“Satisfaction Level for Banking Services: A Case Study of HDFC Bank Customers”

Prepared By:

Nawa Raj Karki

Under supervision of :

Dr. Renuka Sharma

In partial fulfilment of the requirements for the award of degree of Master of Business Administration

Submitted to :Chitkara Business School

Bank

Equation (Income = Consumption + Saving)

Bank is an institution to gather the household saving and channelize that saving to the deficit unit or section who requires capital or fund.

RBI the Watchdog

RBI was established on 1 April 1935 during the British Raj in accordance with the provisions of the Reserve Bank of India Act, 1934

The Bank was constituted for the need of following: To regulate the issue of banknotesTo maintain reserves with a view to securing monetary stability andTo operate the credit and currency system of the country to its advantage.

Rates Current Rates

Bank Rate 8.25%

Cash Reserve Ratio (CRR) 4.00%

Statutory Liquidity Ratio (SLR) 23%

Repo Rate under LAF(Liquidity

adjustment Facility)

7.25%

Reverse Repo Rate under LAF * 6.25%

Current Policy Rates

RBI decides these Rates by considering Liquidity, Inflation and Credit supply in Economy.

Types of Risk

Financial Risk Non Financial Risk

Strategic Risk

Operational Risk

Political Risk

Legal Risk

Market RiskCredit Risk

Liquidity Risk

Interest Rate Risk

Exchange rate Risk

Counter Part or Borrower Risk

Portfolio or concentration risk

Risk in Banking

Banks like HDFC, SBI & ICICI are too big fail

Basel II Integrated Risk Management system

Three Pillars of Basel IIMinimum Capital RequirementIt states the Capital Adequacy that bank should maintain to cover three types of risks it defined; credit risk, market risk and operational risk. According to the Basel II the CAR should >8% but in India its 9%. Supervisory review ProcessIt sets out the new supervisory review process. It requires financial institutions to have their own internal process to access their overall capital adequacy ratio in relation to their risk profile. Market DisciplineIt requires transparency and the obligations of the banks to disclosure meaningful information to all stakeholders. Clients and shareholders should have sufficient understanding of activities of banks and the way they manage the risks.

Capital Adequacy Ratio

• CAR is also called Capital to Risk (weighted) assets ratio (CRAR), is a ratio of a bank’s capital to its risk. RBI tracks bank’s CAR to ensure that it can absorb a reasonable amount of loss and complies with statutory requirements.

Tier 1 Capital +Tier 2 CapitalCAR

Risk Adjusted Assets

=

Capital elementsTier 1(a) Paid-up share capital/common stock(b) Disclosed reserves

Tier 2(a) Undisclosed reserves(b) Asset revaluation reserves(c) General provisions/general loan-loss reserves(d) Hybrid (debt/equity) capital instruments(e) Subordinated debt

HDFC Bank an Introduction

Incorporated in 1994 under the name HDFC Bank Limited.It started its operations after one year of commencement since January 1995, with the mission to be “World-class Indian Bank”.

Name Designation

C M Vasudev Chairman

Aditya Puri Managing Director

Harish Engineer Executive Director

Paresh Sukthankar Executive Director

Renu Karnad Director

Partho Datta Director

Pandit Palande Director

Bobby Parikh Director

Anami N Roy Director

Keki Mistry Director

Vijay Merchant Additional Director

Management Team HDFC Bank

Retail Product Matrix

Accounts and Deposits

Saving Accounts

Salary Accounts

Demat Account

Safe Deposit Locker

Rural Accounts

Loans

Personal Loans

Business loans

Home loan

Car Loans

Two wheelers Loans

Loans against Assets

Educational Loan

Rural Loans

Cards & Forex

Credit Cards

Debit Cards

Prepaid Cards

Credit Card reward program

Travel Solutions

Remittance Products

Other Forex Services

Investments and Insurance

Wealth Service

Investment Products

Life Insurance

Health Insurance

Motor Insurance

Travel Insurance

Home Insurance

Business Segmentation

WholesaleIn this segment HDFC Bank targets for big projects and blue-chip companies.

Retail:The objective of the Retail Bank is to provide its target market customers a full range of financial products and banking services, giving the customer a one-stop window for all his/her banking requirements.

TreasuryWithin this business, the bank has three main product areas - Foreign Exchange and Derivatives, Local Currency Money Market & Debt Securities, and Equities.

Branch Structure

3Man Branches Teller, Authorizer and BM– objective cost cutting --- In rural Area

4 Man BranchesPB, teller, PB& Teller Authorizer and BM

5 Man BranchesLike 4 man branches only addition is relationship manager.

SWOT Analysis

Competent Human Resources

High Customer Driven system

Popular brand

Wide coverage, also International presence too

Strengths

High A/c maintenance or Monthly average balance (MAB)

Weakness

Rising per capita income along with disposable income

The recent government provision that bank a/c is mandatory for avail direct cash subsidy brings more people in formal banking channel.

The rising standard of rural India and still out of formal banking system.

OpportunitiesFinancial industry is dominated by shadow banking and offering alternative investment scheme.

Government is considering giving license to new entity that definitely snatches the market share.

Basel III implementation will hurt the profitability as banks are required to increase their paid up capital for safety of depositor’s. money

Threats

Competitors Analysis

Leader State Bank of India

Challenger HDFC Bank

Followers ICICI, Axis and others

Comparing Mcap

Market Capitalization as on 27th April

2013

Bank M.cap in CRs

SBI 164,975.31

HDFC 164027.85

ICICI 132020.79

Axis 69614.84

Kotak Mahindra 53076.44

IndusInd 23962.05

SBI

HDFCIC

ICI

Axis

Kotak

Mah

indr

a

Indu

sInd

0.0020,000.0040,000.0060,000.0080,000.00

100,000.00120,000.00140,000.00160,000.00180,000.00

Net Profit Comparison

Net Profit in CRs

Banks 2012 2011 2010 2009 2008

SBI 11686.9 7370.35 9166.05 9121.23 6729.12

HDFC 5167.09 3926.4 2948.7 2244.94 1590.18

ICICI 6465.26 5151.38 4024.98 3758.13 4157.73

0

2000

4000

6000

8000

10000

12000

14000

SBIHDFCICICI

2008

Net Profit in crores

2012 2011 2010 2009

Profitability Analysis and Trend Analysis

Year ROA In % EPS

2010 1.53 13.5

2011 1.58 17

2012 1.77 22.1

2010 2011 20120

5

10

15

20

25

13.517

22.1EPS

EPS

in R

S.

2010 2011 2012

1.531.58

1.77ROA In %

Net NPA and Gross NPA

Year Gross NPA% Net NPA %

2010 1.43 0.31

2011 1.05 0.19

2012 1.02 0.18

2010 2011 20120

0.20.40.60.8

11.21.41.6 1.43

1.05 1.02

0.310000000000001

0.19 0.18

NPA

Gross NPA% Net NPA %

Research

“Satisfaction Level for Banking Services: A Case Study of HDFC Bank Customers”

Research Methodology

Type of Research: ExploratoryPopulation(N) People who have HDFC Bank a/cSample Size(n): 250 RespondentsSample Design: Convenience Questionnaire type: Likert ScaleStatistical Tools ; Mean, Percentage & standard Deviation.

Points of Scale Assigned Score

Very Satisfied 5

Satisfied 4

Neither Satisfied Nor Dissatisfied 3

Dissatisfied 2

Very Dissatisfied 1

Likert Scale

Objective and Limitations of the Study

Objectives of the Study•To find out the current customer satisfaction level.•To find out the weakest facet of Bank that is hurting customer satisfaction.•To suggest bank to improve where required.

Limitations of the Study•Respondents are selected on Convenience basis•The study covers only the satisfaction level among customers who have bank account in sector 8 branch CHD.

Gender No of Respondents %

Male 187 74.8

Female 63 25.2

Total 250 100

Demographic distribution of Respondents

75%

25%

Gender Male Female

Age group

No of

Respondents %

Below 20 13 5.2

20-35 137 54.8

35-60 83 33.2

60above 17 6.8

Total 250 100

5%

55%

33%

7%

AGE Below 20 20-35 35-60 60above

Age group

Gender

Education

No of

Respondents %

Diploma and

Below 85 34.4

Graduation 129 51.6

P.G and Above 36 14.4

Total 250 250 Diploma and Be-low

Graduation P.G and Above0

20

40

60

80

100

120

140

Income

Class

No of

Respondents %

0-5 L 187 74.8

5-10 L 56 22.4

Above 10 L 7 2.28

Total 250 100 0-5 L 5-10 L Above 10 L0

20406080

100120140160180200

Education

Income Class

Results and Interpretation

S.N. Dimensions Mean score Standard Deviation

1 Accounts and Deposits 3.48 1.03

2 Investments 3.12 0.97

3 Health Plans 3.32 1.11

4 Loans 3.08 1.22

5 Credit Cards 3.39 1.20

1 Product Features

Accounts and Deposit has the maximum mean that is 3.48, on the contrast the loans of HDFC bank has got the mean score of 3.08 that shows it is product which is least preferred by the customers of HDFC Bank.

Similarly, the S.D. of Loans and the S.D. of Investments are highest and lowest in this product features category. The S.D. shows the consistency in the response of the customers which participate in this research.

S.N

.

Dimensions Mean

score

Standard

Deviation

1 Location of the Branches 4.10 0.93

2 Infrastructure 3.70 1.01

3 Waiting Lounge 3.57 1.06

4 Lolly Pops (Signage’s) 3.4 0.87

5 Parking Facilities 3.32 1.10

2 Infrastructure and Accessibility

Here in the above table the means Score of Location of the bank is highest and the Parking facilities get the minimum mean scores.

Customers believe the bank is in the right place and people say the parking doesn’t belong to bank so they still show quite satisfactory response. At the same time the S.D. of parking facility is highest and the Lolly pop gets the lowest S.D.

S.N. Dimensions Mean

score

Standard

Deviation

1 Helpfulness 3.44 1.05

S2 Attentiveness 3.60 0.93

3 Politeness 3.68 0.89

4 Knowledge of the Staff 3.72 0.93

5 Presentation of the Staff 3.72 0.81

6 Honesty and Trustworthiness of the staff 3.60 1.01

7 Preference to the Senior Citizen 3.58 0.84

3 The Level of Customer Satisfaction

The dimension knowledge of the staff and the presentation has the highest mean score that’s indicates customer feel the staff have good knowledge and the present in a good manner at same time they feel they staffs are not helpful enough

S.N. Dimensions Mean

score

Standard

Deviation

1 Quick Dealings 3.44 0.88

2 Query Resolve 3.66 0.98

3 Educating Customer 3.64 0.96

4 Desire to listen customer

queries / Complaint

3.60 0.86

5 Satisfactory Closure of a

Compliant

3.52 1.13

4. Efficiency of the Staff

Query resolve has the highest mean score and the Quick in dealings get sthe low mean score.

S.

N.

Dimensions Mean

score

Standard

Deviation

1 A/c Maintenance charges 3.16 0.97

2 Competitive Interest Rate 3.37 0.85

3 Misc. Charges(Instant alert, cheque return or

bounce)

3.34 0.83

4 Service charges on Loan 3.53 0.97

5 Compensation policy- Redressal 3.02 1.02

5. Interest and Charges

The mean score of dimension called competitive interest rate highest and the compensation policy has the lowest mean score.

S.N

.

Dimensions Mean score Standard

Deviation

1 Net Banking 3.29 1.14

2 Phone Banking 3.60 0.91

3 Mobile Banking 3.67 1.14

6 Ways of banking-Techno Banking

The mean score of e-banking ways are given above among three the Mobile banking gets the highest and net banking gets the lowest mean score. The standard deviation of phone banking is lowest among other two alternatives.

Combined mean factor wise

S.N. FACTORS Mean Score

1 Product Features 3.28

2 Infrastructure & Accessibility 3.62

3 The Level of Customer Service 3.62

4 Efficiency of the Staff 3.57

5 Interest and Charges 3.29

6 Techno Banking 3.52

Findings:

As per the study suggests people are less satisfied with the charges it charge against the service, HDFC a big brand but the bank have to act before it is too late while others bank offering same products in a lower Charges.

The loan product gets lower means score among 38 dimensions which are asked in the questionnaires that points the bank should give wider range of investment options and financial education to the customers.

Every dimension of Each factors which ere asked have mean more than three that shows customers are not dissatisfied but there is lot of room for improvement.

Recommendations:

We find some customers are extremely dissatisfied with the staffs’ behaviour so HDFC Bank can offer the Staffs some courses like behaviour modification and anger management.

People don’t want lock their money and the HDFC Bank account require to maintain Rs.10000 MAB that is not suitable for customers. So if it really wants to serve the bottom of pyramid segment they should lower its MAB it definitely gives bank more market share.

Staffs who are given target for month should think for years ahead. They are hunting customers with insufficient knowledge about product the product and services to meet the short term target.

BibliographyPatanaik Ila, Shah Ajay(2004);interest rate volatility & risk in Indian bankingTirupathi Kanchu, Kumar Manoj (2013); Risk management in Indian Banking sector: An empricical study Volume No 2 , ISSN 2277-3622Fawzi AI-Khatib, Abdullah Al-Khulaifi, Khalid Al-Sulaiti; Banking services and customer's satisfaction in Qatar :A statistical analysisMesay Sata Shanka (2012): Bank Service Quality, Customer Satisfaction andLoyalty in Ethiopian,Banking Sector: Journal of Business Administration and Management Sciences Research Vol. 1(1), pp. 001-009Ayyanar G.(2012); Customers’ Satisfaction in Public and Private Sector Banks and their Comparison: Vol. 5 (11) Nov. (2012)Federation Of Indian Chambers Of Commerce & Industry: Indian banking system: the current state & road aheadHdfcbank.comrbi.org.ineconomist.comfinanceindiamart.comallbanking.com

Thank you for your Patience!!!