COMPARISON BETWEEN TWO PRIVATE SECTOR BANKS

COMPARISON BETWEEN TWO PRIVATE SECTOR BANKS

CHAPTER 1

INTRODUCTION

The world of banking has assumed a new dimension at dawn of the 21st century

with the advent of tech banking, thereby lending the industry a stamp of

universality. In general, banking may be classified as retail and corporate

banking. Retail banking, which is designed to meet the requirement of

individual customers and encourage their savings, includes payment of utility

bills, consumer loans, credit cards, checking account and the like. Corporate

banking, on the other hand, caters to the need of corporate customers like bills

discounting, opening letters of credit, managing cash, etc. Metamorphic changes

took place in the Indian financial system during the eighties and nineties

consequent upon deregulation and liberalization of economic policies of the

government. India began shaping up its economy and earmarked ambitious plan

for economic growth. Consequently, a sea change in money and capital markets

took place. Application of marketing concept in the banking sector was

introduced to enhance the customer satisfaction he policy of privatization of

banking services aims at encouraging the competition in banking sector and

introduction of financial services. Consequently, services such as Demat,

Internet banking, Portfolio Management, Venture capital, etc, came into

existence to cater to the needs of public. An important agenda for every banker

today is greater operational efficiency and customer satisfaction. The mew

watchword for the bank is pretty ambitious: customer delight. The introduction

to the marketing concept to banking sectors can be traced back to American

Banking Association Conference of 1958. Banks marketing can be defined as

the part of management activity, which seems to direct the flow of banking

services profitability to the customers. The marketing concept basically requires

that there should be thorough understanding of customer need and to learn about

1


market it operates in. Further the market is segmented so as to understand the

requirement of the customer at a profit to the banks.

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CHAPTER 2

DEFINITION OF BANK

The Oxford dictionary defines the Bank as,

“An establishment for the custody of money, which it pays out, on a customer’s

order.”

According to Whitehead

“A Bank is defined as an institution which collects surplus funds from the

public, safeguards the, and makes them available to the true owner when

required and also lends sums be their true owners to those who are in need of

funds and can provide security.”

Banking Company in India has been defined in the Banking Companies

act1949,“One which transacts the business of banking which means the

accepting, for the purpose of lending or investment of the deposits of money

from the public, repayable on demand, or otherwise and withdraw able be

cheque draft, order or otherwise.”The banking system is an integral subsystem

of the financial system. It represents an important channel of collecting small

savings form the households and lending it to the corporate sector. The Indian

banking system has Reserve Bank of India (RBI) as the apex body for all

matters relating to the banking system. It is the central Bank of India. It is also

known as the Banker to All Other Banks.

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CHAPTER 3

PRIVATE SECTOR BANKS

All those banks where greater parts of stake or equity are held by the private

shareholders and not by government are called "private-sector banks". These are

the major players in the banking sector as well as in expansion of the business

activities India. The present private-sector banks equipped with all kinds of

contemporary innovations, monetary tools and techniques to handle the

complexities are a result of the evolutionary process over two centuries. They

have a highly developed organizational structure and are professionally

managed. Thus they have grown faster and stronger since past few years

The part of the economy that is not state controlled, and is run by individuals

and companies for profit. The private sector encompasses all for-profit

businesses that are not owned or operated by the government. Companies and

corporations that are government run are part of what is known as the public

sector, while charities and other nonprofit organizations are part of the

voluntary sector.

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CHAPTER 4

PRIVATIZATION OF INDIAN BANKING

For the public sector banks, the era of bumper profit is over. For much of the

last decade the process of collaborated financial liberalization had cleared up

the Bank’s balance sheet enabling them to with stand increased competition,

global financing, turmoil and even unprotected industrial slow down. But the

cycle of liberalization has run its full course. Now it is the time for the big

structural leap, rationalization, mergers, and privatization. Unless the banks

undertake these fundamental changes, their profit will stay under pressure.

There are two areas of competitions which banking industry is facing

internationally and nationally. In the pre-liberalization era, Indian banks could

grow in a closed economy but the banking sector opened up for private

competition. It is possible that private banks could become dominant players

even within India. It has been recorded a rapid rise of the new private sector

banks and it has tracked the transformation of the public sector banks as they

grapple with the changes of financial deregulation.

Use of ATM cards, Internet Banking, Phone Banking, Mobile Banking are the

new innovative channels of banking which are being widely used as they result

in saving both time and money which are two essential things that every one is

short of and is running to catch hold of them. Moreover private sector banks

are aligning its infrastructures, marketing quality and technology to build

deep commitment in building consumer and retail banking. The main focus of

these banks is on innovative range of services or products.

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CHAPTER 5

HISTORY & EVALUATION OF PRIVATE SECTOR

BANKS

Private-sector banks have been functioning in India since the very beginning of

the banking system. Initially, during 1921, the private banks like bank of

Bengal, bank of Bombay and bank of Madras were in service, which all

together formed Imperial Bank of India.

Reserve Bank of India (RBI) came in picture in 1935 and became the centre of

every other bank taking away all the responsibilities and functions of Imperial

bank. Between 1969 and 1980 there was rapid increase in the number of

branches of the private banks. In April 1980, they accounted for nearly 17.5

percent of bank branches in India. In 1980, after 6 more banks were

nationalized, about 10 percent of the bank branches were those of private-sector

banks. The share of the private bank branches stayed nearly same between 1980

and 2000.

Then from the early 1990s, RBI's liberalization policy came in picture and with

this the government gave licenses to a few private banks, which came to be

known as new private-sector banks.

There are two categories of the private-sector banks: "old" and "new".

The old private-sector banks have been operating since a long time and may be

referred to those banks, which are in operation from before 1991 and all those

banks that have commenced their business after 1991 are called as new private-

sector banks.[

6

http://en.wikipedia.org/wiki/Liberalisation

http://en.wikipedia.org/wiki/Reserve_Bank_of_India

http://en.wikipedia.org/wiki/Imperial_Bank_of_India

http://en.wikipedia.org/wiki/Bank_of_Madras

http://en.wikipedia.org/wiki/Bank_of_Bombay

http://en.wikipedia.org/wiki/Bank_of_Bengal

http://en.wikipedia.org/wiki/Bank_of_Bengal

http://en.wikipedia.org/wiki/Banking


Housing Development Finance Corporation Limited was the first private bank

in India to receive license from RBI as a part of the RBI's liberalization policy

of the banking sector, to set up a bank in the private-sector banks in India.

7

http://en.wikipedia.org/wiki/Liberalization

http://en.wikipedia.org/wiki/Housing_Development_Finance_Corporation


LIST OF PRIVATE SECTOR BANKS

Old private sector banks New private banks

Catholic Syrian Bank Ltd. Axis Bank Ltd.

City Union Bank Ltd. Development Credit Bank Ltd.

Dhanalakshmi bank Ltd. HDFC Bank Ltd.

Federal Bank Ltd. ICICI Bank Ltd.

ING Vysya Bank Ltd. Induslnd Bank Ltd.

Jammu & Kashmir Bank Ltd. Kotak Mahindra Bank Ltd.

Karnataka Bank Ltd. Yes Bank Ltd.

Karur Vysya Bank Ltd.

Lakshmi Vilas Bank Ltd.

Nainital Bank Ltd.

Ratnakar Bank Ltd.

South Indian Bank Ltd.

Tamilnad Mercantile Bank Ltd.

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CHAPTER 6

7 P’S OF THE PRIVATE SECTOR BANKS

PRODUCT

(A) DEPOSITS: Savings, Current, Fixed etc.

(B) ADVANCES: a) Term Loan, b) Clean Loan, c) Bills Discounting, d)

Advances, e) Pre-shipment Finance, f) Post-shipment finance, g) Secured and

Unsecured lines of credit.

(2) Non-fund oriented: a) Guarantees, and b) Letter of Credit.

(C) INTERNATIONAL BANKING: a) Letter of Credit, and b) Foreign

Currency.

(D) CONSULTANCY: a) Investment Counseling, b) Project Counseling, c)

Merchant Banking, and d) Tax Consultancy.

(E) MISCELLANEOUS: a) Traveler Cheques, b) Credit card, c) Remittances,

d) Collections, e) Sale of Drafts, f) Standing instructions, and g) Trusteeship.

As seen in the goods-service continuum, your product can have both tangible

and intangible aspects, and is the thing you offer to satisfy your customers’

wants and needs. Within this element, you need to consider such things as your

product range; its quality and design; its features and the benefits it offers;

sizing and packaging; and any add-on guarantees and customer service

offerings.

PRICE

The price mix in the banking sector is nothing but the interest rates charged by

the different banks.

Let's understand this with an example. A particular buyer approaches for a car

loan say for a period of 3 years. He is charged Rs. 20,000 as interest. however if

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a sales representative of another bank comes to know of this deal he will try to

attract the customer by giving him a better deal that is a loan at a lower rate on

interest. In this way due to the high level of competition the customer benefits.

PROMOTION

Promotion is nothing but making the customer more and more aware of the

services and benefits provided by the bank.

The banks today can use a lot of new technology to communicate to their

customers. Two of the fastest growing modern tools of communicating with the

customers are:

1. Internet Banking

2. Mobile Banking

PLACE

Place mix is the location analysis for banks branches. There are number a

factors affecting the determination of the location of the branch of bank. Like

population characteristics, commercial, proximity of other commercial outlets.

Your choice of such channels is important, as is the variety of channels you use.

For example, a common issue for businesses beginning to trade on-line is how

that will affect their off-line business, for example selling directly through the

web could alienate retail outlets that have been the mainstay of your business in

the past.

PEOPLE

The impact that your people can have on your marketing cannot be

underestimated. At its most obvious, this element covers your front line sales

and customer service staff who will have a direct impact on how your product is

perceived. You need to consider the knowledge and skills of your staff; their

motivation and investment in supporting your brand. Any element of the

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marketing mix will also have its impact on other elements of your business, but

the people element is one where the importance of regarding marketing as an

integral part of the way you do business is crystal clear.

PROCESS

The process mix constitutes the overall procedure involved in using the services

offered by the bank.

Let's take for example the process for application for a car loan.

Now this mainly involves 3 things.

1. Producing of proper documents

2. Filling up of application form

3. Paying for the initial down payment

PHYSICAL EVIDENCE

Physical evidence is the overall layout of the place. How the entire bank has

been designed. Physical evidence refers to all those factors that helps make the

process much easier and smoother. For example in case of a bank the physical

evidence would be the placement of the customer service executive's desk, or

the location of the place for depositing Cheques.

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CHAPTER 7

COMPANY PROFILE

INDUSTRIAL CREDIT & INVESTMENT

CORPORATION OF INDIA

INTRODUCTION TO ‘ICICI BANK’

ICICI Bank is India’s second-largest bank with total assets of Rs. 3,663.74

billion (US$ 76 billion) at September 30, 2009 and profit after tax Rs. 19.18

billion (US$ 398.8 million) for the half year ended September 30, 2009. The

Bank has a network of 1,588 branches and about 4,883 ATMs in India and

presence in 18 countries. ICICI Bank offers a wide range of banking products

and financial services to corporate and retail customers through a variety of

delivery channels and through its specialised subsidiaries and affiliates in the

areas of investment banking, life and non-life insurance, venture capital and

asset management. The Bank currently has subsidiaries in the United

Kingdom, Russia and Canada, branches in United States, Singapore, Bahrain,

Hong Kong, Sri Lanka, Qatar and Dubai International Finance Centre and

representative offices in United Arab Emirates, China, South Africa,

Bangladesh, Thailand, Malaysia and Indonesia. Our UK subsidiary has

established branches in Belgium and Germany.

ICICI Bank’s equity shares are listed in India on Bombay Stock Exchange and

the National Stock Exchange of India Limited and its American Depositary

Receipts (ADRs) are listed on the New York Stock Exchange (NYSE).

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HISTORY OF ‘ICICI BANK’

ICICI Bank was originally promoted in 1994 by ICICI Limited, an Indian

financial institution, and was its wholly-owned subsidiary. ICICI’s

shareholding in ICICI Bank was reduced to 46% through a public offering of

shares in India in fiscal 1998, an equity offering in the form of ADRs listed on

the NYSE in fiscal 2000, ICICI Bank’s acquisition of Bank of Madura Limited

in an all-stock amalgamation in fiscal 2001, and secondary market sales by

ICICI to institutional investors in fiscal 2001 and fiscal 2002. ICICI was

formed in 1955 at the initiative of the World Bank, the Government of India

and representatives of Indian industry. The principal objective was to create a

development financial institution for providing medium-term and long-term

project financing to Indian businesses. In the 1990s, ICICI transformed its

business from a development financial institution offering only project finance

to a diversified financial services group offering a wide variety of products and

services, both directly and through a number of subsidiaries and affiliates like

ICICI Bank. In 1999, ICICI become the first Indian company and the first

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

After consideration of various corporate structuring alternatives in the context

of the emerging competitive scenario in the Indian banking industry, and the

move towards universal banking, the managements of ICICI and ICICI Bank

formed the view that the merger of ICICI with ICICI Bank would be the

optimal strategic alternative for both entities, and would create the optimal

legal structure for the ICICI group’s universal banking strategy. The merger

would enhance value for ICICI shareholders through the merged entity’s

access to low-cost deposits, greater opportunities for earning fee-based income

and the ability to participate in the payments system and provide transaction-

banking services. The merger would enhance value for ICICI Bank

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shareholders through a large capital base and scale of operations, seamless

access to ICICI’s strong corporate relationships built up over five decades,

entry into new business segments, higher market share in various business

segments, particularly fee-based services, and access to the vast talent pool of

ICICI and its subsidiaries. In October 2001, the Boards of Directors of ICICI

and ICICI Bank approved the merger of ICICI and two of its wholly-owned

retail finance subsidiaries, ICICI Personal Financial Services Limited and

ICICI Capital Services Limited, with ICICI Bank.

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THE 7 P’s OF ‘ICICI BANK’

PRODUCT MIX:

1. DEPOSITS:

ICICI Bank offers wide variety of Deposit Products to suit our requirements.

Coupled with convenience of networked branches/ over 1800 ATMs and

facility of E-channels like Internet and Mobile Banking, ICICI Bank brings

banking at your doorstep.

Savings Account: ICICI Bank offers a power packed Savings Account with a

host of convenient features and banking channels to transact through. So now

you can bank at your convenience, without the stress of waiting in queues.

Senior Citizen Services: The Senior Citizen Services from ICICI Bank has

several advantages that are tailored to bring more convenience and enjoyment

in your life.

Young Stars: It’s really important to help children learn the value of finances

and money management at an early age. Banking is a serious business, but we

make banking a pleasure and at the same time children learn how to manage

their personal finances.

Fixed Deposits: Safety, Flexibility, Liquidity and Returns!!!! A combination

of unbeatable features of the Fixed Deposit from ICICI Bank.

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Recurring Deposits: Through ICICI Bank Recurring Deposit you can invest

small amounts of money every month that ends up with a large saving on

maturity. So you enjoy twin advantages- affordability and higher earnings.

Roaming Current Account: Only Roaming Current Account from ICICI

Bank travels the distance with your business. You can access your accounts at

over 500 networked branches across the country.

Bank @ Campus: Thanks to bank@campus, child can now surf the Net and

access all the details of his / her account at the click of a mouse! No need to

visit the bank branch at all.

ICICI Bank Salary Account: is a benefit-rich payroll account for Employers

and Employees. As an organization, you can opt for our Salary Accounts to

enable easy disbursements of salaries and enjoy numerous other benefits too.

2. INVESTMENTS

Along with Deposit products and Loan offerings, ICICI Bank assists you to

manage your finances by providing various investment options such as:

ICICI Bank Tax Saving Bonds

Government of India Bonds

Investment in Mutual Funds

Initial Public Offers by Corporate

Investment in “Pure Gold”

Foreign Exchange Services

Senior Citizens Savings Scheme, 2004

3. ANYWHERE BANKING

ICICI Bank is the second largest bank in the country. It services a customer

base of more than 5 million customer accounts through a multi-channel access

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network. This includes more than 500 branches and extension counters, over

1800 ATMs, Call Centre and Internet Banking.

Thus, one can access the various services ICICI Bank has to offer at anytime,

anywhere and from anyplace.

4. LOAN

a) Home Loans

b) Personal Loans

c) Car Loans

d) Two Wheeler Loans

e) Commercial Vehicle Loans

f) Loans against Securities

g) Farm Equipment Loans

h) Construction Equipment Loans

i) Office Equipment Loans

j) Medical Equipment Loans

5. CARDS

a) Credit Card: ICICI Bank Credit Cards give you the facility of cash,

convenience and a range of benefits, anywhere in the world. These benefits

range from life time free cards, Insurance benefits, global emergency

assistance service, discounts, utility payments, travel discounts and much

more.

b) Debit ATM Card: The ICICI Bank Debit Card is a revolutionary form of

cash that allows customers to access their bank account around the clock,

around the world. The ICICI Bank Debit Card can be used for shopping at

more than 100,000 merchants in India and 13 million merchants worldwide.

17


c) Travel Card: Presenting ICICI Bank Travel Card. The Hassle Free way to

Travel the world. Traveling with US Dollar, Euro, Pound Sterling or Swiss

Francs; Looking for security and convenience; take ICICI Bank Travel Card.

Issued in duplicate. Offers the Pin based security. Has the convenience of

usage of Credit or Debit card.

6. DEMAT SERVICES

ICICI Bank Demat Services boasts of an ever-growing customer base of over

7 lacs account holders. In their continuous endeavor to offer best of the class

services to our customers we offer the following features:

Digitally signed transaction statement by e-mail.

Corporate benefit tracking.

e-Instruction facility – facility to transfer securities 24 hours a day, 7 days a

week through InternetÂ Interactive Voice Response (IVR) at a lower cost.

Dedicated specially trained customer care executives at their call centre, to

handle all queries.

7. MOBILE BANKING

With ICICI Bank, banking is no longer what it used to be. ICICI Bank offers

Mobile Banking facility to all its Bank, Credit Card and Demat customers.

ICICI Bank Mobile Banking enables you to bank while being on the move.

8. NRI SERVICES

ONLINE MONEY TRANSFER facility available to NRIs worldwide

through www.money2India.com at the click of a button

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Benefits:

FREE Money transfers into accounts with over 30 banks in India

Demand Drafts issued and payable at over 1250 locations in India

ONLINE Tracking of the status of your funds

SUPERIOR Exchange rates

OFFLINE MONEY TRANSFER facility is also available across

geographies through

Local branches and in association with partner banks/ exchange houses.

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PRICING MIX:

The pricing decisions or the decisions related to interest and fee or commission

charged by banks are found instrumental in motivating or influencing the

target market.

The RBI and IBA are concerned with regulations. The rate of interest is

regulated by the RBI and other charges are controlled by IBA.

The pricing policy of a bank is considered important for raising the number of

customers the accretion of deposits. Also the quality of service provided has

direct relationship with the fees charged. Thus while deciding the price mix

customer services rank the top position.

The banking organizations are required to frame two- fold strategies. First, the

strategy is concerned with interest and fee charged and the second strategy is

related to the interest paid. Since both the strategies throw a vice- versa

impact, it is important that banks attempt to establish a correlation between

two. It is essential that both the buyers as well as the sellers have feeling of

winning.

PROMOTION MIX:

Advertising: Television, radio, movies, theatres

Print media: hoardings, newspaper, magazines

Publicity: road shows, campus visits, sandwich man, Sponsorship

Sales promotion: gifts, discount and commission, incentives,etc.

Personal selling: Cross-sale (selling at competitors place),personalized

service.

Telemarketing: ICICI one source Call center (mind space)

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IMPORTANT 4 P`S OF ICICI BANK

PLACE:

This component of marketing mix is related to the offering of services. The

services are sold through the branches.

The 2 important decision making areas are: making available the promised

services to the ultimate users and selecting a suitable place for bank branches.

The number of branches OF ICICI: 1900 in India and 33 in Mumbai.

PEOPLE:

All people directly or indirectly involved in the consumption of banking

services are an important part of the extended marketing mix. Knowledge

Workers, Employees, Management and other Consumers often add significant

value to the total product or service offering. It is the employees of a bank

which represent the organisation to its customers.

In a bank organization, employees are essentially the contact personnel with

customer. Therefore, an employee plays an important role in the marketing

operations of a service organisation.

To realize its potential in bank marketing, ICICI become conscious in its

potential in internal marketing – the attraction, development, motivation and

retention of qualified employee-customers through need meeting job-products.

Internal marketing paves way for external marketing of services. In internal

marketing a variety of activities are used internally in an active, marketing like

manner and in a coordinated way.

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The starting point in internal marketing is that the employees are the first

internal market for the organization.

The basic objective of internal marketing is to develop motivated and customer

conscious employees.

A service company can be only as good as its people. A service is a

performance and it is usually difficult to separate the performance from the

people.

If the people meet customers’ expectations, then neither does the service.

Therefore, investing in people quality in service business means investing in

product quality.

PROCESS:

Flow of activities: All the major activities of ICICI banks follow RBI

guidelines. There has to be adherence to certain rules and principles in the

banking operations. The activities have been segregated into various

departments accordingly.

Standardization: ICICI bank has got standardized procedures got typical

transactions. In fact not only all the branches of a single-bank, but all the

banks have some standardization in them. This is because of the rules they are

subject to. Besides this, each of the banks has its standard forms,

documentations etc. Standardization saves a lot of time behind individual

transaction.

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Customization: There are specialty counters at each branch to deal with

customers of a particular scheme. Besides this the customers can select their

deposit period among the available alternatives.

Number of steps: Numbers of steps are usually specified and a specific

pattern is followed to minimize time taken.

Simplicity: In ICICI banks various functions are segregated. Separate

counters exist with clear indication. Thus a customer wanting to deposit

money goes to deposits counter and does not mingle elsewhere. This makes

procedures not only simple but consume less time. Besides instruction boards

in national boards in national and regional language help the customers further

.

Customer involvement: ATM does not involve any bank employees. Besides,

during usual bank transactions, there is definite customer involvement at some

or the other place because of the money matters and signature requires.

PHYSICAL EVIDENCE:

Physical evidence is the material part of a service. Strictly speaking there are

no physical attributes to a service, so a consumer tends to rely on material

cues. There are many examples of physical evidence, including some of the

following:

Internet/web pages

Paperwork

Brochures

Furnishings

Business cards

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The building itself (such as prestigious offices or scenic headquarters)

The physical evidences also include signage, reports, punch lines, other

tangibles, employees dress code etc.

Signage: Each and every bank has its logo by which a person can identify the

company. Thus such sign ages are significant for creating visualization and

corporate identity.

Financial reports: The Company financial reports are issued to the customers

to emphasis or credibility.

Tangibles: Bank gives pens, writing pads to the internal customers. Even the

passbooks, cheque books, etc reduce the inherent intangibility of services.

Punch lines: Punch lines or the corporate statement depict the philosophy and

attitude of the bank. Banks have influential punch lines to attract the

customers.

Employees dress code: ICICI bank follows a dress code for their internal

customers. This helps the customers to feel the ease and comfort.

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ICICI STRATEGY FOR PROMOTION OF FINANCIAL

INCLUSION

ICICI Bank has taken up specific initiatives to ramp up financial literacy as well

as intermediation to the underserved and under banked segments in both rural

and urban areas.

ICICI Bank’s financial intermediation models, both through the microfinance

institutions and business correspondents have been designed to build a

repository of information with regard to financial behaviour of the customers.

ICICI Bank’s Financial Intermediation Models:

With focus on low-income segments, ICICI Bank has come up with innovative

delivery channels:

Microfinance

ICICI Bank works closely with MFIs and NGOs to adapt its products to suit

consumer needs.

Two innovative models have helped achieve scale in serving the low-income

household:

a) Partnership Model being implemented with NGOs and MFIs: Under this

model ICICI Bank forges an alliance with existing MFIs wherein the MFI

undertakes the promotional role of identifying, training and promoting the

micro-finance clients and the ICICI Bank finances the clients directly on the

recommendation of the MFI, so the customer and portfolio resides in the Bank’s

book.

b) Securitisation of Portfolios of MFIs: Under this model ICICI Bank buys out

portfolios from MFIs. The MFI continues to service the clients and acts as the

collection agent. Here again, the MFI shares the credit risk with the Bank. A

variant of the securitisation model is ‘on-tap securitisation’, wherein the MFI

25


receives an advance purchase consideration to create a portfolio of loans that

could then be periodically sold to ICICI Bank.

Technology

The Bank has been actively looking at technology solutions to scale up the

micro finance portfolio. Further, the Bank has been considering adopting a

'Core Banking System' (CBS) for managing the loan portfolio generated under

the partnership model. In this regard, the Bank has found an able partner in

FINO to provide technology solutions to the micro finance sector. The

technology solution comprises of core banking and smart card systems. In light

of the technology solutions available through FINO, the Bank has designed a

new process for delivering loans under the partnership model.

Some of the key aspects where a strong technology platform will add value to

the micro finance operations include reduction in transaction cost; better data

management and reporting capacities and capability to interface with multiple

peripherals, etc. This will also enable enhanced disclosure and transparency in

the operations of MFIs, setting a platform for robust securitisation / buyout

opportunities to meet the priority sector lending objectives of the regulator.

Business Correspondent

In line with the RBI guidelines ICICI Bank employs Business Correspondent

(BC) model to extend financial services, especially the much-needed savings

services to rural customers.

In the pilot stage, the transactions by BC are being done with the help of an 'e-

Passbook' and an Authentication Device (AD). The e-Passbook can display and

store the customer KYC information, customer account details and the

transactions in each account. It also has a unique feature of biometric

authentication by the way of fingerprints, thereby mitigating the risk related to

PIN (Personal Identification Number) in the rural scenario.

26


ADs provide Customer interface with user-friendly menu options, enabling

transactions. An authorized operator is enrolled by capturing the fingerprints of

all the 10 fingers to mitigate fraud risk, can operate each AD. The transaction is

recorded on the AD, which at specific intervals would be uploaded and updated

in the Bank's system through a normal telephone line, which is a widely

available infrastructure even in remote rural areas. Further connectivity through

GSM and CDA would also be made possible to ensure that the transaction

details are updated in the Bank’s system at higher frequency.

Multiple products

ICICI Bank offers a complete suite of products and services to meet the

individual

financial requirements of customer segments. Savings, investments and

insurance

products are made available to its rural and agri customer base. The Bank also

offers microfinance services to low-income households and crop loans, farm

equipment loans, commodity based loans to farmers.

Hybrid channels

ICICI Bank employs delivery channels backed by technological innovations to

achieve scale and outreach in a sustainable manner. The Bank’s channel

architecture includes branch and non-branch channels. Branches act as a

business

hub providing banking services on the one hand, while facilitating the fulfilment

of

products that have been sourced by the business facilitators and business

correspondents.

Non-branch channels are of two types, business facilitators and business

correspondents.

27


CHAPTER 8

COMPANY PROFILE

HOUSING DEVELOPMENT FINANCE

CORPORATION

HDFC BANK

HDFC Bank is India's second-largest bank with total assets of Rs.

3,849.70 billion (US$ 82 billion) at September 30, 2008 and profit after tax Rs.

17.42 billion for the half year ended September 30, 2008. The Bank has a

network of about 1,400 branches and 4,530 ATMs in India and presence in 18

countries. HDFC Bank offers a wide range of banking products and financial

services to corporate and retail customers through a variety of delivery channels

and through its specialized subsidiaries and affiliates in the areas of investment

banking, life and non-life insurance, venture capital and asset management. The

Bank currently has subsidiaries in the United Kingdom, Russia and Canada,

branches in United States, Singapore, Bahrain, Hong Kong, Sri Lanka, Qatar

and Dubai International Finance Centre and representative offices in United

Arab Emirates, China, South Africa, Bangladesh, Thailand, Malaysia and

Indonesia. Our UK subsidiary has established branches in Belgium and

Germany.

HDFC Bank's equity shares are listed in India on Bombay Stock Exchange and

the National Stock Exchange of India Limited and its American Depositary

Receipts (ADRs) are listed on the New York Stock Exchange (NYSE).

28


HISTORY OF HDFC BANKS

HDFC Bank was originally promoted in 1994 by HDFC Limited, an Indian

financial institution, and was its wholly-owned subsidiary. HDFC's

shareholding in HDFC Bank was reduced to 46% through a public offering of

shares in India in fiscal 1998, an equity offering in the form of ADRs listed on

the NYSE in fiscal 2000, HDFC Bank's acquisition of Bank of Madura Limited

in an all-stock amalgamation in fiscal 2001, and secondary market sales by

HDFC to institutional investors in fiscal 2001 and fiscal 2002. HDFC was

formed in 1955 at the initiative of the World Bank, the Government of India and

representatives of Indian industry.

The principal objective was to create a development financial institution for

providing medium-term and long-term project financing to Indian businesses. In

the 1990s, HDFC transformed its business from a development financial

institution offering only project finance to a diversified financial services group

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

number of subsidiaries and affiliates like HDFC Bank. In 1999, HDFC become

the first Indian company and the first bank or financial institution from non-

Japan Asia to be listed on the NYSE.

29


OBJECTIVES OF HDFC BANK

HDFC Bank has taken several initiatives as part of its corporate social

responsibility. It has collaborated with several NGOs to assist in its activities.

Initiative Objective Activities Facts/Figures

Sustainable

Livelihood

Provide

livelihood

finance to

empower rural

people,

especially

women at the

bottom of the

pyramid

Training for Occupation

Skills

Credit Counseling

Financial Literacy

Market Linkages

Reached 20 lakh

households across

24 states

Financial

Literacy

Provide

affordable

access to basic

banking

products and

services to

excluded and

underprivileged

sections of the

society

Literacy programs in

schools

‘Power of Banking’

workshops

600 government

schools across

Andhra Pradesh

& Odisha in

literacy programs

3365 students

across 6 locations

covered in

workshops

30


Education

Spread the

importance of

education by

providing

quality

education to

children

Galli School Project

Grow with Books

Library programs

Engineering scholarships

Child development

program

Family based care

programs

A large number of

students reached

through various

programs across

the country

Training

Enhance

employability

of youth and

women in the

weaker sections

of the society

by providing

training and

capacity

development

Skill-based courses

Technical & vocational

training

Basic computer

programming

Educational support for

children

More than 1500

youth benefitted

through various

programs across

the country

Community Enable

economic

growth and

sustainable

development

through

community

building

Rain water harvesting

programs

Setting up blood storage

facilities

Construction of sanitation

facilities in schools

Child Aid Foundation

150 tribal girls

benefitted through

sanitation project

350 poor and

needy children

supported

1600+ children

31


programs rescued

Go Green

Take

responsibility

for the effects

of the

operations of

the Bank on the

environment

and the society.

Promoting paperless

banking

Multi-channel delivery

(Internet, Mobile, Phone,

ATM)

Energy efficiency

Green infrastructure

As of Mar 2013,

82% of customer-

initiated retail

transactions direct

banking channels,

reducing the need

to commute

66 lakh retail

customers

subscribed for e-

statement

20 ATMs

operating on clean

energy

PRODUCTS PROVIDED BY HDFC BANK

32


NRI banking

Under NRI Banking, HDFC offers:

Accounts & Deposits

Money Transfer

Investments & Insurance

Research Reports

Payment Services

Wholesale banking

HDFC offers Wholesale Banking for Corporates and Financial Institutions &

Trusts. The Bank also provides services such as Investment Banking and other

services in the Government sector.

SERVICES PROVIDED BY HDFC BANK

33


Wholesale banking services

HDFC Bank provides a range of commercial and transactional banking services,

including working capital finance, trade services, transactional services, cash

management, etc. to large, small and mid-sized corporates and agriculture-based

businesses in India. The bank is also a leading provider of these services to its

corporate customers, mutual funds, stock exchange members and banks.[14]

Retail banking services

HDFC Bank was the first bank in India to launch an International Debit Card in

association with VISA (Visa Electron). The bank also issues the

MasterCard Maestro debit card. The Bank launched its credit card business in

late 2001. By the end of June 2013, it had a credit card base of 5.94 million. By

March 2012, the bank had a total card base (debit and credit cards) of over 19.7

million. The Bank is also one of the leading players in the "merchant acquiring"

business with over 240,000 point-of-sale (POS) terminals for debit / credit cards

acceptance at merchant establishments. The Bank is positioned in various net

based B2C opportunities including a wide range of Internet banking services for

Fixed Deposits, Loans, Bill Payments, etc.

Treasury

The bank has three main product areas - Foreign Exchange and Derivatives,

Local Currency Money Market & Debt Securities, and Equities. These services

are provided through the bank's Treasury team. To comply with statutory

reserve requirements, the bank is required to hold 25% of its deposits in

government securities. The Treasury business is responsible for managing the

returns and market risk on this investment portfolio.

EMPLOYMENT PROVIDED BY HDFC BANK

34

https://en.wikipedia.org/wiki/Credit_card

https://en.wikipedia.org/wiki/MasterCard

https://en.wikipedia.org/wiki/Visa_Electron

https://en.wikipedia.org/wiki/Debit_Card

https://en.wikipedia.org/wiki/HDFC_Bank#cite_note-Businesses-14


As of 31 March 2013, the company has 69,065 employees, out of which 12,295

are women (17.80%). In June 2013, the company reported an annual attrition

rate of approx. 20%. During the financial year 2012-13, the company incurred

INR 42 billion on employee benefit expenses.

OPERATIONAL AREA OF HDFC BANK

As of 30 September 2013, HDFC Bank has 3,251 branches and 11,177 ATMs,

in 2,022 cities in India, and all branches of the bank are linked on an online real-

time basis. The Bank has overseas branch operations in Bahrain and Hong

Kong.

HDFC Bank has two subsidiaries:

HDB Financial Services Limited (‘HDBFS’): HDBFS is engaged in retail asset

financing. It is a non-deposit taking non-bank finance company (NBFC). Apart

from lending to individuals, the company grants loans to micro, small and

medium business enterprises. It also runs call centers for collection services to

the HDFC Bank’s retail loan products. HDFC Bank holds 97.4% shares in

HDBFS. As of March 31, 2013, HDBFS has 230 branches in 184 cities. During

the FY 2012-13, HDBFS had turnover of INR 9.6 billion and profit after tax of

INR 1 billion. It has 6,404 employees as of 31 March 2013.

HDFC Securities Limited (‘HSL’): HSL is engaged in stock broking. As of

March 31, 2013, HDBFS has 194 branches across 150 cities. HDFC Bank has

62.1% shareholding in HSL. During the FY 2012-13, HSL had turnover of INR

35


2.3 billion and profit after tax of INR 668 million. During the year, the

Company received the “Best e-Brokerage Award - 2012” in the Outlook Money

Awards in the runner up category.

CHAPTER 9

36


SWOT ANALYSIS

ICICI:-

STRENGTHS:

Branch network, brand name, very fast service, No. one private sector bank of

India,

WEAKNESS:

High average balance maintenance, maintenances charges are high.

OPPORTUNITIES:

Untapped rural market of India

THREATS:

Emerging private banks like Citibank and HDFC bank

HDFC:-

STRENGTH:

Maintains the highest level of ethical standards, professional integrity, corporate

governance and regulatory compliance, Operational Excellence, Customer

Focus, Product Leadership and People.

WEAKNESS:

Limited number of branches

OPPRTUNITIES:

Untapped rural markets of India.

THREATS:

Competition among the private players.

CHAPTER 10

37


COMPARISON OF FINANCIAL RATIOS OF TWO

BANKS

TOTAL ASSETS

BANKS IN RS.

(CRORES)

2014 2015 % change

HDFC 491599.50 590503 120.11

ICICI 594641.60 649129.29 109.16

TOTAL SHARE CAPITAL

BANKS IN RS.

(CRORES)

2014 2015 % change

HDFC 479.81 501.30 100.70

ICICI 1155.04 1159.66 100.39

NET WORTH

BANKS IN RS.

(CRORES)

2014 2015 % change

HDFC 43478.63 62009.42 142.62

ICICI 73213.32 80429.36 109.85

38


DEPOSITS

BANKS IN RS.

(CRORES)

2014 2015 % change

HDFC 367337.48 450795.64 122.71

ICICI 331913.66 361562.73 108.93

ADVANCES

BANKS IN RS.

(CRORES)

2014 2015 % change

HDFC 303000.27 365495.03 120.62

ICICI 338702.65 387552.07 114.42

INVESTMENTS

BANKS IN RS.

(CRORES)

2014 2015 % change

HDFC 120951.07 166459.95 137.62

ICICI 177021.82 186580.03 105.39

BORROWINGS

BANKS IN RS.

(CRORES)

2014 2015 % change

HDFC 39438.99 45213.56 114.64

ICICI 154759.05 172417.35 111.41

39


TOTAL DEBT

BANKS IN RS.

(CRORES)

2014 2015 % change

HDFC 406776.47 496009.20 121.93

ICICI 486672.71 533980.08 109.72

TOTAL LIABILITIES

BANKS IN RS.

(CRORES)

2014 2015 % change

HDFC 491599.50 590503.08 120.11

ICICI 594641.58 649129.30 109.16

CASH & BALANCES WITH RBI

BANKS IN RS.

(CRORES)

2014 2015 % change

HDFC 25345.63 27510.45 108.54

ICICI 21821.83 25652.91 117.55

40


CHAPTER 11

CONCLUSION

Almost all the Banks offer similar features and facilities with their Savings

accounts. There are certain reasons for existing customers of Saving Account

of any Bank to shift to another Bank.

The level of service in terms of delivering whatever is promised, fast

response in case of problems, is the most important benefit that the

customers seek, from the Bank they have a Saving Account with.

1. Network reach and visibility of a Bank is a very important criterion for

the customer while opening a Saving Account. We can also conclude

from our analysis that network reach in terms of Branches and ATMs is

directly proportional to the market share in case of Private Players.

2. In case of a new customer, if a bank approaches it first for opening a

Saving Account with them, then there is a good chance for the bank of

getting many future businesses and cross sales from the deal.

3. Aggressive Marketing is the key to increasing the market share in this

area, since the market has a lot of potential both in terms of untapped

market.

AS COMPARED TO OTHER PRIVATE SECTOR BANKS IN INDIA,

NOW-A-DAYS HDFC BANK IS GROWING RAPIDLY IN IT`S ALL

THE DEPARTMENTS LIKE TOTAL ASSETS, SHARE CAPITAL,

NETWORTH & IT`S INVESTMENTS.

WHEN WE COMPARED HDFC BANK AMONG ICICI BANK MOST

OF CUSTOMERS GO WITH THE HDFC BANK BECAUSE OF ITS

INNOVATIVE PRODUCTS & BETTER SERVICE QUALITY.

41


CHAPTER 12

WEBILOGRAPHY

http://www.icicibank.com/

http://www.hdfcbank.com/

www.moneycontrol.com/

42

http://www.hdfcbank.com/

http://www.icicibank.com/

Documents

COMPARISON BETWEEN TWO PRIVATE SECTOR BANKS