Indian Banking

10 Sector
Services Marketing

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Contents

Objectives ............................................................................3

History of Banking in India ............................................4

Banks in India .........................................................4

Major Banks in India ..........................................................5

Banking Services in India…………………………………….6

Kinds of Banks .....................7

Products Offered………………………..7

PEST Analysis……………………………………….10

The 4I’s of Banking…………………………….12

RATER Analysis…………………………………………..14

Future……………………………………

BY: Ajita Singh

Lucky Parashar

Pranay Goel
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Rakhi Jain
OBJECTVES
Because of the following reasons, we preferred 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.

Usually all persons want money for personal and commercial purposes. Banks are the
oldest lending institutions in Indian scenario. They are providing all facilities to all
citizens for their own purposes by their terms. To survive in this modern market every
bank implements so many new innovative ideas, strategies, and advanced
technologies. For that they give each and every minute detail about their institution and
projects to Public.

They are providing ample facilities to satisfy their customers i.e. Net Banking, Mobile
Banking, Door to Door facility, Instant facility, Investment facility, Demat facility, Credit
Card facility, Loans and Advances, Account facility etc. And such banks get success to
create their own image in public and corporate world. These banks always accepts
innovative notions in Indian banking scenario like Credit Cards, ATM machines, Risk
Management etc.

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HISTORY OF BANKING IN INDIA-------
Without a sound and effective banking system in India it cannot have a
healthy economy. The banking system of India should not only be hassle
free but it should be able to meet new challenges posed by the technology
and any other external and internal factors.

For the past three decades India's banking system has several outstanding
achievements to its credit. The most striking is its extensive reach. It is no
longer confined to only metropolitans or cosmopolitans in India. In fact,
Indian banking system has reached even to the remote corners of the
country. This is one of the main reasons of India's growth process. The
government's regular policy for Indian bank since 1969 has paid rich
dividends with the nationalization of 14 major private banks of India.

Not long ago, an account holder had to wait for hours at the bank counters
for getting a draft or for withdrawing his own money. Today, he has a choice.
Gone are days when the most efficient bank transferred money from one
branch to other in two days.

Now it is simple as instant messaging or dial a pizza. Money has become the
order of the day. The first bank in India, though conservative, was
established in 1786. From 1786 till today, the journey of Indian Banking
System can be segregated into three distinct phases.

They are as mentioned below:

• Early phase from 1786 to 1969 of Indian Banks

• Nationalization of Indian Banks and up to 1991 prior to Indian banking
sector Reforms.
• New phase of Indian Banking System with the advent of Indian
Financial & Banking Sector Reforms after 1991.

BANKS IN INDIA----------
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In India the banks are being segregated in different groups. Each group has
their own benefits and limitations in operating in India. Each has their own
dedicated target market. Few of them only work in rural sector while others
in both rural as well as urban.

Many even are only catering in cities. Some are of Indian origin and some
are foreign players. All these details and many more are discussed over
here. The banks and its relation with the customers, their mode of operation,
the names of banks under different groups and other such useful information
are talked about.

There are many upcoming foreign banks in India. The RBI has shown certain
interest to involve more of foreign banks than the existing one recently. This
step has paved a way for few more foreign banks to start business in India.

Major Banks in India

-ABN-AMRO Bank -Abu Dhabi Commercial Bank

-American Express Bank Andhra Bank -Allahabad Bank

-Bank of Baroda -Bank of India

-Bank of Maharastra -Bank of Punjab

-Bank of Rajasthan -Bank of Ceylon

-BNP Paribas Bank -Canara Bank

-Catholic Syrian Bank -Central Bank of India

-Centurion Bank -Indian Overseas Bank

-IndusInd Bank -ING Vysya Bank

-Jammu & Kashmir Bank -JPMorgan Chase Bank

-Karnataka Bank -Karur Vysya Bank

-Laxmi Vilas Bank -Oriental Bank of Commerce

-Punjab National Bank -Punjab & Sind Bank

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-Scotia Bank -South Indian Bank

-Standard Chartered Bank -State Bank of India (SBI)

-State Bank of Bikaner & jaipur -China Trust Commercial bank

-Citi Bank -City Union Bank

-Corporation Bank -Dena Bank

-Deutsche Bank -Development Credit Bank

-Dhanalakshmi Bank -Federal Bank

-HDFC Bank -HSBC

-ICICI Bank -IDBI Bank

-Indian Bank -State Bank of Hyderabad

-State Bank of Indore -State Bank of Mysore

-State Bank of Saurastra -State Bank of Travancore

-Syndicate Bank -Taib Bank

-UCO Bank -Union Bank of India

-United Bank of India -United Bank Of India

-United Western Bank -UTI Bank

-Vijaya Bank

BANKING SERVICES IN INDIA:-

With years, banks are also adding services to their customers. The Indian
banking industry is passing through a phase of customers market. The
customers have more choices in choosing their banks. A competition has
been established within the banks operating in India.

With stiff competition and advancement of technology, the service provided

by banks has become more easy and convenient. The past days are witness

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to an hour wait before withdrawing cash from accounts or a cheque from
north of the country being cleared in one month in the south.

This section of banking deals with the latest discovery in the banking
instruments along with the polished version of their old systems.

KINDS OF BANKS------
Financial requirements in a modern economy are of a diverse nature,
distinctive variety and large magnitude. Hence, different types of banks
have been instituted to cater to the varying needs of the community.

Banks in the organized sector may, however, be classified in to the following

major forms:

1. Commercial banks

2. Co-operative banks

3. Specialized banks

4. Central bank

Products offered
Lending Products:-
I. Housing Loans

II. Loan for Consumer goods

III. Personal Loans for marriage, honeymoon, medical treatment and holding
etc.

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IV. Education Loans

V. Auto Loans

VI. Gold Loans

VII. Event Loans

VIII. Festival Loans

IX. Insurance Products

X. Loan against Rent receivables

XI. Loan against Pension receivables to senior citizens

XII. Debit and Credit Cards

XIII. Global and International Cards

XIV. Loan to Doctors to set up their own Clinics or for purchase of medical
equipments

XV. Loan for Woman Empowerment for the Setting up of boutiques

Setting up of beauty parlours

Setting up of creches

Setting up of flower shops

For making jaipuri quilts etc.

Preparation and supply of Food Tiffins

XVI. Loan for purchase of acoustic enclosures for Diesel Gen. Sets etc.

Banking Products for Depositors:-

Banking products for depositors in various segments of customers like;
children, salaried persons, senior citizens, professionals, technocrats’
business men, retail traders and farmers etc. include:

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a. Flexi deposit Accounts

b. Savings Bank Accounts

c. Recurring Deposit Accounts

d. Short Term Deposits

e. Deferred pension Linked Deposit Schemes

Today pure deposit type products are giving way to multi-benefit, multi-
access genres of banking products. Most of the innovation is taking place in
saving bank accounts to make the meager return of 3.5% p.a. that they
earn, more attractive. Most of the banks now offer Sweep in and sweep out
account, called 2-in-1 accounts or value added savings bank accounts. This
account is a combination of savings bank and term deposit accounts and
offers twin benefit of liquidity of a savings bank account and higher interest
earning of term deposit accounts.

Add-ons and Freebies:-

To make their products and services more service more attractive so as to
woo maximum number of customers, the banks are vying with each other
with whole lot of frills, goodies, freebies are as under:

1. Free collection of specified number of outstation instruments

2. Instant credit of outstanding cheques up to Rs.15000/-

3. Concession in exchange on demand drafts and pay-orders and

commission on

bills of exchange

4. Issuance of free personalized cheques books

5. Free issuance of ATM, Debit, Credit and add-on Cards

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6. Free investment advisory services

7. Grant of redeemable reward points on use of credit cards

8. Free internet banking, phone banking and any where banking facilities

9. Issuance of discount coupons for purchase of various products like

computer

accessories, music CDs, cassettes, books, toys, garments etc.etc.

10. Last but not the least, issuance of free PVR, Trade Fair tickets etc. etc.

11. Concession in rate of interest on Group advances

12. Exemption in upfront fees

These concessions, freebies and add-ons are based on the True Relationship
Value of customers and is calculated by the return on various products and
services of the banks availed by them. These concessions and freebies are
usually offered for purchase of consumer goods but now they have become
an integral part of retail Banking products and services also.

Other Banking Services:-

Offer of several frills and goodies is not the end of the game. Banks also
offer following Banking services free of charges to customers:

1. Payment of utility bills like water, electricity, telephone and mobile phone
bills

2. Payment of insurance premiums on due dates

3. Payment of monthly/quarterly education fee of children to their

respective schools

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4. Remittance of funds from one account to another

5. Demating of shares, bonds, debentures, and mutual funds

6. Payment of credit card bills on due dates

7. Last but not the least, the filing of income tax returns and payment of
income tax

PEST ANALYSIS
TECHNOLOGICAL ENVIROMENT

Technology plays a very important role in bank’s internal control mechanisms as well as
services offered by them. It has in fact given new dimensions to the banks as well as
services that they cater to and the banks are enthusiastically adopting new
technological innovations for devising new products and services.

The latest developments in terms of technology in computer and telecommunication

have encouraged the bankers to change the concept of branch banking to anywhere
banking. The use of ATM and Internet banking has allowed ‘anytime, anywhere
banking’ facilities. Automatic voice recorders now answer simple queries, currency
accounting machines makes the job easier and self-service counters are now
encouraged. Credit card facility has encouraged an era of cashless society. Today
MasterCard and Visa card are the two most popular cards used world over. The banks
have now started issuing smartcards or debit cards to be used for making payments.
These are also called as electronic purse. Some of the banks have also started home
banking through telecommunication facilities and computer technology by using
terminals installed at customers home and they can make the balance inquiry, get the
statement of accounts, give instructions for fund transfers, etc. Through ECS we can
receive the dividends and interest directly to our account avoiding the delay or chance
of losing the post.

Today banks are also using SMS and Internet as major tool of promotions and giving
great utility to its customers. For example SMS functions through simple text messages
sent from your mobile. The messages are then recognized by the bank to provide you
with the required information.

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All these technological changes have forced the bankers to adopt customer-based
approach instead of product-based approach.

ECONOMICAL ENVIROMENT

Banking is as old as authentic history and the modern commercial banking are
traceable to ancient times. In India, banking has existed in one form or the other from
time to time. The present era in banking may be taken to have commenced with
establishment of bank of Bengal in 1809 under the government charter and with
government participation in share capital. Allahabad bank was started in the year 1865
and Punjab national bank in 1895, and thus, others followed

Every year RBI declares its 6 monthly policy and accordingly the various measures and
rates are implemented which has an impact on the banking sector. Also the Union
budget affects the banking sector to boost the economy by giving certain concessions
or facilities. If in the Budget savings are encouraged, then more deposits will be
attracted towards the banks and in turn they can lend more money to the agricultural
sector and industrial sector, therefore, booming the economy. If the FDI limits are
relaxed, then more FDI are brought in India through banking channels.

POLITICAL/ LEGAL ENVIROMENT

Government and RBI policies affect the banking sector. Sometimes looking into the
political advantage of a particular party, the Government declares some measures to
their benefits like waiver of short-term agricultural loans, to attract the farmer’s votes.
By doing so the profits of the bank get affected. Various banks in the cooperative sector
are open and run by the politicians. They exploit these banks for their benefits.
Sometimes the government appoints various chairmen of the banks.

Various policies are framed by the RBI looking at the present situation of the country for
better control over the banks.

SOCIAL ENVIROMENT

Before nationalization of the banks, their control was in the hands of the private parties
and only big business houses and the effluent sections of the society were getting
benefits of banking in India. In 1969 government nationalized 14 banks. To adopt the

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social development in the banking sector it was necessary for speedy economic
progress, consistent with social justice, in democratic political system, which is free
from domination of law, and in which opportunities are open to all. Accordingly, keeping
in mind both the national and social objectives, bankers were given direction to help
economically weaker section of the society and also provide need-based finance to all
the sectors of the economy with flexible and liberal attitude. Now the banks provide
various types of loans to farmers, working women, professionals, and traders. They
also provide education loan to the students and housing loans, consumer loans, etc.

Banks having big clients or big companies have to provide services like
personalized banking to their clients because these customers do not believe in running
about and waiting in queues for getting their work done. The bankers also have to
provide these customers with special provisions and at times with benefits like food and
parties. But the banks do not mind incurring these costs because of the kind of
business these clients bring for the bank.

THE 4 I’s OF BANK MARKETING

There are four distinctive characteristics of service, which create challenges and
opportunities. They are commonly known as the four I’s namely:

• Intangibility
• Inconsistency
• Inseparability
• Inventory

Intangibility

It is that characteristics of a service indicating that it has no physical attributes that a

person may feel, hear, taste before they buy it.

For example, a person who is new to a bank and wants to open up an account in the
bank cannot feel or taste it and ascertain whether the bank is good or bad before
opening an account. He has to experience it, feel how the service is, how humbly do
people or the staff members behave with him, is his money invested or put in a safe
account or not. It is only then he would come to know about the services. This could be
done only from the ‘trust’ that he would have built up, as these things cannot be
inspected before the use. Therefore, most banks now a days, indulge in “tangibilizing

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the intangibles” i.e. they provide tangible clues to the prospective customers like the
different awards that they have received for their superior services, their annual
records, etc. this helps the customers in selecting the banks more easily.

Inconsistency

It refers to variability or heterogeneity. In case of a bank, a new customer or a rarely

going customer may not get the same type of service as a regular customer may get.
This may be the case because the staff members know the person well as he comes
often but they don’t know that person who does not come in again and again.

Also another point for inconsistency is that there is variability in the service
delivered by different people, that is, services delivered differs from people to people.
Like in case of a bank, different staff members would provide different services. In the
bank, a person may have lot of work and may not attend to a customer .On the other
hand, some other person with the same work may attend him with great enthusiasm. In
order to tackle this inconsistency aspect, adequate training and motivation must be
provided to the employees. This will result in higher number of customers for the bank,
higher profits and subsequently lower retention rate.

Eg. “PUNJAB NATIONAL BANK” prides itself for providing “crown of quality for
customer who is the king” and is an ISO 9002 certified bank. Thus, they will have to
ensure that their service quality level is always consistent and up to the mark to meet
the tall expectations of their customers.

Inseparability

Inseparability is that characteristics of a service indicating that it cannot be separated

from creator-seller of the product. Many services are created, delivered and consumed
simultaneously through interaction between customers and service producers. This is a
source of major limitation for the bank. But technology has in a big way helped the
banks to cope with this problem.

Production of services, when it comes to banks can be performed in the following 3

ways:

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(i) Co- production: In this case both the service provider and the customer work
together to produce services. When a customer wants to withdraw cash from the
banking premises, then both the customer and the service provider needs to be
present.

(ii) Isolated production: It is that part of service that is done outside to an organization.
Eg. Tele-Banking.

(iii) Self Service production: In this case, the customer uses the equipments of the
service providers and self serves it. Eg. ATM.

Inventory

Inventory relates to the perishable characteristics of the service marketing. If a

customer starts his day at eight in the morning and ends it at four, but if bank is open
only from 9:00 a.m. to 1:00 p.m. in the afternoon, then one might not be able to attend
it. The demand for banking services also fluctuates by day and hour. The day before
the holiday, weekend, most Mondays and Saturdays, pension and salary days are
heavier than normal banking hours. So service faces a lot of problem from inventory as
it cannot be stored, saved and then used later.

RATER Analysis
There are many reasons why a customer should be given QUALITY SERVICES. The
most of them are:

Industry being so competitive that a customer should be given the best services as they
have many competitors (the company) and if even a single customer is lost in today’s
JLT world then it very difficult to win back the customer.

Most of the customers do not complain as they just opt out and do get satisfied with
better services elsewhere.

When it comes to services, there are 10 quality dimensions. Each of the dimensions is
of utmost importance since human element is involved and it relates to services.

But Zeithaml, Bitner and Parsuraman have developed a new and concise model
by clubbing some points. This model consists of the following dimensions:

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 • Reliability
• Assurance
• Tangibility
• Empathy
• Responsiveness

RELIABILITY

RESPONSIVENESS ASSURANCE

EMPATHY TANGIBILITY

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RELIABILITY

It is defined as the ability to perform the promised service dependably and accurately.
In its broadest sense, reliability means that the company delivers on its promises–
promises about delivery, service provision, problem resolution, and pricing. It is also
known as the “No Excuses” service delivery.

Indian Overseas Bank faces stiff competition from many other banks within its vicinity
and some of these banks are foreign banks. But the existing customers have faith,
loyalty and trust in this bank. The customers are well aware that the bank will provide
them back the best and reliable services. For e.g., no person likes to wait to withdraw
his/her money. In order to correct this problem, Indian Overseas Bank has ensured that
whoever comes in for cash withdrawal will receive his/her cash within five to ten
minutes.

ASSURANCE

Assurance is defined as employee’s knowledge and courtesy and the ability of the firm
and its employees to inspire trust and confidence. It includes the ability, knowledge,
genuineness, and honesty to provide the best services to the customer from the
frontline staff. In this dimension the front line staff is more important rather than the
owner.

At Indian Overseas Bank, every customer who comes is treated with utmost care
and any problem that takes place is solved with great enthusiasm. It assures the
customers coming up to the bank that the money they invest is secure; the interest rate
that is being provided to them is at par or sometimes even higher as compared to other
banks. Also, it assures the customers that the money they have invested will be
returned to them as and when required with proper interest. It tries to empower their
customer contact people and regularly train them in skills to build trust and loyalty
between employees and the customers. They have assigned some of their staff
members to build relationships with the customers by getting to know them personally.

TANGIBLITY

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Tangibles are defined as the appearances of physical facilities, equipments, personnel
and communication materials. All of these provide physical representations or images
of the service that customers, particularly new customers, will use to evaluate quality.

At Indian Overseas Bank, the entire premise is air-conditioned. They have

computerized systems in place and therefore quick, accurate and efficient service can
be provided to the customers. The tables and chairs are conveniently located for the
customers. The personnel always have a cheerful and helping veneer and are always
ready to help out the customers. The entire place is done up in bright colours and thus
the customer can immediately feel the warmth and the radiance of the place.

EMPATHY

Empathy is defined as the caring, individualized attention the firm provides its
customers. The essence of empathy is conveying, through personalized or customized
service, the customers are unique and unique special.

The empathy shown by the employees of the Indian Overseas Bank is good as they are
always polite humble and helpful. There was a case where once a customer misplaced
Rs. 1,00,000 within the premises of the bank. He panicked but the bank personnel put
him at rest and assured him that they would locate the same for him. Since he was a
regular customer, they knew him very well and took the situation under control. They
quickly located the cash and thus, the customer was placated. The bank personnel
went out of their way to help this customer and thus understood his predicament. This
bank regularly holds seminars and training workshops so that they can understand the
consumer better and thus serve him better.

RESPONSIVENESS

Responsiveness is the willingness to help the customer and provide him with immediate
and fast service.

The Indian Overseas Bank is prompt at providing its customers with the information and
services that they seek. It is extremely prompt when it comes to resolving the
complaints of the customers. The customers, in their feedback form, mentioned this as
one of the most important factor that has prompted them to continue with this bank.

All the five dimensions basically aim at serving the customers to the best of their ability,
giving them quality services and if things are followed as they are demanded, (i.e.,

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according to the customers demand) then there would be no problems in facing any
type of people. The successful service organizations set up speeds for service
standards. Banks have changed the culture of human life in India and have made life
much easier for the people.

Future
• The pervasive influence of information technology will continue to revolutionize
banking.

• Internationally, the number brick and mortar structure has been rapidly yielding
ground to click and order electronic banking with a plethora of new products.

• Banks will strongly rely on the merits of relationship banking.

• CRM has, therefore, will become the new mantra in customer service
management, which is both relationship based and information intensive.

• Boom in housing loan market, the sign of overheating has also started surfacing
with potential problem for banks that have not exercised sufficient caution.

• The pressure on margins is mounting partly because of fierce competition and

partly as a result of falling interest rates environment.

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