final project andy

8/6/2019 Final Project ANDY

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IDBI BANK LTD.

A Project Report On

New Customer Acquisition of IDBI Bank

Submitted by:

ARINDAM DAS

Reg. No.- 9212400147

Submitted to:

Prof. Narayan Prasad

International Institute Of Business Studies, Bangalore

(In Partial Fulfillment Of The Requirement To MBA)

(2009-2011)


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Certificate

This is to be certified that Mr. ArindamDas, student of fourth semester of MBA from

International Institute of Business Studies,Bangalore has under taken two month final

project program with IDBI Bank Ltd. from 14th of November 2010 to 18th of January 2011.

With the bank and for the bank he himself offered the project title 'New Customer

Acquisition', and given his all efforts in spite of hectic schedule of job. His contribution

through this project is really commendable.

Project Coordinator: Prof. Narayan Prasad Sir (College)

Mrs. Vasundhara kushwa (Bank)


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Acknowledgement

To acknowledge all the persons who had helped for the fulfillment of the project is not possible for

any researcher but in spite of all that it becomes the foremost responsibility of the researcher and

also the part of research ethics to acknowledge those who had played a great role for the

completion of the project.

So in the same sequence at very first, I would like to acknowledge my parents

because of whom I got the existence in the world for the inception and the conception of this

project. Later on I would like to confer the flower of acknowledgement toprof. Narayan Prasad

and other faculty members who taught me that how to do project through appropriate tools and

techniques. Because IDBI bank has trusted me and given me a chance to do my integrated research

study, I would like to give thanks to the organization and especially to Mrs. Jyotimohan (Branch

Manager), Mrs. VasundharaKushuwa (Relationship Manager) from the depth of my heart.

Rest all those people who helped me are not only matter of acknowledgment but also authorized

for sharing my success.


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Table of content

Certificate of the company

Acknowledge

Chapter 1 :- Introduction: Executive summary of the project

Chapter 2 :- Industry Introduction & IDBI Bank

Industryintroduction

IDBI Bank: All about

Industry/Bank performance

Correlation between Industry and IDBI banksmovement

Chapter 3 :-Research Methodology

Objective of the study

Scope of the study

Tools & techniques used

Applied principles and concepts

Sources of primary and secondary data

Data collection

Statistical analysis

Theoretical interpretation

Findings

Chapter 4:- Conclusions and Recommendations

Appendix 1: Questionnaire

Appendix 2: Reference material


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Introduction: Executive summary of the project

Executive Summary

Banking Industry around which my project has to be revolved is really a very complex

industry. And to work for this was really a complex and hectic task and few times I feltso

frustrated that I thought to left the project and go for any new industry and new project.

Challenges which I faced while doing this project were following-

- Banking sector was quite similar in offering and products and because of that it was very

difficult to discriminate between our product and products of the competitors.

- Target customers and respondents were too busy persons that to get their time and view

for specific questions was very difficult.

- Sensitivity of the industry was also a very frequent factor which was very important to

measure correctly.

- Area covered for the project (i.e JC Nagar, RT Nagar, Hebbal, Sanjay nagar, Sultanpalya,

Kavalbyrasandra, Ganganagar, CBI) while doing job also was very large and it was very

difficult to correlate two different customers/respondents views in a one.

- Every financial customer has his/her own need and according to the requirements of the

customer product customization was not possible.

So above challenges some time forced me to leave the project but any how I did my project in all

circumstances. Basically in this project I analyzed that-What factors are really responsible for

performance of IDBI Banks performance in this competitive era.

Chapter 1


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INTRODUCTION

Customer acquisition is the first stage of customer lifecycle. New customers have to be

acquired to build the companies. Even in well-managed companies there can be significant level of

customer attrition. These lost customers need to be replaced. Several important matters are which

potential customers to target, how to approach them and what to offer them.

Customer acquisition is always the most important goal during new product launches and with

new business start-ups. For small businesses with ambitions to grow, customer acquisition is

again very important for their survival.

Even with well-developed and implemented customer retention plans, customers still need

replacement. In a B2C context, customer may shift out of a targeted demographic as they age and

progress through the family life cycle; their personal circumstances may change and they may no

longer need or find value in products; they may even die. In a B2B context, they may lose

corporate customers because they have been acquired by another company with established

buying practices and supplier preferences; they may have stopped producing the goods and

services for which your companyprovided input; they may have ceased trading. Customers lost to

these uncontrollable causes indicate that customer acquisition will always be needed to replace

natural attrition.

Several important questions have to be answered when a company puts together a customer

acquisition plan. These questions concern targets, channels and offers:

(1)Which prospects(potential new customers) will be targeted?

(2)How will these prospects be approached?

(3)What offer will be made?

These issues need to be carefully considered and programmed into a properly resourced

customer acquisition plan.

What is a new customer?

A customer can be new in one of these senses:

(1) New to the product category

(2) New to the company.


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New-to category

Customers are customers who have either identified a new need or have found a new categoryof solution for an existing need. In the B2C context, when a couple has their first child they have a

completely new set of needs connected to the growth and nurturing of their child. This includes

baby clothes, food and toys, for example. As the child grows, the parents are faced with additional

new-to-category decisions, such as preschool and elementary education. Sometimes, customers

also become new-to-category because they find a new category to replace an existing solution.

Mobile phones have now significantly replaced card or cash-operated pay-phones in many

countries. Environmentally friendlier detergents and diapers are growing their share of market, as

customer switch from current products.

Sometimes, customers beat marketers to the punch by adopting established products for new

uses. Marketers then catch on and begin to promote the new use. Arm and Hammer baking soda

was used by customers to deodorize fridges and rubbish bins, and as a mild abrasive for whitening

teeth. The manufacturer, church and dwight, responded to this revelation and began promoting a

variety of different applications. It is now an ingredient in toothpaste. Automobile manufacturers

noticed that many utility vehicles were not being bought by tradesmen, but as fun vehicles for

weekend use. They began promoting this use, while at the same time trying to innovate in product

design to meet the requirements of that market segment. The result has been the emergence of a

completely new market segment: the market for sports utility vehicles

The same distinction between new needs and new solutions also exists in the B2B

marketplace. A customer can be new-to-category if they begin an activity that requires resources

that are new to the business. For example, when McDonalds entered the coffee shop market, they

needed to develop a new set of supplier relationships. New-to-category customers may also be

customer who find a new solution for an existing problem. For example, some clothing

manufacturers now use computer-operated sewing machines to perform tasks that were

previously performed by skilled labour using traditional sewing machines.


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New-to-companyThe second category of new customers is customers that are new to the company. New-to-

company customers are won from competitors. They might switch to your company because they

feel you offer a better solution or because they value variety. Generally, new-to-company

customers are the only option for growing customer They advertise heavily in mass media,

communicate direct to students, offer free gifts and low or zero-cost banking for the duration of

the studentship. On the other hand, supermarket retailers incur no direct costs in attracting these

same students to their local stores.

New-to-company customers can be very expensive to acquire, particularly if they are strongly

committed to their current supplier. Commitment is reflected in a strong positive attitude to,or

high levels of investment in, the current supplier can be difficult, and often too expensive, to break.

High potential value customers are not always the most attractive prospects, because of this

commitment and investment. A lower value customer with a weaker commitment to the current

supplier may be a better prospect.

Portfolio purchasing

New customers can be difficult to identify in markets where customers exhibit portfolio

purchasing behaviors. Customers buy on a portfolio basis when they buy from a choice set of

several more or less equivalent alternatives. A customer who has not bought from one of the

portfolio suppliers for a matter of months, or even years, may still regard the unchosen supplier as

a part of the portolio. The supplier, on the other hand, may have a business rule that says: If a

customer has not bought for three months, mail out a special offer. In the UK many grocery

customers shop at both Tesco and Sainsburys

Strategic switching

These are customers who shift their allegiances from one supplier to another in pursuit of a better

deal. Banks know that their promotional pricing stimulates hot money. This is money that is

moved from account to account across the banking industry in search of a better rate of interest.

Sometimes the money may only be in an account overnight.


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Sometimes, a customer may have regained a second or further time as a new customer. For

example, if the new parents mentioned previously were to have a second child after four years,

they would most likely have been removed from mother and baby databases. A new customer

record would have to be created. The customer would need to be targeted afresh. In portfolio

markets, a customer who has not purchased in quarter 1 may be treated as a new customer for

promotional purposes in quarter 2, as the company attempts to reactivate the customer.

Customer value estimates

Companies must choose which of several potential customers or customer segments to target for

acquisition. Not all prospects have similar potential. The final choice will depend on a number of

considerations.

(1)What is the estimated value of the customer? This depends on the margins earned from the

customers purchase over a given time period.

(2)If that customer switches from his current suppliers, what proportion of category spending will

your company earn?

(3)What is the probability that the customer will switch from current suppliers.

Committed customers

y Entrenched customers are unlikely to switch in the foreseeable future.

y Average customers are unlikely to change in the short term, but may switch in the medium

term.

Uncommitted customers

y Shallow customer have a lower commitment than average, and some of them are already

considering alternatives.

y Convertible customers are most likely to defect.

companies can measure customer commitment by asking just four questions:(1)How happy are you with( whatever it is)?

(2)Is this relationship something that you care about?

(3)Is there any other(whatever it is) that appeals to you?

(4)Is so, how different is the one(whatever) from the other?


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Non-customers are also segmented according to commitment scores into four availability subsets:

available, ambivalent, weakly unavailable and strongly unavailable. There are two clusters that are

open and two that are unavailable:

Open non-customers

y Available non-customers prefer the alternative to their current offer though they have not

yet switched, and are ready to switch

y Ambivalent non-customers are as attracted to the alternative as they are to their current

brand.

Unavailable non-customers

y Weakly unavailable non-customers prefer their current brands

y Strongly unavailable non-customers have a strong preference for their current brands.

In the B2B environment it is very often the task of marketers to generate leads for the salesperson

to follow up. Leads are individuals or companies that might be worth approaching. The leads then

needs to be qualified. The qualification process submits all leads to a series of questions, such as:

y Does the lead have a need for my companys product?

y Does the lead have the ability to pay?

y Is the lead authorized to buy?

If the answers are yes, yes and yes, the lead becomes a genuine prospect. Ability to pay covers

both cash and credit. The ability to pay of prospective customers can be accessed by subscribing to

credit rating services.

Once leads are qualified, companies need to decide the best channels for initiating contact. A

distinction can be made between direct to customer channels, such as salesperson, direct mail, e-

mail and telemarketing, and channels that are indirect, either because they use partners or other

intermediaries or because they bought time and space in media. The improved quality of

databases has meant that direct channels allow access to specified named leads in target

businesses.


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Sources of B2B leads

Leads come from a variety of sources. In a B2B context this includes the sources identified.

y Satisfied customers

Referrals from satisfied customers

y Networking

Personal contacts with well-connected and co-operative people

y Promotional activities

Exhibitions, seminars, tradeshows and conferences

Delegate and attendee lists

Advertising response inquiries

Publicity

y Websites

y Lists and directories

SIC listing, telephone directories

y Canvassing

y Tele-marketing

y E-mail

Many companies are turning to satisfied customers who may be willing to generate personal

referrals. Customer-related data enables many companies to identify which customers are very

satisfied. These special customers can then be proactively approached for a referral. They may be

prepared to write a letter or e-mail of introduction, provide a testimonial or receive a call to verify

the credentials of a salesperson.

Networking can be defined as follows:

Networking is the process of establishing and maintaining business-related personal

relationships.

A network might include members of a business association, friends from universities or

professional colleagues in other companies. In some countries it is essential to build and maintain

personal networks.


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Referral networks are common in professional services. Accountants, banks, lawyers, auditors, tax

consultants, estate agents will join together into a referral network in which they undertake to

refer clients to other members of the network.

Promotional activities can also generate useful leads. Exhibitions, seminars, trade shows and

conferences can be productive sources. Companies that pay to participate in these events may be

able to obtain privileged access to delegate and attendee lists, or to generate lists of their own

stand at a trade show.

B2B marketers generally do little advertising, even though this can generate leads. B2B

advertising is generally placed in highly-targeted specialist media such as trade magazines.

An important activity for some B2B companies is publicity. Publicity is an outcome of public

relations activity. Publicity can be defined as follows:

Publicity is the generation of free editorial content relevant to a companys interests

Successful public relations can generate publicity for your product or company in appropriate

media. This coverage, unlike advertising, is unpaid. Though unpaid, publicity does create costs.

Someone has to be paid to write the story and submit it to the media. Many magazines, trade

papers and online communities are run on a shoestring. They employ very few staff and rely

heavily on stories submitted by companies and their public relations staff to generate editorial

matter. Editors are looking for newsworthy items, such as stories about product innovation,

original customer applications or human-interest stories about product innovation, original

customer applications or human-interest stories about inventors and entrepreneurs. Editorial

staff generally will edit copy to eliminate deceptive or brazen claims.

Prospecting on the internet

Company websites can also be fruitful sources of new customers. Anyone with access to the

internet is a prospective customer. The internet enables potential customers to search globally for

products and suppliers. To be effective in new customer generation, websites must take into

account the way prospects search for information. There are four ways:

(1)Keying in a pages URL

(2)Using search engines

(3)Exploring directories, web catalogues or portals

(4)Surfing


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A URL is a website address. URL stand for uniform(or universal) resource locator. By tying it

into a web browsers address window, you move straight to the website. URLs can be saved as

favorites once you are sure of the address.

Search engines provide an indexed guide to websites. Users searching for information type

keywords into a web-based form. The engine then reports the number of hits, that is,webpages

that feature the keypad word or words. Users can be click on a hyperclick to take them to relevant

pages. To ensure that your site is hit when a prospect is searching, your website needs to be

registered with appropriate search engines. There are hundreds of search engines.

Directories or web catalogues such as yahoo! Provide a structural hierarchical listing of

websites, grouped into categories such as business, entertainment and sport. Companies choose

under which category to register.

Surfing is a term used to describe a more intuitive and less structured approach to website

searching.

When prospective customers reach your site they need to be able to do what they want. This

may mean searching for a product, registering for information, requesting a quotation, describing

their requirements and preferences.

Lists of prospects can be developed from many sources such as telephone directories, business

lists, chamber of commerce memberships, professional and trade association memberships, and

magazine circulation data. Lists can also be bought readymade from lists compilers and brokers.

Lists of prospects, organized by their standard industrial classification code are widely used. Some

lists are of poor quality: out of date, containing duplications, omissions, and other errors. High

quality lists with full contact details, including phone and e-mail address tend to be more

expensive. Lists can support direct marketing efforts by phone, mail, e-mail, fax or face-to-face.

Canvassing involves making unsolicited calls, sometimes known as cold calls. This can be a very

wasteful use of an expensive asset: the salesperson. Some companies have banned their

salespeople from cold calling. Others outsource this activity to third parties. Some hotel chains, for

example, use hospitality students to conduct a sales blitz that is essentially a telephone-based cold

calling campaign.


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Telemarketing is widely used as a more cost-effective way of prospecting than use of a

salesperson. Telemarketing, sometimes called telesales, is a systematic approach to prospecting

using the telephone, and, sometimes, other electronic media such as fax and e-mail. Telemarketing

is usually performed by staff of customer contact centers. These are either in-house or outsourced.

Outbound telemarketers make outgoing calls to identify and qualify leads. Inbound telemarketers

receive calls from prospective customers. In addition to prospecting, telemarketing can be used to

manage other parts of the customer lifecycle: cross-selling, handling complaints and winning back

at-risk or lost customers, for example.

A growing number of companies are using e-mail for new customer acquisition. E-mail offers

several clear advantages. A very large proportion of business decision makers have e-mail,

although this does vary by country and industry. It is cheap, costing about the same to send one

thousand e-mails as it does to send a single e-mail. It is quick and simple for recipients to respond.

Content can be personalized. Production values can be matched to audience preferences: you can

use richly graphical or simple textual content. It is an asynchronous prospecting tool, in other

words it is not tied to a particular timeframe like a sales call.


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Industry status & IDBI Banks interface

Industry introduction

The Indian Banking industry, which is governed by the Banking Regulation Act of India, 1949 can

be broadly classified into two major categories, non-scheduled banks and scheduled banks.

Scheduled banks comprise commercial banks and the co-operative banks. In terms of ownership,

commercial banks can be further grouped into nationalized banks, the State Bank of India and its

group banks, regional rural banks and private sector banks (the old/ new domestic and foreign).

These banks have over 67,000 branches spread across the country in every city and villages of all

nook and corners of the land.

The first phase of financial reforms resulted in the nationalization of 14 major banks in 1969 and

resulted in a shift from Class banking to Mass banking. This in turn resulted in a significant growth

in the geographical coverage of banks.Every bank had to earmark a minimum percentage of their

loan portfolio to sectors identified as priority sectors. The manufacturing sector also grew

during the 1970s in protected environs and the banking sector was a critical source. The next

wave of reforms saw the nationalization of 6 more commercial banks in 1980. Since then the

number of scheduled commercial banks increased four-fold and the number of bank branches

increased eight-fold. And that was not the limit of growth.

After the second phase of financial sector reforms and liberalization of the sector in the early

nineties, the Public Sector Banks (PSB) s found it extremely difficult to compete with the new

private sector banks and the foreign banks. The new private sector banks first made their

appearance after the guidelines permitting them were issued in January 1993. Eight new private

Chapter 2


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sector banks are presently in operation. These banks due to their late start have access to state-of-

the-art technology, which in turn helps them to save on manpower costs.

During the year 2000, the State Bank Of India (SBI) and its 7 associates accounted for a 25 percent

share in deposits and 28.1 percent share in credit. The 20 nationalized banks accounted for 53.2

percent of the deposits and 47.5 percent of credit during the same period. The share of foreign

banks (numbering 42), regional rural banks and other scheduled commercial banks accounted for

5.7 percent, 3.9 percent and 12.2 percent respectively in deposits and 8.41 percent, 3.14 percent

and 12.85 percent respectively in credit during the year 2000.about the detail of the current

scenario we will go through the trends in modern economy of the country.


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CurrentScenario:

The industry is currently in a transition phase. On the one hand, the PSBs, which are the mainstay

of the Indian Banking system are in the process of shedding their flab in terms of excessive

manpower, excessive non Performing Assets (Npas) and excessive governmental equity, while on

the other hand the private sector banks are consolidating themselves through mergers and

acquisitions.

PSBs, which currently account for more than 78 percent of total banking industry assets are

saddled with NPAs (a mind-boggling Rs 830 billion in 2000), falling revenues from traditional

sources, lack of modern technology and a massive workforce while the new private sector banks

are forging ahead and rewriting the traditional banking business model by way of theirsheer

innovation and service. The PSBs are of course currently working out challenging strategies even

as 20 percent of their massive employee strength has dwindled in the wake of the successful

Voluntary Retirement Schemes (VRS) schemes.

The private players however cannot match the PSBs great reach, great size and access to low cost

deposits. Therefore one of the means for them to combat the PSBs has been through the merger

and acquisition (M& A) route. Over the last two years, the industry has witnessed several such

instances. For instance, HDFC Banks merger with Times Bank Icici Banks acquisition of ITC

Classic, Anagram Finance and Bank of Madurai. Centurion Bank, Indusind Bank, Bank of Punjab,

Vysya Bank are said to be on the lookout. The UTI bank- Global Trust Bank merger however

opened a pandoras box and brought about the realization that all was not well in the functioning

of many of the private sector banks.


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Private sector Banks have pioneered internet banking, phone banking, anywhere banking, mobile

banking, debit cards, Automatic Teller Machines (ATMs) and combined various other services and

integrated them into the mainstream banking arena, while the PSBs are still grappling with

disgruntled employees in the aftermath of successful VRS schemes. Also, following Indias

commitment to the W To agreement in respect of the services sector, foreign banks, including both

new and the existing ones, have been permitted to open up to 12 branches a year with effect from

1998-99 as against the earlier stipulation of 8 branches.Tasks of government diluting their equity

from 51 percent to 33 percent in November 2000 has also opened up a new opportunity for the

takeover of even the PSBs. The FDI rules being more rationalized in Q1FY02 may also pave the

way for foreign banks taking the M& A route to acquire willing Indian partners.

Meanwhile the economic and corporate sector slowdown has led to an increasing number of

banks focusing on the retail segment. Many of them are also entering the new vistas of Insurance.

Banks with their phenomenal reach and a regular interface with the retail investor are the best

placed to enter into the insurance sector. Banks in India have been allowed to provide fee-based

insurance services without risk participation, invest in an insurance company for providing

infrastructure and services support and set up of a separate joint-venture insurance company

with risk participation.


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Aggregate Performance of the Banking Industry

Aggregate deposits of scheduled commercial banks increased at a compounded annual average

growth rate (Cagr) of 17.8 percent during 1969-99, while bank credit expanded at a Cagr of 16.3

percent per annum. Banks investments in government and other approved securities recorded a

Cagr of 18.8 percent per annum during the same period.

In FY01 the economic slowdown resulted in a Gross Domestic Product (GDP) growth of only 6.0

percent as against the previous years 6.4 percent. The WPI Index (a measure of inflation)

increased by 7.1 percent as against 3.3 percent in FY00. Similarly, money supply (M3) grew by

around 16.2 percent as against 14.6 percent a year ago.

The growth in aggregate deposits of the scheduled commercial banks at 15.4 percent in FY01

percent was lower than that of 19.3 percent in the previous year, while the growth in credit by

SCBs slowed down to 15.6 percent in FY01 against 23 percent a year ago.

The industrial slowdown also affected the earnings of listed banks. The net profits of 20 listed

banks dropped by 34.43 percent in the quarter ended March 2001. Net profits grew by 40.75

percent in the first quarter of 2000-2001, but dropped to 4.56 percent in the fourth quarter of

2000-2001.

On the Capital Adequacy Ratio (CAR) front while most banks managed to fulfill the norms, it was a

feat achieved with its own share of difficulties. The CAR, which at present is 9.0 percent, is likely to

be hiked to 12.0 percent by the year 2004 based on the Basle Committee recommendations. Any

bank that wishes to grow its assets needs to also shore up its capital at the same time so that its

capital as a percentage of the risk-weighted assets is maintained at the stipulated rate. While the

IPO route was a much-fancied one in the early 90s, the current scenario doesnt look too

attractive for bank majors.


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Consequently, banks have been forced to explore other avenues to shore up their capital base.

While some are wooing foreign partners to add to the capital others are employing the M& A

route. Many are also going in for right issues at prices considerably lower than the market prices

to woo the investors.

Interest Rate Scene

The two years, post the East Asian crises in 1997-98 saw a climb in the global interest rates. It was

only in the later half of FY01 that the US Fed cut interest rates. India has however remained more

or less insulated. The past 2 years in our country was characterized by a mounting intention of the

Reserve Bank Of India (RBI) to steadily reduce interest rates resulting in a narrowing differential

between global and domestic rates.

The RBI has been affecting bank rate and CRR cuts at regular intervals to improve liquidity and

reduce rates. The only exception was in July 2000 when the RBI increased the Cash Reserve Ratio

(CRR) to stem the fall in the rupee against the dollar. The steady fall in the interest rates resulted

in squeezed margins for the banks in general.


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Governmental Policy:

After the first phase and second phase of financial reforms, in the 1980s commercial banks began

to function in a highly regulated environment, with administered interest rate structure,

quantitative restrictions on credit flows, high reserve requirements and reservation of a

significant proportion of lendable resources for the priority and the government sectors. The

restrictive regulatory norms led to the credit rationing for the private sector and the interest rate

controls led to the unproductive use of credit and low levels of investment and growth. The

resultant financial repression led to decline inproductivity and efficiency and erosion of

profitability of the banking sector in general.

This was when the need to develop a sound commercial banking system was felt. This was worked

out mainly with the help of the recommendations of the Committee on the Financial

System (Chairman: Shri M. Narasimham), 1991. The resultant financial sector reforms called for

interest rate flexibility for banks, reduction in reserve requirements, and a number of structural

measures. Interest rates have thus been steadily deregulated in the past few years with banks

being free to fix their Prime Lending Rates(PLRs) and deposit rates for most banking products.

Credit market reforms included introduction of new instruments of credit, changes in the credit

delivery system and integration of functional roles of diverse players, such as, banks, financial

institutions and non-banking financial companies (Nbfcs).


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Implications Of Some Recent Policy Measures:

The allowing of PSBs to shed manpower and dilution of equity are moves that will lend greater

autonomy to the industry. In order to lend more depth to the capital markets the RBI had in

November 2000 also changed the capital market exposure norms from 5 percent of banks

incremental deposits of the previous year to 5 percent of the banks total domestic credit in the

previous year. But this move did not have the desired effect, as in, while most banks kept away

almost completely from the capital markets, a few private sector banks went overboard and

exceeded limits and indulged in dubious stock market deals. The chances of seeing banks making a

comeback to the stock markets are therefore quite unlikely in the near future.

The move to increase Foreign Direct Investment FDI limits to 49 percent from 20 percent

during the first quarter of this fiscal came as a welcome announcement to foreign players wanting

to get a foot hold in the Indian Markets by investing in willing Indian partners who are starved of

networth to meet CAR norms. Ceiling for FII investment in companies was also increased from

24.0 percent to 49.0 percent and have been included within the ambit of FDI investment.


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IDBIbank: all about

The economic development of any country depends on the extent to which its financial system

efficiently and effectively mobilizes and allocates resources. There are a number of banks and

financial institutions that perform this function; one of them is the development bank.

Development banks are unique financial institutions that perform the special task of fostering the

development of a nation, generally not undertaken by other banks.

Development banks are financial agencies that provide medium-and long-term financial assistance

and act as catalytic agents in promoting balanced development of the country. They are engaged in

promotion and development of industry, agriculture, and other key sectors. They also provide

development services that can aid in the accelerated growth of an economy.

The objectives of development banks are:

To serve as an agent of development in various sectors, viz. industry, agriculture, and

international trade

To accelerate the growth of the economy

To allocate resources to high priority areas

To foster rapid industrialization, particularly in the private sector, so as to provide

employment opportunities as well as higher production

To develop entrepreneurial skills

To promote the development of rural areas

To finance housing, small scale industries, infrastructure, and social utilities.

In addition, they are assigned a special role in:

Planning, promoting, and developing industries to fill the gaps in industrial sector.


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Coordinating the working of institutions engaged in financing, promoting or developing industries,

agriculture, or trade, rendering promotional services such as discovering project ideas,

undertaking feasibility studies, and providing technical, financial, and managerial assistance for

the implementation of projects

Industrial development bank of India

The industrial development bank of India(IDBI) was established in 1964 by parliament as wholly

owned subsidiary of reserve bank of India. In 1976, the banks ownership was transferred to the

government of India. It was accorded the status of principal financial institution for coordinating

the working of institutions at national and state levels engaged in financing, promoting, and

developing industries.

IDBI has provided assistance to development related projects and contributed to building up

substantial capacities in all major industries in India. IDBI has directly or indirectly assisted all

companies that are presently reckoned as major corporates in the country. It has played a

dominant role in balanced industrial development.

IDBI set up the small industries development bank of India (SIDBI) as wholly owned subsidiary to

cater to specific the needs of the small-scale sector.

IDBI has engineered the development of capital market through helping in setting up of the

securities exchange board of India(SEBI), National stock exchange of India limited(NSE), credit

analysis and research limited(CARE), stock holding corporation of India limited(SHCIL), investor

services of India limited(ISIL), national securities depository limited(NSDL), and clearing

corporation of India limited(CCIL)


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IDBI BANK LTD.

In 1992, IDBI accessed the domestic retail debt market for the first time by issuing innovative

bonds known as the deep discount bonds. These new bonds became highly popular with the

Indian investor.

In 1994, IDBI Act was amended to permit public ownership up to 49 per cent. In July 1995, it

raised over Rs 20 billion in its first initial public (IPO) of equity, thereby reducing the government

stake to 72.14 per cent. In June 2000, a part of government shareholding was converted to

preference capital. This capital was redeemed in March 2001, which led to a reduction in

government stake. The government stake currently is 51 per cent.

In august 2000, IDBI became the first all India financial institution to obtain ISO 9002: 1994

certification for its treasury operations. It also became the first organization in the Indian financial

sector to obtain ISO 9001:2000 certification for its forex services.


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IDBI BANK LTD.

Milestones

y July 1964: Set up under an Act of Parliament as a wholly-owned subsidiary of Reserve

Bank of India.

y February 1976: Ownership transferred to Government of India. Designated Principal

Financial Institution for co-coordinating the working of institutions at national and State

levels engaged in financing, promoting and developing industry.

y March 1982: International Finance Division of IDBI transferred to Export-Import Bank of

India, established as a wholly-owned corporation of Government of India, under an Act of

Parliament.

y April 1990: Set up Small Industries Development Bank of India (SIDBI) under SIDBI Act as

a wholly-owned subsidiary to cater to specific needs of small-scale sector. In terms of an

amendment to SIDBI Act in September 2000, IDBI divested 51% of its shareholding in

SIDBI in favour of banks and other institutions in the first phase. IDBI has subsequently

divested 79.13% of its stake in its erstwhile subsidiary to date.

y January 1992: Accessed domestic retail debt market for the first time with innovative

Deep Discount Bonds; registered path-breaking success.

y December 1993: Set up IDBI Capital Market Services Ltd. as a wholly-owned subsidiary to

offer a broad range of financial services, including Bond Trading, Equity Broking, Client

Asset Management and Depository Services. IDBI Capital is currently a leading Primary

Dealer in the country.


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IDBI BANK LTD.

y September 1994:Set up IDBI Bank Ltd. in association with SIDBI as a private sector

commercial bank subsidiary, a sequel to RBI's policy of opening up domestic banking

sector to private participation as part of overall financial sector reforms.

y October 1994: IDBI Act amended to permit public ownership upto 49%.

y July 1995: Made Initial Public Offer of Equity and raised over Rs.2000 crore, thereby

reducing Government stake to 72.14%.

y March 2000:Entered into a JV agreement with Principal Financial Group, USA for

participation in equity and management of IDBI Investment Management Company Ltd.,

erstwhile a 100% subsidiary. IDBI divested its entire shareholding in its asset management

venture in March 2003 as part of overall corporate strategy.

y March 2000: Set up IDBI Intech Ltd. as a wholly-owned subsidiary to undertake IT-related

activities.

y June 2000: A part of Government shareholding converted to preference capital, since

redeemed in March 2001; Government stake currently 58.47%.

y August 2000: Became the first All-India Financial Institution to obtain ISO 9002:1994

Certification for its treasury operations. Also became the first organisation in Indian

financial sector to obtain ISO 9001:2000 Certification for its forex services.

y March 2001: Set up IDBI Trusteeship Services Ltd. to provide technology-driven

information and professional services to subscribers and issuers of debentures.

y Feburary 2002: Associated with select banks/institutions in setting up Asset

Reconstruction Company (India) Limited (ARCIL), which will be involved with the


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IDBI BANK LTD.

y September 2004:The new entity "Industrial Development Bank of India" was

incorporated on September 27, 2004 and Certificate of commencement of business was

issued by the Registrar of Companies on September 28, 2004.

y September 2004:Notification issued by Ministry of Finance specifying SASF as a financial

institution under Section 2(h)(ii) of Recovery of Debts due to Banks & Financial Institutions

Act, 1993.

y September 2004:Notification issued by Ministry of Finance on September 29, 2004 for

issue of non-interest bearing GoI IDBI Special Security, 2024, aggregating Rs.9000 crore, of

20-year tenure.

y September 2004:Notification for appointed day as October 1, 2004, issued by Ministry of

Finance on September 29, 2004.

y September 2004:RBI issues notification for inclusion of Industrial Development Bank of

India Ltd. in Schedule II of RBI Act, 1934 on September 30, 2004.

y October 2004:Appointed day - October 01, 2004 - Transfer of undertaking of IDBI to IDBI

Ltd. IDBI Ltd. commences operations as a banking company. IDBI Act, 1964 stands

repealed. January 2005:The Board of Directors of IDBI Ltd., at its meeting held on January

20, 2005, approved the Scheme of Amalgamation, envisaging merging of IDBI Bank Ltd.

with IDBI Ltd. Pursuant to the scheme approved by the Boards of both the banks, IDBI Ltd.

will issue 100 equity shares for 142 equity shares held by shareholders in IDBI Bank Ltd.

EGM has been convened on February 23, 2005 for seeking shareholder approval for the

scheme.

Then its going on and on.


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IDBI BANK LTD.

IDBI Bank Business Chart

IDBIBANK

INVESTMENTCURRENT ACCOUNTSAVING ACCOUNT

DEVELOPMENT BANK.RETAIL BANKING

CORPORATE SAVINGPERSONAL SAVING


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IDBI BANK LTD.

IDBI Bank Organizational Chart

Chairman

President

Vice president

Finance

Vice president

Marketing

Vice president

Operations

Vice president

H. R.

Divisional Sales

Mana er

Zonal Head

Territory In charge

Regional Head


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IDBI BANK LTD.

Research Methodology

Objective of the study

Project study which is being conducted by me for the last two month is not only a formality for the

fulfillment of the two year MBA. But being a management student I tried my best to extract best of

the information available in the market and used all resources to sell the CASA products for the

benefit of the bank as well as to expand the business. The objectives have been classified by me in

this project form personal to professional, but here I am not disclosing my personal objective

which have been achieved by me while doing the project. Only professional objectives which are

being covered by me in this project are as following- To know the opinion of new customers about the newly launched scheme for new customer.

To assess the satisfaction level of existing customers about the services of the bank.

To know the intention of the customers for maintaining a healthy relationship with the Bank in

future.

To know the perception and conception of customers towards banking products and specially

focused for IDBI Banks product.

Chapter 3


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Scope of the Study

Each and every project study along with its certain objectives also have scope for future. And this

scope in future gives to new researches a new need to research a new project with a new scope.

Scope of the study not only consist one or two future business plan but sometime it also gives idea

about a new business which becomes much more profitable for the researches then the older one.

Scope of the study could give the projected scenario for a new successful strategy with a

proper implementation plan. Whatever scope I observed in my project are not exactly having all

the features of the scope which I described above but also not lacking all the features.

- Research study could give an idea of network expansion for capturing more market

and customer with better services and lower cost, with out compromising with quality.

- In future customer requirements could be added with the product and services for

getting an edge over competitors.

- Consumer behavior could also be used for the purpose of launching a new product with

extra benefits which are required by customers for their account (saving or current

)and/or for their investments.

- Factors which are responsible for the performance for bank can also be used for the

modification of the strategy and product for being more profitable.

- Factors which I observed while doing project study are following-

Competitors

Customer Behaviour

Advertisement/promotional activities

Attitude of manpower and

Economic conditions


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IDBI BANK LTD.

These all could also be interchanged with each other for each other in banks strategies

for making a final business plan to effect the market with a positive way without

disturbing a lot to market, customers and competitors with disturbance in market

shares.

Tools andTechniques

As no study could be successfully completed without proper tools and techniques, same with my

project. For the better presentation and right explanation I used tools of statistics and computer

very frequently. And I am very thankful to all those tools for helping me a lot

Applied Principles and Concepts

While I started to do the project the main thing which was the matter of concern was that around

what principles I have to revolve my project. Because with out having any hypothesis and

objective we can not determine that what output or result we are expecting form the project.

And second thing is that having only tools and techniques for the purpose of project is not relevant

until unless we have the principals for which we have to use those tools and techniques.


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IDBI BANK LTD.

Sources of Primary and Secondary data:

For the purpose of project data is very much required which works as a food for process which

will ultimately give output in the form of information. So before mentioning the source of data for

the project I would like to mention that what type of data I have collected for the purpose of

project and what it is exactly.

1. Primary Data:

Primary data is basically the live data which I collected on field while doing cold calls with the

customers and I shown them list of question for which I had required their responses. In some

cases I got no response form their side and than on the basis of my previous experiences I

filled those fields.

Source: Main source for the primary data for the project was questionnaires which I got filled

by the customers or some times filled myself on the basis of discussion with the customers.

2. Secondary Data:

Secondary data for the base of the project I collected from intranet of the Bank and from

internet, RBI Bulletin etc.


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IDBI BANK LTD.

Statistical Analysis

In this segment I will show my findings in the form of graphs and charts. All the data

which I got form the market will not be disclosed over here but extract of that in the form

of information will definitely be here.

Detail:

Size of Data : 250

Area : RT Nagar

Type of Data : 1. Primary 2. Secondary

Industry : Banking

Respondent : Customers


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IDBI BANK LTD.

Table1: Correlation between awareness of customers about IDBI bank & their

Age

NO. OF RESPONSEAGE

2520-254625-303430-352335-402140-452245-50

2450-605560-ABOVE

0

10

20

30

40

50

60

20-2525-3030-3535-4040-4545-5050-6060-ABOVE

AGE GROUP

NO. OF RESPONSE

R

E

S

P

O

N

S

E


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IDBI BANK LTD.

TABLE 2: PERCEPTION OF IDBI AS A BANK

TYPE OF BANK RESPONSES

PRIVATE 50PUBLIC 45

PRIVATE/PUBLIC 100DON'T KNOW 55

RESPO

SES

PRIVATE

PUBLIC

PRIVATE/PUB

LIC

DO

'T K

OWPRIVATE

PUBLIC

PRIVATE/PUBLIC

DO

'T K

OW


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IDBI BANK LTD.

TABLE 3 : RATING OF CUSTOMERS FOR IDBI BANK AS A GOOD BANK

PARAMETER RESPONSES

EFFICIENCY 75%

INTERNETBANKING/ATMs 25%

PRODUCTRANGE 95%

NETWORK 33%

PHONEBANKING 22%

75%

25%

95%

33%22%

EFFICIENCY

IN ERNETBAN INGATMs

PRODUCTRANG

E

NETWORK

PHONE BANKING


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IDBI BANK LTD.

TABLE 5: FACTORS RESPONSIBLE FOR PERFORMANCE OF IDBI BANK IN

BANGALORE

PARAMETERS % OF SHARE

PRODUCT 50%

ADVERTISMENT 5%

MANPOWER 25%

NET-BA

NKING

2%PHONEBANKING 5%

INVESTMENTSCHEME 10%

NETWORK 3%

50%

5%

25%

2%5%

10%

3%

0%

10%

20%

30%

40%

50%

60%

% O SHARE

PARAMETERS

PERSENT

A

PRO U

ADVERTISMENT

MANPOWER

NET-BANKING

PHONE BANKING

INVESTMENT SCHEME

NETWORK


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IDBI BANK LTD.

TABLE 6 : COMPARATIVE STUDY WITH MAJOR COMPETITORS ON BASIC

PARAMETERS

PARAMETERS/BANKS IDBI ICICI SBI PNB HSBCCANARA

BANK

PRODUCT 20% 15% 30% 15% 10% 10%

ADVERTISMENT 3% 45% 15% 20% 7% 10%

MANPOWER 10% 50% 2% 3% 25% 10%

NET-BANKING 3% 50% 10% 12% 8% 17%

PHONEBANKING 10% 40% 5% 5% 30% 10%

INVESTMENTSCHEME 5% 25% 50% 10% 5% 5%

NETWORK 2% 40% 40% 5% 3% 10%CREDIBILITY 20% 10% 40% 20% 5% 5%

COMPARATIVE GRAPHS

0%

10%

20%

30%40%

50%

60%

IDBI

ICICI

SBI

PNB

HSBC

CANA

RABA

NK

BANKS

PERCENTA

GE

PRODUCT

ADVERTISMENT

MANPOWER

NET-BANKING

PHONE BANKING

INVESTMENT SCHEME

NETWORK

CREDIBILITY


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IDBI BANK LTD.

TABLE 7: THE EFFECTIVENESS OF COMMERCIALS OF IDBI BANK

DAYS AFTER THE ADIS

SEEN POSITIVE RESPONSE

0-5days 100

6-10days 6711-15days 43

more than15days 40

P SI

IVE ESP NSE

8

-

day

-

day

-

day

more

than

day

NO.OF D YS FTE D

NO.

OFPE

OPLE

EMEMBEE

D

THE

P SI

IVE ESP NSE


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IDBI BANK LTD.

Findings

1. The credibility of IDBI bank is good in comparison to its competitors as GOI

(Government Of India) is a major share holder in the company.

2. IDBI bank has potential a tapped market in RT NAG AR in region and hence has

opportunities for growth.

3. The products of IDBI bank have good credibility in the region compare to its

competitors.

4. The initial payment for opening a new A/C (both Current & Savings A/C) is Rs.5000/- with

totally free banking services with no minimum balances and thats why people are reluctant

in opening the same.

Chapter 4


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IDBI BANK LTD.

Conclusions and Recommendations

Conclusions

1. Consumers of IDBI bank have good awareness level about IDBI bank as well as about

its services and products.

2. The advertising campaign has successfully been able to increase the market share of

IDBI bank.

3. The modern days technology like internet banking, phone banking, used by IDBI

bank for providing banking services has sent positive signals in the mind of

consumes.

4. The network of IDBI is lagging behind a little than its competitors like ICICI bank

and HDFC bank.

5. It can be distilled from data that IDBI bank has good market share as compared to its

competitors considering the amount of resources deployed by them in the market.


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IDBI BANK LTD.

Recommendations

1. Since there is only threeATMs in RT NAGAR area, so it is necessary for IDBI bank to

install more ATMs to serve the vast market in this area especially.

2. More resources should be allocated in the market of RT NAG AR as there is big

untapped market, so it becomes necessary for IDBI bank for taking an edge over the

competitors.

3. A short advertising campaign inRT NAGAR has produced good results in a short span

of times, so to gain long term benefits is very necessary for IDBI bank to carry on this

campaign with more intensity.

4. As Government is the majority share holder in the shares of IDBI bank, which makes

this bank more reliable than other private banks, this thing can be used in the favour

of IDBI bank by making people aware about this fact and winning their faith.


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IDBI BANK LTD.

NAME

AGE. SEX: MALE/FEMALE

ADDRESS:...

CITY

PIN CODE....

CONTACT NO.

1. DO YOU KNOW ABOUT IDBI BANK LTD.?

YES NO

2. IDBI BANK IS A

PRIVATE BANK PRIVATE/PUBLIC BANK

PUBLIC BANK DONT KNOW

3. RANK THE IDBI BANK ON THE FOLLOWEING FEATURES (RANK 1 FOR BEST AND 5 FOR

WORSE ON 1 TO 5 SCALE)

EFFICENCY MANPOWER

INTERNET BANKING/ATMs NETWORK

PRODUCT RANGE PHONE BANKING

4. YOU WOULD LIKE TO BE A CUSTOMER OF BANK BECAUSE

5. YOU WOULD NOT LIKE TO BE A CUSTOMER BANK BECAUSE-

Appendix1: Questionnaire


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IDBI BANK LTD.

6. NAME THE BANK WHICH COMES IN YOUR MIND AT VERY FIRST AND WHY?

.

7. DO YOU THINK IDB IBANK IS A SAFE PLACE FOR YOUR MONEY?

YES NO

8. DO YOU THINK IDBI BANK NEED MORE ADVERTISMENT?

YES NO

9. YOUR LEVEL OF SATISFACTION WITH IDBI BANK-

VERY SATISFIED SATISFIED NORMAL DISSATISFIED VERY DISAT.

10. IF YOU WILL HAVE OPTION AGAINEST IDBI BANK YOU WILL GO FOR

SBI PNB

ICICI OTHER

11. DO YOU REMEMBER THE COMMERCIAL OF IDBI BANK?

YES NO

12. WHEN DID YOU LAST SEE THE ADVERTISEMENT OF IDBI BANK?

0-5 DAYS BACK 6-10 DAYS BACK

11-15 DAYS BACK MORE THAN 15 DAYS BACK

13. DO YOU KNOW WHERE THE BRANCH OF IDBI LOCATED IN RT NAGAR IS?

14. IDBI BANK LTD. IN RT NAGAR IS EFFECTIVE BECAUSE-

.

15. IDBI BANK LTD. IN RT NAGAR IS NOT EFFECTIVE BECAUSE-

.


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IDBI BANK LTD.

16. IDBI BANK LTD. IS A GOOD BANK FOR-

SERVICE PEOPLE BUSINESS PERSONS

POLITICIANS GENERAL PUBLIC

ALL OF ABOVE

17. NAME IDBI BANK LTD. GIVE BLUE-PRINT IN YOUR MIND OF-

HIGH NETWORK FINANCILALLY EFFICIENT BANK

HI-TECH BANK CUSTOMER FRIENDLY

OTHER (PLEASE SPECIFY).


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IDBI BANK LTD.

www.idbibank.com

www2.idbibank.com

www.google.com

ICFAI Journal of Banking

The Economics times

The Times of India

Appendix 2: Reference Material


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IDBI BANK LTD.

final project andy

Documents