A Study On Customer Awareness Towards Loan Products & Services in Bangalore With Special Reference To State Bank of India

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October 2013, Volume: III,Special Issue: X
“Re-engineering of Indian Economy-Opportunities & Challenges” On 24th October 2013
A Study on Customer Awareness towards Loan Products & Services in

Bangalore with Special Reference to State Bank of India
Dr. G Nagarajan * Mr. A. Asif Ali ** Mr. N. Sathyanarayana*** Ms.Gowhar Jan.S****

Abstract:
The implementation of globalization, government policies and liberalization has made
the banking industry very competitive by providing various products and services to the
customers. The various services offered by the banks can be utilized by the customers only
when they are made aware of these services. The banker and customer have to know about
one another. The banker has to understand the customers’ needs and in the same way, the
customer has to know about the carious services offered by the banks. Increased level of
awareness among the customers leads to increased preferences. The purpose of this study was
to investigate the awareness and satisfaction level of customers towards various loans
rendered by SBI. The present study was to compare and analyze the customer awareness and
satisfaction towards banking services in SBI with reference to Bangalore region.
Key Words: Loan Products, Customer Awareness, loan, interest charges & income
_____________________________________________________________________
* Professor & Head, Department of Management Studies and Research Centre, Sambhram Institute of
Technology, Bangalore, Karnataka-560097. Email: drnagarajanrmj@gmail.com, Phone - +91- 9742780195
** Asst. Professor, Department of Management Studies and Research Centre, T John Institute of Technology,
Bangalore, Karnataka-560083. Email: asif.mba.khan@gmail.com, Phone - +91- 9916083284
*** Asst. Professor, Department of Management Studies and Research Centre, T John Institute of Technology,
Bangalore, Karnataka-560083. Email: n.sathya1985@gmail.com, Phone - +91- 9986314840
****Research Scholar in Commerce, Dravidian University, Email.gowharsyed@yahoo.com,
Phone - +91- 9535459458
1. INTRODUCTION:
Banking system is an important constituent of overall economic system. State Bank of
India is the India's largest bank by virtue of its size and importance it become leader among
the Public Sector Banks. It is a multinational banking and financial services company based
in India. It is a government-owned corporation with its headquarters in Mumbai,
Maharashtra. As of December 2012, it had assets of US$501 billion and 15,003 branches,
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including 157 foreign offices, making it the largest banking and financial services company
in India by assets. SBI is the most trusted and patronized bank. State Bank of India offers
largest banking network of Indian customers. The bank is also in the process of providing
complete payment solution to its clientele with its over 8500 ATMs and other electronic
channels such as Internet banking, Debit cards, Mobile banking etc.
2. REVIEW OF LITERATURE:
Ravi and Kundan basavaraj (2013) analyzed the customer preference and satisfaction
towards banking services both private and public banks in Shivamogga district. The authors
found business and vehicle loans are fast moving than other services and overall satisfaction
resulted at 50%. Further, overall satisfaction on bank deposit schemes resulted positively
while other services of banking still need to be given attention by focusing on customer
issues. They authors suggested that, bankers should work towards 100% customer
satisfaction that automatically fosters customer delight and to sustain customers on a long
term basis.
Sumedha Kalia and Urvashi Kalra (2012) investigated various factors influencing
customer’s perception and satisfaction level towards E-Banking. They found that, lack of
knowledge, inadequate legislations and security concerns are the major reasons for not using
E-Banking by the SBI customers. They suggested that, banks should provide “demo” on their
website for new users to know about online banking services and facilities of experts to
increase awareness in the minds of customers to use e banking safely.
Selvaraj (2011) measured and analyzed the awareness level of the customers towards
services provided by the State Bank of India of Erode district of Tamil nadu. He found that
70% of the sample respondents had low level of awareness towards the services provided by
the bank. It may be due to the fact that the study area was mostly covered by rural areas. The
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bank has to initiate necessary measures to increase the awareness level through conducting
awareness programs in the rural areas and the bank has to concentrate more on promotional
activities.
3. PROBLEM IDENTIFICATION:
Problems faced by customers
 Customers standing in long queues waiting for counter clerk who comes late
and not on time.
 Bank Employees irresponsible behavior with customers and not attending the
customers.
Though there were several studies done by various researchers/authors pertaining to

credit/loan products & Services. The researcher could not find research pertaining to
awareness of customers towards perception towards credit/loan products & Services in the
current scenario with respect to SBI in Bangalore region. Thus the researcher has made an
effort to do study in this area and topic has been entitled as “A Study on Customer
Awareness towards Loan Products & Services in Bangalore with Special Reference to
State Bank of India”.
4. OBJECTIVES OF THE STUDY:
 To study the role of customers in public sector banks in India.

 To know the customer satisfaction of State Bank of India in India with reference to
Bangalore.
 To evaluate the level of awareness of towards loan products & Services.
 To measure the financial strength & ability of customers towards banking services.
 To assess the credit scores and interest charges by State Bank of India towards loan
products.
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5. RESEARCH METHODOLOGY
The present study has been conducted on the basis of primary data and was descriptive in
its nature. Primary data obtained by interacting with various people, getting the
questionnaires filled by them. The data was collected by means of questionnaire and was
classified and analyzed carefully. Questionnaire was constructed innovatively and
systematically distributed to respondents in the study field. In this research, the questionnaire
was formed as a direct and structured one. The questions were mostly close-ended questions.
Open-ended question has been used only for deriving suggestions from the respondents.
6. SAMPLING DESIGN:
Table: 1 Sampling Design to meet Objectives:

Location : Bangalore Region
Sampling units : SBI Customers
Sampling method : Non Probability Convenience Sampling
Sample Size : 220 Respondents
Instrument for data collection : Structures Questionnaire
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7. TOOLS AND TECHNIQUES OF DATA ANALYSIS:
The statistical analysis carried out in the study by using MS-Excel and SPSS (Statistical
Package for Social Science) Software. The statistical technique like Chi-square, ANOVA, has
been used for the analysis. Analyzed & interpreted data have been presented in the form of
tables, charts and figures.
8. QUESTIONNAIRE RELIABILITY TEST:
The researcher has used Cronbach’s Alpha reliability test to evaluate the reliability of the
questionnaire for the survey study. The analysis was done using SPSS.
Table: 2 Cronbach's Alpha Reliability Statistics
Cronbach's Alpha N of Items
.943 29
(Data Compiled by using SPSS)
As statistics tells more the Alpha value near to 1 more will be the reliability.
The above table-2 reveals that the Cronbach’s Alpha value = .943. Therefore based on the
Alpha value it can be decided that the framed questionnaires are more reliable with each
other and the questionnaire survey can be conducted by using the questionnaire.
9. DATA ANALYSIS & INTERPRETATION:
Hypothesis: 1
H0: Gender and awareness about loan products and services are independent.
H1: Gender and awareness about loan products and services are related.
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Table 3: Gender wise awareness of loan/credit products and services

Gender
Particulars Total
Male Female
Count 21 4 25
Highly Aware
% of Total 9.5% 1.8% 11.4%
Count 44 17 61
Awareness Aware
% of Total 20.0% 7.7% 27.7%
about
Neither Aware Count 37 57 94
loan/credit
nor Not Aware % of Total 16.8% 25.9% 42.7%
products and
Count 7 13 20
services Not Aware
% of Total 3.2% 5.9% 9.1%
Highly Not Count 6 14 20
Aware % of Total 2.7% 6.4% 9.1%
Count 115 105 220
Total
% of Total 52.3% 47.7% 100.0%
(Data Compiled from the primary questionnaire by using SPSS)
Table 4: Chi-Square Tests
Value df Asymp. Sig. (2-sided)

a
Pearson Chi-Square 32.378 4 .000
Likelihood Ratio 34.002 4 .000
Linear-by-Linear Association 26.059 1 .000
N of Valid Cases 220
a. 0 cells (.0%) have expected count less than 5. The minimum expected count is 9.55.
Graph 1: Gender wise awareness of loan products and services
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60 57
No. of Respondents
50 44
40 37
30
21
20 17
13 14
10 7 6
4
0
Highly Aware Aware Neither Aware Not Aware Hithly Not
nor Not Aware Aware
Awareness about loan products and services
Gender Male Gender Female
(Graph Compiled by using Ms-Excel)
From the table 3 it can be identify that, out of 220 total respondents 115 (52.3%) are male and
105 (47.7%) are female. Out of male respondents majority fall under aware 44 (20%)
followed by neither aware nor not aware 37 (16.8%) followed by highly aware 21 (9.5%) and
the lowest level of respondents fall under highly not aware are aware category are 6 (2.7%).
Out of female respondents majority fall under neither aware nor not aware 57 (25.9%)
followed by aware 77 (7.7%) and the lowest level of respondents fall under highly aware
category are 4 (1.8%). It can be inferred that majority of female respondents are not aware
compared to male respondents.
From the table 4 it can be identify that, the Pearson chi-square value is 32.378 and p-value is
less than .05, (p = 0.00). So we can reject the null hypothesis, and say that Gender and
awareness about loan products and services are related.
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Hypothesis: 2
H0: There is a relationship between the customer’s income and awareness about the EMI &
Tax benefits they get out of loan they borrowed.
H1: There is no relationship between the customer’s income and awareness about the EMI &
Tax benefits they get out of loan they borrowed.
Table 5: Income wise awareness about the EMI & Tax benefits
EMI & TAX BENEFITS

Neither
Highly
Particulars Highly Aware Not Total
Aware Not
Aware nor Not Aware
Aware
Aware
Count
"Less than 0 5 14 4 26 49
15000" % of Total 0.0% 2.3% 6.4% 1.8% 11.8% 22.3%
Count 0 23 0 1 25 49
15001 - 25000
% of Total 0.0% 10.5% 0.0% 0.5% 11.4% 22.3%
Income
Count 6 14 26 8 31 85
per 25001 - 50000
% of Total 2.7% 6.4% 11.8% 3.6% 14.1% 38.6%
month
50001 - Count 0 8 12 1 7 28
100000 % of Total 0.0% 3.6% 5.5% 0.5% 3.2% 12.7%
100000 and Count 0 0 9 0 0 9
above % of Total 0.0% 0.0% 4.1% 0.0% 0.0% 4.1%
Count 6 50 61 14 89 220
Total
% of Total 2.7% 22.7% 27.7% 6.4% 40.5% 100.0%

a
a. 12 cells (48.0%) have expected count less than 5. The minimum expected count is .25.
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From the table 5 showed the classification based on Income per month and awareness about
EMI & Tax benefits. It can be identify that, based on Income per month majority of
respondents fall under Rs 25,001 to Rs 50,000 category is 85 (38.6%) followed by Rs 15,000
to Rs 25,000 category is 49 (22.3%) followed by Rs 15,000 to Rs 25,000 category is 49
(22.3%) and the lowest level of respondents fall under Rs 1,00,000 and above category is 9
(4.1%). Based on awareness about EMI & Tax benefits majority of respondents fall under
highly aware 89 (40.5%) followed by neither aware nor not aware 61 (27.7%) followed by
aware 50 (22.7%) and the lowest level of respondents fall under highly aware category are 6
(2.7%). It can be inferred that majority of respondents falling under the income group of less
than Rs 15,000 to Rs 50,000 are highly not aware about EMI & Tax benefits out of loan they
borrowed.
less than .05, (p = 0.00). So we can reject the null hypothesis, and say that, there is no
relationship between the customer’s income and awareness about the EMI & Tax benefits
they get out of loan they borrowed.
Hypothesis: 3
H0: There is a significance relationship between the customer’s occupation and awareness
about the purpose of borrowing loan.
H1: There is no significance relationship between the customer’s occupation and awareness
about the purpose of borrowing loan.
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Table 7: Occupation wise awareness about the purpose of borrowing loan
Awareness about the purpose of borrowing loan

Highly Neither Highly
Particulars Not Total
Aware Aware Aware nor Not
Aware
Not Aware Aware
Count 0 62 55 3 0 120
Employee
% of Total 0.0% 28.2% 25.0% 1.4% 0.0% 54.5%
Occupation
Count 0 0 4 0 0 4
Employer
% of Total 0.0% 0.0% 1.8% 0.0% 0.0% 1.8%
Self Count 0 28 29 28 5 90
Employed % of Total 0.0% 12.7% 13.2% 12.7% 2.3% 40.9%
Count 0 2 1 3 0 6
Others
% of Total 0.0% 0.9% 0.5% 1.4% 0.0% 2.7%
Count 0 92 89 34 5 220
Total
% of Total 0.0% 41.8% 40.5% 15.5% 2.3% 100.0%

a
a. 10 cells (62.5%) have expected count less than 5. The minimum expected count is .09.
From the table 7 showed the classification based on occupation of the respondents and
awareness about purpose of borrowing loan. It can be identify that, based on occupation
majority of respondents fall under employee category is 120 (54.5%) followed by self-
employed category is 90 (40.9%) and the lowest level of respondents fall under employer
category is 4 (1.8%). Based on awareness about purpose of borrowing loan majority fall
under aware 92 (41.8%) followed by neither aware nor not aware 89 (40.5%) followed by not
aware 34 (15.5%) and no respondent fall under highly aware category. It can be inferred that
majority of respondents falling under the occupation group of Employee and self-employed
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are aware 90 (40.9%) and neither aware nor not aware 84 (38.20%) about purpose of
borrowing loan.
less than .05, (p = 0.000). So we can reject the null hypothesis, and say that, there is no
significance relationship between the customer’s occupation and awareness about the purpose
of borrowing loan.
Hypothesis: 4
H0: There is no significance difference between the customer’s occupation and awareness
level about documents required, credit scores, prepayment penalty charges, interest charges,
growth benefits and financial strength & ability to repay the loan.
H1: There is significance difference between the customer’s occupation and awareness level
about documents required, credit scores, prepayment penalty charges, interest charges,
growth benefits and financial strength & ability to repay the loan.
Table 9: ANOVA
Sum of Mean
df F Sig.
Squares Square
Between Groups 1.719 3 .573 1.165 .324
Awareness about
Within Groups 106.258 216 .492
documents required
Total 107.977 219
Between Groups 32.767 3 10.922 10.559 .000
Awareness about
Within Groups 223.433 216 1.034
credit scores
Total 256.200 219
Awareness about Between Groups 1.834 3 .611 .933 .426
prepayment penalty Within Groups 141.525 216 .655
charges Total 143.359 219
Between Groups 10.395 3 3.465 5.081 .002
Awareness about
Within Groups 147.314 216 .682
interest charges
Total 157.709 219
Awareness about Between Groups 38.044 3 12.681 12.974 .000
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growth benefits Within Groups 211.133 216 .977

Total 249.177 219
Awareness about Between Groups 3.806 3 1.269 1.873 .135
Financial Strength Within Groups 146.281 216 .677
and Ability to Repay
Total 150.086 219
the Loan
Regarding awareness level about documents required, prepayment penalty charges, and
financial strength & ability to repay the loan 3 is the between-groups degrees of freedom, 216
is the within groups degrees of freedom, 1.165, 0.933 and 1.873 is the F ratio from the F
column, 0.324, 0.426 and 0.135 is the value in the Sig. column (the p value), respectively.
In these above cases, the p value equals 0.324, 0.426 and 0.135 which are greater than the α
level (.05), so we fail to reject null hypothesis and say that, there is no significance difference
between the customer’s occupation and awareness level about documents required,
prepayment penalty charges, and financial strength & ability to repay the loan.
Regarding awareness level about credit scores, interest charges and growth benefits 3 is the
between-groups degrees of freedom, 216 is the within groups degrees of freedom, 10.559,
5.081 and 12.974 is the F ratio from the F column, 0.000, 0.002 and 0.000 is the value in the
Sig. column (the p value), respectively. In these above cases, the p value equals 0.000, 0.002
and 0.000 which are lesser than the α level (0.05), so we can reject null hypothesis and say
that, there is significance difference between the customer’s occupation and awareness level
about credit scores, interest charges and growth benefits.
10. FINDINGS:
The major findings are as follows:

 The majority of female respondents are not aware compared to male respondents
about loan products and services.
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 The majority of respondents falling under the income group of less than Rs: 15,000 to
Rs 50,000 are highly not aware about EMI & Tax benefits out of loan they borrowed.
 The majority of respondents falling under the occupation group of Employee and self-
employed are aware 90 (40.9%) and neither aware nor not aware 84 (38.20%) about
purpose of borrowing loan.
 Gender and awareness about loan products and services are related.
 There is no relationship between the customer’s income and awareness about the EMI
& Tax benefits they get out of loan they borrowed.
 There is no significance relationship between the customer’s occupation and
awareness about the purpose of borrowing loan.
 There is no significance difference between the customer’s occupation and awareness
level about documents required, prepayment penalty charges, and financial strength &
ability to repay the loan.
 There is significance difference between the customer’s occupation and awareness
level about credit scores, interest charges and growth benefits.
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11. RECOMMENDATIONS:
The researcher would here by like to put forth the following recommendations to the bank
based on observation, analysis and interpretation of the collected data from the respondents.
 The bank has to conduct awareness programs / loan melas to educate the customers
about loan products and services.
 The bank has to provide customer support services to make awareness about the EMI
& Tax benefits they get out of loan they borrowed and prepayment penalty charges.
 The bank has to provide a check list method about documents required for processing
the loan in order to identify financial strength & ability to repay the loan.
12. CONCLUSION:
It is felt that more than offering good value added products the bank has to make proper reach
of its innovative products & services to the customers by effective awareness strategies to
increase the purchase and performance of the bank. On the basis of the findings of the present
study some constructive, practicable and viable suggestions have been made. If the
Administrative Policy Makers of the State Bank of India seriously considers all the
suggestive measures, no doubt that even in the competitive trend State Bank of India will
shine and it will continue to be a leading bank in India.
13. REFERENCES:
Books:
1. Cooper Donald R., Business Research Methods, New Delhi, Tata McGraw Hill Education Private
Limited, 2009
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2. Gupta, S. P., Statistical Methods, New Delhi, Sultan Chand & Sons., 2008
3. Kothari, C.R., Research Methodology Methods and Techniques, New Delhi, New Age
International Pvt Ltd, Publishers., 2004
4. Kulkarni, Mahesh. K., Research Methodology and Project Work, Pune, Nirali Prakashan, 2003
5. Shajahan, S., Research Methods for management, Mumbai, Jaico Publishing House., 2006
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Articles/Journals:
1. Jithendra Kumar Mishra (2007), “Constituent Dimensions of Customer Satisfaction: A Study of

Nationalized and Private Banks”, (Revista Tinerilor Economist), The Young Economists Journal, Vol.
1, No.8, pp. 40-47.
2. Ravi and Kundan basavaraj (2013) “Customers Preference and Satisfaction towards Banking Services
with Special Reference to Shivamogga District in Karnataka”, Trans Asian Journal of Marketing &
Management Research, Vol.2, Issue 1, pp. 28-38.
3. Selvaraj (2011), “A Study on Customers' Awareness and Level of Satisfaction with Special Reference
to SBI of Erode District of Tamil Nadu”, JMIJMM, Vol.1, Issue 2, pp. 1-7.
4. Sumedha Kalia and Urvashi Kalra (2012), “Analysis of SBI Customer’s Attitude towards E-Banking”,
RJSITM, Vol.1, Issue 4, pp. 1-5.
5. Vigg Silky, Mathur Garima and Holani Umesh (2007), “Customer Satisfaction in Banking Services: A
Comparative Study of Public and Private Sector Banks”. The Journal of Indian Management and
Strategy 8M, Vol. 12, No. 2, PP 24-30.
6. VimiJham and Kaleem M Khan (2008), “Customer Satisfaction with Usage of Banks Distribution
Channels: An Empirical Investigation:, International Journal of Financial Services Management, Vol. 3
and pp 283-284.
Websites:
www.statebank of india.com
www.sbi.co.in
http://www.theshillongtimes.com/2012/03/08/sbi-customers-face-problem-updating-passbooks/
en.wikipedia.org
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October 2013, Volume: III,Special Issue: X

“Re-engineering of Indian Economy-Opportunities & Challenges” On 24th October 2013