A

PROJECT
ON
SERVICE QUALITY
ANALYSIS IN
BANKING SECTOR

SUBMITTED BY:
VIRAL SHRIMALI ( 7093)
SUBMITTED TO:
N.R. INSTITUTE OF BUSINESS MANAGEMENT

TABLE OF CONTENTS
1. RESEARCH METHODOLOGY 5
1.1 RESEARCH DESIGN
6
1.2 ANALYSIS OF DATA
7
1.3 LIMITATION OF STUDY
7
1.4 BENIFICIARIES OF PROJECT 8
1.5 THE RESEARCHER
2. INTRODUCTION TO THE BANKING 9
INDUSTRY

2.1 A SNAPSHOT OF THE BANKING INDUSTRY 10

2.2.1 REFORMS IN THE BANKING SECTOR 12
2.2.2 CLASSIFICATION OF BANKS 13
2.2 CURRENT BANKING SCENARIO OF INDIA 14
2.3 BANKING REVIEW
29
2.4 BANKING SECTOR
31
2.5 SWOT ANALISIS: BANKING SECTOR 32
2.5.1 PORTERS FIVE FORCE ANALYSIS FOR
INDIAN BANKING SECTOR 33
2.5.2 PESTAL ANALYSIS
35
2.5.3 RECENT TRENDS
37
3. INRODUCTION TO SBI AND AXIS 50
3.1 STATE BANK OF INDIA
51
3.2 AXIS BANK
59
3.4 ABOUT AXIS BANKS PROFILE 63
3.5 GOAL AND OBJECTIVES
64
4. SERVICE QUALITY 65
4.1 SERVICE AND ITS CHARECTERISTICS 66
4.2 GAP ANALYSIS
67
4.3 SERVICE QUALITY MEASUREMENT 68
5. ANALYSIS AND INTERPRETATION 70
6. KEY FINDINGS
93
7. CONCLUSION
96
8. RECOMMENDATION 98
9. BIBLIOGRAPHY
101
10. QUESTIONNAIRE 103

CHAPTER 1
RESEARCH METHODOLOGY

1.1 RESEARCH DESIGN:

The methodology for the research study is descriptive and is as follows:

Research Approach: Quantitative research

Objectives:
The main objective of our project is:
To assess and compare the overall service performance of SBI and AXIS bank.
To know in which service quality dimension the bank is performing well and in wh ich dimension
it needs improvement.
To know customers requirements or expectation for service.

Sampling:
Following sampling is designed in order to execute the survey.
Sample Area: : Ahmedabad
Sample size: 100 AXIS customers
100 SBI customers
Sample Design: Samples selected in the survey are those who are the customers of either AXIS or
SBI or both.
Data Collection Method:
Data Collection Tool
Secondary data: Various websites, articles from magazines and news papers, books were used for
collecting secondary data.
Primary data: The primary data has been collected by the researchers by designi ng structured
questionnaire with the relevant question to the project study and research.
Type of questionnaire: Structured questionnaire.
1.2 ANALYSIS OF DATA:
The collected data in the study has been presented and analyzed using the variou s graphs for
satisfaction level, score of various factors on the particular dime nsions, and overall dimension
score and is compared with other service.
Also data is analyzed through performance matrix.

1.3 LIMITAION OF STUDY:

The study was restricted to two banks, so the competitive scenario could not be studied.
Inadequate time was the major constraint during the whole project. All the
answers given by the respondents have been assumed true.

1.4 BENEFICIARIES OF PROJECT:

Beneficiary of this project is to the bank, to improve the customer satisfaction in the dimension in which
they are lagging.
Key findings and analysis will helpful to them for provide better services to cu
stomers.
For researchers, to know the competitive advantage of both the banks and their s
ervices.

1.5 THE RESEARCHERS:

Viral Shrimali is final year MBA-marketing student of NRIBM, Gujarat University. He has
completed his Bachelor in Commerce from Gujarat University..
I have selected this topic because I am interested in banking sector. Knowledge through this
project can help me to identify more about the practices that will add value in an organization.
CHAPTER-2
INTRODUCTION TO THE BANKING INDUSTRY

2.1 A SNAPSHOT OF THE BANKING INDUSTRY:

The Reserve Bank of India (RBI), as the central bank of the country, closely mon itors
developments in the whole financial sector.
The banking sector is dominated by Scheduled Commercial Banks (SCBs). As at end-March 2002,
there were 296 Commercial banks operating in India. This included 27 Public Sector Banks
(PSBs), 31 Private, 42 Foreign and 196 Regional Rural Banks
. Also, there were 67 scheduled co-operative banks consisting of 51 scheduled ur ban co-operative
banks and 16 scheduled state co-operative banks.
Scheduled commercial banks touched, on the deposit front, a growth of 14% as aga inst 18%
registered in the previous year. And on advances, the growth was 14.5% against 17.3% of the
earlier year.
State Bank of India is still the largest bank in India with the market share of 20% ICICI and its
two subsidiaries merged with ICICI Bank, leading creating the second largest bank in India with
a balance sheet size of Rs. 1040bn.
Higher provisioning norms, tighter asset classification norms, dispensing with t
he concept of past due for recognition of NPAs, lowering of ceiling on exposure to a single borrower
and group exposure etc., are among the measures in order to i mprove the banking sector.
A minimum stipulated Capital Adequacy Ratio (CAR) was introduced to strengthen t he ability of
banks to absorb losses and the ratio has subsequently been raised from 8% to 9%. It is proposed to
hike the CAR to 12% by 2004 based on the Basle Committee recommendations.

Retail Banking is the new mantra in the banking sector. The home loans alone acc ount for nearly
two-third of the total retail portfolio of the bank. According t o one estimate, the retail segment is
expected to grow at 30-40% in the coming y ears.
Net banking, phone banking, mobile banking, ATMs and bill payments are the new b uzz words
that banks are using to lure customers.
With a view to provide an institutional mechanism for sharing of information on borrowers /
potential borrowers by banks and Financial Institutions, the Credit Information Bureau (India) Ltd.
(CIBIL) was set up in August 2000. The Bureau pr ovides a framework for collecting, processing
and sharing credit information on
borrowers of credit institutions. SBI and AXIS are the promoters of the CIBIL. The RBI is now
planning to transfer of its stakes in the SBI, NHB and National b ank for Agricultural and Rural
Development to the private players. Also, the Gov ernment has sought to lower its holding in PSBs
to a minimum of 33% of total cap ital by allowing them to raise capital from the market.
Banks are free to acquire shares, convertible debentures of corporate and units of equity-oriented
mutual funds, subject to a ceiling of 5% of the total outstan ding advances (including commercial
paper) as on March 31 of the previous year. The finance ministry spelt out structure of the
government-sponsored ARC called the Asset Reconstruction Company (India) Limited (ARCIL),
this pilot project of the ministry would pave way for smoother functioning of the credit market in
the country. The government will hold 49% stake and private players will hold the r est 51%- the
majority being held by ICICI Bank (24.5%).

2.1.1 REFORMS IN THE BANKING SECTOR:

The first phase of financial reforms resulted in the nationalization of 14 major banks in 1969 and
resulted in a shift from Class banking to Mass banking. This in turn resulted in a significant
growth in the geographical coverage of banks. Every bank has to earmark a minimum percentage
of their loan portfolio to sector
s identified as priority sectors. The manufacturing sector also grew during the 19 70s in protected
environs and the banking sector was a critical source. The next wave of reforms saw the nationalization
of 6 more commercial banks in 1980. Si nce then the number scheduled commercial banks increased
four-fold and the numbe
r of banks branches increased eight-fold.
After the second phase of financial sector reforms and liberalization of the sec tor in the early
nineties, the Public Sector Banks (PSB) s found it extremely di fficult to complete with the new
private sector banks and the foreign banks. The new private sector banks first made their
appearance after the guidelines permi tting them were issued in January 1993. Eight new private
sector banks are prese ntly in operation. These banks due to their late start have access to state-of-t
he-art technology, which in turn helps them to save on manpower costs and provid e better
services.
During the year 2000, the State Bank of India (SBI) and its 7 associates account ed for a 25%
share in deposits and 28.1% share in credit. The 20 nationalized ba nks accounted for 53.5% of the
deposits and 47.5% of credit during the same peri od. The share of foreign banks ( numbering 42 ),
regional rural banks and other scheduled commercial banks accounted for 5.7%, 3.9% and 12.2%
respectively in de posits and 8.41%, 3.14% and 12.85% respectively in credit during the year
2000.

2.1.2 CLASSIFICATION OF BANKS:

The Indian banking industry, which is governed by the Banking Regulation Act of India, 1949 can
be broadly classified into two major categories, non-scheduled b anks and scheduled banks.
Scheduled banks comprise commercial banks and the co-o perative banks. In terms of ownership,
commercial banks can be further grouped
into nationalized banks, the State Bank of India and its group banks, regional r ural banks and
private sector banks (the old / new domestic and foreign). These banks have over 67,000 branches
spread across the country. The Indian banking in dustry is a mix of the public sector, private sector
and foreign banks. The priv ate sector banks are again spilt into old banks and new banks.

Banking System in India

Reserve bank of India (Controlling Authority)

Development Financial institutions

Banks

IFCI IDBI ICICI NABARD NHB IRBI EXIM Bank ISIDBI

Commercial Regional Rural Land Development
Co-operative
Banks Banks Ba
nks Banks

Public Sector Banks Pr

ivate Sector Banks

SBI Groups Nationalized Banks Indian Banks

Foreign Banks

2.2 CURRENT BANKING SCENARIO OF INDIA:

As per the Advance Estimates of GDP for 2008-09 released by the Central Statisti cal
Organization on 9, February, 2009, the growth of GDP at factor cost (at cons tant 99-2000 prices)
is estimated to grow at 7.1% during the year. The growth of GDP during 2007-08 (Quick
estimates) was 9.0%.
The International Monetary Fund (IMF) has forecast that Indias gross domestic pro duct (GDP)
growth will slow dramatically to 6.25% in the fiscal year to March, a nd to 5.25% in the following
year. This is well below the 9% growth in the year to March 2008 and even lower than the
governments prediction of 7.1% growth in 20 08-09.
The average growth in the first three quarters of the fiscal year was 6.9%. This effectively means
IMF expects the economy to grow only 4.4% in the last quarter
.

As per the above estimates, the growth rate for Agriculture, Industry and Servic es is estimated to
be 2.6%, 4.8% and 9.6% respectively in 2008-09. In the quick estimates for 2007-08, the
corresponding growth rates for these three sectors we re 4.9, 8.1 and 10.9% respectively.
After growing at 5.0% in 2006 and 4.9% in 2007, IMF estimates global GDP growth to decelerate
to 3.7% in 2008 in the wake of the current financial crisis. The f
inancial market turbulence in developed economies following the US sub-prime mor tgage crisis
has reduced financial leverage, lowered credit availability and neg ative wealth effects have
emerged as risks to consumption and growth in advanced economies, especially in the US.
Continuing inflationary pressures from food an d commodity prices as well as high and volatile
crude oil prices are other risks being faced by the global economy.

India continued to be one of the fastest growing economies of the world. During 2007-08, the
Indian economy grew at a robust pace for the fifth consecutive year. Real GDP gr owth, estimated
at 8.7% in 2007-08, is in tune with the average annual GDP growt h of 8.7% in the five year
period 2003-04 to 2007-08. Agriculture and allied act ivities are estimated to grow by 2.6% in
2007-08, which is in line with the aver age growth of 2.6% per annum during 2000- 01 to 2007-
08. Food grains production touched a record high in FY08, with total food grains production
placed at 227.3 million tones, surpassing the target of 221.5 million tones and recording an in
crease of 4.6% over the previous year. Industrial growth at 8.6% during 2007-08 has moderated
somewhat against 10.6% in the previous year.

The services sector maintained its double-digit growth at 10.6% during 2007-08, higher than the
long term average of 8.9% (2000-01 to 2007-08). Within services, transport and communications
and financial services recorded double-digit growt h for the last two years and are expected to
maintain the growth momentum. Trade and hotels showed higher growth of 12.1% in 2007-08
against 11.8% growth in 200 6-07. Another positive feature underpinning growth is the sharp rise
in the rate of savings and investment in recent years, which rose to 34.8% and 35.9% respec tively
in 2006-07.

Towards the close of the fiscal year, higher inflation rate was noticed due to r ise in global prices
of food, metals and crude oil. Inflation based on WPI decli ned from 6.4% at the beginning of the
fiscal year to a low of 3.1% by mid-Octobe r 2007, partly reflecting moderation in the prices of
some primary food articles and manufactured products.

After hovering around 3% during November 2007, inflation began to edge up from e arly
December 2007 to touch 7.4% by 29 March 2008, mainly reflecting hardening i n prices of
primary articles such as fruits and vegetables, oilseeds, raw cotton and iron ore, as well as fuel and
manufactured products such as edible oil/oil cakes and basic metals, partly due to international
commodity price pressures. H owever, fiscal and monetary measures are being taken to contain
inflation and ma intain high growth.

Despite Rupee appreciation, exports continued to show a healthy growth, rising b y 23% in dollar
terms during 2007-08 against 22.6% in the previous year. Overall exports growth was driven by
petroleum and crude products, gems and jewellery, iron ore, non-basmati rice, cotton, transport
equipment, etc. While Indias export s to USA, its single largest trading partner, showed deceleration,
exports to UA E and China remained robust. In the same period, imports increased by 27.0% agai nst
24.5%, mainly due to higher oil imports; non-oil imports were led by capital goods, chemicals and
related products, edible oils, gold, silver and pearls, pr ecious and semiprecious stones. Due to higher
growth in imports than exports, th e trade deficit widened by 35.5% to US$ 80.4 bn during 2007-08
from US$ 59.3 bn in the previous year.

The overall stance of RBIs monetary and credit policy during the year was to ensu re price stability
and financial system stability along with continuation of the growth momentum, emphasis on credit
quality and credit delivery including finan cial inclusion. During 2007-08, the Bank Rate, Repo and
Reverse Repo rates were kept unchanged. To manage the liquidity in the economy, RBI raised the
Cash Rese
rve Ratio four times: in April, August and November 2007 from 6% to 7.50%. In li ne with
liquidity tightening, PLRs and deposit rates of major banks were hiked d uring the year. While
lending rates rose to 12.25-12.75% from 12.25- 12.50%, dep osit rates (for more than one year
maturity) rose to 8.25-9.0% from 7.5-9.0% in the previous financial year. However, in the month
of February 2008, to keep up the growth momentum in the economy, some banks announced cuts
in their PLR and i nterest rate on housing loans below Rs.20 lakh.

The tight monetary policy followed by RBI to control inflation and money supply had a
Moderating impact on credit growth, which increased by 21.6% in 2007-08 against 28.1% in
2006-07. Deposit growth also moderated to 22.2% in 2007-08 from 23.8% in 2006-07
.
For the current year, despite slowdown in the major economies of the world, the Indian economy
will continue to grow at 8-8.5% driven by investment. Due to a nu mber of fiscal and monetary
measures taken by the Government and RBI to put a ch eck on prices, inflation is expected to
come down to 5-5.5% by March 2009.
Need for a revolutionary approach towards privatization

Nationalized banks such as State Bank Of India (SBI), though pygmies in the inte rnational
banking market, are banking behemoths of India. They have branches spr ead over the entire
length and breadth of the country. SBI in particular is all-pervasive enjoying a sprawling network
of 9000 branches. Its blue and white shin gle is visible to the smallest hamlet. It has assets
understood to be worth abou t Rs2,22,500 crore ($52 billion). SBI has a very conservative
approach to accoun ting particularly when it comes to declaration of its assets. Probably modesty d
oes not permit the bank to exhibit its strengths. In particular, it has real est ate properties some of
which are heritage sites all over the country. These are estimated to collectively command a value
of Rs.30,000 crores. This, it is belie ved, does not get reflected in its book of accounts.

SBI enjoys a monopoly of the government business. The Reserve Bank of India owns about 60% of
the banks equity. To its credit, SBI mobilized $4.2 billion through the Resurgent India Bonds (RIB)
issue in just 3 months down the post-Pokhran sa nction period. This was the difficult time when the
international credit rating agencies had downgraded the country. SBI, time and again, does a rescue
act in t he forex market to contain any volatility of the rupee.

SBI was formed under the SBI Act in 1955 with the takeover of Imperial Bank and amalgamation
of Bank of Bengal, Bank of Bombay, and Bank of Madras. The governme nt mopped up around
93% of the equity, leaving 7% to private ownership. By this act the equity of RBI cannot be
diluted below 55%.

SBI enjoys a pool of best managerial talent, assured government business, a coun trywide network
of branches and strong brand credibility in the Indian market.

But, that numero uno position is sliding with the entry of sleeker private and f oreign banks into
the Indian Banking scene. The bank is continuously restructuri ng itself and for this, they even hire
the services of foreign consultants but t he pace has to be hastened.

With the government offering an assured business, nationalized banks and State B ank of India in
particular should not take a complacent view. They should evolve service-intensive products and
make their employees customer-friendly. With com petition from private and foreign banks
knocking at the door, the banks should r ealize, size is no more an insurance against the onslaught
of competition from s leek private and foreign banks. A revolutionary approach to privatize
ownership is the need of the hour.
Virtual Banking:

SBI has yet to computerize its operations and network all its branches. The comp uters currently
available serve only to relieve the burden of the clerical staff of maintaining manual ledgers and
not to penetrate into areas of customer servi ce. ATMs, Anytime-Anywhere, round the clock and
telephone banking is still a far cry. These computers at the best remain only as desk ornaments.
With the New Te lecom Policy (NTP) almost in place, telecom sector will soon be revolutionized.
E-commerce, telephone banking, consumer banking, Internet banking, insurance et al are waiting
just around the corner. At least in major metros, virtual banking will soon take-over from the
brick-mortar banks.
Privatization and Credit disbursement:

Talks about privatization of the banks ownership have been initiated but the SBI act of 1955 does
not permit RBIs ownership to be diluted to below 55%. This act i s outdated and needs to be re-
addressed. However, efforts have been initiated by SBI to privatize its non banking subsidiaries
like SBI Caps, SBI Gilts, SBI Fun ds Management, where SBIs holding is about 85% of the equity.
But the pace has to be hastened so that investments thus released can migrate to more important are
as like development of new technologies and products in customer service and ser vice intensive
areas. Privatization also helps to professionalize the banks day-t o-day operation, which will allow
the management more freedom in decision making during credit disbursement.

To aid privatization and effect a better price realization, the bank is attempti
ng to change over its accounting and reporting procedures to comply with US GAAP norms. This is
a prerequisite for trying out the ADR route, as it is known that
US market is by far the undisputed biggest market and can offer the best price. At the moment,
the SBI stock is undervalued at Rs.240 whereas experts expect Rs
.300 would be a more realistic value. Action on this front at blitzkrieg pace is the need of the hour.

Manpower Retraining and not Retrenchment:

As a hangover of the past socialistic mindset, all the nationalized banks have e xcess workforce. This
is indeed a hot potato for the management of many enterpri ses and is therefore being handled with
kid gloves. In India, it is everyones wor ry to look at business as a source of employment, while
making money is secondar y. In this ocean of manpower, every institution does have its share of
highly sk illed and talented manpower, which contribute to asset building. It is the semi skilled
manpower having outdated skills, which form the excess baggage. All bank s must invest in re-
training the manpower so that they can migrate from the area s that will be vacated by
computerization. The level of Non-Performing-Assets (N PAs) is still at very high levels and to start
with, some of this excess manpowe r can cover areas of debt recovery.

At the same time, one should also take note of the flight of talent from these n ationalized banks to
newly set-up private and foreign banks. And, it is these ne w banks top officials after migrating
from the government banks are targeting at the top corporate clients and thus poaching into the
corporate business, which h as been the mainstay of the nationalized banks. This will soon become
a problem of serious proportion unless the banks initiate steps to stem the flow. It is di fficult, to
exclusively address the problem of excess manpower by schemes such a s voluntary retrenchment
scheme (VRS) because while attempting to remove dead wo od, talent also takes an exit. Many
industries have faced this problem. Also it will be over simplicity to state that the salaries should be
raised because that will only start a wage war. Instead, the banks should involve the services of i
nternational consultants specialized in this field and take a holistic view of t he problem.
Retraining and Rationalization of manpower commands higher priority over Retrenchment of
manpower.
New Products and New technologies:

Nationalized banks have generally been preoccupied with treasury business. The n ew product
areas that require greater penetration are personal banking, housing finance, consumer durable
finance, auto-finance, internet banking, insurance, te lephone banking et al. Development of these
new areas call for heavy investments and this cash - flow can only generated by privatization. In
addition, surplus manpower once retrained can be absorbed in the new ventures.

All nationalized banks and SBI in particular has the advantage of vast network o f branches and
can therefore carry the new business to the remotest corner, but to make this presence felt the
banks have to move at blitzkrieg pace.
2.2.1 BANKING IN THE NEW MILLENIUM

The banking environment has suddenly become quite challenging after the sub prim e crisis that
surfaced last year and which has resulted in an unprecedented glob al liquidity crunch.
The flattening of the world has dramatically impacted both the dynamics and the pace of global
banking business. Mergers, acquisitions, consolidation, expansion
, diversification of lines of business, shifting customer orientation and the ch anging regulatory
environment are building up the pressure for banks to explore new possibilities by abandoning the
familiar and embracing the unconventional. C ompetition is compelling banks to be agile and
innovate everyday. In this milieu
, what really enables banks to build a lasting competitive advantage is the abil ity to continuously
innovate, achieve differentiation and respond quickly to dyn amic business challenges.
The banking sector has witnessed wide ranging changes under the influence of the financial Sector
reforms initiated during 2008. The approach to such reforms in India has been one of gradual and
non-disruptive progress through a consultativ e process. The emphasis has been on deregulation
and opening up the banking sect or to market forces. The Reserve Bank has been consistently
working towards the establishment of an enabling regulatory framework with prompt and effective
supe rvision as well as the development of technological and institutional infrastruc ture. Persistent
efforts have been made towards adoption of international benchm arks as appropriate to Indian
conditions. While certain changes in the legal inf rastructure are yet to be effected, the
developments so far have brought the Ind ian financial system closer to global standards.

2.2.2 BANKING ACTIVITIES:

Banks activities can be divided into retail banking, dealing directly with indi viduals; business
banking, providing services to mid-size business; corporate ba nking dealing with large business
entities; private banking, providing wealth ma nagement services to High Net Worth Individuals;
and investment banking, relates to helping customers raise funds in the Capital Markets and
advising on mergers and acquisitions. Banks are now moving towards Universal Banking, which
is a co
mbination of commercial banking, investment banking and various other activities including
insurance.

2.2.3 TECHNOLOGICAL DEVELOPMENTS:

Technology has brought about strategic transformation in the working of banks. W ith years, banks
are also adding services to their customers. The Indian banking industry is passing through a phase
of customers market. The customers have mor e choices in choosing their banks. With stiff
competition and advancement of tec hnology, the service provided by banks has become more
easy and convenient.

Internet Banking (E-Banking)

Internet banking (or E-banking) means any user with a personal computer and a br owser can get
connected to his banks website to perform any of the virtual banki ng functions. In internet
banking system the bank has a centralized database tha t is web-enabled. All the services that the
bank has permitted on the internet a re displayed in menu. Any service can be selected and further
interaction is dic tated by the nature of service. The traditional branch model of bank is now givi
ng place to an alternative delivery channels with ATM network. Once the branch o ffices of bank
are interconnected through terrestrial or satellite links, there would be no physical identity for any
branch.

Internet banking in India

The Reserve Bank of India constituted a working group on Internet Banking. The g roup divided
the internet banking products in India into 3 types based on the le vels of access granted. They are:

Information Only System: General purpose information like interest rates, branc h location, bank
products and their features, loan and deposit calculations are provided in the banks website.
Electronic Information Transfer System: The system provides customer- specific information in
the form of account balances, transaction details, and statement
of accounts.
Fully Electronic Transactional System: This system allows bi-directional capabi lities.
Transactions can be submitted by the customer for online update. This sy
stem requires high degree of security and control

Automated Teller Machine (ATM): ATM is designed to perform the most important fu nction of
bank. It is operated by plastic card with its special features. The pl
astic card is replacing cheque, personal attendance of the customer, banking hou rs restrictions
and paper based verification.
Credit Cards/Debit Cards: The Credit Card holder is empowered to spend wherever and
whenever he wants with his Credit Card within the limits fixed by his bank.
Credit Card is a post paid card. Debit Card, on the other hand, is a prepaid c
ard with some stored value.
Smart Card: Banks are adding chips to their current magnetic stripe cards to enh
ance security and offer new service, called Smart Cards. Smart Cards allow thous
ands of times of information storable on magnetic stripe cards.

Core Banking Solutions

Core Banking Solutions is new jargon frequently used in banking circles. The adv ancement in
technology especially internet and information technology has led to new way of doing business in
banking. The technologies have cut down time, work ing simultaneously on different issues and
increased efficiency. The platform wh ere communication technology and information technology
are merged to suit core needs of banking is known as Core Banking Solutions. Here computer
software is d eveloped to perform core operations of banking like recording of transactions, p
assbook maintenance, interest calculations on loans and deposits, customer recor ds, balance of
payments and withdrawal are done.
Real Time Gross Settlement (RTGS)
RTGS is an electronic settlement system of Reserve Bank of India without involve ment of papers.
To facilitate an Efficient, Secure, Economical, Reliable and Exp editious System of Fund transfer
and clearing in the Banking sector throughout I ndia. Real time gross settlement systems (RTGS)
are a funds transfer mechanism w here transfer of money takes place from one bank to another on
a "real time" and on "gross" basis.
Electronic Clearing Service
Electronic Clearing Service is another technology enhancement happened in the ba nking industry.
The customer willing to use this facility is required to fill in the mandate form from the
corporate/any utility service institution for ECS mod e of credit and debit. The customer needs to
prepare the payment date and submit
it to the sponsor Bank and after that everything happened electronically. So cust omers can there by
make payments as well as receive all incomes electronically. Mobile banking
Mobile banking (also known as M-Banking, mbanking, SMS Banking etc.) is a term u sed for
performing balance checks, account transactions, payments etc. via a mob ile device such as a
mobile phone.
2.2.4 BASEL II: HOW GEARED ARE BANKS??

BASEL II is a new capital adequacy frame work applicable to scheduled commercial banks in
India, as mandated by the RBI. The Basel capital accord (BASEL II) gui deline promulgated by
the BIS to establish Capital adequacy requirements and sup ervisory standards for banks and
structured by three pillars.
In a nut-shell, BASEL II
Provide effective assessment method
Incorporates Sensitivity to banks. Makes
better business standards
Reduce losses to the banks
The 3-Pillar Approach of BASEL II

The BASELII is designed to facilitate a more comprehensive, sophisticated and ri sk sensitive

approach for banks to calculate regulatory capital. The basic objec tive of BASEL II is to create an
international standard

2.2.5 CAMEL: TOOL FOR MEASURING THE PERFORMANCE OF BANKS

An international bank-rating system where bank supervisory authorities rate inst itutions according
to six factors. The six factors are represented by the acrony m "CAMELS." The six factors
examined are as follows:
C - Capital adequacy : Reflects the overall financial condition
of a bank & also the ability of the managemen
t to meet the need for additional
capital.
A - Asset quality : To ascertain the component of non perfor
ming assets as a percentage of t
he total asset
M - Management quality : To measure the efficiency of the management
E - Earnings : To assess the quality of income generat
ed by core activity
L - Liquidity : To measure the ability of a bank to meet
the demand from demand deposits
in a particular year
On the Basis of CAMEL rating Top Ten Banks in Performance During 2008-2009
Public sector Banks Private sector Banks Foreign Banks
Bank of India Karur vysya bank Shinhan bank
Corporation Bank Yes bank Abu Dhabi commercial bank
Union Bank of India City Union Bank Mashreqbank P S C
Andhra bank Tamil Nadu Mercantile Bank Antwerp Diamond bank N V
State bank of Patiala South Indian bank Bank of Tokyo-Mitsubishi
UFJ
Bank of Baroda Federal Bank Calyon Bank
Indian Overseas Bank Jammu & Kashmir Bank Krung Thai Bank Public Co.
State Bank of Hyderabad Dhanalakshmi Bank State Bank of Mauritius
Punjab & Sind Bank Karnataka Bank Bank of America National Trust
Indian Bank Kotak Mahindra Bank Mizutto Corporate Bank

2.3 Banking Review-2009

NPAs rise for Private Banks, stable for PSBs

Gross NPAs movement of banks in Q1 has shown an interesting trend

Gross NPAs of all Private Banks that we have covered have seen a sequential rise However, asset
quality of most PSBs remained stable, with flat to lower Gross NP As

NIMs of most banks saw a sequential decline

Decline was largely due to PLR cuts by banks towards the end of Q4FY08
Most banks have, however, raised their PLRs and deposit rates by 100-150bps in J une08 and
Q1FY09
NIMs should see a marginal improvement in Q2 on account of PLR hikes
However, as deposit re-pricing kicks in with a lag effect, NIMs may again come u nder pressure.

Credit spreads saw a decline after a long time

After a long time, the sector saw a decline in credit spreads (Yield on advances
Cost of deposits)
Decline in credit spreads was largely due to inability of most banks to raise PL R in Q1 even as
interest rates were rising
BOB, IOB, Corpbank and BOI saw substantial fall in yields on credit book, result ing in
compression of credit spreads
Canbank, PNB, Union Bank saw sequential improvement in credit spreads in Q1

CASA saw a mixed trend

Among Public Sector Banks (PSBs), SBI, Canara and Union saw marginal improvement in CASA
on YoY basis
Others like BOB, BOI, OBC saw a decline on YoY basis
Among private banks, AXIS bank lost out due to CBOP merger, ICICI Bank saw impro vement
both on YoY and sequential basis

Overall credit growth was robust

Among PSBs BOI, BOB, SBI and IOB saw above 30% growth. Canbank, Union and PNB we re
more moderate at 16-20%
Among Private banks, except for ICICI, most showed above 40+% growth Even for
ICICI, consolidated book (including overseas book) grew 20% YoY

Credit growth has been very robust at 26% in Q1 against 24.6% last year Banks which
witnessed high credit growth
Axis, AXIS Bank and Yes Bank among private
BOB, BOI and SBI among PSBs

SBI showed a robust growth across all segments, except for mortgages International
credit grew 46% YoY
SME credit grew 23% YoY
Mid Corporate credit grew 31% YoY
Home Loans grew 17% YoY
Axis among the private banks and BoI amongst PSBs
continues to deliver high NII growth
Credit growth of ICICI, Canara, Union, PNB, OBC was lower than the avera
ge

2.4 IN BANKING SECTOR

Non Performing Assets
Capital Adequacy Ratio
Q Ratio
Z Score
Shareholding Pattern of the Banks
EPS Growth Rate
Reserves with RBI to Total Assets Ratio
Business per Employee & Profit Per Employee
Total Liability to Net Worth Ratio
Dividend Payout Ratio
Return on Assets
2.5 SWOT ANALYSIS: Banking Sector
Strength Weakness

Aggression towards development the

existing standards by banks.
Strong regulatory impact by central Bank to
all the banks.
Presence of intellectual capital to face
the change in implementation with good quality.

Poor Technology infrastructure.

Ineffective risk measures. Presence of
more number of smaller banks that would
likely to be Impacted adversely.
Opportunities Threats
Increasing Risk management Expertise.
Need significant Connection among, business Credit & risk management and Informa tion
Technology.
Advancement of technologies. Strong Asset Base would help in bigger growth. Inability to
meet the additional Capital Requirements.

Loss of Capital to the entire banking system due to merger and acquisitions. Huge investment in
technology.

2.5.1 Porters FIVE-FORCE analysis for Indian banking

industry
Key Points:
Supply
Liquidity is controlled by the Reserve Bank of India (RBI). Demand
India is a growing economy and demand for credit is high though it could be cycl ical.
Barriers to entry
Licensing requirement, investment in technology and branch network.

Bargaining power of suppliers

High during periods of tight liquidity. Trade unions in public sector banks can be anti reforms.
Depositors may invest elsewhere if interest rates fall. Bargaining power of customers
For good creditworthy borrowers bargaining power is high due to the availability of large number
of banks
Competition - High
There are public sector banks, private sector and foreign banks along with non banking finance
companies competing in similar business lines.

2.5.2 PESTAL ANALYSIS:

PEST Analysis for Banking Services
Political/ Legal
Influences which have an impact on banking services and consumer confidence incl ude the
following:
State provision of pensions
Government encouragement of savings and investment (for e.g. via tax benefits)
Regulatory control and protection (to prevent the collapse of financial institut ions and
protect investors money)
Economic
Economic factors are key variables which have an impact on the activity in the b anking services
sector. The level of consumer activity is governed by income lev els and personal wealth. As
income levels grow, more discretionary income is ava ilable to spend on banking services.
Consumer confidence in the economy and in j ob security also has a major impact; if lean times
are foreseen ahead, savings w ill take priority over loans and other forms of expenditure.
Consumers may also
seek easy access savings and be willing to tie up their money for longer periods with potentially
more attractive investments.
The main economic factors that should be monitored with regard to banking servic es marketing
are as follows:
Personal and household disposable income
Discretionary income levels
Employment levels
The rate of inflation
Income tax levels and taxation structures
Savings and investment levels and trends
Stock market performance
Consumer spending & Consumer credit

Socio-cultural
Many demographic factors have an important bearing on banking services markets.
Changing attitude towards consumer credit and debt
Changing employment patterns
Numbers of working women
The ageing population
Marriage/divorce/birth rates
Consumption trends
Technological
Technology has a major impact on many industries including financial services an d banking in
particular. ATM services which not only provide cash but also allow for bill payments, deposits and
instant statements are widely used. From the cu stomers viewpoint, technology has played a major
role in the development of the p rocess whereby the service is delivered. Automated queuing systems
have made vis its to the bank easier and more convenient. Telephone Banking and insurance serv ices
are now being used in place of the traditional branch-based service process
. Technology has also played a major role within organizations, bringing about f ar greater
efficiency through computerized records and transaction systems and a lso in business
development, through the setting up of detailed customer databas es for effective segmentation and
targeting.
The main technological developments fall within these categories;
Process developments
Information storage and handling
Database system

2.5.3 RECENT TRENDS

I. Universal Banking
Universal banking refers to Financial Institution offering all types of financia l services under one
roof. Thus, for example, besides borrowing and lending for the long term, the Development
Financial Institutions will be able to borrow/len d for the short-term as well.

Impact on FDI:
Two key aspects of the business are affected. The institution can have access to cheap retail
deposits and the breadth of its advances increase to include short -term working capital loans to
corporates. The Institution has greater operation al flexibility. Also they can now effectively
compete with the commercial banks.
IndianScenario:
In India the five FDIs that are frontrunners in the race to convert to Universal Bank are:
1. Industrial Credit and Investment Corporation of India (ICICI)
2. Industrial Development Bank of India (IDBI)
3. Export Import Bank (EXIM Bank)
4. Industrial Finance Corporation of India (IFCI)
5. Industrial Investment Bank of India (IIBI)
ICICI is already a virtual bank with subsidiaries like ICICI Bank engaged in ban king business.
Thus with clearing of legal hurdles it just has to work out the m odalities to formally call itself a
universal bank.
Similarly other FDIs are charting out aggressive plans to stay ahead in this rac e.
Also recently Bank of Baroda, a commercial bank has indicated its intention to c onvert to a
Universal Bank.

II. RBI Norms:

The norms stipulated by RBI treat FDIs at par with the existing commercial banks
. Thus all Universal banks have to maintain the CRR and the SLR requirement on t he same lines
as the commercial banks. Also they have to fulfill the priority se ctor lending norms applicable to
the commercial banks. These are the major hurdl es as perceived by the institutions, as it is very
difficult to fulfill such nor ms without hurting the bottomline

Effect on the Banking Sector:

However, with large Term lenders converting into Commercial banks, the existing players in the
industry are likely to face stiff competition, lower bottom line ultimately leading to a shakeout in
the industry with only the operationally eff icient banks will stay into the business, irrespective to
the size.
III. Mergers & Acquisition
The Indian Banking Sector is more overcrowded then ever. There are 96 commercial banks
reporting to the RBI. Ever since the RBI opened up the sector to private players, there have been
nine new entrants. All of them are growing at a scorchi ng pace and redefining the rules of the
business. However they are dwarfed by ma ny large public and old private sector banks with a
large network of branches sp read over a diverse geographical area. Thus they are unable to make
a significan t dent in the market share of the old players. Also it is impossible to exponent ially
increase the number of branches. The only route available for these banks is to grow inorganically
via the M & A route. Hence the new banks are under a tr emendous pressure to acquire older banks
and thus increase their business.
Currently most of the institutionally promoted banks have already gobbled smalle r banks. ICICI
Bank has acquired ITC Classic, Anagram Finance and Bank of Madura within a period of two
years. AXIS Bank has merged Times Bank with itself. UTI bank had almost completed its merger
with Global Trust Bank before it ran into r ough weather. Also Nationalised Banks like Bank of
Punjab, Vyasa Bank are wooing IDBI Bank for a merger. Among foreign banks, Standard &
Chartered Bank has acqu ired ANZ Grindlays Banks Asian and Middle East operations
The above happenings clearly indicate that the M & A scenario in the Indian bank ing sector is far
from over. Strong banks will continue to takeover weak and ine fficient banks to increase their
size.
IV. Multiple Delivery Channels
Today the technology driven banks are finding various means to reduce costs and reach out to as
many customers as possible spread over a diverse area. This has led to using multiple channels of
delivery of their products.
1. ATM (Automatic Teller Machine):
An ATM is basically a machine that can deliver cash to the customers on demand a fter
authentication. However, nowadays we have ATMs that are used to vend differ ent FMCG products
also. An ATM does the basic function of a banks branch, i.e., d elivering money on demand. Hence
setting of newer branches is not required there by significantly lowering infrastructure costs.
Cost reduction is however possible only when these machines are used. In India, the average cash
withdrawal per ATM per day has fallen from 100 last year to 70 this year. Though the number of
ATMs has increased since last year, it is not in sync with the number of cards issued. Also, there
are many dormant cardholders who do not use the ATMs and prefer the teller counters. Inspite of
these odds, I ndian banks are increasing the number of ATMs at a feverish pace. These machines
also hold the keys to future operational efficiency.
2. Net Banking:
Net banking means carrying out banking transactions via the Internet. Thus the n eed for a branch
is completely eliminated by technology. Also this helps in serv ing the customer better and
tailoring products better suited for the customer
A customer can view his account details, transaction history, order drafts, elec tronically make
payments, transfer funds, check his account position and electro nically communicate with the
bank through the Internet for which he may have wan ted to visit the bank branch.
Net banking helps a bank spread its reach to the entire world at a fraction of t he cost.
3. Phone Banking:
This means carrying out of banking transaction through the telephone. A customer can call up the
banks helpline or phone banking number to conduct transactions like transfer of funds, making
payments, checking of account balance, ordering c heques, etc,. This also eliminates the customer of
the need to visit the banks br anch.
4. Mobile Banking:
Banks can now help a customer conduct certain transactions through the Mobile Ph one with the
help of technologies like WAP, SMS, etc,. This helps a bank to comb ine the Internet and
telephone and leverage it to cut costs and at the same time provide its customer the convenience.
Thus it can be seen that tech savvy banks are tapping all the above alternative channels to cut
costs improve customer satisfaction.
V. VRS (Voluntary Retirement Scheme):
VRS or the Golden Handshake is picking up very fast in the recent times due to the serious attention
of the government towards overstaffing in the banks, especial
ly among the public sector banks. The government had also cleared a uniform VRS framework for
the sector giving the banks a seven months time frame to cut flab. The scheme was open till 31st
march, 2001.
Though many banks had announced different VRS schemes it involved an outflow of huge sums
of money. This could have had an adverse impact on the Capital Adequac y Ratio (CAR). Hence
the RBI allowed the banks to write off the VRS expenses ove r a period of 5 years.
CHALLNGES:
Liberalisation process has increasingly exposed Indian Industry to international competition and
banking being a service industry is also not an exception. Bank ing Sector in India too faces same
challenges at local, national and internatio nal level.
Indian Banks, functionally diverse and geographically widespread, have played a crucial role in
the socio-economic progress of the country after independence. H owever, the growth led to
strains in the operational efficiency of banks and the accumulation of non-performing assets
(NPAs) in their loan portfolios.
Banks face increasing pressure to stand out from the crowd. On the Internet, thi s means offering
your target customers an increasingly broader range of services than your competitors and that too
in unique way.
All this has resulted in a challenge to managers of banks to develop the right m ix of acquired and
internally grown IT applications which suits customers expecta tions.
Banking sector reforms and liberalisation process raised many challenges before Indian Banks and
for sustainable development it has become necessary to face the se challenges effectively:

Intense Competition: The RBI and Government of India kept banking industry open for the
participants of private sector banks and foreign banks. The foreign bank
s were also permitted to set up shop on India either as branches or as subsidiar ies. Due to this
lowered entry barriers many new players have entered the market such as private banks, foreign
banks, non-banking finance companies, etc. The f oreign banks and new private sector banks have
spearheaded the hi-tech revolutio n. Heavy weight foreign banks with huge base, latest technology
innovative and g lobally tested products are spreading their wings and wooing away customers
form other banks. For survival and growth in highly competitive environment banks ha
ve to follow the new Guru Mantra of prompt and efficient customer service, which c alls for
appropriate customer centric policies and customer friendly procedures.
Technological Up gradation: Already electronic transfers, clearings, settlements have reduced
translation times. To face competition it is necessary for banks t
o absorb the technology and upgrade their services.
However use of High-Tech sophisticated technology leaves the predominantly rural , poor and
even illiterate mans in the lurch to which the level of automation an d efficiency of services are
immaterial.
Privacy and Safety: Among the most important aspects, of savings, i.e., safety l iquidity and
profitability, safety has to be accorded top most priority. The saf
ety aspect assumes more significance in the emerging scenario as the economic lo ss caused
internationally by these types of crimes might risk area and any lacun ae is safety would result in
erosion of confidence and the same might possibly paralyse the entire network. The areas among
other things, which might endanger security in e-banking can be:
Changes in input data such as changing the amount in ledges, increasing the limi ts in accounts or
face value of cheaques. Though these trends could be detected consequently, prevention is a major problem
with these types of crimes.
Use of stolen or falsified cards in ATM machines.
Computer forgery could be committed by way of gaining access to other account, d eliberate
damage through viruses on data stored in computers. In this case, same criminals might gain entry into the
computers and cause damage to the system. T
his apart, another through which security and privacy are maintained. If a hacke r has found out
the password, he can cause havoc to the entire network. Also, if the password is stolen money
could be transferred from one account to another.
Software privacy is another area of potential danger faced by the banking indust ry. In this the
entire software could be stolen. If this is done, the hackers co
uld operate a parallel network.
Human Resources Management: In the recent past the human resource Policies in ba
nks were mainly guided by the comcept of permanent employment and its necessary concomitants of
creating career paths, terminal benfits, etc. for the employees. In todays fast-changing world of
employee mobility both horizontally and vertica lly and value systems, the public sector banks need
to hire the right talent at market related compensation and to shed surplus manpower/staff. Thus
many banks are going for URS schemes to reduce the burden of excessive staff. Schemes like VRS
are going to change the nature of workforce with many senior and experienced persons opting for it.

The key elements that shall provide a competitive edge to banking sector will no t be physical
assets but knowledge assets and information. Therefore, banks must understand how to retain
knowledge based employees and prevent them to migratin g to some other organisation. Banks
must believe in people, customer orientation , and continuous improvement of excellence.
Therefore it becomes necessary for b anks to encourage all employees to take risks and work
towards continuous improv ements and breakthroughs.
Successful banks overcoming the challenges will be those that harness technology in a customer
friendly yet cost effective way. This requires enormous internal and external management and the
crux of the solution lies in blending human reso urces with information technology.

3 Emerging Issues in International Scenario:

Banking and Financial Sector Reform

With the evolving global scenario at the background, let us now discuss the chal lenges and
opportunities facing the financial sector around the globe. The pr esent trend towards financial
sector liberalization and globalisation, es pecially with respect to the EMEs has resulted in a
overall trend to
wards conglomeration, internationalisation and dollarisation in the financial sy
stems
of many of the countries notably the EMEs. Such trends have important i
mplications for financial sector regulation. I would like to highlight
the main issues in this respect:
It also needs to be recognised that in recent times, there has been
growing concern worldwide about the need for preserving financial stabi
lity. This is true in the Indian context as well where the erstwhile
Government- dominated financial system was, so to speak, imparting stab
ility under rigidregulation, possibly at the cost of efficiency. In t
his context, the pursuit of financial stability in India, viewed from the st
andpoint of banking system, has sought to (a) ensure uninterrupted financia
l transactions and (b) maintain confidence in the financial system amon
gst all stakeholders.
When we talk of the major features of international banking sc
enario, the following observations come immediately to mind.
First, the structure of the industry. In the worlds top 1000 banks, the
re are many more large and medium-sized domestic banks from the develo
ped countries than from the emerging economies. Illustratively, ac
cording to The Banker 2004, out of the top 1000 banks globally, over 200 are loc
ated in USA, just above 100 in Japan, over 80 in Germany, over 40 in Spain and a
round 40 in the UK. Even China has as many as 16 banks within the top 1000, out
of which, as many as 14 are in the top 500. India, on the other hand, had 20 ban
ks within the top 1000 out of which only 6 were within the top 500 banks. Th
is is perhaps reflective of differences in size of economies and of the
financial sectors.
Second, the share of bank asset in total financial sector assets. In
most emerging markets, banking sector assets comprise well over 80 per cent of
total financial sector assets, whereas these figures are much lower in
 developed economies. Thus, Banking Sector reforms are of paramount impor
tance in many emerging markets.
Third, industry concentration, measured by the percentage of a countrys
banking sector assets controlled by the largest banks. In most emerging
market economies, the five largest banks (usually domestic) acco
unt for over two-thirds of bank assets. These figures tend to be much lower in
developed economies.
The fourth factor is the growing internationalization of banking operatio
ns. Internationalization, defined as the share of foreign-owned banks in total b
ank assets, is increasing fast in emerging economies from very low levels not
too long ago.
The phenomenon of internationalisation has primarily been polarized o
n medium- to high-income countries, likely owing to attractive risk-retu
rn investment opportunities for foreign banks in such countries. However, for
eign banks are often viewed to be cherry-picking host country corporations, l
eaving domestic banks with less creditworthy customers, increasing the o
verall risk of domestic bank portfolios. Additionally, increased competition
arising out of foreign bank entry could prompt domestic state-owned banks
to venture into high-risk areas in an attempt to maintain their fra
nchise value.
Fifthly, financial sectors across the globe has witnessed increased cong

lomeration to survive in a milieu of financial liberalization

and technological improvements. Globalization of clients of major
financial instruments who, in turn, demand global access to services an
d a wide product mix has also been a contributory factor. The
growth of such conglomeration has raised the possibility of vulnerabilitie
s including systemic risk due to contagion and the possibility of opport
unities for regulatory and supervisory arbitrage.
Further, the growing dollarisation, especially in Latin America and tran
sition economies raises several vulnerabilities in the financial system,
salient among them being (a) diminished role of central banks to act
as lenders of last resort, (b) possibility of dollar deposits being subject to
runs since such deposits are usually close substitutes for deposits abro
ad or dollars cash and (c) limited ability of central banks to raise the inter
est rate on dollar deposits to act as interest rate defenses against deposit withd rawals.

The global banking scenario is going to be influenced by impleme

ntation of the Basel II Accord. It seems at this point that Basel II may be ben
eficial to many of the EMEs including India. While the Pillar I of the N
ew Accord signifies a refinement of existing capital charge by making it more co
rrelated with the credit risk of the banks assets and an extension of
the capital charges for risks not considered in the current Accord, such as in
terest rate risk in the banking book, and operational risk, Pillar II, which foc
uses on the supervisory review process, aims to ensure that a banks capital posit
ion is consistent with its overall risk profile. Finally, Pillar III aims at enc
ouraging banks to disclose information in order to enhance the
role of market participants in monitoring banks

The recent survey by the IMF on the implementation of financial secto

r regulation in 36 Fund member countries3 based on the Financial Sect
or Assessment Programmes (FSAPs) completed over the period 2000-03
 reveals the following interesting points about the global financial system. On
the positive side, there has been relatively high level of implementation with r
espect to legal foundations , rationalisation of the licensing process
and minimum entry standards in most countries.
In terms of regulatory weaknesses, recent evidences point out to a nu
mber of deficiencies including;
(i) The problems associated with regulatory forbearance.

(ii) Deficiencies have been observed in the oversight of country risk4, issues of connected
lending and corporate governance practices.

(iii) deficiencies have been observed in respect of the design/implementation of

consolidated supervision.
(iv) With regard to financial integrity and development of safety net,
the observed deficiencies mainly relate to timeliness of disclosure, protection
of minority shareholders, accounting and auditing procedures and p
rocedures for orderly winding up of failed insurers and securities firms.

CHAPTER 3
INTRODUCTION TO SBI AND AXIS

3.1 STATE BANK OF INDIA

State Bank of Indias operating profit and net profit for Q209 surged
54.5% and 40.2% yoy, respectively, exhibiting a strong performance.
Advances growth to slow down: SBI recorded a handsome 37% yoy growth i
n advances, translating into an 18% sequential growth in the first half. However
, this momentum is likely to decelerate considerably in the second half of 20
08-09.
Robust rise in deposits: State Bank of Indias deposit base surged
28% yoy and its CASA ratio improved from 39.45% to 39.71% over the same period.
On a quarterly basis, the banks deposits grew by 10.3%.
Improvement in the credit-deposit ratio: The Banks credit-deposit ratio i
ncreased from 68.9% in Q208 to 73.8% this quarter. This was following
a robust 37% yoy increase in advances, which exceeded the 28% growth in
deposits over the same period.
Increase in the NII and NIM: SBIs net interest income (NII) increased by 45% yoy
to reach Rs. 54.6 bn.
Profitability: The Banks ROE declined from 17.38% for H108 to 14.63% for H109.
The return on assets (annualized), however, increased from 0.99% in
Q208 to 1.13% in Q209.

The State Bank of India, the countrys oldest Bank and a premier in terms of balan ce sheet size,
number of branches, market capitalization and profits is today go ing through a momentous phase of
Change and Transformation the two hundred year old Public sector behemoth is today stirring out
of its Public Sector legacy and moving with an agility to give the Private and Foreign Banks a run for
their mo ney.

The bank is entering into many new businesses with strategic tie ups Pension Fun ds, General
Insurance, Custodial Services, Private Equity, Mobile Banking, Point of Sale Merchant Acquisition,
Advisory Services, structured products etc each o ne of these initiatives having a huge potential for
growth.

The Bank is forging ahead with cutting edge technology and innovative new bankin g models, to
expand its Rural Banking base, looking at the vast untapped potenti al in the hinterland and
proposes to cover 100,000 villages in the next two year s.

It is also focusing at the top end of the market, on whole sale banking capabili ties to provide Indias
growing mid / large Corporate with a complete array of pro ducts and services. It is consolidating its
global treasury operations and enter ing into structured products and derivative instruments. Today,
the Bank is the largest provider of infrastructure debt and the largest arranger of external com
mercial borrowings in the country. It is the only Indian bank to feature in the Fortune 500 list.

The Bank is changing outdated front and back end processes to modern customer fr iendly
processes to help improve the total customer experience. With about 8500 of its own 10000
branches and another 5100 branches of its Associate Banks alrea dy networked, today it offers the
largest banking network to the Indian customer
. The Bank is also in the process of providing complete payment solution to its clientele with its
over 8500 ATMs, and other electronic channels such as Interne t banking, debit cards, mobile
banking, etc.

With four national level Apex Training Colleges and 54 learning Centres spread a ll over the
country the Bank is continuously engaged in skill enhancement of its employees. Some of the
training programs are attended by bankers from banks in other countries.

The bank is also looking at opportunities to grow in size in India as well as in ternationally. It
presently has 82 foreign offices in 32 countries across the gl obe. It has also 7 Subsidiaries in India
SBI Capital Markets, SBICAP Securities, SBI DFHI, SBI Factors, SBI Life and SBI Cards - forming
a formidable group in t
he Indian Banking scenario. It is in the process of raising capital for its grow th and also
consolidating its various holdings.

Throughout all this change, the Bank is also attempting to change old mindsets, attitudes and take all
employees together on this exciting road to Transformatio n. In a recently concluded mass internal
communication programme termed Parivarta n the Bank rolled out over 3300 two day workshops
across the country and covered over 130,000 employees in a period of 100 days using about 400
Trainers, to driv e home the message of Change and inclusiveness. The workshops fired the imaginat
ion of the employees with some other banks in India as well as other Public Sect or Organizations
seeking to emulate the programme.
3.1.1 ABOUT SBI:

The State Bank of India, the countrys oldest Bank and a premier in terms of balan ce sheet size,
number of branches, market capitalization and profits is today go ing through a momentous phase of
Change and Transformation the two hundred year old Public sector behemoth is today stirring out
of its Public Sector legacy and moving with an agility to give the Private and Foreign Banks a run for
their mo ney.

The Bank is forging ahead with cutting edge technology and innovative new bankin g models, to
expand its Rural Banking base, looking at the vast untapped potenti al in the hinterland and
proposes to cover 100,000 villages in the next two year s.

It is also focusing at the top end of the market, on whole sale banking capabili ties to provide Indias
growing mid / large Corporate with a complete array of pro ducts and services. It is consolidating its
global treasury operations and enter ing into structured products and derivative instruments. Today,
the Bank is the largest provider of infrastructure debt and the largest arranger of external com
mercial borrowings in the country. It is the only Indian bank to feature in the Fortune 500 list.

The Bank is changing outdated front and back end processes to modern customer fr iendly
processes to help improve the total customer experience. With about 8500 of its own 10000
branches and another 5100 branches of its Associate Banks alrea dy networked, today it offers the
largest banking network to the Indian customer
. The Bank is also in the process of providing complete payment solution to its clientele with its
over 8500 ATMs, and other electronic channels such as Interne t banking, debit cards, mobile
banking, etc.

With four national level Apex Training Colleges and 54 learning Centres spread a ll over the
country the Bank is continuously engaged in skill enhancement of its employees. Some of the
training programes are attended by bankers from banks in other countries.

The bank is also looking at opportunities to grow in size in India as well as in ternationally. It
presently has 82 foreign offices in 32 countries across the gl obe. It has also 7 Subsidiaries in India
SBI Capital Markets, SBICAP Securities, SBI DFHI, SBI Factors, SBI Life and SBI Cards - forming
a formidable group in t he Indian Banking scenario. It is in the process of raising capital for its grow
th and also consolidating its various holdings.
3.1.2 KEY AREAS OF OPERATION:

The business operations of SBI can be broadly classified into the key income gen erating areas
such as National Banking, International Banking, Corporate Banking , & Treasury operations. The
functioning of some of the key divisions is enumera ted below:

a) CORPORATE BANKING
The corporate banking segment of the bank has total business of around Rs1,193bn
. SBI has created various Strategic Business Units (SBU) in order to streamline its operations.
These SBUs are as follows:
Corporate Accounts Leasing
Project Finance Mid
Corporate Group
Stressed Assets Management
b) NATIONAL BANKING

The national banking group has 14 administrative circles encompassing a vast net work of 9,177
branches, 4 sub-offices, 12 exchange bureaus, 104 satellite office s and 679 extension counters, to
reach out to customers, even in the remotest co rners of the country. Out of the total branches, 809
are specialized branches.

This group consists of four business group which are enumerated below: Personal
Banking SBU
Small & Medium Enterprises
Agricultural Banking
Government Banking

c) INTERNATIONAL BANKING

SBI has a network of 73 overseas offices in 30 countries in all time zones and c orrespondent
relationship with 520 international banks in 123 countries. The ban k is keen to implement core
banking solution to its international branches also. During FY06, 25 foreign offices were
successfully switched over to Finacle soft ware. SBI has installed ATMs at Male, Muscat and
Colombo Offices. In recent year s, SBI acquired 76% shareholding in Giro Commercial Bank
Limited in Kenya and PT Indomonex Bank Ltd. in Indonesia. The bank incorporated a company
SBI Botswana Ltd. at Gaborone.
d) TREASURY

The bank manages an integrated treasury covering both domestic and foreign excha nge markets.
In recent years, the treasury operation of the bank has become more active amidst rising interest
rate scenario, robust credit growth and liquidity constraints. The bank diversified its operations
more actively into alternative assets classes with a view to diversify the portfolio and build
alternative rev enue streams in order to offset the losses in fixed income portfolio. Reorganiza tion
of the treasury processes at domestic and global levels is also being under taken to leverage on the
operational synergy between business units and network. The reorganization seeks to enhance the
efficiencies in use of manpower resourc es and increase maneuverability of banks operations in the
markets both domestic
 as well as international.
e) ASSOCIATES & SUBSIDIARIES

The State Bank Group with a network of 14,061 branches including 4,755 branches of its seven
Associate Banks dominates the banking industry in India. In additio n to banking, the Group,
through its various subsidiaries, provides a whole rang e of financial services which includes Life
Insurance, Merchant Banking, Mutual Funds, Credit Card, Factoring, Security trading and primary
dealership in the Mo ney Market.

e.1) Associates Banks:

SBI has seven associate banks namely
State Bank of Indore
State Bank of Travancore
State Bank of Bikaner and Jaipur
State Bank of Mysore
State Bank of Patiala
State Bank of Hyderabad
State Bank of Saurashtra

All associate banks have migrated to Core Banking (CBS) platform. Single window delivery system
has been introduced in all associate banks. SBIs seven associate banks are the first amongst the
public sector banks in India to get fully networ ked through CBS, providing anytime-anywhere
banking to its customers to facilita te a bouquet of innovative customer offerings.

e.2) Non-Banking Subsidiaries/Joint Ventures

i) SBI Life:
ii) SBI Capital Markets Limited (SBICAP)
iii) SBI DFHI LTD
iv) SBI Cards & Payments Services Pvt. Ltd. (SBICSPL)
v) SBI Funds Management (P) Ltd. (SBIFMPL)
f) Human Resources

NON BANKING SUBSIDIARIES:

The Bank has the following Non-Banking Subsidiaries in India : SBI

Capital Markets Ltd
SBI Funds Management Pvt Ltd
SBI Factors & Commercial Services Pvt Ltd

3.2 AXIS BANK

AXIS Bank-2009:
Axis Bank was the first of the new private banks to have b
egun operations in 1994, after the Government of India allowed new private banks to be
established. The Bank was promoted jointly by the Administrator of the sp ecified undertaking of
the Unit Trust of India (UTI - I), Life Insurance Corpora tion of India (LIC) and General Insurance
Corporation of India (GIC) and other f our PSU insurance companies, i.e. National Insurance
Company Ltd., The New India Assurance Company Ltd., The Oriental Insurance Company Ltd.
and United India In surance Company Ltd.

The Bank today is capitalized to the extent of Rs. 403.63 crores with the public holding (other than
promoters and GDRs) at 53.72%.
The Bank s Registered Office is at Ahmedabad and its Central Office is located a t Mumbai. The
Bank has a very wide network of more than 896 branches and Extensi on Counters (as on 31st
December 2009). The Bank has a network of over 4055 ATMs (as on 31st December 2009)
providing 24 hrs a day banking convenience to its cu stomers. This is one of the largest ATM
networks in the country.
The Bank has strengths in both retail and corporate banking and is committed to adopting the best
industry practices internationally in order to achieve excelle nce.
Promoters

Axis Bank Ltd. has been promoted by the largest and the best Financial Instituti on of the country,
UTI. The Bank was set up with a capital of Rs. 115 crore, wit h UTI contributing Rs. 100 crore,
LIC - Rs. 7.5 crore and GIC and its four subsi diaries contributing Rs. 1.5 crore each.

Shareholding 24.09%
Erstwhile Unit Trust of India was set up as a body corporate under the UTI Act, 1963, with a view
to encourage savings and investment. In December 2002, the UTI Act, 1963 was repealed with the
passage of Unit Trust of India (Transfer of Und ertaking and Repeal) Act, 2002 by the Parliament,
paving the way for the bifurca tion of UTI into 2 entities, UTI-I and UTI-II with effect from 1st
February 2003
. In accordance with the Act, the Undertaking specified as UTI I has been transf erred and vested
in the Administrator of the Specified Undertaking of the Unit T rust of India (SUUTI), who
manages assured return schemes along with 6.75% US-64 Bonds, 6.60% ARS Bonds with a Unit
Capital of over Rs. 14167.59 crores.
The Government of India has currently appointed Shri K. N. Prithviraj as the Adm inistrator of the
Specified undertaking of UTI, to look after and administer the schemes under UTI - I, where
Government has continuing obligations and commitme nts to the investors, which it will uphold.

Banking Privileges Priority

Banking Lounge:
As a Priority banking customer you will have access to an exclusive Priority Ba nking Lounge at
branches. This will allow you to conduct your financial transac tions in utmost comfort and
confidentiality through an exclusive Relationship Ma nager.
Dedicated Relationship Manager:
You will enjoy access to a dedicated Relationship Manager who will be your one p oint contact at
branch for all your banking transactions thus ensuring that you would neither have to move from
one counter to the other nor stand in queues to await your turn.

Home Banking:
Experience the convenience of our home banking facilities. Avail of free cash an d cheque pick-up
and delivery at your office or residence.
Exclusive Priority Banking International Debit card:
This card allows you free access to all VISA ATMs in India. The card also comes with higher ATM
withdrawal limits, higher POS transaction limits at merchant est ablishments, enhanced insurance
cover and a host of special discounts and offers
.
You also get Preferential Interest Rates and lowered Processing Fees on select R etail Loans.
Other Banking Privileges:
Enjoy a host of banking privileges like free at-par cheques, demand drafts and p ay orders, free
passbook updates and monthly statements.
You would also be entitled to two free minor accounts, one free outward remittan ce per quarter
and free Mobile banking.
As a Priority Banking customer, there would be no issuance charges on Axis Bank s Travel
Currency Card.

Investment Privileges
Avail of assistance in financial planning. Investment advice, market information reports, and
invitations to investor meets are offered complimentary to you.
Lifestyle Privileges
However, it s not all about just financial services. We aim to provide a differe nt Lifestyle
experience through special offers on premium brands, movie privileg es, special events and lots
more - especially for our Priority Banking customers
Gold Credit Card
As an added privilege, Priority Banking customers may also apply for a Gold Stan dard Credit
Card and Gold Standard Secured Credit Card without any additional fe e, subject to the applicable
terms and conditions.
Priority Banking customers would also be eligible for a 50% reduction on the Iss uance Fee of
Gold Plus Credit Card and Gold Plus Secured Credit Card. Rs. 500 wi ll be charged as the annual
maintenance charge for Priority Banking customers, s ubject to the applicable terms and
conditions.
3.2.1 ABOUT AXIS BANKS PROFILE
About AXIS Bank

The Unit Trust Of India (UTI) is a statutory public sector investment institutio n set up in 1964.
It mobilizes the savings of the community through the sale of its units under it s various unit
schemes..The.resources thus mobilized are invested by the UTI mai nly in the shares and
debentures of the companies. Income received from this inv estment, after meeting the expenses of
the Trust, is distributed to unit holders annually as dividend.
The Unit Trust Of India has introduced a number of Unit schemes so far, the Unit scheme,1964,the
Unit Linked Insurance Plan, 1971, Unit Scheme for Charitable an d Religious Trusts and
Registered Societies, 1981, the Income Unit Scheme, 1982, Monthly Income Unit Scheme, 1983
and Growth and Income Unit Scheme, 1983.

3.2.2 GOAL AND OBJECTIVES

Business Objectives
The primary objective of AXIS is to enhance residential housing stock in the cou ntry through the
provision of housing finance in a systematic and professional m anner, and to promote home
ownership. Another objective is to increase the flow of resources to the housing sector by
integrating the housing finance sector wit h the overall domestic financial markets.

Organizational Goals
AXISs main goals are as follows:
Develop close relationships with individual households,
Maintain its position as the premier housing finance institution in the country,
Transform ideas into viable and creative solutions,
Provide consistently high returns to shareholders, and
To grow through diversification by leveraging off the existing client base.

CHAPTER 4
SERVICE QUALITY
4.1 SERVICE AND ITS CHARACTERISTICS
Banks are investing a lot of money on web technologies and are therefore expecti ng numerous
benefits on their investments. The intensifying competition on todays market has forced
banks to seek profitable ways to differentiate themselves. Companies have moved their focus from
products and services toward a customer-centered focus as a too l to gain competitive advantages
and a great return on already made investments.
The success in these customer- centered businesses is to deliver high service quality. Already in
the end of the 1980s researchers were determined that if the companies wanted to succeed they
needed to give the development of service qual ity the highest priority. The delivery of high service
is a challenging task an d to provide their customers with high service quality companies must
know what their customers want and need. Because of factors that are unique to s ervices,
companies face difficulties while delivering service quality: intangibi lity, heterogeneity,
inseparability and perishability. Because services are int angible they can not be felt, smelled
or tasted which makes it hard for customers to evaluate the service quality. Fur thermore, services
are not possible to store for later use, they are consumed im mediately. Therefore
companies need to offer other visible indicators where customers could evaluate the delivered
service quality. Services heterogeneity means that services are no t produced by single unit and
then distributed to customers. This means that the quality of services varies depending on who
provides them as well as when, wher e and how services are provided.
Here the focus is on the employee and the way in which the service is delivered and perceived by the
customer will depend on the employee. Services are perishab le which means that they are consumed
when they are provided and can not be stor ed. Service has many definitions, one definition has been
chosen that describe i t in summary: A service is something that can be bought and sold, but which
you c annot drop on your foot. Both managers and academic researchers have in recent y ears given
a great deal of interest in measurement of customer satisfaction and perceived service quality. Spreng
et al (1996) discuss the difference between c ustomer satisfaction and perceived service quality and
suggest that these are no t the same and that companies need to take both into consideration. This
because companies need to know whether they should focus on having satisfied customers or to
deliver the maximum service quality. Perceived service quality is accordi ng to Parasuraman et al a
global judgment of, or, attitude relating to the superi ority of the service and this definition can be
found in other service literatur e. The definition of the customer satisfaction has not the same clear
definitio n but Spreng et al use the definition an evaluative, affective or emotional respo nse.

4.2 GAPS ANALYSIS

The knowledge of how to measure service quality is of great importance for the c ompanies if they
want to succeed on the todays competitive market. The measuremen t of perceived service quality
derives from the Gap analysis, which was original ly conducted during the end of the 1980s. The
Gap analysis was developed to help managers analyze the sources for quality problems but also to
help them in under standing how to improve the service quality. The first gap in the analyses is du e
to the lack of managers understandings about the perceived service quality. It states that managers
have incorrect understanding of what their customers want and need, e.g. because of wrong
information from customers surveys. The second g ap is about service characteristics not complying
with management understanding and customers expectations. This may arise due to lacking
communication inside th e organization and lack of clear organizational goals. It is due to the fact tha
t the specific quality is not fulfilled during the production and deliverance of
 the service. This gap usually occurs when the employee and customer interact. I t occurs because
employees are not ready to deliver the good service quality or that the quality characteristics are
not agreed upon within the organizational c ulture. The fourth gap deals with problems within the
marketing communication. T herefore it is important to always give customers appropriate and
correct inform ation. The analysis simply describes how the gap between expected and perceived
service quality arise from these four gaps while the difference between the del ivered and
perceived service by customers is the fifth gap. The goal for compan ies should be to minimize all
the gaps as much as possible. The bigger the first four gaps are, the bigger the fifth gap will be.
This means that the perceived service quality will be low and companies could fail in delivering
high service quality. Because of the Gap analyses Parasuraman et al designed SERVQUAL, a mult
iple-item scale for measuring service quality. The instrument has been used a l ot within the
service literature and as a basic tool for companies in measuring the perceived service quality.

4.3 SERVQUAL- SERVICE QUALITY

MEASUREMENT
As mentioned earlier the main difficulty with service quality is that it is hard to measure. According
to the Finnish author Christian Grnroos, many of these stu dies derive from the same point that
service quality is experienced from a compa rison between anticipation and experience with
consideration to a couple of qual ity attributes. SERVQUAL is conducted from Gaps analysis and a
study of five di fferent business and four dimensions form this instrument: Tangibles, Reliabilit y,
Responsibility, Assurance and Empathy Tangibles are about the physical facili ties that companies
have, including the appearance of the employees.
Reliability shows that the employees show that they can dependably perform their service and
customer attain and sustain their trusts in the company. Responsibi lity is when the company is
willing to help customers and provide them with the best service. Assurance is when companys
employees are containing knowledge and w ith their ability inspire trust and confidence to
customers. The last dimension is Empathy and this shows that the company is giving the customer
attention and caring. The SERVQUAL measurement can be accepted as
a traditional way of measuring the perceived service quality and is a basic skel eton of underlying
service quality; therefore it needs to be used in its entiret y as much as possible.
Parasuraman et al concur that SERVQUAL is universal and can be used across all s ervices. This
has received a lot of critics and many researches within the servi ce quality field have concluded
that the instrument can not directly be applied to studies of the online service quality. When
considering the last dimension Em pathy and then studying the interaction between the customer
and the computer th
ere is no Empathy and therefore companies cant really take this dimension into acc ount when
measuring the perceived service quality online. SERVQUAL is a good ser vice quality instrument when
measuring and studying an organization which is not providing services online. In this study e-banking
is merely about online servi ces and therefore this instrument is not an appropriate instrument of
measuremen
t.
It is important to note that much of the research that has been performed about service quality is
deriving from SERVQUAL. Many of the dimensions that construct the instrument are adapted to the
other instruments of measurements. Technology , which is the major force in shaping the buyer-seller
interaction, is having an impact on the service quality. Within the e- banking, banks need to focus
their attention on customers and to understand customers attributes which they are usi ng to judge
service quality.
CHAPTER 5
ANALYSIS AND INTERPRETATION

1) Modern looking equipment

From the graph it is clearly seen that for AXIS and SBI most of the respondents are fall in
satisfaction range.
For AXIS highest frequency is observed in satisfactory level, whereas for SBI hi ghest frequency
is observed in neither satisfied nor dissatisfied range.
So, for modern looking equipment AXIS bank has more number of satisfied response s as
compared to SBI.

2) Visually appealing physical facilities

For both the banks highest frequency is observed in neither satisfied nor dissat isfied range.
And most of the respondents for both the banks are less satisfied as far as visu ally appealing
physical facilities concerned, as in level 3 i.e. dissatisfied mo
re numbers of respondents are there for both the banks.
AXIS bank has more satisfied customers, so for visually appealing physical facil ities AXIS bank
has good response as compared to SBI.

3) Neat appearing employees

From the graph, SBI respondents are showing more positive response then that of AXIS
respondents, and also respondents fall in satisfied range is more in case o
f SBI then that of AXIS.
Also there are more numbers of respondents in moderate and strongly agreed zone for SBI as
compared to AXIS. And for AXIS most of the respondents are present in
3,4 and 5 level of satisfaction, so respondents are not satisfied for AXIS.
So for neat appearing employees SBI respondents has more satisfaction level.
4) Visually appealing materials associated with the services

Here, for AXIS bank there are slightly more numbers of respondents which are fal l in satisfied
range then from SBI. Also most of the respondents fall in neither dissatisfied nor satisfied and satisfied area
for both the banks.
Here it is difficult to say that which bank is performing better in visually app ealing materials
associated with the services.

5) Keeping promise to do something by certain time

Here from the graph it is clearly seen that respondents of SBI are having more s atisfaction than
that of AXIS, as more numbers of respondents are fall in satisf
action level.
For both the banks most of the respondents are fall in neither satisfied nor dis satisfied level and
satisfied level. So for this factor both the banks are relat
ively not performing well as per resondents.
Overall for this question SBI respondents are showing more satisfaction than tha t of AXIS.

6) Showing sincere interest in solving a customers problem

Here from the graph, SBI and AXIS have nearly the same kind of responses, but AX IS has
slightly more numbers of satisfied repondents as compared to SBI for show
ing sincere interest in solving a customers problem, so for this factor AXIS is p erforming slightly
well over SBI.
Here both the banks have more numbers of respondents who are fall in level 4 i.e
. neither satisfied nor dissatisfied so both the banks can improve the level of satisfaction by
improving on this variable.

7) Performing the service correctly the first time

Here for SBI highest frequency is observed in satisfied level, whereas for AXIS it is in neither
dissatisfied nor satisfied level.
Total number of respondents for SBI are more in satisfaction level, whereas for AXIS most of the
respondents are fall in dissatisfied and neither dissatisfied n
or satisfied level.
So for performing the service correctly the first time SBI respondents are agre
ed compared to AXIS respondents.
Also for this factor AXIS is underperforming compared to SBI.

8) Providing the service at the time the service was promised

From the graph, the responses are nearly similar for both AXIS as well as SBI. So for providing
the service at the time the service was performed both the bank has similar kind of responses. Hence there
is not so much difference in providi
ng the service at the time the service was performed.
Also there are very few respondents for both the banks which are highly or moder atley satisfied,
so both the banks need to improve satisfaction level on this fa
ctor, so satisfaction level of their customers will improve.

9) Insisting on error free records

There is quite large difference among the respondents for insisting on error fre e records, SBI
respondents are showing more positive response as compared to A
XIS respondents.
Also AXIS respondents are more on dissatisfaction level than SBI respondents.
So respondents of SBI are agree with the statement as compared to AXIS responden ts.
For this factor AXIS need improvement so satisfaction level of their customer wi ll improve,
whereas for SBI they are performing well.

10) Employees telling customers exactly what services will be

performed

Here from the graph it is clearly seen that almost all the respondents for both the banks are falling
in satisfied and neither dissatisfied nor satisfied level.
But number of respondents for SBI are more satisfied for employees telling custo mers exactly
what services will be performed.
Also there are very few respondents which are moderately and highly agreed with the statements
for both the banks.
So for both the banks there is a scope of improvement on this factor so satisfac tion level of
customers can be improved.

11) Employees giving prompt service to customers

 Here for SBI highest frequency is observed in satisfaction level, whereas for AX IS it is in neither
dissatisfied nor satisfied level.
So for employees giving prompt service to customers SBI respondents are more agr eed over
AXIS respondents.
Here AXIS need improvement as there are less numbers of satisfied respondents.

12) Employees always being willing to help customers

Here, more number of the respondents of AXIS is falling in satisfaction level as compared to SBI
respondents.
SBI respondents are mainly falling in lower side of satisfaction level.
So, for the statement employees always being willing to help customers AXIS resp ondents are
more agreed than of SBI respondents.

13) Employees are never too busy to respond to customers

requests

From the graph, SBI respondents are more in number in satisfaction level as comp ared to AXIS
respondents.
Highest frequency of respondents for both AXIS and SBI is fall in neither dissat isfied nor
satisfied level.
Also there are quite more numbers of respondents for both the banks which are di ssatisfied.
So, for the statement that employees are never too busy to respond to customers r equest SBI
respondents are more agreed as compared to AXIS respondents, the sati
sfaction level is slightly low for both the banks.

14) The behavior of employees instilling confidence in their customers

From the graph it is seen that, there are more number of respondents for SBI who are satisfied as
compared to AXIS respondents.
Also most of the respondents for both the banks are falling in neither dissatisf ied nor satisfied and
satisfied level.
So for the statement that the behavior of employees instilling confidence in the ir customers, SBI
respondents are more agreed as compared to AXIS respondents.
15) Customers feeling safe in their transactions

Here, for SBI highest frequency of respondents is observed in satisfied level, w hereas for AXIS it
is in moderately satisfied level.
But for AXIS respondents they are nearly equally distributed in neither dissatis fied nor satisfied to
highly satisfied level, whereas for SBI in satisfied level
there is quite large peak of respondents.
So for the staement customer feeling safe in there transactions AXIS has more nu mber of
respondents which are moderate to highly satisfied level and for SBI res pondents in satisfied zone are more.
Also here for AXIS numbers of respondents in moderate and highly satisfied are m ore compared
to SBI, but due to large number of respondents in satisfied level f
or SBI lead them to more stronger position.

16) Employees being consistently courteous with their customers

Here from the graph, respondents of both the banks have nearly the same type of responses,
except in level 5 i.e. satisfied where more noumber of AXIS responden
ts are fall.
For both the banks, there are more numbers of satisfied respondents so both the banks are
performing well on this criteria.
So here for the statement employees being consistently courteous with their cust omers, AXIS has
slightly more number of satisfied respondents.

17) Employees having the knowledge to answer

customers questions

For this question the respondents are distributed all over the satisfaction scal e for both the banks.
So here there are more number of dissatisfied respondents as well as more number of satisfied
respondents for both the banks.
Highest frequency is observed in level 5 i.e. satisfied respondents.
But there are more number of respondents for SBI who are agreed with statement h ence for
employees having the knowledge to answer customers question SBI is ahead
of AXIS.

18) Giving customers indivdual attention

 Here for AXIS there are more numbers of respondents who are agreed with the ques tion as
compared to SBI respondents.
But here there is minor difference in the responses of respondents for both the banks.
So level of satisfaction of respondents for both the banks is almost same for th is question.
Both the banks need to convert low satisfied customers to more satisfied custome rs by improving
the performance of this factor.

19) Operating hours convenient to all their customer

There are more numbers of satisfied respondents for AXIS as compared to SBI.
Highest frequency of respondents for both the banks is at level 4 i.e. neither d issatisfied nor
satisfied.
Also there are slightly more numbers of respondents on dissatisfied level for bo th the banks, so
they have to improve in this factor.

20) Employees giving customers personal attention

Here from the graph, we can say that SBI has more number of respondents who are dissatisfied
as compared to AXIS respondents.
Also highest frequency of respondents for AXIS is at level 4 i.e. neither dissat isfied nor satisfied,
whereas for SBI it is at level 3 i.e. dissatisfied.
So for employees giving customers personal attention AXIS has better response as compared to
SBI. Also for both the banks there are quite large numbers of repon
dents who are not agreed with statement.

21) Having the customers best interest at heart

Here most of the respondents for both the banks are fall in dissatisfaction zone
.
Also highest frequency is observed in level 3 i.e. dissatisfied for both the ban ks.
So as far as for this question both the banks have negative response and they n eed to improve it.
22) The employees understanding the specific needs of customers

From the graph, there are more numbers of respondents who are disagree with this statement for
both the banks.
But for SBI there are more numbers of repondents which are falling in level 4 an d for AXIS more
numbers of respondents are falling in level 5.
So for this question AXIS has comparatively good response. But both the banks ha ve below
average response.

CHAPTER 6
KEY FINDINGS

AXIS has more satisfaction level of respondents for dimensions tangibility and e mpathy; whereas
SBI has more satisfaction level of respondents for remaining thr
ee dimensions i.e. reliability, responsiveness, and assurance.
Most of the respondents for both the banks are less satisfied as far as visually appealing physical
facilities concerned and neat appearing employees are concer
ned.
The difference in score was more for SBI, so AXIS was lagging more on reliabili ty dimension.

Insisting on error-free records the difference in score was huge for SBI in comp arison to AXIS.
Also there is moderate difference in score for performing the se
rvice correctly the first time for SBI over AXIS. Hence AXIS needs to improve on
 these two factors as far as reliability dimension is concerned.
For these three factors keeping promise to do something by certain time, providi ng the service at
the time the service was promised and, performing the service correctly the first time both the banks can
improve the level of satisfaction as
there were less number of respondents who were satisfied.
For employees telling customers exactly what services will be performed differen ce is so large for
SBI over AXIS so AXIS has to focus on this factor to improve
score on responsiveness dimension.
Whereas for SBI they are almost performing well on responsiveness dimension, but they need
improvement on employees always being willing to help customers.
Employees telling customers exactly what services will be performed and employee s are never to
busy to respond to customers request for these two questions both
the banks had less satisfaction of customers so by focusing on this to factors t hey can improve
satisfaction level.
Both the banks are performing nearly same on dimension assurance, as there was s light difference
in the score.
Customers feeling safe in their transaction for this question, AXIS has more num ber of
respondents which were moderate to highly satisfied level and for SBI res pondents in satisfied zone were
more but there were less number of respondents i
n moderate to highly satisfied level so due to more numbers of respondents in sa tisfied level,
score of SBI is more.
Employees having enough knowledge to answer customers questions, here both the ba nks need to
improve on this factor as there were more numbers of respondents in
level 3 and level 4 for both the banks, so by focusing on this they can improve satisfaction level
of their customers.
SBI has to improve in all the aspects for the dimension empathy as AXIS is perfo rming well on
this dimension. Mainly they have to focus on giving customers indi
vidual attention and employees giving customers personal attention as they were more lagging
behind in these factors in comparison of AXIS.
Both the banks need to improve its service for employees giving customers person al attention,
operating hours convenient to all their customers, having the cust
omers best interest at heart and the employees understanding the specific needs o f customers as
there were more numbers of respondents who were either not satisf ied or less satisfied.
CHAPTER 7
CONCLUSION

AXIS is doing well on the tangibility and empathy dimension, whereas SBI perform ing well on
reliability, responsiveness and assurance dimensions.
Mainly SBI is doing well on insisting on error free record, employees telling cu stomers exactly
what service will be performed and employees are never too busy
to respond to customers.
Whereas AXIS is performing well on giving customers individual customers and emp loyees
always being willing to help customers.
Both the banks need to improve on empathy dimension.

CHAPTER 8
RECOMMENDATIONS
AXIS:
AXIS needs to improve on mainly these three factors i.e. Promise, Doing it right and Competency
as these factors are more important for banking industry and the
y are lagging on these factors as compared to SBI.
AXIS should maintain these four factors i.e. Promptness, Willingness, Competency and
Understanding as in these factors either AXIS is performing well or doing u
p to the mark and these four factors are important for banking industry.
AXIS should deemphasize on factor Appearance and Approachable as in these factor s they are
performing well, but these factors have less importance as compared t
o other factors.
AXIS should concentrate on insisting on error free records, on performing the se rvice correctly
the first time and employees telling customers exactly what serv
ices will be performed.

SBI:

SBI should improve its performance on Understanding and Credibility as these fac tors are
important for banking industry and they are lagging in these two factor
s.
SBI should concentrate on employees always being willing to help customers, on g iving
customers individual attention, on employees giving customers personal att ention.
As SBI is performing poorly in all the aspect of empathy dimension, so SBI shoul d concentrate on
this dimension more.
SBI should maintain these five factors i.e. Appearance, Promises, Doing it right , Competency, and
Approachable in these factors either SBI is performing well or
doing up to the mark and these four factors are important for banking industry.
SBI should deemphasize on factor Promptness as in this factor they are performin g well, but these
factors have less importance as compared to other factors.
BOTH AXIS AND SBI:
Both the banks should increase satisfaction level of their customers by mainly f ocusing on
following factors:
Keeping promise to do something by certain time.
Providing services at the time the service was promised. Performing
the services correctly the first time.
As on above factor, most of the respondents shows neither satisfied nor dissatis fied, so by
improving this factors satisfaction level can be improve.
CHAPTER 9
BIBLIOGRAPHY

REFERENCE BOOKS:
1) Zeithamal V. A., Gremler D.D., Bitner M.J., and Pandit A.: Service Market ing Integrated
Customer Focus Across The Firm, Fourth Edition, pp. 156-172.
2) Zillur Rahman, Service Quality: Gap in the Indian Bank Industry The ICFAI Journal of
Marketing Management, Feb. 2005, pp 37-50.
WEBSITES:
1) ideas.repec.org/a/ipf/finteo/v31y2007i2p185-201
2) marketing.byu.edu/download/measurementanalysis/servqual
3) http://areas.kenan-flagler.unc.edu/Marketing/FacultyStaff/zeithaml/Selec ted
%20Publications/SERVQUAL-%20A%20Multiple-Item%20Scale%20for%20Measuring%20Con
sumer%20Perceptions%20of%20Service%20Quality.pdf
4) business.mapsofindia.com/banks-in-india
5) rbidocs.rbi.org.in/rdocs/Speeches/PDFs/86160.pdf
6) www.researchandmarkets.com/reports/4020/indian_banking_industry
7) www.mckinsey.com/locations/india/mckinseyonindia/pdf/india_banking_ 2010
.pdf
8) media.wiley.com/product_data/excerpt/34/04713931/0471393134.pdf
9) www.marketresearch.com/product/display.asp?productid=2156584&g=1
10) www.sbi.co.in/
11) www.AXISbank.com/
12) www.experiencefestival.com/banking_in_india_-_current_scenario
13) http://pmindia.nic.in/eac_report_09.pdf

CHAPTER 10
QUESTIONNAIRE

Sr. no.____
Questionnaire
The data/information gathered through this questionnaire would be strictly used for academic
purpose only. All the responses and data will be kept CONFIDENTIAL.
Dear Sir/Madam,
I am the student of GLS-MBA conducting a study on SERVQUAL analysis of banking s ector
with emphasis on State Bank of India and AXIS Bank.
SERVQUAL for AXIS

Please rate the following 22 SERVQUAL instruments by circling the number from s trongly
disagree=1 to strongly agree=7 accordingly to your perception.
1 Modern looking equipment 1 2 3 4 5 6 7
2 Visually appealing physical facilities 1 2 3 4 5 6 7
3 Neat-appearing employees 1 2 3 4 5 6 7
4 Visually appealing materials associated with the service 1 2
3 4 5 6 7
5 Keeping promise to do something by a certain time 1 2 3 4
5 6 7
6 Showing sincere interest in solving a customers problems 1 2 3 4
5 6 7
7 Performing the service correctly the first time 1 2 3 4 5 6
7
8 Providing the service at the time the service was promised 1 2
3 4 5 6 7
9 Insisting on error-free records 1 2 3 4 5 6 7
10 Employees telling customers exactly what services will be performed
1 2 3 4 5 6 7
11 Employees giving prompt service to customers 1 2 3 4 5 6
7
12 Employees always being willing to help customers 1 2 3 4
5 6 7
13 Employees are never too busy to respond to customers requests 1 2
3 4 5 6 7
14 The behavior of employees instilling confidence in their customers
1 2 3 4 5 6 7
15 Customers feeling safe in their transactions 1 2 3 4 5 6
7
16 Employees being consistently courteous with their customers 1 2
3 4 5 6 7
17 Employee having the knowledge to answer customers questions 1 2
3 4 5 6 7
18 Giving customers individual attention 1 2 3 4 5 6 7
19 Operating hours convenient to all their customers 1 2 3 4
5 6 7
20 Employees giving customers personal attention 1 2 3 4 5 6
7
21 Having the customers best interests at heart 1 2 3 4 5 6
7
22 The employees understanding the specific needs of customers 1 2
3 4 5 6 7
Personal Information
1. Gender
Male Female
2. Age
25 years and below 26-35 years
36-45 years Above 45 years
3. Education
Below H.Sc. Completed school education
Graduate Post Graduate
4. Occupation
Own business Government employee
Professional Student
Housewife Other
5. Income
Less than 1 lakh p.a. 1-3 lakh p.a.
3-5 lakh p.a. More than 5 lakh p.a.
Sr. no.____
Questionnaire
The data/information gathered through this questionnaire would be strictly used for academic
purpose only. All the responses and data will be kept CONFIDENTIAL.
Dear Sir/Madam,
I am the student of GLS-MBA conducting a study on SERVQUAL analysis of banking s
ector with emphasis on State Bank of India and AXIS Bank.
SERVQUAL for SBI

Please rate the following 22 SERVQUAL instruments by circling the number from s trongly
disagree=1 to strongly agree=7 accordingly to your perception.
1 Modern looking equipment 1 2 3 4 5 6 7
2 Visually appealing physical facilities 1 2 3 4 5 6 7
3 Neat-appearing employees 1 2 3 4 5 6 7
4 Visually appealing materials associated with the service 1 2
3 4 5 6 7
5 Keeping promise to do something by a certain time 1 2 3 4
5 6 7
6 Showing sincere interest in solving a customers problems 1 2 3 4
5 6 7
7 Performing the service correctly the first time 1 2 3 4 5 6
7
8 Providing the service at the time the service was promised 1 2
3 4 5 6 7
9 Insisting on error-free records 1 2 3 4 5 6 7
10 Employees telling customers exactly what services will be performed
1 2 3 4 5 6 7
11 Employees giving prompt service to customers 1 2 3 4 5 6
7
12 Employees always being willing to help customers 1 2 3 4
5 6 7
13 Employees are never too busy to respond to customers requests 1 2
3 4 5 6 7
14 The behavior of employees instilling confidence in their customers
1 2 3 4 5 6 7
15 Customers feeling safe in their transactions 1 2 3 4 5 6
7
16 Employees being consistently courteous with their customers 1 2
3 4 5 6 7
17 Employee having the knowledge to answer customers questions 1 2
3 4 5 6 7
18 Giving customers individual attention 1 2 3 4 5 6 7
19 Operating hours convenient to all their customers 1 2 3 4
5 6 7
20 Employees giving customers personal attention 1 2 3 4 5 6
7
21 Having the customers best interests at heart 1 2 3 4 5 6
7
22 The employees understanding the specific needs of customers 1 2
3 4 5 6 7
Personal Information
1. Gender
Male Female
2. Age
25 years and below 26-35 years
36-45 years Above 45 years
3. Education
Below H.Sc. Completed school education
Graduate Post Graduate
4. Occupation
Own business Government employee
Professional Student
Housewife Other
5. Income
Less than 1 lakh p.a. 1-3 lakh p.a.
3-5 lakh p.a. More than 5 lakh p.a.