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    BANKING SERVICE SECTOR

    Ravindra -01

    Faizan -02

    Rasika -03

    Udya- 04

    Mahesh -06

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    INTRODUCTION OF A BANK

    The Banking Companies Act of 1949, define

    Banking Company as a company which transacts the business of banking

    in India. It defines banking as, accepting for the purpose of lending orinvestment of deposit money from the public, repayable on demand or

    otherwise and withdraw able by cheque draft , order or otherwise

    A bank as an institution dealing in money and credit. It safeguard of the

    savings of the public and gives loans and advances.

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    ORIGIN OF BANKING

    The word of Bank is said to be of Germanic origin , cognate with the French wordBanque and theItalian word Banca , both meaning bench.

    Banking is as old as the authentic history and origins of modern Commercial

    banking tare traceable to ancient times. The New Testament mention aboutactivities of the money changers in the temple of Jerusalem. In ancient Greecearound 2000 B.C . The famous temples of Ephesus, Delphi and Olympia were usedas depositories for peoples surplus funds and these temples were the centers ofMoney lending transaction.

    In, India the ancient Hindu scriptures refer to money lending activities in the Vedicperiod. In India The Ramayana and Mahabharata eras, banking had become a fullfledged activity and during the Smriti period which followed the Vedic period andEpic age the business of banking was carried on by the members of the Vanishcommunity.

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    PRE INDEPENDENCE BANKING SYSTEM OF

    INDIA

    Banking in India originated in the last decades of the 18th century. The firstbanks were The General Bank of India which started in 1786, and the Bank ofHindustan, both of which are now defunct. The oldest bank in existence in India isthe State Bank of India, which originated in the Bank of Calcutta in June 1806,which almost immediately became the Bank of Bengal . This was one of the threepresidency 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.

    Indian merchants in Calcutta established the Union Bank in 1839, but it failed in1848 as consequence of the economic crisis of 1848-49. The Allahabad Bank,established in 1865 and still functioning today, is the oldest Joint Stock bank inIndia.

    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 operatedin different segments of the economy. The exchange banks, mostly owned byEuropeans, concentrated on financing foreign trade. Indian joint stock banks weregenerally under capitalized and lacked the experience and maturity to compete withthe presidency and exchange banks.The first entirely Indian joint stock bank was theOudh Commercial Bank, established in 1881 in Faizabad. It failed in 1958. The nextwas the Punjab National Bank, established in Lahore in 1895, which has survived tothe present and is now one of the largest banks in India.

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    POST INDEPENDENCE BANKING SYSTEM OF INDIA

    In the post-independence period, India observed the emergence of large numberof institutions for providing finance to different sectors of the economy.

    There were two nationalizations of banks in India, one in 1969 and the other in1980. The entry activities of private sector and foreign banks were restricted

    through branch licensing and regulation norms.

    The over regulated and over administered polices eroded the capital base of mostof the public Sector banks and recapitalization of 19 nationalized banks wasmade by government through of budgetary provision Nevertheless, acute problemarises in productivity, efficiency and profitability front of the commercial banks.

    The policy of directed investment in the form high SLR and CRR, directed creditprograms, extra administrative interference in credit decision making, highoperating costs, regulated interest rates, non-transparent accounting systemcoupled Non existence of operational flexibility, internal autonomy and absenceof competition contaminated the health of the commercial banks and threatenedtheir future survival.

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    NATIONALIZATION OF INDIAN BANKING SYSTEM

    Indian marched towards the establishment of public sector banking through The progressive nationalisationof commercial banks. There were three phases of bank nationalisation:

    Nationalization of Imperial Bank of India in1955 and its seven associate banks in 1959-60.

    Nationalizations of the 14 major commercial banks in 1969.

    Nationalization of 6 more commercial banks in 1980.

    On July 1, 1955 the government of India nationalized the Imperial Bank of India and converted it into theState Bank of India. The establishment of the State Bank of India was a pioneering attempt in public

    introducing sector banking in the country. Later on in 1959-60, seven subsidiary State Banks were also

    nationalized to form the SBI Group.

    For a short period during December 1967 to June 1969, the Government of India pursued the banking of

    policy control of banks, aiming at an equitable and purposeful distribution of credit towards developmental

    needs.

    A such over 90 percent of the banking activity in the country is brought under into the public sector.

    In short, nationalization of banks implied a bold and major economic step in the process of banking

    reforms in the country. It has resulted in the evolution of public sector banking.

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    TYPES OF BANKS

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    1. Central Bank

    2. Commercial Banks

    Types of Commercial Banks:

    a. Public Sector Banks

    E.g.

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    b. Private Sectors Banks

    E.g.

    c. Foreign Banks

    E.g.

    3. Development BanksE.g. Industrial Finance Corporation of India (IFCI),

    State Financial Corporations (SFCs)

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    4. Co-operative Banks

    Types of Co-operative Banks:

    a. Primary Credit Societies

    b. Central Co-operative Banks

    c. State Co-operative Banks

    5. Specialized Banks

    E.g.

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    7 PS OF BANKING SECTOR

    Important to provide quality service to customer

    Product

    Price

    Place

    Promotion

    People

    Process

    Physical evidence

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    PRODUCT

    Bundle of utilities

    Bank service not only things but alsosatisfaction they deliverE.g. bank account

    bank products

    DEPOSITS: Savings, current, fixed etc.

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    ADVANCES:

    (a) Fund Oriented:

    Term loan Clean loan

    Bill discounting

    Advancing

    Pre-shipment and post-shipment finance

    Secured and unsecured lines of credit.

    (b) Non-Fund Oriented: Guarantees

    Letter of credit.

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    International Banking:

    Letter of credit

    Foreign currency

    Consultancy:

    Investment counselling

    Project counselling

    Merchant banking

    Tax consultancy

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    Miscellaneous:

    Traveller cheques

    Credit cards

    Remittances

    Collections Sale of drafts

    Standing instructions and

    Trusteeship.

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    PRODUCT LEVEL

    Core

    Product

    Basic

    Product

    Expected

    Product

    Augmented

    Product

    Potential Product

    The basic

    necessity to

    use banking

    services in

    order to

    handle

    finance

    more

    efficiently

    Safety of

    deposits

    Timely

    service

    Goods

    waiting

    rooms

    Mobile and

    internet Banking

    Loanable

    funds etc.

    Long

    bankinghours

    Extensive

    ATMnetwork

    New Schemes

    tailored forspecific

    customers

    Low interest

    rates

    Promotional

    Discounts

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    PRICE

    Interest rate

    compete in terms of annual fees for services

    like credit cards, DMAT

    etc banks pricing policy today is the interest

    charged on the Home Loans and Car Loans

    ATM Card Issue Free 2 ATM cards issued free if it joint

    account

    Add on Card RS. 100 Beyond 2 cards

    Duplicate Card Rs. 100

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    PLACE

    The Trade area

    Population characteristics

    Commercial structure Industrial structure

    Banking structure

    Proximity to other convenient outlets

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    Real estate rates

    Proximity to public

    Transportation

    Drawing time

    Location of competition

    Visibility Access

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    PROMOTION

    Internet Banking

    Mobile Banking

    Public Relations Personal Selling

    Sales Promotion

    Word of mouth Promotion Telemarketing

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    PROCESS

    process mix constitutes the overall procedure

    customer friendly

    process for application for a car loan at HDFC

    bank.

    Now this mainly involves 3 things.

    Producing of proper documents Filling up of application form

    Paying for the initial down payment.

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    PHYSICAL EVIDENCE

    Physical evidence is the overall layout of the

    place

    Design placement

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    PEOPLE

    People are the employees that are the service

    providers

    Important role in providing customersatisfaction and good services

    Employee must understand what customer

    needs

    Employee attitude, appearance, behaviour

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    DIMENSIONS OF SERVICE QUALITY

    Reliability: Perform promised service dependablyand accurately. E.g. Receive mail at same time eachday.

    Responsiveness : Willingness to help customerpromptly. E.g. = avoid keeping customers waiting forno apparent reason.

    Assurance = Ability to convey trust & confidence.E.g.= Being polite showing response for customers.

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    Empathy : Ability to be approachable.

    E.g. = Being a good listener.

    Tangibles : Physical facilities & facilitating

    goods.

    E.g. : Cleanliness.

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    TECHNOLOGIES & INNOVATIONS IN

    BANKING

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    ELECTRONIC BANKING

    1) Automated Teller Machines (ATMs)

    Eliminated the time limits of customer

    service

    Offer a host of banking services

    including deposits, withdrawals,

    requisitions, instructions & transactions It is issued to Current and Saving account

    holders of a bank who hold a certain

    minimum balance

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    2) Internet Banking

    The delivery channels include dial-up

    connection, private network, public

    network etc

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    3) Mobile Banking

    Through inter banking one can

    visit the web site of each bank by

    entering his password and can

    even pass his own credit and debit

    entries

    Customers can now make balance

    enquires, download statements and

    open fixed deposits over the net

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    5) Electromagnetic Cards

    I. Charge Cards

    II. Debit Cards

    III. Credit Cards

    IV. Smart Card

    V. Member card

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    APPRECIATE YOUR PATIENCE!