Chapter 2 REVIEW OF LITERATURE - Shodhgangashodhganga.inflibnet.ac.in/bitstream/10603/46445/13/13_chapter2.pdf · Review of Literature 17 ... assessment of the performance of public

Chapter 2

REVIEW OF LITERATURE

Review of Literature 17

REVIEW OF LITERATURE

A number of studies have been conducted in India and abroad on various

aspects of banking especially retail banking. Some worthwhile studies relating to the

present topic are reviewed here.

Birla Institute of Scientific Research (1981)1 in its study makes a comparative

assessment of the performance of public sector banks and major private sector banks

since nationalisation. They find that the performance of public sector banks is not

satisfactory in rural development activities when compared to the private sector

banks.

Jain, Pinson and Malhotra (1987)2 in their study “Customer loyalty as a

construct in the marketing of bank services” feel that customer loyalty is a very

useful construct. Their contention is that the human aspect of banking should be

given utmost importance by the loyal segment for the marketing of bank services.

R Jayakumar (1993)3 in his study of “Performance of private sector banks in

Kerala” makes a comparative examination of performance of public sector banks

and private sector banks in Kerala. He finds that in Kerala private sector banks

perform better than their public sector counterparts.

Delvin James (1995)4 makes a case study of the retail banking services in

UK using First Direct, a subsidiary of Midland Bank. He concludes that banks can

increase their market share through proper communication and prompt delivery of

their products.


Govindarajalu (1996)5 in his article “Satisfaction and dissatisfaction with

bank services” views that the Indian banks have lost the quality of customer service.

The dissatisfaction of customers with bank services is an important issue to be

considered by banks and policy makers for the development of banking sector.

Sarkar and Das (1997)6 make a comparison of the performance of the three

bank sectors - public, private and foreign - for the year 1995-1996. These banks are

compared in terms of profitability, productivity and financial management. They

find that the public sector banks are very poor in performance on the basis of these

variables than the other two sectors.

D Mishra (1997)7 makes a study on the performance of commercial banks in

India choosing relevant parameters like quality of service, risk management,

profitability etc. His conclusion is that the banks should try to increase quality,

balance risk management, and optimise profitability in order to survive and

succeed. He identifies four challenges for the bank namely competition, credit,

customer and control.

Gaganjot Singh (1998)8 in his study “New innovations in banking industry –

a study of new private sector banks” views that the new private sector banks in

India are using better technology and are offering better services to the customers.

The new private banks have emerged as a model to the banking industry in terms of

service levels, ambience, technology etc. As the public sector banks have already

established a huge customer base, they become complacent and are slow to become

customer friendly. They are also less innovative in the use of technology-assisted

customer service. Because of their huge customer base they feel that they can

withstand competitions from new generation banks.


N. S. Varghese (2000)9 is of the opinion that new generation private sector

banks with their latest technology are able to implement e-banking and are highly

preferred by investors in the stock market. He also points out that prominent new

generation private sector banks like HDFC and ICICI have entered into internet

banking through which greater convenience is offered with lower transaction cost.

The study carried out by P Verma (2000)10 is in tune with the findings of

Varghese. Analysing the impact of information technology on new generation banks

Verma feels that new generation banks are far ahead of traditional public sector

banks. He finds that information technology is posing a threat to the public sector

banks. He observes that the business per employee of major public sector banks in

India is a mere fraction of the business per employee of new generation banks. So

the public sector banks have to improve their productivity and efficiency to compete

with the new generation banks which are fully computerized. But Eapen Varghese

(2001)11 finds no such difference between the services rendered by public sector and

private sector banks.

Mini Joseph’s (2001)12 view is that new generation banks have created a

spirit of competition in the banking industry by fully utilizing the facilities and

amenities available from technology and computerization, and by accepting

customer satisfaction as the core aspect. For preventing the erosion in the market

share of old private sector banks and public sector banks, they are also providing

quality service now in a competitive spirit.

Anantha Swamy (2001)13 makes an appraisal of the performance of different

bank groups in India in the backdrop of competition, deregulation and changes in the

field of banking. He classifies banks into public sector, old private sector, new


private sector and foreign banks. His focus has been on profitability, NPA,

contingent liabilities, spread etc. for the last five years and arrives at the conclusion

that the new private sector banks are performing better than the banks in other

sectors.

Jamal and Naser (2002)14 makes a study on “The factors influencing

customer satisfaction in the retail banking sector of Abu Dhabi”. He collected the

necessary data using structured questionnaire. Customer response to questionnaire

shows that the customer expectations from the bank and service quality provided by

the banks are the major determinants of customer satisfaction. Their investigation on

factors influencing customer satisfaction in the Pakistan retail banking sector15 also

reveals that service quality is the important determinant of customer satisfaction.

P. D. Jeromi (2002)16 who studied “The trends and issues of bank credit in

Kerala” finds that the absolute rate of growth of credit is reasonably good. But in

relation to deposits, per capita credit, credit per account, disbursement by all India

Financial Institutions the level of credit is lower. He also observes that more

attention should be given to mobilization of deposits than to expansion of credit.

Pushpangadharan’s (2002)17 study on “The quality of customer service in

public sector banks” also shows that public sector banks lag behind private sector

banks in customer service. The parameters he used in the study are facilities and

amenities, speed in completing transactions and providing deposit related and credit

related services. The customers of public sector banks are not much satisfied with

branch managers’ and employees’ attitudes. The public sector banks are very poor in

respect of customer feedback system and redress of grievances.


Bharathi Pathak (2003)18 makes a study of “The financial operations of new

generation private sector banks in India”. Five banks (Indusind bank, Centurion

bank, HDFC bank, ICICI bank and UTI bank) are taken up for financial analysis for

a period of five years from 1996-97 to 2000-01. Their financial performance is

studied under four different parameters – financial, operating, profitability and

productivity. His conclusion is that the working of all banks is satisfactory but

HDFC bank comes at the top closely followed by ICICI bank.

Bikram De (2003)19 makes a study on the effects of ownership on bank

performance. He compared old private sector banks and new generation banks in

terms of profitability, efficiency, liquidity etc.

Gilotra (2003)20, in his study on retail lending, views that the success of

retail lending of a bank depends on factors like marketing efficiency, proper

appraisal and follow-up. He also finds that HDFC has become very excellent in

housing finance solely due to the long term strategies adopted by them.

R.Kumar (2003)21 in his study “Retail banking growth drivers and analysis

of associated risks” views that banks should review the retail loan portfolio at

periodical intervals in a structured manner for identifying the risks and upgrading

the strategies for the reduction of risk.

V.S. Murthy (2003)22 in his study views that in India the banking industry

has very high competition particularly in the retail sector. In this competition only

the fittest will survive. It is expected that the banks are well equipped to succeed in

the retail journey.


Qamar (2003)23 has done a comparative study on the “Profitability and

resource use efficiency in scheduled commercial banks in India”. He finds that

efficiency of new private banks and foreign banks is better though marginally than

the old private sector banks and public sector banks.

Velayudham (2003)24 in his article “Banking for corporate new directions”

reminds banks to ensure that for a balanced asset portfolio retail banking has

to go along with wholesale banking. Besides, for better management of customer’s

needs and consultative selling of products, commercial banks should have customer

relationship management department.

Filomina’s (2004)25 survey on expectations of customer from retail banks

shows that none of the banks are able to meet the diverse needs of customers. As a

result the customers are not so loyal to a particular bank and go for multiple

banking. Customers are aware of the variety of products and services that are

available in the banking sector and demand them from their banks. The aggressive

banking of new generation banks make customers dislike them.

Groeneveld and Wagemakers (2004)26 in their article “Retail banking

strategies in Europe” analyse retail banking strategy with special emphasis on retail

banking in the broadest sense of the word. He finds that many banks rediscovered

retail banking after the collapse of investment and corporate banking activities and

the fall in the stock prices in the last few years. The retail banking strategies in

general and the strategic positioning of Rabobank group in particular are described

in the study.


Gurumurthy (2004)27 has made an analysis of income, expenditure, operating

profit and NPA of public sector banks, foreign banks, old private sector banks and

new private sector banks. He contends that the reforms in banking sector positively

influence the financial health of the banks. He observes that the financial

performances of the banks are improving as a result of the prudential norms of RBI

and other committees. Besides, these reforms have helped to increase competition in

the banking industry.

Subrat Mohapatra (2004)28 in his article states that the non-food credit of the

banks has increased several times. Banks have to increase the lending even though

the interest rates are decreasing due to the of bulk deposits received by them. Retail

credit and SME advances are the growth areas of banks.

Velouston and Cleopatra (2004)29 in their study have analysed the relative

role of certain drivers of bank loyalty. Their study shows the links between image,

perceived quality satisfaction, commitment and loyalty in Greek retail banking. The

result of the study is that the image has a positive impact on perceived quality and

satisfaction. The key factor that leads to loyalty is the personalisation in providing

services to customers which help to increase customer satisfaction.

Yeole (2004)30 in her article “Problems of NPA” deals with the NPA

problems of commercial banks. She feels that the public sector banks are facing the

NPA problem more often than the private and foreign banks. The NPA of public

sector banks is growing due to external and internal factors and affects the

profitability and liquidity of the banks adversely.


Zhou’s (2004)31 study is on “The dimensions of customer satisfaction in the

Chinese retail banking”. The factors contributing to customer satisfaction are

determined using the model of SERVPERF. Her study points that empathy or

responsiveness of the employees, reliability or assurance from the bank and

tangibility of services are the important factors affecting customer satisfaction.

Bhayani (2005)32 conducted a study among 200 customers on the retail

banking awareness of private banks, nationalized and co-operative banks in the

Rajkot city of Gujarat. The conclusion she arrives at is because of the low literacy

among the customers, they are not aware of technology assisted banking services. So

the banks should try to create awareness among customers on technology and

technology driven products for better retail banking operations.

Chakraborty (2005)33 in the article, “Customer relationship management, a

new mantra in Indian banking” views that CRM has an important role for banks in

the marketing of products and services in an era of technology. By practicing CRM,

the customer base and customer loyalty in banks can be increased.

Gopalakrishnan (2005)34 in his study identifies four main causes of NPA. In

his opinion the main causes are wilful default, funds diversion, deficiency in credit

appraisal standards and lack of follow-up and supervision. Besides these, absence of

market intelligence, lack of staff to supervise the advances and shortage of credit

information among banks also cause NPA.

S. Joy (2005)35 in his study “Performance evaluation of private sector

scheduled banks in Kerala” suggests that private sector banks in Kerala are far

below the other banks in performance but above other banks in growth proportions.


Ramola (2005)36 in his article states that Indian banking industry can reach

international level only through the growth of retail banking. For the growth of retail

banking, innovative products which satisfy the needs of the individuals are required.

Such products can be developed through market research. Besides, new regulations

are required to reduce NPA in retail sector.

Rudra Sen Sarma (2005)37 makes a study on “The cost and profit efficiency

of Indian banks during 1986-2003”. During this period the cost efficiency of the

banks improved but the profit efficiency decreased. Compared to foreign banks,

domestic banks are found to be more efficient in terms of cost and profit.

Sudhir (2005)38 in his study “Retail banking – a paradigm shift” points out

that the potentials of retail banking in rural and semi urban areas remain untapped.

The potential customers in the rural and semi urban areas provide opportunities for

the growth of retail banking in future.

Ndubisi and Wah (2005)39 studied on the “Factors affecting customer

satisfaction in the Malaysian retail banking”. They made a field survey using structured

questionnaire among the bank customers in Malaysia. Using the method of factor

analysis they identified five important factors of customer satisfaction. are They are

communication, competence, trust, conflict handling and relationship quality.

Amit and Anwarin (2006)40 view that most of the Indian banks are providing

retail banking services like phone banking, internet banking, multi-city cheque

facility, any branch banking and bill pay services. Along with this technology based

services, banks are concentrating on business intelligence for providing better

customer services.


Arun Kumar (2006)41 in his study entitled “Retail banking-its socio-

economic impact” argues that retail banking has failed to improve the socio-

economic conditions of retail loan customers.

Deepal Singh (2006)42 who made a study on “Consumer behavior and

banking of retail products” argues that borrower’s attitude is the most important

factor which determines the success of housing loan scheme.

Dharmendra Singh and Garima Kohli (2006)43 are of the opinion that the

new generation banks in India are different from the traditional banks. They are the

pioneers in the use of technology, utilization of manpower with professional

management and implementing corporate governance. The traditional banks follow

the technology adoption of these banks to retain customers.

Laxman (2006)44 in his article “Retail banking, small and beautiful

dimensions” identifies the convenience of the customers, excellence in processing

and cost effectiveness as prime factors determining the success of retail banking.

Nair (2006)45 opines that Indian banks should innovate and grow for facing

the new situations of technological developments in the banking sector. Modern

customers are not satisfied with traditional banking and traditional banking products

and services.

Focus of Neetu Prakash’s (2006)46 comprehensive study on “Growth of retail

banking in India” is growth pattern of retail banking in India. Her argument is that

even though the growth of Retail banking in India is very small compared to world

standards, the growth and development of retail banking is an important milestone in

the Indian banking sector development. She also finds that the performance of


private sector banks is better than that of their public sector counterparts in the

growth of retail banking.

Pikkarainen, Pikkarainen, Karjaluoto, and Pahnila (2006)47 studied the

“Factors affecting online banking customer satisfaction in the Finnish retail

banking”. Convenience sampling was adopted and data was collected with a

structured questionnaire. The outcome of their research is that website content, ease

of use of the websites and accuracy are the important factors of customer

satisfaction.

Rajesh Chakrabarti (2006)48 observes that the over emphasis on competition

and profitability has driven away the socialistic approach of public sector banks

followed for decades. Yet he concludes that the emergence of new generation banks

and foreign banks has promoted the use of technology and professionalism in

banking sector.

Shyamala (2006)49 in her study “Retail banking –opportunities and

challenges” has identified certain opportunities and challenges of retail banking in

India. In her opinion, the growing youth population, technological developments

like ATM, credit card, internet banking etc are the major opportunities and

challenges in Indian retail banking.

Uppal (2006)50 in his study the “Survival of public sector banks in the post

LPG era” studied the profitability of SBI and its associates, nationalised banks, new

private sector banks and foreign banks in the post-reforms era. He finds that there is

a significant difference in the profitability of major bank groups. Foreign banks have


the highest profitability. It is also found that the lower profitability of public sector

banks is due to the negative effects of burden.

The focus of Dhandapani Alagiri’s (2007)51 article “Retail banking:

challenges” is on the retail banking in India with increased consumer spending and

increased challenges in the form of competition and technology up-gradation. He

concludes that the most important issues for the new generation customers are

product innovation and competitive packaging services. Retail banking increased the

uses of the mobile phones and e-banking facilities for quick service. As a result the

security and confidentiality have become very difficult to maintain. This has become

a major problem for the banks in India. Another result of the study is that credit

delivery mechanism has been improved considerably with the advent of

technological advances.

Molina, Martin-Consuegra, and Esteban (2007)52 have made a study on

“The impact of relational benefits on customer satisfaction in Spanish retail

banking”. It is an empirical study using a sample of customers regarding the

relationship between relational benefits and customer satisfaction. Their study shows

that confidence benefits have a direct, positive effect on the satisfaction level of

customers with their bank.

Praveeth (2007)53 in his study the “Perceptions of customers on retail

banking” points out that the customers of both public and private sector banks are

satisfied on many factors but are dissatisfied on areas like holiday period granted by

banks and insurance coverage.


Santi Gopal and Soma Dey (2007)54 in their study on “Retail banking in

Indian scheduled commercial banks” bring to light that there is very high

competition in Indian retail banking. Innovation in products, technological

developments and strategies to capture the market share decide the success in retail

banking. Quality of customer service is equally important. Thus retention of

customers and attracting potential customers are the major challenges before banks.

Venkata Seshaiah and Vunyale Narender (2007)55 identify various factors

affecting customer’s choice in their study “Factors affecting customer’s choice of

retail banking”. They probe into the psychology of the customer’s loyalty. They

identify different factors affecting the choice of banks through a survey. These

factors are safety of deposits, size and strength, accuracy, general survey quality,

speed of delivery, proximity, security of environment, cordiality of staff, price &

services charges, product packaging, general public impression, peer group

impression, face lift, friendship with staff and advertising and publicity. They

conclude that in order to achieve their corporate mission through customer

orientation, retail banks must reorganize their activities.

Vyas and Dhade (2007)56 who conducted a study on “The impact of new

private sector banks on State Bank of India” observe that the new private sector

banks are not a threat to the SBI at present but the situation may change in future.

The SBI with a vast net work of branches and presence is able to compete with these

banks at present.

Manoj Kamar Joshi (2008)57 in his article entitled “Customer service in retail

banking in India” discusses the various service aspects of Indian banks in retail

banking. He finds that through the use of modern technology, they provide high


standard and quality customer service and this helps them to succeed in the

competitive world of retail banking. While processing the loans, banks should

provide comprehensive information with regard to the fees / charges levied from the

borrowers. By standardising the procedures banks can prompt the customers to visit

them hazzle free and by directing them to the right officials they can save their time

and acquire their goodwill.

Uppal (2008)58 in his study finds that the banks are not following the

cardinal principles of lending in distributing the retail credit. Banks can succeed

only through aggravating and emphasizing various retail credit activities.

Al-Eisa and Alhemoud (2009)59 studied the most important attributes that

influence customer satisfaction with retail banks in Kuwait. They also measured the

level of overall satisfaction of the customers of the sample banks. The multiple-

attribute approach was applied in the analysis of data. A convenient sample was

selected from customers of retail banks in Kuwait. They observe that the most

important factors for predicting customer satisfaction with retail banks in Kuwait are

fast service, availability of self-banking services and courtesy and helpfulness of

employees.

Arti (2009)60 in her comparative study of ICICI bank and SBI found that

ICICI bank perform better in staff behaviour and services than SBI. She also found

that the competitive rate and commitment make satisfied customers while hidden

charges is the reason for dissatisfaction with ICICI bank.


Herington and Weaven (2009)61 analysed the factors affecting customer

satisfaction for e-retail banking in Australia. A survey was conducted among the

regular users of online banking by selecting a convenience sample. The factors for

customer satisfaction were ascertained by factor analysis and regression analysis. He

identifies that personal need of the customer, website organization, user-friendliness

of the websites and efficiency as important factors contributing to the satisfaction of

customers.

Kanning and Bergmann (2009)62 studied the “Factors affecting customer

satisfaction in the German retail banking sector”. By applying the field study

method they identified the factors affecting customer satisfaction. They identify

Performance of banks and fulfilment of customer expectations as the major factors

which affect customer satisfaction.

Mohammed Hossain and Shirley Leo (2009)63 in their study find that the

perception of customers changes in accordance with the nature of service. They

view that in this competitive environment, all banks are offering the same or similar

products and the only factor to differentiate them is the service quality. Thus retail

banks must ensure better service to their customers to become successful

Pankaj Kumar (2009)64 in his article “Customer relationship management in

retail banking” highlights that Customer relationship management is especially

useful for large banks like SBI which are spread across different locations. For CRM

to be truly effective, it requires a well thought out initiative involving strategy,

people, technology and process.


Uppal (2009)65 in his article “Retail banking strategies in the liberalized

globalised era” views that Indian banks must give more attention to the retail

banking activities. Banks have to expand the product line, identify new delivery

channels, develop better marketing systems and strategies and service quality so that

satisfaction of the customers can be enhanced.

Bhaskaran (2010)66 in the article “Impact of financial crisis on banks in

India” views that the impact of financial crisis is more on private sector banks.

Nonperforming assets have increased in all banking sectors. The increase in NPA

preceded the financial crisis and coincided with the retail boom.

Aparna Mishra and Kamini Tandon (2011)67 who studied “Customer centric

approach towards retail banking services” find that the important factor affecting

customer satisfaction in retail banking is service quality. The customer retention can

be ensured only through the quality of service provided by the banks.

Dhara Kothari (2011)68 views that retail banking offers vast opportunities for

growth and at the same time has challenges which are discouraging. The success of

retail banking depends on the ability of banks to make use of these challenges and

opportunities profitably. The efficiency of operations and use of technology would

provide the competitive strength for success in retail banking.

Dilip Kumar and Durga Sankar (2011)69 compare the performances of new

generation banks in India. During the periods of slow- down in the growth of credit,

the private sector banks have been able to perform better on account of the retail

lending. The competition in the field is very high and the customers are benefitted


by it in the form of better service quality, product innovations and better bargains.

The retail segment has tremendous growth.

Ganguli and Roy (2011)70 also studied the “Factors affecting customer

satisfaction in the Indian retail banking sector”. The factors affecting customer

satisfaction were identified through factor analysis. Their study also shows that the

important factors affecting customer satisfaction are customer service and

technology usage, easiness and reliability.

Gupta and Meera (2011)71 in their study on “Indian banks and Basel II

norms” find that the capital adequacy and risk structure of the banks have improved

as a result of Basel II regulations. The NPA of all banks have declined. The capital

adequacy ratio of banks has increased as a result of capital regulations which in turn

lead to decrease in NPA.

Kajal Chaudhary and Monika Sharma (2011)72 in their article “Performance

of Indian public sector banks and private sector banks: a comparative study”

suggests that banks should take adequate measures to escape from NPA problem.

Proper training should be given in documentation and creation of charge of

securities to the staff involved in loan sanctioning. Care should be exercised in the

selection of borrowers and projects

Kalpesh (2011)73 in his comparative study of financial performance of Indian

banks points out that efficiency and stability of the banking system in India is

impacted by the reform measures. The profitability and liquidity of both public and

private sector banks have also improved a lot.


Mukhopadhy (2011)74 opines that retail banking in India has been fast

emerging as one of the major drivers of the overall banking industry. Retail banking

has shown much growth in the recent past. The strategies adopted by banks in retail

banking are changing fast as the banks are following a combination of organic

growth, acquisition and alliance.

Nishith, Enid and Devaraj (2011)75 in their article “Retail banking the new

buzzword of today’s banking” subscribe to the view that the retail banking has

challenges along with the vast opportunities. The ability of banks to effectively meet

the challenges of retail banking and use the opportunities profitably will determine

the growth of banking. The efficiency of operations and adoption of technologies

help banks to compete with other players in retail banking business.

Siddeshwar and Pradeep (2011)76 make an interesting observation regarding

home loans. They point out that home loans are beneficial to the banks due to

various reasons. Banks earn huge amount of interest income through home loans.

House loans are sanctioned against most secured asset compared to most other

loans. Since the dream home of the individual is mortgaged for the home loan, the

borrower pays the instalments timely, and hence there is little or no chance of such a

loan becoming bad and non-performing asset for the bank.

The study of Singh and Kaur (2011)77 has its focus on the factors that affect

customer satisfaction in selected Indian universal banks. Survey method was used

for the study. A well-structured questionnaire was used for collecting data from

sample respondents. He identifies seven factors that influence customer satisfaction

– employee responsiveness, appearance of tangibles, social responsibility, service

innovation, positive word-of-mouth, competence, and reliability. The variable social


responsibility, positive word-of-mouth, and reliability have major influences on the

overall satisfaction of the customers.

Syed Ibrahim (2011)78 in his study states that Indian scheduled commercial

banks have improved their operational performance since 2000. There is constant

increase in aggregate deposits. The C-D ratio also shows an increasing trend. The

investment deposit ratio and priority sector advances have also gone up.

Uppal (2011)79 in his study states that as e-channels provide time and cost

utility, customers prefer them. His stance is that public sector banks have least

growth in terms of number of customers. The financial productivity index has

decreased in new private sector banks. The productivity index of employees, branch

and bank is increased in all bank groups.

Aashish Shashikant Jani (2012)80 in his comparative study on the use of

technology in retail banking among public and private sector banks argues that e-

channels are preferred by customers because of cost and time utility. Her suggestion

is that in this era of information technology, the public sector banks have to

introduce more technology based products and services to compete with other bank

groups especially new generation banks.

Nishit (2012)81 in her comparative study on private sector banks in India

analysed the performance of six major private sector banks during the period 2008-

09 to 2009-10. She found that profit maximisation and wealth maximisation are the

main concern for banks. The private sector banks play an important role in the

economic development of the country. The study also contains the profitability


analysis of the sample banks which can be used as a basis for investment decision by

the investors.

Examining the macro trends of retail credit in India, Dinabandhu Bag

(2012)82 observes that the personal credit has increased many times in India since

1996. But this increase is not significant when compared to the increase in per capita

income and per household income in India. The demand for retail credit has

increased as a result of the increased employment generation in the organised sector.

He further views that a large portion of households remain unserved with retail

credit and that the gap between retail credit and income is increasing. Through better

credit management tools the banks can improve the credit eligibility and build a

culture of credit.

Paritosh and Kavita (2012)83 in their research paper on “The impact of

customer satisfaction on retail banking” conclude that the ATM, internet and branch

office are the popular channels used by retail banking customers. The financial crisis

has not affected the trust and relationship of customers with their retail banks.

Raghuwanshi (2012)84 in his article states that the Indian retail banking has

wide opportunities and challenges. The retail portfolio of banks is subject to

frequent change. Banks should constantly innovate in retail banking through product

diversification, technology up-gradation, cross selling etc.

Revathy (2012)85 in her article views that retail banking has greater scope of

generating profit than the traditional banking. Banks have identified this and are

adopting a different approach in designing the retail banking products and services

to hold the market share.


Ashok Kumar (2013)86 in his study “Opportunities and challenges in the

Indian retail banking industry” concludes that for the development of retail banking in

India, a paradigm shift is required in bank financing through innovative products and

mechanisms involving constant up-gradation of the banks internal systems and

processes. Banks require product development and differentiation, innovation and

business process reengineering, micro-planning, marketing, prudent pricing,

customisation, technology up-gradation, electronic or mobile banking, cost reduction

and cross-selling for their development through retail lending. He says that retail

banking has more scope for generating profit than any other traditional methods.

Madhvi (2013)87 is of the opinion that retail banking is the most tremendous

area to be looked after by the banks. The rising population of higher income earning

middle class, who are ready to take risk, has increased the scope of retail banking.

So banks should concentrate on this elite group of customers through product

innovation and offer them quality service in time.

Mittal and Pachauri (2013)88 in their study on promotional tools and

techniques adopted for retail banking compared the public sector banks and private

sector banks. Their finding is that the perception of customers with regard to the

type of promotional tools and the techniques adopted significantly vary between

public sector and private sector banks.

Phanindra and Parashuramulu (2013)89 in their article view that the Indian

banks have wide scope for operations but the important obstacle before them is the

hard regulations made by the apex body. The LPG measures have affected the banking

sector. Thus the participants in retail banking in India have to adopt a different approach

in designing products and services in order to retain the market share.


Sujatha S. And Arumugam N. (2013)90 in their study “Customer satisfaction

in Indian banking sector” view that before introducing various services to customers,

banks should take care of their needs. To serve customers with different occupations

and educational backgrounds banks should adopt strategies. There is a correlation

between the satisfaction of the customer and the performance of the banks. So it is

important for banks to consider satisfaction of the customer as a relationship-

marketing strategy.

Gokilamani, and Natarajan (2014)91 in their study opine that customers of

Indian commercial banks are positively responding to retail banking. It is important

for banks to focus on service quality for strengthening their competitive edge and to

allocate the limited resources to serve the personal banking division. They further

views that the success of a retail bank will depend on product innovation,

technological developments and strategies to retain the retail customers.

Research gap

The foregoing analysis of the available literature of the researches carried out by

various scholars clearly shows that there is a research gap for the present study. The

earlier studies differed one another in the selection of variables, selection of reference

period, selection of banks and the use of tools and techniques. None of the studies had

made an effort to understand and compare the retail finance practices of old commercial

banks and new generation banks in Kerala. The present study brings within its purview

the areas of the retail finance practices and the satisfaction level of retail borrowers of

old commercial banks and new generation banks in Kerala. Thus the present study is an

important venture for studying and comparing the retail finance practices of the two

types of banks and offer suggestions on the basis of the findings.


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