Company Profile Punjab National Bank of India, the first Indian bank started only with Indian capital,

was nationalized in July 1969 and currently the bank has become a frontline banking institution in India with 4 ! "ffices including 4#! $%tension &ounters' (he corporate office of the bank is at )ew *elhi' +un,ab )ational -ank of India has set up representati.e offices at /lmaty 01azakhistan2, 3hanghai 0&hina2 and in 4ondon and a full fledged -ranch in 1abul 0/fghanistan2'

+un,ab )ational -ank with 4495 offices and the largest nationalized bank is ser.ing its #' crore customers with the following wide .ariety of banking ser.ices6

&orporate banking +ersonal banking Industrial finance /gricultural finance 7inancing of trade International banking

+un,ab )ational -ank has been ranked #8th amongst top 99 companies by (he $conomic (imes' +)- has earned 9th position among top 9 trusted brands in India' +un,ab )ational -ank India maintains relationship with more than !99 leading international banks worldwide' +)- India has :upee *rawing /rrangements with 1 e%change companies in ;/$ and 1 in 3ingapore'

INTRODUCTION TO BANKING IN INDIA

(he banking section will na.igate through all the aspects of the -anking 3ystem in India' It will discuss upon the matters with the birth of the banking concept in the country to new players adding their names in the industry in coming few years' (he banker of all banks, :eser.e -ank of India 0:-I2, the Indian -anks /ssociation 0I-/2 and top !9 banks like I*-I, <3-&, I&I&I, /-) /=:", etc' has been well defined under three separate heads with one page dedicated to each bank' <owe.er, in the introduction part of the entire banking cosmos, the past has been well e%plained under three different heads namely6

<istory of -anking in India )ationalization of -anks in India 3cheduled &ommercial -anks in India

(he first deals with the history part since the dawn of banking system in India' >o.ernment took ma,or step in the 1969 to put the banking sector into systems and it nationalized 14 pri.ate banks in the mentioned year' (his has been elaborated in )ationalization -anks in India' (he last but not the least e%plains about the scheduled and unscheduled banks in India' 3ection 4! 062 0a2 of :-I /ct 19#4 lays down the condition of scheduled commercial banks' (he description along with a list of scheduled commercial banks are gi.en on this page

I!TOR" O# BANKING IN INDIA ?ithout a sound and effecti.e banking system in India it cannot ha.e a healthy economy' (he banking system of India should not only be hassle free but it should be able to meet new challenges posed by the technology and any other e%ternal and internal factors' 7or the past three decades India@s banking system has se.eral outstanding achie.ements to its credit' (he most striking is its e%tensi.e reach' It is no longer confined to only metropolitans or cosmopolitans in India' In fact, Indian banking system has reached e.en to the remote corners of the country' (his is one of the main reasons of India@s growth process' (he go.ernment@s regular policy for Indian bank since 1969 has paid rich di.idends ?ith the nationalization of 14 ma,or pri.ate banks of India' )ot long ago, an account holder had to wait for hours at the bank counters for getting a draft or for withdrawing his own money' (oday, he has a choice' >one are days when the most efficient bank transferred money from one branch to other in two days' )ow it is simple as instant messaging or dials a pizza' =oney has become the order of the day' (he first bank in India, though conser.ati.e, was established in 1586' 7rom 1586 till today, the ,ourney of Indian -anking 3ystem can be segregated into three distinct phases' (hey are as mentioned below6

$arly phase from 1586 to 1969 of Indian -anks )ationalization of Indian -anks and up to 1991 prior to Indian banking sector :eforms' )ew phase of Indian -anking 3ystem with the ad.ent of Indian 7inancial
3

A -anking 3ector :eforms after 1991'

(o make this write-up more e%planatory, I prefi% the scenario as +hase I, +hase II and +hase III' P$a%e I (he >eneral -ank of India was set up in the year 1586' )e%t came -ank of <industan and -engal -ank' (he $ast India &ompany established -ank of -engal 018992, -ank of -ombay 018492 and -ank of =adras 0184#2 as independent units and called it +residency -anks' (hese three banks were amalgamated in 19!9 and Imperial -ank of India was established which started as pri.ate shareholders banks, mostly $uropeans shareholders' In 186 /llahabad -ank was established and first time e%clusi.ely by Indians, +un,ab )ational -ank 4td' was set up in 1894 with headBuarters at 4ahore' -etween 1996 and 191#, -ank of India, &entral -ank of India, -ank of -aroda, &anara -ank, Indian -ank, and -ank of =ysore were set up' :eser.e -ank of India came in 19# ' *uring the first phase the growth was .ery slow and banks also e%perienced periodic failures between 191# and 1948' (here were appro%imately 1199 banks, mostly small' (o streamline the functioning and acti.ities of commercial banks, the >o.ernment of India came up with (he -anking &ompanies /ct, 1949 which was later changed to -anking :egulation /ct 1949 as per amending /ct of 196 0/ct )o' !# of 196 2' :eser.e -ank of India was .ested with e%tensi.e powers for the super.ision of banking in India as the &entral -anking /uthority' *uring those dayCs public has lesser confidence in the banks' /s an aftermath deposit mobilisation was slow' /breast of it the sa.ings bank facility pro.ided by the +ostal department was comparati.ely safer' =oreo.er, funds were largely gi.en to traders'
4

P$a%e II >o.ernment took ma,or steps in this Indian -anking 3ector :eform after independence' In 19 , it nationalized Imperial -ank of India with e%tensi.e banking facilities on a large scale especially in rural and semi-urban areas' It formed 3tate -ank of India to act as the principal agent of :-I and to handle banking transactions of the ;nion and 3tate >o.ernments all o.er the country' 3e.en banks forming subsidiary of 3tate -ank of India was nationalized in 1969 on 19th July, 1969, ma,or process of nationalization was carried out' It was the effort of the then +rime =inister of India, =rs' Indira >andhi' 14 ma,or commercial banks in the country were nationalized' 3econd phase of nationalization Indian -anking 3ector :eform was carried out in 1989 with se.en more banks' (his step brought 89D of the banking segment in India under >o.ernment ownership' (he following are the steps taken by the >o.ernment of India to :egulate -anking Institutions in the &ountry6

19496 $nactment of -anking :egulation /ct' 19 6 )ationalization of 3tate -ank of India' 19 96 )ationalization of 3-I subsidiaries' 19616 Insurance co.er e%tended to deposits' 19696 )ationalization of 14 ma,or banks' 19516 &reation of credit guarantee corporation' 195 6 &reation of regional rural banks' 19896 )ationalization of se.en banks with deposits o.er !99 crore'
5

/fter the nationalization of banks, the branches of the public sector bank India rose to appro%imately 899D in deposits and ad.ances took a huge ,ump by 11,999D' -anking in the sunshine of >o.ernment ownership ga.e the public implicit faith and immense confidence about the sustainability of these institutions' P$a%e III this phase has introduced many more products and facilities in the banking sector in its reforms measure' In 1991, under the chairmanship of = )arasimham, a committee was set up by his name which worked for the liberalisation of banking practices' (he country is flooded with foreign banks and their /(= stations' $fforts are being put to gi.e a satisfactory ser.ice to customers' +hone banking and net banking is introduced' (he entire system became more con.enient and swift' (ime is gi.en more importance than money' (he financial system of India has shown a great deal of resilience' It is sheltered from any crisis triggered by any e%ternal macroeconomics shock as other $ast /sian &ountries suffered' (his is all due to a fle%ible e%change rate regime, the foreign reser.es are high, the capital account is not yet fully con.ertible, and banks and their customers ha.e limited foreign e%change e%posure' !C &DU'&D CO((&RCIA' BANK! IN INDIA (he commercial banking structure in India consists of6

3cheduled &ommercial -anks in India ;nscheduled -anks in India

3cheduled -anks in India constitute those banks which ha.e been included in the 3econd 3chedule of :eser.e -ank of India 0:-I2 /ct, 19#4' :-I in turn includes only those banks in this schedule which satisfy the criteria laid down .ide section 4! 062 0a2 of the /ct'
6

/s on #9th June, 1999, there were #99 scheduled banks in India ha.ing a total network of 64,918 branches' (he scheduled commercial banks in India comprise of 3tate bank of India and its associates 082, nationalized banks 0192, foreign banks 04 2, pri.ate sector banks 0#!2, co-operati.e banks and regional rural banks' E3cheduled banks in IndiaE means the 3tate -ank of India constituted under the 3tate -ank of India /ct, 19 0!# of 19 2, a subsidiary bank as defined in the 3tate -ank of India 03ubsidiary -anks2 /ct, 19 9 0#8 of 19 92, a corresponding new bank constituted under section # of the -anking &ompanies 0/cBuisition and (ransfer of ;ndertakings2 /ct, 1959 0 of 19592, or under section # of the -anking &ompanies 0/cBuisition and (ransfer of ;ndertakings2 /ct, 1989 049 of 19892, or any other bank being a bank included in the 3econd 3chedule to the :eser.e -ank of India /ct, 19#4 0! of 19#42, but does not include a co-operati.e bankE' E)on-scheduled bank in IndiaE means a banking company as defined in clause 0c2 of section of the -anking :egulation /ct, 1949 019 of 19492, which is not a scheduled bankE' T$e follo)in* are t$e !+$eduled Bank% in India ,Publi+ !e+tor-.

3tate -ank of India 3tate -ank of -ikaner and Jaipur 3tate -ank of <yderabad 3tate -ank of Indore 3tate -ank of =ysore 3tate -ank of 3aurashtra 3tate -ank of (ra.ancore /ndhra -ank /llahabad -ank -ank of -aroda
7

-ank of India -ank of =aharashtra &anara -ank &entral -ank of India &orporation -ank *ena -ank Indian ".erseas -ank Indian -ank "riental -ank of &ommerce +un,ab )ational -ank +un,ab and 3ind -ank 3yndicate -ank ;nion -ank of India ;nited -ank of India ;&" -ank Fi,aya -ank

T$e follo)in* are t$e !+$eduled Bank% in India ,Pri/ate !e+tor-.

I)> Fysya -ank 4td /%is -ank 4td Indusind -ank 4td I&I&I -ank 4td 3outh Indian -ank <*7& -ank 4td &enturion -ank 4td
8

-ank of +un,ab 4td I*-I -ank 4td

T$e follo)in* are t$e !+$eduled #orei*n Bank% in India.

/merican $%press -ank 4td' /)G >ridlays -ank +lc' -ank of /merica )( A 3/ -ank of (okyo 4td' -anBuc )ationale de +aris -arclays -ank +lc &iti -ank )'&' *eutsche -ank /'>' <ongkong and 3hanghai -anking &orporation 3tandard &hartered -ank' (he &hase =anhattan -ank 4td' *resdner -ank />'

BANKING !&R0IC&! IN INDIA ?ith years, banks are also adding ser.ices to their customers' (he Indian banking industry is passing through a phase of customers market' (he customers ha.e more choices in choosing their banks' / competition has been established within the banks operating in India' ?ith stiff competition and ad.ancement of technology, the ser.ices pro.ided by
9

banks ha.e become more easy and con.enient' (he past days are witness to an hour wait before withdrawing cash from accounts or a cheBue from north of the country being cleared in one month in the south' (his section of banking deals with the latest disco.ery in the banking instruments along with the polished .ersion of their old systems' BANK ACCOUNT (he most common and first ser.ice of the banking sector' (here are different types of bank account in Indian banking sector' (he bank accounts are as follows6

-ank 3a.ings /ccount - -ank 3a.ings /ccount can be opened for eligible person H persons and certain organizations H agencies 0as ad.ised by :eser.e -ank of India 0:-I2 from time to time2 -ank &urrent /ccount - -ank &urrent /ccount can be opened by indi.iduals H partnership firms H +ri.ate and +ublic 4imited &ompanies H <;7s H 3pecified /ssociates H 3ocieties H (rusts, etc' -ank (erm *eposits /ccount - -ank (erm *eposits /ccount can be opened by indi.iduals H partnership firms H +ri.ate and +ublic 4imited &ompanies H <;7sH 3pecified /ssociates H 3ocieties H (rusts, etc' -ank /ccount "nline - ?ith the ad.ancement of technology, the ma,or banks in the public and pri.ate sector has faciliated their customer to open bank account online' -ank account online is registered through a +& with an internet connection' (he ad.ent of bank account online has sa.ed both the cost of operation for banks as well as the time taken in opening an account' P'A!TIC (ON&"

&redit cards in India are gaining ground' / number of banks in India are encouraging people to use credit card' (he concept of credit card was used in 19 9 with the launch of charge cards in ;3/ by *iners &lub and /merican $%press' &redit card howe.er became more popular with use of magnetic strip in 1959' &redit card in India became popular with the introduction of foreign banks in the
10

country' &redit cards are financial instruments, which can be used more than once to borrow money or buy products and ser.ices on credit' -asically banks, retail stores and other businesses issue these' 'OAN!

-anks in India with the way of de.elopment ha.e become easy to apply in loan market' (he following loans are gi.en by almost all the banks in the country6

+ersonal 4oan &ar 4oan or /uto 4oan 4oan against 3hares <ome 4oan $ducation 4oan or 3tudent 4oan

In +ersonal 4oan, one can get a sanctioned loan amount between :s ! ,999 to 19, 99,999 depending upon the profile of person applying for the loan' 3-I, I&I&I, <*7&, <3-& are some of the leading banks which deals in +ersonal 4oan' /lmost all the banks ha.e ,umped into the market of car loan which is also sometimes termed as auto loan' It is one of the fast mo.ing financial products of banks' &ar loan H auto loan are sanctioned to the e%tent of 8 D upon the e%showroom price of the car with some simple paper works and a small amount of processing fee' 4oan against shares is .ery easy to get because liBuid guarantee is in.ol.ed in it' <ome loan is the latest craze in the banking sector with the de.elopment of the infrastructure' )ow people are mo.ing to township outside the city' =ore number of townships is coming up to meet the demand of @house for all@' (he :-I has also liberalised the interest rates of home loan in order to match the repayment capability of e.en middle class people' /lmost all banks are dealing in home loan'
11

/gain 3-I, I&I&I, <*7&, <3-& are leading' (he educational loan, rather to be termed as student loan, is a good banking product for the mass' 3tudents with certain academic brilliance, studying at recognised collegesHuni.ersities in India and abroad are generally gi.en education loan H student loan so as to meet the e%penses on tuition feeH maintenance costHbooks and other eBuipment'

(ON&" TRAN!#&R

-eside lending and depositing money, banks also carry money from one corner of the globe to another' (his act of banks is known as transfer of money' (his acti.ity is termed as remittance business' -anks generally issue *emand *rafts, -anker@s &heBues, =oney "rders or other such instruments for transferring the money' (his is a type of (elegraphic (ransfer or (ele &ash "rders' It has been only a couple of years that banks ha.e ,umped into the money transfer businesses in India' (he international money transfer market grew 9'#D from !99# to !994 i'e' from ;3I!1# bn' to ;3I!## bn' in !994' $conomists say that the market of money transfer will further grow at a cumulati.e 1!'1D a.erage growth rate through !999' #UTUR& O# BANKING IN INDIA / healthy banking system is essential for any economy stri.ing to achie.e good growth and yet remain stable in an increasingly global business en.ironment' (he Indian banking system has witnessed a series of reforms in the past, like deregulation of interest rates, dilution of go.ernment stake in +3-s, and increased participation of pri.ate sector banks' It has also undergone rapid changes, reflecting a number of underlying de.elopments' (his trend has created new competiti.e threats as well as new opportunities' (his paper aims to foresee ma,or
12

future banking trends, based on these past and current mo.ements in the market' >i.en the competiti.e market, banking will 0and to a great e%tent already has2 become a process of choice and con.enience' (he future of banking would be in terms of integration' (his is already becoming a reality with new-age banks such as J$3 -ank, and others too adopting a single-+I)' >eography will no longer be an inhibitor' (echnology will pro.e to be the differentiator in the short-term but the dynamic en.ironment will soon lead to its saturation and what will ultimately be the key to success will be a better relationship management' O0&R0I&1 If one were to say that the future of banking in India is bright, it would be a gross understatement' ?ith the growing competition and con.ergence of ser.ices, the customers 0you and I2 stand only to benefit more to say the least' /t the same time, emergence of a multitude of comple% financial instruments is foreseen in the near future 0the trend is .isible in the current scenario too2 which is bound to confuse the customer more than e.er unless she spends hours 0maybe days2 to understand the same' <ence, I see a growing trend towards the importance of relationship managers' (he success 0or failure2 of any bank would depend not only on tapping the untapped customer base 0from other departments of the same bank, customers of related similar institutions or those of the competitors2 but also on the effecti.eness in retaining the e%isting base' India has witness to a sea change in the way banking is done in the past more than two decades' 3ince 1991, the :eser.e -ank of India 0:-I2 took steps to reform the Indian banking system at a measured pace so that growth could be achie.ed without e%posure to any macro-en.ironment and systemic risks' 3ome of these initiati.es were deregulation of interest rates, dilution of the go.ernment stake in public sector banks 0+3-s2, guidelines being issued for risk management, asset classification, and pro.isioning' (echnology has made tremendous impact in banking' KAnywhere bankingC and KAnytime bankingC ha.e become a reality' (he financial sector now operates in a more competiti.e en.ironment than before and intermediates relati.ely large .olume of international financial flows' In the wake
13

of greater financial deregulation and global financial integration, the biggest challenge before the regulators is of a.oiding instability in the financial system' RI!K (ANAG&(&NT (he future of banking will undoubtedly rest on risk management dynamics' "nly those banks that ha.e efficient risk management system will sur.i.e in the market in the long run' (he effecti.e management of credit risk is a critical component of comprehensi.e risk management essential for long-term success of a banking institution' /lthough capital ser.es the purpose of meeting une%pected losses, capital is not a substitute for inadeBuate decontrol or risk management systems' &oming years will witness banks stri.ing to create sound internal control or risk management processes' ?ith the focus on regulation and risk management in the -asel II framework gaining prominence, the post--asel II era will belong to the banks that manage their risks effecti.ely' (he banks with proper risk management systems would not only gain competiti.e ad.antage by way of lower regulatory capital charge, but would also add .alue to the shareholders and other stakeholders by properly pricing their ser.ices, adeBuate pro.isioning and maintaining a robust financial structure' KThe future belongs to bigger banks alone, as well as to those which have minimized their risks considerably.C I!TOR" O# T & BANK Punjab National Bank 0+)-2 was registered on =ay 19, 1894 under the Indian &ompanies /ct with its office in /narkali -azaar 4ahore' (he -ank is the second largest go.ernment-owned commercial bank in India with about 4, 99 branches across 564 cities' It ser.es o.er #5 million customers' (he bank has been ranked !48th biggest bank in the world by -ankers /lmanac, 4ondon' (he bank@s total assets for financial year !995 were about ;3I69 billion' +)- has a banking subsidiary in the ;1, as well as branches in <ong 1ong and 1abul, and representati.e offices in /lmaty, *ubai, "slo, and 3hanghai'
14

189 6 +)- commenced its operations in 4ahore' +)- has the distinction of being the first Indian bank to ha.e been started solely with Indian capital that has sur.i.ed to the present' 0(he first entirely Indian bank, the "uch &ommercial -ank, was established in 1881 in 7aizabad, but failed in 19 8'2 +)-@s founders included se.eral leaders of the 3wadeshi mo.ement such as *yal 3ingh =a,ithia and 4ala <ar1ishen 4al,L1M 4ala 4alchand, 3hri 1ali +rosanna :oy, 3hri $'&' Jessawala, 3hri +rabhu *ayal, -akshi Jaishi :am, and 4ala *holan *ass' 4ala 4a,pat :ai was acti.ely associated with the management of the -ank in its early years' 19946 +)- established branches in 1arachi and +eshawar' 19496 +)- absorbed -hagwan *ass -ank, a scheduled bank located in *elhi circle' 19456 +artition of India and +akistan at Independence' +)- lost its premises in 4ahore, but continued to operate in +akistan' 19 16 +)- acBuired the #9 branches of -harat -ank 0est' 194!2N -harat -ank became -harat )idhi 4td' 19616 +)- acBuired ;ni.ersal -ank of India' 196#6 (he >o.ernment of -urma nationalized +)-@s branch in :angoon 0Jangon2' 3eptember 196 6 /fter the Indo-+ak war the go.ernment of +akistan seized all the offices in +akistan of Indian banks, including +)-@s head office, which may ha.e mo.ed to 1arachi' +)- also had one or more branches in $ast +akistan 0-angladesh2' 1969s6 +)- amalgamated Indo &ommercial -ank 0est' 19##2 in a rescue' 19696 (he >o.ernment of India 0>"I2 nationalized +)- and 1# other ma,or commercial banks, on July 19, 1969' 1956 or 19586 +)- opened a branch in 4ondon' 1986 (he :eser.e -ank of India reBuired +)- to transfer its 4ondon branch to 3tate -ank of India after the branch was in.ol.ed in a fraud scandal' 19866 +)- acBuired <industan &ommercial -ank 0est' 194#2 in a rescue' (he acBuisition added <industan@s 14! branches to +)-@s network'
15

199#6 +)- acBuired )ew -ank of India, which the >"I had nationalized in 1989' 19986 +)- set up a representati.e office in /lmaty, 1azakhstan' !99#6 +)- took o.er )edungadi -ank, the oldest pri.ate sector bank in 1erala' :ao -ahadur ('=' /ppu )edungadi, author of 1undalatha, one of the earliest no.els in =alayalam, had established the bank in 1899' It was incorporated in 191#, and in 196 had acBuired selected assets and deposits of the &oimbatore )ational -ank' /t the time of the merger with +)-, )edungadi -ank@s shares had zero .alue, with the result that its shareholders recei.ed no payment for their shares' +)- also opened a representati.e office in 4ondon'

!9946 +)- established a branch in 1abul, /fghanistan' +)- also opened a representati.e office in 3hanghai' +)- established an alliance with $.erest -ank in )epal that permits migrants to transfer funds easily between India and $.erest -ank@s 1! branches in )epal'

!99 6 +)- opened a representati.e office in *ubai' !9956 +)- established +)-I4 - +un,ab )ational -ank 0International2 - in the ;1, with two offices, one in 4ondon, and one in 3outh <all' 3ince then it has opened a third branch in 4eicester, and is planning a fourth in -irmingham' >atin >upta became &hairmen of +un,ab )ational -ank' !9986 +)- opened a branch in <ong 1ong' !9996 +)- opened a representati.e office in "slo, )orway'

AC I&0&(&NT! +un,ab )ational -ank announced its O17J!919 results on !9 July !999, deli.ering 6!D y-o-y growth in net profits to :s8#! crore 0:s 1!cr2,
16

substantially ahead of e%pectations on account of large treasury gains, apart from healthy operating performance' ?hile the bankCs deposit growth was reasonably robust at 4'4D seBuentially and !6' D y-o-y, unlike the peers its growth in ad.ances also remained strong at #8D y-o-y' In spite of being at the forefront of +4: cuts, the bank posted a healthy growth in )et Interest Income 0)II2 of !9D y-o-y' "ther Income surged 11#D y-o-y, dri.en by strong treasury gains of :s# crore during the Buarter in line with industry trends, e.en as 7ee income was also robust at 4 D y-o-y, on the back of strong balance sheet growth' "perating e%penses were higher than e%pected on account of :s1 9 crore of pro.isions for imminent wage hikes' >ross and )et )+/ ratios remained stable seBuentially at 1'8D and 9'!D, with the bank not adopting the guidelines of treating floating pro.isions as part of tier ! capital instead of ad,usting against )+/s on e%press permission from the :-I'

0I!ION AND (I!!ION 0i%ion

17

 (o e.ol.e and position the bank as a world class, progressi.e, cost effecti.e and customer friendly institution pro.iding comprehensi.e financial and related ser.ices'

Integrating frontiers of technology and ser.ing .arious segments of society especially weaker section'

&ommited to e%cellence in ser.ing the public and also e%celling in corporate .alues

(i%%ion (o pro.ide e%cellent professional ser.ices and impro.e its position as a leader in financial and related ser.ices'

-uild and maintain a team of moti.ated workforce with high work ethos'

;se latest technology aimed at customer satisfaction and act as an effecti.e catalyst for socio economic de.elopment'

0A'U&! AND &T IC! -onding and Integrity

18

 $thical conduct

+eriodic disclosure

&onfidentiality and fair dealing

&ompliance with rules and regulations

PRODUCT! AND !&R0IC&!

!a/in*% #und A++ount 2 (otal 7reedom 3alary /ccount, +)- +rudent 3weep, +)- Fidyarthi 37 /ccount, +)- =itra 37 A++ount Current A++ount 2 +)- Faibha., +)- >aura., +)- 3mart :oamer #i3ed Depo%it !+$eme% 2 3pectrum 7i%ed *eposit 3cheme, /nupam /ccount, =ahabachat 3chemes, =ulti -enefit *eposit !+$eme Credit !+$eme% 2 7le%ible <ousing 4oan, &ar 7inance, +ersonal 4oan, &redit &ards !o+ial Bankin* 2 =ahila ;dyam )idhi 3cheme, 1rishi &ard, +)- 7armers ?elfare (rust

19

Corporate Bankin* 2 >old &ard scheme for e%porters, $PI= finance Bu%ine%% !e+tor 2 +)- 1arigar credit card, +)- 1ushal ;dhami, +)- +ragati ;dhami, +)- Fikas ;dhami /part from these, and the +)- also offers locker facilities, senior citizens schemes, ++7 schemes and .arious $-ser.ices'

A1ARD! AND DI!TINCTION!

:anked among top 9 companies by the leading financial daily, $conomic (imes' :anked as #!#rd biggest bank in the world by -ankers /lmanac 0January !9962, 4ondon' $arned 9th place among India@s =ost (rusted top 9 ser.ice brands in $conomic (imes- /'& )ielson 3ur.ey' Included in the top 1999 banks in the world according to (he -anker, 4ondon' >olden +eacock /ward for $%cellence in &orporate >o.ernance - !99 by Institute of *irectors' 7I&&I@s :ural *e.elopment /ward for $%cellence in :ural *e.elopment Q !99

ORGANI4ATIONA' !TRUCTUR&

20

!1OT ANA'"!I!

!TR&NGT
21

 ?ide network 4arge number of customers 7ast adaptability to technology -rand image 1&AKN&!!

&asual beha.iour &orruption and red tapism 3low decision making due to large hierarchy <igh gross )+/ OPPORTUNITI&!

22

 <ome to home banking ser.ices *i.ersification towards other fields >lobalization

T R&AT!

3tiff competition from 3-I and other pri.ate players'

CU!TO(&R !ATI!#ACTION

&ustomer satisfaction refers to the e%tent to which customers are happy with the products and ser.ices pro.ided by a business'

23

&ustomer satisfaction le.els can be measured using sur.ey techniBues and Buestionnaires

D&#INITION!. Definition 5. &ustomer satisfaction is eBui.alent to making sure that product and ser.ice performance meets customer e%pectations'

Definition 6. &ustomer satisfaction is the perception of the customer that the outcome of a business transaction is eBual to or greater than hisHher e%pectation'

Definition 7. &ustomer satisfaction occurs when acBuisition of products andHor ser.ices pro.ides a minimum negati.e departure from e%pectations when compared with other acBuisitions'

>aining high le.els of customer satisfaction is .ery important to a business because satisfaction customers are most likely to be loyal and to make repeat orders and to use a wide range of ser.ices offered by a business (here are many factors which lead in high le.els of customer satisfaction including' +roducts and ser.ices which are customer focused and hence pro.ide high le.els of .alue for money'
24

?hat is clear about customer satisfaction is that customers are most likely to appreciate the goods and ser.ices that they buy if they are made to feel special' (his occurs when they feel that the products and ser.ices that they buy ha.e been specially produced for them or for people like them' B&N&#IT! O# CU!TO(&R !ATI!#ACTION

(he importance of customer satisfaction and support is increasingly becoming a .ital business issue as organization realize the benefits of &ustomer :elationship =anagement 0&:=2 for pro.iding effecti.e customer ser.ice' +rofessionals working within customer-focused business or those running call centers or help desks, need to keep informed about the latest customer satisfaction techniBues for running a .aluable customer ser.ice function' 7rom small customer ser.ice departments to large call centers, the importance of de.eloping a .alued relationship with customers using &:= is essential to support customer and longterm business growth' 1$at Do Cu%tomer% 1ant8 -efore we begin to create tools to measure the le.el of satisfaction, it is important to de.elop a clear understanding of what e%actly the customer wants' ?e need to know what our customers e%pect from the products and ser.ices we pro.ide' &ustomer e%pectations ha.e two types Q $%pressed Implied
25

&3pre%%ed &ustomer $%pectations are those reBuirements that are written down n the contract and agreed upon by both parties for e%ample, product specifications and deli.ery reBuirements' 3upplierCs performance against these reBuirements is most of the items directly measurable'

Implied &ustomer $%pectations are not written or spoken but are the ones the customer would Ke%pectC the supplier to meet ne.ertheless' 7or e%ample, a customer would e%pect the ser.ice representati.e who calls on him to be knowledgeable and competent to sol.e a problem on the spot'

(here are many reasons why customer e%pectations are likely to change o.ertime' +rocess impro.ements, ad.ent of new technology, changes in customerCs priorities, impro.ed Buality of ser.ice pro.ided by competitors are ,ust a few e%amples' (he customer is always right' 3upplierCs ,ob is to pro.ide the customer what heHshe wants, when heHshe wants it' &ustomer satisfaction is customerCs perception that a supplier has met or e%ceeded their e%pectations' 1 AT CON!TITUT&! !ATI!#ACTION8

?e cannot create customer satisfaction ,ust by meeting customerCs reBuirements fully because these ha.e to be met in any case' <owe.er failing short is certain to create dissatisfaction
26

(ajor Attribute% of +u%tomer %ati%fa+tion in bankin* indu%try +an be %ummari9ed a%.

+roduct Buality +remium "utflow :eturn on In.estment 3er.ices :esponsi.eness and ability to resol.e complaints and re,ect reports' ".erall communication, accessibility and attitude'

1 AT AR& T & TOO'!8 &ustomer e%pectations can be identified using .arious methods such as6 +eriodic contract re.iews =arket research (elephonic inter.iews +ersonal .isits ?arranty records Informal discussions
27

 3atisfaction sur.eys

*epending upon the customer base and a.ailable resources, we can choose a method that is most effecti.e in measuring the customerCs perceptions' (he purpose of the e%ercise is to identify priorities for impro.ements' ?e must de.elop a method or combination of methods that helps to continually impro.e ser.ice'

CU!TO(&R !ATI!#ACTION !UR0&"! 7ormal sur.ey has emerged as by far the best method of periodically the customer satisfaction' (he sur.ey are not marketing tools but an informationR gaining tool' $nough homework needs to be before embarking on the actual sur.ey' (his includes6

*efining "b,ecti.es of the 3ur.ey

28

 *esign 3ur.ey approach *e.elop Buestionnaires and forms /dminister 3ur.ey 0$mail, (elephone or +ost2 =ethod of compiling data and analyzing the findings 7ormat of the report to present the findings

(here is no point in asking irrele.ant Buestions on a customer satisfaction Buestionnaire' (he basic purpose is to find out what we are doing right or wrong' ?here is the scope for impro.ement, where do we stand .is-S-.is other suppliers' <ow we can ser.e the customer betterT

A +u%tomer %ati%fa+tion mea%urement %ur/ey %$ould at lea%t identify t$e follo)in* obje+ti/e%. Importance to customers 0&ustomers priorities2 &ustomerCs perception of supplierCs performance Jour performance relati.e to customerCs priorities' +riorities for impro.ement 3ur.ey forms should be easy to fill out with minimum amount of time and efforts on customerCs part' (hey should be designed to acti.ely encourage the customer to complete the Buestions' Jet they must pro.ide accurate data should also be sufficiently reliable for management decision making' (his can be achie.ed by incorporating ob,ecti.e type Buestions where customer has to UrateV on scale of say 1 to 19' 7or repeated sur.eys, you could pro.ide the rating that was pre.iously accorded by the customer' (his works like a reference point for the customer'
29

3pace should always be pro.ided for the customers own opinions this enables them to state any additional reBuirements or report any shortcomings that are not co.ered by the ob,ecti.e Buestions' )ormally, we deal .arious personnel at .arious le.els in the customerCs organizationRthe buyer, user, recei.ing inspector, finance and purchase person etc' sur.eying a number of respondents for each customer gi.es a complete perspecti.e of customer satisfaction' It may be necessary to de.ice a different Buestionnaire for each of them' :espondents must be pro.ided a way to e%press the importance they attach to .arious sur.ey parameters' :espondents should be asked to gi.e a weighting factor, again on a rating scale of say, 1 to 19, for each reBuirement' (his gi.es a better indication of relati.e importance of each parameter towards o.erall customer satisfaction and makes it easier for suppliers to prioritize their action plans by comparing the performance rating 0scores2 with importance rating 0weighing2'

CON!U(&R R&!&ARC

IN DI##&R&NT DI!CIP'IN&!

/ considerable body of literature e%ists on consumption, consumer beha.iour and consumer decision making process'

=ost of the consumer research focused on adopter categories, habits, attitudes and intentions rather that on actually measuring the satisfaction le.el with the ser.ice'
30

CON!U(&R !ATI!#ACTION PROC&!!

(he paramount goal of marketing is to understand the customer and to influence buying beha.iour'

(he process can be depicted as follows6-

)eed recognition- realization of the difference between the desired and the current situation that ser.es as a trigger for entire process' 3earch for information' +re purchase alternati.e e.aluation' &onsumption0utilization of the procured option2 +ost purchase alternati.e re-e.aluation' *i.estment0disposal of the unconsumed product and itCs remnants2

1A"! #OR (AINTAINING R&'ATION! 1IT ADOPT&D B" PNB

T & CUTO(&R!

(he ability of the banking industry to achie.e the socio-economic ob,ecti.es and in the process bringing more and more customers into its fold will ultimately depend on the satisfaction of the customers' ?e ha.e a strong belief that a satisfied customer is the foremost factor in de.eloping our business'

31

/ need was felt by us at +un,ab )ational -ank that in order to become more customers friendly the -ank should come out with &harter of its ser.ices for the customers' &itizens@ &harter concept was considered as a base instrument to fill this need and accordingly this document was prepared' (his document was made in consultation with the users and highlights our -ank@s commitments towards the customer satisfaction, thus ensuring accountability and responsibility amongst its officials and staff' (his &ode for customers not only e%plains our commitment and responsibilities along with the redressed methods but also specifies the obligation on the part of customers for healthy practices in &ustomer--anker relationships' (his is not a legal document creating rights and obligations' (he &ode has been prepared to promote fair banking practices and to gi.e information in respect of .arious acti.ities relating to customer ser.ice' ?e wish to acknowledge the initiati.e taken by the =inistry of 7inance, >o.ernment of India and =inistry of /dministrati.e :eforms and +ublic >rie.ances for encouraging us to bring out this &ode'

CO((ON PRACTIC&! #O''O1&D B" PNB BRANC &!

*isplay business hours' :ender courteous ser.ices' /ttend to all customers present in the banking hall at the close of business hours'
32

 +ro.ide separate @$nBuiry@ or @=ay I help you@ counter at large branches' "ffer nomination facility to all deposit accounts 0i'e' account opened in indi.idual capacity2 and all safe deposit locker hirers 0i'e' indi.idual hirers2' *isplay interest rates for .arious deposit schemes from time to time' )otify change in interest rates on ad.ances' +ro.ide details of .arious deposit schemesHser.ices of the -ank' Issue *emand *rafts, +ay "rders, etc' *isplay (ime-)orms for .arious banking transactions' +ay interest for delayed credit of outstation cheBues, as ad.ised by :eser.e -ank of India 0:-I2 from time to time' /ccord immediate credit in respect of outstation and local cheBues upto a specified limit sub,ect to certain conditions, as ad.ised by :-I from time to time' +ro.ide complaintHsuggestion bo% in the branch premises' *isplay address of :egionalHGonal and &entral "ffices as well as )odal "fficer dealing with customer grie.ancesHcomplaints'

OB:&CTI0& O# T & !TUD"

33

 (o ha.e an insight into the attitudes and beha.iors of customers' (o find out the differences among percei.ed ser.ice and e%pected ser.ice' (o produce an e%ecuti.e ser.ice report to upgrade ser.ice characteristics' (o understand consumerCs preferences' (o access the degree of satisfaction of the consumers

34

!COP& O# T & !TUD"

(his study is limited to the consumers with in )ew *elhi city' (he study will be able to re.eal the preferences, needs, satisfaction of the customers regarding the banking ser.ices, It also help banks to know whether the e%isting products or ser.ices the are offering are really satisfying the customersC needs'

35

R&A!&RC

(&T ODO'OG"

/ descripti.e study tries to disco.er answers to the Buestions who, what, when, where, and, sometimes, how' (he researcher attempts to describe or define a sub,ect, often by creating a profile of a group of problems, people, or e.ents' 3uch studies may in.ol.e the collection of data and the creation of a distribution of the number of times the researcher obser.es a single e.ent or characteristic 0the research .ariable2, or they may in.ol.e relating the interaction of two or more .ariables' "rganizations that maintain databases of their employees, customers, and suppliers already ha.e significant data to conduct descripti.e studies using internal information' Jet many firms that ha.e such data files do not mine them regularly for the decision-making insight they might pro.ide' (his descripti.e study is popular in business research because of its .ersatility across disciplines' In for-profit, not-for-profit and go.ernment organizations, descripti.e in.estigations ha.e a broad appeal to the administrator and policy analyst for planning, monitoring, and e.aluating' In this conte%t, how Buestions address issues such as Buantity, cost, efficiency, effecti.eness, and adeBuacy' *escripti.e studies may or may not ha.e the potential for drawing powerful inferences' / descripti.e study, howe.er, does not e%plain why an e.ent has occurred or why the .ariables interact the way they do'

36

!A(P'& (&T OD

&on.enience sampling method is used for the sur.ey of this pro,ect' It is a nonprobability sample' (his is the least reliable design but normally the cheapest and easiest to conduct 'In this method :esearcher ha.e the freedom to choose whome.er they find, thus the name con.enience' $%ample includes informal pools of friends and neighbours or people responding to a newspaperCs in.itation for readers to state their position on some public issue'

!A(P'& !I4&

3ample size denotes the number of elements selected for the study' 7or the present study, 199 respondents were selected at random' /ll the 199 respondents were the customers of different branches of +)-'

!A(P'ING (&T OD

/ sample is a representati.e part of the population' In sampling techniBue, information is collected only from a representati.e part of the uni.erse and the conclusions are drawn on that basis for the entire uni.erse'
37

/ con.enience sampling techniBue was used to collect data from the respondents'

(&T OD O# DATA CO''&CTION

(o know the response, the researcher used Buestionnaire method' It has been designed as a primary research instrument' Ouestionnaires were distributed to respondents and they were asked to answer the Buestions gi.en in the Buestionnaire' (he Buestionnaires were used as an instrumentation techniBue, because it is an important method of data collection' (he success of the Buestionnaire method in collecting the information depends largely on proper drafting' 3o in the present study Buestions were arranged and interconnected logically' (he structured Buestionnaire will reduce both inter.iewers and interpreters bias' 7urther, coding and analysis was done for each BuestionCs response to reach into findings, suggestions and finally to the conclusion about the topic' T"P&! O# DATA $.ery decision poses uniBue needs for information, and rele.ant strategies can be de.eloped based on the information gathered through research' :esearch is the systematic ob,ecti.e and e%hausti.e search for and study of facts rele.ant to the problem :esearch design means the framework of study that leads to the collection and analysis of data' It is a conceptual structure with in which research is conducted' It facilitates smooth sailing of .arious research operations to make the research as effecti.e as possible'
38

PRI(AR" DATA +rimary data are those collected by the in.estigator himself for the first time and thus they are original in character, they are collected for a particular purpose' / well-structured Buestionnaire was personally administrated to the selected sample to collect the primary data' !&CONDAR" DATA 3econdary data are those, which ha.e already been collected by some other persons for their purpose and published' 3econdary data are usually in the shape of finished products'

(wo types of secondary data were collected for the preparation of the pro,ect work6 Internal Data was generated from companyCs brochures, manuals and annual reports &3ternal Data; on the other hand, was generated from magazines, research books, intranet and internet 0websites2'

39

'I(ITATION! O# T & !TUD"

/lthough the study was carried out with e%treme enthusiasm and careful planning there are se.eral limitations, which handicapped the research .iz,

Time Con%traint%. (he time stipulated for the pro,ect to be completed is less and thus there are chances that some information might ha.e been left out, howe.er due care is taken to include all the rele.ant information needed'

!ample %i9e. *ue to time constraints the sample size was relati.ely small and would definitely ha.e been more representati.e if I had collected information from more respondents'

A++ura+y. It is difficult to know if all the respondents ga.e accurate informationN some respondents tend to gi.e misleading information'

40

It was difficult to find respondents as they were busy in their schedule, and collection of data was .ery difficult' (herefore, the study had to be carried out based on the a.ailability of respondents' ! AR& O# DI##&R&NT T"P&! O# ACCOUNT!
SL. No. NATURE OF ACCOUNTS 1. Saving A/Cs 2. Curren t A/Cs 3. Fixe !e"osit s 4 4& 4. #oans 5. $t%er s Total

NUMBER OF RESPONDENTS PERCENTAGE OF RESPONDENTS

78 78&

9 9&

3 3&

6 6&

100 100&

Analy%i%. /bo.e table shows that 58D respondents ha.e 3a.ing /H&s, and 9D
41

ha.e &urrent /H&s and rest of the respondents ha.e 1#D share of other /H&s in total 0which includes fi%ed deposits, loans, and other products2 Interpretation. (his means most of the respondents are ha.ing 3a.ing /H&s which means the bank deposits are enriching as 3a.ing /H&s share is most' !ATI!#ACTION O# R&!POND&NT! 1IT PNB BRANC !&R0IC&! O##&R&D B"

SL. No.

RESPONSE

NUMBER OF RESPONDENTS 89 11 100

PERCENTAGE OF RESPONDENTS 89& 11& 100 %

1. 2. TOTAL

Satis'ie (ot satis'ie

Analy%i%. 7rom the abo.e table it could be inferred that 89D of the consumers are satisfied with the ser.ice and Buality of products of their bank' "nly 11D of consumers are not satisfied'
42

Interpretation. =ost of the respondents are satisfied with the ser.ice offered by +)-' +resently the bank offers .arieties of ser.ices and the customers are getting a good rate of return from their deposits' &ustomers are getting good ser.ice from the bank'

RATING! O# T & !&R0IC&! O##&R&D B" T & R&!POND&NT<! 'I#& IN!URANC& CO(PAN"
SL. No. RATINGS NUMBER OF RESPONDE NTS PERCENTA GE OF RESPONDE NTS 1. )*C)## )(T 05 2. +),.$$! 09 3. .$$! 06 4. A+),A .) 04 5. /$$, 100 TOTAL

5&

9&

76&

6&

4&

100 %

Analy%i%. 7rom this table it could be inferred that 56D of the consumers ha.e rated ser.ice offered as KgoodC, 9D of them ha.e rated them as K.ery goodC, and 9 D of them ha.e rated as e%cellent and a.erageC while only 4D ha.e rated as KpoorC
43

'Interpretation. 3er.ice offered by the bank is impro.ing day by day' :eturns consumers are getting are also attracti.e' =a,ority of the customers rates good, .ery good and e%cellent because of the customer ser.ice offered by the bank' TAB'& ! O1ING (OTI0& B& IND T & !&'&CTING PNB

SL.NO 1. 2. 3. 4.

ATTRIBUTE 0ran na1e Custo1er servi2e 3nterest $t%ers

SCORE 56 30 12 2

RANK 1 2 3 4

Analy%i%. (his table show the strengths and weaknesses of the brand, and what are the important criteria or factors on which decision-making is done' 7rom this table we can infer that consumers gi.e more importance for K-rand nameC, secondly they prefer KsatisfactionC, and then Kreturns on in.estmentC' Interpretation. (his purely shows that people are now looking forward for better customer ser.ice in addition to the brand name in which they are in.esting and the returns they are getting'
44

CON!U(&R! 1I''INGN&!! TO R&CO((&ND IN!URANC& CO(PAN" TO OT &R!

T &IR

'I#&

SL. No.

RESPONSES

NUMBER OF RESPONDENTS 92 08 100

PERCENTAGE OF RESPONDENTS 92& 8& 100 %

1. 2. TOTAL

,e2o11en e (ot re2o11en e

Analy%i%. 7rom this table it can be noted that the ma,ority of consumers 09!D2 would like to recommend their bank ser.ices to others and only 8D of consumers would not like to recommend it to others' Interpretation. 3ince the competition has increased in the field of benefits and ser.ice of banking' 3o customers are getting good ser.ice, so that they are willing to recommend their bank ser.ices to others' CON!U(&R! 1I''INGN&!! TO ! I#T T &IR A=C% TO OT &R BANKS

45

SL. No.

RESPONSES

NUMBER OF RESPONDENTS 8 92 100

PERCENTAGE OF RESPONDENTS 8& 92& 100 %

1. 2. TOTAL

S%i't !oesn4t s%i't

Analy%i%. 7rom this table it can be noted that the ma,ority of consumers 09!D2 doesnCt like to shift their /H&s to other banks'

Interpretation. (he reason can be increasing customer satisfaction and Buality ser.ices offered by the bank' CONC'U!ION

46

(he pro,ect entitled UA !TUD" TO UND&R!TAND T & CU!TO(&R !ATI!#ACTION AT PNB> has helped me in studying satisfaction about ser.ices and products offered to consumers' Sin2e t%e o"ening u" o' t%e 5an6ing se2tor7 "rivate 5an6s are in t%e 'ra8 ea2% one tr8ing to 2over 1ore 1ar6et s%are t%an t%e ot%er. Jet, +)- is far behind 3-I' +)- must also be alert what with +ri.ate -anks 0I&I&I, <*7&2 breathing down its neck' I am sure the bank will find my findings rele.ant and I sincerely hope it uses my suggestions enlisted, which I hope will take them miles ahead of competition' In short, I would like to say that the .ery act of the concerned management at +)in gi.ing me the ,ob of critically e%amining consumer satisfaction towards financial products and ser.ices of the company is a step in their continual mission of making all round impro.ements as a means of progress' I am sure the bank has a .ery bright future to look forward to and will be a trailblazer in its own right'

R&CO((&NDATION!

47

?ith regard to banking products and ser.ices, consumers respond at different rates, depending on the consumerCs characteristics' <ence I +)- should try to bring their new product and ser.ices to the attention of potential early adopters'

*ue to the intense competition in the financial market, +)- should adopt better strategies to attract more customers' :eturn on in.estment company reputation and premium outflow are most preferred attributes that are e%pected by the respondents' <ence greater focus should be gi.en to these attributes' +)- should adopt effecti.e promotional strategies to increase the awareness le.el among the consumers' +)- should ask for their consumer feedback to know whether the consumers are really satisfied or dissatisfied with the ser.ice and product of the bank' If they are dissatisfied, then the reasons for dissatisfaction should be found out and should be corrected in future' (he +)- brand name has earned a lot of goodwill and en,oys high brand eBuity' /s there is intense competition, +)- should work hard to maintain its position and offer better ser.ice and products to consumers' (he bank should try to increase the -rand image through performance and ser.ice then, only the customers will be satisfied' =a,ority of the people find banking important in their life, so +)- should employ the strategies to con.ert the want in to need which will enrich their business'

48

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