indian private sector banking
TRANSCRIPT
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A
Project report
OnConsumer behavior towards Third Party
Products (TPP) in Indian Private Sector
Banking
Submitted To
Prof.Rupal Parmar
Submitted By
Hetal Kalathiya
Shree Samanvay Institute of MBA
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PREFACE
Todays finicky customers will settle for noting less. The customer has come to
realize somewhat belatedly that he is the king. The customers choice of one
entity over another as his principal bank is determined by consideration of servicequality rather than any other factor. He wants competitive loan rates but at the
same time also wants his loan or credit card application processed in double quick
time.
As the traditional system is concern Banks mean that where there is cash
transactions are processing, where the receipts and payments or withdrawal and
deposits are made. But, now in a modern context Banks becomes the Basket of
products. Now a days, banks are offering the Third Party products like Mutual
Funds, Insurance and other financial securities products like Demat Accounts etc.
along with the Saving Accounts, Current Accounts, Fixed Deposits, Over-draft,Term Loans and Cash-Credit etc.
So, as the mind set of the customers are concern some still not accepted the
concept of Banking with basket of products. Still there are banking customers
who believe that Banking should be for the only cash transactions and taking and
giving of money.
So, to know the consumer behavior towards this concept and the expectations of
the consumers from the banks for the third party products and to analyze the
perception gap we had taken 3 Private Sector Banks and analyze the productswhich they are offering and surveyed the Bank Consumers. The Products of Bankswhich we analyzed are
- Centurion Bank of Punjab
- HDFC Bank
- ICICI Bank
This is a some how new concept in the Indian Private Sector Banking so
researches are made on it for the acceptance but here we tried to enlighten the
expectations of the consumers plus also thrown the light on the perception gapexist for the same.
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Acknowledgement
It is really a matter of pleasure for us to get an opportunity to thank all the persons
who contributed directly or indirectly for the successful completion of the project
report Consumer Behavior towards Third Party Products in Indian Private SectorBanking.
First of all we are extremely helpful to our college S.K.PATEL INSTITUTE OF
MANAGEMENT & COMPUTER STUDIES for providing us with this
opportunity and for al its cooperation and contribution. We also express our
gratitude to our honorable director Prof. S.Chinnam Reddy , and are highly
thankful to our project guide Prof. Pratima Prakash for giving us the
encouragement and freedom to conduct our project.
We are also grateful to our coordinator Dr.S.G.Das and all our faculty membersfor their valueable guidance and suggestions for our entire study.
We are greatly thankful to Mr. Dhaval Barot, Relationship Manager- Centurion
Bank of Punjab, Ahmedabad, for providing us guidance and helping us for the
entire study.
Last but not least we are thankful to all the friends and all other persons who
directly or indirectly help us for this project.
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Executive Summary
The report Consumer Behavior Towards Third Party Products in Indian Private
Sector Banking aims to the assimilate data about the various aspects of the
consumers behavior regarding the behaviors of the consumers towards the Third
Party Products of the Indian Private Sector Banking and to know the acceptance of
and the expectations of the consumers from Third Party Products of the Indian
Private Sector Banking.
For this we surveyed the consumers of the various Banks in Botad Coty viz.
The report is a mixture of secondary and primary data with Questionnaires beingour major instrument to collect primary data.
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INDUSTRY
PROFILE
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INDIAN BANKING SECTOR
Banking in India has its origin as early as the Vedic period. It is believed that the
transaction from money lending to banking must have occurred even before menu,
the great Hindu jurist, who has devoted a section of his work to deposit his
advances and laid down rules relating to rest of interest. During the Mogul period,
the indigenous bankers played a very important role in lending money and
financing foreign trend commerce. During the day of east India Company, it was
the turn of the agency houses to carry on banking business. The general bank of
India was the first joint stock bank to t be established in the year 1786.the other
which followed where the bank of Hindustan and Bengal bank. The bank of
Hindustan is reported to have continued till 1906 while the other two failed in
mean time. In the first half of the 19 century the east India company established
three bank, the bank of Bengal in 1809, the bank of Bombay in 1840,the bank of
madras in 1843. This three banks also known as residency bank, where
independent units and functioned well. this tree banks where amalgamated in 1920
and new bank, the imperial bank of India was established on 27th jan,1921.with
passing of the state bank of India act in 1955the undertaking of the imperial bank
of India was taken by the newly constituted state bank of India. The reserve bank
which is the central bank was creatsd in 1935 by passing reserve bank of India act
1934.in the wakw of the Swadeshi movement, a numbers of banks with Indian
management were established in the country namely, Punjab national bank ltd,
bank of India ltd. canara bank ltd, Indian bank ltd,the bank of Baroda ltd, central
bank of India ltd. On July 19,1969,14 major banks of the country were
nationalized and 15th April 1980 six more commercial private sector banks were
also taken over by the government.
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Today the commercial banking system in India may be distinguished into:
Public sector bank
a. state bank of India and its associated banks called the state bank group
b. 20 nationalized bank
c. regional rural banks mainly sponsored by public sector banks
Private sector banks
a. old generation private bank
b. new generation private banks
c. foreign banks in India
d. scheduled co-operation banks
e. non scheduled banks
Co operative sector
The co-operative banking sector has been developed in the country to the
supplement the village money lender. the co operative banking sector in India is
devided into 4 components:
1. State co-operative bank
2. Central co-operative bank3. Primary agriculture credit societies
4. Land development bank
5. Urban co-operative banks
6. Primary Agriculture development banks
7. Primary land development banks
8. State land development banks
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since 1990 in many developed countries, while in developing countries public
deposits continue to be dominant in banks. In India, the share of banking assets is
around 75 per cent, as of end-March 2004. There is, no doubt, merit in recognizing
the importance of diversification in the institutional and instrument specificaspects of financial intermediation in the interest of wider choice, competition and
stability.
However, the dominant role of banks in financial intermediation in emergence
economies and particularly in India will continue in the medium term and the
banks will continue to be special for a long time. In this regard, it is useful t
emphasis the dominance of the banks in the developing countries in promoting
non-bank financial intermediaries and service including in development of debt
market. Even where role of banks is apparently diminishing in the emerging
markets, substantively, they continue to play a leading role in non-banking
financial activities, including the development of finance markets.
Third, internationalization of banking operations: The foreign controlled banking
assets, as a proportion of total domestic banking assets, increased significantly in
several European countries (Austria, Ireland, Spain, Germany and Nordic
countries), but increases have been fairly small in some others (UK and
Switzerland). Amongst the emerging economies, while there was marked increase
of foreign controlled ownership in several Latin American economies, the increase
has, at best, been modest in the Asian economies. Available evidence seems toindicate some correlation between the extent of liberalization of capital account in
the emerging markets and the share of assets controlled by foreign banks. as per
the evidence available, the form of branches, seem to enjoy on par with domestic
banks, as compared with most of the other developing countries. Furthermore, the
profitability of their operation in India is considerably higher than the foreign
banks operation in most other developing countries. India continues to grant
branch licenses more liberally than the commitments made to the W.T.O
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Fourth, the Share of state owned banks in total banking sector assets: Emerging
economies with predominantly government owned banks, tend to have much
higher state ownership of banks compared to their developed counterparts. whilemany emerging countries choose to privatized their public sector banking
industries after a process of absorption of the overhang problems by the
government, we have encouraged state run banks to diversify ownership by
inducting private share capital through public offerings rather than by strategic
sales and still absorb the overhang problems. the process has helped reduced the
burden on the govt, enhance transparency, encourage market displined and
improved efficiency as reflected in stock market valuation promote efficient new
private sector banks, while drastically reducing the share of the wholly
government owned public sector banks is a good example of a dynamic mix of
public and privet ownership in banks.
A noteworthy feature of banking reforms in India is the growth of newly licensed
privet sector banks, some of which have attained globally best standards in terms
of technology, services and sophistically promoted banks have surpassed branches
of foreign banks in India. And could be a role model for other banks.
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BANK SYSTEM
Introduction
The reserve bank of India (RBI) is Indias central bank. Through the bankingindustry is currently dominated by public sector banks, numerous privet and
foreign banks exist. Indias govt owned banks dominate the market. Their
performance has been mixed with a few being consistently profitable. Several
public sector banks are being restructured, and in some the govt either already has
or will reduce its ownership.
Private and foreign banks
The RBI has granted operating approval to a few privately owned domestic banks;
of these many commenced banking business. Foreign banks operate more than
150 branches in India. The entry of foreign banks is based on reciprocity,
economic and political bilateral relations. An inter-departmental committee
approves applications for entry and expansion.
Capital adequacy norm
Foreign banks were required to achieve an 8% capital adequacy norm by march
1993, while Indian banks with overseas branches had until march 1995 to meet
that target. All other banks had to do so by march 1996. the banking sector is to be
use as a model for opening up of Indias insurance sector to privet domestic and
foreign participants, while keeping the insurance companies in operation.
Banking
India has an extension banking network, in both urban and rural areas. All large
Indian banks are nationalized, and all Indian financial institutes are in the public
sector.
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RBI Bank
The reserve bank of India is the central banking institutions. It is the sole authority
for issuing bank notes and the supervisory for banking operations in India.
It supervises and administers exchange control and banking regulations, andadministers the govts monitory policy. It is also responsible granting licenses for
new bank branches. 25 foreign banks operate in India with full banking licenses.
Several licenses for private bank have been approved. Despite fairly broad
banking coverage nation wide, the financial system remains inaccessible to the
poorest people in India.
Indian banking system
The banking system has three tiers. These are then scheduled commercial banks:
the regional rural banks which operate in rural areas not covered by the scheduled
banks;
And the cooperative and special rural banks.
Scheduled and scheduled banks
There are approximately 80 scheduled commercial banks, Indian and forign;
almost 200 regional rural banks; more than 350 central cooperatives banks,20 land
development banks; and a number of primary agricultural credit societies .in terms
of business , the public sector banks, namely the state bank of India and the
nationalized banks, dominate the banking sector.
Logical financingAll sources of local financing are available to foreign-participation companies in
corporate in India, regardless of the extent of foreign participation. Under foreign
exchange regulations, foreigners and non-residents, including foreign companies,
Require the permission of the reserv bank of India to borrow from a person or
company resident in india
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THIRD PARTY
PRODUCTS
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Today Indian Private Sector Banks started to deal with the Third Party Products. Now a
days Private Banks are selling the Third Party Products like Mutual Funds and Insurance
mainly.
Let us see both the industry in detail.
MUTUAL FUNDS
History of the Indian Mutual Fund Industry
The mutual fund industry in India started in 1963 with the formation of Unit Trust of
India, at the initiative of the Government of India and Reserve Bank the. The history of
mutual funds in India can be broadly divided into four distinct phases
First Phase 1964-87
Unit Trust of India (UTI) was established on 1963 by an Act of Parliament. It was set up
by the Reserve Bank of India and functioned under the Regulatory and administrativecontrol of the Reserve Bank of India. In 1978 UTI was de-linked from the RBI and the
Industrial Development Bank of India (IDBI) took over the regulatory and administrative
control in place of RBI. The first scheme launched by UTI was Unit Scheme 1964. At the
end of 1988 UTI had Rs.6,700 crores of assets under management.
Second Phase 1987-1993 (Entry of Public Sector Funds)
1987 marked the entry of non- UTI, public sector mutual funds set up by public sector
banks and Life Insurance Corporation of India (LIC) and General Insurance Corporation
of India (GIC). SBI Mutual Fund was the first non- UTI Mutual Fund established in June
1987 followed by Canbank Mutual Fund (Dec 87), Punjab National Bank Mutual Fund
(Aug 89), Indian Bank Mutual Fund (Nov 89), Bank of India (Jun 90), Bank of Baroda
Mutual Fund (Oct 92). LIC established its mutual fund in June 1989 while GIC had set
up its mutual fund in December 1990.
At the end of 1993, the mutual fund industry had assets under management of Rs.47,004
crores.
Third Phase 1993-2003 (Entry of Private Sector Funds)
With the entry of private sector funds in 1993, a new era started in the Indian mutual fundindustry, giving the Indian investors a wider choice of fund families. Also, 1993 was the
year in which the first Mutual Fund Regulations came into being, under which all mutual
funds, except UTI were to be registered and governed. The erstwhile Kothari Pioneer
(now merged with Franklin Templeton) was the first private sector mutual fund
registered in July 1993.
The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive
and revised Mutual Fund Regulations in 1996. The industry now functions under the
SEBI (Mutual Fund) Regulations 1996.
The number of mutual fund houses went on increasing, with many foreign mutual fundssetting up funds in India and also the industry has witnessed several mergers and
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acquisitions. As at the end of January 2003, there were 33 mutual funds with total assets
of Rs. 1,21,805 crores. The Unit Trust of India with Rs.44,541 crores of assets under
management was way ahead of other mutual funds.
Fourth Phase since February 2003
In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI was
bifurcated into two separate entities. One is the Specified Undertaking of the Unit Trust
of India with assets under management of Rs.29,835 crores as at the end of January 2003,
representing broadly, the assets of US 64 scheme, assured return and certain other
schemes. The Specified Undertaking of Unit Trust of India, functioning under an
administrator and under the rules framed by Government of India and does not come
under the purview of the Mutual Fund Regulations.
The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC. It is
registered with SEBI and functions under the Mutual Fund Regulations. With the
bifurcation of the erstwhile UTI which had in March 2000 more than Rs.76,000 crores ofassets under management and with the setting up of a UTI Mutual Fund, conforming to
the SEBI Mutual Fund Regulations, and with recent mergers taking place among
different private sector funds, the mutual fund industry has entered its current phase of
consolidation and growth. As at the end of September, 2004, there were 29 funds, which
manage assets of Rs.153108 crores under 421 schemes.
The graph indicates the growth of assets over the years.
GROWTH IN ASSETS UNDER MANAGEMENT
Note:
Erstwhile UTI was bifurcated into UTI Mutual Fund and the Specified Undertaking of
the Unit Trust of India effective from February 2003. The Assets under management ofthe Specified Undertaking of the Unit Trust of India has therefore been excluded from the
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total assets of the industry as a whole from February 2003 onwards.
Mutual Funds: An overview
Introduction
A Mutual Fund is a trust that pools the savings of a number of investors who share a
common financial goal. The money thus collected is invested by the fund manager in
different types of securities depending upon the objective of the scheme. These could
range from shares to debentures to money market instruments. The income earned
through these investments and the capital appreciation realized by the scheme are shared
by its unit holders in proportion to the number of units owned by them (pro rata). Thus a
Mutual Fund is the most suitable investment for the common man as it offers an
opportunity to invest in a diversified, professionally managed portfolio at a relatively low
cost. Anybody with an investible surplus of as little as a few thousand rupees can investin Mutual Funds. Each Mutual Fund scheme has a defined investment objective and
strategy.
A mutual fund is the ideal investment vehicle for todays complex and modern financial
scenario. Markets for equity shares, bonds and other fixed income instruments, real
estate, derivatives and other assets have become mature and information driven. Price
changes in these assets are driven by global events occurring in faraway places. A typical
individual is unlikely to have the knowledge, skills, inclination and time to keep track of
events, understand their implications and act speedily. An individual also finds it difficult
to keep track of ownership of his assets, investments, brokerage dues and bank
transactions etc.
A mutual fund is the answer to all these situations. It appoints professionally qualified
and experienced staff that manages each of these functions on a full time basis. The large
pool of money collected in the fund allows it to hire such staff at a very low cost to each
investor. In effect, the mutual fund vehicle exploits economies of scale in all three areas -
research, investments and transaction processing. While the concept of individuals
coming together to invest money collectively is not new, the mutual fund in its present
form is a 20th century phenomenon. In fact, mutual funds gained popularity only after the
Second World War. Globally, there are thousands of firms offering tens of thousands of
mutual funds with different investment objectives. Today, mutual funds collectivelymanage almost as much as or more money as compared to banks.
A draft offer document is to be prepared at the time of launching the fund. Typically, it
pre specifies the investment objectives of the fund, the risk associated, the costs involved
in the process and the broad rules for entry into and exit from the fund and other areas of
operation. In India, as in most countries, these sponsors need approval from a regulator,
SEBI (Securities exchange Board of India) in our case. SEBI looks at track records of the
sponsor and its financial strength in granting approval to the fund for commencing
operations.
A sponsor then hires an asset management company to invest the funds according to theinvestment objective. It also hires another entity to be the custodian of the assets of the
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fund and perhaps a third one to handle registry work for the unit holders (subscribers) of
the fund.
In the Indian context, the sponsors promote the Asset Management Company also, in
which it holds a majority stake. In many cases a sponsor can hold a 100% stake in the
Asset Management Company (AMC). E.g. Birla Global Finance is the sponsor of theBirla Sun Life Asset Management Company Ltd., which has floated different mutual
funds schemes and also acts as an asset manager for the funds collected under the
schemes.
Recent trends in mutual fund industry
The most important trend in the mutual fund industry is the aggressive expansion of the
foreign owned mutual fund companies and the decline of the companies floated by
nationalized banks and smaller private sector players.
Many nationalized banks got into the mutual fund business in the early nineties and got
off to a good start due to the stock market boom prevailing then. These banks did not
really understand the mutual fund business and they just viewed it as another kind of
banking activity. Few hired specialized staff and generally chose to transfer staff from the
parent organizations. The performance of most of the schemes floated by these funds was
not good. Some schemes had offered guaranteed returns and their parent organizations
had to bail out these AMCs by paying large amounts of money as the difference between
the guaranteed and actual returns. The service levels were also very bad. Most of these
AMCs have not been able to retain staff, float new schemes etc. and it is doubtful
whether, barring a few exceptions, they have serious plans of continuing the activity in amajor way.
The experience of some of the AMCs floated by private sector Indian companies was
also very similar. They quickly realized that the AMC business is a business, which
makes money in the long term and requires deep-pocketed support in the intermediate
years. Some have sold out to foreign owned companies, some have merged with others
and there is general restructuring going on.
The foreign owned companies have deep pockets and have come in here with the
expectation of a long haul. They can be credited with introducing many new practices
such as new product innovation, sharp improvement in service standards and disclosure,
usage of technology, broker education and support etc. In fact, they have forced the
industry to upgrade itself and service levels of organizations like UTI have improved
dramatically in the last few years in response to the competition provided by these.
Types of Mutual Funds
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Mutual fund schemes may be classified on the basis of its structure and its investment
objective.
ByStructure:
Open-ended Funds
An open-end fund is one that is available for subscription all through the year. These do
not have a fixed maturity. Investors can conveniently buy and sell units at Net Asset
Value ("NAV") related prices. The key feature of open-end schemes is liquidity.
Closed-ended Funds
A closed-end fund has a stipulated maturity period which generally ranging from 3 to 15
years. The fund is open for subscription only during a specified period. Investors can
invest in the scheme at the time of the initial public issue and thereafter they can buy or
sell the units of the scheme on the stock exchanges where they are listed. In order toprovide an exit route to the investors, some close-ended funds give an option of selling
back the units to the Mutual Fund through periodic repurchase at NAV related prices.
SEBI Regulations stipulate that at least one of the two exit routes is provided to the
investor.
Interval Funds
Interval funds combine the features of open-ended and close-ended schemes. They are
open for sale or redemption during pre-determined intervals at NAV related prices.
By Investment Objective:
Growth Funds
The aim of growth funds is to provide capital appreciation over the medium to long-
term. Such schemes normally invest a majority of their corpus in equities. It has been
proven that returns from stocks, have outperformed most other kind of investments held
over the long term. Growth schemes are ideal for investors having a long-term outlook
seeking growth over a period of time.
Income Funds
The aim of income funds is to provide regular and steady income to investors. Such
schemes generally invest in fixed income securities such as bonds, corporate debentures
and Government securities. Income Funds are ideal for capital stability and regular
income.
Balanced Funds
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The aim of balanced funds is to provide both growth and regular income. Such schemes
periodically distribute a part of their earning and invest both in equities and fixed income
securities in the proportion indicated in their offer documents. In a rising stock market,
the NAV of these schemes may not normally keep pace, or fall equally when the market
falls. These are ideal for investors looking for a combination of income and moderate
growth.
Money Market Funds
The aim of money market funds is to provide easy liquidity, preservation of capital and
moderate income. These schemes generally invest in safer short-term instruments such as
treasury bills, certificates of deposit, commercial paper and inter-bank call money.
Returns on these schemes may fluctuate depending upon the interest rates prevailing in
the market. These are ideal for Corporate and individual investors as a means to park
their surplus funds for short periods.
Load Funds
A Load Fund is one that charges a commission for entry or exit. That is, each time you
buy or sell units in the fund, a commission will be payable. Typically entry and exit loads
range from 1% to 2%. It could be worth paying the load, if the fund has a good
performance history.
No-Load Funds
A No-Load Fund is one that does not charge a commission for entry or exit. That is, nocommission is payable on purchase or sale of units in the fund. The advantage of a no
load fund is that the entire corpus is put to work.
INSURANCE
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Today concept of Banc assurance is getting very common, selling Insurance of another
company to the Bank customers.
Lets see the Bancassurance in detail.
Bancassurance
Introduction
With the opening up of the insurance sector and with so many players entering the Indian
insurance industry, it is required by the insurance companies to come up with innovative
products, create more consumer awareness about their products and offer them at a
competitive price. New entrants in the insurance sector had no difficulty in matching
their products with the customers' needs and offering them at a price acceptable to the
customer.
But, insurance not being an off the shelf product and one which requiring personal
counseling and persuasion, distribution posed a major challenge for the insurance
companies. Further insurable population of over 1 billion spread all over the country has
made the traditional channels of the insurance companies costlier. Also due to heavy
competition, insurers do not enjoy the flexibility of incurring heavy distribution expenses
and passing them to the customer in the form of high prices.
With these developments and increased pressures in combating competition, companies
are forced to come up with innovative techniques to market their products and services.
At this juncture, banking sector with it's far and wide reach, was thought of as a potential
distribution channel, useful for the insurance companies. This union of the two sectors iswhat is known as Bancassurance.
What is Bancassurance?
Bancassurance is the distribution of insurance products through the bank's distribution
channel. It is a phenomenon wherein insurance products are offered through the
distribution channels of the banking services along with a complete range of banking and
investment products and services. To put it simply, Bancassurance, tries to exploit
synergies between both the insurance companies and banks.
Bancassurance if taken in right spirit and implemented properly can be win-win situation
for the all the participants' viz., banks, insurers and the customers.
Advantages to banks
Productivity of the employees increases.
By providing customers with both the services under one roof, they can improve
overall customer satisfaction resulting in higher customer retention levels.
Increase in return on assets by building fee income through the sale of insurance
products.
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Can leverage on face-to-face contacts and awareness about the financial
conditions of customers to sell insurance products.
Banks can cross sell insurance products Eg: Term insurance products with loans.
Advantages to insurers
Insurers can exploit the banks' wide network of branches for distribution of
products. The penetration of banks' branches into the rural areas can be utilized to
sell products in those areas.
Customer database like customers' financial standing, spending habits, investment
and purchase capability can be used to customize products and sell accordingly.
Since banks have already established relationship with customers, conversion
ratio of leads to sales is likely to be high. Further service aspect can also be
tackled easily.
Advantages to consumers
Comprehensive financial advisory services under one roof. i.e., insurance services
along with other financial services such as banking, mutual funds, personal loans
etc.
Enhanced convenience on the part of the insured
Easy access for claims, as banks are a regular go.
Innovative and better product ranges
Bancassurance in India
Bancassurance in India is a very new concept, but is fast gaining ground. In India, the
banking and insurance sectors are regulated by two different entities (banking by RBI
and insurance by IRDA) and bancassurance being the combinations of two sectors comes
under the purview of both the regulators. Each of the regulators has given out detailed
guidelines for banks getting into insurance sector. Highlights of the guidelines are
reproduced below:
RBI guideline for banks entering into insurance sector provides three options for
banks. They are:
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Joint ventures will be allowed for financially strong banks wishing to undertake
insurance business with risk participation;
For banks which are not eligible for this joint-venture option, an investment
option of up to 10% of the net worth of the bank or Rs.50 crores, whichever is
lower, is available;
Finally, any commercial bank will be allowed to undertake insurance business asagent of insurance companies. This will be on a fee basis with no-risk
participation.
The Insurance Regulatory and Development Authority (IRDA) guidelines for the
Bancassurance are:
Each bank that sells insurance must have a chief insurance executive to handle all
the insurance activities.
All the people involved in selling should under-go mandatory training at aninstitute accredited by IRDA and pass the examination conducted by the
authority.
Commercial banks, including cooperative banks and regional rural banks, may
become corporate agents for one insurance company.
Banks cannot become insurance brokers.
Lifeinsurers:
1. Allianz Bajaj Life Insurance Co. Ltd.
2. Amp Sanmar Assurance Co. Ltd.
3. Birla Sun Life Insurance Co. Ltd.
4. Dabur Cgu Life Insurance Company Pvt.Ltd.
5. Hdfc Standard Life Insurance Co. Ltd.
6. Icici Prudential Life Insurance Co.Ltd.
7. Ing Vysya Life Insurance Co. Pvt. Ltd.
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8. Life Insurance Corporation Of India
9. Max New York Life Insurance Co. Ltd.
10. Metlife India Insurance Co. Pvt. Ltd.
11. Om Kotak Mahindra Life Insurance Co. Ltd.
12. Sbi Life Insurance Co.Ltd.
13. Tata Aig Life Insurance Co. Ltd.
Non-Life Insurers:
1. Bajaj Allianz General Insurance Co.
2. Icici Lombard General Insurance Co.
3. Iffco Tokyo General Insurance Co.
4. National Insurance Co.
5. New India Assurance Co.
6. Oriental Insurance Co.
7. Reliance General Insurance Co.
8. Royal Sundaram Alliance Insurance Co.
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9. Tata Aig Life Insurance Co.
10. United India Insurance Co.
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COMPANYPROFILE
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History of the Peoples Bank
The Botad peoples co-operative Bank in Gujarat State, India. wasestablished on 19thSeptember 1996 with a small capital of Rs.5000 under
the leadership of Late Dr. Vallbhbhai Patel as a Chairmen and Late
Bhupatrai Kothari as a Manager director has made tremendous and real
progress under the leadership of the former Chairman Late pro. Shamjibhai
Dhanani. Bank during past years bank has played vital role and leading
role for the development of industries,economy of Botad city.
Due to the great support and faith of customer, employees, The
Botad peoples co-operative Bank has got very nice position in themarket.As we know there is very much tough and cut throat competition in
banking sector yet The Botad peoples Co-Operative Bank regularly
increases its deposits and creates a good image.
Besides this, this bank is registered as insured bank by the
insurance and credit guarantee corporation of India, which has approved by
RBI, In addition, since last three years, this bank got A grade in the audit
inspection. It is also big achievement of this bank. In the year of 2007, the
bank co-coordinated with ING-VYSYA LIFE INSURANCE.
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Corporate Value and Culture
The Botad peoples co-operative Bank focuses not only to learn profitbut also to provide valuable services and products to the society.
It believes in maintain good and healthy relation with its employees and
customers.
It believes in smooth functioning of all departments from top to bottom
level.
This bank provides quick services to their customers compare to other
banks exist in Botad city.
It also accepts the suggestions and remarks of its employees and
customers
It strictly follows circulars which are timely announced by RBI.
This bank every year appreciates students who have secured above 80
percentages.
This Bank have good staff who always put their best effort to satisfy
their customers need and proved full information and solve theirdoubts.
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Bank Profile:
1. Head Office: Sardar shaker Bhawan
Haweli chowk paliyad
Road,Botad-364710
Dist. Bhavnagar
2. Phone number (02849) 242319
3. Fax Number (02849)253114
4. E mail Id [email protected]
5. Registration Number sec/7013
6. License Number OBD GUJ.1553P
7. No.of employees 7
8. Working Hours Transation Time 10
To 4 pm Saturday
10 am to 1 pm
9. Products Liability and Asset products
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Product Range
The Botad peoples Co-Operative bank provides diversified products to
its customers. The products can be categorized in
Liability products
Assets products
Liability Products
Saving Account:
The Botad peoples Co-Operative bank provides 3.5%
interest on the savin accounts and the person gets interest only up to
between 10th of the month and ending day of the month.If any one takes
out money between these periods then he or she will not get the interest on
he money in saving account.
Fix deposits:
The Botad Peoples Co-Operative bank had different fixeddeposits with different types of intrest
30 days to 45 days up to 4.00%
46 days to 90 days up to 4.5%
91 days to 180 days up to 5.5%
185 days to 1 year up to 7.5%
1 year to 2 year up to 9.0%
More than 2 years 9.25%
Extra services
Senior citizens will get additional Interest 0.5%
Fixed Deposit Quaterly Interest Rate 0.25%Less
Franking Machine for special adhesive stamp is there in this Bank
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Assets Products
Hypothecation cash credit
In this facility bank provides money to the person according to hisstock in this business.Whatever stock he is having,he is able to get the
loan.Bank checks the business position and stock register of previous and
current year.
Against Fixed Receipts
In this bank provide against the fixed receipt of the customers. Inthis he bank checks out the receipts and takes it with bank till he customer
pays money with decided interest.
Secured Loan
This loan is given against some security. The procedure is
according to legal rules and the care should be taken that the customer is
liable to the bank until the customer will pay he money with predefinedinterest.
Unsecured Loan
This loan is given rarely because it involves risk of bad
debts. This loan is given to the customers up to only Rs.50,000
Mortgage Loan
In his bank follows certain decided steps. First of all, the
customers present the clear document to the bank then the engineer checks
out market value of assets. He also checks out the balance sheet and P&L
account and other business documents.
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RESEARCH DESIGN
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Types Of Research:
There are certain types of research which can be classified according to their very
purpose as well as by the research strategy used. A research can be classified into the
following categories:
Exploratory research
Conclusive research (Descriptive research )
Explanatory research
1. Exploratory research:
Exploratory research is an initial research which explores the possibility of
obtaining as many relationships as possible between different variables without knowing
their end-use applications. Here, a general study will be conducted without having any
specific objectives.
2. Conclusive research (Descriptive research):
In this type of research, problem of a research is formulated and specific
objectives are established. This type of research may be a result of exploratory research.
At the, the research draws definite and concrete conclusion(s) for implementation.
3. Explanatory research:
Here, in this type of research, the emphasis is given on studying a situation or a
problem in order to explain the relationship between two or more than two particular
variables. In short, situation is there, and you are just expected to explain the situation in
order to reveal the solutions.
Our research project falls in the both second and third categories. Its a
combination of both types of research. As the project has definite problems and specificobjectives, our project is of descriptive, in nature. At the end of our research, an attempt
would be made to explain the satisfaction level of employees along with their reasons and
factors for the employees working in BPOs and Call Centers to effect implementation.
Research Objectives:
The first step of any research project is to define the problem that is to be
answered by the research project itself. This is the most important part of the research
process, as it provides a focus and direction for the project and identifies the specific
information the reader is looking at in the project.
Actually, research objectives enable the reader to understand exactly what theproject is attempting to achieve. If the definition of problem is unclear and objectives are
poorly defined, the result could be waste of time, money, energy and resources. In short,
research objective is a pre-requisite for any research project.
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Objectives of the Project:
To know the Acceptance of TPP in Banking by Customers
To get the knowledge about the Expectations of the customers from Banking
sector towards TPP
To get knowledge about the Management of Customer Relationship towards TPPin different Private Sector Banks
To know the Satisfaction Level of the Customers from the TPP
Research Methodology:
Data Collection:
Data gathering is a very important part of the research project process. It is through
data, with the help of which we would be able to analyze the problem in terms of factsand figures.
Actually, the reliability of research decisions depends on the quality of data gathered.
By taking this concept into consideration, the data can be classified into primary data and
secondary data. We have used both the types of data, as far as our project is concerned.
1. Primary data
2. Secondary data
1. Primary Data:
Primary data are generally information gathered or generated by the researcher
for the purpose of the project immediately at hand. When the data are collected for the
first time, then that data is called primary data.
We have used the following primary data in our project:
Observation
Personal interview-include both formal as well as an informal interview
Questionnaire
2. Secondary Data:
These are those data which are collected from the various sources which have
been already created for the purpose of first time use and future use.
We have used the following secondary data in our project:
Internet
Journals
Magazines
Publications, Articles and Research Papers done before
From various Organizations
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Sample Unit:
Botad Paliyad Road Area was surveyed
Sample Size:
At the planning stage of a statistical investigation part, the question of sample size is very
critical. If the sample size is large, there could be a waste of money, energy and
resources, and if it is small, it doesnt make any sense of practical use in making good
decisions. So, the sample should be taken in such a way that it can bring fair, accurate
level of accuracy and unbiased results. 100 Samples from the all three banks are to be
surveyed and analyzed
SamplingTechnique:
Convenience Sampling was used to collect the data from the various banks and from thevarious bank customers.
Types of data analysis used:
In order to properly analyze the data, there would be two types of data analysis in
this project. They are as follows:
Qualitative data analysis through Findings, Analysis and explanation
Quantitative data analysis through charts, schedules, figures, and structures
Limitations:
The sample size was restricted with in the area of Botad
Further it was a convenience sampling.
There were time and cost limitations.
This project has been done for academic purpose and not done as a professional
researcher for the company.
There are chance of bias form the side of consumer also so that we cannot get
proper data so there are some part of error also there in the project
Bank is not provided full information so that we cannot get sufficient data for the
project
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Data
Analysisand
Interpretation
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1. In which sectors bank do you have bank account?
Public Sector 60%
Private Sector 56%
Co-operative 42%
Customers Preference for t
Banking Sector
0%
10%
20%
30%
40%
50%
60%
70%
public
sector
private
sector
co-
operative
Banking Secto
Percentages
Series1
Interpretation
The above diagram stat that 60% customer having bank account in public sector
56% customer having bank account in private sector and 42% customer having
account in co-operative bank which indicate that major customer having account in public
sector
Most of the customer preferred public sector bank because they said that this bank
are more safe and also they got more benefit and interest than private sector bank
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2. Which type of Bank Account do you have?
Current Account 84%
Saving Account 76%
Fixed Deposits 42%
0%
20%
40%
60%
80%
100%
Current
Account
Saving
Account
Fixed
Deposits
Series1
Interpretation:-
We can see from the chart that majority of the customer have current and savingsaccount in the bank this shows that there are customer who have both saving and
current account for business
There are so many people who have their own business so they have special
current account for their business so they prefer both savings and current
account.
Almost 42% of the customers respond to fixed deposits so we can say that this
people are keep their money for longer period of time
3. Are you aware about the Third Party Products?
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Yes 52%
No 48%
Interpretation:-
We can see from the chart that majority of the customer are aware about TPPand almost half of the customer are not that much aware about TPP
TPP is not that much popular in the city of Botad so that many of the customer
are not aware about it
39
46%
47%
48%
49%
50%
51%
52%
yes no
Series1
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4. If yes, then have you ever invested for the same?
Yes 85%
No 15%
0 %
2 0 %
4 0 %
6 0 %
8 0 %
1 0 0 %
y e s n o
S e ries
Interpretation:-
We can see from the chart that those who respond positively in the previous
question respond positively in this question also.
Almost 85% of them are clearly invested in third party product. Majority of
the customer invest in insurance and mutual fund.
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0%
20%
40%
60%
80%
insurance Mutual fund
Series1
5. If yes, then in which product had you invested?
Insurance 78%
Mutual Funds 22%
Interpretation:-
We can see form the chart that majority of the customer invested in insurance
because the awareness of mutual fund is not that much in the market
Almost 22% of the respondents respond to mutual fund. There are so fewer banks in
the city which sell mutual fund as TPP so most of the people are invest their money
in Insurance
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0%
20%
40%
60%
80%
yes no
Series1
6. Do you think Banks need to deal with Third Party Products?
Yes 72%
No 28%
Interpretation:-
We can see from the chart that majority of the respondents respond positively that
bank should deal with TPP
Those who respond positively to this question, they think that if the banks are deal
with TPP then there is no extra commission or other charger the customer have to
pay.
There are some person who respond negatively because they think that bank is not
proper for the TPP there should be some agent of people to sell the mutual fund or
insurance
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7. Which Criteria you consider before taking the decision of
investment through particular Bank?
Service 44%
Credit worthiness 72%
Relations 62%
0%
10%
20%
30%
40%
50%
60%
70%
80%
servise credit
worthiness
relations
Series1
Interpretation:-
We can see from the chart that credit worthiness is one of the most important criteria
for the any person while making investment in any bank followed by the relation the
bank keep with its clients and the last one is service - the bank is providing.
Majority of the clients choose the combination of service and the credit worthiness.
If the bank provide more credit to the customer then the customer will invest more in
the bank and also it will directly benefited to the customer.
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0%
10%
20%
30%
40%
50%
highly
satisfied
satisfied moderate dissatisfied highly
dissatisfied
Series1
8. How will you rate the Satisfaction level from the services provided
to you by the Bank through which you made your investment?
Highly Satisfied 34%
Satisfied 42%
Moderate 15%
Dissatisfied 5%
Highly Dissatisfied 4%
Interpretation:-
We can clearly see from the chart that majority of the respondents respond to highly
satisfied and satisfied from the service provided by the bank through the investment
made in the bank.
The people who are satisfied got all the services and the credit worthiness from the
bank and there some extra services also which the bank is provided to its regular
customer.
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0%
20%
40%
60%
80%
100%
yes no
Series1
There are some customer who respond to dissatisfied and highly dissatisfied with the
services the bank provided to them
9. Are you satisfied with the products which are provided to you by
your Bank?
Yes 82%
No 18%
Interpretation:-
The main aim for asking this question was to identify whether the customer are
satisfied with the services which the banks provide to them
Here we can see from the chart that majority of the customer are respond positively
that they are almost satisfied with the current services provided by the bank like
credit facility, online banking, monthly statement etc.
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10. Before this, have you ever made investment in any TPP of Banks?
Yes 36%
No 64%
0 %
2 0 %
4 0 %
6 0 %
8 0 %
y e s n o
S er ie s
Interpretation: -
The main aim for asking this question was to know whether the customer made
the investment in TPP in other bank before or not
We can see from the chart that majority of the customer respond negatively that
they did not make any investment in TPP with other bank before.
Generally the people are invested in their insurance with in bank so they made
first time investment in bank with the TPP
There are some people who made investment with other bank also like SBI,
HDFC etc.
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11. Which factor leads you to shift to this Bank?
Services 10%
Product 42%
Relations 08%
Credit worthiness 22%
Return 18%
0 %
1 0 %
2 0 %
3 0 %
4 0 %
5 0 %
s e r v ic e p r o d u c t r e la t io n c r e d it
w or t h i nes s
r e t u r n
S erie s
Interpretation:-
The main aim for asking this question was to know about that what are various
factors which are responsible for the customers shifting from one bank to another
bank
We can see from the chart that product and credit worthiness is the highest ranked by
investors followed by service, return and relation
Relation and return also plays an important role for the shifting of customer from one
bank to another because the relation the banks are maintain with the customer and the
return the bank provided to the investment made by the customer is very important
aspects.
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0%
20%
40%
60%
80%
yes no
Series1
12.Do you think you may shift to any other Bank for Investment in
TPP in future?
Yes 68%
No 32%
Interpretation:-
The main aim for asking this question was to know whether investor want to shift
to other banks for investment in TPP or not
We can see from the chart that 68% of the customer wants to shift because they
think than there are also more options available in other bank also
Those who respond negatively said that they want to be with this bank only
because they are the highly satisfied customer
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13.Do you think you are getting the perceived product satisfaction?
Yes 52%
No 48%
46%
48%
50%
52%
yes no
Series1
Interpretation:-
The main aim for asking this question was to know whether the customers are
satisfied with the product offered by the bank or not
We can see from the chart that almost half of the customers are satisfied and half
of the customer respond negatively that they are not satisfied with the current
product offered by the bank
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Finding
s
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Findings
We found that how the various transaction and operational activity in the bank is
occurred in daily basis and how it interact with its customer
We also found that how the credit department works and the procedure for
opening of savings and current account
From the survey I have done in Botad, I found that almost half of the customer are
aware about the Third Party Product
Most of the people are invested their money in Insurance and not in mutual fund
because they are not that much aware about it and the basic things of mutual fund
There are some factors because of which the customer are shifted from one bank to
another, the main reasons include credit worthiness, relation, investment service,
relation with bank etc.
Most of the customer are satisfied with the current product provided by the bank
and they said that they do not want to shift in the case of TPP
TPP is one of the emerging concept among the people and in the Botad city, its
not that much popular because most of the bank do not provide that product other
than insurance
In the city majority of the customer have both savings and current account and
they also have insurance for their business also so they mainly deal with the TPP
for their business
Peoples are satisfied with the kind of services provided by the bank and the
product which are offered by the bank
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Conclusion
I hereby conclude that the summer internship program gives us lots of knowledge and we
got more practical knowledge then theory. We also know that how the corporate world
works and what all the norms, rules and regulation we have to follow once we entered in
to corporate
I have prepared this report on the consumer behavior towards TPP at Botad. This project
concludes that there is the market for third party product in the city because majority of
the people are not that much aware about the mutual fund and insurance also. So we
found that most of the customer have insurance and they are satisfied with the services
and the product which are offered by banks
Because of summer internship program in various company and financial corporate, as a
management student I learn lot of practical aspect from the corporate world and it will
surely help me in the future for my growth in corporate life.
Today in the world where smart work is appreciated and not the hard work, a bankmust be aware of its competitors and take such actions that would help it to snatch the
market share from the leader.
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Book Reference
Kothari C.R., 1990, Research Methodology, Second Edition
New Delhi, New Age International (P)Ltd. Publisher
Dr.S.P.Gupta and Dr.M.P.Gupta, Business Statistics, Fourteenth Edition, New
Delhi, Sultan Chand & Sons.
H.R.Ramanath, Research Methodology and Operation Research, Bombay/New
Delhi/Ahmedabad, Himalaya Publishing House
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Questionnaire on Consumer behavior towards Third Party Products
(TPP) in Indian Private Sector BankingObjective: - This Survey is aimed at identifying on Consumer behavior towards Third
Party Products (TPP) in Indian Private Sector Banking. The data and information given
by you in this questionnaire will be kept confidential and used for educational purposes
only. It will be a great help if you cooperate with usName:_____________________________________________________________
Gender: _________ Cell No: _______________
Age:
18-25 26-35 36-55 Above 56
Monthly Income
5000-10000 10000-20000 20000-30000 Above 30000
Educational Background
Under graduate Graduate Post Graduate
1. In which sectors bank do you have bank account? Public Sector
Private Sector
Co-operative
2. Which type of Bank Account do you have?
Current Account
Saving Account
Fixed Deposits
3. Are you aware about the Third Party Products? Yes
No
4. If yes, then have you ever invested for the same?
Yes
No
5. If yes, then in which product had you invested?
Insurance
Mutual Funds
6. Do you think Banks need to deal with Third Party Products? Yes
No
7. Which Criteria you consider before taking the decision of
investment through particular Bank?
Service
Credit worthiness
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Relations
8. How will you rate the Satisfaction level from the services provided
to you by the Bank through which you made your investment?
Highly Satisfied
Satisfied
Moderate
Dissatisfied
Highly Dissatisfied
9. Are you satisfied with the products which are provided to you by
your Bank?
Yes
No
10.Before this, have you ever made investment in any TPP of Banks? Yes
No
11.Which factor leads you to shift to this Bank?
Services
Product
Relations
Credit worthiness
Return
12.Do you think you may shift to any other Bank for Investment inTPP in future?
Yes
No
13.Do you think you are getting the perceived product satisfaction?
Yes
No