SECTORA L PROJECT REPORT

COMPARATIVE ANALYSIS OF AXIS BANK LIMITED WITH OTHER BANKS

 

SUBMITTED BY:

ARPIT SHARMA

PGDM 4 SEMESTER

UNDER THE GUIDENCE OF: PROF. SMITH KUMAR

SURYADATTA GROUP OF INSTITUTE

(Affiliated to AICTE AND AQA)

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CERTIFICATE

This is to certify that ARPIT SHARMA PGDM (MKT+I.T) 4rd SEMESTER has

accomplished the project report title ‘AXIS BANK’ under my guidance and provision.

He has submitted this project in the partial fulfillment of requirement as per the

SURYADATTA GROUP OF INTITUTE PUNE (MAHARASHTRA)

I further certify that this is an original work. All sources of information and help have

been duly mentioned and acknowledged.

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ACKNOWLEDGEMENT

This project has been possible through the direct and indirect cooperation of various

people who bear the imprints of their efforts for my work. I take this opportunity to

acknowledge the invaluable assistance of the people who helped me in the completion of

this project report.

I humbly convey my sincerest gratitude to my internal guide PROF. SMITA KUMAR

for her guidance, suggestions and unintended support, without which the project would

not have been possible. I would also like to thank the faculty members who provided me

all the necessary information in the completion of the project report.

Last but not the least; I would like to place a word of thanks for all those who directly or

indirectly helped me in the successful completion of the project.

ARPIT SHARMA

7709947043

PGDM 4TH Semester

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TABLE OF CONTENTS

Introduction

Objectives of the study 6

Research methodology 7

Limitations of the study 8

Profile of the organization

Evolution 12

Mission and Values 16

7 Ps of the Bank 24

Achievements 35

Analysis and Interpretation

Financial Performance 50

S.W.O.T Analysis 57

Conclusion 59

Annexure: Bibliography 62

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INTRODUCTION

BANKING IN INDIA

HISTORY

The first bank in India, though conservative, was established in 1786. From 1786 til l today,

the j o u r n e y o f I n d i a n B a n k i n g S y s t e m c a n b e s e g r e g a t e d i n t o t h r e e d i s t i n c t

p h a s e s . T h e y a r e a s mentioned below:

PHASE I    -  Early phase from 1786 to 1969 of Indian Banks

PHASE II   - Nationalization of Indian Banks and up to 1991

PHASE III - Indian Financial & Banking Sector Reforms after 1991.

PHASE I

T h e G e n e r a l B a n k o f I n d i a w a s s e t u p i n t h e y e a r 1 7 8 6 . N e x t c a m e B a n k o f

H i n d u s t a n a n d 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

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established which started as private shareholders banks, mostly Europeans shareholders. During the first phase

the growth was very slow and banks also experienced periodic failures between 1913 and 1948.

There were a p p r o x i m a t e l y 1 1 0 0 b a n k s , m o s t l y s m a l l . T o s t r e a m l i n e

t h e f u n c t i o n i n g a n d a c t i v i t i e s o f 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 b a n k i n g i n I n d i a a s t h e C e n t r a l B a n k i n g A u t h o r i t y . D u r i n g t h o s e d a y ’ s p u b l i c h a s

l e s s e r 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 the

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.

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.

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1971: Creation of credit guarantee corporation.

•

1975: Creation of regional rural banks.

•

1980: Nationalization of seven banks with deposits over 200 crore. 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

liberalization 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. 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

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.

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BANKING STRUCTURE IN INDIA

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Reserve bank of India (central bank & supreme monetary authority of the country)

OBJECTIVE OF THE PROJECT

To gain the knowledge of products and services of Axis Bank Ltd. and to compare it vis-vis other banks.

To identify the perception of consumer about their banks with comparison to other banks.

Recommendations to increase customer satisfaction level.

Because of the following reasons, I prefer this project work to get the knowledge of the banking system.

Banking is an essential industry.

It is where we often wind up when we are seeking a problem in financial crisis and money related query.

Banking is one of the most regulated businesses in the world.

Banks remain important source for career opportunities for people.

It is vital system for developing economy for the nation. 

Banks can play a dynamic role in delivery and purchase of consumer durables

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New Private Banks (8)

Nationalized banks (19)Old Private Banks

(17)

State Bank of India & its Associates (8)

Urban Cooperative Banks (53)

State Cooperative Banks (31)

Regional Rural Banks (357)

Foreign banks in India (39)

Private sector (25)

Public sector (27)

Co-operatives bank

Scheduled banks

Commercial Banks

RESEARCH METHODOLOGY

1. Descriptive Research

2. Follow Questionnaire method

3. Primary Data: In some cases the researchers may realize the need for collecting

the first hand information. As in the case of everyday life, if we want to have first

hand information on any happening or event, we either ask someone who knows

about it or we observe it ourselves, we do the both. Thus, the two methods by

which primary data can be collected is observation and communication. Those

data collected first hand, either by the researcher or by someone else, especially

for the purpose of the study is known as primary data.

4. Secondary Data: Any data, which have been gathered earlier for some other

purpose, are secondary data in the hands of researcher.

5. Information was collected through both primary and secondary sources.

The data collected for this project has been taken mostly from the

secondary source.

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LIMITATIONS

Some of the limitations of the project are listed as below:

1. Due to the financial and time constraints a cluster analysis of the population so as to get better results was not feasible.

2. It was difficult to break the ice with the common people initially. It was a daunting task to convince them to fill in the personal details of the questionnaire where they have to mention the monthly income, occupation etc.

3. To convince the people for a proper interviewing process is also difficult.

4. Figures keep on changing from time to time.

5. Data may be outdated.

6. Compilation of data on competitor analysis was difficult due to non-availability of correct information.

7. The figures have been taken as approximations.

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PROFILE OF THE BANK

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Type Public

Traded as BSE: 532215

LSE: AXBC

NSE: AXISBANK

Industry Banking, Financial services

Founded 1994

Headquarters Mumbai, India

Key people Adarsh Kishore, Chairman

Shikha Sharma MD & CEO

Products Credit cards, consumer banking, corporate banking, finance and

insurance, investment banking, mortgage loans, private banking, private

equity, wealth management

Revenue 198.26 billion (US$4.02 billion)(2011) [1]

Net income 33.88 billion (US$687.09 million)(2011) [1]

AUM US$ 40.121 billion (2010)

Employees 21,640 (2010)[2]

Website www.axisbank.com

COMPANY PROFILE: AXIS BANK

Axis Bank India, the first bank to begin operations as new private banks in 1994 after the Government of India

allowed new private banks to be established. Axis Bank was jointly promoted by the Administrator of the

specified undertaking of the

Unit Trust of India (UTI-I)

Life Insurance Corporation of India (LIC)

General Insurance Corporation Ltd.

Also with associates viz. National Insurance Company Ltd., The New India Assurance Company, The Oriental

Insurance Corporation and United Insurance Company Ltd. Axis Bank in India today is capitalized with Rs.

43,283.77 Crores. It has more than 1281 branch offices and Extension Counters in the country with over 6270 

Axis Bank ATM proving to be one of the largest ATM networks in the country. This is the first bank in  India to  

offer the AT-PAR Cheque facility, without any charges, to all its Savings Bank customers in all the places across

the country where it has presence. With the AT PAR cheque facility, customers can make cheque payments to

any beneficiary at any of its existence place. The ceiling per instrument is Rs. 50,000/-.The latest offerings of the

bank along with Dollar variant is the Euro and Pound Sterling variants of the International Travel Currency Card.

The Travel Currency Card is a signature based pre-paid travel card which enables traveler’s global access to

their money in local currency of the visiting country in a safe and convenient way. The Bank has strengths in

both retail and corporate banking and is committed to adopting the best industry practices internationally in

order to achieve excellence.

It is has a diversified presence across business and product lines with corporateAdvances

constituting ~57% of its total loan book, retail ~20%, SME ~14% and agriculture ~9%, as on December 31, 2010.

The bank was formerly known as UTI Bank; it changed its name to Axis Bank in July 2007.

The bank has overseas offices at Singapore, Dubai and Hong Kong and a representative office in

Shanghai.

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EVOLUTION

UTI was established in 1964 by an Act of Parliament; neither did the Government of India own it nor

contributes any capital. The RBI was asked to contribute one-half of its initial capital of Rs 5 crore, and given the

mandate of running the UTI in the interest of the unit-holders. The State Bank of India and the Life Insurance

Corporation contributed 15 per cent of the capital each, and the rest was contributed by scheduled commercial

banks which were not nationalized then. This kind of structure for a unit trust is not found anywhere else in the

world. Again, unlike other unit trusts and mutual funds, the UTI was not created to earn profits. In the course of

nearly four decades of its existence, it (the UTI) has succeeded phenomenally in achieving its objective and has

the largest share anywhere in the world of the domestic mutual fund industry.'' The emergence of a "foreign

expert" during the setting up of the UTI makes an interesting story. The announcement by the then Finance

Minister that the Government of India was contemplating the establishment of a unit trust caught the eye of

Mr. George Woods, the then President of the World Bank. Mr. Woods took a great deal of interest in the Indian

financial system, as he was one of the principal architects of the ICICI, in which his bank, First Boston

Corporation Bank, had a sizeable shareholding. Mr. Woods offered, through Mr. B.K. Nehru, who was India's

Executive Director on the World Bank, the services of an expert. The Centre jumped at the offer, and asked the

RBI to hold up the finalization of the unit trust proposals till the expert visited India. The only point Mr. Sullivan

made was that the provision to limit the ownership of units to individuals might result in unnecessarily

restricting the market for units. While making this point, he had in mind the practice in the US, where small

pension funds are an important class of customers for the unit trusts. The Centre accepted the foreign expert's

suggestion, and the necessary amendments were made in the draft Bill. Thus, began corporate investment in

the UTI, which received a boost from the tax concession given by the government in the 1990-91 Budget.

According to this concession, the dividends received by a company from investments in other companies,

including the UTI, were completely exempt from corporate income tax, and provided the dividends declared by

the investing company were higher than the dividends received. The result was a phenomenal increase in

corporate investment which accounted for 57 per cent of the total capital under US-64 scheme. Because of

high liquidity the corporate sector used the UTI to park its liquid funds. This added to the volatility of the UTI

funds.

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The corporate lobby which perhaps subtly opposed the establishment of the UTI in the public sector made use

of it for its own benefits later. The Government-RBI power game started with the finalization of the UTI charter

itself. The RBI draft of the UTI charter stipulated that the Chairman will be nominated by it, and one more

nominee would be on the Board of Trustees. While finalizing the draft Bill, the Centre changed this stipulation.

The Chairman was to be nominated by the Government, albeit in consultation with RBI. Although the

appointment was to be made in consultation with the Reserve Bank, the Government could appoint a person of

its choice as Chairman even if the Bank did not approve of him.

Board of Directors

The members of the Board are

Dr. Adarsh Kishore Chairman

Smt. Shikha Sharma Managing Director & CEO

Shri S. K. Chakrabarti Deputy Managing Director

Dr. R.H. Patil Director

Smt. Rama Bijapurkar Director

Shri R.B.L. Vaish Director

Shri M.V. Subbiah Director

Shri K. N. Prithviraj Director

Shri V. R. Kaundinya Director

Shri S. B. Mathur Director

Shri Prasad R. Menon Director

Shri R. N. Bhattacharyya Director

Shri Samir K Barua Director

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SHAREHOLDING (as on March31,2011)

Shareholding pattern (Per cent)

2010

June 2010 September 2010 December 2010 March 2011

Promoters 37.7 37.5 37.4 37.2

Fll 36.3 37.2 36.6 37.7

Dll 6.5 5.5 5.3 5.1

Others 19.5 19.7 20.8 20.0

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Above charts show, Axis Bank’s net advances are skewed towards the corporate segment, of which the financial

industry, infra, power, and metal together make up around 42%. Only 20% of the net advances are in retail

banking, with a major exposure to the housing segment followed auto loans. Each of them (corporate and retail

banking) contributes 23% to the net revenue of the Bank.

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MISSION AND VALUES

OUR VALUES

Customer Service and Product Innovation tuned to diverse needs of individual and corporate

clientele.

Continuous technology up gradation while maintaining human values.

Progressive globalization and achieving international standards.

Efficiency and effectiveness built on ethical practices.

CORE VALUES

Customer Satisfaction through

Providing quality service effectively and efficiently

"Smile, it enhances your face value" is a service quality stressed on

Periodic Customer Service Audits

Maximization of Stakeholder value

Success through Teamwork, Integrity and People

MARKETING OBJECTIVES

Axis Bank wants to achieve following marketing objectives by the end of the year 2011.

To get the market capitalization 500 Crore

To get the 200 Crore retail investment

To get 125 Crore Corporate investments

To get the 175 Crore Capital investments

MAJOR PLAYER IN THE BANKING INDUSTRY

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HDFC

HISTORY

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. 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 SUMMARY

HDFC Bank Limited offers a range of commercial and transactional banking services, and treasury products to

wholesale and retail customers. It operates in three segments:

Retail Banking,

Wholesale Banking,

Treasury Services.

WHOLE SALE BANKING SERVICES

The Bank's target market ranges from large, blue-chip manufacturing companies in the Indian corporate to

small & mid-sized corporate and agri-based businesses. For these customers, the Bank provides a wide range of

commercial and transactional banking services, including

Working capital finance,

Trade services,

Transactional services,

Cash management,

RETAIL BANKING SERVICES

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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. The products

are backed by world-class service and delivered to the customers through the growing branch network, as well

as through alternative delivery channels like

ATMs,

Phone Banking,

Net Banking,

Mobile Banking.

TREASURY

Within this business, the bank has three main product areas –

Foreign Exchange and Derivatives,

Local Currency Money Market & Debt Securities,

Equities.

ICICI

HISTORY

ICICI Bank was originally promoted in 1994 by ICICI Limited, an Indian financial institution, and was its wholly-

owned subsidiary. ICICI's shareholding in ICICI Bank was reduced to 46%through a public offering of shares in

India in fiscal 1998, an equity offering in the form of ADRs listed on the NYSE in fiscal 2000, ICICI Bank's

acquisition of Bank of Madura Limited in an all-stock amalgamation in fiscal 2001, and secondary market sales

by ICICI to institutional investors in fiscal 2001 and fiscal 2002. ICICI was formed in 1955 at the initiative of

the World Bank, the Government of India and representatives of Indian industry. The principal objective was to

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create a development financial institution for providing medium-term and long-term project financing to Indian

businesses. In the

1990s, ICICI transformed its business from a development financial institution offering only project finance to a

diversified financial services group offering a wide variety of products and services, both directly and through a

number of subsidiaries and affiliates like ICICI Bank. In 1999, ICICI become the first Indian company and the first

bank or financial institution from non-Japan Asia to be listed on the NYSE. After consideration of various

corporate structuring alternatives in the context of the emerging competitive scenario in the Indian banking

industry, and the move towards universal banking, the managements of ICICI and ICICI Bank formed the view

that the merger of ICICI with ICICI Bank would be the optimal strategic alternative for both entities, and would

create the optimal legal structure for the ICICI group's universal banking strategy. The merger would enhance

value for ICICI shareholders through the merged entity's access to low-cost deposits, greater opportunities for

earning fee-based income and the ability to participate in the payments system and provide transaction-

banking services. The merger would enhance value for ICICI Bank shareholders through a large capital base and

scale of operations, seamless access to ICICI's strong corporate relationships built up over five decades, entry

into new business segments, higher market share in various business segments, particularly fee-based services,

and access to the vast talent pool of ICICI and its subsidiaries. In October 2001, the Boards of Directors of ICICI

and ICICI Bank approved the merger of ICICI and two of its wholly-owned retail finance subsidiaries, ICICI

Personal Financial Services Limited and ICICI Capital Services Limited, with ICICI Bank. The merger was approved

by shareholders of ICICI and ICICI Bank in January2002, by the High Court of Gujarat at Ahmedabad in March

2002, and by the High Court of Judicature at Mumbai and the Reserve Bank of India in April 2002. Consequent

to the merger, the ICICI group's financing and banking operations, both wholesale and retail, have been

integrated in a single entity.

Performance Review – Quarter and year ended March 31, 2010

35% year-on-year increase in standalone profit after tax to Rs. 1,006 crore for the quarter ended

March 31, 2010 from

Rs. 744 crore for the quarter ended March 31, 2009

Highest ever consolidated profit after tax of Rs. 4,670 crore for the year ended March 31, 2010; 31%

increase from Rs.

3,577 crore for the year ended March 31, 2009

Current and savings account (CASA) ratio increased to 41.7% at March 31, 2010 from 28.7% at March

31, 2009

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Net non-performing asset ratio decreased to 1.87% at March 31, 2010 from 1.96% at March 31, 2009

and 2.19% at December 31, 2009

Strong capital adequacy ratio of 19.4% and Tier-1 capital adequacy of 14.0%

Dividend of Rs. 12 per share proposed

Balance sheet

During the year ended March 31, 2010, the Bank has significantly strengthened its deposit franchise. This

is reflected in the strong growth in savings and current account deposits and increase in the CASA

ratio. The Bank continues to invest in expansion of its branch network to enhance its deposit

franchise and create an integrated distribution network for both asset and liability products.

CASA deposits increased 34% to Rs. 84,216 crore (US$ 18.8 billion) at March 31, 2010 from Rs. 62,668

crore (US$ 14.0 billion) at March 31, 2009 and the CASA ratio increased from 28.7% at March 31,

2009 to 41.7% at March 31, 2010. Total deposits of the Bank were Rs. 202,017 crore (US$ 45.0 billion)

at March 31, 2010, compared to Rs. 218,348 crore (US$ 48.6 billion) at March 31, 2009.

The branch network of the Bank has increased to 1,741 branches at April 24, 2010 giving the Bank a wide

distribution reach in the country.

The loan book of the Bank decreased to Rs. 181,206 crore (US$ 40.4 billion) at March 31, 2010 from Rs.

218,311 crore (US$ 48.6 billion) at March 31, 2009 mainly due to the repayments from the retail loan

portfolio and the loan portfolio of overseas branches.

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SBI

HISTORY

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 modernize 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.

BUSINESS SUMMARY

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 woolens, 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.

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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 favor 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 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.

SERVICES PROVIDED

PERSONAL BANKING:

AGRICULTURAL BANKING

CORPORATE BANKING

NRI BANKING

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INDIAN OVERSEAS BANK

HISTORY

Indian Overseas Bank (IOB) was founded on February 10, 1937 by Shri.M.Ct.M. Chidambaram Chettyar. IOB had

the unique distinction of commencing business on the inaugural day itself in t h r e e b r a n c h e s

s i m u l t a n e o u s l y - a t K a r a i k u d i a n d C h e n n a i i n I n d i a a n d R a n g o o n i n B u r m a (presently

Myanmar) followed by a branch in Penang.

Indian Overseas Bank was the first Bank to venture into consumer credit. It introduced the popular Personal

Loan scheme. In 1964, the Bank made a beginning in computerization in the areas of inter-branch reconciliation

and provident fund accounts. IOB was one of the 14 major banks that were nationalized in 1969. On the eve of

Nationalization in 1969, IOB had 195branches in India with aggregate deposits of Rs 67.70 crores and

Advances of Rs 44.90 crores. In1977, IOB opened its branch in Seoul and the Bank opened a Foreign Currency

Banking Unit in the free trade zone in Colombo in 1979.As of March 2003, IOB had 1427 branches in India and 6

branches overseas. Besides the Bank has a network of over 240 ATMs and 243 Extension Counters. IOB has

specialized branches to cater to the exclusive needs of Commercial & Industrial credit, Industrial finance, Small

Scale industries, hi-tech agriculture and foreign exchange.

SERVICES PROVIDED

Saving Bank Deposits

No Frills SB Accounts

Current Account

Fixed Deposit

Reinvestment Deposit

Recurring Deposit Account

Annuity Deposit Plan

Multiple Investment Scheme

Cumulative Benefit Deposit

Multiple Deposit Account

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7P FRAME WORK IN AXIS BANK

Once the marketing strategy is developed, there is a "Seven P Formula" that should be used to continually

evaluate and reevaluate your business activities. These seven are:

Product,

Price

Promotion

Place

Process

Positioning

People, as products, markets, customers and needs change rapidly, company must continually revisit these

seven Ps to make sure you're on track and achieving the maximum results possible for you in today's

marketplace.

PRODUCT

To begin with, develop the habit of looking at your product as though you were an outside marketing

consultant brought in to help your company decide whether or not it's in the right business at this time. Ask

critical questions such as, "Is the current product or service, or mix of products and services, appropriate and

suitable for the market and the customers of today?"

Develop a habit of assessing your business honestly and asking,

Are these the right products or services for our customers today?

Compared to your competitors, is your product or service superior in some significant

way to anything else available? If so, what is it? If not, could you develop an area

of superiority? Should you be offering this product or service at all in the current market

place?

Product variety, quality and its features.

Is there a market for the service on offer?

Is the market growing or shrinking?

Is the service new or established?

The competition prevailing in the market for the service on offer?

The USP of the product.

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Products and Services on offered by AXIS Bank

Accounts:

Easy Access Accounts

Prime Savings Account

Salary Account

Women’s Saving Account

Senior Privilege Account

Defense Salary Account

Trust & NGO Savings Account

Azzadi –No frills

RFC (D) Account

Pension savings Account.

Deposits:

Fixed Deposits

Recurring deposits

Encash 24

Tax Saver Fixed  Deposits

Loans:

Home loan

Personal loan

Loan Against Property

Loan Against Security

Car Loans

Study Loans

Two Wheeler  Loan

Consumer Loan

Investments:

Online Trading

Mutual Funds

Fixed Income

Depository Services

E Depository Services

Insurance:

Health Insurance

Family Health

Health Guard

Hospital Cash

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PRICES

The second P in the formula is price. Develop the habit of continually examining and reexamining the

prices of the products and services you sell to make sure they're still appropriate to the realities of the

current market. Sometimes you need to lower your prices. At other times, it may be appropriate to raise

your prices. Many companies have found that the profitability of certain products or services doesn't

justify the amount of effort and resources that go into producing them. By raising their prices, they may

lose a percentage of their customers, but the remaining percentage generates a profit on every sale.

Could this be appropriate for you? Sometimes you need to change your terms and conditions of sale.

Sometimes, by spreading your price over a series of months or years, you can sell far more than you

are today, and the interest you can charge will more than make up for the delay in cash receipts.

Sometimes you can combine products and services together with special offers and special promotions.

Sometimes you can include free additional items that cost you very little to produce but make your

prices appear far more attractive to your customers. In business, as in nature, whenever you experience

resistance or frustration in any part of your sales or marketing activities, be open to revisiting that area.

Be open to the possibility that your current pricing structure is not ideal for the current market. Be open

to the need to revise your prices, if necessary, to remain competitive, to survive and thrive in a fast-

changing market place.

AXIS bank has developed innovative strategies against its competitors with respect to pricing by use of

technology. The use of technology is the strategic differentiator for AXIS bank that helps in cost

minimization and creating efficiency for the customer. The creation of centralized processing system

linking all its branches has been a major strategic move in this regard.

The pricing mechanism and features of various HDFC products are as follows: Home Loans:

Floating rates:

For  loan of up to five years for amounts between Rs one lakh and Rs 50 lakh is at9.25 per

cent (9 per cent).

The rate for loans of 5 years and above up to 10 years is now at 9.75 per cent (9.50 per cent).

The interest rate for above ten years now stands at 10.25 per cent (10 per cent)

30

Description of Charges Regular Savings Account

Minimum Average Quarterly

Balance

Rs 5000 (urban),

Rs 2500(Semi Urban),

Rs 1000 (Rural branch),

Rs 500 (student account)

Charges on non maintenance thereof Rs750 per quarter(urban & semi urban)

Rs 500 (Rural branch),

Rs 250 (student account)

Cheque Book, Pass Book Issuance Free

Account Statements Free

Phone banking and Net banking Free

PROMOTION

The third habit in marketing and sales is to think in terms of promotion all the time. Promotion includes

all the ways you tell your customers about your products or services and how you then market and sell

to them. Small changes in the way you promote and sell your products can lead to dramatic changes in

your results. Even small changes in your advertising can lead immediately to higher sales.

AXIS bank has devised an aggressive promotional strategy through its diversified distribution mix which

includes tied agencies and alternate channels like banks, brokers, telemarketing, direct sales force,

internet advertizing .

Some of the promotional activities undertaken are:

Cross Selling exercises

Organizing school level painting competitions in order to create awareness about the

environmental concerns and the wild life to promote kids advantage account.

31

Wheels of fortune - This promo are targeted at all those customers who avail a personal

loan, car or a two wheeler loan. There will be lucky draw at the end of the promo and the

winners would get exotic prizes.

Personalized promos by sending mailers about various products on offer to all those who

come in contact during the mass promotion strategies.

The promotional strategies are carried out with an objective of positioning AXIS bank as a one stop

financial super market. The focus of the promotions are not just confined to acquisition of new products

but also extends to creating product awareness, enhancing usage, and also provide value add to the

customers for their faith and loyalty. These promotions are scientifically designed based on data analysis

and data mining in order to have maximum impact on the target audience.

PLACE

The fourth P in the marketing mix is the place where your product or service is actually sold. You can sell

your product in many different places. Some companies use direct selling, sending their salespeople out

to personally meet and talk with the prospect. Some sell by telemarketing. Some sell through catalogs or

mail order. Many companies use a combination of one or more of these methods. It refers to those

activities of the company that makes the product available to target consumers. It includes geographic

spread, distribution channels, dealer ships that facilitate network establishment. Axis bank is widely

spread in India and its core banking operations has huge network–

1281 branches and extension counters foreign offices – in Singapore, Hong Kong,

Shanghai and Dubai

6270 ATMs reaches out to 34 states and union territories across the country

AXIS bank owns a wholly owned distribution channel with dedicated workforce, thereby lowering

the operating costs. It uses its network base to good effect to sell customized products.

32

PROCESS

The fifth element in the marketing mix is the process. Develop the habit of standing back and looking at

every visual element in the process or service through the eyes of a critical prospect. Remember, people

from their first impression about you within the first 30 seconds of seeing you or some element of your

company. Small improvements in the process or external appearance of your product or service can

often lead to completely different reactions from your customers. With regard to the process of your

company, your product or service, you should think in terms of everything that the customer sees from

the first moment of contact with your company all the way through the purchasing process.

Process refers to the way your product or service appears from the outside. Packaging refers to your

people and how they dress and groom. It refers to your offices, your waiting rooms, your brochures,

your correspondence and every single visual element about your company. Everything counts.

Everything helps or hurts. Everything affects your customer's confidence about dealing with you.

POSITIONING

The next P is positioning, the habit of thinking continually about how you are positioned in the hearts

and minds of your customers.

How do people think and talk about you when you're not present?

How do people think and talk about your company?

What positioning do you have in your market, in terms of the specific words people use

when they describe you and your offerings to others?

AXIS Bank has positioned its branches in all the strategic position so that it is easily accessible to

maximum customer. It has also come up with some phone banking centre and centralized collection and

payment hub.

33

CENTRALISED PHONE BANKING CENTRE

The Bank’s Centralized Phone Banking Centre provides customers across the country Access to the Bank

over the phone, handling multiple queries in about 7000 calls per day.

CENTRALISED COLLECTION AND PAYMENT HUB

The Bank’s Centralized Collection and Payment Hub (CCPH) manages the entire collection and payment

activity under the Bank’s Cash Management Services (CMS) across the country, handling on an average

about Rs.5000 crores per month on the collection front and aboutRs.1500 crores per month on

the payment front.

PEOPLE

The final P of the marketing mix is people. Develop the habit of thinking in terms of the people inside

and outside of your business who are responsible for every element of your sales and marketing

strategy and activities. It's amazing how many entrepreneurs and businesspeople will work extremely

hard to think through every element of the marketing strategy and the marketing mix, and then pay

little attention to the fact that every single decision and policy has to be carried out by a specific person,

in a specific way. Your ability to select, recruit, hire and retain the proper people, with the skills and

abilities to do the job you need to have done, is more important than everything else put together. An

essential ingredient to any service provision is the use of appropriate staff and people. Recruiting the

right staff and training them appropriately in the delivery of service is essential if the organization has to

obtain competitive advantage. AXIS bank values its human resources very highly and is on a constant

endeavor to continuously develop its human resources by laying strong emphasis on training

development. It possesses a highly motivated team of professionals and has the lowest

employee turnover rate in the industry.

PROMOTIONAL STRATERGIES

In early 1950's most of the markets were choking with surplus products on offer, defying the theory "the

best quality will always sell". The emergence of Branding as a value in offering has kept many

organizations leaders, and in survival. Branding is termed as a part of offering, created in the mind of

customer and consumer of superior values that he or she perceives and ready to pay for. The brand

34

can be associated with superior product, superior services, and superior sales after services, or easy

access. In today's era with increasing competition, is that not important enough to revisit Brand as a

marketing offering (Product or Service).

BRAND NAME

UTI has officially announced the change of its name to ‘Axis Bank’. The awareness campaign titled ‘UTI

Bank is now Axis Bank; everything is the same except the name’, has been created by O&M and is the

brainchild of Sumanto Chattopadhyay.

The decision to re-brand the bank emanated from the need to move out of a scenario of brand

confusion that is created by several shareholder-unrelated entities using the UTI brand. On the creative

point of view, the change of name from UTI Bank to Axis Bank is precisely just a name change.

Everything else about the brand remains the same. Axis is a strong name with an international aura to it.

It is very much in keeping with UTI’s success story in the private banking arena.

LOGO DESIGN

The logo design of Axis Bank is based on the letter ‘A’. It is a contemporary, universal and solid design

that retains the burgundy color of the original UTI logo as a link to its heritage

MARKETING INITIATIVES

On the marketing initiatives, a multimedia campaign was unfolded on August 1 that will go on for the

next few weeks. It seeks to reassure customers that the change of name will in no way affect the

services offered by the bank. On the thought process the creative platform adopted for the name

change is based primarily on twins -- siblings whose names are different, but are identical in every other

way. This campaign will run on

Television

Outdoor 

Print

Radio and other 360-degree media.

Some interesting innovations are planned in the print medium. On radio, the name change is being

expressed in a slightly different manner, in keeping with the nature of the medium.

35

Growth Prospects of Axis

Over the last five years, the CAGR for loan growth for the banking industry has been 25-26 per cent; for

Axis Bank it has been above 40 per cent.

Nonetheless, the bank is still expected to grow its loan portfolio at 1.5-1.7x the industry average.

In FY09 its advances grew at the rate of 37.5 per cent.

In FY10 they are expected to grow at the rate of 27-28 per cent and in FY11 at 25 per cent.

For the banking industry as a whole, the loan book is expected to grow at 18 per cent in FY10 and 16 per

cent in FY11.

Thus, Axis Bank’s fast pace of growth is expected to sustain over the next couple of years.

Marketing Objectives

Axis Bank wants to achieve following marketing objectives by the end of the year 2011.

To get the market capitalization 500 Crore

To get the 200 Crore retail investment

To get 125 Crore Corporate investments

To get the 175 Crore Capital investments

36

Net Revenue Segmentation (FY 10)

In FY10, treasury operations contributed ~54% of total revnue, retail banking ~23

% and corporate/ wholesale banking ~23%. In December 2008, the bank launched

its new investment advisory service exclusively for high networth clients. 

In January 2009, the bank set up Axis Asset Management Company to carry on the 

activities of managing a mutual fund business. Alsoit incorporated Axis Mutual 

Fund Trustee Ltd to act as the trustee for the mutual fund business. 

In February 24, 2010, the bank launched ‘Call & Pay’,a mobile payments solution 

using Axis  debit cards. 

Axis is the country’s first bank to provide a secure debit cardbased payment servic

e over interactive voice response (IVR). 

37

ACHIEVEMENTS / AWARDS

38

March 2011 Bank launches ‘ e-Wallet Card’

September 2009 Bank launches private banking business in the domestic market to cater to highly affluent individuals and families

March 2008 Axis Bank launches Platinum credit card, India’s first EMV chip based card

September 2007 Axis Bank ties up with Privee Edmond de Rothschild Europe for Wealth Management

July 2007 UTI Bank re-brands itself as Axis Bank

July 2007 UTI Bank ties up with Tata Motors Ltd. for Car Loans

June 2007 UTI Bank’s expansion into Asia supported by FRS

April 2007 UTI Bank opens a Financial Services Category I Branch in the DIFC in Dubai

April 2007 UTI Bank ties up with Hyundai Motor India Ltd. for Car loans

March 2007 UTI Bank ties up with IIFCL to provide finance for infrastructure projects in the country

March 2007 UTI Bank launches Car Loans in association with Maruti Udyog Ltd.

August 2006 UTI Bank becomes the first Indian bank to successfully issue Foreign Currency Hybrid Capital in the International Market

July 2006 UTI Bank opens Representative Office in Shanghai

May 2006 UTI Bank and LIC join hands to launch an Annuity Card for group pensioners of LIC

May 2006 UTI Bank ties up with Geojit Financial Services to offer Online Trading services to its customers

April 2006 UTI Bank opens its first international branch in Singapore

December 2005 UTI Bank wins International Financing Review(IFR) Asia ‘India Bond House’ award for the year 2005

May 2005 UTI Bank and Bajaj Allianz join hands to distribute general insurance products

March 2005 UTI Bank gets listed on London Stock Exchange, raises US$ 239.30 million

February 2005 UTI Bank appointed by Govt. of Karnataka as the sole banker for the Bangalore One (B1) project

February 2004 UTI Bank (by pursuing a proactive strategy of forging bilateral agreements and being a progressive player in the multi-lateral consortiums for shared ATM network) offers its customers access to over 7000 ATMs across the country – the largest to be offered by any

December 2003 Bank inaugurated its ATM at Thegu near the Nathula Pass in Sikkim. This ATM is at the highest altitude in India

August 2003 The Bank’s Debit Card crosses 1 million markAugust 2003 Total advances crosses Rs. 7000 croreMay 2003 Banks declares a net profit of Rs. 192.18 crores

for FY 03, a growth of 43% over the previous year

February 2003 Bank in a pioneering move, launches the AT PAR Cheque facility, free of cost, for all its Saving Bank customers

February 2003 Bank wins mandate to set up 14 ATMs at the Western Railway Stations along the Mumbai division

August 2002 Bank signs MoU with BSNL regarding bill collection services across the country through both online and offline channels

March 2002 Deposits Cross Rs. 12000 croreJanuary 2002 The Bank’s 100th branch opens at Tuticorin,

Tamil Nadu

January 2002The Bank opens an ATM at Gol Dak-Khana, i.e. the New Delhi GPO, making it the first instance of a commercial bank setting up an ATM at any post-office in the country.

39

July 2001 Bank ties up with Govt. of Andhra Pradesh for collection of commercial tax

December 2000 Bank opens its 200th ATM. It becomes the 2nd largest ATM network in the country , a position held even today

October 2000 Bank becomes fully networked

April 2000 UTI Bank calls off its proposed merger with Global Trust Bank and surges ahead on its own

March 1995 Completes first profitable year in operation

April 1994 First branch of UTI Bank inaugurated at Ahmedabad by Dr. Manmohan Singh, Hon’ble then Finance Minister of India

December 1993 Registered office at Ahmedabad; Head office in Mumbai

40

ANALYSIS AND INTERPRETATION

OF DATA

41

Some ratios that are relevant for evaluating banks include

Credit to deposit ratio

Capital adequacy ratio

Non-performing asset ratio

Provision coverage ratio

Return on assets ratio

We thought it would be an interesting idea to look and compare these numbers for the leading private

(HDFC Bank, ICICI Bank and Axis Bank) and public sector (SBI, Punjab National Bank and Bank of Baroda)

banks. In addition, we will also see how the same ratios have changed over the past few years.

Credit to deposit ratio: This ratio indicates how much of the advances lent by banks is done

through deposits. It is the proportion of loan-assets created by banks from the deposits received. The

higher the ratio, the higher the loan-assets created from deposits. Deposits would be in the form of

current and saving account as well as term deposits. The outcome of this ratio reflects the ability of the

bank to make optimal use of the available resources.

If we see the following chart, ICICI Bank distinctly stands out from its peers. A strong reason for the

same would be its aggressive nature. Further, PSU banks and Axis Bank have seen their ratios increase

gradually over the years. The credit to deposit ratio of HDFC Bank on the other hand, has been fairly

stable.

42

Capital adequacy ratio: A bank's capital ratio is the ratio of qualifying capital to risk adjusted

(or weighted) assets. The RBI has set the minimum capital adequacy ratio at 9% for all banks. A ratio

below the minimum indicates that the bank is not adequately capitalized to expand its operations. The

ratio ensures that the bank do not expand their business without having adequate capital.

It must be noted that it would be difficult for an investor to calculate this ratio as banks do not disclose

the details required for calculating the denominator (risk weighted average) of this ratio in detail. As

such, banks provide their CAR from time to time.

Considering that the Indian banking sector has been growing at a strong pace, all the leading banks, both

private and public have been expanding operations at a strong pace. As such, their CAR ratios are well

above the prescribed limit of 9%. Private Banks such as HDFC Bank, Axis Bank and ICICI Bank have in fact

increased their CAR over the past four to five years.

As for the public banks, SBI and Punjab National Bank (PNB) have seen their CAR steadily expand over

the past few years as well. However, this ratio for Bank of Baroda has been fairly stable.

Non-performing asset ratio: The net NPA to loans (advances) ratio is used as a measure of

the overall quality of the bank’s loan book. An NPA are those assets for which interest is overdue for

more than 90 days (or 3 months). Net NPAs are calculated by reducing cumulative balance of provisions

outstanding at a period end from gross NPAs. Higher ratio reflects rising bad quality of loans.

43

The NPA ratio is one of the most important ratios in the banking sector. It helps identify the quality of

assets that a bank possesses. If we look at the chart below, we can clearly see a differentiation between

India’s largest banks. A bank such as ICICI Bank would garner one of the highest NPA ratios amongst

private banks on the back of its aggressive nature. As the banks lends out strongly to customers, the

chances of them defaulting also rises. Plus, considering that private banks charge higher interest costs

would only make things more difficult for its customers. At the same time, the NPA ratio of a relatively

much conservative bank such as HDFC Bank would remain low. It is clearly evident from the above chart.

The marginal spurt in this ratio during FY09 is due to its acquisition of Centurion Bank of Punjab.

Further, Axis Bank has done well in the recent past to bring down its NPA ratio. So is the case for Bank of

Baroda (BoB). PNB has done well to keep its NPA levels low as well. As for India’s largest bank SBI, its

NPAs are relatively much higher than that of its PSU peers. This can also be attributed to its aggressive

period over the past few years.

Provision coverage ratio: The key relationship in analyzing asset quality of the bank is

between the cumulative provision balances of the bank as on a particular date to gross NPAs. It is a

measure that indicates the extent to which the bank has provided against the troubled part of its loan

portfolio. A high ratio suggests that additional provisions to be made by the bank in the coming years

would be relatively low (if gross non-performing assets do not rise at a faster clip).

44

On observing the above chart, we can notice that private banks such as HDFC Bank & ICICI Bank as also

PNB and Bank of Baroda have been quite conservative when it comes to covering their NPAs. Axis Bank

on the other hand has been extra conservative in the past few years. This explains the reason for the

sharp improvement in the NPA ratio as well. The same can however, not be said about SBI, which is the

only large bank which has seen its provision coverage ratio deteriorate over the past four years.

Return on assets ratio: Returns on asset (ROA) ratio is the net income (profits) generated by

the bank on its total assets (including fixed assets). The higher the proportion of average earnings assets,

the better would be the resulting returns on total assets.

45

While HDFC Bank has done well to maintain its ROAs over the past few years, that of ICIC Bank has been

gradually on a decline. The other banks, has however done well to improve their return ratio over the

past few years.

Conclusion

Looking at the above mentioned parameters, it would be quite easy to differentiate the aggressive banks

from the conservative ones. During good times and bad, banks such as HDFC Bank have managed to

keep things under control. Relatively aggressive banks such as ICICI Bank and SBI have been facing some

problems. Further, PNB, Axis Bank and Bank of Baroda have done well to improve their asset quality,

return ratios over the past few years as well.

The Most Social Media Friendly Private Bank in India

46

Although HDFC Bank is ahead of the competition, India’s number one private sector bank; ICICI is giving

it a tough fight in the social media space too. Axis Bank and Yes Bank are at third and fourth spot,

respectively. The detailed numbers are in the table below

Competitive Position

47

Fixed Deposit Rates of Various Banks

48

Base Rates

49

50

Balance Sheet ------------------- in Rs. Cr. -------------------

Axis Bank HDFC Bank ICICI Bank Kotak MahindraIndusInd

Bank

Mar '11 Mar '11 Mar '11 Mar '11 Mar '11

Capital and Liabilities:

Total Share Capital 410.55 465.23 1,151.82 368.44 465.97

Equity Share Capital 410.55 465.23 1,151.82 368.44 465.97

Share Application Money 0.00 0.00 0.29 0.00 7.98

Preference Share Capital 0.00 0.00 0.00 0.00 0.00

Reserves 18,588.28 24,914.04 53,938.82 6,464.95 3,350.92

Revaluation Reserves 0.00 0.00 0.00 0.00 225.35

Net Worth 18,998.83 25,379.27 55,090.93 6,833.39 4,050.22

Deposits 189,237.80 208,586.41 225,602.11 29,260.97 34,365.37

Borrowings 26,267.88 14,394.06 109,554.28 11,723.95 5,525.42

Total Debt 215,505.68 222,980.47 335,156.39 40,984.92 39,890.79

Other Liabilities & Provisions 8,208.86 28,992.86 15,986.35 3,032.36 1,694.83

Total Liabilities 242,713.37 277,352.60 406,233.67 50,850.67 45,635.84

51

Axis BankHDFC

Bank

ICICI

Bank

Kotak

Mahindra

IndusInd

Bank

Mar '11 Mar '11 Mar '11 Mar '11 Mar '11

Assets

Cash & Balances with RBI 13,886.16 25,100.82 20,906.97 2,107.72 2,456.04

Balance with Banks, Money at Call 7,522.49 4,568.02 13,183.11 363.26 1,568.56

Advances 142,407.83 159,982.67 216,365.90 29,329.31 26,165.65

Investments 71,991.62 70,929.37 134,685.96 17,121.44 13,550.81

Gross Block 3,426.49 5,244.21 9,107.47 831.80 971.26

Accumulated Depreciation 1,176.03 3,073.56 4,363.21 406.20 399.20

Net Block 2,250.46 2,170.65 4,744.26 425.60 572.06

Capital Work In Progress 22.69 0.00 0.00 0.00 24.41

Other Assets 4,632.12 14,601.08 16,347.47 1,503.33 1,298.32

Total Assets 242,713.37 277,352.61 406,233.67 50,850.66 45,635.85

Contingent Liabilities 429,069.63 559,681.87 883,774.77 12,291.30 79,647.25

Bills for collection 57,400.80 28,869.10 47,864.06 4,470.06 7,860.30

52

Book Value (Rs) 462.77 545.53 478.31 92.74 81.95

Comparison of various Banks

Name Last Price Market Cap.

(Rs. cr.)

Net Interest

Income

Net Profit Total Assets

HDFC Bank 471.40 110,167.83 19,928.21 3,926.39 277,352.61

ICICI Bank 821.00 94,607.93 25,974.05 5,151.38 406,233.67

Axis Bank 1,049.50 43,283.77 15,154.81 3,388.49 242,713.37

Kotak Mahindra 502.35 37,105.96 4,303.56 818.18 50,850.66

IndusInd Bank 261.55 12,202.94 3,589.36 577.32 45,635.85

YES BANK 293.65 10,308.46 4,041.74 727.13 59,007.00

Federal Bank 390.70 6,682.83 4,052.03 587.08 51,456.37

ING Vysya Bank 320.10 4,795.15 2,694.06 318.65 39,013.98

Karur Vysya 378.45 4,056.24 2,217.69 415.59 28,224.84

JK Bank 817.25 3,961.85 3,713.13 615.20 50,508.15

South India Bk 23.00 2,599.26 2,446.01 292.56 32,820.21

StanChart IDR 81.55 1,957.20 - - 1,945,725.80

City Union Bank 44.00 1,789.54 1,218.41 215.05 14,591.52

Karnataka Bank 79.80 1,501.98 2,370.84 204.61 31,693.01

Lakshmi Vilas 97.95 955.59 1,064.84 101.14 13,301.19

53

DCB 40.10 802.99 536.26 21.43 7,372.33

Dhanlaxmi Bank 63.95 544.45 906.42 26.06 14,268.16

Goldman BEES 2,774.35 284.66 - - -

Financial Performance of Axis Bank

The net interest income (NII) of Axis Bank, over the last 10 years, has rocketed by 54.8% CAGR

from Rs. 98 Cr. in FY01 to Rs. Rs. 5004 Cr. in FY10; and its total income has grown by 34.9%

CAGR. During the same period its book value and EPS have jumped by 37% and 28% resp.

The bank has maintained its net profit to total fund ratios between 1 and 1.25 during FY05 to

FY08, whereas in the last two financial years, this ratio has been above 1.25. This increasing

trend of net profit to total fund ratio shows that it has continuously increased its efficiency of

utilizing funds. The non-performing assets (NPA) to net advances ratio has also shown a

decreasing trend from 3.46% in FY02 to 0.4% in FY10 which shows the bank has continuously

increased its assets quality. It has also maintained a very good capital adequacy ratio (CAR) of

15.8% at the end of FY10, well above the RBI guide line of 9%, which indicates that it can easily

cover all the associated risks.

Hence, the 10 YEAR X-RAY of Axis Bank is Green (Very Good).

54

Analysis of Axis Bank Ltd

In the short-term

Axis Bank’s target for FY11: -

Business growth (Advances + Deposits) of 25%

Opening 200-250 new branches and 1000 new ATMs

Axis Bank has reported a strong performance in December, 2010 quarter:

• It has shown a 36% jump in the Net Profit at Rs. 891.36 Cr. and a 28% rise in the Net Interest Income

to Rs. 1733.12 Cr. on the back of robust 46% credit growth.

• The other income of the Bank inched up by 16% to Rs. 1147.71 Cr. mainly on the back of 21% jump in

the fee income at Rs. 968 Cr.

• CAR has decreased to 12.46% in Q3 FY11, compared to 16.8% in the same quarter last year.

• Its Net Interest Margin (NIM) stood at 3.81% during Q3 FY11, compared to 4% during Q2FY10 (much

higher than the industry standard of 2-2.5%).

• The net NPAs of Axis Bank stood at 0.29% in Q3 FY11, which is amongst the lowest in the banking

industry; the provision coverage ratio stood at 82.69%, much higher than the regulatory requirement of

70%.

55

Advances of the Bank have reported a strong growth of 46% on y-o-y basis and 12% on q-o-q basis to

Rs. 123547 Cr. in the December 2010 quarter. The growth in the advances was driven by 69% jump in

the corporate segments at Rs. 70518 Cr. and 33% rise in the retail segment at Rs. 25204 Cr. Agri &

microfinance loan book grew by 24% to Rs. 10772 Cr. and SME by 9% to Rs. 17053 Cr. Exposure to the

Microfinance institutions is around 1% of advance book and that of telecom (mainly 2G license

advances) constitutes 6% of total advance book.

For the nine months ended December 2010, Axis Bank has reported 37% rise in the NII at Rs 4861.99 Cr.,

19% in fee-based income at Rs. 2559 Cr., and 6% in the other income at Rs 3181.73 Cr. compared to that

of corresponding quarter last year respectively. In FY11, so far, it has opened 142 branches and 1010

ATMs. Thus, the bank is on line to achieve its target for FY11.

Increasing cost of funds is a cause for concern:

The RBI has increased the Repo rate, Reverse repo rate, and CRR in the last one and a half year in several

phases to control inflation. This has lead to lower loan able fund availability in the bank and continuous

56

increase in cost of funds, which can be seen in the chart. As, the inflation rate is still on the higher side,

tight monetary policy is expected to continue in the short-term. So, we expect that the cost of funds will

also increase further in the short-term, which will keep margins under pressure.

RBI, recently, has increased provisioning percentage on housing, real estate, and many other types of

loans. This will affect the profitability of the bank because, in the retail segment, it finances almost 70%

advances in housing.

Considering above factors, we expect that the short-term future prospects of Axis Bank will be Orange

(‘somewhat good’)

Strength of Axis Bank:

• It is India’s third largest private bank, with 1281 branches and 5303 ATMs, and a customer base of

over 150 Lakh as on 31st Dec, 2010

• It has the largest EDC network, the third largest ATM network, and the fourth largest base of debit

cards in India.

• It already has branches in Singapore, Hong Kong and Dubai International Financial Centre. About 14%

of the bank’s asset book is from international operations. It is further going to set up a subsidiary in

London and upgrade its representative office in Shanghai to a branch.

• 100% core banking facilities with advanced technology

• On-line trading facilities in alliance with Geojit BNP Paribas

In Jan 2011, Axis Bank, , announced the launch of AxisDirect, an online trading platform– a product of

its wholly-owned subsidiary, Axis Securities and Sales Ltd. AxisDirect will offer trading in cash,

derivatives, IPO segments through NSE and BSE; and provide well-researched information about various

corporate, access to independent third-party research, stock research and analysis tools.

57

Axis Bank has maintained a very good Current Account Savings Account (CASA) ratio, above 40% in the

last three years, which is higher than the industry standard of 35-40%. CASA plays a very significant

role in keeping cost of funds low and margins high. Only four other banks – SBI, PNB, HDFC Bank, and

ICICI Bank – have more that 40% CASA ratio.

Product strategy designed to benefit customers:

To beat the market, Axis Bank is adopting different product strategies. Recently, it has extended the

repayment period of the standard home loan to the maximum tenure of 25 years. In the step down

product (a type of home loan product), the customer has to pay a higher EMI when the combined family

income is higher and a lower EMI when the family income has reduced over a period of time. Apart from

this, the Bank has given option to its customers to close the loan before its maturity with no prepayment

penalty.

Banking Sector – Heading towards a high-performing sector:

The banking sector is poised to grow in line with the growth of the economy. The Indian economy is

expected to have a high growth in the long-term and so is the Indian banking sector, which is currently

in consolidation stage. According to Mckinsey Report on India Banking 2010, ‘The banking index has

grown at a compounded annual rate of over 51% since April 2001 as compared to a 27% growth in the

market index for the same period (2001 to 2010)’. The report says that the Indian banking sector is

heading towards a high-performing sector. Axis Bank, being the third largest private bank in India, is

ready to take full advantage of this growth opportunity.

Financial Inclusion Program:

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Under Financial Inclusion Program, RBI is taking initiative to provide banking services at affordable costs

to the weaker sections of society or the unbanked segment, which does not have any access to the

formal banking system. As of now, it is estimated that 60% of the Indian population does not have

access to formal banking facility and RBI is keen on achieving 100% financial inclusion for sustaining

equitable growth. Axis Bank is taking following initiatives under this Program:

o Targets to cover 12,000 villages in the next 5 years: Axis Bank plans to cover 5,500 villages for financial

inclusion by March 2011 and scale it up to 12,000 villages in five years time. It is looking at opening 18-

lakh no-frills accounts, Rs. 40 Cr. of deposits, and Rs. 10 Cr. of advances. The 18-lakh account would

include 12-lakh accounts that they have already opened for government-sponsored scheme. The bank is

looking at several low-cost delivery models such as smart card, mobile banking and point of transaction

device.

o Tie up with Janalakshmi Social Services to tap urban poor: To tap unbanked population in urban areas,

Axis Bank has tied up with a Bangalore-based microfinance institution, Janalakshmi Social Services.

Janalakshmi will use its client base to provide banking services of Axis Bank and will work as business

correspondent to sell other products of the Bank. This service would be spread from Bangalore to 50

other cities in the near future.

o MoU with Idea to test a Branchless Banking Model: Axis Bank has signed a Memorandum of

Understanding with Idea Cellular to test a ‘Branchless Banking’ model through a mobile enabled

remittance pilot. Idea will act as a ‘Business Correspondent’ of Axis Bank to provide an entire range of

financial products and services offered by the Bank, through the mobile operator’s retail outlets. Idea’s

network will help Axis Bank gain access to widespread distribution reach and a low-cost delivery channel

for offering financial products and services, based on the mobile platform. On the other hand, Idea can

offer value-added services to its customers by offering financial products and services.

There is still a question mark on the viability of Financial Inclusion Program which primarily targets the

low-income group. This leaves little scope of high margins under this program. However, this initiative

is expected to help in economic development, and hence is expected to be fruitful in the long-term.

Diversified into non-banking financial services:

Axis Bank has started non-banking financial services to carry out investment and lending activities with a

focus on infrastructure and other activities. It has five wholly-owned subsidiaries:

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1. Axis Securities and Sales Ltd. – to market credit cards , retail asset products and online trading

facilities

2. Axis Private Equity Ltd – to manage equity investments & provide venture capital to support

businesses

3. Axis Trustee Services Ltd – to engage in trusteeship activities

4. Axis Asset Management Companies Ltd. – to carry on the activities of managing mutual fund

business

5. Axis Mutual Fund Trustee Ltd. – to act as the trustee for the mutual fund business

Acquisition of Enam’s investment banking business expected to fill the gap in their portfolio:

Axis Bank has acquired Enam’s investment banking and institutional broking businesses for R.s 2,064 Cr.

in a stock-swap deal. Pursuant to the scheme and in consideration for the proposed demerger, Enam

shareholders will receive 5.7 shares of Axis Bank for every 1 share held in Enam; translating into an

approximately 3.37% shareholding in Axis Bank. While the acquisition appears to be at a slight premium,

it will help Axis Bank fill a key gap in portfolio, increase fee-based income and bring significant long-term

benefits. Also, as these businesses are profit-making and enjoy one of the highest margins in the

industry, they will contribute to Axis Bank’s profits and will be earnings accretive.

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SWOT ANALYSIS OF AXIS BANK

STRENGTHS:

Brand Name

Support of various promoters.

High level of services.

Knowledge of Indian market.

WEAKNESS:

Not having good image.

Market capitalization is very low.

Not been capable to position itself

correctly.

OPPORTUNITIES:

Growing Indian banking sectors.

People are becoming more service

oriented.

In the global market.

Dissatisfied customers.

THREATS:

Advent of MNC banks.

Foreign banks

Government banks

Future market trends.

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SWOT

Risks & Concerns

a) Low exposure in high-margin retail banking.

b) New Bank License would hamper banks’ profits: RBI is providing banking licenses to selected NBFCs

from 2011. This would increase competition among banks which would consequently hampers their

profits.

c) RBI, in Bancon 2010 held in Mumbai, has indicated that Indian Banks should operate at lower

margin, in line with global standard. They should decrease lending rate and increase savings rate to

help in achieving double digit economic growth. RBI may also increase Capital Adequacy Ratio

benchmark from 2013.

d) As the banks have mainly financial assets, they have to manage several risks such as credit risk,

market risk, liquidity risk, country risk etc. So, banking business, as a whole, is considered as risky

business.

e) Government regulation increases uncertainty in the banking sector: The Government of India

frequently changes monetary policies by changing CRR, repo rate, reverse repo rate etc. to maintain

stability in the economy. It increases uncertainty in the banking sector.

Considering the strong position that Axis Bank has established for itself in the banking industry and its

recent acquisition of Enam, we can expect that the long-term future prospects of Axis Bank will

be Green (Very Good).

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CONCLUSION AND RECOMMENDATION

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So, is it an investment-worthy Bank?

The economy is expected to grow roughly by 5-7% in the next 5 years. The

banking sector is poised to grow in line with the growth of the economy.

Considering the bank’s large size and its strengths, we can expect this economic

growth to have a positive impact on Axis Bank’s growth.

Yes, Axis Bank is an investment worthy bank, but only at the right

price. Currently, it is trading at a price of Rs. 1304.65. But, does this price offer an

attractive discount to its right value (MRP) or is it over-priced? It is always best to

invest at an attractive discount to its MRP, to get maximum returns at minimum

risk. Become a member of MoneyWorks4me.com to know its sensible buy- price

and hence take the right action for this company.

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Conclusion & Recommendation

Axis Bank is one of the few clean (in terms of asset book), rapidly growing,

profitable, & competitive private-sector banks in India; thus it will be a major

beneficiary of the favorable banking environment. The Indian banking sector is in

a sweet spot: consumer and corporate lending is strong, asset quality is improving

and fee-income opportunities are growing. We expect this favorable environment

to continue in the medium term but recognize that a key challenge for banks will

be funding growth. Looking at its profile, I believe Axis Bank stands to gain

disproportionately from existing opportunities in the sector. The bank has strong

technology & products, an expanding distribution franchise, adequate scale, a

strong service culture, and management enterprise -features that should help it

stay ahead of the dominant government banks to win market share.

Private players such as Axis Bank that offer a multitude of delivery channels and

have an integrated technology platform could potentially achieve comparable

distribution reach in the top 200 cities to government banks with substantially

fewer branches. With a presence in the top 150 cities, I think Axis Bank is very

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well positioned to rapidly reap the benefits of the expanded reach by scaling up

its retail foray.

Moreover, earnings CAGR is likely to be stronger than the larger private peers as

it begins to benefit from the distribution expansion.

BIBLIOGRAPHY

The following books and websites have been consulted for the preparation

of this project.

Books:

Philip Kotler’s Marketing Management. Twelfth edition

Journal:

Business & Economics (September/October)

Web sites:

www.google.co.in

www.axisbank.com

www.slidworld.com66

Annex: Glossary

ATM

An automated teller machine (ATM) is a machine in which a customer can use his card along with PIN to

get cash, information and other services.

Bank Guarantee

Bank guarantee is a promise by a bank on behalf of its customer to a third party to pay an amount

specified in the guarantee deed in case the customer fails to perform the obligation as stipulated in the

deed.

Banking Ombudsman

Banking Ombudsman is an independent dispute resolution authority set up by Reserve Bank of to deal

with disputes between the bank and individual / small businesses.

Bills

Bills are financial negotiable instruments such as Bills of Exchange or Promissory Notes. Bill of Exchange

is issued by a seller to his buyer directing him to make payment for the goods supplied / services

rendered. Bill in the form of a promissory note is issued by a buyer to his seller undertaking to make

payment for the goods received / service rendered.

Bill discounting

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In case of discounting of a bill, a bank buys a bill (i.e. Bill of Exchange or Promissory Note) before it is due

and credits the value of the bill after discount charges to the customer’s account. The transaction is

practically an advance against the security of the bill and the discount represents the interest on the

advance from the date of purchase of the bill until it is due for payment. Only usance bills are

discounted.

Card

Card is a general term for any plastic card, which a customer may use to pay for goods and services or to

withdraw cash. In this Code, it includes ATM / Debit / Credit Cards.

Cash Credit / Overdraft

Cash credit / overdraft is a form of credit facility in which a borrower is sanctioned a pre-arranged limit

with the freedom to borrow as much money as he requires. In case of flow of credit to the account, he

can withdraw afresh subject to the limit sanctioned. As such, the limit works as a revolving line of credit.

Bank charges interest on the outstanding balances.

Cash losses

Cash loss mean net losses minus depreciation.

Cheque Collection Policy

Cheque Collection Policy refers to the policy followed by a bank in respect of various local and

outstation cheques and instruments deposited with the bank for credit to an account. The policy, inter

alia, deals with

Cheque purchase requests.

Time frame for credit of cheques

Payment of interest in case of delay in collection of cheques

Instant credit of local and outstation cheques

Cheque instruments lost in transit

Collateral Security / Security

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Collateral are assets pledge / hypothecated / mortgaged by a borrower as a security for a credit facility.

In the event of the borrower defaulting on the loan, the lender bank can claim these assets in lieu of the

sum owed.

Compensation Policy

Compensation Policy refers to the policy followed by a bank for compensating its customers for the

financial losses incurred by them (the customers) due to the acts of omission or commission on the part

of the bank.

Credit facilities / Bank Loan

Credit facilities from the bank may be in the form of a term loan or in the form of overdraft or cash

credit, that is extended by a bank to its customer for a specified period and he is charged interest on the

outstanding balances.

Credit reference agencies

Credit reference agency means a credit information company formed and registered under the

Companies Act, 1956 that has been granted a Certificate of Registration under the Credit Information

Companies (Regulation) Act, 2005.

Current Account

A form of demand deposit wherefrom withdrawals are allowed any number of times depending upon

the balance in the account or up to a particular agreed amount.

Customer

An MSE or its authorized representative who has an account with a bank or who avails of other

products / services from a bank.

Deceased account

A Deceased account is a deposit account in which case either the single account holder has deceased or

in case of joint accounts one or more of joint account holders has / have deceased.

Demat accounts

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A Demat account refers to dematerialized account and is an account in which the stocks of investors are

held in electronic form.

Deposit Accounts:

“Savings deposits" means a form of demand deposit which is subject to restrictions as to

the number of withdrawals as also the amounts of withdrawals permitted by the Bank

during any specified period;

"Term deposit" means a deposit received by the Bank for a fixed period withdraw able

only after the expiry of the fixed period and includes deposits such as Recurring / Double

Benefit Deposits / Short Deposits / Fixed Deposits /Monthly Income Certificate

/Quarterly Income Certificate etc.

"Notice Deposit" means term deposit for specific period but withdraw able on giving at

least one complete banking day's notice;

Electronic Clearing System

The Electronic Clearing System (ECS) is an online transmission system which permits the electronic

transmission of payment information by the banks / branches to the Automated Clearing House (ACH)

via a communication network.

Equity

Equity means a part of capital of a corporate entity which is represented by the shares of the company

whether in physical or in dematerialized form

Factoring

Factoring is a financial option for the management of receivables. It is the conversion of credit sales into

cash.

Government Bond

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Government bond means a security, created and issued, by the Central or State Government for raising

a public loan.

Guarantee

A promise given by a person

Letter of Credit

A letter of credit is a document issued by a bank, which usually provides an irrevocable undertaking for

payment to a beneficiary against submission of documents as stated in the Letter of Credit.

Mail

Mail is a letter in a physical or electronic form.

Merchant Services

Merchant services generally refer to merchant accounts allowed to trading and service establishments

for acceptance of payments through credit / debit cards. The cards may be accepted over the counter

through card terminals i.e. Point of Sale (POS) machines or over phone or through internet.

Micro and Small Enterprises

Micro and Small Enterprises are those enterprises engaged in manufacturing or rendering services.

A micro enterprise is defined as:

An enterprise engaged in the manufacture or production of goods pertaining to any industry where the

investment in plant and machinery does not exceed Rs. 25 lakh.

Or 

An enterprise engaged in rendering services where investment in equipment does not exceed Rs. 10

lakh.

A small enterprise is defined as:

An enterprise engaged in manufacture or production of goods pertaining to any industry where the

investment in plant and machinery is more than Rs. 25 lakh but does not exceed Rs. 5 crore.

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Or  

An enterprise engaged in rendering services where investment in equipment is more than Rs. 10 lakhs

but does not exceed Rs. 2 crore.

Net worth

Net worth means sum of Capital and free reserves minus accumulated losses.

Nomination facility

The nomination facility enables the bank to : make payment to the nominee of a deceased depositor, of

the amount standing to the credit of the depositor, return to the nominee, the articles left by a

deceased person in the bank's safe custody, release to the nominee of the hirer, the contents of a safety

locker, in the event of the death of the hirer.

Non-fund based facility

Non-fund based facilities are such facilities extended by banks which do not involve outgo of funds from

the bank when the customer avails the facilities but may at a later date crystallize into financial liability if

the customer fails to honor the commitment made by availing these facilities. Non-fund based facilities

are generally extended in the form of Bank Guarantees, Acceptances and Letters of Credit.

Non-Performing Asset

A Non-Performing Asset (NPA) is a loan or an advance where

Interest and / or installment of principal remain overdue for a period of more than 90 days in respect of

a term loan.

The account remains ‘out of order’ in respect of an Overdraft / Cash Credit (OD/CC).

The bill remains overdue for a period of more than 90 days in the case of bills purchased or discounted.

Originator

An organization which collects payments from a customer’s account in line with customer’s

instructions.

Other security information

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A selection of personal facts and information [in an order which the customer knows],which may be

used for identification when using accounts.

Out-of-date [stale] cheque

A cheque, which has not been paid because the date written on the cheque is of a date exceeding six

months from the time of its presentation.

PAN

The Permanent Account Number is an all India unique Number having ten alphanumeric Characters

allotted by the Income Tax Department, Government of India. It is issued in the form of a laminated

card. It is permanent and will not change with change of address of the assessee or change of Assessing

Officer.

Password

A word or numbers or a combination or an access Code, which the customer has chosen, to allow them

to use a phone or Internet banking service. It is also used for identification.

Payment and Settlement Systems

Payments and Settlement Systems mean financial system creating the means for transferring money

between suppliers and user of funds usually by exchanging debits or credits among financial institutions.

PIN [personal identification number]

A confidential number, use of which along with a card allows customers to pay for articles/ services,

withdraw cash and use other electronic services offered by the bank.

Repossession

Repossession is the process by which a creditor with a loan secured on house or goods (e.g. car) takes

possession of the security, if the debtor does not repay as per the terms of the loan agreement.

Rehabilitation Package

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Rehabilitation package is the package drawn for the rehabilitation of a sick unit. The package has to be

drawn in accordance with RBI stipulations and it usually consists of

i. Working Capital with relaxation in the rate of interest in terms of regulatory guidelines.

ii. Funded Interest Term Loan

iii. Working Capital Term Loan

iv. Term Loan

v. Contingency Loan Assistance

Security

Represents assets used as support for a loan or other liability.

Services

i. In respect of small and micro service enterprises, services refer to small road and

water transport operators, small business, professional and self-employed persons,

and all other service enterprises.

ii. Services rendered by the banks include various facilities like remittance (issue of

DDs, MTs, TTs, etc.), receipt and payment of cash, exchange of notes and foreign

exchange, etc. provided by the banks to the customers.

Sick Unit

Sick unit refers to a unit whose account has remained substandard for more than six months or there

has been erosion in net worth due to accumulated cash losses to the extent of 50% of the net worth

during the previous accounting year and the unit has been in commercial product for at least two years.

Substandard

A substandard asset would be one, which has remained NPA for a period less than or equal to 2 months.

Tariff Schedule

The charges levied by a bank on the products and services offered by it to its customers

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Unpaid Cheque

This is a cheque, which is returned 'unpaid' [bounced] by the bank.

ANNEXURES

QUESTIONNAIRE

Section A: Personal Information

1. NAME:

2. GENDER:

a) Male b) Female

3. MARTIAL STATUS:

a) Single b) Married

4. AGE:

a) 15-20 yrs b) 21-30 yrs

c) 31- 40 yrs d) 41-50 yrs

e) >50 yrs

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5. OCCUPATION:

a) Government b) Private Service

c) Business d) other

6. ANNUAL INCOME:

a) Up to 2 lacs        b) Between 2-3 lacs

c) 3-5 lacs       d) Above 5 lacs

7. If given an option, which bank will you prefer to deal with as a customer?

a) Axis Bank b) HDFC Bank c)SBI d) Other______

8. In terms of saving bank account opening, which bank would you prefer?

a) Axis Bank b) HDFC Bank c)SBI d) Other______

9. What are the services you use of a bank, in saving account?

a) ATM/Debit Card b) Internet Banking c) Cheque book at Par

d) Mobile Banking f) Relationship Manager

10. Which bank as per your experience provides the best customer service when you

personally visit the Bank?

a) Axis Bank b) HDFC Bank c) SBI d) Other______

11. What average balance account services you usually avail from your existing bank?

a) < = Rs. 1000 b) = > Rs. 5000 c) = > Rs.10000

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d) = > Rs. 25000 e) = > Rs. 100000

12. Which Bank’s ATM you use the most for cash withdrawal?

a) Axis Bank b) HDFC Bank c) SBI d) Other______

13. Which is the most customer friendly Bank in terms of charges as per you?

a) Axis Bank b) HDFC Bank c) SBI d) Other______

14. Are all the Bank informed to you at the time of Saving Bank Account opening

a) Yes b) No

15. If you have to do an investment, which Bank would you consult for Portfolio

Management?

a) Axis Bank b) HDFC Bank c)SBI d) Other______

16. Kindly rate the below mentioned banks as per the ambience and infrastructure facilities provided to the

customers? NOTE: in Ranking 1 being the Best and 5 being the Last preference.

a) Axis Bank Ltd.  [  ]

b) HDFC Bank  [  ]

c) SB I  [ ]

d) ICICI [  ]

e) PNB  [ ]

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