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CHAPTER - 1

INTRODUCTION

INTRODUCTION

Modern banking in India could be traced back to the establishment of Bank of Bengal (Jan 2, 1809),

the first joint-stock bank sponsored by Government of Bengal and governed by the royal charter of

the British India Government. It was followed by establishment of Bank of Bombay (Apr 15, 1840)

and Bank of Madras (Jul 1, 1843). These three banks, known as the presidency banks, marked the

beginning of the limited liability and joint stock banking in India and were also vested with the right

of note issue.

In 1921, the three presidency banks were merged to form the Imperial Bank of India, which had

multiple roles and responsibilities and that functioned as a commercial bank, a banker to the

government and a banker’s bank. Following the establishment of the Reserve Bank of India (RBI) in

1935, the central banking responsibilities that the Imperial Bank of India was carrying out came to an

end, leading it to become more of a commercial bank. At the time of independence of India, the

capital and reserves of the Imperial Bank stood at Rs 118 mn, deposits at Rs 2751 mn and advances

at Rs 723 mn and a network of 172 branches and 200 sub offices spread all over t he country.

Banking system of a nation is the shadow of nation’s economy. A healthy and profitable banking

system is just like the backbone of nation’s economy. It is necessary for a nation to achieve growth

and remain stable in this global world and global economy. The Indian banking system, with one of

the largest banking networks in the world, has witnessed a series of reforms over the past few years

like the deregulation of interest rates, dilution of the government stake in public sector banks (PSBs)

and the increased participation of private sector banks.

1.1 HISTORY OF INDIAN BANKING SYSTEM

Banking in India originated in the last decades of the 18th century. The first banks were The General

Bank of India, which started in 1786, and the Bank of Hindustan, both of which are now defunct The

oldest bank in existence in India is the State Bank of India, a government-owned bank that traces its

origins back to June 1806 and that is the largest commercial bank in the country. Allahabad Bank,

established in 1865 and still functioning today, is the oldest Joint Stock bank in India.

Central banking is the responsibility of the Reserve Bank of India, which in 1935 formally took over

these responsibilities from the then Imperial Bank of India, relegating it to commercial banking

functions. After India's independence in 1947, the Reserve Bank was nationalized and given broader

powers. In 1969 the government nationalized the 14 largest commercial banks; the government

nationalized the six next largest in 1980.

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In 1948, the Reserve Bank of India, India's central banking authority, was nationalized, and it

became an institution owned by the Government of India.

In 1949, the Banking Regulation Act was enacted which empowered the Reserve Bank of India

(RBI) "to regulate, control, and inspect the banks in India."

The Banking Regulation Act also provided that no new bank or branch of an existing bank could

be opened without a license from the RBI, and no two banks could have common directors

1.2 LIBERALIZATION IN INDIAN BANKING SYSTEM

In the early 1990s, the then government embarked on a policy of liberalization, licensing a small

number of private banks. These came to be known as New Generation tech-savvy banks, and

included Global Trust Bank (the first of such new generation banks to be set up), which later

amalgamated with Oriental Bank of Commerce, Axis Bank(earlier as UTI Bank), ICICI Bank and

HDFC Bank. This move, along with the rapid growth in the economy of India, revitalized the

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banking sector in India, which has seen rapid growth with strong contribution from all the three

sectors of banks, namely, government banks, private banks and foreign banks

The next stage for the Indian banking has been setup with the proposed relaxation in the norms for

Foreign Direct Investment, where all Foreign Investors in banks may be given voting rights which

could exceed the present cap of 10%, at present it has gone up to 49% with some restrictions.

The new policy shook the Banking sector in India completely. Bankers, till this time, were used to

the 4-6-4 method (Borrow at 4%; Lend at 6%; Go home at 4%) of functioning. The new wave

ushered in a modern outlook and tech-savvy methods of working for traditional banks. All this led to

the retail boom in India. People not just demanded more from their banks but also received more.

Currently (2009), banking in India is generally fairly mature in terms of supply, product range and

reach-even though reach in rural India still remains a challenge for the private sector and foreign

banks. In terms of quality of assets and capital adequacy, Indian banks are considered to have clean,

strong and transparent balance sheets relative to other banks in comparable economies in its region.

The Reserve Bank of India is an autonomous body, with minimal pressure from the government. The

stated policy of the Bank on the Indian Rupee is to manage volatility but without any fixed exchange

rate-and this has mostly been true.

With the growth in the Indian economy expected to be strong for quite some time-especially in its

services sector-the demand for banking services, especially retail banking, mortgages and investment

services are expected to be strong. One may also expect M&As, takeovers, and asset sales.

Currently, India has 88 scheduled commercial banks (SCBs) - 27 public sector banks (that is with the

Government of India holding a stake), 31 private banks (these do not have government stake; they

may be publicly listed and traded on stock exchanges) and 38 foreign banks. They have a combined

network of over 53,000 branches and 17,000 ATMs. The public sector banks hold over 75 percent of

total assets of the banking industry, with the private and foreign banks holding 18.2% and 6.5%

respectively.

In 1951, in the backdrop of central planning and the need to extend bank credit to the rural areas, the

Government constituted All India Rural Credit Survey Committee, which recommended the creation

of a state sponsored institution that will extend banking services to the rural areas. Following this, by

an act of parliament passed in May 1955, State Bank of India was established in Jul, 1955. In 1959,

State Bank of India took over the eight former state-associated banks as its subsidiaries. To further

accelerate the credit to fl ow to the rural areas and the vital sections of the economy such as

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agriculture, small scale industry etc., that are of national importance, Social Control over banks was

announced in 1967 and a National Credit Council was set up in 1968 to assess the demand for credit

by these sectors and determine resource allocations. The decade of 1960s also witnessed significant

consolidation in the Indian banking industry with more than 500 banks functioning in the 1950s

reduced to 89 by 1969.

For the Indian banking industry, Jul 19, 1969, was a landmark day, on which nationalization of 14

major banks was announced that each had a minimum of Rs 500 mn and above of aggregate

deposits. In 1980, eight more banks were nationalised. In 1976, the Regional Rural Banks Act came

into being, that allowed the opening of specialized regional rural banks to exclusively cater to the

credit requirements in the rural areas. These banks were set up jointly by the central government,

commercial banks and the respective local governments of the states in which these are located.

The period following nationalisation was characterized by rapid rise in banks business and helped in

increasing national savings. Savings rate in the country leapfrogged from 10-12% in the two decades

of 1950-70 to about 25 % post nationalisation period. Aggregate deposits which registered annual

growth in the range of 10% to 12% in the 1960s rose to over 20% in the 1980s. Growth of bank

credit increased from an average annual growth of 13% in the 1960s to about 19% in the 1970s and

1980s. Branch network expanded significantly leading to increase in the banking coverage.

A) ORANGE SAVINGS ACCOUNT:

This account is the basic product of ING Vysya Bank. In this account minimum cash balance

required to open an account & the Quarterly Average Balance requirement is Rs5000. Some of the

major features and benefits of this account are:

FREE

Free issue of International Debit Card.

Unlimited ATM transactions at over 25,000 (Cirrus/Cashnet) ATM’s in India, where QAB is

maintained.

Shopping convenience at over 2 Lakh merchant locations, with the ING Vysya International

Debit card.

Unlimited ATM transactions at over 196 ING Vysya ATM’s.

2 Demand Drafts with a value not exceeding Rs.50,000 per annum, where QAB is

maintained.

Unlimited usage of payable at par (PAP) Cheques.

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Transfer of funds across all branches.

National Electronic Funds Transfer (NEFT) through the internet banking channel.

Electronic Bill Payment service.

Smartserv - Personal Assistance Service.

Statement of Account through E-mail.

Mi-b@nk - Internet banking facility.

RTGS (Real Time Gross Settlement) transactions at all branches.

AAA Cash deposit (Customers) – Free up to 2 transactions per month and a value limit of

Rs. 50,000/-

BENEFITS

Free unlimited access to 25,000 + other bank ATM’s- enhanced accessibility.

Free multi branch, Multi-city banking convenience.

Payable at par Cheques.

Smartserv- Personal Concierge Services.

B) ING FORMULA SAVINGS ACCOUNT:

This is the product of ING Vysya Bank which is targeted towards the upper middle class segment of

the society. Basically the targeted segment is the age group between 18-40 yrs. This product has its

significance particularly in Metropolitan/A grade cities. This product is also useful for people who

travel frequently particularly to Metropolitan/A grade cities.

Minimum cash balance required to open this account and Quarterly Average Balance requirement is

Rs. 25000/-

Some of the major features and benefits of this account are :

Maximum withdrawal limit from ING’s ATM or any other bank’s ATM is Rs. 50,000.

Maximum shopping limit through ING’s ATM/Debit card is Rs. 75,000.

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Free Payable at Par cheques.

Exclusive F1 themed, Internet Banking services.

Formula 1 International Debit card.

Free sms alerts on transactions above Rs. 1500.

SPECIAL BENEFITS CARD

FUEL GAUGE

Fill fuel across any petrol pump in India and get the 2.5% surcharge waived.

SPEED LAP

Shop using your ING Formula savings account and get Formula One merchandise.

RACE DAY

Whenever there is a Formula 1 race anywhere in the world, there is a race for u as well.

Shop using your ING Formula debit card on the day of the race and top 25 spenders for

the race day wins vouchers from ING.

3 winners – Gift vouchers worth Rs. 5000/-

10 runner ups- Gift vouchers worth Rs. 2000/-

12 second runner ups- Gift vouchers worth Rs. 1000/-

C) PLATINA ACCOUNTS

This product (account) of ING Vysya Bank is a special product for special class of customers. This

can also be termed as Preferred Platina Banking. This product is designed to reduce the efforts put in

handling banking and financial needs. This product has special features which are mainly meant for

business class people who have to make large payments and have regular transactions. The Platina

account holder becomes the preferred customer of the bank.

The average quarterly balance (QAB) is Rs. 100,000

Features:

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Dedicated Relationship Manager

Our dedicated relationship managers can help you manage your money; while you pursue your

passion, be it business or pleasure.

Wealth Management Service

Our preferred banking services offer you customized financial strategies on how to invest and where

to invest based on simple financial risk profiling.

ING Platina Debit Card

Use your ING Platina Gold Debit Card and withdraw cash up to Rs1 lac per day from any ATM,

Avail a 1% cash back on shopping with your Debit Card.

Account Representative Services

Now when you are out building a business empire or taking that well deserved vacation, just

nominate someone else to do your routine banking enquires.

Preferential rates on ING products

Get more out of the Platina relationship. Avail preferential rates on Demat, Bank Lockers, Personal

and Home loans.

1.3 TYPES OF SAVING ACCOUNTS OFFERED BY OTHER PRIVATE BANKS

ICICI BANK

A) ICICI Savings Bank Account:

ICICI Bank is also offering the saving accounts as their products.

The ICICI Bank International debit card is a debit-cum-ATM card provides with the

convenience of acceptance at merchant establishments and cash withdrawals at ATM.

Money Multiplier Facility

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Internet Banking is offered free of cost.

Anywhere Banking facility entitles the account holder to withdraw or deposit cash upto a

limit of Rs.50,000 across all ICICI Bank branches.

An average quarterly balance of Rs.10,000 only in metro and urban locations.

Nomination facility is available.

Interest is payable half-yearly.

Third party withdrawal limit is only Rs 15,000 and free demand draft making facility for a month is

only up to Rs 10,000. Free withdrawal limit from ATM card is only up to Rs 25,000 in all accounts.

B) GOLD PRIVILAGE ACCOUNTS

The Gold Privilege Account brings the customer exclusive benefits, especially created for valuable

customers. The minimum quarterly average balance (QAB) requirement for Gold Privilege account

is Rs.50, 000. Non-maintenance of the required QAB in any quarter attracts a charge as per the

following guidelines:

If QAB is between Rs.50, 000 and Rs.25, 000, charge of Rs.250 will be levied

If QAB is between Rs.25, 000 and Rs.10, 000, charge of Rs.500 will be levied

If QAB falls below Rs.10, 000, charge of Rs.750 will be levied

Your Gold Privilege account entitles you to select privileges and offers:

BENIFITS

Jump Queue facility in ICICI Bank branches.

Free usage of payable-at-par chequebook.

International VISA Gold debit card with higher daily withdrawal and spend limit.

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Waiver of annual fee for Debit card.

Free and Unlimited access (cash withdrawals and balance enquiry) to any Bank's ATM in the

country using ICICI Bank International Gold Debit card.

Waiver of DD/PO charges for up to Rs.100,000 per day.

Waiver of Anywhere Banking charges across all ICICI Bank branches.

Priority Processing through ICICI Bank Phone Banking.

Preferential rates for Gold Coins.

Better rates for Foreign Exchange Service.

Discounts on Safe deposit locker facility.

Special asset deals from time to time.

C) TITANIUM PRIVILAGED ACCOUNT

This product from ICICI is mainly to serve privileged customer (upper class)

In constant endeavor to fulfill all the banking needs and enhance exclusivity ICICI Bank launched

Titanium Privilege Account - tailored to take care of customer’s banking and investment

requirements and status. This account offers a dedicated Branch Relationship Manager supported

with a Phone Banking Relationship Manager.

Customer can realize the benefits of a Titanium Privilege Account on the basis of his total

relationship value (TRV) with the bank. Customer need to maintain a TRV of between Rs. 5 lac and

Rs. 10 lac and a quarterly average balance (QAB) of Rs.75,000. In addition to this, there is waiver of

QAB charges, subject to FD of min. 3.75 Lac.

BENIFITS

Branch Relationship Manager supported with Phone Banking Relationship Manager.

Priority processing at all ICICI bank branches and through customer care.

A higher daily withdrawal and spend limit on a Titanium debit card.

Free International Titanium Debit Card.

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Unlimited free access to any bank’s ATM throughout the country.

Free usage of multi-city cheque book.

Free physical monthly account statement.

Anywhere banking.

Complete waiver on DD/PO charges.

Preferential rate on purchase of ICICI Bank Pure Gold.

Preferential rates on purchase of foreign exchange with a complete waiver on commission

charges.

Discounted rates on safety locker charges.

HDFC BANK

A) REGULAR SAVING ACCOUNT

An easy-to-operate savings account that allows customer to issue cheques, draw Demand Drafts and

withdraw cash. Customer can check balances from the comfort of his home or office through

NetBanking, PhoneBanking and MobileBanking.

Withdrawal of cash from any of the 3275 ATM centers spread across the country.

FEATURES & BENEFITS

Facilities like NetBanking and MobileBanking.

Customer can check the account balance, pay utility bills or stop cheque payment, through

SMS.

Personalized cheques with customer’s name printed on each cheque leaf for enhanced

security.

Advantage of BillPay, an instant solution to all frequent utility bill payments. Instructions for

payment over the phone or through the Internet.

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Customers can avail the facilities like Safe Deposit Locker, Sweep-In and Super Saver

facility on their account.

Free cash withdrawals on any other Bank's ATM

Free Payable-at-Par chequebook, without any usage charges upto a limit of Rs.50,000/- per

month.

Free InstaAlerts for all account holders for lifetime of the account.

Free Passbook facility available at home branch for account holders (individuals).

Free Email Statement facility.

B) SAVING MAX ACCOUNT

Welcome to a world of convenience. HDFC has presented SavingsMax account, loaded with

maximum benefits to make banking experience a pleasure. By maintaining an average quarterly

balance of just Rs. 25,000/- customer can get a host of premium services from HDFC Bank.

FEATURES & BENIFITS

Free unlimited transactions: Cash withdrawal and balance enquiry, at all HDFC Bank ATMs

& on any other Bank's ATM using your HDFC Bank Debit Card.

Free Gold Debit Card for primary account holder for lifetime of the account. Gold Debit

Card for other account holders at Rs 250/- p.a.

Free Woman's Advantage/International Debit Card for all account holders for lifetime of the

account.

Free Payable-at-Par (PAP) chequebook, without any usage charges upto a limit of 1 lac per

month.*

Free Demand Drafts on HDFC Bank locations, upto a limit of 50,000/- per day at home

branch.

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Self/Third Party Cash Deposit/Withdrawal at non-home branches, upto Rs 50,000/- per day

free. Above Rs 50,000 a charge of Rs 2.90 per thousand on the full amount would be

applicable.

Optional sweep out facility to transfer extra savings to a Fixed Deposit, at the threshold of

Rs.50,000/-.In the event of the balance in SavingsMax account exceeding Rs 50,000/-, the

amount in excess of Rs 50,000/- will be swept out in to a Fixed Deposit with a minimum

value of Rs 25000/- for a 1year 1day period.

Free BillPay & InstaAlerts for all account holders for lifetime of the account.

Free Monthly Statement of Account.

50% off on the Locker rental for the 1st year only.

Folio maintenance charges on Demat account free for first year.

Free National Electronic Funds Transfer facility, NetBanking, MobileBanking.

Free Passbook facility available at home branch for account holders (individuals).

Free Email Statement facility

C) PREFERRED BANKING ACCOUNTS

This account has been offered by HDFC for its preferred customers, so as to give special benefits to

them. The minimum quarterly available balance (QAB) that has to be maintained in this account is

Rs. 2,00,000

FEATURES & BENIFITS

Dedicated Relationship Manager

Customized Investment Solutions

Investment Options

e-Broking

Expedited Tax Payments

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Relationship Pricing

Business Solutions

On-demand exclusive privileges

Annual Service Charge Waiver

Indian banking, which experienced rapid growth following the nationalization, began to face

pressures on asset quality by the 1980s. Simultaneously, the banking world everywhere was gearing

up towards new prudential norms and operational standards pertaining to capital adequacy,

accounting and risk management, transparency and disclosure etc. In the early 1990s, India

embarked on an ambitious economic reform programme in which the banking sector reforms formed

a major part. The Committee on Financial System (1991) more popularly known as the Narasimham

Committee prepared the blue print of the reforms. A few of the major aspects of reform included (a)

moving towards international norms in income recognition and provisioning and other related

aspects of accounting (b) liberalization of entry and exit norms leading to the establishment of

several New Private Sector Banks and entry of a number of new Foreign Banks (c) freeing of deposit

and lending rates (except the saving deposit rate), (d) allowing Public Sector Banks access to public

equity markets for raising capital and diluting the government stake,(e) greater transparency and

disclosure standards in financial reporting (f) suitable adoption of Basel Accord on capital adequacy

(g) introduction of technology in banking operations etc. The reforms led to major changes in the

approach of the banks towards aspects such as competition, profitability and productivity and the

need and scope for harmonization of global operational standards and adoption of best practices.

Greater focus was given to deriving efficiencies by improvement in performance and rationalization

of resources and greater reliance on technology including promoting in a big way computerization of

banking operations and introduction of electronic banking.

The reforms led to significant changes in the strength and sustainability of Indian banking. In

addition to significant growth in business, Indian banks experienced sharp growth in profitability,

greater emphasis on prudential norms with higher provisioning levels, reduction in the non

performing assets and surge in capital adequacy. All bank groups witnessed sharp growth in

performance and profitability. Indian banking industry is preparing for smooth transition towards

more intense competition arising from further liberalization of banking sector that was envisaged in

the year 2009 as a part of the adherence to liberalization of the financial services industry.

1.4 STRUCTURE OF THE BANKING INDUSTRY

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According to the RBI definition, commercial banks which conduct the business of banking in India

and which (a) have paid up capital and reserves of an aggregate real and exchangeable value of not

less than Rs 0.5 mn and (b) satisfy the RBI that their affairs are not being conducted in a manner

detrimental to the interest of their depositors, are eligible for inclusion in the Second Schedule to the

Reserve Bank of India Act, 1934, and when included are known as ‘Scheduled Commercial Banks’.

Scheduled Commercial Banks in India are categorized in five different groups according to their

ownership and/or nature of operation. These bank groups are (i) State Bank of India and its

associates, (ii) Nationalised Banks, (iii) Regional Rural Banks, (iv) Foreign Banks and (v) Other

Indian Scheduled Commercial Banks (in the private sector). All Scheduled Banks comprise Schedule

Commercial and Scheduled Co-operative Banks. Scheduled Cooperative banks consist of Scheduled

State Co-operative Banks and Scheduled Urban Cooperative Banks.

Banking Industry at a Glance

In the reference period of this publication (FY09), the number of scheduled commercial banks

functioning in India was 222, of which 133 were regional rural banks. There are 71,177 bank XIV

offices spread across the country, of which 43 % are located in rural areas, 22% in semi-urban areas,

18% in urban areas and the rest (17 %) in the metropolitan areas. The major bank groups (as defined

by RBI) functioning during the reference period of the report are State Bank of India and its seven

associate banks, 19 nationalised banks and the IDBI Ltd, 19 Old Private Sector Banks, 8 New Private

Sector Banks and 29 Foreign Banks.

Mergers & Acquisitions

During FY09, two domestic banks were amalgamated - Ganesh Bank of Kurundwad with Federal

Bank Ltd and Bank of Punjab Ltd with Centurion Bank Ltd to become Centurion Bank of Punjab

Ltd, while one Foreign bank UFJ Bank Ltd merged with Bank of Tokyo-Mitsubishi Ltd. ING Bank

NV closed its business in India. In Sept, 2008, The United Western Bank Ltd was placed under

moratorium leading to its amalgamation with Industrial Development Bank of India Ltd. in Oct,

2009. On Apr 1, 2007, Bharat Overseas Bank an old private sector bank was taken over by Indian

Overseas Bank and on Apr 19, 2007, Sangli Bank, another old private sector bank was merged with

ICICI Bank, a new private sector bank.

Shareholding Pattern

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As of Mar 2009, only four Nationalised Bank had 100% ownership of the Government. These are

Central Bank of India, Indian Bank, Punjab and Sind Bank and United Bank of India. As of Mar

2006, the government shareholding in the State Bank of India stood at 59.7% and in between 51-77%

in other nationalised banks. In Feb 2007, Indian Bank came out with a public issue thus leaving only

three nationalised banks having 100% government ownership. Foreign institutional holding up to

20% of the paid up is allowed in respect of Public Sector Banks including State Bank of India and

many of the banks have reached the threshold level for FII investment. In respect of Private Sector

Banks where higher FII holding is allowed, threshold limit has been reached in the leading banks.

1.5 INDIAN BANKING AND INTERNATIONAL TRENDS

When compared to other emerging markets, the growth of Indian banking has been impressive and

compares favorably on several counts. A recent study by Bank for International Settlements on the

progress and the prospects of banking systems in emerging countries highlights the following

features of the performance of Indian banks:

Average growth rate of real aggregate credit in India rose from 6.1% during the period 1995-

99 to 14.6 % in 2000-04.

The average growth rate of real aggregate credit in India during 2000-04 in India is higher as

compared to major countries and regions in the emerging markets, such as China (13.3%),

Other Asia (4.7%), Latin America (4.5%), and Central Europe (9.6%).

Commercial banks in India account for a major share of the bank credit (97%) as compared to

Latin America (68%), Other Asia (74%) and Central Europe (83%).

Real bank credit to the private sector has shown sustained growth in India, and has moved

from 3.9% a year in 1990-94 to 6.9% a year in 1995-99 to 13.5 % a year in 2000-04. In 2005,

real bank credit to the private sector in India showed a growth of 30% year-on-year as against

9.4% in China and 15.8% in emerging markets.

In India, during the period 1999 and 2004, non-performing loans as a percentage of total

commercial bank assets came down from 6.1% to 3.3%, capital asset ratios moved up from

11.3% to 12.9% and operating costs as a percentage of total assets reduced from 2.4% to

2.3%. NPAs in China in 2004 stood at 6%.

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In India, return on assets of banks during the period 1999-2004 moved up from 0.4% to 1.1%,

and return on equity from 8.5% to 20.9% where as in China the former rose from 0.1% to

0.3%.

1.6 BUSINESS OF COMMERCIAL BANKS

1. Balance Sheet Growth

In FY08, the aggregate balance sheet of the scheduled commercial banks increased by 18.4%, over a

19.3 % growth registered in FY08. The ratio of bank assets to GDP rose to 86.9% as compared to

82.8% in FY08. Banking industry gained from the by rapid rise in the real economy, leading to surge

in several areas of business.

2. Capital and Reserves

The capital of the scheduled commercial banks as on Mar 31, 2008 stood at Rs 252040 mn. During

FY08, reserves and surplus of all scheduled commercial banks rose by 27.6%. Revenue and other

reserves nearly doubled for the banks as a whole, with SBI reporting four fold increase in this regard.

3. Deposits and Advances

Deposits of SCBs grew by 17.8 % in FY08 as against 16.6% in FY09, but the advances growth

outstripped this pace with a rise of 31.8% in FY09, over a 33.2% growth in FY08. As per a recent

RBI report, FY09 was the second consecutive year, when increase in credit in absolute terms was

more than the absolute increase in aggregate deposits.

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4. Group-wise Performance

The growth in deposits across the different bank groups showed substantial variation. Public Sector

Banks with a deposit growth of 12.9% and Old Private Sector Banks with 11.4% showed a relatively

subdued growth in deposits where as the New Private Sector Banks with 50.7% and Foreign Banks

with 31.7% showed a sharp rise. Borrowings of the Public Sector Banks grew at 24%, but that of the

Foreign Banks was much higher (30%). Due to redemption of the India Millennium Deposits in Dec

2005, banks’ non-resident foreign currency deposits showed a sizeable decline. Loans and advances

growth too was on similar trends. For Public Sector Banks, loan growth was 29.5% as compared to

34.9% in FY08, for Old Private Sector Banks, it was 21.5% as against 22.7% in the previous year,

for New Private Sector Banks it was 50.2 % as against 33% in FY08, and for Foreign Banks it was

29.5% as against 24 % in FY08. In the non-food credit, apart from retail credit which grew at 40.9%;

infrastructure (24%), basic metals (14.1%) and textiles (11.2%) were the other major sectors that

received higher levels of incremental credit.

5. Growth in Retail Lending

While total credit of the SCBs grew at 31% in FY09, credit to the new segments in the retail banking

showed still higher growth rates. In FY09, loans to housing rose by 33.4%, credit card receivables by

47.9%, auto loans by 75%, and other personal loans by 39.1% taking the growth of retail loans

during the FY09 to 40.9%. Retail loans in FY09 constituted 25.5% of the total loans and advances of

scheduled commercial banks. Lending to sensitive sectors also rose significantly. Loans to capital

market rose by 39.2%, to real estate markets by 81.78% and to commodities by 85.56% with the

growth in these three segments reaching to 77.65% in FY09.

6. Priority Sector Advances

Credit to priority sector increased at a robust rate of 33.7% in FY09 on the top of 40.3% in the

previous year. A major portion of the credit growth in the priority sector is accounted by agriculture

and housing. Credit to SSI also grew sizeably.

7. Market Share

The share of Public Sector Banks showed deceleration in respect of major areas of business, where

as that of the new private sector and Foreign Banks earned higher share of business. The market

share of the Old Private Sector Banks too came under pressure. Public Sector Banks hold 75%

market share in major areas of business.

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8 Access to Equity Markets

Banks have been increasingly accessing primary equity capital markets for raising resources. In

FY09, resource mobilization of banks through public equity markets rose by 24%. Resources raised

by banks from public equity markets showed continuous increase, from Rs 24560 mn in FY04 to Rs

89220 mn in FY08 to Rs 110670 mn in FY09. Encouraged by the response to banks stocks, eleven

banks, six in the public sector and five in the private sector, raised Rs 110670 mn from the equity

markets. The Public Sector Banks which raised equity from the capital markets included Allahabad

Bank, Oriental Bank of Commerce, Syndicate Bank, Andhra Bank, Bank of Baroda and Union Bank

of India. The five Private Sector Banks were Lakshmi Vilas Bank Ltd, Yes Bank Ltd, ICICI Bank

Ltd., The South Indian Bank Ltd and The United Western Bank Ltd. The size of the share issue of

these banks was Rs 6270 mn where as the premium was at Rs 104400 mn. Banks also tapped private

placement market for resource mobilization in a big way by raising Rs 301510 mn of which Public

Sector Banks accounted for 74%.

Bank stocks also emerged as an important portfolio for investment giving significant returns. Returns

from bank stocks as measured through BSE Bankex rose from 28.6% in FY08 to 36.8 % in FY09 as

compared to the benchmark index. Bank stocks still have scope for further growth with lower

valuation prevailing at present in many banks.

8. Asset Quality

There is a perceptible increase in the quality of bank assets. Standard assets as percent of all assets

for scheduled commercial banks moved from 94.9% in FY08 to 96.7% in FY 06, with decline in

reported sub standard, doubtful and loss assets. The proportion of standard assets rose across all the

bank groups in FY09, showing improved management of assets by banks. According to a report of

the Reserve Bank of India, the gross non performing assets of the scheduled commercial banks

declined by Rs 73090 mn over and above the decline of Rs 65610 mn in FY08.

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As on 31 Mar 2006, gross NPAs of scheduled commercial banks stood at Rs 518150 mn of which

26.4% are with State Bank group, 53% with the nationalised banks, 7.1% with the Old Private Sector

Banks, 7.3% with the New Private Sector Banks and 3.7% with the Foreign Banks.

Scheduled commercial banks stepped up recovery efforts through numerous methods. In addition to

their own internal recovery processes, banks recovered to the tune of Rs 6080 mn through one-time

settlement and compromise schemes, Rs 2230 mn though Lok Adalats, Rs 47100 mn through Debt

Recovery Tribunals and Rs 34230 mn through SARFAESI Act. Asset Reconstruction Company of

India Ltd (ARCIL) acquired 559 cases amounting to Rs 211260 mn from banks.

9. Distribution of Network

The expansion in the distribution network of the banks is increasingly evident from the growth of the

automated teller machines. There is a surge in the growth of off-site ATMs with their share in the

total ATMs rising to 32% in respect of Public Sector Banks, 67% in State Bank group, 32% in Old

Private Sector Banks, 63% in New Private Sector Banks and 73% in Foreign Banks.

Computerization of public sector bank branches is also moving at rapid pace. In 2007 the pace of

computerization progressed much further. Public Sector Banks have 93 branches operating abroad in

26 countries. All scheduled commercial banks together have 106 branches abroad.

20

10. Major Trends in Business

Indian banking, in addition to improvements in performance and efficiency, has also experienced

significant changes in the structure of asset and liabilities. The major changes on the liabilities side

include relatively higher growth of demand deposits over time deposits, and also, within time

deposits, greater preference for short term over the longer term deposits. The share of demand

deposits in total deposits increased from 14.7% in FY01 to 17% in FY09. The share of short term

deposits in total time deposits increased from 43.8% in FY00 to 58.2% in FY09. The narrowing of

interest rate spread between short and long term deposits has reduced the preference for long term

deposits.

Banks are moving away from investments to loans due to more lending opportunities offered by the

higher economic growth. The rate of bank credit growth which was at 14.4% in FY03 rose sharply to

reach 30% each in the FY08 and FY09. Bank credit has picked up momentum on the back of rising

growth of real economy. A period of low interest rates induced banks to shift their preference from

investments to advances, which led to the share of gross advances in total assets of all commercial

banks reaching 54.7% in FY09 from 45% in two years prior to that.

The sectors towards which the bank credit was directed has also shown significant changes. Retail

loans witnessed growth of over 40% in the last two years, and began driving the credit growth to a

significant extent. Retail loans as a percentage of Gross Advances rose from about 22% in FY04 to

25.5% in FY09. Within the retail loans, housing segment showed the highest growth of 50% in FY08

and 34% in FY09. As per the RBI data, banks direct exposure to commercial real estate more than

doubled in FY09.

Despite sharp rise in the credit growth, improved risk management processes and procedures of

banks contained the surge in bad debts which is evident from the lower levels of incremental

nonperforming assets reported by the banks as also the rise in the proportion of standard assets.

Further improvement in risk management systems could provide banks with more opportunities in

expanding credit and pursuing higher levels of growth in retail lending.

A few other major developments in the performance of the Indian banking industry are briefly

mentioned below.

1. Rise of Transactional Banking: Growth of retail lending including mortgage and personal

loans is leading to numerous transactions, which banks are able to manage efficiently with

the support of growing technology prowess and competencies. In FY09, growth of major

21

segments of the retail lending includes housing loans at 33%, consumer durables at 17%,

credit card receivables at 48%, auto loans at 75% and other personal loans at 39%. Except

consumer durables, all these segments have grown at a pace that is much higher than the

growth of total loans and advances which was at 31%. In view of the greater possibility of

personal banking services in India, transactional banking will assume significance, thus

giving scope for a new business model as also a wide range of technology solutions.

2. Outsourcing Gaining Significance: The rapid rise of personal banking, the need to service

and track it in a consistent manner, has led to the outsourcing of several of the follow-up and

customer service functions, with banks setting up separate processes and mechanisms to

manage them. This trend will increasingly be evident in the marketing of products,

maintaining client profiles, attending to customer requests and also in exploring new business

opportunities.

3. Focus on Fee Income: Indian banks, including the Public Sector Banks, have become

focused on the fee income, taking advantage of the enormous scope and potential for personal

banking and related services. Several banks have shown sizeable growth in the fee/non-

interest income in the recent period.

4. Thrust on SMEs and SSIs: The promotion and growth of small and medium enterprises

(SMEs) has become an issue of policy thrust in recent years, in view of their significance in

the domestic economy and contribution to the national output. The performance of the stock

markets in the last three years was also largely on the back of surge in the share prices of

stocks pertaining to SMEs. The environment governing SME financing has vastly improved

with the setting up of rating agencies for SME financing. Banks look at this segment as a

potential source of business and growth.

5. Product and Business Collaborations: Initiatives at deriving economies of scale are gaining

importance in Indian banking. There is growing collaboration and partnerships amongst

banks in promoting new business, distributing products and services as also in cross selling.

In the recent period, instances of even some Public Sector Banks coming together to jointly

develop business initiatives is increasingly evident In Sep 2006, Indian Bank, Corporation

Bank and Oriental Bank of Commerce announced a business alliance that is envisaged to

generate greater benefits to each of them, including expansion of international business.

Similarly, several banks are distributing insurance products in collaboration with insurance

companies.

22

6. Shared Services (ATM Networks): There is growing trend of pooling of resources for

providing some shared services, such as ATMs and credit cards. In the 1990s, the first of

such initiatives began under the aegis of the Indian Banks’ Association, with the setting up of

SWADHAN, a shared ATM Network. Following its dissolution, a new set up came into

being, under the aegis of the IDBRT, known as National Financial Switch (NFS) which has

24 banks sharing the network of 8371 ATMS, the largest of such network of ATMs in India.

Cash Tree is another ATM network with major public and private sector participating in it.

MITR is a network of ATMs between six Public Sector Banks.

7. NRI Banking/International Services: Total International liabilities of SCBs in FY09 rose

by 20.2% as compared to 15.5% in the previous year. International liabilities consist of

various items, including foreign currency deposits, non resident deposits, and equities of

banks held by non-residents etc. International borrowings are growing at a pace higher than

that of deposits. The strong surge in international liabilities has led to banks stepping up their

focus on external activities, in the form of opening new branches outside India and forging

business relationships and collaborations. The focus is more on the Middle East, European

and North American markets, where significant presence of population of Indian origin is

prevalent. A few banks have begun to explore China and Vietnam as new markets.

8. Technology and Core Banking Solution: Core banking solution (CBS) is critical to offer

country-wide banking facilities, and has emerged as a key competitive and success factor for

banks. CBS is more of a challenge for the public and the Old Private Sector Banks, since the

New Private Sector Banks are already networked since their inception. Several public sector

and Old Private Sector Banks have made significant advances in extending core banking

solution to most of the branches, which will radically redefine the scope and quality of

delivery and distribution of bank products as also the customer service. Between 1999 and

2006, Public Sector Banks have spent about Rs 106760 mn on computerization and the

development of communication networks and at end March 2006, 77.5% of the branches of

these banks were fully computerized.

9. Cross Selling: Globally, cross selling is a major component of the business of banks. In India

too, it is catching up fast with several of the banks of the State Bank Group already making

headway in selling products of other group banks and subsidiaries in the insurance and capital

market services. Other banks are also building this business in an aggressive manner. Cross

selling would help in banks boosting the fee income.

23

10. Internet/Mobile Banking: Taking advantage of the vastly improved and innovative telecom

solutions, many banks are able to offer services on internet and mobile telephones. Internet

banking and phone banking are becoming quite common place amongst all groups of banks

that provide customers with ready information on certain banking services. Internet / and

mobile based banking is expected to grow further in view of the expansion of capacity in the

bandwidth and value added services introduced in the telecom sector.

11. Financial Inclusion: Following the government’s policy initiative of pursuing inclusive

growth, banking institutions have been advised to offer products that will cater to a wide

spectrum of the population living in the rural areas. Following this, many banks have

introduced exclusive no-frills accounts, which will provide banking access to a large segment

of unbanked population. Banks, particularly in the public sector see a huge opportunity in this

segment, as more people will now seek banking services. The advances in technology and

computing could enable banks to manage growth of huge numbers in the accounts and

transactions.

12. Risk Management/Asset Liability Management: One of the positive features of the Indian

banking is its low cost of the turnaround. Following financial liberalization leading to the

banking crisis, many emerging and mature economies spent huge amounts, sometime costing

upto 50% of the GDP, in making successful banking turnaround. In India, however the cost

of the turnaround is relatively low, somewhere in the region of 3% of the GDP. A greater

challenge following the turnaround is keeping the loan book healthy. It is where banks are

taking proactive measures in setting up efficient risk management systems and robust asset

liability management processes. All banks have put in place several tiers of risk management

processes and procedures that are helping them to contain the growth of bad debts.

13. Capital Adequacy Norms: Indian banking system has been proactive in adopting global

standards in capital adequacy and are gearing up to adopt Basel II norms. Basel II norms

provide banks and the regulatory agencies a range of options for determining capital

requirements for credit and operational risk that are most suitable for the operations in

financial markets. This framework consists of a three-pillared approach viz., minimum capital

requirements, supervisory review of capital adequacy, and market discipline. The Reserve

Bank of India stipulated that Foreign Banks operating in India and Indian banks with

operational presence outside India should adopt the new standards in computing capital

24

adequacy with effect from Mar 31, 2008 and all other scheduled commercial banks to move

towards this system not later than Mar 31, 2009

14. Corporate Governance and Disclosures: There is a distinct improvement in the corporate

governance norms and the disclosure standards in the banking industry. All listed banks are

now required to follow Clause 49 of the listing agreement of stock exchanges that stipulates

the structure of the corporate governance as also disclosure standards. All listed banks now

disclose details of the governance and their functioning through various committees and

forums and follow norms on reporting the financial details, consisting of quarterly

announcements, segmental reporting etc. Enhanced quality of governance and disclosure

standards have made the banking sector an attractive option for investors in India and abroad.

15. Standards in Customer Service: In Feb 2006, the Reserve Bank of India, with 11 other

banks, set up the Banking Codes and Standards Board of India to monitor and ensure that

banking codes and standards are voluntarily adopted by the banks and strictly adhered to,

while providing customer services. The Code is a major development that would have

significant impact on the quality of customer services and in fulfilling the obligations of the

bank. The Code sets out minimum standards of banking practices that banks should follow in

dealing with the customers. The Code envisages providing full information to the customers

before a product is sold. Similarly, guidelines on credit card operations were also issued by

the Reserve Bank of India in Nov 2005. These are envisaged to significantly enhance the

customer service standards in Indian banking

16. Growing Investor Interest in Indian Bank Stocks: In view of the great potential and

prospects, bank stocks have seen significant growth in the recent period with the support of

investor interest from India and abroad. Non resident holdings in the New Private Sector

Banks where foreign holding is allowed up to 74%, rose to 70.9% in ICICI Bank, 70.3% in

Centurion Bank of Punjab, 53.6% in KOTAK MAHINDRA Bank, 50% in YES Bank for

FY09. Among the Old Private Sector Banks, ING Vysya Bank (70.8%), Federal Bank

(45.8%) has sizeable non-resident holdings. Among the Public Sector Banks, non-resident

holdings vary across banks. The latest position in this regard indicates quite a few big banks

reaching the threshold levels (20%) of foreign institutional investment.

17. Growth of Off Balance Sheet Operations: There is a sharp increase in the offbalance sheet

operations of banks, particularly in the Foreign and New Private Sector Banks. Off-balance

sheet exposures of banks in India, of which derivatives form a major component, rose five

25

times in FY09 on the top of 58% growth registered in FY08. The share of off-balance sheet

exposures in total assets rose from 57% in FY02 to 152% in FY09. This trend, which refl ects

growing deregulation and new business opportunities for banks, also emphasizes the scope

for robust risk management to overcome the challenges of market dynamics.

26

CHAPTER - 2

COMPANY PROFILE

27

COMPANY PROFILE

2.1 Think Investment Think Kotak

Banks like Kotak Mahindra, standard chartered, ICICI, KOTAK MAHINDRA, and Citibank now

bring your Bank Account and Debit card to your fingertips. With Mobile commerce, you can

perform a wide range of query-based transactions from your Mobile Phone, without even making a

call. Kotak Mahindra is one of India's leading financial institutions, offering complete financial

solutions that encompass every sphere of life. From commercial banking, to stock broking, to mutual

funds, to life insurance, to investment banking, the group caters to the financial needs of individuals

and corporate. The group has a net worth of over Rs.1, 800 crore and employs over 4,400 employees

in its various businesses. With a presence in 82 cities in India and offices in New York, London,

Dubai and Mauritius, it services a customer base of over 5, 00,000.

Kotak Mahindra has international partnerships with Goldman Sachs (one of the world's largest

investment banks and brokerage firms) and Old Mutual (a large insurance, banking and asset

management conglomerate). The Kotak Mahindra Group was born in 1985 as Kotak Capital

Management Finance Limited. This company was promoted by Uday Kotak, Sidney A. Pinto and

Kotak & Company. Industrialists Harish Mahindra and Anand Mahindra took a stake in 1986, and

that's when the company changed its name to Kotak Mahindra Finance Limited. Since then it's been

a steady and confident journey to growth and success.

1986 : Kotak Mahindra Finance Limited starts the activity of Bill Discounting

1987 : Kotak Mahindra Finance Limited enters the Lease and Hire Purchase market

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1990 : The Auto Finance division is started

1991 : The Investment Banking Division is started. Takes over FICOM, one of India’s

largest financial retail marketing networks

1992 : Enters the Funds Syndication sector

1995 : Brokerage and Distribution businesses incorporated into a separate company -

Kotak Securities. Investment Banking division incorporated into a separate company - Kotak

Mahindra Capital Company

1996 : The Auto Finance Business is hived off into a separate company - Kotak Mahindra

Primus Limited. Kotak Mahindra takes a significant stake in Ford Credit Kotak Mahindra

Limited, for financing Ford vehicles. The launch of Matrix Information Services Limited

marks the Group’s entry into information distribution.

1998 : Enters the mutual fund market with the launch of Kotak Mahindra Asset

Management Company.

2000 : Kotak Mahindra ties up with Old Mutual plc. for the Life Insurance business.

Kotak Securities launches kotakstreet.com - its on-line broking site. Formal commencement

of private equity activity through setting up of Kotak Mahindra Venture Capital Fund.

2003 : Kotak Mahindra Finance Ltd. Converts to bank

Established in 1984, The Kotak Mahindra Group has long been one of India’s most reputed financial

organizations. In Feb 2003, Kotak Mahindra Finance Ltd., the group’s flagship company was given

the license to carry on banking business by the Reserve Bank of India (RBI).This approval creates

banking history since Kotak Mahindra Finance Ltd is the first company in India to convert to a bank.

The license authorizing the bank to carry on banking business has been obtained from the RBI in

tune with Section 22 of the Banking Regulation Act 1949.

KMBL was promoted by Mr. Uday.S.Kotak, Kotak and Company Ltd and Mr. Sidney &A.A.Pinto

under the name of Kotak Capital Management Finance Ltd on 21st Nov 1985 and obtained a

Certificate of Commencement of Business on 11th Feb 1986.

The bank customers have access to entire VISA network of 4500 ATM’S in India and

800000ATM’S worldwide accepted in more than 56000 establishments across India and 10 million

29

worldwide. The customer also has access to over 800 ATM’s with sharing arrangements with UTI

BANK, of these 125 are in the NCR.

2.2 KEY GROUP COMPANIES AND THEIR BUSINESSES

Kotak Mahindra Bank

The Kotak Mahindra Group's flagship company, Kotak Mahindra Finance Ltd which was established

in 1985, was converted into a bank- Kotak Mahindra Bank Ltd in March 2003 becoming the first

Indian company to convert into a Bank. Its banking operations offer a central platform for customer

relationships across the group's various businesses. The bank has presence in Commercial Vehicles,

Retail Finance, Corporate Banking, Treasury and Housing Finance.

Kotak Mahindra Capital Company

Kotak Mahindra Capital Company Limited (KMCC) is India's premier Investment Bank. KMCC's

core business areas include Equity Issuances, Mergers & Acquisitions, Structured Finance and

Advisory Services.

Kotak Securities

Kotak Securities Ltd. is one of India's largest brokerage and securities distribution houses. Over the

years, Kotak Securities has been one of the leading investment broking houses catering to the needs

of both institutional and non-institutional investor categories with presence all over the country

through franchisees and coordinators. Kotak Securities Ltd. offers online and offline services based

on well-researched expertise and financial products to non-institutional investors.

Kotak Mahindra Prime

Kotak Mahindra Prime Limited (KMP) (formerly known as Kotak Mahindra Primus Limited) has

been formed with the objective of financing the retail and wholesale trade of passenger and multi

utility vehicles in India. KMP offers customers retail finance for both new as well as used cars and

wholesale finance to dealers in the automobile trade. KMP continues to be among the leading car

finance companies in India.

Kotak Mahindra Asset Management Company

Kotak Mahindra Asset Management Company Kotak Mahindra Asset Management Company

(KMAMC), a subsidiary of Kotak Mahindra Bank, is the asset manager for Kotak Mahindra Mutual

30

Fund (KMMF). KMMF manages funds in excess of Rs 20,800 crore and offers schemes catering to

investors with varying risk-return profiles. It was the first fund house in the country to launch a

dedicated gilt scheme investing only in government securities.

Kotak Mahindra Old Mutual Life Insurance Limited

Kotak Mahindra Old Mutual Life Insurance Limited is a joint venture between Kotak Mahindra

Bank Ltd. and Old Mutual plc. Kotak Life Insurance helps customers to take important financial

decisions at every stage in life by offering them a wide range of innovative life insurance products, to

make them financially independent.

2.3 BOARD OF DIRECTORS

Mr. K.M.Gherda – Executive Chairman

Mr. Uday Kotak –Executive Vice Chairman and Managing Director

Mr. Anand Mahindra –Co Promoter of Kotak Mahindra Bank and

Vice Chairman and Managing Director of Mahindra and Mahindra

Mr. Cyril Shroff –Co Promoter

Mr. Pradeep N Kotak –Agri Division of Kotak and Company Limited

Dr. Shanker Acharya

Mr. Shivaji Dam –Managing Director Kotak Mahindra Old Mutual Life Insurance Limited

Mr. C.Jayaram –Executive Director

Mr. Dipak Gupta –Executive Director

2.4 Product Detail

Kotak Mahindra Bank is one of the prominent subsidiaries of Kotak Mahindra group. The activities

of the company being parallel to its objective are very wide and cover all the components of a Bank.

The Basic area of Operations is the Banking business, other products are meant for the regular

revenue generation. Being a Banking house, the company is in regular touch with Banking Accounts,

Investment Services, Convenience Banking and Other Services. They offer complete solutions that

31

address all your financial requirements, whether you're an individual or a firm. From everyday

banking to long term investments — their offering covers it all. This wide range of products is

delivered to you with a genuine understanding of your specific need and warm, personalised service.

Kotak Mahindra Bank, it's not about selling you many different products — it's about working out a

holistic, pragmatic solution that addresses your financial needs. Through their varied products,they

commit themselves to becoming “banker” to the customer rather than being “asset financier” to our

customers.

2.5 Banking Accounts

There are three types of banking account:

Savings Account

Current Account

Term Deposit

SAVINGS ACCOUNT

“Choose from our range of Savings Accounts”

KOTAK MAHINDRA has got a variety of options of savings accounts to choose from for its

customers according to their convenience and requirements .These savings accounts offer attractive

returns along with personalized banking services at three convenient average quarterly

balances(AQB)levels of Rs. 10000 (KOTAK EDGE SAVINGS ACCOUNT),Rs. 20000 (KOTAK

PRO SAVINGS ACCOUNT) and at Rs75000(KOTAK ACE SAVINGS ACCOUNT).The average

quarterly balance levels as well the corresponding services and benefits try to ensure the various

customer needs and requirements.

Thus the three account opening options in savings account are as mentioned above:

EDGE SAVINGS ACCOUNT: Kotak Mahindra Bank´s Edge Savings Account is a complete

financial package customized to suit individual banking needs. Its constant endeavour is to

32

enable regular financial transactions through online platform so that most of payments can be

made directly through your account or card.

Features & Benefits

Wide ATM access through the Kotak Mahindra Bank Debit Card

One can walk into any KOTAK or KOTAK MAHINDRA Bank ATMs to withdraw cash or enquire

balance at no extra charge!

Multiple Access Channels Access

An account through phone, mobile phone or internet to get information about account balance or

track transactions. One can even transfer funds through Phone Banking or Net Banking.

Financial payments facilitated through the savings account

Use the free Payment Gateway to make online payments for utility bills, credit cards, online trading

of shares or even online shopping.

Quick and easy funds transfer

Quick funds transfer to a third party account with another Bank is available across 15 locations

through Net Banking. Also get a multi-city cheque book so that money from account is received by

the beneficiary in the fastest possible time.

Free investment account

One can open an investment account, and use the Net Banking facility to purchase/redeem mutual

funds online while directly debiting / crediting your Bank Account. Besides this you get a

consolidated view of all your mutual fund investments across schemes with updated returns status,

latest NAV information and research reports.

Attractive returns

Earn better returns in your savings account, with our 2-Way Sweep facility that automatically sweeps

out idle funds, above a threshold, from your account into Term Deposits. These Term Deposits

sweep back into your account to meet fund requirements when your withdrawals exceed the balance

available in your account, thereby providing you maximum liquidity.

33

PRO SAVINGS ACCOUNT:

Kotak Mahindra Bank´s Pro Savings Account is an account packed with powerful features to provide

a superior banking experience at a very comfortable balance requirement. They provide a

relationship manager who will specifically take care of banking and investment needs.

Features & Benefits

Free ATM access all domestic VISA ATM network

Walk into any VISA ATM in India to check balance or withdraw cash absolutely free. no longer

have to worry about locating your Bank or Partner Bank ATM – Use the first VISA ATM that you

spot, for cash withdrawal or balance enquiry transactions.

Multiple access channels

Access your account through phone, mobile phone or internet to get information on your account

balance or track your transactions. You can even transfer funds through Phone Banking or Net

Banking.

Free investment account

One can open an investment account, and use the Net Banking facility to purchase/redeem mutual

funds online while directly debiting / crediting bank account. Besides this get a consolidated view of

all the mutual fund investments across schemes with updated returns status, latest NAV information

and research reports.

Financial payments facilitated through the savings account

Use our free Payment Gateway to make online payments for utility bills, credit cards, online trading

of shares or even online shopping.

Quick and easy funds transfer

Quick funds transfer to a third party account with another Bank is available across 15 locations

through Net Banking. Also get a multi-city cheque book so that money from account is received by

the beneficiary in the fastest possible time

Attractive returns

34

Earn better returns in your savings account, with our 2-Way Sweep facility that automatically sweeps

out idle funds, above a threshold, from your account into Term Deposits. These Term Deposits

sweep back into your account to meet fund requirements when your withdrawals exceed the balance

available in your account, thereby providing you maximum liquidity.

Dedicated relationship manager

You get a one point contact for all your banking related queries and transactions. Your relationship

manager will also help you with financial planning and sound investment decisions.

Free banking transactions

You can issue demand drafts or send cheques for collection on branch locations without any charge

to your account.

ACE SAVINGS ACOUNT:

Kotak Mahindra Bank's Ace Savings Account has been designed as a gateway to a world of financial

benefits and privileged banking transactions. The account carries benefits ranging from personal

investment advisory services to concierge services to free banking transactions. Onewill find that this

package of services and privileges is unmatched by any other savings account in the market.

Features & Benefits

Free access at all domestic and international VISA ATMs

No longer have to worry about locating your Bank or Partner Bank ATM - Use the first VISA ATM

that you spot, for free cash withdrawal or balance enquiry transactions. So walk into any VISA ATM

in India or abroad to withdraw cash or for balance enquiry.

Multiple access channels

Access the account anytime through land line, mobile phone or internet to get information on

account balance or track transactions. One can even transfer funds through Phone Banking or Net

Banking.

Financial payments facilitated through the savings account

Use the free Kotak Payment Gateway to make online payments for utility bills, credit cards, online

trading of shares or even online shopping. All this at the click of a mouse!

35

Quick and easy funds transfer

Transfer funds easily and with speed, to a beneficiary account at another bank. One can avail of this

facility by walking into any of branches or by simple logging on to Net Banking. Also get a free

multi-city cheque book so that money from your account is transferred to the beneficiary's account at

any of branch locations, in the fastest possible time.

Free banking transactions

One can issue demand drafts or send cheques for collection at all branches for no extra charge.

Attractive returns

Earn better returns in your savings account, with our 2-Way Sweep facility that automatically sweeps

out idle funds, above a threshold, from your account into Term Deposits. These Term Deposits

sweep back into account to meet fund requirements when withdrawals exceed the balance available

in the account, thereby providing maximum liquidity.

CURRENT ACCOUNT

Kotak Mahindra Bank offers unparalleled advantages with its three Current Account offerings.

Whether small/ mid size business or an enterprise spread across multiple locations in the country,

would find a Current Account that's just designed for you. These Current accounts offer attractive

returns along with personalized banking services at three convenient average quarterly

balances(AQB)levels of Rs. 25000 (KOTAK EDGE SAVINGS ACCOUNT),Rs. 50000 (KOTAK

PRO SAVINGS ACCOUNT) and at Rs250000(KOTAK ACE SAVINGS ACCOUNT).The average

quarterly balance levels as well the corresponding services and benefits try to ensure the various

customer needs and requirements. With features ranging from Free DDs, Free Cheque Collection,

Free At -Par Cheque facility to Free Trading Account & free Demat Account, and more!

Thus the three account opening options in savings account are as mentioned above:

Edge Current Account

In need of a well equipped bank account to keep pace in all the business endeavors. They offer the

Kotak Edge Current Account, armed with Kotak 2-Way Sweep and the entire gamut of Banking

Privileges, providing that extra edge to get ahead. The feature rich Kotak Edge Current Account is

the ideal way to make money work harder.

36

Features & Benefits

Multi City Banking

Current account/s with Kotak Mahindra Bank will be recognized in every other branch. One can just

walk into a Kotak Mahindra Bank branch in any of our branches across country to satisfy all the

banking needs.

2 - Way Sweep* : Term Deposit linked Current Account

Kotak 2-Way Sweep ensures that money never stops working for you. Daily balances, above a

threshold level, in Current Account are automatically swept out into Term Deposits (TD). This

'swept out amount' is brought back into account to meet fund requirements when withdrawals exceed

the balance available in the account (or when the account balance goes below the specified threshold

level.) With Kotak 2-Way Sweep you enjoy the twin advantages of attractive returns & maximum

liquidity.

Free Demand Drafts and Pay Orders

Enjoy the benefit of our free Demand Drafts, payable at Kotak Mahindra Bank Branch location in

India.

At-par Cheques

Get free At-par Cheques that are treated as 'local clearing' cheques across all branch locations. All

these at nominal costs.

Cheque Collection

All Outstation cheques, drawn on any of branch locations, are collected 'at nominal charge' for you.

The strong network of correspondent banks enables us to collect cheques from 1600 locations across

India at faster speed and minimal cost

Mobile Banking and Alerts

Our Mobile Banking & Alerts service enables to access bank account on Mobile Phone. One can

access all your standing instructions (SI), any large credits or debits, available balance, balance

below AQB, any SI failure and SIs successfully executed will be intimated to you via SMS

37

PRO Current Accountt

You need a well equipped bank account to keep pace with you in the ever changing business

scenario. We offer you the Kotak Pro Current Account, armed with Kotak 2-Way Sweep, as well as

an entire gamut of Banking Privileges and 'user-friendly' Convenience Banking facilities. The feature

rich Kotak Pro Current Account is the ideal way to make your money work harder.

Key Features

Dedicated Relationship Manager

Free Demand Drafts & Pay Orders>

Free At Home Services

Better Forex rates and Efficient Trade Services

ACE Current Account

In the need of a well equipped bank account to keep pace with you in the ever changing business

scenario. They offer you the Kotak Ace Current Account, armed with Business benefits and

exclusive Ace Privileges and an entire gamut of banking conveniences especially designed for you.

The feature rich Kotak Ace Account is the ideal way to make money work harder

38

CHAPTER - 3

LITERATURE

REVIEW

LITERATURE REVIEW

39

The Indian banking industry showed great resilience in springing back to shape as also adjusting to

the impact of the reforms. From a high overhang of bad debts and large loan delinquency in the early

1990s, Indian banks turned the corner in a decade’s time with a stronger balance sheet and surging

profitability. Not deterred by the burden of bad debts that emerged in the aftermath of banking sector

reforms and introduction of prudential norms, the banking industry showed sound growth and

expansion in the post reform period. Capital levels have increased, profitability has risen, and

productivity improved and so has several developments in enhancing the quality of customer service.

Integration of banking industry with other major segments of finance, notably the securities markets

is also growing. Integration with international markets is also on the rise, where Indian banks are

increasing their presence and operations. All these augur well for the prospects of the Indian banking

in the future. An important aspect of the Indian economy at present is having a vibrant domestic

financial system and a strong external sector. Given the growing pace of globalization of finance,

Indian domestic financial system in general and banking industry in particular, stand to gain from

opportunities arising within the country and outside. The Union Budget and the Monetary Policy

statements in the recent period have greatly enhanced the scope and significance of the Indian

financial sector by encouraging greater integration among the domestic and international financial

markets. In this context the constitution of a Committee on Financial Sector Assessment by the

Government and the Reserve Bank to undertake comprehensive self assessment of the Indian

financial sector as per global standards and laying down a road map for further reforms is an

important initiative. RBI announced constitution of an internal working group to examine the report

of the High Powered Expert Committee on Making Mumbai as an International Financial Centre and

implement the recommendations as appropriate. Making Mumbai as an international financial centre

would be of great significance for Indian finance and banking in view of the enormous opportunities

such a development could bring in. The stance of the monetary policy to get a hold on rapidly rising

asset prices and growing inflationary tendencies in the back of high economic growth, though might

appear to impact the business of banks, but could prove helpful in the long run since the prudential

measures could ensure appropriate pace of business and better risk management.

At the same time there are challenges that may appear daunting. Banks in Asia, particularly in China

have phenomenal size as compared to Indian banks. Liberalisation is leading to creation of global

banks through growth and consolidation. In this background, an important and most urgent challenge

for Indian banks is to create a size that would be effective in dealing with the global competition.

Indian banking also needs larger amounts of capital to sustain their growth in the future for which

they need to step up performance and efficiency that would attract investors. Another equally

40

important challenge would be harnessing the benefits of technology. Though progress is made,

technology solutions integrating the banking operations to derive synergies and efficiencies in Public

Sector Banks need to move at a much faster pace. Similarly, Public Sector Banks need to step up the

use of infrastructure related to Real Time Gross Settlement and Electronic Fund Transfer Systems

that could benefit their customers. There is much scope to further increase the share of non-interest

income, which will raise profitability and productivity.

In the next two years (2009) there would be significant changes in the banking landscape as per the

road map announced for the presence of Foreign Banks in India. From Arpil 2009 onwards, the

limitations on the Wholly Owned Subsidiaries of the Foreign Banks would be removed. Wholly

Owned Subsidiaries of the Foreign Banks will also be allowed to list and dilute their stake and will

be allowed to enter into mergers and acquisitions with the Private Sector Banks in India. These

measures will greatly enhance the opportunities for Foreign Banks that will further intensify the

competition for the domestic banks.

Notwithstanding these challenges, the Indian banking industry can look forward to a promising

period ahead. High economic growth offers banks a host of opportunities in new businesses and also

in expanding the existing ones. Growing international operations of Indian business will provide

Indian banks with global opportunities in banking. Rising income levels of people will give scope to

design and develop a wide range of personal financial products and fee based services. Focus on

infrastructure development and certain key sectors like rural economy, health and education offer

exciting business opportunities for the extensive branch network of Public Sector Banks located in

the rural and semi-urban areas.

While opportunities could be numerous, responding to them positively and realizing them to a

desired extent would be a great challenge. With right strategies in harnessing technology and human

resources developing market segments, design of new generation products and services, focus on

efficient customer service and pursuing global aspirations can take Indian banks to the next

generation banking.

41

CHAPTER - 4

RESEARCH

METHODOLOGY

42

RESEARCH METHODOLOGY

OBJECTIVES

To understand the customer services being provided by the KOTAK MAHINDRA BANK To about the expectations & requirements of the customer from KOTAK MAHINDRA

BANK To find out whether customer are fully satisfied with the services of KOTAK MAHINDRA

BANK To know about the deficiencies felt by the customer To make Recommendations for improvement on KOTAK MAHINDRA BANK customer

services

IMPORTANCE OF THE STUDY

By the help of this study, the bank will be able to know its present situation. Thus, the

management will be able to take necessary measures by paying more attention on the sectors

which are outperforming and by this study they will also come to know what all things the

customers want.

With the help of this study the company will be able to attract and build a large customer base as

they will be able to know the taste and preferences of the customers.

RESEARCH DESIGN

I have used a Descriptive Research design in my study as I have described all the features and

characteristics of different direct banking channels of kotak and its competitors to arrive on a

particular conclusion.

SAMPLE DESIGN

The sampling design adopted for this study is probability proportional to size as it has following

advantages:

o It reduces the heavily expected non response of many smaller operators.

o It provides a simple sample selection rule that allows flexibility in using most up-to-date data

from a variety of sources, thus minimizing the sample size.

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o The study involved finding the responses of the customers of Kotak Mahindra Bank in the

Delhi/ NCR region specifically. For that we administered the questionnaire to the customers

of Kotak as well as to its competitors.

SAMPLE SIZE

Determining sample size is a very important issue because samples that are too large may waste

time, resources and money, while samples that are too small may lead to inaccurate results. In many

cases, we can easily determine the minimum sample size needed to estimate a process parameter,

such as the population mean . When sample data is collected and the sample mean is

calculated, that sample mean is typically different from the population mean . This difference

between the sample and population means can be thought of as an error. The margin of

error is the maximum difference between the observed sample meanand the true value of

the population mean :The sample size for the region has been taken to be 100. Research

methodology is the method or the entire procedure involved in carrying out a research for a specific

purpose. Research is a way to systematically solve the research problem. In it we study the various

steps that are generally adopted by a research to know not only the research methods or techniques

and they need to know the criteria by which they can decide technique and procedure will be

applicable to certain problems and other will not. Research is thus an original contribution to the

existing stock of knowledge making for its advancement. Te purpose of research is to discover

answer to questions application of scientific procedures.

Research always starts with a question or a problem.

Its purpose is to find answers to questions through the application of the scientific method.

It is a systematic and intensive study towards study a more complete knowledge of the studied.

As marketing does not address itself to basic or fundamental questions, it does not qualify. On the

contrary, it tackles problems, which seem to have immediate commercial potential. In the view of the

major consideration, marketing research should be regarded as applied research. We may also say

that marketing research is of both types problem solving oriented.

TYPES OF RESEARCH

The approach followed in his type of research, the researcher has to contact the person directly to

know about the available information and analyze these to make a critical evaluation. The facts and

information required to analyze the data was available in the interviewer’s statements. It is called

44

descriptive as it in the present. The researcher has no control over the variable. He can report what

has happened or what is happening.

DATA COLLECTION

PRIMARY DATA:

Primary data are data freshly gathered for specific purpose or for a specific research project. When

the needed do not exist or are dated, inaccurate, incomplete, unreliable, the researcher will have to

collect primary data. The normal procedure is to interview some people individually or in groups, to

get a sense of how people feel about the topic in question and develop a formal research instrument

into field. It is also called as the first hand data.

SECONDARY DATA:

It refers to data that is collected from some other sources, probably for similar purpose already exists

somewhere. The research assignment under was aimed at gathering some vital information Alliance

for Debit Card Customer used by kotak Mahindra bank in attracting the customer and the reasons

for enormous success. Among all the available ways, survey was the most feasible option to carry in

the cores of carrying out the research as it was more economical and keeping the limited time in hand

it thus proved to be the best option.

Survey was the best option as:

It provides larger and fast coverage

Low cost is involved

Direct interface with people

The analysis can be done on the basis of structured questionnaire

Data is easier to compile and categorize

RESEARCH INSTRUMENTS

A structured questionnaire was used as tool for data collection. To capture the consumer,

preferences, questionnaire having two type of question were used areas follows:

Close ended question

45

Open ended question

The questionnaire covers aspects like:

Kotak Mahindra bank popularity among the customer

The impact of scheme like tie up with the shop keeper or big organization

The prospective and potential customer of the kotak Mahindra bank

Exiting banker’s and main banker’s and the facilities of the current banker

Earn interest on your current account

Exiting banker’s offer dedicated relationship manager to service the a/c

SAMPLE TECHNIQUE

It is all about a study of relationships existing between debit card customer and kotak Mahindra

bank. After taking the consideration of Patna city population it was decided to use non probability

sampling method to use.

SAMPLE ELEMENT

(To whom this survey concern) To know the promotional strategy and its impact on customers

Sample frame

The research consists of list of items from which sample is to be drawn. In this case sample is to

premises of kotak Mahindra bank in exhibition road in Patna region.

Sample design

It is definite plan for obtaining a sample frame. It refers to technique or procedure the researcher

would adopt in selecting some sampling units from which references about the population are drawn.

It is a definite plan determined before data are actually collected for obtaining a sample from a given

customer population.

Sample method

End consumers: Random sampling

In this research

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The information is based on primary data.

The quantitative measures have been used.

The tools used were observation personal interview and questionnaire.

Data collection and analysis

All the analysis and findings of the project is based on the data which has been collected from the

survey of the market. The analysis of data requires a number of closely related operations into raw

data through tabulation chart and then draws inferences. Analysis of work is generally based on

computation of various percentages.

Preparation of report

After analysis is the next step is in the preparation of report has been prepared according to the report

writing principals. The objective, clarity in presentation of ideas and the use of charts have been

maintained throughout the report. Once the data has been collected the researcher has to process

analysis and interpret the same. Sufficient attention is often not given to these aspects with the result

that the quality of report suffers.

Tabulation

It comprise of sorting of data into different categories and counting the number of cases that belongs

to each categories.

Analysis and interpretation

These are central steps in the research process. The goal of this analysis is to summarize the collected

data in such a way that they provide answers to the question that triggered the research. Hence the

questionnaire prepared was then done to bring the meaning an implication study. All result is

interpreted from raw data which was collected through survey, while results have been filtered from

the interview of the bank and customers through questionnaires. For convince and easy interpretation

all the data has been presented in graphical method.

47

CHAPTER - 5

DATA ANALYSIS

AND

INTERPRETATION

48

DATA ANALYSIS AND INTERPREATION

Q1. Do you have a bank account

1. Yes ( )

2. No ( )

  BANK ACCOUNT

YES 100

NO 0

100%

BANK ACCOUNTYES NO

As our study suggested that 100% of the people who is contributed to the survey has the bank

account which helps us to find out the objective of the project.

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Q2. If Yes in which bank you have Account

1. Kotak Mahindra Bank ( )

2. ING Vysya ( )

3. Any Other Bank,Pls Specify the Name___________

 

SERVICE TAKEN

FROM THE BANK

KOTAK MAHINDRA BANK 50

ING VYSYA 50

OTHERS 0

50%50%

SERVICE TAKEN FROM THE BANKKOTAK MAHINDRA BANK ING VYSYA OTHERS

As per our primary data suggested that we have taken 50% of the people form the ING VYSYA

BANK and the 50% from the Kotak Mahindra bank this is done by us because we want to take true

representation of these two bank towards the loan potential towards the objective of the study.

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Q3. How much are you aware of the services offered by Kotak Bank.

1) Very much ( )

2) Not aware ( )

3) Cant Say ( )

 

Kotak Bank Loan Schemes

Awareness

Very Much 55

Not Aware 44

Can't Say 1

This question tells the product awareness by the people for Kotak Bank, focus of the study is to

understand different Loan product provided by the Kotak bank and being of the customer of bank

they knew the Loan product offering or not. 55% of the people suggested that they know about

Kotak bank Loan product very much while almost 44% of the people either does not know about the

loan product provided by the company or they are not sure about that.

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Very Much 55%

Not Aware44%

Can't Say1%

KOTAK MAHINDRA BANK SERVICES AWARENES

As per our study suggested it is clear that nearly 60% customers are aware of the services provided

by kotak Mahindra bank. Almost 40% were not aware of the services provided by the bank .

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Q4. What do you feel about the quality of services offered by Kotak Mahindra Bank?

1. Excellent ( )

2. Good ( )

3. Satisfactory( )

4. Poor ( )

5. Very poor ( )

10%

18%

60%

8%4%

PERCENTAGE OF RESPONDENTSEXCELLENT GOOD SATISFACTORY POOR VERY POOR

Almost 78% of the customer were happy with the kind of service provided by the bank to the

customer which is good sign of the bank. Adding to this almost 12% of the customer were not happy

with the current service provided by the organization.

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Q5 Are you aware of the type of loan provide by the Kotak Mahindra Bank.

1. Home Loans

2. Personal Loans

3. Commercial Loans

4. Loan Against Property

A. Yes ( )

B. No ( )

C. Cant Say ( )

  Yes No Can't Say

Home Loan 67 23 10

Personal Loans 89 10 1

Commercial Loans 69 30 1

Loans Against property 59 30 11

Home Loan Personal Loans Commercial Loans Loans Against property

67

89

6959

2310

30 30

101 1

11

Yes No Can't Say

This finding is based on the product category which is provided by the Kotak bank to the end

consumer as loan facility, almost 67% of the people out of 100 aware about the Kotak bank is

providing the Home loan same manner almost 89% of the people are aware about he Kotak bank also

facilitate the Personal Loans to the end customer over all it is good sign for the new Kotak bank to

providing there loan services to the end customer.

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OPTION ResponsesN Percentage

Lessen a/c opening time 8 13.33%Lower min. Bal. in saving a/c 12 20%

Feed back facility 10 16.66%Increase branches 20 33.33%

Advertise more 10 16.66%Total 60 100.0%

Q6 What are your recommendations for improvement in customer services? 

1. Lessen a/c opening time = 1

2. Lower min. Bal. in saving a/c = 2

3. Feedback facility = 3

4. Increase branches = 4

5. Advertise more = 5

13.33%

20.00%

16.66%

33.33%

16.66%

Responses

les. a/c opn. Tmmin. Bal. a/cfeedback facilityincrease branchesadvertise more

Inference

It is clear from the above data that retailer want more distribution channels amd also feed

back from them and also want the company to perform demand survey at regular intervals

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CONCLUSION

A roof over one's head and ground beneath one's feet count as the bare necessities of life.

There’s nothing quite like owning a home, however humble, to give one that warm and

glowing feeling. But when one buys a home, one has much more than a feel-good purchase

in mind: it’s also a crucial investment decision, perhaps the biggest spending decision of

one's life. There are ample opportunities today for young salaried investors to plan their

moves early and buy a house at the right time — and at the right price. In the process, not

only do they fulfill that cherished dream of owning a house, but also put themselves on the

path to acquiring property that would meet the needs and aspirations of their growing

family, even as it leads to wealth creation. Every individual aspires to own a home. But

many either spend a lifetime saving to purchase a house or exhaust money on monthly

house rents.

Take a house loan and let the monthly rent (easily converted into affordable EMIs) build

dream home.

Profitable Proposition

“The overall demand in the residential sector has grown by about 7-8 per cent in the past

few months as compared to the same period last year. The growth is on account of two

main factors:

One, income-tax exemption;

Two, with no similar rebates available for individuals in the high-income group, they are

creating a second asset.

Add to this the stable property prices over the last year and plunging interest rates, planning

for dream home could not have been better timed. Rock-bottom interest rates,

standardization of the periodicity of interest calculation across lenders (which makes it

easier to compare loans), lower interest charges, waiver of loan application processing fees

and, a customer-friendly attitude is reason enough to celebrate the ascension of the home

loan consumer as the king.

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In response, private players like ICICI Bank, KOTAK Bank, ING Bank and a few others

too lowered their rates. Market leader ICICI also brought down its interest rates to 8.0%,

very recently, to participate in the interest rate war. If one is still not satisfied with the

lowered loan rates, there’s more. Some industry watchers believe the floating home loan

rate will slip to 8 per cent for long-term loans in another two to three years.

Most banks have changed the way interest is calculated from annual rests to monthly rests.

Under the annual rests method, the EMIs (equated monthly installments) one pays through

a year are factored in as part-repayment of the principal component only at the end of each

year. In other words, one has to pay interest even on the installments one has paid until

they’re reduced from the principal at the end of each year. Under monthly rests, the

principal is lowered by the appropriate amount each month. The thumb rule being that the

more frequently interest is calculated, the better for the creditor. Recently, ICICI added

monthly rests on its fixed-interest loans apart from annual rests. As a result, the fall in EMIs

on fixed-interest loans (where the interest rate is constant for the entire tenure of the loan,

irrespective of changes in the lending rates) is more pronounced than on floating-rate loans

(where the loan interest rate varies with changes in the interest rates). For example, the EMI

on a 15-year, fixed-interest loan for Rs 15 lakhs has come down by Rs 840; the

corresponding fall in the EMI on a floating-rate loan is only Rs 465. Apart from lowering

the cost of one's loan, the switchover to monthly rests has another advantage: it makes it

easier to compare loans.

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RECOMMENDATION

The following suggestions are strongly recommended:

1. To broaden the customer base the vast middle income strata should be fully exploited

2. Simplify the procedure, reduce service charges, and demand only the basic essential proof.

3. Most banks are reluctant to advance loan to the service class e.g. lawyers, police officers etc..

This aspect must be exploited.

4. Adoption of flexible and more lenient penalty should the customer fail to deposit the payment on

time. The penalty should be on case to case basis rather then the same for the entire customer

base.

5. Restriction to be reduced to bare minimum for loan advances and for repayment. For e.g. offer

long-term repayment facilities and have no age restriction to choosing repayment.

6. The maximum age for repayment could be increase to 65-70 years of age. Such facility will help

grow fast retail segment of the bank.

7. Offer multiple repayment loans.

8. Service class to be exploited by offering special reduced rates and linking the repayment from

the source from where the pay-cheque to the employee is issued. This needs to undergo special

contract with government organisation to ensure implementation.

58

BIBLIOGRAPHY

1. Isn’t it time Banks Score their Retail Applicants’, by TS Rama Krishna Rao, 2005 The ICFAI

University Press

2. ‘Retail Banking in India – The key growth driver’, by Manoranjan Sharma, 2005 The ICFAI

University Press

3. ‘Pricing of Products: The Bankers’ Dilemma’, by P.P.Pathrose, April 2005 IBA Bulletin

4. ‘Management of Non-Performing Assets in Banks’, by Dr. Bashir Ahmed Rao, 2003 The

Business Review

5. ‘Retail Loan – A Risk Management Perspective’, by Shyam Ji Mehrotra, 2005 The ICFAI

University Press

6. Channelising Retail Credit’, by T.M.Bhasin, August 2005 IBA Bulletin

7. Retail Loans: Is a Bubble in the Making?’ by Vinod Sharma, 2005 The ICFAI University

Press

8. KMBL’s Internal Manuals

9. www.google.com

10. http://www.ingvysyabank.com

11.http://www.kotak.com

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