Dhanlaxmi bank

Organizational Study of Dhanlaxmi Bank

CHAPTER-1

INTRODUCTION

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http://en.wikipedia.org/wiki/File:Dhandabanklogo.gif


REVIEW OF LITERATURE:

RETAIL BANKING

DEFINITION:

“Retail banking is typical mass-market banking where individual

customers use local branches of larger commercial banks. Services

offered include: savings and checking accounts, mortgages, personal

loans, debit cards, credit cards, and so”

The Retail Banking environment today is changing fast. The

changing customer demographics demands to create a differentiated

application based on scalable technology, improved service and banking

convenience. Higher penetration of technology and increase in global

literacy levels has set up the expectations of the customer higher than

never before. Increasing use of modern technology has further enhanced

reach and accessibility.

The market today gives us a challenge to provide multiple and

innovative contemporary services to the customer through a consolidated

window as so to ensure that the bank’s customer gets “Uniformity and

Consistency” of service delivery across time and at every touch point

across all channels. The pace of innovation is accelerating and security

threat has become prime of all electronic transactions. High cost structure

rendering mass-market servicing is prohibitively expensive.

Present day tech-savvy bankers are now more looking at reduction in

their operating costs by adopting scalable and secure technology thereby

reducing the response time to their customers so as to improve their client

base and economies of scale.

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The solution lies to market demands and challenges lies in innovation of

new offering with minimum dependence on branches – a multi-channel

bank and to eliminate the disadvantage of an inadequate branch network.

Generation of leads to cross sell and creating additional revenues with

utmost customer satisfaction has become focal point worldwide for the

success of a Bank.

Today’s retail banking sector is characterized by three basic

characteristics:

Multiple products (deposits, credit cards, insurance, investments

and securities)

Multiple channels of distribution (call center, branch, internet)

Multiple customer groups (consumer, small business, and

corporate).

STRATEGIES FOR INCREASING RETAIL BANKING

BUSINESS

Constant product innovation to match the requirements of the

customer segments

The customer database available with the banks is the best source of

their demographic and financial information and can be used by the

banks for targeting certain customer segments for new or modified

product. The banks should come out with new products in the area of

securities, mutual funds and insurance.

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Quality service and quickness in delivery

As most of the banks are offering retail products of similar nature, the

customers can easily switchover to the one, which offers better service

at comparatively lower costs. The quality of service that banks offer

and the experience that clients have, matter the most. Hence, to retain

the customers, banks have to come out with competitive products

satisfying the desires of the customers at the click of a button.

Introduction of new delivery channels

Retail customers like to interface with their bank through multiple

channels. Therefore, banks should try to give high quality service

across all service channels like branches, Internet, ATMs, etc.

Tapping of unexploited potential and increasing the volume of

business

This will compensate for the thin margins. The Indian retail banking

market still remains largely untapped giving a scope for growth to the

banks and financial institutions. With changing psyche of Indian

consumers, who are now comfortable with the idea of availing loans

for their personal needs, banks have tremendous potential lying in this

segment. Marketing departments of the banks be geared up and

special training be imparted to them so that banks are successful in

grabbing more and more of retail business in the market.

Infrastructure outsourcing

This will help in lowering the cost of service channels combined with

quality and quickness.

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Detail market research

Banks may go for detail market research, which will help them in

knowing what their competitors are offering to their clients. This will

enable them to have an edge over their competitors and increase their

share in retail banking pie by offering better products and services.

Cross-selling of products

PSBs have an added advantage of having a wide network of branches,

which gives them an opportunity to sell third-party products through

these branches.

Business process outsourcing

Outsourcing of requirements would not only save cost and time but

would help the banks in concentrating on the core business area.

Banks can devote more time for marketing, customer service and

brand building. For example, Management of ATMs can be

outsourced. This will save the banks from dealing with the intricacies

of technology.

Tie-up arrangements

PSBs with regional concentration can reap the benefit of reaching

customers across the country by entering into strategic alliance with

other such banks with intensive presence in other regions. In the

present regime of falling interest and stiff competition, banks are

aware that it is finally the retail banking which will enable them to

hold the head above water. Hence, banks should make all out efforts

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to boost the retail banking by recognizing the needs of the customers.

It is essential that banks would be imaginative in predicting the

customers' expectations in the ever-changing tastes and environments.

It is the innovative and competitive products coupled with high

quality care for clients will only hold the key to success in this area. In

short, bankers have to run very fast even to stay where they are now.

It is the survival of the fastest now and not only survival of the fittest.

EMERGING ISSUES IN HANDLING RETAIL BANKING

KNOWING CUSTOMER

‘Know your Customer’ is a concept which is easier said than practiced.

Banks face several hurdles in achieving this. In order to that the product

lines are targeted at the right customers-present and prospective-it is

imperative that an integrated view of customers is available to the

banks. The benefits flowing out of cross-selling and up-selling will

remain a far cry in the absence of this vital input. In this regard the

customer databases available with most of the public sector banks, if not

all, remain far from being enviable.

What needs to be done is setting up of a robust data warehouse

where from meaningful data on customers, their preferences, there

spending patterns, etc. can be mined. Cleansing of existing data is the

first step in this direction. PSBs have a long way to go in this regard.

TECHNOLOGY ISSUES

Retail banking calls for huge investments in technology. Whether it is

setting up of a Customer Relationship Management System or

Establishing Loan Process Automation or providing anytime, anywhere

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convenience to the vast number of customers or establishing

channel/product/customer profitability, technology plays a pivotal role.

And it is a long haul. The Issues involved include adoption of the right

technology at the right time and at the same time ensuring volumes and

margins to sustain the investments.

It is pertinent to remember that Citibank, known for its

deployment of technology, took nearly a decade to make profits in credit

cards. It has also to be added in the same breath that without adequate

technology support, it would be well nigh possible to administer the

growing retail portfolio without allowing its health to deteriorate.

Further, the key to reduction in transaction costs simultaneously with

increase in ability to handle huge volumes of business lies only in

technology adoption.

PSBs are on their way to catch up with the technology much

required for the success of retail banking efforts. Lack of connectivity,

stand alone models, concept of branch customer as against bank

customer, lack of convergence amongst available channels, absence of

customer profiling, lack of proper decision support systems, etc., are a

few deficiencies that are being overcome in a great way. However, the

initiatives in this regard should include creating flexible computing

architecture amenable to changes and having scalability, a futuristic

approach, networking across channels, development of a strong

Customer Information Systems (CIS) and adopting Customer

Relationship Management (CRM) models for getting a 360 degree view

of the customer.

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ORGANIZATIONAL ALIGNMENT

It is of utmost importance that the culture and practices of an institution

support its stated goals. Having decided to take a plunge into retail

banking, banks need to have a well defined business strategy based on

the competitive of the bank and its potential. Creation of a proper

organization structure and business operating models which would

facilitate easy work flow are the needs of the hour. The need for

building the organizational capacity needed to achieve the desired

results cannot be overstated.

This would mean a strong commitment at all levels, intensive

training of the rank and file, putting in place a proper incentive scheme,

etc. As a part of organizational alignment, there is also the need for

setting up of an effective Corporate Marketing Division. Most of the

public sector banks have only publicity departments and not marketing

setup. A fully fledged marketing department or division would help in

evolving a brand strategy, address the issue of alienation from the

upwardly mobile, high net worth customer group and improve the recall

value of the institution and its products by arresting the trend of getting

receded from public memory. The much needed tie-ups with

manufacturers/distributors/builders will also facilitated smoothly. It is

time to break the myth PSBs are not customer friendly. The attention is

to be diverted to vast databases of customers lying with the PSBs till

unexploited for marketing.

PRODUCT INNOVATION

Product innovation continues to be yet another major challenge. Even

though bank after bank is coming out with new products, not all are

successful. What is of crucial importance is the need to understand the

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difference between novelty and innovation? Peter Drucker in his path

breaking book: “Management Challenges for the 21st Century” has in

fact sounded a word of caution: “innovation that is not in tune with the

strategic realities will not work; confusing novelty with innovation

(should be avoided), test of innovation is that it creates value; novelty

creates only amusement”. The days of selling the products available in

the shelves are gone. Banks need to innovate products suiting the needs

and requirements of different types of customers. Revisiting the

features of the existing products to continue to keep them on demand

should not also be lost sight of.

PRICING OF PRODUCT

The next challenge is to have appropriate policies in place. The industry

today is witnessing a price war, with each bank wanting to have a larger

slice of the cake that is the market, without much of a scientific study

into the cost of funds involved, margins, etc. The strategy of each

player in the market seems to be: ‘under cutting others and wooing the

clients of others’. Most of the banks that use rating models for

determining the health of the retail portfolio do not use them for pricing

the products. The much needed transparency in pricing is also missing,

with many hidden charges. There is a tendency, at least on the part of

few to camouflage the price. The situation cannot remain his way for

long. This will be one issue that will be gaining importance in the near

future.

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Retail Banking in India

With a jump in the Indian economy from a manufacturing sector, that

never really took off, to a nascent service sector, Banking as a whole is

undergoing a change. A larger option for the consumer is getting

translated into a larger demand for financial products and customisation

of services is fast becoming the norm than a competitive advantage. With

the Retail banking sector expected to grow at a rate of 30% [Chanda

Kochhar, ED, ICICI Bank] players are focussing more and more on the

Retail and are waking up to the potential of this sector of banking. At the

same time, the banking sector as a whole is seeing structural changes in

regulatory frameworks and securitisation and stringent NPA norms

expected to be in place by 2004 means the faster one adapts to these

changing dynamics, the faster is one expected to gain the advantage. In

this article, we try to study the reasons behind the euphemism regarding

the Retail-focus of the Indian banks and try to assess how much of it is

worth the attention that it is attracting.

Potential for Retail in India: Is sky the limit?

The Indian players are bullish on the Retail business and this is not totally

unfounded. There are two main reasons behind this. Firstly, it is now

undeniable that the face of the Indian consumer is changing. This is

reflected in a change in the urban household income pattern. The direct

fallout of such a change will be the consumption patterns and hence the

banking habits of Indians, which will now be skewed towards Retail

products. At the same time, India compares pretty poorly with the other

economies of the world that are now becoming comparable in terms of

spending patterns with the opening up of our economy. For instance,

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while the total outstanding Retail loans in Taiwan is around 41% of GDP,

the figure in India stands at less than 5%. The comparison with the West

is even more staggering. Another comparison that is natural when

comparing Retail sectors is the use of credit cards. Here also, the potential

lies in the fact that of all the consumer expenditure in India in 2001, less

than 1% was through plastic, the corresponding US figure standing at

18%.

But how competitive are the players?

The fact that the statistics reveal a huge potential also brings with it a

threat that is true for any sector of a country that is opening up. Just how

competitive are our banks? Is the threat of getting drubbed by foreign

competition real? To analyze this, one needs to get into the shoes of the

foreign banks. In other words, how do they see us? Are we good takeover

targets?

Going by international standards, a large portion of the Indian

population is simply not “bankable” – taking profitability into

consideration. On the other hand, the financial services market is highly

over-leveraged in India. Competition is fierce, particularly from local

private banks such as HDFC and ICICI, in the business of home, car and

consumer loans. There, precisely lie the pitfalls of such explosive

growth. All banks are targeting the fluffiest segment i.e. the upwardly

mobile urban salaried class. Although the players are spreading their

operations into segments like self- employed and the semi-urban rich, it

is an open secret that the big city Indian yuppies form the most

profitable segment. Over-dependence on this segment is bound to bring

in inflexibility in the business.

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INDUSTRY

PROFILE

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BANKING BASICS

The Indian banking industry which is governed by the Banking

Regulation Act of India, 1949 can be broadly classified into two major

categories.

Scheduled Banks

Non-scheduled Banks

FIGURE:-1 STRUCTRE OF INDIAN BANKING INDUSTRY

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RESERVE BANK OF INDIA (CENTRAL BANK

AND SUPREME MONETORY AUTHORITY)

SCHEDULED BANKS

(96)

COMMERCIAL BANKS

FOREIGN BANKS

(40)

REGIONAL RURAL BANKS(196) PUBLIC

SECTOR BANKS

(27)

SBI & ASSOCIATE

BANKS(8)

OTHER NATIONALIZED

BANKS(19)

PRIVATE SECTOR BANKS

(30)

OLD PRIVATE BANKS

(22)

NEW PRIVATE BANKS

(8)

CO-OPERATIVE

BANKS

URBAN CO-OPERATIVE

BANKS(52)

STATE CO-OPERATIVE BANKS

(16)



Scheduled banks comprise commercial banks and the co-operative banks.

In terms of ownership commercial banks can be further grouped into

nationalized banks, the State Bank of India and its group banks, regional

rural banks and private sector banks(old/new domestic and foreign)

Banking regulation act of India, 1949 defines banking as “accepting, for

the purpose of lending or investment of deposits of money from the

public, repayable on demand or otherwise and withdraw able by

cheques, draft and order or otherwise.”

In addition, Banks are allowed to perform certain activities which are

ancillary to this business of accepting deposits and lending. A bank’s

relationship with the public, therefore, revolves around accepting deposit

and lending money. Another activity which is assuming increasing

importance is transfer of money, both domestic and foreign, from one

place to another. This activity is generally known as “Remittance

Business” in banking parlance. The so called forex (foreign exchange) is

largely a part of remittance. It involves buying and selling o0f foreign

currencies.

The law governing Banking Activities in India is called “Negotiable

Instrument Act 1881”. The banking activities can be classified as:

Accepting deposits from public/others

Transferring money from one place to another

Acting as trustees

Keeping valuable in safe custody

Collection business

Deposits

Loans

Lending money to public

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HISTORY

Banking in India originated in the last decades of the 18th century with

The General Bank of India which came into existence in 1786. This was

followed by The Bank of Hindustan. Both of these are now defunct. The

oldest bank in existence in India is the State Bank of India, which

originated in the Bank of Calcutta (later Bank of Bengal) in June 1806. A

couple of decades late, foreign banks like Credit Lyonnais started their

Calcutta operations in 1850s. The first fully Indian owned bank was The

Allahabad Bank, which was established in 1865.

By the 1900s, the market expanded with the establishment of banks such

as Punjab National Bank, in 1895 in Lahore and Bank of India in 1906, in

Mumbai. Both these were founded under private ownership. The Reserve

Bank of India formally took on the responsibility of regulating the Indian

banking sector from 1935. After India’s independence in 1947, the

Reserve Bank of India was nationalized and given broader powers.

POST-INDEPENDENCE

The partition of India in 1947 adversely impacted the economies of

Punjab and West Bengal, paralyzing banking activities for months. India's

independence marked the end of a regime of the Laissez-faire for the

Indian banking. The Government of India initiated measures to play an

active role in the economic life of the nation. This resulted into greater

involvement of the state in different segments of the economy including

banking and finance. The major steps to regulate banking included:

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http://en.wikipedia.org/wiki/Government_of_India

http://en.wikipedia.org/wiki/Laissez-faire

http://en.wikipedia.org/w/index.php?title=Indian_independence_eovement&action=edit&redlink=1

http://en.wikipedia.org/wiki/West_Bengal

http://en.wikipedia.org/wiki/Punjab,_India

http://en.wikipedia.org/wiki/Partition_of_India



In 1948, the Reserve Bank of India, India's central banking

authority, was nationalized, and it became an institution owned by

the Government of India.

The Banking Regulation Act also provided that no new bank or

branch of an existing bank could be opened without a license from

the RBI, and no two banks could have common directors.

However, despite these provisions, control and regulations, banks in India

except the State Bank of India, continued to be owned and operated by

private persons. This changed with the nationalization of major banks in

India on 19th July 1969.

NATIONALIZATION

By the 1960s, the Indian banking industry had become an important tool

to facilitate the development of the Indian economy. At the same time, it

had emerged as a large employer, and a debate had ensued about the

possibility to nationalize the banking industry. The Prime Minister of

India expressed the intention of the GOI in the annual conference of the

All India Congress Meeting in a paper entitled "Stray thoughts on Bank

Nationalization."

After this, until the 1990s, the nationalized banks grew at a pace of

around 4%, closer to the average growth rate of the Indian economy.

LIBERALISATION

In the early 1990s, the then Narsimha Rao government embarked on a

policy of liberalization, licensing a small number of private banks. These

came to be known as New Generation tech-savvy banks, and included

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

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http://en.wikipedia.org/wiki/Liberalization

http://en.wikipedia.org/wiki/Narsimha_Rao


http://en.wikipedia.org/wiki/Prime_Minister_of_India

http://en.wikipedia.org/wiki/Prime_Minister_of_India

http://en.wikipedia.org/wiki/Indian_economy

http://en.wikipedia.org/wiki/State_Bank_of_India

http://en.wikipedia.org/wiki/Reserve_Bank_of_India



which later amalgamated with Oriental Bank of Commerce, Axis

Bank(earlier as UTI Bank), ICICI Bank and HDFC Bank.

This move, along with the rapid growth in the economy of India,

revitalized the banking sector in India, which has seen rapid growth with

strong contribution from all the three sectors of banks, namely,

government banks, private banks and foreign banks.

CURRENT SITUATION

Currently, India has 96 scheduled commercial banks (SCBs) - 27 public

sector banks (that is with the Government of India holding a stake), 31

private banks (these do not have government stake; they may be publicly

listed and traded on stock exchanges) and 38 foreign banks. They have a

combined network of over 53,000 branches and 49,000 ATMs.

The industry is currently in a transition phase. On the one hand, the

Public Sector Banks which are the mainstay of Indian banking system,

are in the process of shedding their flab in terms of excessive manpower,

excessive Non Performing Assets (NPAs) and excessive governmental

equity, while on the other hand the private sector banks are consolidating

themselves through mergers and acquisitions.

With he growth in the Indian economy which is expected to be strong for

services sector, the demand for the banking services, especially retail

banking, mortgages and investment services are expected to be strong.

One may also expect mergers and acquisitions, takeovers and asset sales.

Banking industry has completely moulded the system with some great

technological developments and few revolutionary thoughts. Introduction

of MIS (MANAGEMENT INFORMATION SYSTEM), HRIS (HUMAN

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http://en.wikipedia.org/wiki/Automated_teller_machine


http://en.wikipedia.org/wiki/Economy_of_India

http://en.wikipedia.org/wiki/HDFC_Bank

http://en.wikipedia.org/wiki/ICICI_Bank

http://en.wikipedia.org/wiki/UTI_Bank

http://en.wikipedia.org/wiki/Axis_Bank

http://en.wikipedia.org/wiki/Axis_Bank



RESOURCE INFORMATION SYSTEM), ERP SYSTEMS has made

this system quick and efficient.

Investment is the part of services sector which is facing a tough

competition these days. Both the public and private sector banking

institutions are the major players.

The scenario which they have brought up in the market through their

unpretentious hardworking and high quality work, has made a cluster

breaking entry in the era of competition.

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Customer Customer Customer

Bank Branch

Clearing Decision

Bank Branch

Clearing Decision

Bank Branch

Clearing Decision

Central clearing Central clearing


TRADITIONAL BANKING

Traditionally the relationship between bank and its customer has

been on a one-to-one level via the branch network. This was put into

operation with clearing and design making responsibilities at the

individual branch level. The head office had the responsibility for the

overall clearing network, the size of the branch network and the training

of staff in the branch network. The branch monitored the organizations

performance and set the decision making parameters, but the information

available to both branch and their customers was limited to one

geographical location.

FIGURE:-2 Traditional banking structure

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RELATIONSHIP BANKING

The modern bank cannot rely on its branch network alone.

Customers are now demanding new, more convenient, delivery systems.

And services such as internet banking have a dual role for the customer

thus increasing the productivity of this sector. They provide traditional

banking service, but additionally offer much greater access to information

on their account and on the banks many other services. To do this

banking has to create information layers, which can be accessed both by

bank staff as well as by the customers themselves.

The use of interactive electronic links via the internet can go a

long way in providing the customers with greater deal of information

about both their financial situation and about the services offered by the

bank.

FIGURE:-3-RELATIONSHIP BANKING

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Customers

Telephone, Branch, Electronic Banking, etc.

Shared Information

Clearing systems Head Office Risk Monitoring



Financial Statement Analysis :

“Financial Statements Analysis is largely a study of relationship

among the various financial factors in a business as disclosed by a

single set of statements and a study of trends of these factors as

shown in a series of statements” this is according to Myer.

Analysis is the process of critically examining in detail accounting

information given in the financial statements. For the purpose of

financial analysis, individual items are studied, their

interrelationships with other related figures established, the data is

sometimes rearranged to have better understanding of the

information with the help of different techniques or tools for the

purpose. Analyzing financial statements is a process of evaluating

relationships between component parts of financial statements to

obtain a better understanding of firm’s position and performance.

Objectives Of Analysis Of The Financial Statements :

The present and future earnings capacity or profitability of the

concern.

The operational efficiency of the concern as a whole and of its

various parts or departments.

The short term and long term solvency of the concern for the

benefit of the debenture holders and trade credit.

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The comparative study in regard to one firm with another firm or

one department with another department.

The possibility of developments in future by making forecasts and

preparing budgets.

The financial stability of a business concern.

The real meaning and significance of financial data.

The long term liquidity of its funds.

Techniques (Tools Or Methods) Of Analysis And ANALYSIS AND

INTERPRETATION:

The following techniques can be used in connection with analysis and

ANALYSIS AND INTERPRETATION of financial statements:

a. Comparative financial statements

b. Common measurement statements

c. Trends percentages analysis

d. Fund flow statement

e. Net working capital analysis

f. Cash flow statement

g. Ratio analysis

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Introduction To Ratios:

Ratio Analysis:

“The indicated quotient of two mathematical expressions”.

Ratio analysis is one of the powerful tools of the financial analysis.

This is done to develop meaningful relationship between individual

items or group of items usually shown in the periodical financial

statements published by the concern.

It shows the relationship between the two interrelated accounting

figures as gross profit to sales, current assets to current liabilities,

loaned capital to owned capital etc.

A Ratio is the numerical or an arithmetical relationship between

two figures. It is expressed where one number is divided by

another. A ratio can be used as a yardstick for evaluating the

financial position and performance of a concern, because the

absolute accounting data cannot provide meaningful understanding

and ANALYSIS AND INTERPRETATION.

A ratio is the relationship between two accounting items expressed

mathematically. Ratio analysis helps the analyst to make

quantitative judgment with regard to concern’s financial position

and performance.

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Absolute figures are valuable but they standing alone convey no

meaning unless compared another.

Accounting ratios show inter-relationships which exist among

various accounting data. When relationships among various

accounting data supplied by financial statements are worked out,

they are known as accounting ratios.

Importance Of Ratio Analysis:

Ratio analysis stands for the process of determining and presenting the

relationship of items and groups of items in the financial statements. It is

an important technique of financial analysis. It is a way by which

financial stability and health of a concern can be judged. The following

are the main points of importance of ratio analysis:

1)Useful in financial position analysis: Accounting ratios reveal the

financial position of the concern. This helps the banks, insurance

companies and other financial institutions in lending and making

investment decisions.

2)Useful in simplifying accounting figures: According ratios simplify,

summarize and systematize the accounting figures in order to make

them more understandable and in lucid form. They highlight the

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interrelationship, which exists between various segments of the business

as expressed by accounting statements.

Often the figures standing alone cannot help them convey any meaning

and ratios help them to relate with other figures.

3) Useful In Assessing Operational Efficiency : Accounting ratios help

to have an idea of the working of a concern. The efficiency of the firm

becomes evident when analysis is based on accounting ratios. They

diagnose financial health by evaluating liquidity, solvency, profitability,

etc. This helps the management to assess financial requirements and the

capabilities various business units.

4) Useful in forecasting purposes: If accounting ratios are calculated for

a number of years, then trend is established. This trend helps in setting

up future plans and forecasting. For example, expenses as a percentage

of sales can be easily forecasted on the basis of sales and expenses of the

past years.

5) Useful in locating the weak spots of the business: Accounting ratios

are of great assistance in locating weak spots in the business even though

the overall performance may be efficient. Weakness in financial structure

due to incorrect policies in the past or present are revealed through

accounting ratios. For example, if a firm finds that increase in

25



distribution expenses is more than proportionate to the results expected or

achieved, it can take remedial steps to overcome this adverse situation.

6) Useful in comparison of performance: Through accounting ratios

comparison can be made between one department of a firm with another

of the same firm in order to evaluate the performance of various

departments in the firm. Manager is naturally interested in such

comparison in order to know the proper had smooth functioning of such

departments. Ratios also help him to make any change in the

organization.

Limitations Of Accounting Ratios :

Ratio analysis is very important in revealing the financial position and

soundness of the business. But, in spite of its advantages, it also has

some limitations which restrict its use. These limitations should be kept

in mind while making use of ratio analysis for interpreting the financial

statements.

The following are the main limitations of accounting ratios:

1) False results if based on incorrect accounting data: Accounting

ratios can be correct only if the data is correct. Sometimes, the

information given in the financial statements is affected by window

dressing i.e. showing position better than what actually is.

26



2) Ignores qualification factors: Accounting ratios are tools of

quantitative analysis only. But sometimes qualification factors may

surmount the quantitative aspects. The calculations derived from the

ratio analysis may be distorted.

3) No idea of probable happenings in future: Ratios are an attempt to

make an analysis of the past financial statements, they are historical

documents. In the present scenario of complexities of the business, it is

important to have an idea of the happenings in future.

4) Variation in accounting methods: The tow firms’ results are

compatible with the help of accounting ratios only if they follow the same

accounting methods or bases. Comparison will become difficult if the

two concerns follows the different methods of providing depreciation or

valuing stock.

5) No common standards: It is very difficult to lay down a common

standard for comparison because circumstances differ from concern to

concern and the nature of each industry is different. For example, a

business with current ratio of more than 2:1 might not be in a position to

pay current liabilities in time because of an unfavorable distribution of

current assets in relation to liquidity.

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Financial ratio analysis groups the ratios into categories which tell us

about different facets of a company's finances and operations. An

overview of some of the categories of ratios is given below.

Leverage Ratios

These are ratios, which show the extent that debt is used in a company's

capital structure.

Liquidity Ratios

These are ratios which give a picture of a company's short term financial

situation or solvency.

Operational Ratios

These are ratios which use turnover measures to show how efficient a

company is in its operations and use of assets.

Profitability Ratios

These are ratios which use margin analysis and show the return on sales

and capital employed

Solvency Ratios

These are ratios which give a picture of a company's ability to generate

cash flow and pay it financial obligations

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CHAPTER 2- COMPANY

PROFILE

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Dhanlaxmi Bank Ltd – At a Glance

Type Public company Private sector (BSE: 532180,

NSE: DHANBANK)

Industry Banking

Financial services

Insurance

Founded 1927

Headquarters Dhanlaxmi Bank Ltd,

Dhanalakshmi Buildings, Naickanal

Thrissur,

Kerala, India

Key people GN Bajpai, PG Jayakumar

Products Investment Banking

Commercial Banking

Retail Banking

Private Banking

Mortgage

Credit Cards

Website Dhanbank.com

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Dhanlaxmi Bank Ltd. was incorporated in 1927 at Thrissur, Kerala by a

group of ambitious and enterprising entrepreneurs. Over the 86 years that

followed, Dhanlaxmi Bank with its rich heritage has earned the trust and

goodwill of clients. It is due to their strong belief in the need to seek

innovation, deliver best service and demonstrate responsibility that they

have grown from strength to strength. Be it in the number of customers,

the scale of business, the breadth of our product offerings, the banking

experience we offer or the trust that people invest in them. With more

than 670 touch points across India at your service; their focus has always

been on customizing services and personalizing relations.

Dhanlaxmi Bank Ltd (BSE: 532180, NSE: DHANBANK) is an old

private sector bank headquartered in Thrissur City, Kerala, India. The

bank was focusing mostly on Southern states like Karnataka, Tamil Nadu,

Andhra Pradesh and Kerala but it is looking for a pan India presence

since the last few years.

Dhanalakshmi Bank Ltd was incorporated on 14 November 1927 by a

group of enterprising entrepreneurs at Thrissur city, the "Cultural Capital

of Kerala" with a capital of Rs 11,000 and 7 employees. It became a

Scheduled Commercial Bank in the year 1977. It has today attained

national stature with 275 branches and 404 ATMs spread over the states

of Kerala, Tamil Nadu, Karnataka, Andhra Pradesh, Maharashtra,

31



Gujarat, Delhi, West Bengal, Madhya Pradesh, Punjab, Uttar Pradesh,

Rajastan, Chandigarh, Goa, and Haryana.

The Dhanalakshmi Bank has deployed technology widely as an

instrument for enhancing the quality of customer service. It has

introduced Centralized Banking Solution (CBS) on the Flexcube Platform

at all its branches for extending anywhere/anytime/anyhow banking to its

clientele through multiple delivery channels. The bank has set-up a state-

of-the-art Data Centre in Bangalore, to keep the networked system

operational round the clock. A Disaster Recovery Centre is also

operational at Thrissur for meeting various contingencies.

Current employee strength is around 4400

VISION AND MISSION

"To become a strong and innovative bank with integrity and social

responsibility and to maximize customer satisfaction and the satisfaction

of its employees, shareholders and the community."

To be amongst the top 5 Private Sector Banks in terms of

Bank’s Balance sheet size Profits Branch network Asset Quality

To be a large profitable “A” rated bank.

AFFILIATIONS

Major Exchange Houses

32



UAE Exchange Centre LLC

Al Ahalia Money Exchange Bureau

Foreign Correspondent Banks

Deutsche Bank Trust Company Americas

Wachovia Bank NA - A Wells Fargo Company

Commerzbank AG

National Westminister Bank PLC

Insurance Partner

Bajaj Allianz

33



Milestones

1927 - Founded on 14 November, 1927, at Thrissur, Kerala

1975 - Set up the first branch outside the home state of Kerala, at Chennai

Mount Road

1977 - Designated as Scheduled Commercial Bank by the Reserve Bank

of India (RBI)

1980 - 100-strong branch network

1986 - Total business of Rs. 100 crores

1996 - First public issue. Total business of Rs. 1,000 crores

2000 - Installed the first ATM

2002 - First Rights Issue

2002 - Platinum Jubilee year

2007 - Total business of Rs. 5,000 crores. 80th Anniversary year

2008 - Total business of Rs. 7,500 crores. Second Rights Issue

2009 - Opened 45 new branches and 102 new ATMs

2010 - Raised Rs. 381 crores through QIP in July 2010, Opened 20 new

branches and 280 new ATMs, launched new brand identity; created

platform for a unified image

2011- Launched its 275th branch in Jan 2011; ATM network expanded to

456, Total asset base for the bank was Rs.14,268 cr, as on 31.03.2011.

34



Growth and Development of Dhanalaxmi Bank

1927 - The Dhanalaxmi Bank Limited (DBL) was incorporated. It took banking business of all kinds.

1991 - 2,30,000 shares issued.

1992 - The Bank opened a branch at Veerappan Chatram. It also opened an Extension Counter at Hyderabad; Our Extension Counter at Nanthencode, Trivandrum was upgraded to a full fledged branch.- On 22nd April, the bank opened a branch at Peelamedu.- 3,50,000 shares issued to the public.

1993 - Modernisation has begun in the Bank with the inauguration of EDP Section in the Central

Office on 28-01-'93. Computer support has been extended to all the three Regional Offices also.- Computer supported banking will be introduced in several selected branches during the course of the year 1993-'94. Some of the branches will be provided with on-line computer facilities. Efforts are also on to build up in house expertise in software development.

1994 - Rights equity shares issued at a prem. of Rs 25 per share.

1995 - The Bank has co-managed 5 issues, participated in 60 public issues in the capacity of Bankers to the Issue and extended underwriting support to 104 Public Issues.- The the Bank has entered in the field of project appraisal. Requests for 26 bridge loans were also entertained.- New branches of the bank were opened at Chevarambalam (Kozhikode Dist.), Ponnani (Malappuram Dist.) and Muvattupuzha (Ernakulam Dist.).- 80,00,000 No. of equity shares of Rs 10 each issued at a prem. of Rs 40 per share.

1996 - The bank had offered 80 lacs equity shares of Rs.10/- each at a

35



premium of Rs.40/- on each share aggregating to Rs.40 crores.

- The bank entered into leasing business.- New branches of the bank were opened at Karur (Tamilnadu), Dasarahalli (Bangalore), Chembur Mumbai (Maharashtra), T. Nagar Chennai (Tamilnadu) and Valancherry (Kerala).

- 82,35,545 No. of equity shares of Rs 10 each issued at a prem. of Rs 40 per share allotted through public issue.

1997 - The bank is celebrating the 70th year of service to the nation. The Bank's corporate philosophy is `service to the poor and needy'.- The Bank opened five more branches during the year at Surat, Ahmedabad, Fort Mumbai, Service Branch at Chennai and Industrial Finance Branch at Kochi. The Bank also opened five Extension Counters including the one at Guruvayur.- 11 branches were fully computerised during the year thereby totalling the fully computerised branches to 26. Back offices of five branches were also computerised.- The Investment Information and Credit Rating Agency has rated the bank's bond issue with a `LA' rating , indicating adequate safety.- The Trichur-based Dhanalakshmi Bank has been granted a full-fledged foreign exchange licence by the Reserve Bank of India (RBI).

The bank had made a public issue of 80,00,000 equity shares of Rs.10 each at a premium of Rs.40 per share in February, 1996. Prior to the public issue, the shares of the bank were spread over 18,000 shareholders.

1998 - Dhanalakshmi Bank has launched two new deposit schemes -- Dhanam Plus and Dhanam Double Plus -- in Bangalore.

- The bank had offered 82 lakh shares at a premium of Rs. 40 per share through the public issue.

1999 - DHANALAKSHMI Bank, which has computerised 70 per cent of its business transactions, is now globally accessible on the Internet and

36



can be visited at http://www.dhanbank.com, an official release from the bank has said.- THE Dhanam Kisan card will be launched by Dhanalakshmi Bank on October 28.- Thrissur-based Dhanalakshmi Bank proposes to introduce Web-based banking services in the new millennium.

2000 - The new rates for domestic deposits had become effective April 22 and for NRE/NRNR deposits from May 1.

- The Kerala-based Dhanalakshmi Bank has received clearance from the RBI to allot shares on a pro rata basis to the subscribers of its public issue held in 1996.- The Bank has opened seven-day banking in select branches in Thiruvananthapuram, Ernakulam and Bangalore.

2001--Dhanalakshmi Bank inaugurated its first ATM Centre in Chennai at Anna Nagar on August 23-Dhanalakshmi Bank has opens its first ATM in bangalore

2002 -Dhanalakshmi Bank introduces new home loan scheme called Dhanam platinum jubilee home loan advantage-The Dhanlakshmi Bank Ltd has fixed February 16, 2002 as the record date for the purpose of issue of four equity shares of Rs 10/- each at a premium of Rs 5/- per share on rights basis for every three existing equity shares held.-Ties up with MetLife India to distribute life insurance products of MetLife India

2003 -Dhanalakshmi Bank sets up 3 branches in Thrissur -Unveils co-branded product DhanLife with MetLife India, makes foray into insurance-Ties up with United India Insurance Co. in order to market insurance products via all the bank's branches-Mr B Muthuswamy, Managing Director and CEO has resigned and the charge handed over to Mr K A Menon, Executive Director.

37



-Dhanalakshmi Bank inaugurates its Mumbai Treasury Department on Oct 29- Dhanalakshmi Bank has taken over a 18,000 square feet property of Pentasoft Technologies under Securitisation Act

2004-Dhanalakshmi Bank introduces new bill payment services-Dhanalakshmi Bank takes possession of part of Devaki Hospital-Dhanalakshmi Bank unveils new loan scheme for 2 wheelers-Dhanalakshmi Bank Ltd has informed that Sri TR Madhavan has been appointed as its Managing Director & Chief Executive Officer at the Board Meeting held on February 23, 2004.- Launches heath insurance scheme in association with United India Insurance company-Delist from Madras Stock Exchange (MSE) with effect from September 7, 2004

2005 - Dhanalakshmi Bank joins IDRBT managed ATM network-Dhanalakshmi Bank inks rupee-drawing agreement with Oman firm-Dhanalakshmi Bank appoints Mr Prasad as new CEO-Dhanalakshmi Bank unveils new housing loan product

2007- Dhanalakshmi Bank Ltd has appointed Mr. K Srikanth Reddy as Additional Director, at the Board meeting held on October 29, 2007.

2008 - Dhanalakshmi Bank Ltd has appointed Mr. S Santhanakrishnan as Additional Director, at the Board meeting held on June 30, 2008.-The company has issued rights in the ratio of 1:1 at a premium of Rs. 52/-Per Share.

2009 - Dhanalakshmi Bank has appointed Mr Bipin Kabra as Chief Financial Officer (CFO), who has over 16 years of experience in financial services industry. His past assignments include stints in ICICI as well as SBI and Reliance group. Prior to joining the Dhanalakshmi Bank, he was associated with Zee group. He has spent considerable period in banking, insurance, merchant banking and treasury.

38



BUINESS OVERVIEW

Dhanlaxmi Bank has reported an 11.8 per cent rise in net profit at Rs.

26.06 crore in the 12 months ended 31 March 2011, against Rs.23.30

crore, a growth of 11.8 per cent. Total income rose to Rs.1,053.19 crore

from Rs.625.56 crore. The financial year 2011 was a year for

consolidation for the Bank. On all parameters, including important ones

such as business growth, net interest margin and NPA control, it was a

good year. Net interest margin for the year was around 2.7 percent. The

bank's loan-book witnessed a sharp growth largely on account of a greater

thrust on the retail segment and diversification across regions, the release

said. The bank's total income increased from Rs 182.40 crore in the

quarter ended 31 March 2010 to Rs. 342.2 crore, recording a growth of

87.6 per cent. Non-interest income rose from Rs. 31.9 crore to Rs. 46.1

crore as a result of a focused thrust on fee-based business.

Dhanlaxmi Bank has deployed technology widely. It has introduced

Centralised Banking Solution (CBS) on the Flexcube Platform at all its

branches for extending anywhere/anytime/anyhow banking to its clientele

through multiple delivery channels. The bank has set-up a Data Centre in

Bangalore, to keep the networked system operational round the clock. A

Disaster Recovery Centre is also operational at Thrissur for meeting

various contingencies.

Name change

The bank has also changed its name from Dhanalakshmi Bank to

‘Dhanlaxmi’ Bank which will have a new corporate identity. FITCH, a

leading international branding and design consultancy had designed the

new identity for the bank.

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Partnerships

The bank is a depository participant of NSDL (National Security

Depository Limited) offering Demat services through select branches.

Bank is offering Online trading in association with Destimoney

securities. It has partnered AGS Infotech for installation of ATMs. It

offers VISA branded debit and credit cards to customers. It is also

offering insurance services through Bajaj Allianz Life Insurance company

as their Bancassurance partner.

Credit cards

In March, 2010, the bank launched Dhanlaxmi Bank Platinum and Gold

Credit cards.

ACHIEVEMENTS Serviced business worth Rs. 21,595 crores as on 31 March 2011,

comprising deposits of Rs. 12,530 crores and advances of Rs. 9,065 crores.

Earned a net profit of Rs. 26.1 crores for the financial year ended 31st March 2011, with a capital adequacy ratio of 11.8% (Basel II) during the same period.

Put in place the Real Time Gross Settlement (RTGS) and National Electronic Fund Transfer (NEFT) systems to facilitate large value payments and settlements online in real time, on a transaction-by-transaction basis.

Set up NRI Boutiques (Relationship Centres) across nine locations in Kerala and Tamil Nadu, with plans to open specialized NRI outlets at potential locations with emphasis on impeccable service levels.

Bank is a major player in micro credit in Kerala and the Bank's outstanding under micro credit was Rs. 266 crores at the end of March 2011.

Attained ISO 9001-2000 certification for the Bank's corporate office at Trissur and industrial finance branch at Kochi.

40



FINANCIAL INCLUSION INITIATIVES Surpassed the RBI's benchmark of priority sector lending of 40%

by advancing Rs. 2565.86 crores as at March end 2011, accounting for 50.90% of net bank credit of net bank credit.

Surpassed RBI's recommended norm of 18% advances with respect to agricultural credit by lending Rs.922.27 crores as as at March end 2011, accounting for 18.30% of net bank credit of net bank credit.

Outstanding of Rs. 814.29 crores were under weaker sections, accounting 16.15% of net bank credit of net bank credit as against the RBI benchmark of 10% as at March end 2011. • Outstanding in the area of micro credit totaled Rs. 336.23 crores as at March end 2011.

Kissan Credit Cards for Rs. 3.91 crores were issued to 1200 farmers as at March end 2011.

Opened 1,09,711 ‘no-frills’ accounts with outstanding of Rs. 26.05 crores as at March end 2011, as part of financial inclusion initiatives.

41



CHAPTER:-3

ORGANIZATIONAL DESIGN,

BUSINESS LEVEL FUNCTIONS & PROCESSES

42



ORGANIZATIONAL STRUCTURE:

MATRIX ORGANIZATIONAL STRUCTURE

The matrix organization is an attempt to combine the advantages of the pure functional structure and the product organizational structure. This form is identically suited for companies, such as construction, that are “project-driven”.

In a matrix organization, each project manager reports directly to the vice president and the general manager. Since each project represents a potential profit centre, the power and authority used by the project manager come directly from the general manager.

Information sharing is mandatory in such an organization, and several people may be required for the same piece of work. However, in general, the project manager has the total responsibility and accountability for the success of the project. The functional departments, on the other hand, have functional responsibility to maintain technical excellence on the

43



project. Each functional unit is headed by a department manager whose prime responsibility is to ensure that a unified technical base is maintained and that all available information can be exchanged for each project.

The basis for the matrix organization is an endeavor to create synergism through shared responsibility between project and functional management. Other advantages of a pure matrix organizational form, to project management, include:

Because key people can be shared, the project cost is minimized

Conflicts are minimal, and those requiring hierarchical referrals are more easily resolved

There is a better balance between time, cost and performance

Authority and responsibility are shared

Stress is distributed among the team

One advantage of a matrix structure is that it facilitates the use of highly specialized staff and equipment. Rather than duplicating functions as would be done in a simple product department structure, resources are shared as needed. In some cases, highly specialized staff may divide their time among more than one project. In addition, maintaining functional departments promotes functional expertise, while at the same time working in project groups with experts from other functions fosters cross-fertilization of ideas.

The disadvantages of a matrix organization arise from the dual reporting structure. The organization's top management must take particular care to establish proper procedures for the development of projects and to keep communication channels clear so that potential conflicts do not arise and hinder organizational functioning. In theory at least, top management is responsible for arbitrating such conflicts, but in practice power struggles between the functional and product manager can prevent successful implementation of matrix structural arrangements.

44



BUSINESS MIX OF DHANLAXMI BANK:-

Graph:-2.1 BUSINESS MIX OF DHANLAXMI BANK

31/03/2009 15/02/20100%

10%

20%

30%

40%

50%

60%

70%

80%

44%

30%

56%

70%

GEOGRAPHICAL BUSINESS MIX

KERALA NON KERALA

Graph:-2.2 GEOGRAPHICAL BUSINESS MIX OF DHANLAXMI BANKSTRATEGICAL ASPECTS OF DHAN BANK:-

1. MARCH TOWARDS PAN INDIA EXPANSION:-

Dhanalakshmi Bank Ltd. (Dhanbank) has vision to be one of the top 5 Indian private banks in the near future. To attain this goal, Dhanbank has huge expansion plans to tap the potential lying in other places outside Kerala. Dhanbank is expected to open up 66 new branches and 389 new ATMs in the current financial year. Dhanbank will convert its 26 extension counters into full fledge branches in the current year, taking the total no. of branches to 273 in the current year. Dhanbank is expected to have 400 branches & 600 ATMs by the end of FY2010-11.

45



.

GRAPH:-2.3 NETWORKING ANALYSIS

Dhanbank has got a contract with a German company, AGS, to handle its new ATM opening based on “only opex no capex” model. As per this model, AGS would be responsible for setting up new ATMs at strategic locations and to maintain the ATMs. Cost incurred to Dhanbank would be on number of transactions

Dhanbank has 65% of its branches in state of Kerala. Out of the new branches few would be located in rural areas of Kerala and other would be mainly in Maharashtra & Gujarat & Northern areas, as these areas has the highest portion of deposits and loan off-take, from the total business of Indian banks. Opening of new rural branches would help Dhanbank to tap the huge potential lying in the rural areas.

Dhanbank is expecting to add 900-1000 accounts daily after achieving the 273 branches target. This would help to bring in more CASA deposits.

2. Brand Transformation:

Dhanbank is in process to strengthen its brand in the market. Ogilvy & Mather and Fitch have been appointed as marketing consultants; this would help the bank to reach to the new customers and to strengthen its brand image in the market.

Dhanbank has appointed Ogilvy & Mather as its agency for the banking business to chart out a new brand proposition and

46



communication strategy. O&M, India’s leading communication agency will help the Bank to design and implement a comprehensive go-to market communication approach. The agency will help the Bank in its endeavor to create an entirely new customer experience and to incorporate a young and contemporary look across all customer touch-points.

3. Margins heading north:

Improvement in margins might be seen in the near future on the basis of:

Increase in CASA: Increase in number of branches is expected to bring in 900 to 1000 accounts daily; this would help to grow the CASA deposits. Dhanbank targets to achieve CASA of 30% in medium span of time. As CASA deposits are low cost deposits this would lead to lower cost of deposits.

GRAPH:-2.4- INCREASE IN CASA

Increase in NRI deposits: At present out of the total deposits, the NRI deposits are approx. 6%. Dhanbank has its major presence in Kerala and this area has huge potential of NRI deposits. Dhanbank plans to tap as much NRI deposits as possible, as these are low cost deposits. A special NRI deposit handling team is setup to tap this category of deposits

Yield on Investments: In FY2008-09, yield on investments went down as Dhanbank had major holding in T-bills. Now Dhanbank plans to invest in the government securities, this is

47



expected to increase the yield on investments, as the govt. securities yield better returns than T-bills.

Repricing of deposits to decrease cost of deposits: In the present low interest rate scenario, Dhanbank is to benefit from the repricing of deposits. This will decrease the cost. Repricing could continue benefiting bank up to 1 year.

4. Venture into new business segments:

Fee & Commission based business would be the focus of Dhanbank. This category of income leads to higher ROE & EPS as it does not require capital expenditure and it leads to regular stream of income. Dhanbank has taken various initiatives to increase its other income sources. With the increasing number of branches and deeper reach to retail clients would be a catalyst for the income from Fee & commission based income.

Insurance distribution: Dhanbank has got into a tie up with Bajaj Allianz for its Life Insurance & general insurance product distribution. A special team of 300 marketing officers is set-up for insurance distribution business.

Mutual fund distribution: As part of their wealth management, Dhanbank intends to distribute leading mutual fund schemes. Professional would be joining for MF product distribution and the bank would have a similar strategy as in case of its insurance distribution business.

Other Products: Dhanbank is expected to come up with new products like gold coins, Travelers cheques, and forex services. The bank plans to offer 3in1 account whereby the customer would be provided with the routine banking relationship (Savings A/C) along with Demat A/C and a trading platform.

AMC: Dhanbank is planning to get into Asset Management business. It is planning to enter the asset management business by buying into an existing fund, the investment is likely to be around Rs15-20 Cr. to buy stake in an existing AMC.

48



Venture Capital: The bank is also looking at setting up a wholly-owned venture capital firm soon. Bank would put in about Rs.2000 Cr. in VC to invest in new start ups. The expected annual return from VC business is approx. 25%.

PRODUCT SUITE:-Following chart shows the various products and services offered by DHAN LAXMI BANK-

49



Figure:-2- PRODUCT SUITE OF DHAN BANK

PRODUCTS AND SERVICES OF DHAN BANK:-

1. Personal Banking

Accounts:- Saving Account, Current Account, Term Deposit Loans:-Personal Loans, Home Loans, Auto Loans, Other Loans Depository Services Locker Facilities Forex Services:- Foreign Currency Cash, Cheque Deposits,

Foreign Currency DD, Remittances.

50

http://www.dhanbank.com/personal/forex_services.aspx




http://www.dhanbank.com/personal/other_loans.aspx

http://www.dhanbank.com/personal/auto_loans.aspx

http://www.dhanbank.com/personal/home_loans.aspx

http://www.dhanbank.com/personal/personal_loans.aspx

http://www.dhanbank.com/personal/term_deposits.aspx

http://www.dhanbank.com/personal/current_account.aspx

http://www.dhanbank.com/personal/accounts.aspx



2. Corporate Banking

Cash Management (CMS) Credit:- Industrial Advance, Trade Advance, Import Export,

Agriculture Assistance Salary Account Forex & Trade:-Forex Services, Export Services, Import

Services

3. NRI Banking

Accounts & Deposits:- NRE Account, NRO Account, Recurring & TD, FCNRY FD, Returning NRIs

Money Transfer:-Draft Drawing, Rupee Drawing, Money Transfer, Overseas Corresp.

NRI Home Loan Investments:-Portfolio, Repatriation, Non-repatriation,

Immovable properties.

51

http://www.dhanbank.com/nri/investment_opportunities.aspx



http://www.dhanbank.com/nri/money_transfer.aspx





http://www.dhanbank.com/nri/accounts.aspx






http://www.dhanbank.com/corporate/import_services.aspx

http://www.dhanbank.com/corporate/import_services.aspx

http://www.dhanbank.com/corporate/export_services.aspx

http://www.dhanbank.com/corporate/forex_and_trade_services.aspx

http://www.dhanbank.com/corporate/credit.aspx





4. Micro (SME) & Agri-Banking

Dhanam Kissan Vahana Kissan Card Agri gold Loan Micro Credit - MFI Micro Credit - SHGs

5. Financial Planning

TABLE 2.1Table showing competitor analysis vs. Dhanlaxmi BankS.No.

FEATURE ICICI BANK

HDFC BANK

AXIS BANK

YES BANK

DHANLAXMI

1 AVERAGE MONTHLY BALANCE

VARY AS PER PRODUCT

VARY AS PER PRODUCT

VARY AS PER PRODUCT

VARY AS PER PRODUCT

VARY AS PER PRODUCT

2 DEBIT CARD FACILITY

FREE FREE FREE FREE FREE

3 MOBILE BANKING

CHARGEABLE

CHARGEABLE

CHARGEABLE

CHARGEABLE

FREE

52



4 RTGS/NEFT ON CHARGE BASIS

ON CHARGE BASIS

ON CHARGE BASIS

ON CHARGE BASIS

BOTH 5-5 FREE PER MONTH

5 COLLECTION OF OUTSTATION CHEQUES

Rs. 50 PER CHEQUE

Rs. 50 PER CHEQUE

Rs. 50 PER CHEQUE

Rs. 50 PER CHEQUE

FREE 5 OUTSTATION CHEQUES PER MONTH

6 DERMAND DRAFT

AS PER RBI NORMS

AS PER RBI NORMS

AS PER RBI NORMS

AS PER RBI NORMS

5 D.D. FREE PER MONTH

7 INTERNET BANKING

FREE FREE FREE FREE FREE

8 SALARY ACCOUNT

YES YES YES YES YES

9 SWEEP IN AND AWEEP OUT FACILITY

IN SOME ACCOUNTS

NO NO NO YES,FREE

10 STOP PAYMENT

CHARGEABLE

CHARGEABLE

CHARGEABLE

CHARGEABLE

FREE TO SOME EXTENT

11 PAY ORDERS

CHARGED AS PER NORMS




5-25 P. O .FREE PER MONTH

12 BILL PYT FACILITY

YES YES YES YES YES

13 INTEREST ON FD <1.5 YR

7% 7.5% 7.25% 7% 7.75%

14 ANY BRANCH BANKING

YES YES YES YES YES

53



Table 2.2S.No.

FEATURE ICICI BANK

HDFC BANK

AXIS BANK

YES BANK

DHANLAXMI

1 MUTUAL FUND INVESTMENT

YES,ICICI DYNAMIC,ICICI GROWTH etc.

YES,HDFC TOP 200

YES YES THIRD PARTY PRODUCTS

2 GENERAL INSURANCE

ICICI LOMBARD

YES YES YES THIRD PARTY PRODUCTS

3 LIFE INSURANCE

ICICI LIFE INSURANCE

YES YES YES THIRD PARTY PRODUCTS

4 NRI BANKING YES YES YES YES YES

5 AGRI BANKING

YES YES YES YES ONLY IN SOUTH INDIA

6 HOME LOANS YES YES YES YES ONLY IN SOUTH INDIA

7 CORPORATE LOANS

YES YES YES YES YES

8 OTHER CREDIT SERVICES


9 CUSTOMER CARE DEPARTMENT

YES YES YES YES YES

10 CREDIT CARD FACILITY


11 ONLINE TRADING

YES YES YES YES YES, IN ALLIANCE WITH DESTIMONEY SECURITIES LTD.

12 INTERNET BANKING

YES YES YES YES YES

13 MOBILE BANKING

YES YES YES YES YES

Table showing features of competitors vs. Dhanlaxmi Bank

54



COMPETITOR ANALYSIS AT A GLANCE:-

Table:- 2.3

55

S.No. FEATURE ICICI BANK

HDFC BANK

AXIS BANK

YES BANK

DHANLAXMI

1 BRANCHES 1544 1725 905 150 273

2 ATM 4816 4232 3894 216 453

3 MARKET CAPITALIZATIONIN CRORE Rs.

100,180.00

94,942.22 52996.04

9762.04 1149.27

4 TOTAL ASSETS

286,059.77

139,011.39 156,748.35

31,688.89

6,795.02

5 NET SALES IN CRORE Rs.(RECENT)

25,706.93 16,332.26 11,638.02

2,369.71 534.57

6 NET PROFIT IN CRORE Rs.(RECENT)

4024.98 2244.94 2514.53

477.74 23.30



MARKET SHARE ANALYSIS:-Following table represents the current market capitalization of different private commercial banks.NAME OF COMPANY MARKET CAPITALIZATION PERCENTAGEICICI In crore Rs. 100,180.00 31%

HDFC 94,942.22 29%

AXIS 52,996.04 16%

YES 9,72.04 3%

DHANLAXMI 1149.27 .03%

OTHERS 63952.16 20.97%

TOTAL 322981.73 100%

Table:-2.4

31%

29%

16%

3%DHANLAXMI, 0.03%

21%

MARKET SHARE ANALYSIS ON THE BASIS OF MARKET CAPITALIZATION

ICICI HDFC AXIS YES DHANLAXMI OTHERS

Graph:- 2.5-MARKET SHARE ANALYSIS

Depiction:-ICICI is the market player of private commercial bank segment with highest market share of 31%. HDFC and AXIS bank are market followers with 29% & 16% market share respectively. Dhanlaxmi has very low market share in the segment (=0.03%), rest 20% share is from others including INDUSIND BANK, BANK OF RAJASTHAN, KOTAK MAHINDRA, FEDERAL BANK, KARNATAKA BANK etc.

56



CHAPTER: - 4

DATA ANALYSIS AND

INETERPRETATION

57



4.1 TABLE SHOWING KIND OF BANKS OPTED BY CUSTOMERS ON THE BASIS OF THEIR NEEDS:-

Table:- 4.1

KIND OF BANK NO. OF CUSTOMERS PERCENTAGE

PUBLIC SECTOR BANKS 35 35%

PRIVATE BANKS 55 55%

OTHERS 10 10%

Depiction:-The survey depicts that around 55% customers have opted public sector banks, while 35% are the customers of private banks. Rest 10% is from others including foreign banks and cooperative banks customers.

Interpretation:- A large no. of customers still don’t have faith in private banks, they still avail public sector nationalized banks for their banking requirements. Private sector banks can target these customers with better strategies.

58



CHART NO.: 4.1

CHART SHOWING KIND OF BANKS OPTED BY CUSTOMERS ON THE BASIS OF THEIR NEEDS

35%

55%

10%

KINDS OF BANKS OPTEDBY CUSTOMERS

PUBLIC SECTOR BANK CUSTOMERS PRIVATE BANK CUSTOMERSOTHERS

Chart no. -4.1

Interpretation:- A large no. of customers still don’t have faith in private banks, they still avail public sector nationalized banks for their banking requirements. Private sector banks can target these customers with better strategies.

59



4.2 TABLE SHOWING CRITERIA OF SELECTING THE BANK FOR BANKING REQUIREMENTS:-

Table:- 4 .2

SELECTION CRITERIA

NO. OF RESPONDENTS

PERCENTAGE

REFERENCE 19 19%

PROXIMITY 30 30%

BRAND IMAGE 08 08%

PRODUCTS AND SERVICES

22 22%

NETWORKING 21 21%

Depiction:-As per survey about 30% respondents selected their bank on the basis of proximity of branch. Effective networking is the reason of selecting the bank for 21% customers, while 19% and 22% customers choosed their bank due to reference of known persons and products and services of the bank respectively. Rest 8% customers considered brand image of the bank while choosing it.

Interpretation:-Survey depicts that proximity and products and services are the major factors which customer keeps in mind before selecting the bank. Some of the respondents selected the bank because it was referred to them by their relatives/friends etc.

60



CHART NO. 4.2

CHART SHOWING CRITERIA OF SELECTING THE BANK FOR BANKING REQUIREMENTS

19%

30%

8%

22%

21%

SELECTION CRITERIA AS PER SURVEY

REFERENCE

PROXIMITY

BRAND IMAGE

PRODUCTS AND SERVICES

NETWORKING

Interpretation:-Survey depicts that proximity and products and services are the major factors which customer keeps in mind before selecting the bank. Some of the respondents selected the bank because it was referred to them by their relatives/friends etc.

61



4.3 TABLE SHOWING SATISFACTION LEVEL OF PUBLIC SECTOR BANK CUSTOMERS:-

Table:-4.3

SATISFACTION LEVEL NO. OF RESPONDENTS %VERY SATISFIED 06 17%SOMEWHAT SATISFIED 20 60%SOMEWHAT DISSATISFIED

06 19%

VERY DISSATISFIED 03 4%

Depiction:- Satisfaction level of public sector bank customers is about 75% as per the survey.

Interpretation: - 25% respondents from public sector banks were not satisfied with the services. Some of the reasons for this dissatisfaction are as below:-

Poor customer relationship management Complex procedures.

62



CHART NO. 4.3CHART SHOWING SATISFACTION LEVEL OF PUBLIC SECTOR BANK CUSTOMERS

VERY SATISFIED

SOMEWHAT SATISFIED

SOMEWHAT DISSATISFIED

VERY DISSATISFIED

18%

60%

18%

4%

SATISFACTION LEVEL

Sales

Interpretation: - 25% respondents from public sector banks were not satisfied with the services. Some of the reasons for this dissatisfaction are as below:-

Poor customer relationship management Complex procedures.

63



4.4 TABLE SHOWING SATISFACTION LEVEL OF PRIVATE SECTOR BANK CUSTOMERS:-

Table:- 4.4

SATISFACTION LEVEL NO. OF RESPONDENTS %VERY SATISFIED 24 47%SOMEWHAT SATISFIED 20 39%SOMEWHAT DISSATISFIED 6 12%VERY DISSATISFIED 5 2%

Depiction:- Survey depicts that 47% respondents from private bank customers were very satisfied with the bank while around 40% were somewhat satisfied.

Interpretation:- As per survey satisfaction level is higher in private bank customers as compared to customers from public sector bank. following are the reasons of dissatisfaction of private bank customers:-

Process delay. Service quality. Hidden charges. Behavior of the employees at branch.

64



Chart :-4.4

CHART SHOWING SATISFACTION LEVEL OF PRIVATE SECTOR BANK CUSTOMERS

VERY SATISFIED

SOMEWHAT SATISFIED

SOMEWHAT DISSATISFIED

VERY DISSATISFIED

47%

39%

12%

2%

SATISFACTION LEVEL

Sales

Interpretation: As per survey satisfaction level is higher in private bank customers as compared to customers from public sector bank. following are the reasons of dissatisfaction of private bank customers:-

Process delay. Service quality. Hidden charges. Behavior of the employees at branch.

65



4.5 RELATION BETWEEN SELECTION CRITERIA AND SATISFACTION LEVEL:-

Table:-4.5

SELECTION CRITERIA

NO. OF RESPONDENTS

VERY SATISFIED RESPONDENTS

PERCENTAGE

REFERENCE 19 3 16%PROXIMITY 30 6 20%BRAND IMAGE 8 4 50%PRODUCTS AND SERVICES

22 12 54%

NETWORKING 21 5 23%

Depiction:-Survey depicts that those respondents who choosed their bank on the basis products and services, 54% out of them were very satisfied with their bank. Respondents who choosed their bank on the basis of its brand image, 50% out of them were very satisfied.

Interpretation:-As per survey results there is a relation between selection criteria and satisfaction level. A private commercial bank has to be strong in terms of following factors for 100% customer satisfaction:- 1. Brand image 2. Product differentiation 3. Network efficiency

66



CHART NO. 4.5

CHART SHOWING RELATION BETWEEN SELECTION CRITERIA AND SATISFACTION LEVEL

REFERENCE PROXIMITY BRAND IMAGE PRODUCTS AND SERVICES

NETWORKING0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

16% 20%

50% 54%

23%

84% 80%

50% 46%

77%

ANALYSIS OF RELATIONSHIP BETWEEN SELECTION CRITERIA AND SATISFAC-

TION LEVEL

VERY SATISFIED OTHERS

Interpretation:-As per survey results there is a relation between selection criteria and satisfaction level. A private commercial bank has to be strong in terms of following factors for 100% customer satisfaction:- 1. Brand image 2. Product differentiation 3. Network efficiency

67



4.6 DOES YOUR BANK GIVE YOU REGULAR UPDATES ABOUT NEW PRODUCT AND SERVICES?

Table:- 4.6

REGULAR UPDATES NO. OF RESPONDENTS PERCENTAGEYES 64 64%NO 17 17%SOMETIMES 19 19%

Depiction:- As per survey 65% respondents say their bank give them regular updates on new products and services launched, while about 20% say their bank does not give them regular updates.

Interpretation:-Regularly updating the customer about new products and services or any change in existing one is an effective tool of service positioning.

68



CHART NO:-4.6

CHART SHOWING ANALYSIS OF REGULAR PRODUCT UPDATES GIVEN BY A BANK

64%

17%

19%

ANALYSIS OF REGULARPRODUCT UPDATES

YESNOSOMETIMES

Interpretation:- Regularly updating the customer about new products and services or any change in existing one is an effective tool of service positioning.

69



4.7 TABLE SHOWING MOBILE BANKING AND INTERNET BANKING SERVICES: PATTERN OF USAGE

TABLE NO.: 4.7USE OF MODERN WAY OF BANKING

YES NO SOMETIMES

NO. OF RESPONDENTS

37 46 17

Depiction:- Survey depicts that only 35% respondents are using mobile banking and internet banking service regularly, whereas around 50% customers are still not using these services.

Interpretation:- The reason behind lacking no. of mobile and e-banking users are :

Hidden charges Unawareness. Complex procedures, etc

70



CHART NO:-4.7

CHART SHOWING MOBILE BANKING AND INTERNET BANKING SERVICES: PATTERN OF USAGE

YES37%

NO46%

SOMETIMES17%

USE OF MOBILE AND INTERNETBANKING

YES NO SOMETIMES

Interpretation: - The reason behind lacking no. of mobile and e-banking users are :

Hidden charges Unawareness. Complex procedures, etc

71



4.8 TABLE SHOWING AWARENESS ABOUT DHANLAXMI BANK IN BANGALORE:-

TABLE NO. 4.8

AWARENESS LEVEL NO. OF RESPONDENTS PERCENTAGEYES 37 37NO 54 54SOMEWHAT 9 9

Depiction:- As per survey 54% respondents said that they don’t know about Dhanlaxmi bank . 37% respondents said that they know about Dhanlaxmi bank through their personal sources.

Interpretation:- Awareness level of Dhanlaxmi Bank is not so high in BANGALORE . Advertisement campaign has not started that’s why people know about it through their personal sources.

72



CHART :-4.8

CHART SHOWING AWARENESS ABOUT DHANLAXMI BANK IN BANGALORE

YES

NO

SOMEWHAT

37%

54%

9%

AWARENESS LEVEL OF DHANLAXMI

Column1

Interpretation:

Awareness level of Dhanlaxmi Bank is not so high in BANGALORE . Advertisement campaign has not started that’s why people know about it through their personal sources.

73



4.9 TABLE SHOWING RISK TAKING ABILITY WITH RESPECT TO DIFFERENT INCOME LEVELS:-

RISK TAKING ABILITYINCOME GROUP

HIGH MODERATE LOW TOTAL

VERY HIGH 6 4 2 12HIGH 8 22 2 32MIDDLE 6 32 18 56

Table:-4.9

Depiction:- Survey depicts that :- 50% respondents from very high income group can take high

risk while investing, whereas around 35% respondents want to invest in those options which are less risky. Around 15% respondents from very this group wants to avoid risk while investing their money’

65%customers from high income group are interested in investing those options having moderate risk whereas 20% can go for high risk categorized investment options; rest 15% wants to avoid the risk.

55% customers from middle income group can take moderate risk. Around 30% respondents want to avoid the risk of investment, rest 10% can go for high risky investment options.

Interpretation:- As we go from very high income group to middle income group

risk taking ability decreases. Customers from middle income group want to avoid

investment in ULIPS, equity market and other equity market linked investment options.

Customers from very high income can take high risk while investing their money as compared to respondents from other income groups.

74



CHART NO. : 4.9

CHART SHOWING RISK TAKING ABILITY WITH RESPECT TO DIFFERENT INCOME LEVELS

VERY HIGH(>50000 MONTHLY)

HIGH(30000-50000 MONTHLY)

MIDDLE(<30000 MONTHLY)

0

10

20

30

40

50

60

70

50%

25%

11%

34%

66%

57%

16%

9%

32%

HIGH MODERATE LOW

Interpretation:- As we go from very high income group to middle income group

risk taking ability decreases. Customers from middle income group want to avoid

investment in ULIPS, equity market and other equity market linked investment options.

Customers from very high income can take high risk while investing their money as compared to respondents from other income groups.

75



4.10 ANALYSIS OF RISK TAKING ABILITY IN INVESTMENT AT DIFFERENT LEVELS OF AGE:-

Table:-4.10

RISK TAKING ABILITY <40 YEARS >40 YEARSHIGH 15 5MODERATE 26 31AVOIDER 8 15

Depiction:- Survey depicts that: 31% respondents from, 40 yrs age group wants to invest

money in high risky investment options. 50% wants to be in moderate risk category.

Only 10% respondents from >40 age group want to put their money in high risk categorized options whereas around 30% want to avoid risk.

Interpretation:- There is a relationship between risk taking ability and age of the respondent. Risk taking ability decreases with increasing age.

76



CHART NO.: 4.10

CHART SHOWING ANALYSIS OF RISK TAKING ABILITY IN

INVESTMENT AT DIFFERENT LEVELS OF AGE

<40 YEARS >40 YEARS0%

10%

20%

30%

40%

50%

60%

70%

31%

10%

50%

61%

19%

29%

RISK TAKING ABILITY

HIGH RISK TAKER

MODERATE RISK TAKER

RISK AVOIDER

AGE GROUPS

NO

. OF

RE

SPO

ND

EN

TS

Interpretation:

There is a relationship between risk taking ability and age of the respondent. Risk taking ability decreases with increasing age.

77



Dhanlakshmi bank

Parent Company Government of India

Category Bank

Sector Banking and finance

Tagline/ Slogan Tan Man Dhan

USP Innovative Bank with integrity and social responsibility

STP

Segment Individual and Industry banking

Target Group Industrial Sector

Positioning Complete Banking solutions

SWOT Analysis

Strength

1. Varied Financial products for different customer segments2. Strategic tie-ups with leading players for various products like insurance etc.3. Schemes for social initiatives aligned with government schemes4. Has around 275 branches, 4400 employees and over 500 ATMs

Weakness1. Low presence across India as it is limited to a few states2. Marketing is very limited as compared to other banks3. Lack of retail banking as compared to popular banks

Opportunity1. Rural banking for higher penetration2. International banking, where Indians are present

78



Threats1. Economic slowdown2. Highly competitive environment3. Stringent Banking Regulations

Competition

Competitors1. Lakshmi Vilas Bank 4. ICICI Bank2. Karur Vyasa Bank 5. HDFC Bank3. Federal Bank 6. Axis Bank

SWOT ANALYSIS

- Strong Network in South India

- Experience and Expertise

- Unlimited Transactions Through

ATM From Any Bank Without

Charge

-ATM Card Can be Used

Internationally

- Attractive Fixed Deposit Rates

(10.25%)

- Late entry

in to North, East & West Indian

Markets

- Dhanlaxmi Bank Only Focused on

Kerala & South India Earlier

- Less No. of Branches and ATMs As

Compared to Competitors

- Expansion Option in North , East &

West India

- Customers are Service-oriented

- Customers Keep Fluctuating From

Banks to Banks

- Big Players in the Industry

- A False Rumor of Reliance Taking

Over the Bank

- Nationalized Banks are Growing

Fast

- Economic Conditions In India

- RBI’s Policy Regarding CRR

79

STRENGTHS

WEAKNESSES

OPPORTUNITIES

THREATS



FINANCIAL ANALYSIS

RATIO ANALYSIS

80



Mar '12 Mar '11 Mar10

Investment

Valuation Ratios

Face Value 10.00 10.00 10.00

Dividend Per Share -- 0.50 1.00

Operating Profit Per

Share (Rs)

-

23.33

-6.16 -2.80

Net Operating Profit /

Share (Rs)

166.2

4

108.54 87.51

Free Reserves Per

Share (Rs)

61.77 75.95 42.54

Profitability Ratios

Interest Spread 4.20 4.03 3.26

Adjusted Cash

Margin(%)

-5.70 3.93 5.27

Net Profit Margin -7.56 2.49 3.73

Return on Long Term

Fund(%)

141.3

6

80.56 95.83

Return on Net

Worth(%)

-

15.87

3.08 5.29

Adjusted Return on Net

Worth(%)

-

16.02

3.02 5.13

Return on Assets

Excluding Revaluations

85.54 99.21 68.64

Return on Assets

Including Revaluations

85.54 99.21 68.64

Management

81




Efficiency Ratios

Interest Income / Total

Funds

9.78 8.27 8.17

Net Interest Income /

Total Funds

1.86 2.53 2.43

Non Interest Income /

Total Funds

0.78 1.09 0.92

Interest Expended /

Total Funds

7.92 5.74 5.74

Operating Expense /

Total Funds

3.23 3.00 2.69

Profit Before Provisions

/ Total Funds

-0.79 0.48 0.51

Net Profit / Total Funds -0.80 0.23 0.34

Loans Turnover 0.16 0.13 0.14

Total Income / Capital

Employed(%)

10.56 9.36 9.09

Total Assets Turnover

Ratios

0.10 0.08 0.08

Asset Turnover Ratio 0.10 4.42 4.16

Profit And Loss

Account Ratios

Interest Expended /

Interest Earned

82.24 70.75 73.71

Other Income / Total

Income

7.41 11.68 10.11

Operating Expense / 30.60 32.04 29.64

82




Total Income

Balance Sheet

Ratios

Capital Adequacy Ratio 9.49 12.47 12.99

Advances / Loans

Funds(%)

65.65 88.98 82.15

Debt Coverage Ratios

Credit Deposit Ratio 73.24 71.69 67.97

Investment Deposit

Ratio

32.88 28.87 29.79

Cash Deposit Ratio 6.87 7.21 8.35

Total Debt to Owners

Fund

16.21 14.83 16.13

Financial Charges

Coverage Ratio

-0.07 0.11 1.11

Financial Charges

Coverage Ratio Post

Tax

0.92 1.06 1.09

LEVERAGE

RATIOS

Current Ratio 0.04 0.04 0.03

Quick Ratio 23.94 38.70 13.66

Cash Flow

Indicator Ratios

Dividend Payout Ratio

Net Profit

-- 19.10 32.18

Dividend Payout Ratio -- 11.95 22.31

83




Cash Profit

Earning Retention

Ratio

-- 80.50 66.80

Cash Earning Retention

Ratio

-- 87.90 77.20

Adjusted Cash Flow

Times

-- 304.61 215.78

Mar

'12

Mar '11 Mar '10

Earnings Per Share -

13.58

3.06 3.63

Book Value 85.54 99.21 68.64

84



CHAPTER-5SUMMARY OF

FINDINGS, SUGGESTIONS &

CONCLUSION

85



FINDINGS:-

As per the survey conducted, it is noticed a good sector of the people prefer to be customers of nationalized banks. This can be very well explained by the fact that nationalized banks are acquainted with the Government and ups and downs in business will not affect the existence of the bank. Also the RBI has good control over the working of these banks and there for the customers have a sense of security in investing in these banks. However it is also seen that a good percentage of people also opt for private banks such as ICICI, HDFC, AXIS bearing in mind the amount of experience they posses in the field of banking.

Survey results show that customers from private sector banks are more satisfied as compared to customers from public sector banks. it was found that there is a direct relationship between brand image/product differentiation and satisfaction of the customer.

Customer demographic plays important role while preparing penetration strategies.

Dhanlaxmi has the retail products with unique features which others don’t have, but some of the services it is selling in alliance with third parties. Product line of Dhan Bank is not as diversified in Jaipur as their competitors have.

Market share of Dhan Bank is not as high as compared to ICICI, HDFC, AXIS and YES BANK.The reasons for above or in other words the hidden reason for all of the is:

# Liberal credit

86



# Credit available in all the branches

# Head office instructions for lending

# No proper follow up

# Aiming for super profit

# Poor legal action

# Defect in cash recovery target/achievement

87



SUGGESTIONS & RECOMMENDATIONS:

The bank should introduce new delivery channels via opening more branches and ATMs in Bangalore to improve network efficiency.

Effective advertisement campaign can help the bank to increase business in Bangalore. TV commercials, Hoardings posters can be some of the mediums to increase the awareness of Bank in Bangalore.

Bank should launch the whole product line in Jaipur to emerge its position in competition.

Bank should target 5 km area around the branch office because survey depicts that most of the customers selected their bank on the basis of proximity.

Bank should constantly innovate their products as per customer requirements.

Dhanlaxmi Bank should maintain the consistency in service quality for total customer satisfaction.

The bank should invest in funds more profitably as it also has to pay interest on the deposits it accepts. Proper precautions should be taken to avoid such situations in future

Added efforts should be made to increase advances to total deposits ratio as it is a source of income for the bank. The advances made by the bank as a percentage of its deposits has increased showing efficient utilization of its funds

88



The bank has not maintained its lending and borrowing rate, this is not appreciable and the bank should maintain a good and balanced lending and borrowing rate, in the stiff competition the industry in going through.

The organization has adopted some measures to reduce the cost. Operational expenses have continuously decreased in the last three financial years.

A good monitoring system has been placed to keep a check on the expenses.

The bank has been increasing the earnings per share and the profitability of the bank has been improving considerably. This shows that the bank has been winning the confidence of the customers

The return on capital employed has an increasing trend. If the return on capital employed is high, the financial institution extends its fresh loans. It helps management for further development of business in future and a high return satisfies share holders.

Return on capital employed of the company is satisfactory.

The low debt equity ratio indicates that the claim of outsiders is lesser than the share holders against the company s assets.‟ It gives higher margin of safety to the creditors at the time of company s liquidation. ‟

The owners funds in case Dhanlaxmi Bank are more than the outsiders funds in all the years which signifies that the long term creditors are relatively less.

89



The organization has to take preventive and be cautious measures so that the Current assets to Networth ratio increases at a constant rate and the company has a satisfactory current assets to Networth ratio.

From the current liabilities to Net worth Ratio we can see that the liability base of the concern will not provide an adequate cover for long-term creditors. Therefore the firm should take preventive and cautious measures to reduce the ratio as if the ratio keeps increasing; it would be difficult to obtain the long term funds.

The bank is in a quiet a good position to meet the contingent expenditure due to its high liquidity position but its important to see the profitability position of the bank. The bank may have to carefully scrutinize its liquidity position and try to increase the profitability

90



CONCLUSION

Banking system is changing in phase. From legendary used applications

banks need to divert and stay update with the latest technology In the

economy customer is the king, the bank needs to change is; business

strategies. Banking system is indispensible. To remain in the competition,

technology is must.

Dhanlaxmi Bank has been successful in satisfying its customers at the

ground level. The bank has made the platform on which the bank is

already in the process of its Business Review Process. Its standards are

heading towards the global market with a competitive edge of

technology.

Dhanlaxmi Bank is now among those few banks that are receiving World

Bank loans for their technology up gradation and infrastructure.

I have successfully been able to accomplish my objective of undertaking

the project.

From my research as indicated and my personal experience, I can state

that Dhanlaxmi Bank has been working towards a progressive and

healthy future towards the achievement of global banking standards by

making an attempt towards up gradation of its infrastructure and services

to cater its customers banking needs.

91



BIBLIOGRAPHYhttp://www.moneycontrol.com/financials/dhanalakshmibank/results/

quarterly-results/DB01

http://www.dhanbank.com/aboutus/about_us.aspx

http://www.dhanbank.com/investor_relations/inv_financials.aspx

http://economictimes.indiatimes.com/dhanalakshmi-bank-ltd/stocks/

companyid-8970.cms

http://en.wikipedia.org/wiki/Dhanlaxmi_Bank

http://www.business-standard.com/india/news/dhanlaxmi-bank-to-raise-

rs-200-crore-by-early-january/198140/on

http://money.rediff.com/companies/Dhanlaxmi-Bank-Ltd/14030067

BOOKS, JOURNALS:- COMPANY BROCHURES ANNUAL REPORTES OF DHAN BANK BUSINESS ECONOMICS JOURNAL KOTHARI, C. R. ,RESEARCH METHODOLOGY

92

http://money.rediff.com/companies/Dhanlaxmi-Bank-Ltd/14030067

http://www.business-standard.com/india/news/dhanlaxmi-bank-to-raise-rs-200-crore-by-early-january/198140/on

http://www.business-standard.com/india/news/dhanlaxmi-bank-to-raise-rs-200-crore-by-early-january/198140/on

http://en.wikipedia.org/wiki/Dhanlaxmi_Bank

http://economictimes.indiatimes.com/dhanalakshmi-bank-ltd/stocks/companyid-8970.cms

http://economictimes.indiatimes.com/dhanalakshmi-bank-ltd/stocks/companyid-8970.cms

http://www.dhanbank.com/investor_relations/inv_financials.aspx

http://www.dhanbank.com/aboutus/about_us.aspx

http://www.moneycontrol.com/financials/dhanalakshmibank/results/quarterly-results/DB01

http://www.moneycontrol.com/financials/dhanalakshmibank/results/quarterly-results/DB01



ANNEXURE:

QUESTIONNAIRE

1. NAME- 2. AGE 3. E-MAIL- 4. CONTACT 5. EDUCATION 6. MONTHLY INCOME 7. PROFESSION- A) SALARIED B) SELF EMPLOYED (………………………………………..) C) OTHERS

Q. 1 WHICH BANK(S) YOU ARE USING FOR YOUR CURRENT BANKING REQUIREMENTS?……………………………………………………………………………………………………………………………

Q. 2 WHICH BANKING PRODUCTS YOU ARE AVAILING? A) SAVING ACCOUNT B) CURRENT ACCOUNT C) LOCKER D) FIXED DEPOSIT E) CREDIT

Q.3 YOU CHOOSED YOUR BANK ON THE BASIS OF-A) PROXIMITY B) NETWORKING C) PRODUCTS AND SERVICESD) REFRENCES E) TIMING F) BRAND IMAGE

Q.4 DO YOU USE THE MODERN AND SMART WAY OF BANKING?A) YES B) NO C) SOMETIMES

Q.5 DOES YOUR BANK GIVES YOU REGULAR UPDATES FOR NEW PRODUCTS AND SERVICES?A) YES B) SOMETIMES C) NO D) NEVER

Q. 6 HOW MUCH YOU ARE SATISFIED WITH THE SERVICES, YOUR BANK IS PROVIDING TO YOU?A) VERY SATISFIED B) SOMEWHAT SATISFIED C)SOMEWHAT DISSATISFIED D) VERY DISSATISFIEDQ. 7 WOULD YOU LIKE TO GET SOME ADDITIONAL BENEFITS FROM YOUR BANK?A) YES B) NO

93



IF YES WHAT KIND OF? ...................................................................................................................

Q. 8 WHAT KIND OF INVESMENT YOU ARE INTO FOR SECURING YOUR FUTURE?A) FIXED DEPOSIT B) INSURANCE C) MUTUAL FUNDSD) SHARES/BONDS E) REAL ESTATES F) OTHERS

Q. 9 WHAT IS THE PURPOSE OF YOUR INVESTMENT A) PROFITABILITY B) LIQUIDITY C) SECURITY D) TAX BENEFIT

Q. 10 WHAT IS YOUR PREFERENCE FOR INVESTMENT, STARTING FROM 1ST RANK TO SUBSEQUENT RANKINGS?MUTUAL FUNDS (….) INSURANCE (….) GOLD (….)REAL ESTATE (….) SHARES/BONDS (….) FIXED DEPOSITS (….)

Q.11 HOW MUCH YOU SPEND YEARLY TOWARDS INVESTMENT ACTIVITIES?A) LESS THAN 1 LAC B) B/W 1-2LACS C) B/W 2-3 LACS D) MORE THAN 3 LACS Q. 12 DO THE INSURANCE PLAN YOU ARE INTO COVERING YOUR RISK PROPERLY?A) NO B) YESIF NO / YES, HOW?

.........................................................................................................Q. 13 HAVE YOU EVER HEARD ABOUT DHANLAXMI BANK?A) YES B) NOIF YES, HOW DID YOU COME TO KNOW ABOUT THE BANK?

……………………………………………………………………………………………………………………………………………

94


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