Summer project report

Summer Internhip

5/31/2011

By: Deepika Agrawal, Praxis Business School Kolkata

Praxis Business School

A report on

Retail Banking business in Bihar with special reference to IDBI Bank

Submitted to

Mr. Rizwan Khan
Deputy General Manager

IDBI Bank Ltd.

In partial fulfillment of the requirements of the course

of the

Summer Internship Program

(2010-2012)

By

Deepika Agrawal


Certificate of approval

The following Summer Project Report titled " Retail Banking business in Bihar with special
reference to IDBI Bank" is hereby approved as a certified study in management carried out
and presented in a manner satisfactory to warrant its acceptance as a prerequisite for the
award of Post-Graduate Diploma in Management for which it has been submitted. It is
understood that by this approval the undersigned do not necessarily endorse or approve any
statement made, opinion expressed or conclusion drawn therein but approve the Summer
Project Report only for the purpose it is submitted.

Signature

(i)


EXECUTIVE SUMMARY

Banking Industry which is basically my concern industry around which my project has to be
revolved is really a very complex industry. The project titled “RETAIL BANKING BUSINESS IN
BIHAR WITH SPECIAL REFERENCE TO IDBI BANK” was basically a research based project. The
main motive behind doing this project is to

know the industry,
have an overview of retail banking,
Know the different products available for retail banking by the bank, current situation
and problems and their solutions.

My project was totally based on primary data. The project started with studying the various
products of IDBI Bank. This was done throughly in order to understand about retail banking
and which products do it covers.

My next step was to come out of the bank and do a comparative analysis of the bank with its
peer banks.My basic objective was to find out what is the scope of retail banking business in
Bihar. The comparative analysis between the banks helped me to understand their perceptions
about the business they see in Bihar.

My main findings through this project was that there is a huge market which still need to be
catered in Bihar. Bihar being a developing state has the capacity to give good business to the
banks. So, IDBI should continue its expansion strategy in Bihar as it would stand profitable for
the bank.

(ii)


Acknowledgement

I would, at the very onset, like to thank Mr. Rizwan Khan, Deputy General Manager, IDBI Bank

for providing me the opportunity to perform my Summer Internship Program in the Company.

I, would like to, give special thanks and gratitude to Mr.Chandan Kumar, Mr. Sanjay Kumar,
Miss. Pragya Nidhi for mentoring and providing the necessary data and information as and
when required throughout the project. Their support and encouragement has been a source of
inspiration for me and made my journey in IDBI a delight.

I, would also offer my thanks to my Dean Mr. Srinivasan Govindrajan, Praxis Business School,
Kolkata.

My thanks also go to Mr. Charanpreet Singh, Asso. Dean, and Prof. Anindra Kumar Halder ,
Praxis Business School.

I would also like to thank my classmates and seniors for extending me their help and
cooperation whenever I approached them.

(iii)


Table of contents

S.No Chapter Particulars Page no.
1 i) Certificate Of approval (i)
2 ii) Executive Summary (ii)
3 iii) Acknowledgement (iii)
4 1) Introduction 1
1.1 A Brief Introduction 2
1.2 Obejective Of The Study 2
1.3 Relevance of The Study 2
1.4 Scope Of The study 3
1.5 Limitations 3
5 2) A Journey Through Banking 4
2.1 Origin Of Banking 4
6 3) IDBI Profile 11
3.1 Journey From IDBI To IDBI Ltd. 11
3.2 IDBI Bank Ltd.- A Profile 13
3.3 IDBI Groups 16
3.4 IDBI- Its Products And Services 17
7 4) Retail Banking 21
4.1 What Is Retail Banking 21
4.2 SWOT Ananlysis Of Retail Bnaking 22
4.3 Need For Retail Banking (The Ultimate 27
Service Provider)
4.4 Retail Banking in India 28
4.5 Advantages Of Retail Banking 29
4.6 Disadvantages 30
4.7 Scope For Retail Banking In India 31
4.8 Present Snario 31
4.9 What Are Various Retail Banking Services 32
4.10 Retail Lending 34
4.11 Role Of IT In Retail Banking 35
8 5) Retail Banking Of IDBI Bank 38
5.1 An Overview Of the product 38
5.2 The IDBI Bank Advantage 46
9 6) Methodology 47
6.1 Research Type 47
6.2 Data type 47
6.3 Sample Selection 47


6.4 Data Collection Method 47
6.5 Tools Used For Data Analysis 48
10 7) The Study 49
7.1 What The Stats Say 50
11 8) Colclusions And Suggestions 60
Basic Findings 60
Suggestions 62
12 9) Bibliography And References 65


List of figures

Fig. No. 1- Banking structure in India

Fig. No. 2- Main Events In The History Of IDBI Bank

Fig. No.3- Number of Branches And ATM’s
Fig. No. 4-IDBI Bank Business Chart

Fig. No.5- Branches In Bihar

Fig. No.6- ATM’s In Bihar

Fig. No.7- Factors Considered

Fig. No.8- Bank’s USP

Fig. No.9- Special Rural Sheme

Fig. No.10- Obstacles Faced

Fig. No.11- Main Driver Of Bank’s Profitability

Fig. No.12- CASA As % Of Total Deposits

Fig. No.13- Current Account As % Of CASA

Fig. No.14- Profitability Or Growth % Of Banks


List of tables

Table No. 1-Categorization of Retail Bank services

Table No. 2- Interest Rates


List of appendices
Annexure

Annexure 1- questionnaire
Annexure 2- master sheet
Annexure 3- schedule of facilities


Abbreviations
DFI- Development Financial Institution

SLR- Statuory Liquidity Ratio

SSI- Small Scale Industries

GOI- Government Of India

SME- Small And Medium Enterprises

PFS- Provident Funds

IPO- Initial Public Offer

NPA- Non performing Assets

CRM- Customer Relatitionship Management

DD- Demend Draft

EFT- Electronic Fund Transferring

ECS- Electronic Clearing Services

PAP- Payable At Par

BR- Base Rate

FCNR- Foreign Currency Accounts

AQB- Average Quarterly Balance


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1) INTRODUCTION
“We don’t want satisfied customers…we want delighted customers.” It is the new
marketing mantra today. The same applies to banking as well. Retail banking and rural
banking were once considered as taboos by the leading foreign and domestic banks. But cut-
throat competition, innovation and advanced technology have altogether changed the face of
banking sector. Now all banks have recognized the importance of retail banking.

Retail banking is that part of a bank that offers products and services primarily to individual
customers, professional, self-employed individuals or small businesses. The focus is on
creating products and services that meet the needs of the target customers and are profitable
for the bank as well.

The approach to retail banking products is more is more on a mass production basis
wherein all risk and operations are based on and geared to cater to a large number of
customers. This is therefore, significantly different from corporate banking or wholesale
banking where focus is on large sized customer accounts rather than large numbers of
customers.

Understanding retail banking will help in servicing your customer better as it would give
you a perspective and insight into how such products are structured and specific requirements
for each set of products. This would help you advice your customer in a more informed manner
besides making you a more informed consumer.

With the advent of ATMs, ‘Anytime banking’ has come into picture. Satellites and
telecom networks across the world have made ‘Anywhere banking’ possible. Now it is the turn
of ‘Anyhow banking’, and the leading bank of the next century will be the one which has all
these three A’s.


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1.1 A Brief Overview:
“IDBI Bank Ltd. – A New Generation Govt. Owned Bank”. The Industrial Development Bank of
India Limited, now more popularly known as IDBI Bank, was established as a wholly-owned
subsidiary of Reserve Bank of India. The foundation of the bank was laid down under an Act of
Parliament, in July 1964. The main aim behind the setting up of IDBI was to provide credit and
other facilities for the Indian industry, which was still in the initial stages of growth and
development. Since, 2005 IDBI expanded its wings in the retail section. Hence, it became
necessary to study the various scope of retail banking and the future prospects of IDBI in the
retail business. The project thus undertaken is for the purpose to know the scope of retail
banking business.

1.2 Objective Of The Study:
My project entitled “Retail Banking Business In Bihar With Special Reference To IDBI Bank”
aims at studying the scope of retail banking business in Bihar. The objective of doing this
project is defined as under.

1) To study the retail banking business in Bihar
2) To study the retail banking business of IDBI in Bihar
3) To study how can IDBI improve on its retail banking business
4) To compare the position of retail banking business in IDBI Bank with its peer banks
(Axis Bank, ICICI Bank, Induslnd, Corporation Bank, Oriental Bank Of Commerce).

1.3 Relevance Of The Study:
Banks are in the business of giving several services to its customers. Retail Banking and
Corporate Banking are its two main sections. Retail banking is the section where banks cater
the individual customers. It accepts deposits, give out loans and provide several other value
added benefits such as phone banking, internet banking, sms banking and many more.
Through retail banking banks get personally connected to the customers and deal them
individually. Hence, it is essential to evaluate different factors impacting the retail business of
the bank. Relevance of this project lies in the fact that it attempts to study the scope that retail


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banking has in Bihar with special reference to IDBI Bank. The study also attempts to find the
outcome of retail business of peer banks which will give the bank understudy an idea of its
position to its peer banks in the area.

1.4 SCOPE OF THE STUDY:
To achieve the above objective I have not restricted my study to just IDBI Bank. In order to
study about the retail banking business in Bihar, and to understand the scope that IDBI has in
this business, I have extended my project to do a detailed study of retail banking in the peer
banks of the bank undertaken. Through a comparative study between the peer banks and IDBI,
I could arrive to a conclusion of the scope of retail business in Bihar.

1.5 Limitations:
To make mistake is human nature and I’m no exception. I have tried to make this project
approachable and helpful for the bank, but at the same time I accept the occurrence of
intermittent mistakes and do accept them sincerely.


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2) A Journey Through Banking

2.1 Origin Of Banking
Banks are among the main participants of the financial system in India. Banking offers
several facilities and opportunities.
Banks in India were started on the British pattern in the beginning of the 19 th century. The first
half of the 19th century, The East India Company established 3 banks The Bank of Bengal, The
Bank of Bombay and The Bank of Madras. These three banks were known as Presidency
Banks. In 1920 these three banks were amalgamated and The Imperial Bank of India was
formed. In those days, all the banks were joint stock banks and a large number of them were
small and weak. At the time of the 2nd world war about 1500 joint stock banks were operating
in India out of which 1400 were non- scheduled banks. Bad and dishonest management
managed quiet a few of them and there were a number of bank failures. Hence the
government had to step in and the Banking Company’s Act (subsequently named as the
Banking Regulation Act) was enacted which led to the elimination of the weak banks that were
not in a position to fulfill the various requirements of the Act. In order to strengthen their weak
units and review public confidence in the banking system, a new section 45 was enacted in the
Banking Regulation Act in the year 1960, empowering the Government of India to compulsory
amalgamate weak units with the stronger ones on the recommendation of the RBI. Today
banks are broadly classified into 2 groups namely—
(a) Scheduled banks.
(b) Non-Scheduled banks.

There are three different phases in the history of banking in India:
Pre-Nationalization Era.
Nationalization Stage.
Post Liberalization Era.


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1. Pre-Nationalization Era:
In India the business of banking and credit was practiced even in very early times. The
remittance of money through Hundies, an indigenous credit instrument, was very popular. The
hundies were issued by bankers known as Shroffs, Sahukars, Shahus or Mahajans in different
parts of the country.
The modern type of banking, however, was developed by the Agency Houses of Calcutta and
Bombay after the establishment of Rule by the East India Company in 18 th and 19th centuries.
During the early part of the 19th Century, the volume of foreign trade was relatively small.
Later on as the trade expanded, the need for banks of the European type was felt and the
government of the East India Company took interest in having its own bank. The government
of Bengal took the initiative and the first presidency bank, the Bank of Calcutta (Bank
of Bengal) was established in 1806. In 1840, the Bank of Bombay and in 1843, the Bank of
Madras was also set up.
These three banks were known as “Presidency Bank”. The Presidency Banks had their branches
in important trading centers but mostly lacked in uniformity in their operational policies. In
1899, the Government proposed to amalgamate these three banks in to one so that it could
also function as a Central Bank, but the Presidency Banks did not favor the idea. However, the
conditions obtaining during world war period (1914-1918) emphasized the need for a unified
banking institution, as a result of which the Imperial Bank was set up in1921. The Imperial Bank
of India acted like a Central bank and as a banker for other banks.
The RBI (Reserve Bank of India) was established in 1935 as the Central Bank of the Country. In
1949, the Banking Regulation act was passed and the RBI was nationalized and acquired
extensive regulatory powers over the commercial banks.
In 1950, the Indian Banking system comprised of the RBI, the Imperial Bank of India,
Cooperative banks, Exchange banks and Indian Joint Stock banks.

2. Nationalization Stages:
After Independence, in 1951, the All India Rural Credit survey, committee of Direction with
Shri. A. D. Gorwala as Chairman recommended amalgamation of the Imperial Bank of India
and ten others banks into a newly established bank called the State Bank of India (SBI). The

6

Government of India accepted the recommendations of the committee and introduced the
State Bank of India bill in the Lok Sabha on 16thApril 1955 and it was passed by Parliament and
got the president’s assent on 8th May 1955. The Act came into force on 1st July 1955, and the
Imperial Bank of India was nationalized in 1955 as the State Bank of India.
The main objective of establishing SBI by nationalizing the Imperial Bank of India was “to
extend banking facilities on a large scale more particularly in the rural and semi-urban areas
and to diverse other public purposes.”
In 1959, the SBI (Subsidiary Bank) act was proposed and the following eight state-associated
banks were taken over by the SBI as its subsidiaries.
Name of the Bank Subsidiary with effect from
1. State Bank of Hyderabad 1st October 1959
2. State Bank of Bikaner 1st January 1960
3. State Bank of Jaipur 1st January 1960
4. State Bank of Saurashtra 1st May 1960
5. State Bank of Patiala 1st April 1960
6. State Bank of Mysore 1st March 1960
7. State Bank of Indore 1st January 1968
8. State Bank of Travancore 1st January 1960
With effect from 1st January 1963, the State Bank of Bikaner and State Bank of Jaipur with
head office located at Jaipur. Thus, seven subsidiary banks State Bank of India formed the SBI
Group.
The SBI Group under statutory obligations was required to open new offices in rural and semi-
urban areas and modern banking was taken to these unbanked remote areas.
On 19th July 1969, then the Prime Minister, Mrs. Indira Gandhi announced the nationalization
of 14 major scheduled Commercial Banks each having deposits worth Rs. 50 crore and above.
This was a turning point in the history of commercial banking in India.
Later the Government Nationalized six more commercial private sector banks with deposit
liability of not less than Rs. 200 crores on 15th April 1980, viz.
Andhra Bank.


7

Corporation Bank.
New Bank if India.
Oriental Bank of Commerce.
Punjab and Sind Bank.
Vijaya Bank.
In 1969, the Lead Bank Scheme was introduced to extend banking facilities to every corner of
the country. Later in 1975, Regional Rural Banks were set up to supplement the activities of the
commercial banks and to especially meet the credit needs of the weaker sections of the rural
society.
Nationalization of banks paved way for retail banking and as a result there has been an all
round growth in the branch network, the deposit mobilization, credit disposals and of course
employment.
The first year after nationalization witnessed the total growth in the agricultural loans and the
loans made to SSI by 87% and 48% respectively. The overall growth in the deposits and the
advances indicates the improvement that has taken place in the banking habits of the people
in the rural and semi-urban areas where the branch network has spread. Such credit expansion
enabled the banks to achieve the goals of nationalization, it was however, achieved at the
coast of profitability of the banks.
Consequences of Nationalization:
The quality of credit assets fell because of liberal credit extension policy.
Political interference has been as additional malady.
Poor appraisal involved during the loan meals conducted for credit disbursals.
The credit facilities extended to the priority sector at concessional rates.
The high level of low yielding SLR investments adversely affected the profitability of the
banks.
The rapid branch expansion has been the squeeze on profitability of banks emanating
primarily due to the increase in the fixed costs.
There was downward trend in the quality of services and efficiency of the banks.


8

3. Post-Liberalization Era—Thrust on Quality and Profitability:
By the beginning of 1990, the social banking goals set for the banking industry made most of
the public sector resulted in the presumption that there was no need to look at the
fundamental financial strength of this bank. Consequently they remained undercapitalized.
revamping this structure of the banking industry was of extreme importance, as the health of
the financial sector in particular and the economy was a whole would be reflected by its
performance.
The need for restructuring the banking industry was felt greater with the initiation of the real
sector reform process in 1992. The reforms have enhanced the opportunities and challenges
for the real sector making them operate in a borderless global market place. However, to
harness the benefits of globalization, there should be an efficient financial sector to support
the structural reforms taking place in the real economy. Hence, along with the reforms of the
real sector, the banking sector reformation was also addressed.
The root causes for the lackluster performance of banks, formed the elements of the banking
sector reforms. Some of the factors that led to the dismal performance of banks were.
Regulated interest rate structure.
Lack of focus on profitability.
Lack of transparency in the bank’s balance sheet.
Lack of competition.
Excessive regulation on organization structure and managerial resource.
Excessive support from government.

Against this background, the financial sector reforms were initiated to bring about a paradigm
shift in the banking industry, by addressing the factors for its dismal performance.
In this context, the recommendations made by a high level committee on financial sector,
chaired by M. Narasimham, laid the foundation for the banking sector reforms. These reforms
tried to enhance the viability and efficiency of the banking sector. The Narasimham
Committee suggested that there should be functional autonomy, flexibility in operations,
dilution of banking strangulations, reduction in reserve requirements and adequate financial


9

infrastructure in terms of supervision, audit and technology. The committee further advocated
introduction of prudential forms, transparency in operations and improvement in productivity,
only aimed at liberalizing the regulatory framework, but also to keep them in time with
international standards. The emphasis shifted to efficient and prudential banking linked to
better customer care and customer services

Fig. No.1- Banking structure in India

Reserve Bank
of India (The
central bank)

Commercial
Cooperatives
Banks (171)

Non-
Scheduled
Scheduled (4)

Regional
Public sector Private banks Foreign
Rural Banks
Banks (27) (22) Banks (32)
(86)

State Bank Other
and its Nationalized Old New
associates Banks

Reserve Bank of India was nationalized in the year 1949. The general superintendence and
direction of the Bank is entrusted to Central Board of Directors of 20 members, the Governor
and four Deputy Governors, one Government official from the Ministry of Finance, ten
nominated Directors by the Government to give representation to important elements in the
economic life of the country, and four nominated Directors by the Central Government to
represent the four local Boards with the headquarters at Mumbai, Kolkata, Chennai and New
Delhi. Local Boards consist of five members each Central Government appointed for a term of
four years to represent territorial and economic interests and the interests of co-operative and
indigenous banks.


10

The Reserve Bank of India Act, 1934 was commenced on April 1, 1935. The Act, 1934 (II of 1934)
provides the statutory basis of the functioning of the Bank.

The Bank was constituted for the need of following:

To regulate the issue of banknotes
To maintain reserves with a view to securing monetary stability and
To operate the credit and currency system of the country to its advantage.

The Reserve Bank of India declared that IDBI Bank Limited, a public sector bank, is
clubbed along with nationalized banks. RBI acknowledged this in the F.No. 7/95/2005-BOA
with effect from 31st December, 2007 stating that IDBI Ltd. Will now be treated on par with
nationalized banks.


11

3) IDBI PROFILE

Change of name of
IDBI Ltd. to IDBI Bank Ltd. became effective from May
07, 2008

Merger of United Western bank with IDBI Ltd on
October 03, 2006.

Merger of IDBI bank Ltd. with IDBI Ltd. became
effective from April 02, 2005.

a new company under the name of Industrial
Development Bank of India Limited (IDBI Ltd.) was
incorporated as a Govt. Company under the
Companies Act, 1956 on September 27, 2004.

Industrial Development bank of India (IDBI) was
constituted under Industrial Development bank of
India Act, 1964

Fig. No. 2- Main Events In The History Of IDBI Bank

3.1 Journey From IDBI To IDBI Bank Ltd.
Industrial Development Bank of India Industrial Development bank of India (IDBI) was
constituted under Industrial Development bank of India Act, 1964 as a Development Financial
Institution and came into being as on July 01, 1964 vide GoI notification dated June 22, 1964. It
was regarded as a Public Financial Institution in terms of the provisions of Section 4A of the
Companies Act, 1956. It continued to serve as a DFI for 40 years till the year 2004 when it was
transformed into a Bank.

Industrial Development Bank of India Limited In response to the felt need and on
commercial prudence, it was decided to transform IDBI into a Bank. For the purpose, Industrial


12

Development bank (transfer of undertaking and Repeal) Act, 2003 [Repeal Act] was passed
repealing the Industrial Development Bank of India Act, 1964. In terms of the provisions of the
Repeal Act, a new company under the name of Industrial Development Bank of India Limited
(IDBI Ltd.) was incorporated as a Govt. Company under the Companies Act, 1956 on
September 27, 2004. Thereafter, the undertaking of IDBI was transferred to and vested in IDBI
Ltd. with effect from the effective date of October 01, 2004. In terms of the provisions of the
Repeal Act, IDBI Ltd. has been functioning as a Bank in addition to its earlier role of a Financial
Institution.

Merger of IDBI bank Ltd. with IDBI Ltd. Towards achieving the faster inorganic growth of the
Bank, IDBI Bank Ltd., a wholly owned subsidiary of IDBI Ltd. was amalgamated with IDBI Ltd.
in terms of the provisions of Section 44A of the Banking Regulation Act, 1949 providing for
voluntary amalgamation of two banking companies. The merger became effective from April
02, 2005.

Merger of United Western bank with IDBI Ltd. The United Western bank Ltd. (UWB), a
Satara based private sector bank was placed under moratorium by RBI. Upon IDBI Ltd.
showing interest to take over the said bank towards its further inorganic growth, RBI and Govt.
of India amalgamated UWB with IDBI Ltd. in terms of the provisions of Section 45 of the
Banking Regulation Act, 1949. The merger came into effect on October 03, 2006.

Change of name of IDBI Ltd. to IDBI Bank Ltd. In order that the name of the Bank truly
reflects the functions it is carrying on, the name of the Bank was changed to IDBI Bank Limited
and the new name became effective from May 07, 2008 upon issue of the Fresh Certificate of
Incorporation by Registrar of Companies, Maharashtra. The Bank has been accordingly
functioning in its present name of IDBI Bank Limited.


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3.2 IDBI Bank Ltd. – A Profile

IDBI Bank Ltd. is today one of India's largest commercial Banks. For over 40 years, IDBI Bank
has essayed a key nation-building role, first as the apex Development Financial Institution (DFI)
(July 1, 1964 to September 30, 2004) in the realm of industry and thereafter as a full-service
commercial Bank (October 1, 2004 onwards). As a DFI, the erstwhile IDBI stretched its canvas
beyond mere project financing to cover an array of services that contributed towards balanced
geographical spread of industries, development of identified backward areas, emergence of a
new spirit of enterprise and evolution of a deep and vibrant capital market. On October 1,
2004, the erstwhile IDBI converted into a Banking company (as Industrial Development Bank of
India Limited) to undertake the entire gamut of Banking activities while continuing to play its
secular DFI role. Post the mergers of the erstwhile IDBI Bank with its parent company (IDBI
Ltd.) on April 2, 2005 (appointed date: October 1, 2004) and the subsequent merger of the
erstwhile The United Western Bank Ltd. with IDBI Bank on October 3, 2006, the tech-savvy,
new generation Bank with majority Government shareholding today touches the lives of
millions of Indians through an array of corporate, retail, SME and Agri products and services.
Headquartered in Mumbai, IDBI Bank today rides on the back of a robust business strategy, a
highly competent and dedicated workforce and a state-of-the-art information technology
platform, to structure and deliver personalized and innovative Banking services and
customized financial solutions to its clients across delivery channels. As an Universal Bank, IDBI
Bank, besides its core Banking and project finance domain, has an established presence in
associated financial sector businesses like Capital Market and Investment Banking, Home
Finance, Primary Dealership area and more recently, the Life Insurance Business. Recently,
IDBI Bank reorganized its business and structure commensurate with its aspiration to become
a 'Top 5' Bank by asset size & market capitalization by the year 2012. As a first step, to give the
organization the focus necessary for accelerated growth, the Bank has reorganized its
businesses around nine verticals, six customer verticals, each focusing on distinct customer
segments and three business verticals. Going forward, IDBI Bank is strongly committed to
work towards emerging as the 'Bank of choice' and 'the most valued financial conglomerate',
besides generating wealth and value to all its stakeholders.

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Vision of IDBI

The vision for the Bank is for it to be the
trusted partner in progress, by leveraging
quality human capital and setting global
standards of excellence, to build the most
valued financial conglomerate. Our
experience of financial markets helps us to
effectively cope with challenges and capitalize
on the emerging opportunities by participating
effectively in our country’s growth process.

Management and Organization

IDBI Bank is a Board-managed organization. The responsibility for the day-to-day
management of operations of the Bank is vested with the Chairman & Managing Director and
two Deputy Managing Directors, who draw upon the support and expertise of a cross-
disciplinary Top Management Team. IDBI Bank Ltd employee base includes professionals from
the fields of accountancy, management, engineering, law,
computer technology, banking and economics.

R M Malla- Chairman and Managing director
B P Singh- Deputy Managing Director
K Narasimha Murthy- Director
SubhashTuli-Director
R P Singh- Director
Lila Firoz Poonawalla- Director
H L Zutshi- Director
B S Bisht- Director
Rakesh Singh- Director


15

Fig. No. 3- Number of Branches And ATM’s

Branches/ATM

No. of Branches
Metro 241
Urban 310
Semiurban 188
Rural 87
Overseas 1


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3.3 IDBI Groups

IDBI is a pioneer Institute in Nation building. To cater to its ever-expanding needs, IDBI formed
subsidiaries & joint ventures across diverse areas of Banking & Financial System.

IDBI Capital Market Services

A wholly owned subsidiary, offers a full suite of financial products. Its business includes stock
broking, distribution of financial products, Portfolio management of Pension / PF funds &
Research services, etc.

IDBI Gilts Ltd

A wholly owned subsidiary commenced its operations as Primary Dealer. The company
presently focuses on Bond trading, underwriting in auctions of G-sec and T-bills.

IDBI Intech Ltd

A wholly owned subsidiary, deals in the Information Technology Services, Information Security
Practice, Knowledge Management Services, national contact centre and outbound contact
centre.

IDBI Home Finance

A wholly owned subsidiary, deals in the Home finance arena. It was acquired in September
2003 from Tata Home Finance Ltd

IDBI Fortis Life Insurance Company Ltd

A joint venture with Federal Bank and Fortis Insurance International. It primarily deals in Life
insurance space.


17

3.4 IDBI- Its Products And Services

IDBI Bank offers a wide array of products and services to its customers. For different customer
groups and needs, there are different types of products and services including Personal
Banking, Corporate Banking, SME Finance and Agriculture Business etc.

Personal Banking

Following products and services are offered under Personal Banking:

Deposits
Savings Account
Current Account
Fixed Deposits
Suvidha Tax Saving Fixed Deposit
Pension Accounts
Sabka Account
Super Shakti Account for Women
Jubilee Plus Account
Loans
Home Loans
Loans Against Property
Education Loans
Personal Loan
Loan Against Securities
Reverse Mortgage Loan
Auto Loan
Payments
Tax Payments
Stamp Duty payments
Easy Fill

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Bill Payment
Card to Card Money Transfer
Online Payments
Pay Mate
Investments Advisory
Smart Financial Planning
Mutual Fund
Insurance
Fixed Income Securities
Cards
Gold Debit Card
International Debit cum ATM Card
Gift Card
World Currency Card
Cash Card
KIDS Debit Card
Foundation Day Cash Back Scheme 2009
Platinum Card
Institutional Banking
Institutional Savings Account
Corporate Payroll Account
24 Hours Banking
Phone Banking
SMS Banking
Account Alerts
Internet Banking
Other products
Lockers
India Post

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Preferred Banking
NRI Services
Capital Market
IPO
Demat

Corporate Banking

Following products and services are offered by IDBI Bank for the corporates:

Project Finance
Infrastructure Finance
Syndication, Underwriting & Advisory Services
Carbon Credits Business
Working Capital
Cash Management Services
Trade Finance
Tax Payments
Derivatives
Technology Upgradation Fund Scheme (TUFS)
Film Financing Scheme
Direct Discounting Bills
Rehabilitation Finance

SME Finance

Following SME Finance products are offered by the IDBI Bank:

Sulabh Vyapar Loan
Dealer Finance
Funding under CGFMSE
Direct Credit Scheme - SIDBI


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Preferred customer scheme - IDBI Bank / SIDBI
Vendor financing (Pre - Sale)
Vendor financing (Post - Sale)
Lending Against the Security of Future Credit Card Receivables
Finance to Medical Practitioners
Loan to SRWTO
SME Hosiery Special Current Account

Fig. No.4-IDBI Bank Business Chart

IDBI BANK

RETAIL BANKING DEVELOPMENT BANK.

SAVING ACCOUNT CURRENT ACCOUNT INVESTMENT

PERSONAL SAVING CORPORATE SAVING


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4) Retail Banking
4.1 WHAT IS RETAIL BANKING?

Retail banking is however; quite broad in nature it refers to the dealing of commercial banks
with individual customers, both on liabilities and assets sides of the balance sheet. Fixed
current/savings accounts on the liabilities side; and mortgages, loans (e.g. personal, housing,
auto and educational) on the assets side are the more important of the products offered by
banks. Related ancillary services include credit cards, or depository services.

Today’s retail banking sector is characterized by three basic characteristics.
Multiple products (deposits, credit card, insurance, investments and securities).
Multiple channels of distribution (call center, branch, internet and kiosk); and
Multiple customer groups (consumer, small business, and corporate)

DEFINITION:

Retail Banking Services:-

Banking services provided to individual members of the public as opposed to those
provided to businesses and institutions.


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4.2 SWOT Analysis Of Retail Banking

STRENGTH:-

1) Emerging as a new growth driver:
For several years banks viewed consumer loan with skepticism. Commercial loans
denominated the loan portfolio as they generated high net yield with low credit risk.
Consumer loans on the other hand involved smaller amount, large staff to handle
account and high default rates. Even regulators across the globe have not encouraged
retail banking until now till very recently. However, over past few years, fierce
competition among the banks lowered the spread and profitability a commercial loan
with deregulation and increase in consumer loan rate, the risk adjusted return in retail
sector have exceed the return on consumer loan.

2) Provides diversified asset portfolio:
Retail banking includes comprehensive range of financial product and services i.e.
deposit product, auto loan, car loan, home loan, loan against equity shares, mortgage
loan, payment of bills, debit card, credit card, etc. These products provide an
opportunity for banks to diversify the asset portfolio with higher profit and relatively
lower NPA.

3) Improves standard of living:
Due to major economic reforms in Indian economy there has been an increase in per
capita income which has led to change in life style and growing urbanization have made
the Indian population rise from oblivion and resurge in modern era on this front role of
retail banking arises. Retail banking provide all such product and services(home loan,
car loan, personal loan, etc) to its customer which are required by them to maintain
change in their life style in short it helps in fulfilling aspiration of people through
affordable credit.

4) CRM tool: The individual customer is deity of bank in retail banking segment. All
product and services are designed to satisfy need and wants of its customer. As

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customer in retail banking belong to different economic, cultural, educational, and
social background there demand is also varied. It is acceptance of the banking product
and satisfaction of customer that yield profit in this segment. Hence customer Service
and Quality implementation through use of CRM tools will help banks Success in this
competitive world of retail banking.
5) Innovative product development :
The scope for development in financial services is unlimited. In retail banking ball is in
the court of bankers where they approach the customer finds out there financial need
and problem, designs the product and services, market them and finally sells them to
satisfy its customer.

6) Economies of scale:
Retail banking enables banks to utilize existing capacities and reaching wider
population of customer. Banks can get the benefits of information and transaction. In
process of extending variety of services, banks are acquiring enormous amount of
customer information .if this information is systematically recorded , banks can
efficiently utilize this information in order to explore new segment and to cross sell new
services.

WEAKNESS:-

1) Avoids corporate sector :
Retail banking avoids corporate sector totally which is the backbone of Indian
economy. Main reason put forth or this is decline in corporate borrowing. However
bank can take certain step to manage there corporate clients such as lower arte credit,
higher amount of loan etc. Managing corporate client is more easier as they have well
defined financial policy and project and they concentrate on product and services
offered rather than on CRM of bank unlike individual clients.

2) Marketing (Internal and External):


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Retail banking requires strong marketing strategies to be adopted by bank both internal
and external. under retail banking segment top level management need employees to
introduce product properly to its employees because if the employees are not aware
regarding the product they are offering that product will fail however effective the product
is also bank require to spend lot on its marketing of product to general public because if
public is not aware regarding the product and service how will they opt for it. All this
increases the cost and time required to introduce the product in the market which can
reduce or make the product out dated immediately on its arrival.
3) Changes in technology:
Future of retail banking lies in the hand of IT. Various It solution used by banks such as
E-banking, phone banking, ATM leverage the retail banking product and service offered
by banks. But this has weekend the segment some how. If banks are not able to adopt
the latest technology it may pull back the growth of bank also this technology requires
lot of capital investment and if at all the technology fails then it may shake the
customer’s confidence on bank and bank may land up in loosing its customer.

4) Reduces the profitability:
It is claimed that retail banking increases overall profitability of the bank but in reality
this is not the case because managing wide range of product and service requires high
quality technology , large number of staff and all this requires high capital investment
which reduces banks profitability.

5) Co-ordination among various department:

Success of retail banking is not the result of one department but is result of various
departments together. If there is lack of co-ordination among various department of
the bank then however strong and effective the may be the product it will fail. Suppose
if the front office is successful in attracting the customer but back office is not able to
execute the delivery of product or service on time then bank may land up loosing the
customer although its CRM was effective.


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OPPORTUNITIES:-

1) Scope for innovation:
Under retail banking as banks try to provide all those product and services which are
desired by its customer this segment has more scope for innovation banks can keep
on modifying its products as per the market demand which helps them from not
being out dated .

2) Rise in per capita income:

The rise of the Indian middle class is an important contributory factor in this segment.
The percentage of middle to high-income Indian households is expected to continue
rising. The younger population not only wields increasing purchasing power, but as far
as acquiring personal debt is concerned, they are perhaps more comfortable than
previous generations. Improving consumer purchasing power, coupled with more
liberal attitudes toward personal debt, is contributing to India's retail banking segment.

3) Economic growth:

Retail banking has immense opportunities in a growing economy like India. In the BRIC
Report India is stated as an economic superpower. According to A. T. Kearney, a global
management-consulting firm, recently identified India as the 'second most attractive
retail destination' of 30 emergent markets. Hence retail banking has high opportunities
in India.

THREATS:

1) Large disbursement of loans:
The boom in the field of retail banking and the intense composition among the to
increases the customer base has resulted in the large disbursement of customer
loans, loans on credit cards, auto loans, educational loans etc. on easy terms without
much scrutiny this has brought with in an increase in the number of cases of default in
loan repayment thus increasing the bank’s NPAs.


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2) Issue of customers dignity:
Banks have been adopting carrot and stick policy by renegotiating loan terms where
the default is genuine and handing over recovery to third parties where default is
willful. Most of the time, the third parties or external agents are not trained to handle
the loan repayment process. Hence, they restore to strong arms tactics with
defaulting customers. Many cases of harassment and invasion of privacy have been
reported by the affected parties. Such instances may hamper the image and
corporate vision of the bank in near future.

3) Issue of customer privacy:

Customer privacy is also affected in another way wherein customer service
representatives of the banks ring up customers at any times at their places of work,
informing them about new products and services. This may cause inconvenience to
busy customers. It is also obligation on part of the banks not to share the private
information from the records of the customers with outside agencies like market
research groups and other advertisers.

4) IT:

The growth of IT has brought with it a number of frauds perpetrated with the help of
technology and which come under the domain of cyber crimes. Banks are the victims
of unscrupulous elements who have in many instance hacked banks website and
stolen credit card number, pass word and other confidential information relating to
customer.


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4.3 Need For Retail Banking- (The Ultimate Service Provider)

Until now banks were relying on financing, production based activities. Retail finance
was not favored by Indian banks, But they have to tune to it now with the demand for loans
from industrial sector is coming downing the past because of the economic slowdown. As a
result banks have become selective in their lending activities. Further changing demographics,
a rapidly growing ,middle-class, rise in disposable income changing life style and increasing
ability of people to take credit risk are providing banks with an opportunity to shift their
lending operation to retail finance. Hence bankers have been increasingly shifting to retail to
increase profitability and reduce delinquency rates. Customer shifting, cost pressure and
increasing competition are some of the other reasons.

Retailing is now favored because of the better returns lesser asset quality problem and
low NPA. Further it provides many opportunities for credit expansion. It helps banks in risk
diversification and is important for low-cost resources mobilization by banks.

For Banks, retail segment is the principal growth driver as they are slowly gaining
market share in the retail space. Foreign banks are securitizing vehicle loans to raise off-
balance sheet resources and to reduce overall cost of funding. For example, Bank of Muscat is
taking over auto loans and personal loans from other banks signaling a softer interest rate
regime for consumer finance and giving indication to the intensifying competition in business.

The objective of the Retail Bank is to provide its target market customers a full range of
financial products and banking services, giving the customer a one-stop window for all his/her
banking requirements. The products are backed by world-class service and delivered to the
customers through the growing branch network, as well as through alternative delivery
channels like ATMs, Phone Banking, Net Banking and Mobile Banking.

.


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4.4 Retail Banking In India
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,
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%.

Retail banking in India is not a new phenomenon. It has always been prevalent in India
in various forms. For the last few years it has become synonymous with mainstream banking
for many banks.

The typical products offered in the Indian retail banking segment are housing loans,
consumption loans for purchase of durables, auto loans, credit cards and educational loans.
The loans are marketed under attractive brand names to differentiate the products offered by
different banks. As shown that the loan values of these retail lending typically range between
Rs.20, 000 to Rs.100 lakh. The loans are generally for duration of five to seven years with
housing loans granted for a longer duration of 15 years. Credit card is another rapidly growing
sub-segment of this product group.

In recent past retail lending has turned out to be a key profit driver for banks with retail
portfolio constituting 21.5 per cent of total outstanding advances as on March 2004. The
overall impairment of the retail loan portfolio worked out much less then the Gross NPA ratio
for the entire loan portfolio. Within the retail segment, the housing loans had the least gross
asset impairment. In fact, retailing make ample business sense in the banking sector.

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While new generation private sector banks have been able to create a niche in this
regard, the public sector banks have not lagged behind. Leveraging their vast branch network
and outreach, public sector banks have aggressively forayed to garner a larger slice of the retail
pie. By international standards, however, there is still much scope for retail banking in India.
After all, retail loans constitute less than seven per cent of GDP in India vis-à-vis about 35 per
cent for other Asian economies — South Korea (55 per cent), Taiwan (52 per cent), Malaysia (33
per cent) and Thailand (18 per cent). As retail banking in India is still growing from modest
base, there is a likelihood that the growth numbers seem to get somewhat exaggerated. One,
thus, has to exercise caution is interpreting the growth of retail banking in India.

The HDFC Bank Preferred program for high net worth individuals, the HDFC Bank Plus
and the Investment Advisory Services programs have been designed keeping in mind needs of
customers who seek distinct financial solutions, information and advice on various investment
avenues. The Bank also has a wide array of retail loan products including Auto Loans, Loans
against marketable securities, Personal Loans and Loans for Two-wheelers. It is also a leading
provider of Depository Participant (DP) services for retail customers, providing customers the
facility to hold their investments in electronic form.

HDFC Bank was the first bank in India to launch an International Debit Card in
association with VISA (VISA Electron) and issues the Master debit card as well. The Bank
launched its credit card business in late 2001. By March 2005, the bank had a total card base
(debit and credit cards) of 4.2 million cards. The Bank is also one of the leading players in the
“merchant acquiring” business with over 42,000 Point-of-sale (POS) terminals for debit / credit
cards acceptance at merchant establishments. The Bank is well positioned as a leader in
various net based B2C opportunities including a wide range of internet banking services for
Fixed Deposits, Loans, Bill Payments, etc.

4.5 Advantages Of Retail Banking
Retail Banking has inherent advantages outweighing certain disadvantages.


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RESOURCES SIDE:

Retail deposit are stable and constitute core deposit
They are interest insensitive and less bargaining for additional interest
They constitute the low cost for banks
Effective CRM with the retail customer builds a strong customer base.
Retail banking increases the subsidiary business of a bank.

ASSETS SIDE:

Retail banking results in better yield and improve bottom line of a bank.
Retail segment is a good avenue for funds deployment.
The consumer loan is presumed to be of lower risk and NPA perception.
Help economic revival of the nation through increased production activities.
Improves lifestyle and fulfills aspiration of people through affordable credit.
Innovative product development.
Retail segment involves minimum marketing efforts in a demand driven economy.

4.6 DISADVANTAGES
v Designing own and new financial products is very costly and time
Consuming for the bank.

v Customers now-a-days prefer net banking to branch banking. The banks that are slow
in introducing technology-based products, are finding it difficult to retain the
customers who wish to opt for net banking.

v Customers are attracted towards other financial products like
Mutual funds etc.

v Though banks are investing heavily in technology, they are not able to exploit the same
to the full extent.
v A major disadvantage is monitoring and follows up of huge volume of loan accounts
inducing banks to spend heavily in human resource department.


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v Long term loans like housing loan due to its long repayment term in the absence
of proper follow-up, can become NPAs.

v The volume of amount borrowed by a single customer is very low as compared
to wholesale banking. This does not allow banks to exploit the advantage of earning huge
profits from single customer as in case of wholesale banking.

4.7 Scope For Retail Banking In India
All round increase in economic activity.

Increase in the purchasing power. The rural areas have the large purchasing power at
their disposal and this is an opportunity to market Retail Banking.

India has 200 million households and 400 million middleclass population more
than 90% of the savings come from the house hold sector. Falling interest rates have
resulted in a shift.

“Now People Want To Save Less And Spend More.”

Nuclear family concept is gaining much importance which may lead to large savings,
large number of banking services to be provided are day-by-day increasing.

Tax benefits are available for example in case of housing loans the borrower can avail
tax benefits for the loan repayment and the interest charged for the loan.

4.8 Present Senario

There has been a considerable growth in the retail-banking sector in India, which makes
up for about 1/5th of the overall bank credit. Typically, the retail banking industry encompasses
the services such as credit cards, Housing loans, Education loans, Auto loan, etc

Retail banking has brought in a drastic makeover in the overall banking scenario in India.
The exceptional improvement in the banking system in India is a result of strong initiatives
taken up by both the government and private companies. A recent market research report
named, “Indian Retail Banking Sector Analysis (2006)” published by RNCOS provides an
exclusive tour to the entire retail-banking industry of India. As per the report, “Mainstream


32

banking and retail banking has become one and the same thing for the past several years now.
Approximately, 22% of the total outstanding advances were derived from the retail portfolios
of the banks in India till March 2004”.

“The contribution of retail banking to the overall banking sector has been outstanding.
Growing at a rate of 122%, the retail-banking sector of India managed to reach a worth of $67
billion in the year 2005”, as per experts at RNCOS. “The retail banking sector in India should
reach a worth of $310 billion by the year 2010”, anticipate the experts. Profiles of key players
along with the strategies and plans adopted by them for the growth of the industry are also
talked about in it. Besides discussing the present scenario of the financial system in India the
report offers a reliable prediction of the market in the years to come.

The ratio of retail credit to net credit at the global level is around 5%. In India, it is
interesting to note that this ratio is over 10% as on March31, 2002 (Source: RBI, Annual
Report). With the economy reforms set in motion, the country is already rated as a major hub
for economic development. Increase in per capita income, change in life style and growing
urbanization has made the Indian population rise from oblivion and resurge in modern era. The
po licy of and spent is gradually giving way to spend and save concept.

4.9 What Are Various Retail Banking Services?

Retail banking includes comprehensive range of financial product and services i.e. deposit
product, auto loan, car loan, home loan, loan against equity shares, mortgage loan, payment
of bills, debit card, credit card, etc. These products provide an opportunity for banks to
diversify the asset portfolio with higher profit and relatively lower NPA. Today the most
proactive banks have entered the retail banking segment and have identified it as a principal
growth driver.


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Table No. 1-Categorization of Retail Bank services

Core services Facilitating services Supporting services

Payment services Cash Making payment at door step
Foreign currency Internet banking
requirements Telephone banking
Traveller cheque
DD/bankers cheque
IT
EFT

Current account and ATM card Credit card
saving account Standing instruction from Debit card
customer for making Service to senior citizen
payments Telephone banking
Inter branch transfer of Internet banking
fund Conversion of excess balance
Safety vault to time deposit
Loan product: Current account Delivery of loan at promised
Saving account time
Consumer loan
Time deposit account Interest loan option
Housing loan Flexibility in
paying loan
Personal loan
Counseling on Real estate
Education loan
market
Legal services for
documentation
ECS for payment of loan


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installment
Insurance product: Current account Additional insurance facility
Saving account for family members.
Life insurance
Time deposit Counseling on post
Pension scheme account retirement saving
Safety vaults

4.10 Retail Lending

Everyone dreams of living a comfortable life and does all one can to make this dream
come true. Today this has become much easier, as with higher levels of income and multiple
earning members in the family, it is easy to avail loans to fulfill aspirations. Buying a home, car
or any small household item such as TV or a refrigerator using money borrowed from a bank or
a finance company has become the way of life today. This has created a big business
opportunity for finance companies.

They are offering loans to all types of customers for all types of assets. Retail lending has
thus become one of the key business verticals for finance companies. This necessitates banks
to follow processes for conducting business profitably. There are two main areas in lending.
Loan Origination and Loan Servicing. The process of validating customers, convincing them
that the finance company is the right source for their loan requirement and finally offering the
loan with terms and conditions that make business sense to the finance company is Loan
Origination and once the loan is disbursed, the process of managing the repayments from


35

customers and responding to the customer requests for pre payments, early settlement,
rescheduling, etc. is Loan Servicing.

Lending has become very competitive as customers are in the mode of shopping for
loans. Finance companies have to continuously offer new financial products to customers and
thus two of the important aspects of the business are time-to-market and flexibility. But as
number of customers increase, the risk of increase in the number of defaulters prevails. Thus
finance companies have to do the balancing act. On one hand they have to acquire more
business by lending to more customers and on the other hand they have to lend to select
customers so that the rate of delinquency is under control.

4.11 Role Of It In Retail Banking

The growth in retail banking has been facilities by the growth in banking technology and
automation in banking process that enables in extension of reach and rationalization of cost.
ATM has emerged as an alternative channel which has facilitated low cost transaction. It also
has the advantage of reducing the branch traffic and enable bank with small network to offset
traditional disadvantage by increasing their reach and spread.

Indian retail banks have been extensively using Information and Communication
technologies for their operations like central accounting, customer information management,
transaction-processing and importantly, for numerous customer-facing solutions. Besides
there are supporting or ancillary solutions such as security and compliance in addition to the
"middleware" that banks uses to link their customer-facing applications to their core systems.
The major business focus of the IT savvy retail banks is in providing products and services to
the customers through a diversified base of channels - bank branches, ATMs, e-banking, e-
branch, mobile-banking, SMS-banking, etc. In India, the business growth is driving technology
spending in the retail banking segment. Indian retail banks are looking to move beyond their
branch-centric distribution models. Extending ATMs networks, advancing online and phone
banking, and rationalizing branch infrastructure are all on the cards.


36

Technology provides Retail Banks with various delivery channels:-

1) Automated Teller Machines(ATM):

The trend in banking has evolved from a cash economy to cheque economy and
thereon to the plastic card economy. One of the channels of banking services delivery is
vide the ATM or the Automated Teller Machines, whose traditional and primary use is to
dispense cash upon insertion of a plastic card and its unique PIN or Personal Identification
Number.

Current and savings account holders of a bank who hold a certain minimum balance in
their accounts (determined by each bank as per their policy) are issued an ATM card. The
card is a plastic card with a magnetic strip with the account number of the individual. When
the card is inserted into the ATM, the machines sensing equipment identifies the account
holder and asks for his/her identification code number. This is referred to, usually, as the
PIN and is issued by the banks computers. This number is unknown to the banks staff and is
secret and unique to that individual. When the person uses the ATM and it asks for the PIN,
the cardholder identifies himself/herself by pressing the relevant number buttons on the
machine. The machine then verifies the account number on the ATM card along with the
secret code number stored in the ATM. When the matches found, the ATM pops a menu
screen, which allows the user to transact almost all types of bank transactions.

1) Tele banking: -
Tele banking or phone banking service offered by banks to enable customers to
access their accounts for information or transactions. Similar to the ATM PIN, a telephone
PIN (T-PIN) is provided to each account holder. The customer can call the exclusive tele-
banking numbers and provide the details to identify himself/herself to the automated
voice. Typically, the bank account number and the T-PIN are asked for. Upon the
respective numbers matching the computerized systems the customer is given access to
his account to query or transact on his account. Though cash withdrawal and deposit are


37

not enabled through this service many banks offer cash delivery or collection service to
certain classes of customers.

2) Internet Banking:
One of the channels of service delivery to a banking customer is through the Internet.
The access to account information as well as transaction is offered through the worldwide
network of computers on the Internet. Every bank has special firewalls & its own security
measures to protect the accounts from non-authentic use from unauthorized users. Data are
encoded using algorithms with a 128-bit key or, in some cases, with a 1,024-bit encryption.

Each account holder is provided a PIN similar to that of the ATM or Phone banking PIN.
The access to the account is allowed upon a match of the account details & PIN entered on the
computer system. A higher level of security may be reached by an electronic finger-print. The
finger print is taken before & after the transaction. Then both versions are compared. In case of
any difference, the transaction is aborted.

Account querying as well as transaction is possible on the Internet banking platform.
The accounting is instantaneous & funds transfers can be affected immediately.

Though cash transactions are not possible at present, the next phase of evolution in Internet
banking will allow those as well.


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5) RETAIL BANKING OF IDBI BANK
5.1 An Overview Of The Product

1. Preferred Banking
PowerPlus Account

We bring to you a product that reflects and matches your financial needs and requirements at
every step. Power Plus account allows you to access a complete suite of product and services
and enjoy world class banking experience, complimenting your professional and personal
goals. This account helps you take complete charge of your banking by providing multiple
channel and products and a wide range of benefits to help your time and money.

Features

25% discount on locker rates.
Higher ATM Cash withdrawal and Point-of-sale limit on International debit cum ATM
card.
Free Demat AMC for first year.
Free Personalized PAP Cheque Book.
Free Demand Draft and Pay order

Preferred banking program is designed to offer services to a select group of discerning and
deserving individual like you. Preferred banking special features help you to save your time,
and help you build wealth through efficient deployment of assets.
Your Lifestyle reflects your personality. Every element of the preferred banking attempts to
complement your status and style. Preferred banking investment advisory, offers you a one
stop solution with all products range from fixed deposits to Govt.of2 India Bonds and Mutual
funds to Unit Linked Insurance Plans.

Royale Account

The IDBI Bank Royale Account has been designed to make banking services more convenient
for esteemed customers. This new service guarantees you as our privileged customer elaborate
and personalized service of the highest order. For all the banking requirements a dedicated
relationship manager would be attached to the account.


39

With the Royale Account comes the Platinum Debit Card that provides enhanced daily cash
withdrawal limit. This lifetime free debit card provides you privileges, which span lifestyle
pursuits like shopping, dining and travel.

Features of IDBI Royale Account:

Zero balance Power Plus account for the one family member
Free Locker (5x6x19) or 50% discount in other locker rentals.
Higher limit of cash withdrawal from any bank ATM. (with Platinum/Gold debit card).
Higher Limit for Point of sale.
Discount on Demat transaction charges
Doorstep banking.
Free Personalized PAP Cheque Book.
Free Demand Draft and Pay order

Deposits

Savings Bank accounts commonly referred to as Savings accounts, have huge potential for
mobilizing low cost deposit and stable deposits. In our Bank, savings accounts are offered to
prospective customers as value added retail liability product.

Regular Savings Account

At IDBI Bank, we believe that different people have different needs. Thus, we offer various
different types of Savings Account to cater to our diverse customer base. Be it individuals, kids,
women, corporate, senior citizens, we have an account tailor-made for each one of them. The
various types of Savings Account offered By IDBI Bank are as follows:

Choose from various range of Personal Banking services like:

SuperSavings Account
SuperShakti (Womens') Account
Jubilee Plus (Senior Citizens) Account
Power Kidz Account
Sabka Account -No Frill account
Pension Savings Account (Central Government Employees)

At IDBI Bank, it is our constant endeavor to provide you products and services that will
enhance your banking experience. From time to time we identify your needs and produce
quality products that will simplify banking for you. Our extensive branch and ATM network,
technology initiatives, and correspondent banking arrangement with banks across the globe


40

have leveraged us to provide superior services.
Savings Account Interest Rate - 4.00% p.a. (w.e.f. May 03,2011)

Current Accounts

Current accounts are meant for customers who have to carry out business and/ or large
number of transactions in the account every day. There are no restrictions on the number of
transactions in current accounts.
Core Current Account

No two businesses are the same, which is why at IDBI Bank; we offer different types of Current
Accounts to choose from, to our customers. The types of Current Accounts that we offer are as
follows:

Our Core Current Account is a straightforward and easy to use Current Account designed to
make even the smallest of business experience hassle free. The Core Current Account comes
loaded with a number of features, which include:

Free PAP (payable at par) chequebook
Free PAP utilisation
Free Electronic Funds Transfer
Free Pay Orders and Demand Drafts
Free Demand Drafts on non-branch locations
Free home / non-home branch cash deposit
Free any branch cash withdrawal
Free Internet/ mobile/ Phone Banking and ATM services
Free other bank ATM transactions

Fixed Deposits
Fixed Deposits, also known as Term Deposits or Time Deposits, are deposits accepted by the
bank for fixed period and are repayable on expiry of the fixed period. Interest is paid at
quarterly rests to the depositor. At the specific request of the depositor, interest could be paid
at monthly rests also, but at a discounted rate. The Bank decides the rates of interest on fixed
deposits of various maturities from time to time by taking into account the market conditions
and directives of the Reserve Bank of India in this regard. IDBI Bank revises fixed deposit rates
at an attractive interest rate of 9.50% p.a. for 500 days for normal deposits and 10.25% p.a. for
senior citizens w.e.f May 5,2011.


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Recurring deposit

Ideal for those who want to save a fixed sum every month
This type of deposit helps you add to your savings at your complete convenience. You can
start saving any amount from Rs. 100 to Rs. 1 lakh every month. The amount as decided by
you, will be deducted every month from your savings account. Further, there is no Tax
deducted at source on these deposits and also no charges for executing your standing
instructions.

Loans

We, at IDBI Bank offer a wide range of loan products to suit all your needs ranging from home
to education, a holiday to buying a laptop. Select from our loan offerings and we shall be glad
to service you on the same. The various loan offerings by IDBI Bank are as follows:

Choose from various range of Personal Banking services like:

Home Loans
Loan Against Property
Education Loan
Personal Loan
Loans Against Securities
Reverse Mortgage Loan
Auto loans

Table No. 2- Interest Rates

Home Loans (Fixed)

Below Rs 75 lacs
ROI(%) p.a Rs. 75 lacs and above
Options
ROI(%) p.a

• Fixed for 3 years • 12.25% • 12.50%

• Fixed for 5 years • 12.75% • 13.00%

Loan for commercial property purchase (Floating)

15.25% p.a (Linked to BR)


42

Reverse Mortgage Loan (Fixed)

Fixed (Re-Phasement after every 5 years )- 12.25%

Educational Loan (Floating)

Type ROI(%) p.a
Up to Rs 4 lakhs 12.75% p.a
(Linked to BR)
Above Rs 4 lakhs 12.75% p.a
(Linked to BR)
For the students of IIT,IIM and ISB 12.00% p.a
(up to Rs 20 lakhs ) (Linked to BR)

Auto Loan(Fixed)

Vehicle Segment ROI(%) p.a

Tenor up to 36 months Tenor up to 60 months
Segment A: Small/Mid-size/ 11.50% p.a 12.00% p.a
Utility & Premium
MUVs 12.00% p.a 13.00% p.a
Segment B: Premium 11.50% p.a 12.00% p.a
Segment C: Luxury & SUV 11.50% p.a 11.75% p.a
Segment D: Classic 11.50% p.a 11.75% p.a

IDBI Bank Debit Cards

International Debit-cum-ATM Card
Gold Debit-cum-ATM Card
IDBI Bank Cash Card
IDBI Bank Gift Card
World Currency Card
Kids Debit Card
Platinum Card
Debit Card Offers


43

24Hrs Banking

Phone Banking
IDBI Bank Phone Banking service enables you to access authentic, instantaneous
information on your account balances and transactions. The service is available totally free of
cost round the clock, 365 days a year.

Mobile Banking

Our SMS banking initiatives permit you to access your Bank account and carry out various
banking transactions and inquires. No need of visiting the bank time and again!

Account Alerts

IDBI Bank's new Account Alert service gives you all this and more. With Account Alert, your
bank account transaction information will be delivered to you automatically, wherever you are.
No more visiting the bank branch or ATM to check routine things like account balances,
cheque clearance, verification of ATM transactions, bill payment verifications, etc. Account
Alerts allows you to monitor finely any type of activity on your accounts, and be notified by e-
mail or cell phone SMS as and when they are executed.

Internet Banking

With IDBI's Internet Banking, your Bank travels with you around the world and you have on-
line, real-time access to your accounts.

Admittedly, such a service requires security of the highest nature and complete privacy
protection. We provide a completely secure environment, using 128-bit encryption SSL
(Secure Sockets Layer), digitally certified by Verisign. 128-bit SSL guarantees world-class
security for Internet and e-commerce applications.

Pay Mate

IDBI Bank Pay Mate Service presenting a simple, convenient and secure way to make
payments
The Pay Mate service has a tie up with various merchants across India (click here for the list of
merchants). You can now shop with any of these merchants and can pay simply through your
Mobile Phone. IDBI Bank offers this service to its customers absolutely free of charge. .

Money Transfer

Sending money within India has never been this simple, convenient, fast and safe. IDBI’s Card
to Card Money Transfer facility; a first of its kind money transfer service in India is the absolute


44

way to send money anywhere, anytime to any Visa Debit or Credit cardholder in India. Bank’s
customers can now transfer money from their Bank account or Visa card to any other Visa
debit or Credit card across the country through this service.

Transfer Funds

We can use Internet Banking; ATM’s or branches for transferring money across the country.
The only information we need to know is the 16-digit card number of the transferee. To carry
out a transfer, simply log on to IDBI’s Internet Banking at www.idbibank.com, or visit the
nearest IDBI ATM or branch and transfer the required amount. The money is directly credited
into the recipient’s card, no matter where he is.

Investment

We believe that all the investors share a common goal, regardless of their objectives: superior
and sustained returns with a tight control over risk. Meeting your long-term investment goal is
dependent on a number of factors: your investment capital, your expected rate of return,
inflation, taxes and your investment time horizon. To meet your requirements, we offer you
investment options based on your risk tolerance and return expectations. Relationship
Managers are equipped to advise you on various investment profiles. They then help you with
your investments and subsequently support you by tracking your investments on a regular
basis.

Mutual Funds

Mutual funds offer a simple and effective way to diversify your investment without the hassles
of tracking individual stocks on a daily basis. Click here for more details on the options we offer
GoI 8.0% Savings (Taxable) Bonds. 8% GoI Savings Bonds is a good option for investors
looking for high yielding risk free instruments.

Capital Gain Bonds

Invest your long-term capital gains on sale of your asset in the specified assets.


45

Insurance Services

IDBI brings to you Birla Sun Life Insurance, one of the leading providers of life insurance
products.

NRI a/c

Being an NRI (non-resident Indian) and privy to special benefits and privileges in India, its only
but natural to expect world class levels- be it banking or any other service. Welcome to IDBI,
where you are treated as special and your needs exclusive. While we offer basic NRI banking
products like Non Resident Rupee Checking Account, Non Resident Rupee Term Deposits and
Foreign Currency Non Resident Deposit, we realize that the requirements of the customers are
manifold.

Non-Resident External (NRE)

Repatriable account for your investment needs your account anytime, anywhere with Internet
Banking, shop at more than 8.3 million locations and withdraw funds in 140 countries.

Non-Resident Ordinary (NRO)

An account for your income and expenses, access your account at more than 250 ATM’s across
the country, pay your bills in India from anywhere in the world.

FCNR

Retain your funds in foreign currency, no exchange risk; earn attractive returns on your fund.

ATM

Automated Teller Machine (ATM) is a sophisticated computer terminal which makes it possible
for a customer holding Debit cum ATM Card to avail specified banking services through ATMs
at any time (24 hours) without any personal interaction with the bank personnel. Our Bank has
ATMs with ‘On-Line’ connectivity across all its branches. The Bankhas also installed many off-
site ATMs. IDBI Bank is a member of VISA, MASTERCARD, CASHNET, NFS, BANCS &
AMERICAN EXPRESS ATM networks. With this, Debit cum ATM Card holder of any of the net
worked banks / institutions can transact specified banking transaction at any ATM of the
networked banks / institutions.

46

At present, Debit cum ATM Card customers can undertake following transactions on our Banks
ATMs:

i) Withdraw cash up to the daily cash withdrawal limits stipulated for the type of the card.
These limits can be enhanced on request of customer.

ii) Deposit cash / cheque (not more than 20 notes / cheques at a time). This facility is not
available on cash dispenser.

iii) Carry out certain functions like balance enquiry, print mini statement recording last 10
transactions and/or inform balance in the account.

iv) Register request for cheque book and statement of account.

v) Change Personal Identification Number (PIN).

vi) Avail other value added services like Bill Payments, mobile recharge, VISA money transfer
etc.

Debit card customers can also withdraw cash and make balance inquiry from ATMs of other
Banks which are members of CASHNET, NFS, BANCS, VISA & MasterCard networks. The
amount of cash withdrawals through these ATMs is maximum of Rs.10,000/- per transaction.

5.2 The IDBI Bank Advantage

Maximum Funding
Services at doorstep
Simple documentation
Personalized services
Free legal and technical assistance
Attractive rate of interest

Applying for a Reverse Mortgage Loan against Home is absolutely simple. Just call our Phone
Banking numbers and our representative will contact you at the earliest


47

6) Methodology
6.1 Research Type

My research is based on the primary data. Primary data has been used to understand the
scope of retail banking business in Bihar and then to make suggestions useful for the bank
under study i.e. IDBI Bank ltd.

6.2 Data Type

Primary data has been used for the purpose of study of ' Retail banking business in Bihar
with special reference to IDBI Bank '.

6.3 Sample Selection:

To collect primary data regarding the scope of retail banking business of IDBI Bank in Bihar, I
selected a list of peer banks and compared it with the bank under study. The list of peer banks
was selected on the basis of their visibility in Bihar, scale of operation in Bihar and the products
they offer. If all these factors were similar to IDBI, the banks were finalized as peer banks. To
collect their details the branches in the main area were selected.

6.4 Data Collection Method

In order to collect the primary data, the method used was personal interview of branch
managers peer banks of IDBI bank’s in the area. A questionnaire was prepared in order to
collect the data a sample of which is attached in the report.

Apart from talking to the branch managers, an interaction with the staff members and the
customers at the branch gave an overview of the performance of the Bank on the individual
level. This helped to look at the retail business from different perspectives and better
suggestion could be given to the bank under study to improve upon the same.


48

6.5 Tools Used for Data Analysis

As no study could be successfully completed without proper tools and techniques, same with
my project. For the better presentation and right explanation I used tools of statistics and
computer very frequently. And I am very thankful to all those tools for helping me a lot. Basic
tools which I used for project from statistics are-

Bar Charts
Tables

Bar charts proved really useful tools to show the result in a well clear, ease and simple way.
Because I used bar charts in project for showing data in a systematic way, so it need not
necessary for any observer to read all the theoretical detail, simple on seeing the charts any
body could know that what is being said.


49

7) The Study
To carry on the survey work, six banks were considered including the IDBI Bank. A comparative
study has been done between the banks. The banks taken were on the basis of their size and
their integration in Bihar. The banks selected on this basis were as under.

The above branches have been compared on various parameters. Factors taken for comparison
were the visibility of the banks, factors which they consider before opening a branch, their
profitability and few more. The comparison helped me to come to a conclusion of the scope of
retail business in Bihar and what IDBI Bank should do in order to improve on its already
flourishing business.


50

7.1 What The Stats Say

1) How many branches do you have in Bihar? Out of these how many are in Patna?

Branches in Bihar
60

50

40

30

20

10

0
Oriental
Corporatio
Axis Bank ICICI Bank IndusInd Bank of IDBI Bank
n Bank
Commerce
Branches in Bihar 50 22 2 6 18 15
Branches in Patna 6 6 1 3 2 3

Fig. No.5- Branches In Bihar

Interpretation:

Branches of a particular bank show the visibility of the bank. Typically retail banking can be
defined as mass-market banking in which individual customers use local branches of larger
commercial banks. Through this definition we can clearly make out the role that number of
branches play in retail business of a particular bank. According, to the RBI rules, a bank will get
license to open branches in urban area only when they open 2-3 branches in rural and semi-
urban areas. Bihar, the state understudy is a mixture of the three, rural, semi-urban, and urban
areas. From the above figure we can see the number of branches, which the seven banks
compared, have in Bihar. From here we can conclude that IDBI needs to expand itself in the
area.


51

2) How many ATM’s do you have in Bihar? Out of these haw many are in Patna?

ATM's in Bihar
250

200

150

100

50

0
Oriental
Corporatio
n Bank
Commerce
ATM's in Bihar 200 54 4 7 14 12
ATM's in Patna 50 11 2 4 1 6

Fig. No.6- ATM’s In Bihar

Interpretation:

As a branch is important for the visibility of a bank, similarly, are the ATM’s. ATM hits are one
of the source of income for the banks. Comparing the number of ATM’s which the other banks
have, IDBI needs to expand the number of its ATM’s.


52

3) What are the factors you consider while opening new branches in Bihar?

a. Business potential

b. Volume of mass catered

c. Presence of competitors

d. Demography of the area

e. Area accessibility

Factors Axis ICICI IndusInd Corporation Oriental IDBI Total
Bank Bank of Bank selected
Commerce
Business * * * * * 5
potential
Volume of * 1
mass
catered
Presence of * 1
competitors
Demography * * 2
of the area
Area * 1
accessibility

Factors Considered
6
5
4
3
2
1
0
Presence
Volume of Demograp Area
Business of
mass hy of the accessibilit
potential competitor
catered area y
s
Total selected 5 1 1 2 1

Fig. No.7- Factors Considered


53

Interpretation:

From the above figure we can conclude that the most important factor which the banks sees
before opening a branch in an area is the business potential of that area. Again if we compare
the above figure with the number of branches that the selected banks have in Bihar, we can
see that banks like ICICI and Axis have a good number of branches in Bihar. This clearly
indicates that these banks believe that there is much business potential in the area and thus
IDBI Bank have a huge scope in this business.

4) Over which products do you consider your bank has an USP over other banks?

Sweep-in Current account with 6.5% interest rate
Axis Bank

ICICI Bank Innovations.
They were first to introduce Any where banking, ATMs etc.

IndusInd FD interest rate. Appx. Highest amongst peers

Corporation Bank 2.5 lakh insurance free of each ATM card at the time of delivery.

Marketing of Services provided to customers
Oriental Bank of Commerce

SERVICE like any std Pvt. bank with PSU bank security, charge
IDBI Bank less A/cs, higher int. rate,PRF & Royal a/cs,sweep-in facility etc

Fig. No.8- Bank’s USP

Interpretation:

The purpose behind asking the USP of every bank was to help the bank understudy, i.e., IDBI
Bank to know the prevailing products of its peer banks. According, to the banks the products
defined by them where those which they consider has an advantage over all other banks.


54

Doing a competitors product analysis IDBI can bring an improvisation in its products if
required.

5) According to you state the scope of retail business in the rural areas of Bihar?

The common answer to this question by all the banks was very high potential. According, to all
the banks, Bihar is in its development stage. Not only in its capital city, Patna, but even in the
outskirts the development process is appreciable. As said by them the agriculture sector is the
major revenue generator for our country. So, they focus more on the areas with agriculture
land. Also they have different products for different areas. The reach of other banks to rural
and semi-urban areas except SBI is not much. The banks consider that there is scope for their
bank to expand their wings to these areas now. So, we can conclude that these areas have a
capacity to provide retail business to the banks and hence IDBI Bank can have more branches
in Bihar.

6) Do you have any special rural scheme? If yes name them.

No such scheme
Axis Bank

ICICI Bank
No frill account and low avg. quarterly balance

IndusInd No such scheme

Corporation Bank
Catering farmers through special loan schemes

Oriental Bank of Commerce KCC, loan for each stage of agricultural cycle

KCC, loans for each stage of agricultural
IDBI Bank cycle,working agri branches

Fig. No.9- Special Rural Sheme


55

Interpretation:
The above are the various products which the banks provide in the rural areas. In Bihar rural
areas can be a major business provider to the banks. So, the banks believe that they need to
have few exceptions in their products when they cater the customers of the rural areas. They
have provided few added facilities like the customers there need not maintain a high AQB in
their accounts. Also there are loans for the farmers at subsidized interest rates. These
attractive offers helps bank to get more customers from these areas. Through this study IDBI
can see what its competitors provide so that by improving its products, it can have an edge
over all its peer banks.

7) What do you consider is the biggest obstacle while conducting business in Bihar?

Answers:
a. Movement of cash

b. Bringing of deposits

c. Small customer database

d. Unawareness of the mass

e. Lower education level

Interpretation:
The following were the main issues which were raised by the banks regarding their biggest
obstacle while conducting business in Bihar. The level of education being less deprives the
customers from understanding the exciting and new schemes. Thus they keep themselves
aloof of taking any new risk and follow the traditional way of banking. This does not initiate the
banks to open new branches in rural areas. But even facing the following issues the banks said
that they could overcome this problem by talking to customers and explaining the about the
new schemes. The banks said that they would impart KYC knowledge through branch level.
Setting up Canopies, distributing pamplets, making anouncements through radio,
demonstrative advertisements through television and the best word of mouth will certainly
prove useful for the bank.


56

8) What obstacles do you face while dealing with the customers in Bihar?

Axis Bank-Ignorance and illiteracy

ICICI Bank-KYC and security problems

IndusInd-Customers come for small loans, KYC, unawareness among people

Corporation Bank-KYC

Oriental Bank of Commerce-No problem

IDBI Bank-Ignorance and illiteracy,

Fig. No.10- Obstacles Faced

Interpretation:

To achieve any objective, there are some problems that could not be over-looked through.
Even when the banks believe that they have a good scope of increasing their business in Bihar,
they face few problems while reaching to their goal. The major problem we could conclude
while dealing with customers in this area was KYC (Know Your Customer). According, to them
there is unawareness among the customers about the formalities that need to be done for
opening an account. IDBI should maintain a good CRM as this is the only way of dealing with
customers having less knowledge about banking.


57

** Further the four questions are branch based. As it was not possible to get the profitabilty of
the bank on the whole so I restricted these questions on the branch level. The branches were
selected on the basis that they should be located in the same area as business capacity varies
with area. The CASA% and profitabilty % are all on approximation basis given by the banks as
these are confidential matters of the banks which could not provided to any outsider.

9) Which is the main driver of your Bank’s profitability?

IndusInd-Third Party
Axis Bank-Volume of CASA ICICI Bank-Volume of CASA products (Aviva life
Insurance & Mutual Fund)

Corporation Bank- IDBI Bank-Best CRM
Operational Efficiency Oriental Bank of resulted in Volume of
Commerce-CRM CASA, TPD, Financial
advisory services

Fig. No.11- Main Driver Of Bank’s Profitability

Interpretation:

Profitability of a bank gives a clear picture of its performance. This question has been asked in
order to have an idea what other banks consider as their profitability factor. IDBI Bank from
here can conclude what its peer banks consider as important and then work on the same, if
required, accordingly.


58

10) What is the percentage of CASA in total deposits?

CASA as % of total deposits
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Oriental
ICICI Corporati Bank of IDBI
Axis Bank IndusInd
Bank on Bank Commer Bank
ce
CASA as % of total deposits 75% 80% 22% 25% 45% 20%

Fig. No.12- CASA As % Of Total Deposits

Interpretation:
CASA is said to be directly related to reducing the cost of funds. Lower CASA is not a good
signal for the bank. From above we can see that Axis Bank and ICICI are having very high CASA
percentage in their total deposits. So, IDBI needs to improve on its CASA %.

11) What is the percentage of current account in CASA%?

Current Account as % of CASA
70%
60%
50%
40%
30%
20%
10%
0%
Oriental
Axis ICICI Corporat Bank of IDBI
IndusInd
Bank Bank ion Bank Commer Bank
ce
Current Account as % of CASA 50% 60% 53% 50% 50% 20%

Fig. No.13- Current Account As % Of CASA


59

12) What is the percentage profitability and growth percentage of your bank?

Chart Title
160%
140%
120%
100%
80%
60%
40%
20%
0%
Oriental
Corporatio
n Bank
Commerce
Profitability% 30% 25% 0 20% 23%
Growth% 150% 50%

Fig. No.14- Profitability Or Growth % Of Bank

Interpretation:
The data being highly confidential for the banks, an approx. Figure had been provided to help
having an insight of the banks. We can see an average profitability of all the banks. Talking
about the growth% IndusInd had a huge growth from its last fiscal year.


60

7)Conclusions And Suggestions
Basic Findings

The credibility of IDBI bank is good in comparison to its competitors as GOI

(Government Of India) is a major share holder in the company.

IDBI bank has potential market in Bihar region and thus has opportunities for growth.

The products of IDBI bank has good credibility in the region and is in par with its

competitors.

The initial balance for A/C opening is Rs, 5000/- and that’s why people are reluctant in

opening the same but now the bank provides Zero Balance Account which can help

them in increasing their CASA ratio.

There is still an unawareness among the mass about the bank being a fully owned

Government bank.

The TPD products of the bank is not yet popular among the mass.

The various rates of interest like the current interest rate of Fixed deposit

which is 9.5% for 500 days and an additional .75% for senior citizen is quite appreciated

by the common mass.

The privilege given to the preferred customer and royal customer like home service is

liked and appreciated by the customers.

The ATM facilities provided by the bank makes its services hustle free.

The vaious add ons by the ATM are cash deposit by way of envelopes, payment of bills,

payment of LIC premium, recharging mobile phones, card to card transfer.


61

While interacting with few customers I could easily find out that the customers were

most excited to know about the various services which are provided for free on their

various accounts. The services like free money transfer, free ATM transactions, free DD

and many more.

The documents required to fill before opening any account is very clear and easy to

understand.

The network of IDBI in Bihar is lagging behind a little than its competitors like ICICI

bank and Axis bank.

It can be distilled from the research that IDBI bank has good market share as compared

to its competitors considering the amount of resources deployed by them in the

market.

The modern days technology like internet banking, phone banking, used by IDBI bank

for providing banking services has sent positive signals in the mind of consumers.


62

Suggestions

IDBI is a very flourished bank. During the two months I could not find any flaw in the

functioning of the bank. After doing my training in the bank and doing my researh work I could

reach to a few conclusion which are mentioned above. From these conclusions I could come to

the following suggestions.

Though IDBI is in its expansion stage, it does not have much visibility in Bihar till date.

IDBI has only 15 branches in Bihar out of which 3 are in Patna. There is big untapped

market in Bihar, so it becomes necessary for IDBI bank, in order to take an edge over

the competitors, to open more branches to serve the vast market of Bihar especially.

IDBI considers ATM hits as one of their major source of income. By ATM hits it means

customers using the ATM of IDBI bank when they are having accounts in other banks.

As one customer hits the ATM of IDBI bank, the bank gets some commission from the

bank in which the customer has its account. IDBI has very less ATM’s in the Bihar

region. So, IDBI should have more ATM’s in the region as this income is the fastest and

easiet to gain.

The modern days technology like internet banking, phone banking, used by IDBI bank

for providing banking services has sent positive signals in the mind of consumers. IDBI

should maintain its technology and update it timely as IT too has a big role in increasing

the business of an organization.

Bank should think for “Innovators of tomorrow” for beating the competition and share

the ideas of the customers for making a better tomorrow for all.


63

Advertising is an effective brand building method, so this can solve the awarness

problem.This is an effective weapon in today’s scenario. IDBI recently changed their

way of advertising. Through the new hoardings IDBI displayed themselves being a fully

owned government bank. A short advertising campaign like this in Bihar has produced

good results in a short span of times. while talking to few customers during my research

work I was informed that through these hoardings and TV advertisements they could

clear thier concept of IDBI being a fully government owned bank. The advertisements

also says “NOT JUST FOR THE BIG BOYS”, which clearly means that IDBI is now into

retail. This helped IDBI gain more recognition and so its preferrable for IDBI bank to

carry on this campaign with more intensity.

Bank will be in a WIN –WIN situation if it provides valued services to its customers and

create a value creation for them.

IDBI could also have some extension counters in the branches which have business

capability. This would be a privelage for the customers as now they need not wait to

aavail any service. This will definately increase the walk-in of the bank.

As Government is the majority share holder in the shares of IDBI bank, which makes

this bank more reliable than other private banks, this thing can be used in the favour of

IDBI bank by making people aware about this fact and winning their faith.

Bank should think to add Value with Creativity and Innovation for real work of its

customers.


64

Retail banking being a new service and new concept, IDBI requires regular follow up

and certain checking parameters.It also needs high level of trust and maintaining the

ethics of the service provided by them.

Adding new features and providing additional facilities to customers will always

strengthen the brand and create barrier for new entrants.

Every bank is trying to aware its USP so SBI should pay attention for it and try to

compete with this new service and should provide unique features.

Proper awareness of the product should be given through word of mouth, seminars,

Pamphlets, communication media, internet etc.


65

9) Bibliography And Referances
Books referred to understand and make this project were:-

B1- Anti- Money Laundering & Know Your Customer ( Indian Institute Of Banking & Finance).

B2- IC-33 Life Insurance ( Insurance Institute of India).

Few more references to make this project were:-

SOF (Schedule Of Facilities) of every account helped to know about the account better
A Profile Of banks by- Reserve Bank of India
Websites
www.google.com
www.idbi.com
www.axisbank.com
www.icici.com
www.hdfcbank.com
www.indusind.com
www.corpbank.com
www.obcindia.co.in
www.scribd.com


66

Annexure-1

Questionnaire

1) How many branches do you have in Bihar? Out of these how many are in Patna?

2) How many ATM’s do you have in Bihar? Out of these haw many are in Patna?

3) What are the factors you consider while opening new branches in Bihar?

a. Business potential

b. Volume of mass catered

c. Presence of competitors

d. Demography of the area

e. Area accessibility

4) Over which products do you consider your bank has an USP over other banks?

5) According to you state the scope of retail business in the rural areas of Bihar?

6) Do you have any special rural scheme? If yes name them.

7) What do you consider is the biggest obstacle while conducting business in Bihar?

8) What obstacles do you face while dealing with the customers in Bihar?

9) Which is the main driver of your Bank’s profitability?

10) What is the percentage of CASA in total deposits?

11) What is the percentage of current account in CASA%?

12) What is the percentage profitability and growth percentage of your bank?


67

Annexure-2

Master sheet showing the answers to the above questions

S.no Particulars Axis Bank ICICI IndusInd Corporation Oriental Bank IDBI
of Commerce
Banks

1. Branches (in 50 22 2 6 18 15
Bihar)
In 6 6 1 3 2 3
Patna
2. ATMs In 200 54 4 7 14 12
Bihar
In 50 2 4 1 6
Patna
3. Factors considered Business Volume of Potential area Business, Business Demography
while opening new potential mass catered demography, potential, of area,
branches potential presence of business
competitors, potential in
prosperity of retail
area
4. USP Sweep-in Innovations. FD interest 2.5 lakh Marketing of SERVICE like
Current They were first rate. Appx. insurance free Services any std Pvt.
account to introduce Highest of each ATM provided to bank with
(with 6.5% Any where amongst peers card at the time customers PSU bank
interest banking, ATMs of delivery. security,
rate) etc. charge less
A/cs, higher
int. rate,PRF
& Royal
a/cs,sweep-in
facility etc
5. Prospects of business Very high Very high Not interested Very high Very high Very high
in rural areas in mass banking
6. Special rural schemes No frill Catering KCC, loan for KCC, loans
account and farmers each stage of for each
low avg. through special agricultural stage of
quarterly loan schemes cycle agricultural
balance cycle,working
agri branches
7. Obstacles in Movement of since they cater Bringing Lower
conducting business Cash to a niche deposits Education
in Bihar segment they level, Low
have small awareness
customer data about KYC,
base improper
documents,
Movement of
Cash,
8. Obstacles in dealing Ignorance KYC and Customers KYC Ignorance
with customers and security come for small and illiteracy,
illiteracy problems loans, KYC,
unawareness
among people
9. Main Driver of Volume of Volume of Third Party Operational CRM Best CRM
Branch’s profitability CASA CASA products (Aviva Efficiency resulted in
life Insurance & Volume of
Mutual Fund) CASA, TPD,
Financial
advisory
services


68

10 CASA as % of total 75% 80% 22% 45% 20%
deposit
11 Current Account as % 50% 60% 53% 50% 20%
of CASA
12 Profitability 30% 25% 300% (low base 20% 50% 23%
effect)


69

Annexure -3

The various shedule of facilities and charges can be found out through the following
website.

http://www.idbi.com/schedule_of_charges.asp

THANK YOU

Summer project report

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Summer project report