23937971 final project sbi sip

8/8/2019 23937971 Final Project SBI SIP

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INTERNATIONAL INSTITUE OF BUSINESS

LUCKNOW

FINAL PROJECT REPORT

ONStudy of Consumer Perceptionregarding State Bank of Indias

Housing Loan

BY

SHWETANK SETU(CFT08_140)

STATE BANK OF INDIA(RACPC) Ahmedabad

Summer Internship Project(Batch of 2008-10)


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PROJECT TITLE

Study of Consumer Perceptionregarding State Bank of Indias

Housing Loan

A report submitted in partial

fulfillment of the requirements ofPGDM program

COMPANY GUIDEMr.Ch Durga Prasad

AGM, RACPCAhmedabad

State Bank of India

SUBMITTED BY

Shwetank Setu(CFT08_140)


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Jaipuria Institute of ManagementLucknow


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Acknowledgements

If words are considered to be signs of gratitude then let these words convey the

very same. My sincere gratitude to State Bank of India for providing me with anopportunity to work with State Bank of India and giving necessary directions on

doing this project to the best of my abilities.

I am highly indebted to Shri Ch. Durga Prasad, Assistant General Manager

(RACPC) and company project guide, who has provided me with the necessary

information and also for the support extended out to me in the completion of this

report and his valuable suggestion and comments on bringing out this report in

the best way possible.

I am grateful to all faculty members of Jaipuria Institute of Management, Lucknow

and my friends who have helped me in the successful completion of this project.

I extend my heartfelt thanks to Mr. V.K Sinha, Assistant General Manager

(SMECCC) SBI Ahmedabad, Mr. Deepak Kumar Sahay, Assistant Manager

(RACPC), and Mr. Shripal J. Shah, Marketing Excutive (HLST), to help meduring this project.


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IntroductionBackground

The State Bank of India is the oldest and largest bank in India, with more than$250 billion (USD) in assets. It is the second-largest bank in the world in numberof branches; it opened its 10,000th branch in 2008. The bank has 84 internationalbranches located in 32 countries and approximately 8,500 ATMs. Additionally,SBI has controlling or complete interest in a number of affiliate banks, resulting inthe availability of banking services at more than 14,600 branches and nearly10,000 ATMs. SBI traces its heritage to the 1806 formation of the Bank of

Calcutta. The bank was renamed the Bank of Bengal in 1809 and operated asone of the three premier "presidency" banks (the presidency banks had theexclusive rights to manage and circulate currency and were provided capital toestablish branch networks). In 1921, the government consolidated the threepresidency banks into the Imperial Bank of India. The Imperial Bank of Indiacontinued until 1955, when India's central bank, the Reserve Bank of India,acquired the majority interest in the bank and changed its name to the StateBank of India (SBI).In 1959, the Indian government passed the State Bank ofIndia Act, resulting in the acquisition (majority shareholding) of eight state-affiliated banks and the creation of the State Bank of India Group (SBI Group).The SBI itself is now majority owned by the Indian government, which purchased

the shares held by the Reserve Bank of India.

Evolution of SBI

The origin of the State Bank of India goes back to the first decade of thenineteenth century with the establishment of the Bank of Calcutta in Calcutta on2 June 1806. Three years later the bank received its charter and wasre-designed as the Bank of Bengal (2 January 1809). A unique institution, it wasthe first joint-stock bank of British India sponsored by the Government of Bengal.The Bank of Bombay (15 April 1840) and the Bank of Madras (1 July 1843)followed the Bank of Bengal. These three banks remained at the apex of modernbanking in India till their amalgamation as the Imperial Bank of India on 27January 1921.

Primarily Anglo-Indian creations, the three presidency banks came into existenceeither as a result of the compulsions of imperial finance or by the felt needs oflocal European commerce and were not imposed from outside in an arbitrarymanner to modernize India's economy. Their evolution was, however, shaped byideas culled from similar developments in Europe and England, and was


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influenced by changes occurring in the structure of both the local tradingenvironment and those in the relations of the Indian economy to the economy ofEurope and the global economic framework.

Establishment

The establishment of the Bank of Bengal marked the advent of limited liability,joint-stock banking in India. So was the associated innovation in banking, viz. thedecision to allow the Bank of Bengal to issue notes, which would be accepted forpayment of public revenues within a restricted geographical area. This right ofnote issue was very valuable not only for the Bank of Bengal but also its twosiblings, the Banks of Bombay and Madras. It meant an accretion to the capital ofthe banks, a capital on which the proprietors did not have to pay any interest.The concept of deposit banking was also an innovation because the practice of

accepting money for safekeeping (and in some cases, even investment on behalfof the clients) by the indigenous bankers had not spread as a general habit inmost parts of India. But, for a long time, and especially up to the time that thethree presidency banks had a right of note issue, bank notes and governmentbalances made up the bulk of the ingestible resources of the banks.

The three banks were governed by royal charters, which were revised from timeto time. Each charter provided for a share capital, four-fifth of which wereprivately subscribed and the rest owned by the provincial government. Themembers of the board of directors, which managed the affairs of each bank, weremostly proprietary directors representing the large European managing agency

houses in India. The rest were government nominees, invariably civil servants,one of whom was elected as the president of the board.

Business

The business of the banks was initially confined to discounting of bills ofexchange or other negotiable private securities, keeping cash accounts andreceiving deposits and issuing and circulating cash notes. Loans were restrictedto Rs.One lakh and the period of accommodation confined to three months only.The security for such loans was public securities, commonly called Company's

Paper, bullion, treasure, plate, jewels, or goods 'not of a perishable nature' andno interest could be charged beyond a rate of twelve per cent. Loans againstgoods like opium, indigo, salt woolens, cotton, cotton piece goods, mule twist andsilk goods were also granted but such finance by way of cash credits gainedmomentum only from the third decade of the nineteenth century. All commodities,including tea, sugar and jute, which began to be financed later, were eitherpledged or hypothecated to the bank. Demand promissory notes were signed by


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the borrower in favour of the guarantor, which was in turn endorsed to the bank.Lending against shares of the banks or on the mortgage of houses, land or otherReal properties was, however, forbidden.

Indians were the principal borrowers against deposit of Company's paper, while

the business of discounts on private as well as salary bills was almost theexclusive monopoly of individuals Europeans and their partnership firms. But themain function of the three banks, as far as the government was concerned, wasto help the latter raise loans from time to time and also provide a degree ofstability to the prices of government securities.

RACPC (Retail Assets Central ProcessingCentre)

State Bank of India has separated its loaning division to the RACPC departmentit is called as the Business Process Reengineering process by the bank. Thebranches serve as the servicing capsule for the customers it is the place wherethe customers can get the details of the loan and various other servicingoperations. The RACPC is the processing and the maintenance department forthe retail loans. Retail loans are defined as the loans which are for the personalindividual use and are availed on the basis of ones income status in no waythese loans can be used for the business purposes. As I was in the RACPC(Ahmedabad) which is located in Ambavadis administrative office of the StateBank of India, I observed the various processes in which the whole process istaken out.

Briefly describing , the first customer interface is the Marketing division of theloans these people are there to convince as well as attract customers theyprovide the first hand information about the loan and the various requirements forpursuing that loan. Then there is the Sanctioning Department which verifies thepotentiality of the customer to repay the loan, and the various documents areverified here. There is an advocate and an in house property valuator whoassists these people in getting a clear view about the customer. If everything isfound to be up to the requirements set by the Bank, the loan is sanctioned to thecustomer. A Sanction letter is issued, and then the process of getting all thingsnotarized. After all the documents and legal formalities of the loan is complete a

loan account is being opened and the margin money is transferred to thataccount. When all these process gets over the disbursement cheque is issued tothe customer. And if the customer is having his/her salary account in a differentbank post dated cheques are collected from the customers for the collection ofthe equated monthly installments (EMI). This is the whole process which iscarried in order to avail a loan.

The various products available at the RACPC are:-


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SBI Housing Loan

SBI Car Loan

SBI Education Loan

SBI Personal Loan

Loan against mortgage of property

Loan against Shares & Debentures SBI Loan for Pensioners

SBI Housing Loan

"THE MOST PREFERRED HOME LOAN PROVIDER" voted in AWAAZConsumer Awards along with the MOST PREFERRED BANK AWARD in asurvey conducted by TV 18 in association with AC Nielsen-ORG Marg in 21 citiesacross India.

SBI HOME LOANS now offers Interest Rates concessions on GREEN HOMES inaccordance with SBI's commitment to Environment protection.SBI Home Loans come to you on the solid foundation of trust and transparencybuilt in the tradition of State Bank of India.Best Practices followed in SBI mentioned below will tell you why it makes senseto do business with State Bank of India

Best practices followed in SBI

People dealing withyou

End to End service by Permanent employees of SBI who areaccountable to you.

Place SBI branch of your choice will service your loan account. Youcan always meet our employees face to face.

PriceComplete transparency.

Interest charged on the daily reducing balance.

Prepaymentcharges

No penalty for prepayments made, out of bonafide savings orwindfall gains for which evidence is produced.

Costs hidden in fineprint

No hidden costs

TransparencyComplete transparency. All the features of our product,

including interest rates, are in the public domain.

Unique features


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Provision for on the spot "In principle" approval.

Loan sanctioned within 6 days of submission of required documents.

Option to avail Home Loan as a Term Loan or as an Overdraft facility tosave on interest and maximise gains (see SBI MaxGain in the following

sections) Option to club income of your spouse and children to compute eligible

loan amount

Provision to finance cost of furnishing and consumer durables as part ofproject cost

Repayment permitted upto 70 years of age

Free personal accident insurance cover upto Rs.40 Lac.

Optional Group Insurance from SBI Life at concessional premium (Upfrontpremium financed as part of project cost)

Interest calculated on daily reducing balance basis, and starts from thedate of disbursement.

Plus schemes which offer attractive packages with concessional interestrates to Govt. Employees, Teachers, Employees in Public Sector OilCompanies.

Special scheme to grant loans to finance Earnest Money Deposits to bepaid to Urban Development Authority/ Housing Board, etc. in respect ofallotment of sites/ house/ flat

Option to avail loan at the place of employment or at the place ofconstruction

Complimentary international ATM-Debit card

Complimentary SBI Classic/ International Credit Card

Option for internet-banking Concessional package under Credit Khazana for prospective Auto

Loan, Student Loan, Personal Loan borrowers whose accounts areconducted satisfactorily

50% concession in charges in respect of all personal remittances/collection of outstation cheques

Personal loan at attractive rates under SBI Home Plus scheme tailoredexclusively for SBI Home Loan customers

Purpose

Purchase/ Construction of House/ Flat

Purchase of a plot of land for construction of House

Extension/ repair/ renovation/ alteration of an existing House/ Flat

Purchase of Furnishings and Consumer Durables as a part of the projectcost


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Takeover of an existing loan from other Banks/ Housing FinanceCompanies.

Eligibility

Minimum age 18 years as on the date of sanction

Maximum age limit for a Home Loan borrower is fixed at 70 years, i.e. theage by which the loan should be fully repaid.

Availability of sufficient, regular and continuous source of income forservicing the loan repayment.

Loan Amount

40 to 60 times of NMI, depending on repayment capacity as % of NMI as under;

Net Annual Income EMI/NMI Ratio

Upto Rs.2 lacs 40%

Above Rs.2 lac to Rs. 5 lacs 50%

Above Rs. 5 lacs 55%

To enhance loan eligibility you have option to add:

1. Income of your spouse/ your son/ daughter living with you, provided they have

a steady income and his/ her salary account is maintained with SBI.

2. Expected rent accruals (less taxes, cess, etc.) if the house/ flat beingpurchased is proposed to be rented out.

3. Depreciation, subject to some conditions.

4. Regular income from all sources.

Note:NMI Net Monthly Income

EMI Equated Monthly Installment


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Margin

Purchase/ Construction of a new House/ Flat/ Plot of land:20% for loans up to Rs.30 Lacs, 20% for loans above Rs.30 lacs and upto Rs.75

lacs. 25% for loans above Rs.75 lacs. (w.e.f. 01.01.2009).

Processing Fee

0.50% of Loan amount with a cap of Rs.10,000/-(including Service Tax)

Pre-closure Penalty

No penalty if the loan is preclosed from own savings/windfall gains for which

documentary evidence is produced by the customer.In case, such proof is not produced by the borrower, penalty @2% on the amountprepaid in excess of normal EMI dues shall be levied if the loan is pre-closedwithin 3 years from the date of commencement of repayment.

Security

Equitable mortgage of the property.

Other tangible security of adequate value like NSCs, Life Insurance policies etc.,if the property cannot be mortgaged.

Maximum Repayment Period

For applicants up to 45 years of age: 25 years

For applicants over 45 years of age: 15 years

Moratorium

Up to 18 months from the date of disbursement of first installment or 2 monthsafter final disbursement in respect of loans for construction of new house/ flat(moratorium period will be included in the maximum repayment period)


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Disbursement

In lump sum direct in favour of the builder/ seller in respect of outrightpurchase

In stages depending upon the actual progress of work in respect of

construction of house/ flat etc.

Documents

Completed application form

Passport size photograph

Proof of Identity PAN Card/ Voters ID/ Passport/ Driving License

Proof of Residence Recent Telephone Bill/ Electricity Bill/ Property taxreceipt/ Passport/ Voters ID

Proof of business address in respect of businessmen/ industrialists

Sale Deed, Agreement of Sale, Letter of Allotment, Non encumbrancecertificate, Land/ Building Tax paid receipt etc. (as applicable and subjectto satisfaction report from our empanelled lawyer)

Copy of approved plan and approval from the Local Body

Statement of Bank Account/ Pass Book for last 6 months

SBI-Flexi Home Loans

A customized product designed to enable borrowers to hedge their Home Loanagainst unfavorable movement in interest rates. The product gives you a one

time irrevocable option to choose one of the three customized combinations offixed and floating interest rates and also to choose the order in which the fixedand floating rate will be availed.Minimum Loan Amount: Rs.5 lacs (Other terms and conditions as applicable toregular Home Loans).

SBI-Maxgain Home Loans

An innovative and customer-friendly product to enable you to earn optimal yieldon your savings and minimize interest burden on Home Loans, with no extracost.

The loan is granted as an Overdraft facility with the added flexibility for you tooperate your Home Loan Account like your SB or Current Account.The product serves to minimize your interest cost by enabling you to park yoursurplus funds in SBI-Maxgain (with the benefit to withdraw the surplus fundswhenever you require), specially in the wake of low yields from other deposit/investment avenues. Minimum Loan Amount: Rs.5 lacs(Other terms and conditions as applicable to regular Home Loans).


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SBI-Realty Home Loans

A unique product if you are on the look out for a loan to purchase a plot of landfor house construction. The loan is available for a maximum amount of Rs.1crore* and with a comfortable repayment period of upto 25 years.

You are also eligible to avail another Housing Loan for construction of house onthe plot financed above with the benefit of running both the loans concurrently.(House construction should commence within 2 years from the date of availmentof SBI-Realty Housing Loan)(Other terms and conditions as applicable to regular Home Loans)(* relaxation considered on case to case basis)

SBI-Freedom Home Loans

A revolutionary product designed for customers who are on the look out for asource of finance for a property they want to invest in without mortgaging thesame. All you have to do is pledge any financial security that you have and youwill get a Home Loan for your dream home.

A must-take for those who do not want to pay stamp duty for mortgage of theirproperty or go through the hassles of creation of mortgage.

You also have an option to take the loan by way of mortgage of the property andpledge financial securities in lieu of margin money.

Repayment is highly customized, giving you the option to repay through regularEMIs or through maturity proceeds of the securities pledged. (Other terms andconditions as applicable to regular Home Loans).

SBI-Optima Additional Home LoansSBI-Homeline Special Personal Loans

Innovative and value added products extended to existing Home loan borrowerswith a satisfactory repayment record of 3 years and whose loan is StandardAsset, with a view to reinforce the customer loyalty and to maintain long term

relationship with the borrowers. In case of take-over of Home Loans from otherBanks/HFCs, the borrower should have fulfilled the above conditions with thepresent Bank/HFC.


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PurposeSBI-Optima Additional HomeLoans

to meet expenditure towards major repair,renovation, addition to their house/flat,

purchase of furniture, fixtures and consumerdurablesSBI-Homeline Special PersonalLoans

General purpose loan to meet expenditureto meet forseen/unforeseen contingencies

Eligibility

SBI-Optima Additional HomeLoans

18 times NMI (for salaried borrowers)/1 times NAI ( for others) or

(i)25% of the original project cost of

house/flat (ii) 85% of the cost of repairs etc.or (iii) gap between 85% of the currentmarket price of flat/house and actualoutstanding loan dues ,

whichever is lower (EMI/NMI ratio of allloans should not exceed 60%)

SBI-Homeline Special PersonalLoans

18 times NMI (for salaried borrowers)/1 times NAI (for others)

Interest Rates/processing fee

SBI-Optima Additional HomeLoans

As applicable to Home Loans

SBI-Homeline Special PersonalLoans

Interest rates 50 bps above rates applicableto the repayment tenure (floating rates only)

Processing fee : 0.50% of the loan amount(including service tax)

Other Salient Features

Inbuilt provision for availment of the loans on the expiry of each bloc of 5 years,the first bloc commencing on the expiry of 5 years from the date of sanction oforiginal Home Loan.Original Home Loan and all SBI-Optima Home Loans/SBI-HomeLine PersonalLoans can run concurrently


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Comfortable repayment obligations Tenure of the loans equal to the residualmaturity of the original Home Loans -

Credit Khazana

The "SBI Credit Khazana" Scheme offers Housing Loan customers, concessionsin interest rates and margins when they subsequently avail of any of the followingloans:

Car Loan, Scoom, Education Loan, Personal Loan, Tractor Loan.

Eligibility

Housing Loan customers who have serviced the loan regularly for at least oneyear and where Equitable Mortgage has been created.

Concession in Interest

There will be a concession of 0.25% in interest when any of the above mentionedloans are availed.

Concession in Margin

There will be a concession of 10% in case of Car Loan and 5% in case of TractorLoan. Under the SCOOM Scheme, the margin has been maintained at 5%.

Security

The security required to be taken under the individual schemes would be takenand additionally, the Equitable Mortgage taken for the Housing Loan would beextended to cover the new loan(s).

Insurance

Free accident insurance cover (to cover death only) is available in case of CarLoan.

Other terms & Conditions:

Other terms & conditions like Amount of Loan, Repayment, Documentation willbe the same as those laid down for the individual schemes.


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Project Report

Problem Statement

To study the consumer perception regarding the State Bank of Indias HousingLoan product.

Need and Scope of the Study

Customer satisfaction is one such element of the service industry which cannotbe taken lightly by any organization. While initial days with the State Bank ofIndia I found many customers who were approaching the marketing departmentpeople for the takeover of their existing loan. This fact led me to study theconsumer perception regarding this SBIs Housing Loan product, actuallypresently the rate of interest offered by SBI is comparatively lower than other

private banks, so it can analyzed that is it only the rate of interest or other factorsalso involved in this transition. Further more this study will help the senior officersof the State Bank of India to look into the lacking and could implement the same.

Objective & Methodology

The objectives of the study are:-

To study the penetration of the SBI product in and around Ahmedabad(Both Customers & Non-customers)

To study the awareness level of the customer regarding SBI housing loan

To study the level of satisfaction regarding SBI product

Limitations of the Study

The study report consists of few limitations:

The report has been conducted within a limited time frame.

The study is self financed.

Only selected Branches and Banks have been considered for the study.

Samples were selected conveniently.

For the convenient of study non probability samples have been used.

Amateur use of MS-Excel software for Data Analysis. The sample size does not represent the total population.


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Literature Review

Superior service quality is widely acknowledged as a driver of perceived value,which, in turn, will enhance customer loyalty (Parasuraman and Grewal, 2000)

and improve the providers image, sales and profitability (Buzzell and Gale, 1987;Gummesson, 1993). Therefore, the notion of service quality has been examinedin for the Housing Loan Product of the State Bank of India.

Customer Satisfaction

Customer satisfaction, a business term, is a measure of how products andservices supplied by a company meet or surpass customer expectation. It is seenas a key performance indicator within business and is part of the fourperspectives of a Balanced Scorecard. In a competitive marketplace wherebusinesses compete for customers, customer satisfaction is seen as a key

differentiator and increasingly has become a key element of business strategy.

Measuring Customer Satisfaction

Organizations are increasingly interested in retaining existing customers whiletargeting non-customers; measuring customer satisfaction provides an indicationof how successful the organization is at providing products and/or services to themarketplace. Customer satisfaction is an ambiguous and abstract concept andthe actual manifestation of the state of satisfaction will vary from person toperson and product/service to product/service. The state of satisfaction dependson a number of both psychological and physical variables which correlate with

satisfaction behaviors such as return and recommend rate. The level ofsatisfaction can also vary depending on other options the customer may haveand other products against which the customer can compare the organization'sproducts.

Because satisfaction is basically a psychological state, care should be taken inthe effort of quantitative measurement, although a large quantity of research inthis area has recently been developed. Work done by Berry, Brodeur between1990 and 1998defined ten 'Quality Values' which influence satisfaction behavior,further expanded by Berry in 2002 and known as the ten domains of satisfaction.These ten domains of satisfaction include: Quality, Value, Timeliness, Efficiency,

Ease of Access, Environment, Inter-departmental Teamwork, Front line ServiceBehaviors, Commitment to the Customer and Innovation. These factors areemphasized for continuous improvement and organizational changemeasurement and are most often utilized to develop the architecture forsatisfaction measurement as an integrated model. Work done by Parasuraman,Zeithaml and Berry between 1985 and 1988 provides the basis for themeasurement of customer satisfaction with a service by using the gap betweenthe customer's expectation of performance and their perceived experience of


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performance. This provides the measurer with a satisfaction "gap" which isobjective and quantitative in nature. Work done by Cronin and Taylor propose the"confirmation/disconfirmation" theory of combining the "gap" described byParasuraman, Zeithaml and Berry as two different measures (perception andexpectation of performance) into a single measurement of performance

according to expectation. According to Garbrand, customer satisfaction equalsperception of performance divided by expectation of performance.

The usual measures of customer satisfaction involve a survey with a set ofstatements using a Likert Technique or scale. The customer is asked to evaluateeach statement and in term of their perception and expectation of theperformance of the organization being measured.

More than a decade ago, Parasuraman, Zeithaml and Berry (1988, 1991)conducted extensive studies in different industries and developed theSERVQUAL instrument: a 22-item scale with a set of service quality dimensions

to quantify a customers assessment of a companys service quality. Five keydimensions of service quality reliability, responsiveness, assurance, empathyand tangibles have been identified and form the foundation on which a lot ofother studies on service quality have been built. SERVQUAL is widelyrecognized and used, and it is regarded as applicable to a number of industries,including the banking industry (Yavas, Bilgin, Shemuell, 1997). However,SERVQUAL has been subject to certain criticisms, including vagueness in thedefinition of expectations, its dubious applicability in some industries (Teas,1993), the need for expectation measurement (Cronin and Tayer, 1992, 1994),and SERVQUALs dimensionality (Carman, 1990). Moreover, the traditionalservice quality dimensions cannot directly apply to Internet banking, because itrepresents a different and unique service delivery process.

SERVQUAL

The SERVQUAL instrument has been the predominant method used to measureconsumers perceptions of service quality. It has five generic dimensions orfactors that are stated as follows (van Iwaarden et al., 2003):

(1) Tangibles: Physical facilities, equipment and appearance of personnel;

(2) Reliability: Ability to perform the promised service dependably and accurately;

(3) Responsiveness: Willingness to help customers and provide prompt service;

(4) Assurance (including competence, courtesy, credibility and security):Knowledge and courtesy of employees and their ability to inspire trust andconfidence;


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(5) Empathy (including access, communication, understanding the customer):Caring and Individualized attention that the firm provides to its customers;

Service quality has been shown to be a significant predictor of behavioralintentions, e.g. likelihood of recommending, repeat purchase, switching, and

complaining (Bitner, 1990). Woodside, Frey and Daly (1989) found that there is asignificant correlation between service quality and repurchase behavior in thehealth care industry. Findings from Dabholkar (1996) indicate that customersfeelings correlate positively with the intention to use. In light of these findings, thepresent study investigates the relationship between service quality, customersatisfaction and future consumption behavior.

SERVQUAL Findings

Tangibles

* Excellent banks (refer to cable TV companies, hospitals, or the appropriateservice business throughout the questionnaire) will have modern-lookingequipments.

* The physical facilities at excellent banks will be visually appealing.

* Employees at excellent banks will be neat in appearance.

* Materials (e.g., brochures or statements) associated with the service will bevisually appealing in an excellent bank.

Reliability

* When excellent banks promise to do something by a certain time, they will doso.

* When customers have a problem, excellent banks show a sincere interest insolving it.

* Excellent banks will perform the service right the first time.

* Excellent banks will provide their services at the time they promise to do so.

* Excellent banks insist on error free records.

Responsiveness

* Employees of excellent banks will tell customers exactly when service will beperformed.


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* Employees of excellent banks will give prompt service to customers.* Employees of excellent banks are always willing to help customers.

* Employees of excellent banks are never too busy to respond to customer

requests.

Assurance

* The behavior of employees of excellent banks will instill confidence incustomers.

* Customers of excellent banks will feel safe in their transactions.

* Employees of excellent banks are consistently courteous with customers.

* Employees of excellent banks are having the knowledge to answer customerquestions.

Empathy

* Excellent banks will give customers individual attention.

* Excellent banks will have operating hours convenient to all their customers.

* Excellent banks will have employees who give customers personal attention.

* Employees of excellent banks will understand the specific needs of theircustomers.

Research Design

Exploratory DesignThe survey research method will be the basic research design. The respondentswill be classified into three types namely the SBI customer, Non SBI customerand the Managers. We will be conducting an experience survey in which we aregoing to have Expert Interview that will be conducted with the experts who arequalified and have good knowledge in the field and the interview will last around

30- 40 minutes. We will also be conducting a Non- disguised, qualitativeanalysis called In-depth Interview of the consumers that is expected to lastbetween 15-20 minutes. By this we came to know about their perceptionregarding the procurement of the Housing Loan and after sales services.

Target Population


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The target population was the people who avail Housing Loan from differentbanks. The research was conducted under a sampling frame of people living inand around Ahmedabad who were already availing the housing loan fromdifferent banks and specially State Bank of India.

Sampling Design

The sampling design adopted was convenience and quota of non probabilistic inwhich we got filled questionnaire from 56 respondents 50 were from State Bankof Indias customer and the rest 6 from the customers of other banks. So mysample size would be 56. Eligible respondents will be adults over the age of 18.The quota that we had taken was on the basis of the Net Monthly Income of thehousehold and the Amount Sanctioned for the Loan dividing it equally on boththe ranges.

Questionnaire Formulation

The scaling technique used in the questionnaire was the Non-ComparativeScaling technique. Under Itemized Rating we used the Likert Scale where weasked the questions for which the respondents would had to answer on the scaleof 1to 5, 1 being strongly disagree and 5 being strongly agree, and also for thesatisfaction level of the customers 1 being totally dissatisfied and 5 being totallysatisfied.

Reliability

For the complete study, 62 responses were generated using the pilot tested

questionnaire, but only 56 completely filled questionnaires were retrieved. Thereliability of the completely filled questionnaires was tested using the correlationtechnique used by the OATBRAN and it came out to be 0.39.

Data Collection

For the complete survey respondents were chosen in such a way that theresponses can be analyzed on each other. I chose respondents mainly fromState Bank of India keeping in mind about the Quota of the Net Monthly Incomeof the house hold and the Loan amount to be sanctioned. I conducted a personal

interview for the customers who visited the bank and the maximum number of myresponses was taken on an interview over telephone. For the responses of theother banks customer I visited other banks and interviewed through ladderingquestions about not being a customer of the State Bank of India.


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Classification and Tabulation of the Data

The raw data obtained from questionnaire must undergo preliminary preparation

before it can be analyzed using statistical techniques. The quality of resultsobtained from statistical techniques and there subsequent integration depends toa greater degree on how well the data were prepared and converted into a formsuitable for analysis.The data after collection has to be processed and analyzed in accordance withthe outline laid down for the purpose at the time of developing the research plan.The processing operation includes:

Editing: Editing of data is a process of examining the collected raw datato detect errors and commissions and to correct them whenever possible.

Coding: The process of assigning numerals or other symbols to answersso that responses can be put into a limited number of categories in orderto make the analysis strong and effective.

Classification: The process of arranging data in groups or classes on thebasis of common characteristics.

Tabulation: Comprises sorting of data into different categories andcounting the number of cases belonging to each category.

Findings

Dimension-wise Analysis

Tangibility: The data in Table-1 brings to light the perception of the State Bank ofIndia with its respective customers on tangibles. The data reveals that themodern scenario of SBI is changing. These days the bank is concentrating on theambience and other facilities which all make customers feel more friendly andfind it a comfortable place. All the customers interviewed has on an averageawarded 91.2% weight age to tangibles.Reliability: The analysis of reliability dimension of service quality shows animpressive figure. SBI (4.52) figure shows that the name of the bank isconsidered reliable to the customers. The customers rate State Bank of India90.4% when it comes to reliability and it was obvious also as State Bank of Indiais one of the best bank and more over a government enterprise.

Responsiveness: The data in Table-3 brings to light that responsiveness patternof the customers of SBI is not as good as that of other banks customers. The


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perpetual difference on said dimensions between SBI and other banks is wide(0.60). The element wise analysis of this dimension shows that SBI is fallingbelow the perceptions of their customers on employees providing promptservices.

Assurance: The perceptual difference between SBI and other banks customer isvery low. The respondents of SBI have given appreciable rating the assurancedimension to the bank. The element wise analysis shows that SBI is exceedingthe perceptions of their customers as far as trust worthiness and feeling safe intransacting with the bank is concerned.

Empathy: The data analysis of Table-5 discloses the fact that banks such as SBIstand away from their customers regarding delivery of quality services. Thereexists a wide gap between the perceptions of banks such as SBI and theircustomers as is evident from the high mean difference (1.05).

Table 1S No. SERVQUAL Dimension Mean

1 Proper lighting, ambience and seating arrangements available 4.6

2

Proper arrangements for heat, ventilation and air conditioningmade 4.6

3

The bank along with loan provides additional facilities ofhaving a saving account, ATM, credit card facility 4.5

Tangibility (1+2+3) 13.7Maximum 15

Table 2S No. SERVQUAL Dimension Mean1 The name of the bank is reliable 4.6

2 The loan is worth to avail 4.4

3 The product (Housing Loan) is tested by users 4.4

4

The bank is updating the web sites about the housing loan forthe knowledge of the customers 3.9

5 Proper ethic advertisements 4

6 Briefed about all the various types of housing loan schemes 4.2

7

How satisfied are you with how your telephone enquiries weredealt with 4.1

8 The rate of interest which is charged is suitable 3.79 How easy was it to find information on the Scheme 3.7

10

How satisfied are you with the availability of the ComplaintRegister 3.7

Reliability (1+2+3+4+5+6+7+8+9+10) 40.7Maximum 45


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1 The feed back of the customer is taken care of 4.1

2 The bank has taken a proper survey about the product 4.2

3 Followed the policy of Customer is King 4.24 The time taken for getting the loan is proper 3.8

5

How satisfied are you with the ease of contacting the personyou needed 4.1

6

How satisfied are you with the time taken to respond totelephone enquiries 4.1

7

How satisfied are you with the time taken to respond to written/postal enquiries 3.7

Responsiveness (1+2+3+4+5+6+7) 28.2Maximum 35


1 The financial institutions (Bank) is legal 4.4

2 Proper assistance in filling the form and other formalities 4.6

3

The marketing executive is properly trained for the purpose tohelp the customers 4.3

4 Properly welcomed by the employee 4.5

5

The customer is treated in the same way after getting the loansanctioned and disbursed 3.6

6 Assistants have proper product knowledge 4.2

7 You will recommend other people about this loan scheme 4.48 Proper assistance is provided also after the loan is availed 3.7

9

How satisfied are you with the clarity of information or adviceprovided 4

10

How easy was it to understand and complete the applicationform 4.4

11

How satisfied are you with the relevant knowledge of the staffyou dealt directly with 3.9

12 How satisfied are you with the way problems were resolved 3.9

13

How satisfied are you with the speed in which theservice/product was delivered 3.9

Assurance (1+2+3+4+5+6+7+8+9+10+11+12+13) 53.8Maximum 65


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1 You will be a loyal customer of this bank life time 4.5

2

You feel that you are cheated and would like to shift to otherbank 4.5

3 How satisfied are you with the courtesy of the staff 4.34 How satisfied are you with the help fullness of the staff 4.2

5

How satisfied are you that the staff showed interest in you asan individual / treated you as a valued customer 4


7

How satisfied are you with the general behavior of the staffmembers 4.2

Empathy (1+2+3+4+5+6+7) 29.9Maximum 35

State Bank of India

Factors Mean STD. DeviationTangibles 4.56 0.03Reliability 4.52 0.32Responsiveness 4.03 0.17Assurance 4.13 0.31Empathy 4.27 1.05Aggregate 4.30 0.38

3.7

3.8

3.9

4

4.1

4.2

4.3

4.4

4.5

4.6

Tangibles Rel iability Responsiveness Assurance Empathy

Mean

Other Banks

Factors Mean


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Tangibles 4.42Reliability 4.08Responsiveness 4.63Assurance 4.02Empathy 4.86Aggregate 4.40

Aggregate Customer Satisfaction Level score of SBI (RACPC) Ahmedabad is4.30 which indicate a good performance where good is considered in between4.00 to 4.50.

Moreover, SBI has established a strong position in terms of Tangibles &Reliability, indicating that customers of SBI are very much reliable on theservices it provides. Overall the customers have expressed positive perception interms of assurance, responsiveness, and empathy also.

Conclusion & Recommendations

The banking sector in India is undergoing major changes due to competition andthe advent of technology. The customer is looking for better quality serviceswhich enhance his/her satisfaction.

From the above analyses, it is evident that SBI has many positive features andthe customers are mostly satisfied with the services offered. In spite of this fact, ithas been observed that many customers are not aware of all sort facilitiesprovided by SBI.

Though this study cant provide conclusive evidence to determine particularcourses of action and further research will be required to provide conclusiveevidence. But the management of SBI (Ahmedabad) should consider the findingsand take all necessary steps for further research and if they think that thecustomers of SBI are homogeneous in their choice and preferences, they mayconsider the following recommendations to gain more customer base andachieve more customer satisfaction along with maintaining existing customersdelights

The Management of SBI should conduct more product & servicesawareness campaign.

They should increase the level of providing personal attention to individualcustomers.

In delivery of quality service in banks, what matter are speed, accuracy,promptness, reliability, individualized attention, etc. Better results can be


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achieved through proper use of relevant banking technology. These arethe areas where our banks are still lagging behind. Still as observed SBI isusing a lot of paper files instead of computer files.

The SBI Management should critically evaluate the deviation in means in

order to create balance in all dimensions of customer satisfactionmeasurement tools.

The customer satisfaction in terms of service quality is a relational marketingparadigm. The relationships are mostly viewed from the perspective of the firmproviding services. For service firm in this case the banks, building strongrelationship is important for improving customer satisfaction through servicequality.

Banks should continually assess and reassess how customers perceive bank

services so as to know whether the bank meets or exceeds or is below theexpectations of their customers. Such an appraisal, however, is a tedious taskbecause customer service is complex in nature and dynamic in action. Moreover,it can vary greatly from one branch to another. Also, what is 'good service' todaymay become 'indifferent service' tomorrow and 'bad service' the next day.Frequent customer surveys, therefore, throw light on ratification and refinementwhich will go a long way to improve the service quality in banks.

Only for State Bank of India Responses

Income Group

Frequency Percent

Valid

Percent

Cumulative

PercentValid


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20000 30000 14 28.0 28.0 54.030000 40000 11 22.0 22.0 76.040000 50000 7 14.0 14.0 90.0Above 50000 5 10.0 10.0 100.0Total 50 100.0 100.0

Age Group

Frequency Percent

Valid

Percent

Cumulative

PercentValid Below 20 0 0 0 0

20 30 14 28.0 28.0 28.030 40 15 30.0 30.0 58.040 50 18 36.0 36.0 94.0Above 50 3 6.0 6.0 100.0Total 50 100.0 100.0

Occupation

Frequency Percent

Valid

Percent

Cumulative

PercentValid Govt. 16 32.0 32.0 32.0

Ltd. Co 6 12.0 12.0 44.0Private 15 30.0 30.0 74.0Own Business 13 26.0 26.0 100.0Total

50 100.0 100.0

Loan Sanctioned

Frequency Percent

Valid

Percent

Cumulative

PercentValid 50 Lacks 0 0 0 100.0Total

50 100.0 100.0

Educational Qualification


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Frequency Percent

Valid

Percent

Cumulative

PercentValid High School 3 6.0 6.0 6.0

Intermediate 7 14.0 14.0 20.0Graduation 30 60.0 60.0 80.0

PG & Above 10 20.0 20.0 100.0Total

50 100.0 100.0

For State Bank of India

Sr No. Choice Criteria Yes %age No %age Total1. Trusted Bank 44 88.0 6 12.0 50 / 100%2. Low Rate of Interest 38 76.0 12 24.0 50 / 100%3. Word of Mouth 33 66.0 17 34.0 50 / 100%4. Time Taken to avail loan 16 32.0 34 68.0 50 / 100%

5. Employee Attitude 28 56.0 22 44.0 50 / 100%6. Transparent Transaction 40 80.0 10 20.0 50 / 100%

For Other BanksSr No. Choice Criteria Yes %age No %age Total

1. Trusted Bank 2 33.33 4 66.67 6 / 100%2. Low Rate of Interest 1 16.67 5 83.33 6 / 100%3. Word of Mouth 5 83.33 1 16.67 6 / 100%4. Time Taken to avail loan 6 100.0 0 0 6 / 100%5. Employee Attitude 5 83.33 1 16.67 6 / 100%6. Transparent Transaction 1 16.67 5 83.33 6 / 100%

Customers FeedbackTable 1

S No. SERVQUAL Dimension Mean1 Proper lighting, ambience and seating arrangements available 4.6

2

Proper arrangements for heat, ventilation and air conditioningmade 4.6

3

The bank along with loan provides additional facilities ofhaving a saving account, ATM, credit card facility 4.5

Tangibility (1+2+3) 13.7Maximum 15


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Customers Feedback:

The common customers feedback was that the ambience and other facilities ofSBI have changed a lot, with the due passage of time. No problem with these

facilities and one have to keep all these update to be in competition too.Table 2S No. SERVQUAL Dimension Mean

1 The name of the bank is reliable 4.6

2 The loan is worth to avail 4.4

3 The product (Housing Loan) is tested by users 4.4

4

The bank is updating the web sites about the housing loan forthe knowledge of the customers 3.9

5 Proper ethic advertisements 4

6 Briefed about all the various types of housing loan schemes 4.2

7

How satisfied are you with how your telephone enquiries were

dealt with 4.18 The rate of interest which is charged is suitable 3.7

9 How easy was it to find information on the Scheme 3.7

10

How satisfied are you with the availability of the ComplaintRegister 3.7

Reliability (1+2+3+4+5+6+7+8+9+10) 40.7Maximum 45

Customers Feedback:

About the reliability quotient almost all the customers gave a feedback that as

SBI is a government body, and has been functioning for such a long time there isno question on its being reliable.

Updating of websites (3.9) many of the customers were not accessing internet forthe procedure of loans and all so many gave a Neutral feedback.

When it is about the interest rate (3.7) no body wishes to pay that interest alsoand many were having a problem that when RBI reduces rates there is noautomatic change in their existing interest rates. And when enquired also manyofficials were not able to clarify all the doubts.

Finding information on scheme is easy but when some body personally assistsand explains everything it becomes very easy to understand.

About complaint register (3.7) many responses were that it is not visible as itshould be in and around customer area only. Some told that there was an openfeedback box so if one writes any thing bad the officials will tear it and no actionswill be taken.


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1 The feed back of the customer is taken care of 4.1

2 The bank has taken a proper survey about the product 4.2

3 Followed the policy of Customer is King 4.2

4 The time taken for getting the loan is proper 3.8

5

How satisfied are you with the ease of contacting the personyou needed 4.1

6

How satisfied are you with the time taken to respond totelephone enquiries 4.1

7

How satisfied are you with the time taken to respond to written/postal enquiries 3.7

Responsiveness (1+2+3+4+5+6+7) 28.2Maximum 35

Customers Feedback:

The responsiveness earned on average same marks. The time taken to avail theloan (3.8) was an issue the customers gave a response that taking long time isnot an issue but give correct information about the time that has to be taken.Many employees are giving false information regarding the time.

About postal enquires again many customers had never tried it so awarded it aneutral mark.


1 The financial institutions (Bank) is legal 4.4

2 Proper assistance in filling the form and other formalities 4.6

3

The marketing executive is properly trained for the purpose tohelp the customers 4.3

4 Properly welcomed by the employee 4.5

5

The customer is treated in the same way after getting the loansanctioned and disbursed 3.6

6 Assistants have proper product knowledge 4.2

7 You will recommend other people about this loan scheme 4.4

8 Proper assistance is provided also after the loan is availed 3.7

9 How satisfied are you with the clarity of information or adviceprovided 4

10

How easy was it to understand and complete the applicationform 4.4

11

How satisfied are you with the relevant knowledge of the staffyou dealt directly with 3.9



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13

How satisfied are you with the speed in which theservice/product was delivered 3.9

Assurance (1+2+3+4+5+6+7+8+9+10+11+12+13) 53.8Maximum 65

Customers Feedback:

In this section the major problem is regarding the treatment of the customer afterthe loan has been availed (3.6) & (3.7). Most of the customers were complainingabout the unavailability of the loan statement on time for the IT returnsprocedure. It is not the fault of RACPC but the branches are very bad inresponding to these queries. This should be strictly taken care of, manycustomers suggested to charge some annual fee and to deliver the statement athome as other private banks are doing.

About the knowledge of the staff a few customers were complaining that the bankofficials on one go are not explaining all the requirements which causes wastageof time and money.


1 You will be a loyal customer of this bank life time 4.5

2

You feel that you are cheated and would like to shift to other

bank 4.53 How satisfied are you with the courtesy of the staff 4.3

4 How satisfied are you with the help fullness of the staff 4.2

5

How satisfied are you that the staff showed interest in you asan individual / treated you as a valued customer 4


7

How satisfied are you with the general behavior of the staffmembers 4.2

Empathy (1+2+3+4+5+6+7) 29.9Maximum 35

Customer Feedback:

When it is regarding the loyalty, being a word of mouth, and good traits of personality ofthe staff almost all of the customers awarded good marks to the survey of SBI.

Reference


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SBI Group, Personal Segment Loan Products 6th Edition (December 2008),A brief History, available at www.sbi.co.in , www.statebankofindia.com

Parasuraman, A., Zeithaml, V.A. and Berry, L.L. (1994), "Reassessment ofexpectations as a comparison standard in measuring service quality: implications

for future research", Journal of Marketing, Vol. 58, pp. 111-124.

Interrogating SERVQUAL: a critical assessment of service quality measurementin a high street retail bank, Karin Newman, Professor, Middlesex UniversityBusiness School, London, UK

East, R., 1997, Consumer Behavior: Advances and Applications in Marketing,London: Prentice--Hall.

Levesque, T, and GHG McDougall, 1996, 'Determinants of Customer Satisfactionin Retail Banking,' International Journal of bank Marketing, Vol 14, No 7 pp 12-20

Anne M. Smith, "Measuring Service Quality: Is SERVQUAL Now Redundant?"Journal of Marketing Management (Jan/Feb/Aril 1955) pp 257-276

QUESTIONNAIRE

This questionnaire is designed only for an academic project survey; information beingprovided by you will be kept confidential and will be used only for the project purpose.

Gender Male FemaleAge Below 20 20 30 30 40 40 50 Above 50Marital Status Single Married Spouse working Yes NoFamily Structure Nuclear JointMonthly Income


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The feed back of the customer is taken care of 1 2 3 4 5Proper assistance in filling the form and other formalities 1 2 3 4 5The marketing executive is properly trained for the purpose tohelp the customers

1 2 3 4 5

Proper ethic advertisements 1 2 3 4 5The bank has taken a proper survey about the product 1 2 3 4 5Properly welcomed by the employee 1 2 3 4 5Followed the policy of Customer is King 1 2 3 4 5Briefed about all the various types of housing loan schemes 1 2 3 4 5Proper lighting, ambience and seating arrangements available 1 2 3 4 5Proper arrangements for heat, ventilation and air conditioningmade

1 2 3 4 5

The customer is treated in the same way after getting the loansanctioned and disbursed

1 2 3 4 5

Assistants have proper product knowledge 1 2 3 4 5The time taken for getting the loan is proper 1 2 3 4 5

The rate of interest which is charged is suitable 1 2 3 4 5

You will recommend other people about this loan scheme 1 2 3 4 5You will be a loyal customer of this bank life time 1 2 3 4 5The bank along with loan provides additional facilities of having asaving account, ATM, credit card facility

1 2 3 4 5

Proper assistance is provided also after the loan is availed 1 2 3 4 5You feel that you are cheated and would like to shift to otherbank

1 2 3 4 5

2. How long you have been availing the loan < 1 Year 1 5 Year 5 10 Year > 10 Years

3. Indicate the level of satisfaction based on your expectations for the housing loan

product1=Totally Dissatisfied-------3=Neutral-------5=Totally Satisfied 1 2 3 4 5

How satisfied are you with the ease of contacting the person youneeded

1 2 3 4 5

How satisfied are you with the clarity of information or adviceprovided

1 2 3 4 5

How satisfied are you with the time taken to respond totelephone enquiries

1 2 3 4 5

How satisfied are you with how your telephone enquiries weredealt with

1 2 3 4 5

How satisfied are you with the time taken to respond to written/postal enquiries

1 2 3 4 5

How easy was it to find information on the Scheme 1 2 3 4 5How easy was it to understand and complete the application form 1 2 3 4 5How satisfied are you with the relevant knowledge of the staffyou dealt directly with

1 2 3 4 5

How satisfied are you with the courtesy of the staff 1 2 3 4 5How satisfied are you with the help fullness of the staff 1 2 3 4 5How satisfied are you that the staff showed interest in you as anindividual / treated you as a valued customer

1 2 3 4 5


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How satisfied are you with the way problems were resolved 1 2 3 4 5How satisfied are you overall with the service you received 1 2 3 4 5

How satisfied are you with the speed in which the service/productwas delivered

1 2 3 4 5

How satisfied are you with the availability of the ComplaintRegister

1 2 3 4 5

How satisfied are you with the general behavior of the staffmembers

1 2 3 4 5

4. Do you visited any other bank for housing loan before availing it from the bankyou are availing right now? Yes No

Mention your Bank _____________________________________________

If Yes Which bank/s ICICI Bank Syndicate Bank United Bank of India HDFC bank Bank of Baroda Union Bank of India IDBI Bank Punjab National Bank Central Bank of India State Bank of India Others (Please Specify) ________________________________________

5. Why you chose your particular Bank? Trusted Bank Low Rate of Interest Word of mouth Time taken to avail loan Employee attitude

Transparent transactions

6. Rank the following products an the scale 1 101 Best Facility 10 Worst Facility

Personal bankingATM facilityCredit Card facilityCar LoanPersonal LoanEducation LoanHousing LoanMortgaged LoanSmall Medium Enterprises CreditInsurance Products

Thank You for your co-operation