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The financial reform process initiated in 1991, poses lot of challenges before the banking sector in India as never before. After nationalization of commercial banks in India in 1969 and 1980, the ownership of major commercial banks was taken over by the Government. Then, the Government decided the agenda for action, directing the flow of credit and even determining the pattern of credit flows to specific sector (Joshi & Joshi, 1998). After nationalisation, competition was restricted and the banking sector was insulated from world financial markets. Over a period of time, the prevailing environment created a mindset, where one began to look for guidance for every thing. There was a comfort among the bankers when approval, guidance or confirmation of actions taken was received from the higher authority. The banking personnel have completely lost their vigour and stopped thinking and operating like business organisation. A country without efficient and profitable financial markets suffers from multiple disadvantages in a more open world. When India opened up its financial markets in the early 1990s, the weaknesses in its financial sector were exposed. It was not able to attract foreign investment, suffered worst in real interest rates in an attempt to attract capital, riddled with the threat of capital flight and erosion of tax base. Another significant aspect is the gradual weakening of the financial base of the banks and over loaded with non-performing loans. In matters relating to adoption of technology and handling difficult issues like credit proposals and personnel matters; the public sector banks face the thorny path. The situation was further worsening with increasing competition because of the entry of new players and the impact of changing environment. In issues like changing the attitude of personnel and developing strategies for survival of both the strong and weak banks are more justified. All banks look back in order to learn from the corporate failures of the past while designing their future strategies, more so for the public sector banks. With the entry of new generation tech-savvy private banks and the expansion of operations of foreign banks, the banking sector has become too competitive. The one for all and all for one syndrome is being given a go-by. To deal with the emerging situations, bankers have to shed a lot of old ideas, change in practices, develop customer loyalty programmes, and adopt a distinct approach to

meet the challenges ahead. In a fiercely competitive market, non-price factors like customer service become more important (Kotler, 2003). Hence, it is desirable for banks to develop a customercentric approach for future survival and growth. The awareness has already dawn that prompt, efficient and speedy customer service alone will tempt the existing customers to continue and induce new customers to try the services offered by a bank. Indian banks have already taken lot of initiatives in this regard. Further, it has been realised that Indians banks have miles to go to capture the recent trends and to be at par with the Western counterparts. As a result, many banks have introduced new customer friendly measures like 24-hour banking, 7-day and anywhere banking, internet banking, extended business hours, ATM network, etc. It is important to continuously build on this goodwill in the months to come. In todays competition in Indian banking industry, customers have to make a choice among various service providers by making a trade-off between relationships and economies, trust and products, or service and efficiency (Sachdev et al, 2004). Customers are increasingly aware of the options on offer in relation to the rising standards of service (Krishnaveni et al, 2004). In this context, expectations rise and customers become more critical of the quality of service. Service quality, customer satisfaction, customer retention and delight are now the major challenges in gripping the banking sector in India. Again, the deregulation in this sector created a great change in present scenario. In addition to the service diversification, the idea of customer satisfaction and formulation of marketing strategies to drag the customer towards the banks are now the key issues in order to survive (Aurora et al, 1997). Level of customer satisfaction is becoming the major target of banks to increase the market share. More specifically, the cost of retaining existing customers by enhancing the products and services that are perceived as being important is significantly lower than the cost of winning new customers (Krishnan et al, 1999). Customer satisfaction is nothing but an outcome of purchase and use resulting from the comparison of the rewards and costs vis--vis customers expectations and actual performance of the product purchased in relation to the expected consequences (Anderson et al, 1994; La Barbera et al, 1983). Customer satisfaction is a measure of extent the existing bank is fulfilling the

general expectations of a customer and how far and/or close does the existing bank come to the customers ideal bank in his mind (Beerli et al, 2004). Customer satisfaction can be viewed as the future intentions of customers towards the service provider, which is more or less related to the attitude (Levesque T et al, 1996). Recently, there has been a keen interest, especially in banking, where banks are looking at the life time value of the customer base rather than focusing on the cost of transactions (Ambler, 1995). Customers perceive services in terms of the quality of the service and how satisfied they are overall with their experiences (Zeithaml and Bitner, 2003). Satisfaction is the consumers European Journal of Social Sciences Volume 16, Number 4 (2010) 655 fulfilment response (Oliver, 2003). Customer satisfaction is influenced by price, product quality; service quality and brand image ( Initially all the banks in India were private banks, which were founded in the pre-independence era to cater to the banking needs of the people. In 1921, three major banks i.e. Banks of Bengal, Bank of Bombay, and Bank of Madras, merged to form Imperial Bank of India. In 1935, the Reserve Bank of India (RBI) was established and it took over the central banking responsibilities from the Imperial Bank of India, transferring commercial banking functions completely to IBI. In 1955, after the declaration of first-five year plan, Imperial Bank of India was subsequently transformed into State Bank of India (SBI). In 1994, the Reserve Bank of India issued a policy of liberalization to license limited number of private banks, which came to be known as New Generation International Journal of Business and Management www.ccsenet.org/ijbm 118 tech-savvy banks. Global Trust Bank was, thus, the first private bank after liberalization; it was later amalgamated with Oriental Bank of Commerce (OBC). At present, Private Banks in India includes leading banks like ICICI Banks, ING Vysya Bank, Jammu & Kashmir Bank, Karnataka Bank, Kotak Mahindra Bank, SBI Commercial and International Bank, etc. Undoubtedly, being tech-savvy and full of expertise, private banks have played a major role in the development of Indian banking industry. .