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“ CHANGES IN BANKING TOOLS ,

TECHNIQUES AND REACH DUE TO DOOR

STEP BANKING ”.

A STUDY IN THE REGION OF MUMBAI.

Synopsis

SUBMITTED

TO THE

Somaiya Instiute of Management Studies and Research

Mumbai UNIVERSITY, Maharashtra

FOR THE Sem V Project of

Masters in Marketing Management

By

Yuvaraj K Pawar

UNDER THE GUIDANCE OF

Prof. Dr. Sunil Pillai

Somaiya Institute of Management studies and Research

Vidyavihar, Mumbai, Maharashtra



TABLE OF CONTENTS

S.NO. TOPIC PAGENo.

1 Introduction 1

2 Objective of the study 7

3 Hypothesis 8

4 Research Methodology 9

5 Scope of study 13

6 Utility of the study 14

7 Limitation of the study 15

8 Time Schedule 16

9 Bibliography 17

SYNOPSIS



INTRODUCTION

“The purpose of a business is to create customers” saidPeter Drucker.

Over a century ago, in a small town or village, before the

advent of the super market and the mall, people went to

the nearby general store to purchase goods. The owner

and the staff of the shop recognized the customers by

name and knew the customer’s needs and wants. The

customer in turn, remained loyal to the store and made

repeat purchases.

As the economy and population grew, the consumer

became mobile and the super markets and departmental

stores were established to achieve economies of scale

through mass marketing.

Although prices were lower and goods were uniform inquality, the relationship between the customer and the

merchant store became nameless and faceless. The

personal relationship between the mall and the customer

became a thing of the past. As a result customers

became fickle and moved to the supplier who provided

lower costs and more benefits.

The new millennium is in the midst of explosive change,

witness rapidly changing market conditions, volatile

equity markets, reconstructed value chains and new

global competitors.



1

Customers themselves are changing. Loyalty has become

the thing of the past. The concept of Customer

Relationship Management has taken center stage in the

business world for sustainable business advantage.Companies and businesses are realizing that long-term

success requires a great customer relationship

management strategy. Therefore a technology enabled

CRM strategy, to meet customer-focused objectives,

involves the vast majority of any organization activity.

Therefore, the last several years saw the rise of CRM as

an important business approach. Its objective is to returnto the world of personal marketing. The concept itself is

relatively simple. Rather than market to a mass of people

or firms, market to each customer individually. In this one

to one approach, information about a customer ( eg.

Previous purchases, needs and wants) is used to frame

offers that are more likely to be accepted.

WHAT IS Doorstep Banking?

In a life full of hectic schedules and time constraints, the value of time is being

increasingly felt. To save your precious time, many Banks (especially, Private) has



introduced doorstep banking. You can now receive or deposit cash and cheques at

your office or home.

WHAT DOOR STEP BANKING CONTAINS:

Opening of an Account

Opening a Bank account has become hassle free today. Bank Manager comes to your premises with all the

documentation and completes the formalities with such swiftness, which is unbelievable. Few banks have even

provided the managers with Portable Photo machines to click instant photos of clients.

Cash delivery

You don’t need to travel to the branch or an ATM for cash withdrawal, we will deliver the sameat your office or home (address registered with us). This is applicable for cash withdrawal

between Rs 25,000 and Rs 500,000**.

Cash pickup

You don’t have to worry about depositing high value cash anymore. Simply give us a call and wewill pickup and deposit the money in your account, without compromising on the safety of your

hard earned money. We offer you customised pickup limits depending on need and nature of

your business ranging from minimum of Rs 25,000 per day to maximum of Rs 500,000**.

Cheque pickup

You don't have to leave your office or home and go to the branch for depositing your cheque,

anymore. We will pickup your cheque from your mailing address registered with us and deposit

it.

Demand Drafts delivery

You can request for delivery of Demand Drafts to your office or home. We will deliver your

demand draft at over 500 key locations across the country.

Documentation for various Loans

Banks nominate sales officers who liaison with various agencies such as Credit and

appraisal departments, legal and valuation departments to help a client acquire

Home loan or mortgage Loan or business loan or any other type of loan facility.

HOW A CLIENT CAN AVAIL OF THESE SERVICES?

1. The client needs to have a existing relationship with the bank to get assistance for various

core retail banking related services, such as Demand draft delivery, cheque pick up or

cash delivery.



2. The client may not have any relationship with the Bank or financial institution while

application of Loan, may be secured or unsecured type. However, the bank may offer

banking facility to this client post disbursement of Loan.3. Many times such services are offered to exclusive clients only by Invitation. In this case

the client is required to maintain certain balances, may be in fixed deposites or any other

form of investments promoted by the service provider bank.4. Most of the times, these services are offered free of cost to these clients. There can be

limitations such as number of times the client can avail the services in month or amount

of cash, which can be picked up or delivered in a month.

Simply, register for our doorstep banking service one time and do your day-to-day banking fromthe comfort of your office or home.

It should be noted that there are different regulations and rules for doorstep banking facilities

offered t o individuals and Businesses. This is due to the sheer nature of volumes and business

transactions.

The Goals of Doorstep Banking are to

1.Build long term and profitable relationships with

chosen customers.

2. Get closer to customers (Engagement) at every

point of contact.

3.Maximize company’s share of the customer wallet.

It is said “ IF YOU WISH TO PROSPER, LET YOUR

CUSTOMER PROSPER”.



INDIAN BANKING SCENARIO

The last decade has seen many positive developments in

the Indian banking sector. The sector now compares

favourably with respect to growth, profitability and non

performing assets ( NPA’s). A few banks have shown an

outstanding record in innovation, growth and value

creation.

The banking sector index has grown at a compounded

annual rate of 51% since April 2001 as compared to 27%

growth in the market index for the same period(8).

a. RBI paves way for doorstep banking

After a gap of 21 years, the Reserve Bank of India has once again alloweddomestic banks to offer doorstep banking, to their customers but with itsprior approval.

A circular issued on April 30 stated that, "A scheme for providing servicesat the premises of a customer within the framework of Section 23 of theBanking Regulation Act 1949 may be formulated by banks with the prior approval of their board and submitted to the Reserve Bank for approval".

The practice was banned in May 24,1983 whereby banks were advised notto extend any banking facilities at premises of their customers without prior approval of the RBI.

The decision, the circular stated, has been taken in view of severalrequests received from government departments such as railways andrepresentation from banks.

Till the time a separate scheme is worked out, agency banks in thebusiness of conducting government business may continue to lift cash and

http://www.rediff.com/money/2005/may/02rbi1.htm






collect credit instruments from premises of central and state governmentdepartments.

Government business, includes disbursing pension, distribution andcollection under savings bonds among other things.

Explaining the significance of the development, a banker said the facilityfollows the RBI's resolve to pay special attention to the needs of a typicalIndian depositor who seeks safe avenues for his savings.

In its annual credit policy announced last, the governor stated, "banks areurged to refocus on deposit mobilisation and empower depositors byproviding wider access and better quality of banking services.

Therefore, the RBI will persist with its efforts to ensure quality of bankingservices in particular to small individual depositors.

RBI issues norms for doorstep banking

Banking services will now be available at the doorstep. Individualcustomers can have cash and other bank instruments picked up from their home or office while only demand drafts will be delivered. Corporate

customers can additionally have cash delivered against cheque received atthe bank's counter.

The Reserve Bank of India on Wednesday issued guidelines for banks on"Doorstep Banking" allowing banks to either deploy their employees or hireagents to extend these services.

The new guidelines allow banks to extend cash delivery services tocorporate clients, public sector units and departments of Central and stategovernments against the receipt of cheque at the branch, and not based on

telephonic requests. Individual customers cannot, however, avail of thisfacility.

Similarly, the delivery of demand drafts for both individual and corporatecustomers will be done by debiting the account on the basis of requisition inwriting or cheque received and not against cash collected at the doorstep.



The RBI has, however, cautioned banks about risks arising out of theseservices and asked them to prescribe cash limits. "Banks are advised totake into account the various risks that may arise on account of offeringdoorstep banking services to customers directly or through agents and takeeffective steps to manage the same. Banks may specifically consider prescribing cash limits for their agents and customers in this regard," saysthe circular.

According to the guidelines, banks have been asked to acknowledge cashcollection by issuing receipts and ensuring that it is credited to thecustomer's account on the same day or the next working day.

The charges for these services would have to be prominently indicated onbrochures.

These services will be provided only to those customers who haveadequately fulfilled the bank's "Know Your Customer" norms.

Banks will now have to prepare their own schemes based on the guidelineswith the approval of their board. The central bank has also asked banks toappoint a Grievance Redressal Machinery for redressing complaints aboutservices rendered by its `agents.' The name and the telephone number of the designated officer should be made available to the customers on thebank's website.

Banks have been asked to educate their `agents' about the incidence of circulation of forged notes, particularly of high denominations. "Banks areadvised to take suitable steps to educate their "Agents" to enable them todetect forged and mutilated notes so as to avoid frauds and disputes withthe customers," said the circular.

RBI Guidelines for Doorstep Banking- 21stFebruary 2007

Banks can offer through own employees and Agents the bankingservices like pick up of cash, instruments and delivery of cash anddemand drafts to Corporate Customers/ Government Departments/PSUs/ Individual Customers at their doorstep.



In order to ensure transparency in respect of the rights and obligationsof customers, uniformity in approach and to clearly delineate the risksinvolved, RBI has laid down general principles and broad parametersto be followed by banks while offering "doorstep" services to their customers, Accordingly, banks may prepare a scheme for offering"doorstep" banking services to their customers, with the approval of their Boards, in accordance with the guidelines provided below-

Detailed Guidelines for Doorstep Banking

1. Services to be offered

Banks can offer the following banking services to their customers at

their doorstep: -

(a) Corporate Customers/ Government Departments/ PSUs etc.

(i) Pick up of cash(ii) Pick up of instruments(iii)Delivery of cash against cheques received at the counter (iv) Delivery of demand drafts

(b)Individual Customers/Natural persons:

(i)Pick up of cash

(ii) Pick up of instruments(iii) Delivery of demand drafts

2. Modalities of Delivery

(a)Through own employees(b) Through Agents

Where banks engage the services of Agents for delivery of services, itshould be ensured that the policy approved by the Board lays downthe broad principles for selection of Agents and payment of



fee/commission etc. Banks may refer to the guidelines on ManagingRisks and Code of Conduct in Outsourcing of Financial Services bybanks issued on November 3, 2006 and ensure that the principlesenumerated therein are complied with while offering DoorstepBanking services.

3. Delivery process

(i) Cash collected from the customer should be acknowledged byissuing a receipt on behalf of the bank;

(ii)Cash collected from the customer should be credited to thecustomer’s account on the same day or next working day, dependingon the time of collection;

(iii) The customer should be informed of the date of credit by issuing asuitable advice.

(iv) Delivery of demand draft should be done by debit to the accounton the basis of requisition in writing/ cheque received and not againstcash or instruments collected at the doorstep;

(v) Cash delivery services may be offered to the corporateclients/PSUs/departments of Central and State Governments againstreceipt of cheque only at the branch and not against telephonicrequest. No such facility, however, shall be made available toindividual customers;

4. Risk Management

It may be ensured that the agreement entered into with the customer does not entail any legal or financial liability on the bank for failure tooffer doorstep services under circumstances beyond its control. The

services should be seen as a mere extension of banking servicesoffered at the branch and the liability of the bank should be the sameas if the transactions were conducted at the branch. The agreementshould not provide any right to the customer to claim the services athis doorstep.

5. Transparency



Charges, if any, to be levied on the customer for doorstep servicesshould be incorporated in the policy approved by the Board andshould form part of the agreement entered into with the customer. Thecharges should be prominently indicated on brochures offeringdoorstep services.

6. Other conditions

(i) Doorstep services should be offered to only those customers inwhose case proper KYC procedures, as laid down in RBI guidelinesdated November 29, 2004 and subsequent circulars on the subjecthave been followed;

(ii) The services should be offered at either the residence or office of the customer, the address of which should be clearly and explicitlymentioned in the agreement.

(iii) The agreement/ contract with the customer shall clearly specifythat the bank will be responsible for the acts of omission andcommission of its ‘agent’.

(iv) The "Scheme" should not be restricted to any particular client/customer or class of customers.

(v) Banks may keep in view the restrictions imposed by Section 10 (1)(b) (ii) (b) of the Banking Regulation Act, 1949, while makingpayments for the services outsourced.

7. Redressal of Grievance

a) Banks should constitute an appropriate Grievance RedressalMachinery internally for redressing complaints about services

rendered by its ‘agents’. The name and telephone number of thedesignated Grievance Redressal officer of the ‘bank’ should be madeavailable to the customers including on the bank’s website. Thedesignated officer should ensure that genuine grievances of customers are redressed promptly.

b) If a customer feels that his complaint has not been satisfactorily



addressed, he will have the option to approach the Office of theconcerned Banking Ombudsman for redressal of his grievance/s.

Section 23 of Banking Regulation Act, 1949 –

Doorstep Banking

1.in terms of which banks were advised to formulate a scheme with theapproval of their Boards, for providing services at the premises of acustomer and submit it to Reserve Bank for approval.

2. In order to ensure transparency in respect of the rights and obligations of customers, uniformity in approach and to clearly delineate the risksinvolved, it has been decided to lay down general principles and broad

parameters to be followed by banks while offering "doorstep" services totheir customers, Accordingly, banks may prepare a scheme for offering"doorstep" banking services to their customers, with the approval of their Boards, in accordance with the guidelines enclosed to this letter.

3. Attention of banks is also drawn to the incidence of circulation of forgednotes, particularly, high denomination notes, in the market. Banks areadvised to take suitable steps to educate their "Agents" to enable them todetect forged and mutilated notes so as to avoid frauds and disputes with

the customers.

4. Banks are further advised to take into account the various risks that mayarise on account of offering doorstep banking services to customers directlyor through agents and take effective steps to manage the same. Banksmay specifically consider prescribing cash limits for their agents andcustomers in this regard.

5. The operation of the scheme may also be reviewed by the Boards of banks on a half-yearly basis, during the first year of its operation and

subsequently on an annual basis.

4

http://www.rbi.org.in/scripts/NotificationUser.aspx?Mode=0&Id=3285#1%231

http://www.rbi.org.in/scripts/NotificationUser.aspx?Mode=0&Id=3285#1%231



The Indian Banking system comprises of

1.Commercial Banks.

a. Public Sector.b. Private Sector.

c. Foreign Banks.

d. Co-operative institutions.

i) Urban co-operative banks.

ii) State co-operative banks.

iii) Central co-operative banks.

iv)

About 92% of the country’s banking segment is under

state control while the balance comprises of private

sector and foreign banks. The public sector commercial

banks are divided into three categories.

1.STATE BANK GROUPS ( EIGHT BANKS).

This consists of State Bank of India (SBI) and associate

banks of SBI. The Reserve Bank of India (RBI) owns themajority share of SBI and some associate banks of SBI.

State Bank of India has 13 head offices governed each by

a board of Directors under the supervision of a Central

Board.



5

2.NATIONALIZED BANKS (19 BANKS).

In 1969, the Government arranged the nationalization of

14 Scheduled Commercial banks in order to expand the

branch network, followed by 6 more in 1980. A merger

reduced the number from 20 to 19. Nationalized banks

are wholly owned by the Government, although some of

them have made public issues. In contrast to SBI,

nationalized banks are centrally governed i.e. by their

respective head offices.

The SBI and Nationalized banks together are referred toas Public Sector Banks (PSB’s).

3.REGIONAL RURAL BANKS (RRB’s).

In 1975, the State Bank group and Nationalized banks

were required to sponsor and set up RRB’s, in partnership

with individual states to provide low cost financing and

credit facilities to the rural masses.



Out of the above formats the Research study will

specifically concentrate on one Bank each from Public

Sector, one from Private sector, one foreign bank and

another from the co-operative sector.6

The financial services industry has entered a new era

where personal attention is decreasing because the

banks are using technology to reduce human contact in

many application areas.

Technical evolution has affected the banking industry.

From time immemorial banks were using branch based

operation. From late 80’s things started changing with

the advent of multiple technologies and applications.

Global changes bought new trends, directions and new

ways of doing business. In order to compete banks mustrecognize the need of balancing their performance, by

achieving their strategic goals and meeting volatile

customer needs and requirements. Different ways has to

be analyzed to meet Customer needs , wants and

demands.

OBJECTIVES OF THE STUDY



The background research work undertaken to arrive at

the current set of objectives have eliminated the work,

which has already been done in the defined area andhelped the researcher to pin point the key objectives that

needs attention in this research work. These objectives

are presented in the form of questions as specified

bellow.

7

1.How to manage Customer Relationship effectively in

the banking industry?

2. How do different types of banks view CRM?

3. What types of relationship marketing tools and

strategies are used by the banks to increase

customer loyalty?

4. All customers are not equally profitable. What are the

different methods used for identifying the

profitability difference among existing customers?

5. How can CRM in banks be described?

6. What kinds of technology are used?



HYPOTHESIS

The formulation of hypothesis is another important step

in conducting research. A hypothesis is tentative

generalizations, the validity of which remains to be

tested. Further hypothesis will be developed after the

exploratory study stage.

8

1. Different customers, according to the profitability

that they generate, are dealt differently.

2. Customer retention and continuous relationship

marketing is what banks aim for.

3. CRM technology is of prime importance.

4. Less emphasis on CRM strategy, which should drive

the organizational structure, which in turn should

drive the technology implementation(10).

RESEARCH METHODOLOGY



Research Methodology is a way to systematically solve

the research problem. It can be understood as a science

of studying how research is done scientifically.

Zikmund ( 1994) states, nature of the problem affectswhether research is going to be exploratory, descriptive

or casual. Our research problem is to get better

understanding of “ HOW CAN BANKS EFFECTIVELY AND

EFFICIENTLY MAMANGE CRM”?

The aim of this research is clearly structured, so the

purpose of research is descriptive.

We intend to describe the area of research and try to find

out the difference and similarities with the reviewed

theories. However this thesis is also exploratory.

9

Because CRM is a rather new area of interest for banks

and also by the fact that we have not been able to findstudies that focuses exactly the same topic as we have

chosen to do in this thesis.

This therefore makes our study mainly descriptive but

with exploratory and explanatory touches.

Since we are conducting research on behaviors and not

on figures, QUALITATIVE research will fulfill our

requirements.

Alvesson and Skoldbery (1994) discusses three ways to

draw conclusions.

a)Inductive.



b)Deductive.

c) Abductive.

We will use deductive approach as we are using existingtheories in the area of CRM. We will not use inductive and

abductive approach because it is time consuming and

also out of scope of our research.

Zikmund (1994) talks about different types of research

strategies for descriptive and casual research. These are

1.Surveys.

2.Experiments.

3. Observation with experience survey.

4.Pilot study.

5. Case study in exploratory research strategy.

SAMPLING AREA : Mumbai Region.10

SAMPLING UNIT: One bank each from Public/ Private/

Foreign & co-operative sector in the region of Mumbai.

DATA SOURCE

The present study will be both descriptive and analytical.

The data for this study is based on primary and

secondary sources. Under mentioned shows the flow of

data collection.



SOURCE OF DATA COLLECTION

1.Primary data. a)Survey.

b)Structural Questionnaire.

c) Personal Interview.

d) Observational Techniques.

e) Case Study.

2.SECONDARY DATA.

a)Journal Articles.

b) Research Publications.

c) Magazines and periodicals.

d) Books.

e)Newspaper articles.

f) Internet.

11

PRIMARY DATA.

The primary data will be collected by the extensive use of

a structured Questionnaire, Survey, personal interview,

observational techniques and case study.



We will use CASE STUDY for our study as we have

decided to use a qualitative approach and collect

information from different situations. Case study are

shown to be the most appropriate choice of our thesis.

SECONDARY DATA.

The secondary data will be collected from various

references which already exists in electronic or published

form. We will make the use of Internet, Newspaper

articles, magazines, Research journals and books. On the

basis of our Research objectives we shall collect the data.

DATA ANALYSIS AND INTERPRETATION

The collected data will be scrutinized for actual andgenuine information. The data will be classified for

suitable tabulations, graphs, tables and diagrams.

Suitable statistical techniques will be used to analyse the

data and draw meaningful conclusions and

recommendations.

12

SCOPE OF THE STUDY



The general aim of the study is to understand how thefinancial services industry, specifically banks can

efficiently and effectively manage their customer

relationship management.

Brief Literature Review on the concept of relationship

management and the emergence of customer

relationship marketing.

Study of practice of customer relationship management

in different banking sectors in Mumbai market.

Study to identify the benefits of CRM and to suggestimprovements to efficiently manage relationships.

13



UTILITY OF THE STUDY

As the study will be conducted taking four types of banks,

namely Public sector. Private sector, Foreign and Co-

operative bank, we will be able to find out what are the

different types of CRM strategy, technology, process and

people orientation they use.

We will able to find out what are the good things that

these banks are doing with respect to Relationship

marketing.

Our attempt through research will be to conclude and

suggest how effectively and efficiently banks can manage

CRM and hence enhance their profitability.

14



LIMITATION OF THE STUDY.

1.There could be possibility of sampling errors in the

study.

2. The responses of respondents may not be

genuine.

3. The questions included in the questionnaire may not

be comprehensive.

4.The respondents may not be able to comprehend and

hence explain a few questions as per the real situation.

5.The respondent explanations may not be to the point

and hence vague, in nature.

6. The study is confined to banks in Mumbai region

only, so the results of the research may vary, if the

same survey is conducted in other parts of the

country.



15

TIME SCHEDULE

STAGE

WORK DURATION IN

MONTHS

STARTDATE

COMPLETION DATE

1 Definingresearchproblem

1 1/9/10 30/09/10

2 Review of literature

3 1/10/10

31/12/10

3 Formulatehypothesis

2 1/11/11

28/02/11

4 Pilot

study( sample)

1 1/03/1

1

31/03/11

5 Collection of the data

9 1/04/11

31/12/11

6 Data Analysis( simultaneou

sly)

2 1/01/12

29/02/12

7 Testing of hypothesis

3 1/03/12

31/05/12

8 Final reportpreparation

2 1/06/12

31/07/12

9 Final print andbinding

1 1/09/12

31/08/12

24 1/09/1 31/08/12



months 0

16

BIBLIOGRAPHY

1. Paul Gray and Jongbook Byan (March 2001)

Customer Relationship Management.

2. Hemamalini Suresh Sept 2002 PGS Institute of

management.

3. Day 2003.

4. Ngai 2005, Romano and Fjermestad 2003.5. Zikmund, mcleod and Gilbert 2003.

6. Kerin, Berkowitz, Hartley and Rudelies 2003, Mitusis

o malley and Patterson 2006, Pelham 1997.

7. Gromoos 1990.

8. Banking Sector 2010 report Mckinsey and company.

9. The Indian banking sector G.H.Deolalkar.

10. Kristin A nderson and Carol – CRM- Tata McGraw

Hill Edition 2002.



17

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