SERVQUAL PROJECT REPORT ON SBI

INTRODUCTION
State Bank of India (SBI) is a multinational banking and financial services company based in
India. It is a government-owned corporation with its headquarters in Mumbai, Maharashtra. As
of December 2013, it had assets of US$388 billion and 17,000 branches, including 190 foreign
offices, making it the largest banking and financial services company in India by assets.
State Bank of India is one of the Big Four banks of India, along with ICICI Bank, Punjab
National Bank and Bank of Baroda.
The bank traces its ancestry to British India, through the Imperial Bank of India, to the founding
in 1806 of the Bank of Calcutta, making it the oldest commercial bank in the Indian
Subcontinent. Bank of Madras merged into the other two presidencies banksBank of
Calcutta and Bank of Bombayto form the Imperial Bank of India, which in turn became the
State Bank of India. Government of India owned the Imperial Bank of India in 1955,
with Reserve Bank of India taking a 60% stake, and renamed it the State Bank of India. In 2008,
the government took over the stake held by the Reserve Bank of India.
History of SBI:The roots of the State Bank of India lie in the first decade of the 19th century, when the Bank of
Calcutta, later renamed the Bank of Bengal, was established on 2 June 1806. The Bank of Bengal
was one of three Presidency banks, the other two being the Bank of Bombay (incorporated on 15
April 1840) and the Bank of Madras (incorporated on 1 July 1843). All three Presidency banks
were incorporated as joint and were the result of royal charters. These three banks received the
exclusive right to issue paper currency till 1861 when, with the Paper Currency Act, the right was
taken over by the Government of India. The Presidency banks amalgamated on 27 January 1921,
and the re-organized banking entity took as its name Imperial Bank of India. The Imperial Bank
of India remained a joint stock company but without Government participation.

Pursuant to the provisions of the State Bank of India Act of 1955, the Reserve Bank of India,
which is India's central bank, acquired a controlling interest in the Imperial Bank of India. On 1
July 1955, the Imperial Bank of India became the State Bank of India. In 2008, the government
of India acquired the Reserve Bank of India's stake in SBI so as to remove any conflict of interest
because the RBI is the country's banking regulatory authority.
In 1959, the government passed the State Bank of India (Subsidiary Banks) Act, which made
eight state banks associates of SBI. A process of consolidation began on 13 September 2008,
when the State Bank of Saurashtra merged with SBI.
SBI has acquired local banks in rescues. The first was the Bank of Behar (est. 1911), which SBI
acquired in 1969, together with its 28 branches. The next year SBI acquired National Bank of
Lahore (est. 1942), which had 24 branches. Five years later, in 1975, SBI acquired Krishnaram
Baldeo Bank, which had been established in 1916 in Gwalior State, under the patronage of
Maharaja Madho Rao Scindia. The bank had been the Dukan Pichadi, a small moneylender,
owned by the Maharaja. The new bank's first manager was Jall N. Broacha, a Parsi. In 1985, SBI
acquired the Bank of Cochin in Kerala, which had 120 branches. SBI was the acquirer as its
affiliate, the State Bank of Travancore, already had an extensive network in Kerala..
On October 7, 2013, Arundhati Bhattacharya became the first woman to be appointed
Chairperson of the bank.
Business

Of

SBI

The business of the banks was initially confined to discounting of bills of

exchange or other negotiable private securities, keeping cash accounts and
receiving deposits and issuing and circulating cash notes. Loans were
restricted to Rs. 1Lakh and the period of accommodation confined to three
months only. The security for such loans was public securities, commonly
called Company's Paper, bullion, treasure, plate, jewels, or goods 'not of a
perishable nature' and no interest could be charged beyond a rate of twelve
per cent. Loans against goods like opium, indigo, salt woolens, cotton, cotton
piece goods, mule twist and silk goods were also granted but such finance by

way of cash credits gained momentum only from the third decade of the
nineteenth century. All commodities, including tea, sugar and jute, which
began to be financed later, were either pledged or hypothecated to the bank.
Demand promissory notes were signed by the borrower in favour of the
guarantor, which was in turn endorsed to the bank. Lending against shares of
the banks or on the mortgage of houses, land or other real property was,
however,

forbidden.

Indians were the principal borrowers against deposit of Company's paper,

while the business of discounts on private as well as salary bills was almost
the exclusive monopoly of individuals Europeans and their partnership firms.
But the main function of the three banks, as far as the government was
concerned, was to help the latter raise loans from time to time and also
provide a degree of stability to the prices of government securities.
Operations
SBI provides a range of banking products through its network of branches in India and overseas,
including products aimed at non-resident Indians (NRIs). SBI has 14 regional hubs and 57 Zonal
Offices that are located at important cities throughout India.
Associate banks
SBI has five associate banks; all use the State Bank of India logo, which is a blue circle, and all
use the "State Bank of" name, followed by the regional headquarters' name:

State Bank of Bikaner & Jaipur

State Bank of Hyderabad

State Bank of Mysore

State Bank of Patiala

State Bank of Travancore

State Bank of India

Employee
SBI is one of the largest employers in the country having 228,296 employees as on 31 March
2013, out of which there were 46,833 female employees (21%) and 2,402 disabled employees
(1%). On the same date, SBI had 43,550 Schedule Caste (19%) and 16,764 Schedule Tribe (7%)
employee. The percentage of Officers, Assistants and Sub-staff was 35%, 48% and 17%
respectively

on

the

same

date.

Hiring drive: The bank hired 20,682 Assistants in FY 2012-13, from over 3 million applicants,
for expansion of the branch network and to mitigate staff shortage, particularly at rural and semiurban branches. In the same year, it recruited 847 probationary officers from around 1.7 million
candidates who applied for an officer position.
Recent awards and recognitions

SBI was ranked as the top bank in India based on tier 1 capital by The Banker magazine
in a 2014 ranking.

SBI was ranked 298th in the Fortune Global 500 rankings of the world's biggest
corporations for the year 2012.

SBI won "Best Public Sector Bank" award in the D&B India's study on 'India's Top
Banks 2013'.

State Bank of India won three IDRBT Banking Technology Excellence Awards 2013 for
Electronic Payment Systems, Best use of technology for Financial Inclusion, and
Customer Management & Business Intelligence in the large bank category.

SBI won National Award for its performance in the implementation of Prime Ministers
Employment Generation Programme (PMEGP) scheme for the year 2012.

Best Online Banking Award, Best Customer Initiative Award & Best Risk Management
Award (Runner Up) by IBA Banking Technology Awards 2010

SKOCH Award 2010 for Virtual corporation Category for its e-payment solution

SBI was the only bank featured in the "top 10 brands of India" list in an annual survey
conducted by Brand Finance and The Economic Times in 2010.

The Bank of the year 2009, India (won the second year in a row) by The Banker
Magazine

Best Bank Large and Most Socially Responsible Bank by the Business Bank Awards
2009

Best Bank 2009 by Business India

The Most Trusted Brand 2009 by The Economic Times.

SBI was named the 29th most reputed company in the world according to Forbes 2009
rankings

Most Preferred Bank & Most preferred Home loan provider by CNBC

Visionaries of Financial Inclusion By FINO

Technology Bank of the Year by IBA Banking Technology Awards

SBI was 11th most trusted brand in India as per the Brand Trust Report 2010.

Competitors and other players in the field

Top Performing Public Sector Banks
Andhra Bank
Allahabad Bank

Punjab National Bank

Dena Bank
Top Performing Private Sector Banks
HDFC Bank
ICICI Bank
AXIS Bank
Kotak Mahindra Bank
Centurion Bank of Punjab

Top Performing Foreign Banks

Standard Chartered
HSBC Bank
ABN AMRO Bank
American Express

SWOT Analysis of SBI

Strength/ Opportunities
The growth for SBI in the coming years is likely to be fuelled by the following factors:
Continued effort to increase low cost deposit would ensure improvement in NIMs and hence
earnings.
Growing retail & SMEs thrust would lead to higher business growth.
Strong economic growth would generate higher demand for funds pursuant to higher corporate
demand for credit on account of capacity expansion.
Weakness/ Threats
The risks that could ensue to SBI in time to come are as under:

 SBI is currently operating at a lowest CAR. Insufficient capital may restrict the growth
prospects of the bank going forward.
Stiff competition, especially in the retail segment, could impact retail growth of SBI and hence
slowdown in earnings growth.
Contribution of retail credit to total bank credit stood at 26%. Significant thrust on growing
retail book poses higher credit risk to the bank.
Delay in technology up gradation could result in loss of market shares.
Management indicated a likely pension shortfall on account of AS-15 to be close to Rs50bn.
Slow down in domestic economy would pose a concern over credit off-take thereby impacting
earnings growth.
SERVICES

Internet Banking

Mobile Banking

ATM Services

Demat Services

Internet Banking

www.onlinesbi.com, the Internet banking portal of our bank, enables its retail banking customers
to operate their accounts from anywhere anytime, removing the restrictions imposed by
geography and time. It's a platform that enables the customers to carry out their banking
activities from their desktop, aided by the power and convenience of the Internet.
Using Internet banking services, you can do the following normal banking transactions online:
Funds transfer between own accounts.
Third party transfers to accounts maintained at any branch of SBI
Group Transfers to accounts in State Bank Group
Inter Bank Transfers to accounts with other Banks
Online standing instructions for periodical transfer for the above
Credit PPF accounts across branches
Request for Issue of Demand Draft
Request for opening of new accounts
Request for closure of Loan Accounts
Request for Issue of Cheque Book
Apart from these, the other salient value-added features available are:
Utility bill payments
Online Ticket Booking for travel by Road, Rail and Air
SBILIFE, LIC and other insurance premia payments
SBI and other Mutual funds Investments
SBI and other Credit Card dues payments
Tax Payment Income, Service, State Govt
Customs Duty Payment
Online Share Trading (eZ-trade@SBI)
Online Application for IPO
Fee Payment to select educational institutions including IITs and NITs

All our branches are enabled for Internet Banking. Contact your branch for availing this service.
You

can

visit

www.onlinesbi.com for

Mobile Banking

State Bank FreedoM Your Mobile, Your Bank

downloading

the

registration

form.

Away from home, balance enquiries can be made and/or money sent to the loved ones or bills
can be paid anytime 24x7!!! That is what State Bank FreedoM offers - convenient, simple,
secure, anytime and anywhere banking.
ATM Services

State Bank ATM Services

State Bank offers you the convenience of 43,000+ ATMs in India, the largest network in the
country and continuing to expand fast! This means that you can transact free of cost at the ATMs
of State Bank Group using any State Bank ATM-cum-Debit Card (This includes the ATMs of
State Bank of India as well as the Associate Banks - namely, State Bank of Bikaner & Jaipur,
State Bank of Hyderabad, State Bank of Mysore, State Bank of Patiala and State Bank of
Travancore.)
Concept of servqual
The SERVQUAL service quality model was developed by a group of American authors, 'Parsu'
Parasuraman, Valarie Zeithaml and Len Berry, in 1988. It highlights the main components of
high quality service. The SERVQUAL authors originally identified ten elements of service
quality, but in later work, these were collapsed into five factors - reliability, assurance, tangibles,
empathy and responsiveness - that create the acronym RATER.
Businesses using SERVQUAL to measure and manage service quality deploy a questionnaire
that measures both the customer expectations of service quality in terms of these five

dimensions, and their perceptions of the service they receive. When customer expectations are
greater than their perceptions of received delivery, service quality is deemed low.
In addition to being a measurement model, SERVQUAL is also a management model. The
SERVQUAL authors identified five Gaps that may cause customers to experience poor service
quality.
Gap 1: between consumer expectation and management perception
This gap arises when the management does not correctly perceive what the customers want. For
instance, hospital administrators may think patients want better food, but patients may be more
concerned with the responsiveness of the nurse. Key factors leading to this gap are:

Insufficient marketing research

Poorly interpreted information about the audience's expectations

Research not focused on demand quality

Too many layers between the front line personnel and the top level management

Gap 2: between management perception and service quality specification

Although the management might correctly perceive what the customer wants, they may not set
an appropriate performance standard. An example would be when hospital administrators instruct
nurses to respond to a request fast, but may not specify how fast. Gap 2 may occur due to the
following reasons:

Insufficient planning procedures

Lack of management commitment

Unclear or ambiguous service design

Unsystematic new service development process

Gap 3: between service quality specification and service delivery

This gap may arise through service personnel being poorly trained, incapable or unwilling to
meet the set service standard. The possible major reasons for this gap are:

Deficiencies in human resource policies such as ineffective recruitment, role ambiguity,

role conflict, improper evaluation and compensation system

Ineffective internal marketing

Failure to match demand and supply

Lack of proper customer education and training

Gap 4: between service delivery and external communication

Consumer expectations are highly influenced by statements made by company representatives
and advertisements. The gap arises when these assumed expectations are not fulfilled at the time
of delivery of the service. For example, the hospital printed on the brochure may have clean and
furnished rooms, but in reality it may be poorly maintained, in which case the patients'
expectations are not met. The discrepancy between actual service and the promised one may
occur due to the following reasons:

Over-promising in external communication campaign

Failure to manage customer expectations

Failure to perform according to specifications

Gap 5: between expected service and experienced service

This gap arises when the consumer misinterprets the service quality. For example, a physician
may keep visiting the patient to show and ensure care, but the patient may interpret this as an
indication that something is really wrong.
Servqual Scale
Parasuraman et al., (1988, 1991) developed SERVQUAL instrument to measure the dimensions
of service quality that is frequently used by researchers. It consists of 24 items that are compiled

into five dimensions: tangibility; reliability; responsiveness; assurance and empathy. This study
applied five dimensions of service quality that are explained as under:
Reliability: This dimension shows the consistency of services towards performance and
dependability.
Tangibles: It shows the physical aspects of the services as physical facilities, appearance of
personnel and tools & equipment used for provision of services.
Responsiveness: It reflects the willingness or readiness of employees to provide quick services
to customers.
Assurance: This dimension indicates the employees knowledge, courtesy and their ability to
incorporate trust and confidence.
Empathy: This dimensions shows the magnitude of caring and individual attention given to
customers.

Literature review
According to K. Rama Mohana Rao Quality means the degree of excellence in service
performance .Consumers perceive the quality of a service by experiencing the consumption
process and comparing the experience with their expectations. The best service quality firms
cannot blame for poor quality .The service firm need to formulate strategies for quality
performance. Service quality management is the most critical task of service companies Quality
may be perceived in many dimensions. It may relate to cost, profitability, customer satisfaction,

customer relations or positive word of mouth, customer asses service quality with their own
criteria.
Buzell and Gales empirical research shows the positive relationship between service quality
and organizational performance.
According to Parasuraman, Zeithmal and Berry Service quality is the degree and direction of
discrepancy between consumers perceptions and expectations in terms of different but relatively
important dimensions of the service quality, which can affect their future purchasing behaviour.
Douglas et al define service quality as an attitude formed by long term, overall evaluation of
performance.
In 1990 Professor Evert Gummesson said that service quality must be viewed in conjunction
with service productivity and profitability, According to him service quality had been widely
researched but not service productivity.
According to Philip Kotler et al 2010 services firm can differentiate it by delivering consistently
higher quality than its competitors provide. Now a days most of service industries have joined
the customer-driven quality movement and like product marketers, service providers need to
identify what target customers expect in regards to service quality. The top service companies set
high service quality standards. They watch service performance closely, both their own and that
of competitors. They do not settle for merely good service; they aim for hundred percent defectfree service.
Studies of Panda reveal that customer tests the quality of service of a firm at every encounter.
Each of the customer encounter is called moment of truth. If the experience from service
encounters are bad, it may not lead to customer satisfaction .Quality management involve
deciding on quality standards and implementing a method of assurance on performance level of
the staff and facilities. Quality has emerged as a major competitive element in service company
strategies. Service providers are giving increasing emphasis on creating reputation for good
quality of service as this provides a positive image for their organization. The service quality
management process involves matching evolving customer expectations. Customers have their
own service expectations. From a firm a customer is satisfied when his expectations match the
perceived service. When the perceived service passes over the expected service, the customer is
delighted if there is failure in meeting expectation the customer is dissatisfied.

Lovelock et al (2006) opined that if a firm wants to retain customer they are required to provide
better services to their customers by quality improvement programs and should continuously
enhance benefits desired by customers. At the same time, productivity improvement efforts
decrease the cost. The customers are satisfied with the organization if the services deliver by firm
are better than their competitors.
According to Zeithamal et al (2008) customer have two different types of service expectations:
1) Meaning and types of expected service
2) Current issues in customer service expectations.
In a Perception of the service, service quality may be the most critical determinant of
satisfaction. They mentioned the service encounters or moments of truth as the building blocks
for both satisfaction and quality. Service encounter is an opportunity to build perceptions of
quality and satisfaction.

Research Methodology
The questionnaire was administrated using SERVQUAL instrument. This questionnaire was
mailed to 100 respondents for participation within Delhi and NCR. However, a total of 70
respondents reverted back on the same. So, the response rate was 70%. All the respondents had
visited SBI. The research paper studied the customers perception and their expectations in the
service quality of the SBI with SERVQUAL instrument with 22 items. In the questionnaire a 7point Likert scale was used where 1 was for Strongly disagree and 7 was for strongly agree.
There were no right or wrong answers all we were interested in is a number that best showed
their expectations and perceptions about the service quality of SBI

Limitations of the Study

The scope of the project is limited to the Delhi only. We cannot say that the same
response will exist throughout India. If we could have gathered responses from the
respondents from outside Delhi then our results would have been more accurate.

The sample size for our research was small where only 70% of the customers responded

to the questionnaire.
Customers did not show interest in filling the questionnaire. It took a lot of effort to
convince them to fill the questionnaire.