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BANK
DEFINITION:
A bank is a financial intermediary that accepts deposits and channels those deposits into lending
activities, either directly or through capital markets. A bank connects customers with capital
deficits to customers with capital surpluses.
The definition of a bank varies from country to country. Under English common law, a banker is
defined as a person who carries on the business of banking, which is specified as
y Conducting current accounts for his customersy Paying cheques drawn on him, andy Collecting cheques for his customers.
In most common law jurisdictions there is a Bills of Exchange Act that codifies the law in
relation to negotiable instruments, including cheques, and this Act contains a statutory definition
of the term banker: banker includes a body of persons, whether incorporated or not, who carry on
the business of banking. Although this definition seems circular, it is actually functional, because
it ensures that the legal basis for bank transactions such as cheques does not depend on how the
bank is organized or regulated.
The business of banking is in many English common law countries not defined by statute but by
common law, the definition above. In other English common law jurisdictions there are statutory
definitions of the business of banking or banking business. When looking at these definitions it is
important to keep in mind that they are defining the business of banking for the purposes of the
legislation, and not necessarily in general. In particular,
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Most of the definitions are from legislation that has the purposes of entry regulating andsupervising banks rather than regulating the actual business of banking. However, in many cases
the statutory definition closely mirrors the common law one. Examples of statutory definitions:
y Banking business" means the business of receiving money on current or deposit account,paying and collecting cheques drawn by or paid in by customers, the making of advances
to customers, and includes such other business as the Authority may prescribe for the
purposes of this Act
y Banking business" means the business of either or both of the following:
receiving from the general public money on current, deposit, savings or other similaraccount repayable on demand or within less than [3 months] ... or with a period of call
or notice of less than that period;
paying or collecting cheques drawn by or paid in by customers
Since the advent of EFTPOS (Electronic Funds Transfer at Point Of Sale), direct credit, direct
debit and internet banking, the cheque has lost its primacy in most banking systems as a payment
instrument. This has led legal theorists to suggest that the cheque based definition should be
broadened to include financial institutions that conduct current accounts for customers and enable
customers to pay and be paid by third parties, even if they do not pay and collect cheques.
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STANDARD ACTIVITIES:
Banks act as payment agents by conducting checking or current accounts for customers, paying
cheques drawn by customers on the bank, and collecting cheques deposited to customers' current
accounts. Banks also enable customer payments via other payment methods such as telegraphic
transfer, EFTPOS, and ATM.
Banks borrow money by accepting funds deposited on current accounts, by accepting term
deposits, and by issuing debt securities such as banknotes and bonds. Banks lend money bymaking advances to customers on current accounts, by making installment loans, and by
investing in marketable debt securities and other forms of money lending.
Banks provide almost all payment services, and a bank account is considered indispensable by
most businesses, individuals and governments. Non-banks that provide payment services such as
remittance companies are not normally considered an adequate substitute for having a bank
account.
Banks borrow most funds from households and non-financial businesses, and lend most funds to
households and non-financial businesses, but non-bank lenders provide a significant and in many
cases adequate substitute for bank loans, and money market funds, cash management trusts and
other non-bank financial institutions in many cases provide an adequate substitute to banks for
lending savings too.
CHANNELS:
Banks offer many different channels to access their banking and other services:
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y ATM is a machine that dispenses cash and sometimes takes deposits without the need fora human bank teller. Some ATMs provide additional services.
y A branch is a retail locationy Call centery Mail: most banks accept check deposits via mail and use mail to communicate to their
customers, e.g. by sending out statements
y Mobile banking is a method of using one's mobile phone to conduct banking transactionsy
Online banking is a term used for performing transactions, payments etc. over the Internety Relationship Managers, mostly for private banking or business banking, often visiting
customers at their homes or businesses
y Telephone banking is a service which allows its customers to perform transactions overthe telephone without speaking to a human
y Video banking is a term used for performing banking transactions or professional bankingconsultations via a remote video and audio connection. Video banking can be performed
via purpose built banking transaction machines (similar to an Automated teller machine),
or via a videoconference enabled bank branch.
HISTORY OF BANKS:
The first banks were probably the religious temples of the ancient world, and were probably
established in the third millennium BC. Banks probably predated the invention of money.
Deposits initially consisted of grain and later other goods including cattle, agricultural
implements, and eventually precious metals such as gold, in the form of easy-to-carry
compressed plates. Temples and palaces were the safest places to store gold as they were
constantly attended and well built. As sacred places, temples presented an extra deterrent to
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Would-be thieves. There are extant records of loans from the 2nd century BC in Babylon that
were made by temple priests/monks to merchants.
EARLIEST BANKS:
By the time of Hammurabi's Code, dating to ca. 1760 BCE, banking was well enough developed
to justify laws governing banking operations. Ancient Greece holds further evidence of banking.
Greek temples, as well as private and civic entities, conducted financial transactions such as
loans, deposits, currency exchange, and validation of coinage. There is evidence too of credit,
whereby in return for a payment from a client, a moneylender in one
Greek port would write a credit note for the client who could "cash" the note in another city,
saving the client the danger of carting coinage with him on his journey. Pythius, who operated as
a merchant banker throughout Asia Minor at the beginning of the 5th century BC, is the first
individual banker of whom we have records. Many of the early bankers in Greek city-states weremetics or foreign residents. Around 371 BC, Pasion, a slave, became the wealthiest and most
famous Greek banker, gaining his freedom and Athenian citizenship in the process. The 4th
century BC saw increased use of credit-based banking in the Mediterranean world. In Egypt,
from early times, grain had been used as a form of money in addition to precious metals, and
state granaries functioned as banks. When Egypt fell under the rule of a Greek dynasty, the
Ptolemies (332-30 BC), the numerous scattered government granaries were transformed into a
network of grain banks, centralized in Alexandria where the main accounts from all the state
granary banks were recorded. This banking network functioned as a trade credit system in which
payments were affected by transfer from one account to another without money passing. In the
late 3rd century BC, the barren Aegean island of Delos, known for its magnificent harbor and
famous temple of Apollo, became a prominent banking center. As in Egypt, cash transactions
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Were replaced by real credit receipts and payments were made based on simple instructions with
accounts kept for each client. With the defeat of its main rivals, Carthage and Corinth, by the
Romans, the importance of Delos increased. Consequently it was natural that the bank of Delos
should become the model most closely imitated by the banks ofRome.
Ancient Rome perfected the administrative aspect of banking and saw greater regulation of
financial institutions and financial practices. Charging interest on loans and paying interest on
deposits became more highly developed and competitive. The development ofRoman banks was
limited, however, by the Roman preference for cash transactions. During the reign of the Roman
emperor Gallienus (260-268 AD), there was a temporary breakdown of the Roman banking
system after the banks rejected the flakes of copper produced by his mints. With the ascent of
Christianity, banking became subject to additional restrictions, as the charging of interest was
seen as immoral. After the fall ofRome, banking was abandoned in western Europe and did not
revive until the time of the crusades.
DURING LATE ANTIQUITY AND MIDDLE AGES:
During the 3rd century AD, banks in Persia and other territories in the Persian Sassanid Empire
issued letters of credit known as sakk.
Muslim traders are known to have used the cheque or sakk system since the time of Harun al-
Rashid (9th century) of the AbbasidCaliphate. In the 9th century, a Muslim businessman could
cash an early form of the cheque in China drawn on sources in Baghdad, a tradition that was
significantly strengthened in the 13th and 14th centuries, during the Mongol Empire. Indeed,
fragments found in the Cairo Geniza indicate that in the 12th century cheques remarkably similar
to our own were in use, only smaller to save costs on the paper. They contain a sum to be paid
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And then the order "May so and so pay the bearer such and such an amount". The date and name
of the issuer are also apparent.
Jews were ostracized from most professions by local rulers, the Church and the guilds and so
were pushed into marginal occupations considered socially inferior, such as tax and rent
collecting and money lending, while the provision of financial services was increasingly
demanded by the expansion of European trade and commerce.
Medieval trade fairs, such as the one in Hamburg, contributed to the growth of banking in a
curious way: moneychangers issued documents redeemable at other fairs, in exchange for hard
currency. These documents could be cashed at another fair in a different country or at a future
fair in the same location. If redeemable at a future date, they would often be discounted by an
amount comparable to a rate of interest. Eventually, these documents evolved into bills of
exchange, which could be redeemed at any office of the issuing banker. These bills made it
possible to transfer large sums of money without the complications of hauling large chests ofgold and hiring armed guards to protect the gold from thieves. Beginning around 12th century,
the need to transfer large sums of money to finance the Crusades stimulated the re-emergence of
banking in western Europe. In 1156, in Genoa, occurred the earliest known foreign exchange
contract. Two brothers borrowed 115 Genoese pounds and agreed to reimburse the bank's agents
in Constantinople the sum of 460 bezants one month after their arrival in that city. In the
following century the use of such contracts grew rapidly, particularly since profits from time
differences were seen as not infringing canon laws against usury. In 1162, King Henry the II
levied a tax to support the crusadesthe first of a series of taxes levied by Henry over the years
with the same objective. The Templars and Hospitallers acted as Henry's bankers in the Holy
Land. The Templars' wide flung, large land holdings across Europe also emerged in the 1100
1300 time frame as the beginning of Europe-wide banking, as their practice was to take in local
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Currency, for which a demand note would be given that would be good at any of their castles
across Europe, allowing movement of money without the usual risk of robbery while traveling.
By 1200 there was a large and growing volume of long-distance and international trade in a
number of agricultural commodities and manufactured goods in western Europe; some of the
goods traded during that period included wool, finished cloth, wine, salt, wax and tallow, leather
and leather goods, and weapons and armour. Individual trading concerns and combines often
specialized in one or more of these, as did individual producers; because a large amount of
capital was required to establish, e.g., a cloth manufacturing business, only the largest firms
could diversify. As a result, businesses and clusters of businesses tended to market fairly narrow
product lines. Big firms like the Medici bank could and did specialize; the Medicis
manufacturing division had a number of manufacturing facilities producing many different types
of cloth. Perhaps the best example of product policy comes from the Cistercian monastic order,
where individual monasteries and granges tended to specialize in particular agricultural products
or types of industrial production, usually with an eye to meeting particular local or regionalmarket needs.
Ironically, the Papal bankers were the most successful of the Western world, though often goods
taken in pawn were substituted for interest in the institution termed the Monte di Piet.
When Pope John XXII (born Jacques d'Euse (12491334) was crowned in Lyon in 1316, he set
up residency in Avignon. Civil war in Florence between the rival Guelph and Ghibelline factions
resulted in victory for a group of Guelph merchant families in the city. They took over papal
banking monopolies from rivals in nearby Siena and became tax collectors for the Pope
throughout Europe. In 1306, Philip IV expelled Jews from France. In 1307 Philip had the Knights
Templar arrested and acquired their wealth, which had become to serve as the unofficial treasury
of France. In 1311 he expelled Italian bankers and collected their outstanding credit. In 1327,
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Avignon had 43 branches of Italian banking houses. In 1347, Edward III of England defaulted on
loans. Later there was the bankruptcy of the Peruzzi (1374) and Bardi (1353). The accompanying
growth of Italian banking in France was the start of the Lombard moneychangers in Europe, who
moved from city to city along the busy pilgrim routes important for trade. Key cities in this
period were Cahors, the birthplace ofPope John XXII, and Figeac. Perhaps it was because of
these origins that the term Lombard is synonymous with Cahorsin in medieval Europe, and
means 'pawnbroker'. Banca Monte dei Paschi di Siena SPA (MPS) Italy, is the oldest surviving
bank in the world.
After 1400, political forces turned against the methods of the Italian free enterprise bankers. In
1401, King Martin I of Aragon expelled them. In 1403, Henry IV of England prohibited them
from taking profits in any way in his kingdom. In 1409, Flanders imprisoned and then expelled
Genoese bankers. In 1410, all Italian merchants were expelled from Paris. In 1401, the Bank of
Barcelona was founded. In 1407, the Bank of Saint George was founded in Genoa. This bank
dominated business in the Mediterranean. In 1403 charging interest on loans was ruled legal in
Florence despite the traditionalC
hristian prohibition of usury. Italian banks such as theLombards, who had agents in the main economic centers of Europe, had been making charges for
loans. The lawyer and theologian Lorenzo di Antonio Ridolfi won a case which legalized interest
payments by the Florentine government. In 1413, Giovanni di Bicci deMedici was appointed
banker to the pope. In 1440, Gutenberg invents the modern printing press although Europe
already knew of the use of paper money in China. The printing press design was subsequently
modified, by Leonardo da Vinci among others, for use in minting coins nearly two centuries
before printed banknotes were produced in the West.
By the 1390s silver was short all over Europe, except in Venice. The silver mines at Kutn Hora
had begun to decline in the 1370s, and finally closed down after being sacked by King Sigismund
in 1422. By 1450 almost all of the mints of northwest Europe had closed down for lack of silver.
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moneychangers were already called bankers, though the term "bank" usually referred to their
offices, and did not carry the meaning it does today. There was also a hierarchical order among
Professionals, at the top were the bankers who did business with heads of state, next were the city
exchanges, and at the bottom were the pawn shops or "Lombard". Some European cities today
have a Lombard street where the pawn shop was located.After the siege of Antwerp trade moved
to Amsterdam. In 1609 the Amsterdamsche Wisselbank (Amsterdam Exchange Bank) was
founded which made Amsterdam the financial center of the world until the Industrial Revolution.
Banking offices were usually located near centers of trade, and in the late 17th century, the
largest centers for commerce were the ports of Amsterdam, London, and Hamburg. Individuals
could participate in the lucrative East India trade by purchasing bills of credit from these banks,
but the price they received for commodities was dependent on the ships returning (which often
didn't happen on time) and on the cargo they carried (which often wasn't according to plan). The
commodities market was very volatile for this reason, and also because of the many wars that led
to cargo seizures and loss of ships.
GLOBAL BANKING:
In the 1970s, a number of smaller crashes tied to the policies put in place following the
depression, resulted in deregulation and privatization of government-owned enterprises in the
1980s, indicating that governments of industrial countries around the world found private-sector
solutions to problems of economic growth and development preferable to state-operated, semi-
socialist programs. This spurred a trend that was already prevalent in the business sector, large
companies becoming global and dealing with customers, suppliers, manufacturing, and
information centres all over the world.
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Global banking and capital market services proliferated during the 1980s and 1990s as a result of
a great increase in demand from companies, governments, and financial institutions, but also
Because financial market conditions were buoyant and, on the whole, bullish. Interest rates in the
United States declined from about 15% for two-year U.S. Treasury notes to about 5% during the
20-year period, and financial assets grew then at a rate approximately twice the rate of the world
economy. Such growth rate would have been lower, in the last twenty years, were it not for the
profound effects of the internationalization of financial markets especially U.S. Foreign
investments, particularly from Japan, who not only provided the funds to corporations in the
U.S., but also helped finance the federal government; thus, transforming the U.S. stock market by
far into the largest in the world.
Nevertheless, in recent years, the dominance of U.S. financial markets has been disappearing and
there has been an increasing interest in foreign stocks. The extraordinary growth of foreign
financial markets results from both large increases in the pool of savings in foreign countries,
such as Japan, and, especially, the deregulation of foreign financial markets, which has enabled
them to expand their activities. Thus, American corporations and banks have started seekinginvestment opportunities abroad, prompting the development in the U.S. of mutual funds
specializing in trading in foreign stock markets. Such growing internationalization and
opportunity in financial services has entirely changed the competitive landscape, as now many
banks have demonstrated a preference for the universal banking model prevalent in Europe.
Universal banks are free to engage in all forms of financial services, make investments in client
companies, and function as much as possible as a one-stop supplier of both retail and
wholesale financial services. Many such possible alignments could be accomplished only by
large acquisitions, and there were many of them. By the end of 2000, a year in which a record
level of financial services transactions with a market value of $10.5 trillion occurred, the top ten
banks commanded a market share of more than 80% and the top five, 55%. Of the top ten banks
ranked by market share, seven were large universal-type banks (three American and four
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European), and the remaining three were large U.S. investment banks who between them
accounted for a 33% market share.
This growth and opportunity also led to an unexpected outcome: entrance into the market of
other financial intermediaries: nonbanks. Large corporate players were beginning to find their
way into the financial service community, offering competition to established banks. The main
services offered included insurances, pension, mutual, money market and hedge funds, loans and
credits and securities. Indeed, by the end of 2001 the market capitalisation of the worlds 15
largest financial services providers included four nonbanks.
In recent years, the process of financial innovation has advanced enormously increasing the
importance and profitability of nonbank finance. Such profitability priorly restricted to the
nonbanking industry, has prompted the Office of the Comptroller of the Currency (OCC) to
encourage banks to explore other financial instruments, diversifying banks' business as well as
improving banking economic health. Hence, as the distinct financial instruments are being
explored and adopted by both the banking and nonbanking industries, the distinction between
different financial institutions is gradually vanishing.
MAJOR EVENTS IN BANKING HISTORY:
11001300 - Knights Templar run earliest Euro wide /Mideast banking.
15421551 - The Great Debasement refers to the English Crowns policy of coinage debasement
during the reigns of Henry VIII and Edward VI.
1602 First joint-stock company, the Dutch East India Company founded.
1602 - The Amsterdam Stock Exchange was established by the Dutch East India Company for
dealings in its printed stocks and bonds.
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1609 - The Amsterdamsche Wisselbank (Amsterdam Exchange Bank) was founded.
1690 - The Massachusetts Bay Colony was the first of the Thirteen Colonies to issue
permanently circulating banknotes.
1694 - The Bank of England was set up to supply money to the King .
1716 - John Law opens Banque Gnrale
1717 - Master of the Royal Mint Sir Isaac Newton established a new mint ratio between silverand gold that had the effect of driving silver out of circulation (bimetalism)and putting Britain on
a gold standard.
1720 The South Sea Bubble and John Law's Mississippi Scheme, which caused a European
financial crisis and forced many bankers out of business.
1775 The first building society, Ketley's Building Society, was established in Birmingham,
England.
1781 The Bank of North America was found by the Continental Congress.
1791 - The First Bank of the United States was a bank chartered by the United States Congress.
The charter was for 20 years.
1800 Rothschild family founds Euro wide banking.
1816 - The Second Bank of the United States was chartered five years after the First Bank of theUnited States lost its charter. This charter was also for 20 years. The bank was created to finance
the country in the aftermath of the War of 1812.
1862 - To finance War Between the States, the federal government under U.S. President
Abraham Lincoln issued a legal tender paper money, the so-called greenbacks.
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1874 - The Specie Payment Resumption Act provided for the redemption of United States paper
currency, known colloquially as greenbacks, in gold, beginning in 1879.
1913 - The Federal Reserve Act created the Federal Reserve System, the central banking system
of the United States of America, and granted it the legal authority to issue legal tender.
193033 In the wake of the Wall Street Crash of 1929, 9,000 banks close, wiping out a third of
the money supply in the United States.
1933 - Executive Order 6102 signed by U.S. President Franklin D. Roosevelt forbid the hoarding
of Gold Coin, Gold Bullion, and Gold Certificates by U.S. citizens, except for a small amount.
This effectively ended the convertibility of dollars to gold for US citizens.
1971 - The Nixon Shock was a series of economic measures taken by U.S. President Richard
Nixon which canceled the direct convertibility of the United States dollar to gold by foreign
nations. This essentially ended the existing Bretton Woods system of international financial
exchange.
1986 The "Big Bang" (deregulation of London financial markets) served as a catalyst to
reaffirm London's position as a global centre of world banking.
2008 Washington Mutual collapses. It was the largest bank failure in history.
BANKING IN INDIA:
Banking in India originated in the last decades of the 18th century. The first banks were The
General Bank of India, which started in 1786, and Bank of Hindustan, which started in 1790;
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both are now defunct. The oldest bank in existence in India is the State Bank of India, which
originated in the Bank ofCalcutta in June 1806, which almost immediately became the Bank of
Bengal. This was one of the three presidency banks, the other two being the Bank of Bombay and
the Bank of Madras, all three of which were established under charters from the British East
India Company. For many years the Presidency banks acted as quasi-central banks, as did their
successors. The three banks merged in 1921 to form the Imperial Bank of India, which, upon
India's independence, became the State Bank of India.
HISTORY OF BANKING IN INDIA:
Indian merchants in Calcutta established the Union Bank in 1839, but it failed in 1848 as a
consequence of the economic crisis of 1848-49. The Allahabad Bank, established in 1865 and
still functioning today, is the oldest Joint Stock bank in India.(Joint Stock Bank: A company that
issues stock and requires shareholders to be held liable for the company's debt) It was not the first
though. That honor belongs to the Bank of Upper India, which was established in 1863, and
which survived until 1913, when it failed, with some of its assets and liabilities being transferred
to the Alliance Bank of Simla. When the American Civil War stopped the supply of cotton to
Lancashire from the Confederate States, promoters opened banks to finance trading in Indian
cotton. With large exposure to speculative ventures, most of the banks opened in India during
that period failed. The depositors lost money and lost interest in keeping deposits with banks.
Subsequently, banking in India remained the exclusive domain of Europeans for next several
decades until the beginning of the 20th century.
Foreign banks too started to arrive, particularly in Calcutta, in the 1860s. The Comptoire
d'Escompte de Paris opened a branch in Calcutta in 1860, and another in Bombay in 1862;
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branches in Madras and Puducherry, then a French colony, followed. HSBC established itself in
Bengal in 1869. Calcutta was the most active trading port in India, mainly due to the trade of the
British Empire, and so became a banking center.
The first entirely Indian joint stock bank was the Oudh Commercial Bank, established in 1881 in
Faizabad. It failed in 1958. The next was the Punjab National Bank, established in Lahore in
1895, which has survived to the present and is now one of the largest banks in India.
Around the turn of the 20th Century, the Indian economy was passing through a relative periodof stability. Around five decades had elapsed since the Indian Mutiny, and the social, industrial
and other infrastructure had improved. Indians had established small banks, most of which served
particular ethnic and religious communities.
The presidency banks dominated banking in India but there were also some exchange banks and
a number of Indian joint stock banks. All these banks operated in different segments of the
economy. The exchange banks, mostly owned by Europeans, concentrated on financing foreign
trade. Indian joint stock banks were generally undercapitalized and lacked the experience and
maturity to compete with the presidency and exchange banks. This segmentation let Lord Curzon
to observe, "In respect of banking it seems we are behind the times. We are like some old
fashioned sailing ship, divided by solid wooden bulkheads into separate and cumbersome
compartments." The period between 1906 and 1911, saw the establishment of banks inspired by
the Swadeshi movement. The Swadeshi movement inspired local businessmen and political
figures to found banks of and for the Indian community. A number of banks established thenhave survived to the present such as Bank of India, Corporation Bank, Indian Bank, Bank of
Baroda, Canara Bank and Central Bank of India.The fervour of Swadeshi movement lead to
establishing of many private banks in Dakshina Kannada and Udupi district which were unified
earlier and known by the name South Canara ( South Kanara ) district. Four nationalised banks
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started in this district and also a leading private sector bank. Hence undivided Dakshina Kannada
district is known as "Cradle of Indian Banking".
POST-INDEPENDENCE:
The partition of India in 1947 adversely impacted the economies ofPunjab and West Bengal,
paralyzing banking activities for months. India's independence marked the end of a regime of the
Laissez-faire for the Indian banking. The Government of India initiated measures to play an
active role in the economic life of the nation, and the Industrial Policy Resolution adopted by the
government in 1948 envisaged a mixed economy. This resulted into greater involvement of the
state in different segments of the economy including banking and finance. The major steps to
regulate banking included:
y The Reserve Bank of India, India's central banking authority, was nationalized on January1, 1949 under the terms of the Reserve Bank of India (Transfer to Public Ownership) Act,
1948 (RBI, 2005b).[Reference www.rbi.org.in]
y In 1949, the Banking Regulation Act was enacted which empowered the Reserve Bank ofIndia (RBI) "to regulate, control, and inspect the banks in India."
y The Banking Regulation Act also provided that no new bank or branch of an existing bankcould be opened without a license from the RBI, and no two banks could have common
directors.
CUSTOMER SATISFACTION:
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Customer satisfaction, a business term, is a measure of how products and services supplied
by a company meet or surpass customer expectation. It is seen as a key performance
indicator within business and is part of the four of a Balanced Scorecard.
In a competitive marketplace where businesses compete for customers, customer
satisfaction is seen as a key differentiator and increasingly has become a key element of
business strategy.
However, the importance of customer satisfaction diminishes when a firm has increased
bargaining power. For example, cell phone plan providers, such as AT&T and Verizon,
participate in an industry that is an oligopoly, where only a few suppliers of a certain
product or service exist. As such, many cell phone plan contracts have a lot of fine print
with provisions that they would never get away if there were, say, a hundred cell phone plan
providers, because customer satisfaction would be way too low, and customers would easily
have the option of leaving for a better contract offer.
MEASURING CUSTOMER SATISFACTION:
Organizations need to retain existing customers while targeting non-customers. Measuring
customer satisfaction provides an indication of how successful the organization is at
providing products and/or services to the marketplace.
Customer satisfaction is an abstract concept and the actual manifestation of the state of
satisfaction will vary from person to person and product/service to product/service. The
state of satisfaction depends on a number of both psychological and physical variables
which correlate with satisfaction behaviors such as return and recommend rate. The level of
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satisfaction can also vary depending on other factors the customer, such as other products
against which the customer can compare the organization's products.
Work done by Parasuraman, Zeithaml and Berry (Leonard L) between 1985 and 1988
delivered SERVQUAL which provides the basis for the measurement of customer
satisfaction with a service by using the gap between the customer's expectation of
performance and their perceived experience of performance. This provides the researcher
with a satisfaction "gap" which is semi-quantitative in nature. Cronin and Taylor extendedthe disconfirmation theory by combining the "gap" described by Parasuraman, Zeithaml and
Berry as two different measures (perception and expectation) into a single measurement of
performance relative to expectation.The usual measures of customer satisfaction involve a
survey with a set of statements using a Likert Technique or scale. The customer is asked to
evaluate each statement in terms of their perception and expectation of performance of the
service being measured. Arguably, consumers are less complex than some of these surveys
tend to portend. They are basically in two simple states; satisfied or not satisfied. On or off,
just like a switch. A business can measure its customer satisfaction index by relating the
aggregates of satisfied customers versus dissatisfied customers.
METHODOLOGIES:
American Customer Satisfaction Index (ACSI) is a scientific standard of customer
satisfaction. Academic research has shown that the national ACSI score is a strong predictor
of Gross Domestic Product (GDP) growth, and an even stronger predictor ofPersonal
Consumption Expenditure (PCE) growth. On the microeconomic level, research has shown
that ACSI data predicts stock market performance, both for market indices and for
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individually traded companies. Increasing ACSI scores has been shown to predict loyalty,
word-of-mouth recommendations, and purchase behavior. The ACSI measures customer
satisfaction annually for more than 200 companies in 43 industries and 10 economic sectors.
In addition to quarterly reports, the ACSI methodology can be applied to private sector
companies and government agencies in order to improve loyalty and purchase intent. Two
companies have been licensed to apply the methodology of the ACSI for both the private
and public sector: CFI Group, Inc. applies the methodology of the ACSI offline, and
Foresee Results applies the ACSI to websites and other online initiatives. ASCI scores have
also been calculated by independent researchers, for example, for the mobile phones sector,
higher education, and electronic mail.
The Kano model is a theory of product development and customer satisfaction developed in
the 1980s by Professor Noriaki Kano that classifies customer preferences into five
categories: Attractive, One-Dimensional, Must-Be, Indifferent, Reverse. The Kano model
offers some insight into the product attributes which are perceived to be important to
customers. Kano also produced a methodology for mapping consumer responses to
questionnaires onto his model.
SERVQUAL orRATERis a service-quality framework that has been incorporated into
customer-satisfaction surveys (e.g., the revised Norwegian Customer Satisfaction
Barometer) to indicate the gap between customer expectations and experience.
J.D. Power and Associates provides another measure of customer satisfaction, known for its
top-box approach and automotive industry rankings. J.D. Power and Associates' marketing
research consists primarily of consumer surveys and is publicly known for the value of its
product awards. Other research and consulting firms have customer satisfaction solutions as
well. These include A.T. Kearney's Customer Satisfaction Audit process, which
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incorporates the Stages of Excellence framework and which helps define a companys status
against eight critically identified dimensions.
MEASURING CUSTOMER SATISFACTION IN THE BANKING INDUSTRY
Banking operations are becoming increasingly customer dictated. The demand for 'banking
supermalls' offering one-stop integrated financial services is well on the rise. The ability of
banks to offer clients access to several markets for different classes of financial instruments
has become a valuable competitive edge. Convergence in the industry to cater to the
changing demographic expectations is now more than evident. Bank assurance and other
forms of cross selling and strategic alliances will soon alter the business dynamics of banks
and fuel the process of consolidation for increased scope of business and revenue. The
thrust on farm sector, health sector and services offers several investment linkages. In short,
the domestic economy is an increasing pie which offers extensive economies of scale that
only large banks will be in a position to tap. With the phenomenal increase in the country's
population and the increased demand for banking services; speed, service quality and
customer satisfaction are going to be key differentiators for each bank's future success. Thus
it is imperative for banks to get useful feedback on their actual response time and customer
service quality aspects of retail banking, which in turn will help them take positive steps to
maintain a competitive edge.
The working of the customer's mind is a mystery which is difficult to solve and
understanding the nuances of what customer satisfaction is, a challenging task. This
exercise in the context of the banking industry will give us an insight into the parameters of
customer satisfaction and their measurement. This vital information will help us to build
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satisfaction amongst the customers and customer loyalty in the long run which is an integral
part of any business. The customer's requirements must be translated and quantified into
measurable targets. This provides an easy way to monitor improvements, and deciding upon
the attributes that need to be concentrated on in order to improve customer satisfaction. We
can recognize where we need to make changes to create improvements and determine if
these changes, after implemented, have led to increased customer satisfaction. "If you
cannot measure it, you cannot improve it." - Lord William Thomson Kelvin (1824-1907).
THE NEED TO MEASURE CUSTOMER SATISFACTION:
Satisfied customers are central to optimal performance and financial returns. In many places
in the world, business organizations have been elevating the role of the customer to that of a
key stakeholder over the past twenty years. Customers are viewed as a group whose
satisfaction with the enterprise must be incorporated in strategic planning efforts. Forward-
looking companies are finding value in directly measuring and tracking customer
satisfaction (CS) as an important strategic success indicator. Evidence is mounting that
placing a high priority on CS is critical to improved organizational performance in a global
marketplace.
With better understanding of customers' perceptions, companies can determine the actions
required to meet the customers' needs. They can identify their own strengths and
weaknesses, where they stand in comparison to their competitors, chart out path future
progress and improvement. Customer satisfaction measurement helps to promote an
increased focus on customer outcomes and stimulate improvements in the work practices
and processes used within the company. When buyers are powerful, the health and strength
of the company's relationship with its customers its most critical economic asset is its
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best predictor of the future. Assets on the balance sheet basically assets of production
are good predictors only when buyers are weak. So it is no wonder that the relationship
between those assets and future income is becoming more and more tenuous. As buyers
become empowered, sellers have no choice but to adapt. Focusing on competition has its
place, but with buyer power on the rise, it is more important to pay attention to the
customer.
Customer satisfaction is quite a complex issue and there is a lot of debate and confusion
about what exactly is required and how to go about it. This article is an attempt to review
the necessary requirements, and discuss the steps that need to be taken in order to measure
and track customer satisfaction.
WHAT CONSTITUTES SATISFACTION?
The meaning of satisfaction: "Satisfied" has a range of meanings to individuals, but it
generally seems to be a positive assessment of the service.
The word "satisfied" itself had a number of different meanings for respondents, which can
be split into the broad themes of contentment/happiness, relief, achieving aims, achieving
aims and happy with outcome and the fact that they did not encounter any hassle:
y Happy- Content
- Happy, pretty happy, quite happy
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- Pleased
- Walked out of there feeling good
- Walk out of there chuffed
- Grateful the service has been OK
y Relieved- Thank God for that
- Phew
- At ease
- Can relax
- Stress reduction
- Secure
- Safe
- Go to the bank with a troubled mind and they sort it out for you
- Sleep at night without worrying what's going to go on
- Everything is sorted out in your mind and you're happy
- Secure, you know the money has been sorted out
- Knowing the money's going to be there
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y Achieving aims- Achieving your aim or goal
- Getting what you went in for
- Achieve whatever it is you wanted to achieve
- Come away with a proportion of what you want
- Got what wanted in the end
- Got what you went down for
- Everything went according to plan, the way it should have done
- Met expectations
- To be unsatisfied is when you come out and you are still on the same level as
you were before.
y Achieving aims, and happy with outcome- Happy with the results
- Happy with what you've got
- When you walk out you're happy they've sorted everything out and quickly
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- Happy with outcome
- Pleased with what's happened
- Content with what's been done for you
- A feeling of happiness having achieved your goal
- You go in there feeling down and the only way you are going to come out
satisfied is if they have been good to you.
y No hassle- Not frustrated
- Everything goes smooth
- No hassle
- No problems
- No hassle getting there
- Straightforward
Clearly then there is some variation in understanding of the term. Some of the
interpretations fit with the definitions used in much of the service quality and satisfaction
literature, where satisfaction is viewed as a zero state, merely an assessment that the serviceis adequate, as opposed to "delight" which reflects a service that exceeds expectations.
However, most respondents have more positive interpretations of the term. These questions
allow us to identify priorities for improvement by comparing satisfaction with stated (overt)
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importance, comparing satisfaction with modeled (covert) importance (from identifying key
drivers of overall satisfaction), as well as respondents' own stated priorities.
SERVICE QUALITY AND CUSTOMER SATISFACTION:
There is a great deal of discussion and disagreement in the literature about the distinction
between service quality and satisfaction. The service quality school view satisfaction as an
antecedent of service quality - satisfaction with a number of individual transactions "decay"
into an overall attitude towards service quality. The satisfaction school holds the oppositeview that assessments of service quality lead to an overall attitude towards the service that
they call satisfaction. There is obviously a strong link between customer satisfaction and
customer retention. Customer's perception of Service and Quality of product will determine
the success of the product or service in the market. If experience of the service greatly
exceeds the expectations clients had of the service then satisfaction will be high, and vice
versa.. In the service quality literature, perceptions of service delivery are measured
separately from customer expectations, and the gap between the two provides a measure of
service quality.
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TITLE OF THE STUDY:
A study on customer satisfaction in terms of service at HDFC Bank, Bangalore.
STATEMENT OF THE PROBLEM:
The expectations of the customers influence their buying behavior. The customers
relate this expectation to the quality of service provided by the banks. The level of
expectation differs from person to person but everyone wants the banks to provide the
services which can satisfy their needs to their expected level or to a higher level so as to
offer them a higher satisfaction. The level of satisfaction of customers is affected by some
other attributes also other than the quality of service such as their experience with the bank
employees etc. As there is a huge competition in the banking sector in India, the customer
satisfaction is an important factor for the success of the banks. So with this background an
attempt has been made to study the satisfaction of the customers of HDFC Bank taking into
consideration some important attributes which customers consider for rating their
satisfaction.
OBJECTIVES OF THE STUDY:
y To identify the major attributes of customer satisfaction.y To study customer perception about HDFC Bank Ltd.y To identify and study the various ways of ensuring customer satisfaction adopted by
HDFC Bank Ltd.
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SCOPE OF THE STUDY:
The scope of the study is confined to measure the customer satisfaction at HDFC Bank.This study is based on sample survey.
SIGNIFICANCE OF THE STUDY:
Satisfied customers are central to optional performance and financial returns.
Business organizations have been elevating the role of the customer to that of a key
stakeholder over the past 20 years. Customers are viewed as group whose satisfaction with
the enterprise must be incorporated in strategic planning efforts. Forward-looking
companies are finding value in directly measuring customer satisfaction as an important
strategic success indicator.
With better understanding of customers perception, companies can determine the actions
required to meet the customers needs.
RESEARCH DESIGN:
1. RESEARCH METHODOLOGY:The research methodology would be descriptive.
2. DATA COLLECTION:The data would be collected from primary source through questionnaires.
3. DATA SOURCE:
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Both primary and secondary sources of data will be used. The major type of
information used is primary data. This is done through primary survey. The literature
review is a secondary data type. The sources include books, periodicals, websites etc.
LIMITATIONS OF THE STUDY:
y This study is geographically restricted to Bangalore city only.y Findings are based on sample survey through questionnaires.y Hence there is a scope for the respondents to be biased or pretentious.
COMPANY PROFILE:
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OVERVIEW AND PROFILE OF HDFC BANK:
The Housing Development Finance Corporation Limited (HDFC) HDFC Bank Ltd is amajor Indian financial services company based in India, incorporated in August 1994, after
the Reserve Bank of India allowed establishing private sector banks. The Bank was
promoted by the Housing Development Finance Corporation, a premier housing finance
company (set up in 1977) of India. HDFC Bank has 1,780 branches and over 5,231 ATMs,
in 883 towns and cities in India, and all branches of the bank are linked on an online real-
time basis. As of 31st March 2010 the bank had total assets of US$ 39.723 billion. For the
fiscal year 2009-2010, the bank has reported net profit ofRs 3,032 crore. Total annual
earnings of the bank reached Rs 21,158 crore. HDFC Bank was incorporated in 1994 by
Housing Development Finance Corporation Limited (HDFC), India's largest housing
finance company. It was among the first companies to receive an 'in principle' approval
from the Reserve Bank of India (RBI) to set up a bank in the private sector. The Bank
started operations as a scheduled commercial bank in January 1995 under the RBI's
liberalization policies.The Housing Development Finance Corporation Limited (HDFC) was
amongst the first to receive an 'in principle' approval from the Reserve Bank of India (RBI)
to set up a bank in the private sector, as part of the RBI's liberalization of the Indian
Banking Industry in 1994. The bank was incorporated in August 1994 in the name of
'HDFC Bank Limited', with its registered office in Mumbai, India. HDFC Bank commenced
operations as a Scheduled Commercial Bank in January 1995. HDFC is India's premier
housing finance company and enjoys an impeccable track record in India as well as in
international markets. Since its inception in 1977, the Corporation has maintained a
consistent and healthy growth in its operations to remain the market leader in mortgages.
Its outstanding loan portfolio covers well over a million dwelling units. HDFC has
developed significant expertise in retail mortgage loans to different market segments and
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also has a large corporate client base for its housing related credit facilities. With its
experience in the financial markets, a strong market reputation, large shareholder base and
unique consumer franchise, HDFC was ideally positioned to promote a bank in the Indian
environment.
HDFC Bank began operations in 1995 with a simple mission: to be a World Class Indian
Bank. We realized that only a single minded focus on product quality and service
excellence would help us get there. Today, we are proud to say that we are well on our way
towards that goal.
BUSINESS FOCUS:
HDFC Banks mission is to be a World-Class Indian Bank. The objective is to build sound
customer franchises across distinct businesses so as to be the preferred provider of banking
services for target retail and wholesale customer segments, and to achieve healthy growth in
profitability, consistent with the banks risk appetite. The banks are committed to maintain
the highest level of ethical standards, professional integrity, corporate governance and
regulatory compliance. HDFC Banks business philosophy is based on four core values
Operational Excellence, Customer Focus, Product Leadership and People.
MANAGEMENT:
Mr.C M Vasudev is the Non-Executive Chairman of the Bank effective July 6, 2010. The
Managing Director, Mr. Aditya Puri, has been a professional banker for over 25 years and
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before joining HDFC Bank in 1994 was heading Citibanks operations in Malaysia. Mr.
Aditya Puri is the Economic Times Business Leader 2010 The Banks Board of Directors
is composed of eminent individuals with a wealth of experience in public policy,
administration, industry and commercial banking. Senior executives representing HDFC are
also on the Board. Senior banking professionals with substantial experience in India and
abroad head various businesses and functions and report to the Managing Director. Given
the professional expertise of the management team and the overall focus on recruiting and
retaining the best talent in the industry, the bank believes that its people are a significant
competitive strength.
TECHNOLOGY USED IN HDFC BANK:
In the era of globalization each and every sector faced the stiff competition from their rivals.
And world also converted into the flat from the globe. After the policy of liberalization and
RBI initiatives to take the step for the private sector banks, more and more changes are
taking the part into it. And there are create competition between the private sector banks and
public sector bank. Private sector banks are today used the latest technology for the different
transaction of day to day banking life. As we know that Information Technology plays the
vital role in the each and every industry and gives the optimum return from the limited
resources. Banks are service industries and today IT gives the innovative Technology
application to Banking industries. HDFC BANK is the leader in the industries and today IT
and HDFC BANK together combined they reached the sky. New technology changed the
mind of the customers and changed the queue concept from the history banking transaction.
Today there are different channels are available for the banking transactions HDFC BANK
is the very consistent player in the new private sector banks. New private sector banks to
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withstand the competition from public sector banks came up with innovative products and
superior service.
HDFC BANK PRODUCT AND CUSTOMER SEGMENTS:
LOAN PRODUCT:
y Personal Loans
y Smart Draft
y Home loansy Two Wheeler Loans
Centralized Processing
Units
Derived Economies of scale
Electronic Straight Through
Processing
Reduced Transaction Cost
Data Warehousing , CRM Improve cost efficiency,
Cross sell
Innovative Technology
Application
Provide new or superior
products
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y New Car Loans
y Used Car Loans
y Cash Back Loans
y Car N Cash Loans
yLoan Against Gold
y Educational Loany Loan Against Securities
y Loan Against Property
y Loans Against Rental Receivables
y Health Care Finance
y Retail Agri Loans
y Tractor Loans
y Commercial Vehicle Finance
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y Construction Equipment Finance
y Warehouse Receipt Loans
y Construction Equipment Finance
DEPOSIT PRODUCT:
y Savings Account
Regular Savings Account
Savings Plus Account
Senior
Citizens Account
Institutional Savings Account
y Salary Account
y Current Account
y Fixed Deposits
y Demat Account
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y Safe Deposit Lockers
y Recurring Deposit
INVESTMENTS AND INSURANCE:
y Wealth Advisory Services
y Mutual Funds
y Tax Planning
y Life Insurance
y General Insurance
y Health Insurance
y Bonds
y Equities & Derivatives
y Mudra Gold Bar
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y Mudra Silver Bar
CARDS:
y Credit Cards
y Debit Cardsy Prepaid Cards
PAYMENT SERVICES:
y Net Safe
y IVR3D Secure
y Merchant Services
y Prepaid Mobile Recharge
y BillPay
y Visa BillPay
y PayNow
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y Register & Pay
y InstaPay
y DirectPay
y Visa Money Transfers
yE-Monies National Electronic Funds Transfer
y Online Payment of Excise & Service Tax
y Online Payment of Direct Tax
ACCESS TO BANK:
y Net Banking
y Credit Cards Online
y Phone Banking
y InstaAlerts
y MobileBanking
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y ATM
y OneView
y Email Statements
y Branch Network
FOREIGN EXCHANGE AND TRADE SERVICES:
y Travellers Cheques
y Foreign Currency Cash
y ForexPlus cardy Foreign Currency Drafts
y Remittances
y Forex service Branch Locater
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WHOLESALE BANKING:
The banks target market ranges from large, blue-chip manufacturing companies in the
Indian corporate to small & mid-sized corporates and agri-based businesses. For these
customers, the Bank provides a wide range of commercial and transactional banking
services, including working capital finance, trade services, transactional services, cash
management, etc. The bank is also a leading provider of structured solutions, which
combine cash management services with vendor and distributor finance for facilitating
superior supply chain management for its corporate customers. Based on its superior
product delivery / service levels and strong customer orientation, the Bank has made
significant inroads into the banking consortia of a number of leading Indian corporates
including multinationals, companies from the domestic business houses and prime public
sector companies. It is recognized as a leading provider of cash management and
transactional banking solutions to corporate customers, mutual funds, stock exchange
members and banks.
RETAIL BANKING SERVICES:
The objective of the Retail Bank is to provide its target market customers a full range of
financial products and banking services, giving the customer a one-stop window for all
his/her banking requirements. The products are backed by world-class service and delivered
to the customers through the growing branch network, as well as through alternative
delivery channels like ATMs, phone Banking, Net Banking and Mobile Banking.
The HDFC Bank preferred program for high net worth individuals, the HDFC Bank
plus and the investment Advisory services programs have been designed keeping in mind
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needs of customers who seek distinct financial solutions, information and advice on variousinvestment avenues. The Bank also has a wide array of retail loan products including Auto
Loans, Loans against marketable securities, Personal Loans and Loans for Two-wheelers. It
is also a leading provider of Depository Participant (DP) services for retail customers,
providing customers the facility to hold their investments in electronic form.
HDFC Bank was the first bank in India to launch an International Debit Card in
association with VISA (VISA Electron) and issues the MasterCard Maestro debit card as
well. The bank launched its credit card business in late 2001. The Bank is also one of the
leading players in the merchant acquiring business with over 50,000 point-of-sale (POS)
terminals for debit / credit cards acceptance at merchant establishments.
TREASURY:
Within this business, the bank has three main product areas Foreign Exchange and
Derivatives, Local Currency Money Market & Debt Securities, and Equities. With the
liberalization of the financial markets in India, corporate need more sophisticated risk
management information, advice and product structures. These and fine pricing on various
treasury products are provided through the banks 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 managing the returns and market risk on
this investment portfolio.
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BUSINESS MIX:
y HDFC Bank is a consistent player in the private sector bank and have a wellbalanced product and business mix in the Indian as well as overseas markets.
y Customer segments (retail & wholesale) account for 84% of Net revenues ( FY2010)
y Higher retail revenues partly offset by higher operating and credit costs.
y Equally well positioned to grow both segments.
BUSINESS STRATEGY:
HDFC BANK mission is to be "a World Class Indian Bank", benchmarking themselves
against international standards and best practices in terms of product offerings, technology,
service levels, risk management and audit & compliance. The objective is to build sound
customer franchises across distinct businesses so as to be a preferred provider of banking
services for target retail and wholesale customer segments, and to achieve a healthy growth
in profitability, consistent with the Bank's risk appetite. Bank is committed to do this while
ensuring the highest levels of ethical standards, professional integrity, corporate governance
and regulatory compliance. Continue to develop new product and technology is the main
business strategy of the bank. Maintain good relation with the customers is the main and
prime objective of the bank.
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HDFC BANK BUSINESS STRATEGY EMPHASIZES THE FOLLOWING:
y Increase market share in Indias expanding banking and financial services industryby following a disciplined growth strategy focusing on quality and not on quantity
and delivering high quality customer service.
y Leverage our technology platform and open scalable systems to deliver moreproducts to more customers and to control operating costs.
y Maintain current high standards for asset quality through disciplined credit riskmanagement.
y Develop innovative products and services that attract the targeted customers andaddress inefficiencies in the Indian financial sector.
y Continue to develop products and services that reduce banks cost of funds.y Focus on high earnings growth with low volatility.
SWOT ANALYSIS:
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The overall evaluation of the companys Strength, Weakness, Opportunities and Threats is
called as SWOT Analysis. The external environment analysis of any business will give you
the opportunities and threats facing the business. The external environment consists of two
parts:
1) MACRO ENVIRONMENT: Demographic, Economic, Technology, Political-legal,
Socio-cultural
2) MICRO ENVIRONMENT:Customers, Competition, Distributors, Suppliers.
The Internal Environment Analysis will give you the strength and weakness of the business.
STRENGTH:
y HDFC Bank has the right strategy for the right products.y Superior customer service vs. competitors.y Great Brand Image.y Products have required accreditations.y High degree of customer satisfaction.y Good Work place.
y Lower response time with efficient and effective service.y Dedicated workforce aiming at making a long-term career in the field.
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WEAKNESS:
y Some gaps in range for certain sectors.y Customer service staff needs training.y Sectoral growth is constrained by low unemployment levels and competition for
staff.
y Processes and systems, etc.y Management cover insufficient.
The External Environmental Analysis will give you the opportunities and threats of the
business.
OPPORTUNITIES:
y Profit margins will be good.y Could extend to overseas broadly.y New specialist applications.y Could seek better customer deals.y Fast-track career development opportunities on an industry-wide basis.y An applied research centre to create opportunities for developing techniques to
provide added-value services.
THREATS:
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y Legislation could impact.y Great risk involved.y Very high competition prevailing in the industry.y Vulnerable to reactive attack by major competitors.y Lack of infrastructure in rural areas could constrain investment.y High volume/low cost market is intensely competitive.
MILESTONES IN THE HISTORY:
HDFC Bank began its operations in 1995 with a simple mission: to be a "World-class
Indian Bank". They realized that only a single-minded focus on product quality and service
excellence would help us get there. Today, they are proud to say that they are well on our
way towards that goal.
It is extremely gratifying that their efforts towards providing customer convenience have
been appreciated both nationally and internationally.
AUGUST 30, 1994: Company Incorporated; Our Bank received "in principle" RBIs
approval to start a commercial Bank.
JANUARY 5, 1995: Received Banking License and entered into strategic alliance with
National Westminster Bank group.
JANUARY 16, 1995: First Branch inaugurated (Ramon House, Churchgate).
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FEBRUARY 18, 1995: Corporate Office and a full service Branch at Sandoz House, Worli
inaugurated by the then Union Finance Minister, Dr. Manmohan Singh.
MARCH 14, 1995: HDFC Bank launches its IPO ofRs.500 million (5,00,00,000 equity
shares at Rs.10 each at par) eliciting a record 55 times oversubscription.
MAY 19, 1995: Listing in the Bombay Stock Exchange.
MAY 20, 1995: First AGM at Birla Matushri Sabhagar, Marine Lines, Mumbai.
NOVEMBER 8, 1995: Listing in the National Stock Exchange.
1995-1996:
y Total Balance sheet crosses Rs.10 billion (Rs. 1000 crore)y Appointed clearing bank by the NSCCL heralding the genesis of what was to become
a major "capital markets infrastructure" business.
1996-1997:
y Declared maiden dividend of 8% on equity shares for year end March 31, 1997.y Launched retail investment advisory services.y Over 19000 deposit accounts and adding 2500 new accounts per month.
1997-1998:
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y Entered into an agreement with NSDL for Demat.y Launched 1st retail lending product - Loans against shares.y ROE crossed 20% for financial year ended March 31, 1998 at 23.9%.y Our Branch network touched 50.y Launched full scale telephone banking in Mumbai and Delhi.y Bank appointed sub custodian by Lloyds Bank.y Entered into MOU with Ahmedabad Stock Exchange to provide Clearing Bank
services.
1998-1999:
y Became part of the MasterCard/Cirrus ATM network and tied up with AmericanExpress to provide ATM cash access to its card members.
y Our DP (Depository Participant) business witnessed phenomenal growth totalinvestor accounts touched 50,000 as on March 31, 1999.
y Became the countrys leading provider of cash clearing and settlement services toStock Exchanges (NSE and Mumbai, Ahmedabad, Calcutta Stock Exchanges.
y Launched online real time netbanking.y Launched first international debit card in India.
1999-2000:
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y Times Bank amalgamation on Feb 26, 2000.y First Bank in India to launch Mobile Banking on January 1, 2000.
2000-2001:
y Focused offering for NRI customers launched. 14 dedicated NRI Centers to cater tothem.
2001-2002:
y Listing in the New York Stock Exchange (July 20, 2001).y First Bank in India to get ISO 9001:200 Certification for Depository services at the
Central processing Unit and backed processing of retail liabilities and direct banking
operations.
y ISO 9001:2000 certification forCustodial Services.
2003-2004:
y Credit card launched in over 100 cities credit card base touches 1 million.
2005-2006:
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y Womens Debit Card launched March 2006.
2007-2008:
y Centurion Bank ofPunjab merged with HDFC Bank.
2008-2009:
y Dec 12, 2008 Tie up with Postal Department to extend rural reach.
2009-2010:
y Dec 21, 2009: Kanjur Marg Office inaugurated by Mr. DeepakParekh HDFCChairman and Mr. Aditya Puri, our MD.
y Our 4000th ATM launched.
2010-2011:
y Our Intensive Rural Campaign launched with 1st Mega Loan Mahotsav inPimpalgaon in Maharashtra.
y First Bank to retail silver bars in India.
y Our 5000th ATM launched.
AWARDS:
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y 2011:
IDC FIIA Awards 2011 Excellence in Customer Experience
y 2010:
Outlook Money 2010 Awards Best Bank
Businessworld Best Bank Awards 2010 Best Bank (Large)
Teacher's Achievement Awards 2010
(Business)
Mr. Aditya Puri
The Banker and PWM 2010 Global
Private Banking Awards
Best Private Bank in India
Economic Times Awards forCorporate
Excellence 2010
Business Leader of the Year - Mr.
Aditya Puri
Forbes Asia Fab 50 Companies - 5th year in a row
NDTV Business Leadership Awards
MIS Asia IT Excellence Award 2010
Best Private Sector Bank
BEST BOTTOM-LINE I.T. Category
Dun & Bradstreet Banking Awards
2010
Overall Best Bank Best Private Sector Bank Best Private Sector Bank in
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SME Financing
Institutional Investor Magazine Poll HDFC Bank MD, Mr. Aditya Puri
among "Asian Captains of Finance
2010"
IDRBT Technology 2009 Awards Winner :
1) IT Infrastructure
2) Use of IT within the Bank
Runners-up:
IT Governance (Large Banks)
ACI Excellence Awards 2010 Highly Commended - Asia Pacific
HDFC Bank
FE-EVI Green Business Leadership
Award
Best performer in the Banking
category
Celent's 2010 Banking Innovation
Award
Model Bank Award
Avaya Global Connect 2010 Customer Responsiveness Award -
Banking & Financial Services
category
Forbes Top 2000 Companies Our Bank at 632nd position and
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among 130 Global High Performers
Financial Express - Ernst & Young
Survey 2009-10
Best New Private Sector Bank Best in Growth Best in strength
Asian Banker Excellence Awards 2010 Best Retail Bank in India Best in M&A Integration Technology Implementation
The Asset Triple A Awards Best Cash Management Bank in India
Euromoney Private Banking and
Wealth Management Poll 2010
1) Best Local Bank in India (second
year in a row)
2) Best Private Banking Servicesoverall (moved up from No. 2 last
year)
Financial Insights Innovation Awards
2010
Innovation in Branch Operations -
Server Consolidation Project
Global Finance Award Best Trade Finance Provider in India
for 2010
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Banking Technology Awards 2009 1) Best Risk Management Initiative
and
2) Best Use of Business Intelligence.
SPJIMRMarketing Impact Awards
(SMIA) 2010
2nd Prize
Business Today Best Employer Survey Listed in top 10 Best Employers in the
country
CUSTOMER SATISFACTION:
Customer satisfaction is equivalent to making sure that product and service performance
meets customer expectations. It is the perception of the customer that the outcome of a
business transaction is equal to or greater than his/her expectation. Customer satisfaction
occurs when the acquisition of products and /or services provides a minimum negative
departure from expectations when compared with other acquisitions and when the marginal
utility of a transaction is equal to or greater than preceding acquisitions. Customer
satisfaction occurs when the perception of the reward from the purchase of goods or
services by the customer meets or exceeds his/her perceived sacrifice. The perception is a
consequence of matching past purchase and consumption experience with the current
purchase.
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CUSTOMER SERVICE AND SATISFACTION:
When we talk about customer service and/or satisfaction, we talk about creativity.
Creativity allows us to handle or diffuse problems at hand or later on rather in the process of
conducting the everyday business. We talk about how, or what, does the organization have
to do to gain not only the sale but also the loyalty of the customer. We want to know the
payoff of the transaction both in the short and long term. We want to know what our
customers Want? We want to know if our customers are satisfied. Satisfaction, Of course,
means that what we delivered to a customer met the customers Approval. We want to know
if customers are delighted and willing to come back, and so on. Fleiss 2 and Feldman 3
present examples of that delightfulness in their writings. Fleiss has written about Ben and
Jerrys ice cream and Feldman has discussed excellence in a cab ride. As important as
delightfulness is, some of us minimize it, or even totally disregard it. At this point, we fail.
We must understand customer expectation levels concerning quality. We must also
understand the strategy for customer service quality, and next we must understand the
measurement and feedback cycles ofCustomer satisfaction. The customer is the person or
unit receiving the output of a process on the system. In fact, it is worth emphasizing that a
customer can be the immediate, intermediate, or ultimate customer. Also, a customer may
be a person or persons, or a process or processes. Customer satisfaction, however, is when
the customer is satisfied with a product/service that meets the customers needs, wants, and
expectations.
CUSTOMER SATISFACTION SURVEYS HELP TO:
y Improve customer, client, or employee loyalty.
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y React quickly to changes in the market.y Identify and capitalize on opportunities.y Beat the competition.y Retain or gain market share.y Increase revenue.y Reduce costs.
COMPANYS EFFORT TO INCREASE CUSTOMER SATISFACTION:
y Promote good and fair banking practices by setting minimum standards in dealingwith customers.
y Increase transparency so that the customers can have a better of what you canreasonably expect from the services.
y Promote a fair and cordial relationship between the customer and the bank.y Foster confidence in the banking system.
TO HELP THE CUSTOMER TO UNDERSTAND HOW OUR FINANCIAL
PRODUCTS AND SERVICES WORK BY:
y Giving the customer information about the bank in any one or more of the followinglanguages: Hindi, English or the appropriate local language.
y Ensuring that the Banks advertising and promotional literature is clear and notmisleading.
y Ensuring that the customers are given clear information about the Banks product andservices, the terms and conditions and the interest rates/service charges.
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y Giving you information on what are the benefits to the customers, how the customerscan avail of the benefits, what are their financial implications and whom they can
contact for addressing their queries.
TO HELP THE CUSTOMER TO USE THEIR ACCOUNT OR SERVICE BY:
y Providing you regular appropriate updates.y Keeping the customers informed about the changes in the interest rates, charges or
terms and conditions.
BEFORE BECOMING A CUSTOMER THE BANK WILL:
y Give the customers clear information explaining the key features of the services andproducts to the customers.
y Give the customers clear information on any type of products and services which theBank offers and that may suit the customers needs.
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TABLE NO: 1
GENDER
ANALYSIS:
On a survey conducted out of 100 respondents to determine the Customer satisfaction in
terms of service at HDFC Bank, 56 are male respondents and 44 are female respondents.
.
INFERENCE:
From the above table we get to know that majority of account holders in HDFC Bank are
Males.
Category Number of respondents Percentage
Male 56 56%
Female 44 44%
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56
44
Male Female
0
10
20
30
40
50
60
Gender
Gender
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TABLE NO: 2
AGE
Age Number of respondents Percentage
20-30 years 52 52%
30-40 years 32 32%
40-50 years 10 10%
Above 50 years 6 6%
ANALYSIS:
The above table reflects 52% of the account holders are from the age group 20-30 years,
32% are from 30-40 years, 10% are from 40-50 years and 6 % are above 50 years.
INFERENCE:
The above study indicates majority of account holders in HDFC bank are from the age
group of 20-30 years.
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AGE:
52
32
10
6
0
10
20
30
40
50
60
20-30 years 30-40 years 40-50 years Above 50 years
Number of respondents
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TABLE NO: 3
OCCUPATION
Occupation Number of respondents Percentage
Student 10 10%
Employed 62 62%
Business 20 20%
Others 8 8%
ANALYSIS:
Account holders in HDFC bank are at different occupational levels, the above table
indicates 62% of the account holders are employed, 20% are having their own business,
10% are students and 8 % come under other category.
INFERENCE:
From the above table we can determine majority of the account holders in HDFC bank are
those who are employed.
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OCCUPATION:
10
62
20
8
0
10
20
30
40
50
60
70
Student Employed Business Others
Occupation
Occupation
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TABLE NO: 4
MONTHLY INCOME
Monthly Income Number of respondents Percentage
Nil(If student) 10 10%
15000-20000 8 8%
20000-30000 34 34%
30000-40000 22 22%
Above 40000 26 26%
ANALYSIS:
Account holders in HDFC bank are having different income levels, the above table indicates
that 10% of the respondents do not have any income (Students), 8% are having an income
of 15000-20000, 34% are having an income of 20000-30000, 22% are having an income of
30000-40000 and 26% are having an income above 40000.
INFERENCE:
From the above table we can deter