

(a) Age Group

AGE NO. OF PERSONSLESS THAN 25 425-35 1235-45 745-55 955 & ABOVE 3

(b) Gender

59

GENDERNO. OF PERSONS

MALE 27

FEMALE 8

2. OCCUPATION OF THE CUSTOMERS OF HDFC

60

OCCUPATIONNO. OF

PERSONSSERVICE 12BUSINESMAN 13PROFESSIONAL 5STUDENT 3HOUSEWIFE 2

61

3. DISTRIBUTION OF THE INCOME OF THE CUSTOMERS OF HDFC

INCOME NO. OF PERSONSNIL 2LESS THAN 50000 450000-150000 9150000-300000 8300000-500000 9500000-ABOVE 3

4. MOST IMPORTANT REASON FOR CHOOSING HDFC

62

FACTORS NO. OF PERSONSI have a traditional bank account with the same bank 3The brand name of the bank 6The excellent service offered by this bank 12ATM service 5Net banking facility 2Location advantage 7

5. ACCOUNT FACILITY AVAILING IN THE HDFC

63

FACILITY NO. OF PERSONSSavings account 21Current account 7Fixed deposit 6NRI account 1

6. NO. OF YEARS, CUSTOMERS DEALING WITH HDFC

64

YEARSNO. OF

PERSONSLess than 1 year 71 to 2 years 93 to 5 years 13More than 5 years 6

65

7. REASON FOR TYPICALLY VISITING THE BANK BRANCH

REASONSNO. OF

PERSONSTo make a deposit 17To get advice for investment options 3To inquire about a balance 5To withdraw cash 10

66

8. HOW WOULD YOU RATE THE FOLLOWING BANKING SERVICE

QUALITY ON SCALE OF 1-5 PROVIDED BY BANK WHERE 1-

EXCELLENT, 2-GOOD, 3 ABOVE-AVERAGE, 4-AVERAGE, 5-BELOW

AVERAGE

ACCESS

COMMUNICAT

IONConfiden

tialityCourtes

yReliabili

tySecuri

tyResponsiveness

Waiting time

EXCELLEN

T 24 6 22 6 15 17 14 3

GOOD 6 12 22 10 8 7 8 2ABOV

E AVERAGE 3 14 4 12 6 6 6 8

AVERAGE 2 2 2 2 4 4 4 17BELO

W AVERAGE 0 1 0 5 2 1 3 5

67

68

9. WHICH FACILITY SATISFIES YOU MOST

FACILITYNO. OF

PERSONSATM 10Loan 4Early cheque clearance 8Preparation of drafts 2Interest package 3Net banking 5Phone banking 3

69

10. IF YOU ARE PROVIDED WITH BETTER SERVICES BY OPTIONAL

BANK. WOULD YOU LIKE TO MOVE TO OTHER BANK

YES 9NO 26

70

11. OVERALL SATISFACTION OF THE CUSTOMERS WITH THE

PERFORMANCE OF HDFC BANK

SATISFCTIONNO. OF

PERSONSEXCELLENT 7GOOD 12SATISFACTORY 8AVERAGE 5BELOW AVERAGE 3

SATISFACTION LEVEL

71

Chapter 4.3

DATA ANALYSIS

COMPARATIVE STUDY

OF

SBIAND

HDFC BANK

Sample Size 70

72

1. COMPARATIVE STUDY OF AGE GROUP WITH GENDER OF

CUSTOMERS LINKING WITH SBI AND HDFC BANK

(a) AGE GROUP

AGE SBI HDFCLESS THAN 25 5 425-35 8 1235-45 6 745-55 12 955 & ABOVE 4 3

73

(b) GENDER

GENDER SBI HDFCMALE 28 27FEMALE 7 8

74

2. COMPARATIVE STUDY OF THE CUSTOMERS OF SBI AND HDFC

BANK REGARDING THEIR OCCUPATION

OCCUPATION SBI HDFCSERVICE 15 12BUSINESMAN 6 13PROFESSIONAL 3 5STUDENT 8 3HOUSEWIFE 3 2

75

3. COMPARATIVE STUDY OF THE CUSTOMERS OF SBI AND HDFC

BANK REGARDING THEIR INCOME

INCOME SBI HDFCNIL 0 2LESS THAN 50000 8 450000-150000 7 9150000-300000 10 8300000-500000 6 9500000-ABOVE 4 3

76

4 . COMPARITIVE STUDY OF MOST IMPORTANT REASON CHOOSING THE PARTICULAR BANK

FACTORS SBI HDFCI have a traditional bank account with the same bank 12 3The brand name of the bank 4 6The excellent service offered by this bank 5 12ATM service 7 5Net banking facility 3 2Location advantage 4 7

77

5. COMPARATIVE STUDY OF THE CUSTOMERS OF SBI AND HDFC BANK

REGARDING THE ACCOUNT FACILITIES PROVIDED TO THEM

FACILITY SBI HDFCSavings account 18 21Current account 5 7Fixed deposit 12 6NRI account 0 1

78

6. COMPARATIVE STUDY OF THE TIME PERIOD OF CUSTOMERS

DEALING WITH SBIAND HDFC BANK

YEARS SBI HDFCLess than 1 year 7 71 to 2 years 12 93 to 5 years 7 13More than 5 years 9 6

79

7. COMPARITIVE STUDY OF REASON THAT MAKE CUSTOMER TO

TYPICALLY VISIT BANK BRANCH

REASONS SBI HDFCTo make a deposit 14 17To get advice for investment options 2 3To inquire about a balance 7 5To withdraw cash 12 10

80

8. COMPARITIVE STUDY OF MOST SATISFYING FACILITY

OFFERED BY THEM

FACILITY SBI HDFCATM 13 10Loan 7 4Early cheque clearance 2 8Preparation of drafts 3 2Interest package 3 3Net banking 3 5Phone banking 4 3

81

9. CUSTOMERS WANT TO SHIFT TO ANOTHER BANK IF THEY ARE

PROVIDED WITH BETTER SERVICE

CHANGE SBI HDFCYES 6 9NO 29 26

10. COMPARISON REGARDING THE OVERALL SATISFACTION

OF THE CUSTOMERS

82

SATISFCTION SBI HDFCEXCELLENT 8 7GOOD 6 12SATISFACTORY 18 8AVERAGE 3 5BELOW AVERAGE 0 3

83

Chapter 5

5.1 Suggestions and Recommendations

1. Both the customers from SBI and HDFC bank have suggested that the bank

should open one of its branch in industrial area like focal point.

2. One of the most common suggestion was to lower down the minimum balance

required in the saving s account.

3. Staff should be more co-operative to the customers.

4. Customers were not fully aware of the services and the various charges which

they have to pay. Therefore Banks should try to give some more information to its

existing customers

Assumptions

The project report is based on the preference of the customers and the level of satisfaction

towards SBI and HDFC bank. During project we come to know that both the banks are

highly preferred by the customers but their preference is different up to some extend

towards the service of these banks. Following are the assumptions of the project.

1. Range of the survey is limited to Patiala city. It may not hold the same result in

the different city.

2. The sample size for the survey is restricted up to 70. Out of Which 35

questionnaire was filled by the customers of SBI and 35 was filled by customers

of HDFC bank.

3. Survey is done in a very short period of time. This may have impact on the final

result of the survey.

84

Chapter 6

Appendix

QUESTIONNAIRE

CUSTOMER PREFERENCE TOWARDS SBI AND HDFC BANK

1. Name____________________

2. Gender

Male Female

3. Age Less than 25 25-35

35-45 45-55

55-above

4. Occupation

Service Business

Professional Student

Housewife

5. Income

Nil Less than 50,000

50,000 to 1,50,000 1,50,000 to 3,00,000

3,00,000 to 5,00,000 5,00,000 and above

85

6. Bank you are dealing with

HDFC SBI

7. What was the single most important reason that you chose this particular Bank

I have a traditional bank account with the same bank

The brand name of the bank

The excellent service offered by this bank

ATM service

Net banking facility

Location advantage

Any other please specify_______________________________________

8. Which account facility you are availing in the Bank

Savings account Current account

Fixed deposit NRI account

9. Since how many years you are dealing with this Bank

Less than 1 year 1 to 2 years

3 to 5 years More than 5 years

10. What is the main reason that you typically visit your bank branch(please choose the single most important reason)

To make a deposit

To get advice for investment options

To inquire about a balance

To withdraw cash

Any other please

specify______________________________________________

86

11. How would you rate the following banking service quality on scale of 1-5 provided by bank where 1-excellent, 2-good, 3 above-average, 4-average, 5-below average

Access Communication

Confidentiality Courtesy

Reliability Security

Responsiveness Waiting time

12. Which facility satisfies you most

ATM Interest package

Loan Net banking

Early cheque clearance Phone banking

Preparation of drafts

13. If you are provided with better services by optional bank. Would you like to move to other bank.

Yes No

14. How would you rank the overall service

Excellent Good

Satisfactory Average Below Average

Suggestions

If any______________________________________________

signature

Thank you very much for your time, cooperation & patient

87

BIBLIOGRAPHY

WEBSITE USED

www.hdfcindia.com

www.statebankofindia.com

http://www.banknetindia.com/banking/index_1.htm

http://www.asiatradehub.com/india/banking/finance.html

http://www.en.wikipedia.org/wiki/Standard_Chartered_Bank

http://www.finance.indiamart.com/investment_in_india/standard_chartered_bank.

html

http://www.essays.se/about/literature+review+of+customer+satisfaction/

http://www.emeraldinsight.com

http://www.essays.se/about/literature+review+of+customer+satisfaction

http://www.essays.se/about/literature+review+of+customer+satisfaction/?startrecord6

BOOKS FOLLOWED

Research methodology by C.R. Kothari

NEWS PAPERS

Business standard

Economic Times

88

http://www.asiatradehub.com/india/banking/finance.htmlhttp://www.banknetindia.com/banking/index_1.htmhttp://www.statebankofindia.com/

ABSTRACTHistoryHDFC Bank and Centurion Bank of Punjab mergerResearch Instrument used: Questionnaires.Courtesy