Acknowledgements 120310030904 Phpapp02

8/17/2019 Acknowledgements 120310030904 Phpapp02

http://slidepdf.com/reader/full/acknowledgements-120310030904-phpapp02 1/39

Industry Analysis of Banking and comprehensive study of top two player

ACKNOWL!"#N$%

It is my proud privilege to release the feelings of my gratitude to several

persons who helped me directly or indirectly to conduct this research project work. I express my

heart full indebtness and owe a deep sense of gratitude to my teacher and my faculty guide #r

Narendra #anral& #r Nimish %a'ena, Shri Ramswaroop Memorial roup of !rofessional

"olleges, for their sincere guidance and inspiration in completing this project.

I am extremely thankful to the (rof BB $iwari& (rof (anka) !hingra& #r Nadeem

*a+il,ash& and #r %hayaan -aidi and all faculties members of !#M of Shri Ramswaroop

Memorial roup of !rofessional "olleges for their coordination and cooperation and for there

kind guidance and encouragement.

I also thank all my friends who have more or less contributed to the preparation

of this project report. I will be always indebted to them.

$he study has indeed helped me to explore more knowledgeable avenues related to

my topic and I am sure it will help me in my future.

#ohammad A+am

("!# .nd year

("!# /0001

% & ! a g eS'RI R(MS)(R**! M+M*RI( R*-! * !R*+SSI*/( "*++S




IN$2O!3C$ION

Banking Industry in India

$he Indian banking industry started taking shape after India0s independence in %123. $hough the

Indian banking industry can be traced as far back as %456 with the establishment of 7ank of

7engal, the industry was in a state of turmoil.

-nder the 7ritish influence, "alcutta witnessed a surge in trading activities, giving rise to a

number of banking establishments during the period. Several banks, set up in order to finance

trading, went out of business. or instance, -nion bank, formed by Indian merchants, failed due

to economic recession during %424821 resulting in depositors losing money. Such events resulted

in shifting the reigns of the industry into the hands of +uropeans till the early twentieth century.

rom %156 to%1%%, several banks were set up based on the principles of the Swadesi movement.

$he movement inspired Indian businessmen and politicians to set up banks for the Indian

community and many new banks were launched to promote trade and finance in communal

groups. Some of the prominent ones among these are 7ank of India, "orporation 7ank, 7ank of

7aroda, Indian bank, "anara 7ank, and "entral bank of India.

7ank of 7engal, along with its sister banks, 7ank of 7ombay and 7ank of Madras, set up by

7ritish +ast India "ompany, merged in %19% to give birth to Imperial bank of India, now known

as State bank of India.#uring %1%28%12:, India went through several ups and downs politically and economically and

the effects were felt in the banking sector too. $he )orld )ars disrupted banking activities of the

nation and almost 12 banks failed during this period. (fter %123, however, banking activities

flourished.

9 & ! a g eS'RI R(MS)(R**! M+M*RI( R*-! * !R*+SSI*/( "*++S




(fter the partition of India, the government toook drastic steps to regulate the banking industry.

or example, in %124, additional powers and authority were vested in the Reserve bank of India

to monitor the functioning of the entire banking system. $he passing the 7anking regulation act

in %121, empowered R7I to further regulate, inspect, and control Indian banks.$he nationali;ation and liberali;ation of banks %161 and %11% respectively also boosted the

development of the Indian banking sector. /ationali;ation resulted in 1%< of government

holding in the banking industry and liberali;ation paved the path for private players to participate

in the industry. (s a result, banks like *riental bank of "ommerce, '#" bank, I"I"I bank, and

(=IS bank came into being. oreign banks too were permitted to set up their offices in India.

$he rationali;ation of #I norms in 9559 also allowed foreign players to ac>uire stakes in Indian

banks.

$hese banks implemented innovative forms of banking like ($Ms, mobile banking, phone

banking, internet banking, and debit?credit cards. $he private players constantly improved

services in order to retain customers and win the severe competition which had become a feature

of the Indian banking industry.

"urrently, private banks are going through a series of mergers and ac>uisitions and public sector

banks are shrinking in the form of manpower, e>uity, and non8performing assets.

$he public sector banks have been grappling with attrition which surfaced after the @oluntary

Retirement Scheme was announced. $he dilution of e>uity from :%< to AA< has opened up

opportunities for takeovers.

$he Indian banking system, however, proved resilient to shocks arising out of the global

financial recession. In terms of >uality of assets, the Indian banking players have come out clean

with strong and transparent balance sheets compared to their counterparts in other nations.

ollowing the financial crisis, new deposits made their way towards public sector banks.

(ccording to R7IBs BCuarterly Statistics on #eposits and "redit of Scheduled "ommercial

7anksD September 9551B, nationali;ed banks, as a group, accounted for :5.:< of the aggregate

deposits, while State 7ank of India ES7IF and its associates accounted for 9A.4<. $he share of

other scheduled commercial banks, foreign banks and regional rural banks in aggregate deposits

were %3.4<, :.6<, and A<, respectively.

A & ! a g eS'RI R(MS)(R**! M+M*RI( R*-! * !R*+SSI*/( "*++S




+ver since -S declared recovery from the global financial crisis, the confidence of non8resident

Indians E/RIsF in the Indian economy has revived again. /RI fund inflows increased since (pril

9551 and touched -SG 2:.: billion on Huly 9551, as per the R7IBs ebruary bulletin. Most of this

has come through oreign "urrency /on8resident E"/RF accounts and /on8resident +xternalRupee (ccounts. IndiaBs foreign exchange reserves rose to -SG 942.96 billion as on Hanuary 4,

95%5, according to the R7IBs ebruary bulletin.

$he report also found that scheduled commercial banks served A2,351 banked centers. *f these

centers, 94,51: were single office centers and 62 centers had %55 or more bank offices.

$he expansion plans are self evident from the example of S7I, which is adding 9A new branches

abroad, bringing its foreign8branch network number to %65 by March 95%5. $his will cement its

leading position as the bank with the largest global presence among local peers.

"urrently, the Indian banking framework is comprised of 44 scheduled commercial banks

ES"7sF 8 94 public sector banks Ethat is with the overnment of India holding a stakeF, 91

private banks Ethese do not have government stake, they may be publicly listed and traded on

stock exchangesF and A% foreign banks. $hey have a combined network of over :A,555 branches

and %3,555 ($Ms. (ccording to a report by I"R( imited, a rating agency, the public sector

banks hold over 3: percent of total assets of the banking industry, with the private and foreign

banks holding %4.9< and 6.:< respectively.

In its platinum jubilee year, the R7I, the central bank of the country, in a notification issued on

Hune 9:, 9551, said that banks should link more branches to the /ational +lectronic "learing

Service E/+"SF. /+"S was introduced in September 9554 for centrali;ed processing of

repetitive and bulk payment instructions. "urrently, a little over 96,555 branches of %%2 banks

are enabled to participate in /+"S.

Banking in India originated in the first decade of %4th century with $he eneral 7ank of India

coming into existence in %346. $his was followed by 7ank of 'industan. 7oth these banks are





now defunct. $he oldest bank in existence in India is the State 7ank of India being established as

$he 7ank of 7engal in "alcutta in Hune %456. ( couple of decades later, foreign banks like

"redit yonnais started their "alcutta operations in the %4:5s. (t that point of time, "alcutta was

the most active trading port, mainly due to the trade of the 7ritish +mpire, and due to which banking activity took roots there and prospered. $he first fully Indian owned bank was the

(llahabad 7ank, which was established in %46:.

7y the %155s, the market expanded with the establishment of banks such as !unjab /ational

7ank, in %41: in ahore and 7ank of India, in %156, in Mumbai 8 both of which were founded

under private ownership. $he Reserve 7ank of India formally took on the responsibility of

regulating the Indian banking sector from %1A:. (fter IndiaBs independence in %123, the Reserve

7ank was nationali;ed and given broader powers.

: & ! a g eS'RI R(MS)(R**! M+M*RI( R*-! * !R*+SSI*/( "*++S




OB4C$I5 O6 $7 (2O4C$

$he *bjectives of the project are as followsD

• (naly;e the industry environment by applying various strategic tools like

!+S$(/(JSIS and S)*$ (/(JSIS.

•

$o find the recent happening in this industry and relate it to draw suitable inferences.

• 7ring out $*! 9 7anks of Indian 7anking Industry on the basis of relevant parameters.

• (naly;e the financial statement of both the companies and discover the various region

where one overcomes the other and try to find reasons for that.

• (naly;e the 7rand lines and try to explore the segmentation, targeting and positioning

policies of these $*! 9 players.

• +valuate the current scenario of the industry as well as estimating the chances of entry of

new players by the help of !*R$+R I@+ *R"+ (/(JSIS.

• Study the management, working style and other organi;ational parameters of the $*! 9

players.





• "onduct a comparative analysis between these $*! 9 players.

%8W8O8$ ANAL9%I% O6 IN!IAN BANKIN" IN!3%$29

%$2N"$7

7ank lending has been a significant driver of #! growth and employmentE$he growth

of services, including banking and insurance, improved to 1.1 per cent in 95%58%% from

1.9 per cent in the previous fiscal. articles.economictimes.indiatimes.comF

$he vast networking K growing number of branches K ($Ms. Indian banking system has

reached even to the remote corners of the country.

!olicy makers have made some notable changes in policy and regulation to help

Strengthen the sector. $hese changes include strengthening prudential norms,+nhancing the payments system and integrating regulations between commercial and"o 8operative banks.

$hey have a combined network of over :A,555 branches and %3,555 ($Ms.

(ccording to a report by I"R( imited, a rating agency, the public sector banks hold

over 3: percent of total assets of the banking industry, with the pr ivate and foreign banks holding %4.9< and 6.:< respectively.

In terms of >uality of assets and capital ade>uacy, I ndian banks are considered to

have clean, strong and transparent balance sheets relative to other banks incomparable economies in its region.





"urrently, India has 4% scheduled commercial banks ES"7sF 8 93 public sector banks

Ethat is with the overnment of India holding a stakeF, 99 private banks Ethese do not

have government stakeL they may be publicly listed and traded on stock exchangesF and

A9 foreign banks.

WAKN%%

!S7s need to fundamentally strengthen institutional skill levels especially in sales and

marketing, service operations, risk management and the overall organi;ational

!erformance ethic K strengthen human capital.

7ank penetration is limited to only a few customer segments and geographies

Structural weaknesses such as a fragmented industry structure, restrictions on capital

availability and deployment, lack of institutional support infrastructure, restrictiveabout laws, weak corporate governance and ineffective regulations beyondScheduled "ommercial 7anks ES"7sF, unless industry utilities and service bureaus.

Impediments in sectoral reformsD *pposition from eft and resultant cautious

approach from the /orth 7lock in terms of approving merger of !S- banks mayhamper their growth prospects in the medium term.

O((O2$3NI$9

iven the demographic shifts resulting from changes in age profile and household

income, consumers will increasingly demand enhanced institutional capabilities and

service levels from banks.

)ith the growth in the Indian economy expected to be strong for >uite some time

especially in its services sector8the demand for banking services, especially retail

banking, mortgages and investment services are expected to be strong

Reach in rural India for the private sector and foreign banks.





( multi8media campaign, SwabhimaanN, has been launched to inform, educate and

motivate people to open bank accounts.

$he market is seeing discontinuous growth driven by new products and services thatinclude opportunities in credit cards, consumer finance and wealth management onthe retail side, and in fee8 based income and investment banking on the wholesale banking side. $hese re>uire new skills in sales K marketing, credit and operations.

oreign banks committed to making a play in I ndia will need to adopt alternative

approaches to win the race for the customerN and build a value8 creating customer franchise in advance of regulations potentially opening up post 9551. (t the sametime, they should stay in the game for potential ac>uisition opportunities as and whenthey appear in the near term. Maintaining a fundamentally long8term value8creationmindset.

$72A$%

Rise in inflation figures which would lead to increase in interest rates.

Increase in the number of foreign players would pose a threat to the !S7 as well as the

private players

(%$ ANAL9%I% O6 IN!IAN BANKIN" IN!3%$29





!+S$ analysis of any industry investigates the important factors that affect the industry

and influence the companies operating in the sector. !+S$ stands for !olitical, +conomic,

Social and $echnological analysis. $he !+S$ (nalysis is a tool to analy;e the forces that

drive the industry y and how those factors can influence the industry.

(OLI$ICAL 6AC$O2%:

overnment and R7I policies affect the banking sector. Sometimes looking into the

political advantage of a particular party, the overnment declares some measures to their

benefits like waiver of short8term agricultural loans, to attract the farmer0s votes. 7y

doing so the profits of the bank get affected. @arious banks in the cooperative sector are

open and run by the politicians. $hey exploit these banks for their benefits. Sometimesthe government appoints various chairmen of the banks. @arious policies are framed by

the R7I looking at the present situation of the country for better control over the banks.

B3!"$ #A%32%:

%5 & ! a g eS'RI R(MS)(R**! M+M*RI( R*-! * !R*+SSI*/( "*++S




Agriculture Credit

$o get the best from their land, farmers need access to affordable credit. 7anks have been

consistently meeting the targets set for agriculture credit flow in the past few years. or the year 95%%8%9, $he target raised of credit flow to the farmers from OA,3:,555 crore this year to

O2,3:,555 crore in 95%%8%9. 7anks have been asked to step up direct lending for agriculture and

credit to small and marginal farmers. E7udget 95%%895%9 Speech of !ranab Mukherjee

Minister of inance ebruary 94, 95%%F

6!I LI#I$

In the private banking sector of India, #I is allowed up to a maximum limit of 32 < of the paid8

up capital of the bank.

Benefits of 6!I in Banking %ector in India;

• $ransfer of technology from overseas countries to the domestic market.

• +nsure better and improved risk management in the banking sector.

CONO#IC 6AC$O2% :

7anking is as old as authentic history and the modern commercial banking are traceable to

ancient times. In India, banking has existed in one form or the other from time to time. $he

present era in banking may be taken to have commenced with establishment of bank of 7engal in

%451 under the government charter and with government participation in share capital. (llahabad

bank was started in the year %46: and !unjab national bank in %41:, and thus, others followed.

+very year R7I declares its 6 monthly policy and accordingly the various measures and rates are

implemented which has an impact on the banking sector. (lso the -nion budget affects the

banking sector to boost the economy by giving certain concessions or facilities. If in the 7udget

savings are encouraged, then more deposits will be attracted towards the banks and in turn they

can lend more money to the agricultural sector and industrial sector, therefore, booming the

%% & ! a g eS'RI R(MS)(R**! M+M*RI( R*-! * !R*+SSI*/( "*++S




economy. If the #I limits are relaxed, then more #I are brought in India through banking

channels.

"2OWIN" CONO#9 < "!(:

Indian economy has registered a growth of more that 4.: per cent for last three year and is

expected to maintain robust growth rate as compare to other developed and developing countries.

7anking Industry is directly related to the growth of the economy. $he contributions of various

sectors in the Indian #! for 95%5895%% are as followsD (gricultureD %3< IndustryD 91< Service

SectorD :2< It is great news that today the service sector is contributing more than half of the

Indian #!. It takes India one step closer to the developed economies of the world. +arlier it was

agriculture which mainly contributed to the Indian #!. $he Indian government is still looking

up to improve the #! of the country and so several steps have been taken to boost the

economy. !olicies of #I, S+Ps and /RI investment have been framed to give a push to the

economy and hence the #!.

#ON$A29 (OLIC9 :

Monetary !olicy 955%5895%%

Cash 2eserve 2atio =C22> 6.55< Ew.e.f. 92?52?95%5F

Increased from :.55< to :.:5< wef %A?59?95%5L and then again to :.3:< wef 93?59?95%5L and

now to 6.55< wef 92?52?95%5

%tatutory Li?uidity 2atio =%L2> 92<Ew.e.f. %4?%9?95%5F

#ecreased from 9:< which was continuing since 53?%%?9551

2epo 2ate 4.:5< Ew.e.f.9:?%5?95%%F Increased from 4.9:< which was continuing since

%6?51?95%%

2everse 2epo 2ate 3.:5< Ew.e.f. 9:?%5?95%%F Increased from 3.9:< which was continuing

since %6?51?95%%.





IN6LA$ION 2A$%:

Inflation represents a rise in general level of prices of goods and services over a period of

time. It leads to an erosion in the purchasing power of money. Resultantly, each unit of currency buys fewer goods and services #ifferent fiscal and monetary policies have

curbed. $he inflation rate in India was last reported at 1.A6 percent in nov of 95%%

%OCIO C3L$32AL 6AC$O2%D

Socio culture factors also affect the business. $hey show in which people behave in country.

Socio8cultural factors like taboos, customs, traditions, tastes, preferences, buying and

consumption habit of people, their language, beliefs and values affect the business. 7anking

industry is also operates under this social environment and it is also affect by this factor. $hese

factor are changing continuously people‟s life style, their behavior, consumption pattern etc. is

changing and also creating opportunities and threat for banking industry. $here are some socio8

culture factors that affect banking inIndia have been analy;ed below.

%7I6$ $OWA2!% N3CLA2 6A#IL9:

(ttitude of people of India is changing. /ow, younger generation wants to remain separate from

their parents after they get married. Hoint families are breaking up. $here are many reasons

behind that. 7ut banking sector is positively affected by this trend. ( family need home

consumer durables likefree;e, washing machine, television, bike, car, etc.. so, they demand for

these products and borrow from banks. Recently there is boost in housing finance and vehicle

loans. (s they do not have money they go for installments. So, banks satisfy nuclear familieswants.

C7AN" IN LI6 %$9L:

%A & ! a g eS'RI R(MS)(R**! M+M*RI( R*-! * !R*+SSI*/( "*++S




ife style of India is changing rapidly. $hey are demanding high class products. $hey have

become more advanced. !eople want everything car, mobile, etc.. what their fore father had

dreamed for. /ow teenagers also have mobile and vehicle. +ven middle class people also want to

have well furnished home, television, mobile, vehicle and this has opened opportunities for banking secter to tap this change. +very thing is available so it has become easy to purchase

anything if you do not have lump sum.

(O(3LA$ION :

Increase in population is one of he important factor, which affect the private sector banks. 7anks

would open their branches after looking into thepopulation demographics of the area. !ercentage

of deposit in any branches of banks depends upon the population demographic of that area. $he

population of India is about %9% cores is expected to reach about %25 cores in 95%4. (bout 35<

of population is below A:years of age. $hey are in the prime earning stage and this increase the

earning of the banks. $otal #eposits mobili;ed by the !rivate Sector 7anks increased from Rs,

9,:9,AA: crore as on A%st March 9551 to Rs. A,%9,62: crore as on A%st March 955%5.

LI$2AC9 2A$D

iteracy rate in India is very low compared to developed countries. Illiterate people hesitate to

transact with banks. So, this impacts negatively on banks. 7ut there is positive side of this as

well i.e. illiterate people trust more on banks to deposit their money, they do not have market

information. *pportunities in stocks or mutual funds. So, they look bank as their sole and safe

alternative.

$C7NOLO"ICAL 6AC$O2%:

$C7NOLO"9 IN BANK%





$echnology plays a very important role in bank ‟s internal controlmechanisms as well as services

offered by them. It has in fact given new dimensions to the banks as well as services that they

cater to and the banks are enthusiastically adopting new technological innovations for devising

new products and services.

A$#

$he latest developments in terms of technology in computer and telecommunication have

encouraged the bankers to change the concept of branch banking to anywhere banking. $he use

of ($M and Internet banking has allowed Qanytime, anywhere banking‟ facilities. (utomatic

voice recorders now answer simple >ueries, currency accounting machines makes the job easier

and self8service counters are now encouraged. "redit card facility has encouraged an era of

cashless society. $oday Master"ard and @isa card are the two most popular cards used world

over. $he banks have now started issuing smartcards or debit cards to be used for making

payments. $hese are also called as electronic purse. Some of the banks have also started home

banking through telecommunication facilities and computer technology by using terminals

installed at customers home and they can make the balance in>uiry, get the statement of

accounts, give instructions for fund transfers, etc. $hrough +"S we can receive the dividends and

interest directly to our account avoiding the delay or chance of loosing the post.

I$ %25IC% @ #OBIL BANKIN"

$oday banks are also using SMS and Internet as major tool of promotions and giving great utility

to its customers. or example SMS functions through simple text messages sent from your

mobile. $he messages are then recogni;ed by the bank to provide you with the re>uired

information. (ll these technological changes have forced the bankers to adopt customer8based

approach instead of product8based approach $echnology advancement has changed the face of

traditional banking systems. $echnology advancement has offer 92=3 banking even giving faster

and secured service.

CO2 BANKIN" %OL3$ION%:

%: & ! a g eS'RI R(MS)(R**! M+M*RI( R*-! * !R*+SSI*/( "*++S



Barriers to entry

Product diferentiation v

Licensing requirement

B

Threat of competitors

Large no o #an$s

%ig! mar$et growt! rate

Low switc!ing costs

"ndiferentiated services

%ig! &'ed cost

%ig! e'it #arriers


It is the bu;;word today and every bank is trying to adopt it is the centrali;e banking platform

through which a bank can control its entire operation the adoption of core banking solution will

help bank to roll out new product and services.

(O2$2% 6I5 6O2C% #O!L O6 CO#($I$ION

$he nature of competition in the industry in large part determines the content of strategy,

especially business level strategy .based it is on the fundamental economics of the industry, the

very profit potential of an industry is determine by competition interaction. )here these

interactions are intense, profit tends to be whittled away by the activities of competing.

!orter0s model is based on the insight that a corporate strategy should meet the opportunities and

threats in the organi;ations external environment. +specially, competitive strategy should base on

and understanding of industry structures and the way they change. !orter has identified five

competitive forces that shape every industry and every market. $hese forces determine the

intensity of competition and hence the profitability and attractiveness of an industry. $he

objective of corporate strategy should be to modify these competitive forces in a way that

improves the position of the organi;ation. !orter0s model supports analysis of the driving forces

in an industry. 7ased on the information derived from the ive orces (nalysis, management can

decide how to influence or to exploit particular characteristics of their industry.





2ivalry among Competing 6irms

Rivalry among competitors is very fierce in Indian 7anking Industry.





$he services banks offer is more of homogeneous which makes the "ompany to offer the same

service at a lower rate and eat their competitor market0s share. Market !layers use all sorts of

aggressive selling strategies and activities from intensive advertisement campaigns to

promotional stuff. +ven consumer switch from one bank to another, if there is a wide spread inthe interest. 'ence the intensity of rivalry is very high. $he no of factors has contributed to

increase rivalry those are.

/8 A large no of ,anks

$here is so many banks and non financial institution fighting for same pie , which has

intensified competition

.8 7igh market growth rate

India is seen as one of the biggest market place and growth rate in Indian banking

industry is also very high. $his has ignited the competition.

8 7omogegeous product and services

$he services banks offer is more of homogeneous which makes the company to offer

the same service at a lower rate and eat their competitor market0s share.

8 Low switching cost

"ostumers switching cost is very low, they can easily switch from one bank to another

bank and very little loyalty exist .

D8 3ndifferanciated services

(lmost every bank provides similar services. +very bank tries to copy each other services

and technology which increase level of competition.

E8 7igh fi'ed cost

18 7igh e'it ,arriers

'igh exit barriers humiliate banks to earn profit and retain customers by providing world

class services.





F8 Low government regulations

$here are low regulations exist to start a new business due lpg policy adopted by India.

BA2"AININ" (OW2 O6 %3((LI2%

7anking industry is governed by Reserve 7ank of India. Reserve 7ank of India is the

authority to take monetary action which leads to direct impact on circulation of money in the

+conomy. $he rules and regulation lay down by R7I.

Suppliers of banks are depositors .these are those people who have excess money and

prefer regular income and safety. In banking industry suppliers have low bargaining power.

/8 Nature of suppliers

Suppliers of banks are those people who prefer low risk and those who need regular income and

safety as well. 7anks best place for them to deposits theirs surplus money.

.8 6ew alternatives

8 2,i rules and regulations

7anks are subject to rbi rules and regulations .bank have to behave in a way that rbi wants. So rbi

takes all decisions related to interest rates . this reduce bargaining power of suppliers .

8 %uppliers not concentrated

7anking industry suppliers sure not concentrated. $here are numerous with negligible

portion of offer .so this reduce their bargaining power .

BA2"AININ" (OW2 O6 CON%3#2%





In today world, "ustomer is the ing. 7anks offers different services (ccording to

clients need and re>uirement. $hey offer loans at !rime ending Rate E!RF to their trust worthy

clients and higher rate to others clients.

"ustomers of banks are those who take loans and uses services of banks. "ustomers havehigh bargaining power. $hese are

/8 Large no of alternatives

"ustomers have large no of alternatives, there are so many banks, which fight for same

pie. $here are many non financial institutions like icici, hdfc, and ifci, etc. which has also jump

into these business .there are foreign banks , privet banks, co8operative banks and development

banks together with speciali;ed financial companies that provides finance to customers .these all

increase preference for customers.

.8 Low switching cost

"ost of switching from one bank to another is low. 7anks are also providing ;ero balance

account and another types of facilities. $hey are free to select any banks service. Switching cost

are becoming lower with internet banking gaining momentum and a result customers loyalties

are harder to retain.

8 3ndiffenciated service

7ank provide merely similar service there are no much diffracted in service provides by

different banks so, bargaining power of customers increase. $hey can not be charged for

differentiation.

8 6ull information a,out the market

"ustomers have full information about the market due to globali;ation and digitali;ation

"onsumers have become advance and sophisticated .they are aware with each market condition

so banks have to be more competive and customer friendly to serve them.

or good creditworthy borrowers bargaining power is high due to the availability of large

number of bank







/7" because it re>uires less formal procedure for getting funds compare to private

banks.

9. (ost Office (roductsD !ost office is also providing some service like fixed deposit

facility, saving account, recurring account etc. $he interest rate of saving account is

higher than private banks. It is fully secured by the government so people who do not

want to take risk for them post office saving is good substitute.

A. "overnment BondD ovt. 7ond also attracts savings from the general public. It is less

risky and more secured as compare to savings in private banks.

2. #utual 6undsD Mutual funds are also now proving as good substitutes for banks. $hey

assure for providing high return with less time in comparison of banks. $he

administrative expenses are also very low as compared to banks. Investment in Mutual

funds is more flexible than investment in banks.

:. %tock #arketD !eople who are ready to bear risk and wants a high return on their

investment, stock market is a good substitute for them. #ay by day investors are

moving towards stock market as interest rate in banks are decreasing. So now stock

market has proved as a big competitor for baking sector.

6. !e,enturesD #ebentures is also proved as a good substitute of bank0s fixed deposit as

return on debenture is fixed and high. $here are different types of debentures, which

attract various classes of investors.

3. Other Investment AlternativesD /ow common people0s attraction is shifting from

banks to other various alternatives such as gold, precious metals, land, small savings .

$O( $WO (LA92% IN BANKIN" IN!3%$29

%tate Bank of India





ICICI ,ank

%LC$ION C2I$2IA

CA%A or !eposits

9A & ! a g eS'RI R(MS)(R**! M+M*RI( R*-! * !R*+SSI*/( "*++S




Investment

Advances

(eposits Investments )dvances*

+*****

,*****

-*****

.*****

/******

/+*****

.*,//-

+.012*

-3/2/,

+*+*/1

/+*.23

/./+*-

comparision chart

Axis Title





%$A$ BANK O6 IN!IA=%BI>

7istory of %BI

9: & ! a g eS'RI R(MS)(R**! M+M*RI( R*-! * !R*+SSI*/( "*++S






purposefully. $he bank served the heterogeneous financial needs of the planned economic

development.

Branches

$he corporate center of S7I is located in Mumbai. In order to cater to different functions, there

are several other establishments in and outside Mumbai, apart from the corporate center. $he

bank boasts of having as many as %2 local head offices and :3 Ponal *ffices, located at major

cities throughout India. It is recorded that S7I has about %5555 branches, well networked to cater

to its customers throughout India.

A$# %ervices

S7I provides easy access to money to its customers through more than 4:55 ($Ms in India. $he

7ank also facilitates the free transaction of money at the ($Ms of State 7ank roup, which

includes the ($Ms of State 7ank of India as well as the (ssociate 7anks U State 7ank of 7ikaner

K Haipur, State 7ank of 'yderabad, State 7ank of Indore, etc. Jou may also transact money

through S7I "ommercial and International 7ank td by using the State 7ank ($M8cum8#ebit

E"ash !lusF card.

%u,sidiaries

$he State 7ank roup includes a network of eight banking subsidiaries and several non8banking

subsidiaries. $hrough the establishments, it offers various services including merchant banking

services, fund management, factoring services, primary dealership in government securities,

credit cards and insurance.

$he eight banking subsidiaries areD

• State 7ank of 7ikaner and Haipur ES77HF

• State 7ank of 'yderabad ES7'F

• State 7ank of India ES7IF

• State 7ank of Indore ES7IRF





• State 7ank of Mysore ES7MF

• State 7ank of !atiala ES7!F

• State 7ank of Saurashtra ES7SF

• State 7ank of $ravancore ES7$F

%"#N$A$ION &$A2"$IN"&(O%I$ION O6 %BI

%"#N$A$ION %$2A$"9:

!emographics varia,les

Location• Metros K divisional cities

Occupation

• 7usiness person

• Salaried class Eboth govt. K privateF

Age

• Senior citi;ens

•Major

• Minor

$A2"$IN" %$2A$"9:

Corporate ,anking market: $his market targets the industries K fulfills their financial needs.

Capital market : $his segment is targeted on the long term needs of the individual as well as ofindustries.

2etail ,anking market : this segment is for retail investors K provide them short term financial

credit for their personal, house hold needs.





(O%I$IONIN" %$2A$"9:

S7I has positioned itself as a bank which gives higher standard of services through product

innovation for the diverse need of individual K corporate clients$aglinesD With you ; all the way and (ure Banking8 Nothing lse

!I662N$ (2O!3C$% O6 %BI:

!(O%I$ LOAN%

%avings Account

Current Account

6i'ed !eposits

!emat Account

Life (lus %enior Citi+ens %avings

Account

%ecurity !eposits

2ecurring !eposits

$a';%aver 6i'ed !eposit

%alary Account

Advantage Woman

%avings Account

2ural %avings Account

No frill account

7ome Loans

Loan Against (roperty

(ersonal Loans

Car Loan

Loans against %ecurities

$wo Wheeler

2etail Asset

6armer 6inance

Business Installment

Loans





Industrial Credit and

Investment Corporation of

India=ICICI>

7istory Of ICICI

A5 & ! a g eS'RI R(MS)(R**! M+M*RI( R*-! * !R*+SSI*/( "*++S




I"I"I 7ank was originally promoted in %112 by I"I"I imited, an Indian financial institution,

and was its wholly8owned subsidiary. I"I"IBs shareholding in I"I"I 7ank was reduced to 26<

through a public offering of shares in India in fiscal %114, an e>uity offering in the form of (#Rslisted on the /JS+ in fiscal 9555, I"I"I 7ankBs ac>uisition of 7ank of Madura imited in an all8

stock amalgamation in fiscal 955%, and secondary market sales by I"I"I to institutional investors

in fiscal 955% and fiscal 9559. I"I"I was formed in %1:: at the initiative of the )orld 7ank, the

overnment of India and representatives of Indian industry. $he principal objective was to create

a development financial institution for providing medium8term and long8term project financing

to Indian businesses.

In the %115s, I"I"I transformed its business from a development financial institution offering

only project finance to a diversified financial services group offering a wide variety of products

and services, both directly and through a number of subsidiaries and affiliates like I"I"I 7ank.

In %111, I"I"I become the first Indian company and the first bank or financial institution from

non8Hapan (sia to be listed on the /JS+.

(fter consideration of various corporate structuring alternatives in the context of the emerging

competitive scenario in the Indian banking industry, and the move towards universal banking, the

managements of I"I"I and I"I"I 7ank formed the view that the merger of I"I"I with I"I"I

7ank would be the optimal strategic alternative for both entities, and would create the optimal

legal structure for the I"I"I groupBs universal banking strategy. $he merger would enhance value

for I"I"I shareholders through the merged entityBs access to low8cost deposits, greater

opportunities for earning fee8based income and the ability to participate in the payments system

and provide transaction8banking services. $he merger would enhance value for I"I"I 7ank

shareholders through a large capital base and scale of operations, seamless access to I"I"IBsstrong corporate relationships built up over five decades, entry into new business segments,

higher market share in various business segments, particularly fee8based services, and access to

the vast talent pool of I"I"I and its subsidiaries.

A% & ! a g eS'RI R(MS)(R**! M+M*RI( R*-! * !R*+SSI*/( "*++S




In *ctober 955%, the 7oards of #irectors of I"I"I and I"I"I 7ank approved the merger of I"I"I

and two of its wholly8owned retail finance subsidiaries, I"I"I !ersonal inancial Services

imited and I"I"I "apital Services imited, with I"I"I 7ank. $he merger was approved by

shareholders of I"I"I and I"I"I 7ank in Hanuary 9559, by the 'igh "ourt of ujarat at(hmedabad in March 9559, and by the 'igh "ourt of Hudicature at Mumbai and the Reserve

7ank of India in (pril 9559. "onse>uent to the merger, the I"I"I groupBs financing and banking

operations, both wholesale and retail, have been integrated in a single entity.

%"#N$A$ION &$A2"$IN"&(O%I$ION O6 ICICI

%"#N$A$ION %$2A$"9:

Occupation

• #ifferent products for different occupational segment identified

Income

"eographical

• "oncentrated on $ier % K $ier 9 "ities trying to extend reach

Age

• Senior citi;ens

• Major

• Minor





$A2"$IN" %$2A$"9:

•

$ailors its marketing campaigns to meet the needs of its target prospects.

(O%I$IONIN" %$2A$"9:

Core proposition G H7um hain na G trust& credi,ility& total financial solution provider=,rought a,out through its cross selling effort>

AA & ! a g eS'RI R(MS)(R**! M+M*RI( R*-! * !R*+SSI*/( "*++S




!I662N$ (2O!3C$% O6 ICICI:

%A5IN"% ACCO3N$

• S(@I/S (""*-/$

• S(@I/S M(= (""*-/$

• !+/SI*/S S(@I/S 7(/ (""*-/$

• S((RJ (""*-/$

C322N$ ACCO3N$

• !-S "-RR+/$ (""*-/$

• $R(#+ "-RR+/$ (""*-/$

• !R+MI-M "-RR+/$ (""*-/$

6I! !(O%I$ ACCO3N$

• R+-(R # (""*-/$

• I@+ J+(R $(= S(@I/ # (""*-/$

!#A$ ACCO3N$

LOAN%

'ome oan

!ersonal oan

"ar oan

$wo )heeler oan

"ommercial @ehicle oan

oan (gainst Securities

oan (gainst old

arm +>uipment oan

"onstruction +>uipment oan

*ffice +>uipment oan

Medical +>uipment oan

Rural +ducational Institute inance





"ustomer #urable oans

6INANCIAL 2A$IO ANAL9%I%

inancial ratio analysis of both banks is as followsD

(< ratio : ( valuation ratio of a companyBs current share price compared to its per8share

earnings.

Calculated as:

#arket 5alue per %hare

arnings per %hare =(%)

+!SD $he portion of a companyBs profit allocated to each outstanding share of commonstock. +arnings per share serve as an indicator of a companyBs profitability.

"alculated asD

(A$

Num,er of %hareholders

!B$ *3I$9 2A$IO:

( measure of a companyBs financial leverage calculated by dividing itstotal liabilities by stockholdersB e>uity. It indicates what proportion of e>uity and debt thecompany is using to finance its assets.

$otal lia,ilities

%hareholders e?uity

#ebt e>uity ratio basically tells about the composition of the capital structure that

how much is the ratio of e>uity to debt

A: & ! a g eS'RI R(MS)(R**! M+M*RI( R*-! * !R*+SSI*/( "*++S




( high debt?e>uity ratio generally means that a company has been aggressive in

financing its growth with debt

C322N$ 2A$IO: ( li>uidity ratio that measures a companyBs ability to pay short8termobligations.

$he "urrent Ratio formula isD

(lso known as li>uidity ratio, cash asset ratio and cash ratio.

$he higher the current ratio, the more capable the company is of paying its

obligations.

BOOK 5AL3: ( companyBs common stock e>uity as it appears on a balance sheet, e>ual to

total assets minus liabilities, preferred stock, and intangible assets such as goodwill. $his is how

much the company would have left over in assets if it went out of business immediately.

$he book value is calculated by the formulaD

Internal lia,ility

Num,er of shares

!I5I!N! 9IL!: ( financial ratio that shows how much a company pays out in dividends

each year relative to its share price.In the absence of any capital gains, the dividend yield is the

return on investment for a stock. #ividend yield is calculated as followsD





2atio %BI ICICI BANK

(< ratio /180/ /18.1

(% //E801 J8EF

!ividend yield /8DD /8E

Book 5alue/&0.80

1F80F

Current 2atio080

08//

!e,t e?uity ratio /81 8/0

2A$IO ANAL9%I% O6 BO$7 CO#(ANI%





BIBLIO"2A(79

httpD??www.moneycontrol.com

httpD??www.nirmalbang.com

articles.economictimes.indiatimes.comF

business.mapsofindia.com

www.allbankingsolutions.com?#($(.htm

www. r,i .org.in?

www. state,ankofindia.com?

www. icici bank.com?

Budget .0//;.0/. %peech of !ranab Mukherjee Minister of Finance 6e,ruary .F&

.0//


http://www.moneycontrol.com/

http://www.nirmalbang.com/

http://www.allbankingsolutions.com/DATA.htm

http://www.rbi.org.in/




http://www.statebankofindia.com/



http://www.icicibank.com/




http://www.nirmalbang.com/

http://www.allbankingsolutions.com/DATA.htm




http://www.moneycontrol.com/




www.business8standard.com

Documents

Acknowledgements 120310030904 Phpapp02