1

CHAPTER - 1

INTRODUCTION

INTRODUCTION
Modern banking in India could be traced back to the establishment of Bank of Bengal (Jan 2, 1809),
the first joint-stock bank sponsored by Government of Bengal and governed by the royal charter of
the British India Government. It was followed by establishment of Bank of Bombay (Apr 15, 1840)
and Bank of Madras (Jul 1, 1843). These three banks, known as the presidency banks, marked the
beginning of the limited liability and joint stock banking in India and were also vested with the right
of note issue.

In 1921, the three presidency banks were merged to form the Imperial Bank of India, which had
multiple roles and responsibilities and that functioned as a commercial bank, a banker to the
government and a bankers bank. Following the establishment of the Reserve Bank of India (RBI) in
1935, the central banking responsibilities that the Imperial Bank of India was carrying out came to an
end, leading it to become more of a commercial bank. At the time of independence of India, the
capital and reserves of the Imperial Bank stood at Rs 118 mn, deposits at Rs 2751 mn and advances
at Rs 723 mn and a network of 172 branches and 200 sub offices spread all over t he country.

Banking system of a nation is the shadow of nations economy. A healthy and profitable banking
system is just like the backbone of nations economy. It is necessary for a nation to achieve growth
and remain stable in this global world and global economy. The Indian banking system, with one of
the largest banking networks in the world, has witnessed a series of reforms over the past few years
like the deregulation of interest rates, dilution of the government stake in public sector banks (PSBs)
and the increased participation of private sector banks.

1.1 HISTORY OF INDIAN BANKING SYSTEM

Banking in India originated in the last decades of the 18th century. The first banks were The General
Bank of India, which started in 1786, and the Bank of Hindustan, both of which are now defunct The
oldest bank in existence in India is the State Bank of India, a government-owned bank that traces its
origins back to June 1806 and that is the largest commercial bank in the country. Allahabad Bank,
established in 1865 and still functioning today, is the oldest Joint Stock bank in India.

Central banking is the responsibility of the Reserve Bank of India, which in 1935 formally took over
these responsibilities from the then Imperial Bank of India, relegating it to commercial banking
functions. After India's independence in 1947, the Reserve Bank was nationalized and given broader
powers. In 1969 the government nationalized the 14 largest commercial banks; the government
nationalized the six next largest in 1980.

2
 In 1948, the Reserve Bank of India, India's central banking authority, was nationalized, and it
became an institution owned by the Government of India.

In 1949, the Banking Regulation Act was enacted which empowered the Reserve Bank of India
(RBI) "to regulate, control, and inspect the banks in India."

The Banking Regulation Act also provided that no new bank or branch of an existing bank could
be opened without a license from the RBI, and no two banks could have common directors

1.2 LIBERALIZATION IN INDIAN BANKING SYSTEM

In the early 1990s, the then government embarked on a policy of liberalization, licensing a small
number of private banks. These came to be known as New Generation tech-savvy banks, and
included Global Trust Bank (the first of such new generation banks to be set up), which later
amalgamated with Oriental Bank of Commerce, Axis Bank(earlier as UTI Bank), ICICI Bank and
HDFC Bank. This move, along with the rapid growth in the economy of India, revitalized the
banking sector in India, which has seen rapid growth with strong contribution from all the three
sectors of banks, namely, government banks, private banks and foreign banks

3
The next stage for the Indian banking has been setup with the proposed relaxation in the norms for
Foreign Direct Investment, where all Foreign Investors in banks may be given voting rights which
could exceed the present cap of 10%, at present it has gone up to 49% with some restrictions.

The new policy shook the Banking sector in India completely. Bankers, till this time, were used to
the 4-6-4 method (Borrow at 4%; Lend at 6%; Go home at 4%) of functioning. The new wave
ushered in a modern outlook and tech-savvy methods of working for traditional banks. All this led to
the retail boom in India. People not just demanded more from their banks but also received more.

Currently (2009), banking in India is generally fairly mature in terms of supply, product range and
reach-even though reach in rural India still remains a challenge for the private sector and foreign
banks. In terms of quality of assets and capital adequacy, Indian banks are considered to have clean,
strong and transparent balance sheets relative to other banks in comparable economies in its region.
The Reserve Bank of India is an autonomous body, with minimal pressure from the government. The
stated policy of the Bank on the Indian Rupee is to manage volatility but without any fixed exchange
rate-and this has mostly been true.

With the growth in the Indian economy expected to be strong for quite some time-especially in its
services sector-the demand for banking services, especially retail banking, mortgages and investment
services are expected to be strong. One may also expect M&As, takeovers, and asset sales.

Currently, India has 88 scheduled commercial banks (SCBs) - 27 public sector banks (that is with the
Government of India holding a stake), 31 private banks (these do not have government stake; they
may be publicly listed and traded on stock exchanges) and 38 foreign banks. They have a combined
network of over 53,000 branches and 17,000 ATMs. The public sector banks hold over 75 percent of
total assets of the banking industry, with the private and foreign banks holding 18.2% and 6.5%
respectively.

In 1951, in the backdrop of central planning and the need to extend bank credit to the rural areas, the
Government constituted All India Rural Credit Survey Committee, which recommended the creation
of a state sponsored institution that will extend banking services to the rural areas. Following this, by
an act of parliament passed in May 1955, State Bank of India was established in Jul, 1955. In 1959,
State Bank of India took over the eight former state-associated banks as its subsidiaries. To further
accelerate the credit to fl ow to the rural areas and the vital sections of the economy such as
agriculture, small scale industry etc., that are of national importance, Social Control over banks was
announced in 1967 and a National Credit Council was set up in 1968 to assess the demand for credit

4
by these sectors and determine resource allocations. The decade of 1960s also witnessed significant
consolidation in the Indian banking industry with more than 500 banks functioning in the 1950s
reduced to 89 by 1969.

For the Indian banking industry, Jul 19, 1969, was a landmark day, on which nationalization of 14
major banks was announced that each had a minimum of Rs 500 mn and above of aggregate
deposits. In 1980, eight more banks were nationalised. In 1976, the Regional Rural Banks Act came
into being, that allowed the opening of specialized regional rural banks to exclusively cater to the
credit requirements in the rural areas. These banks were set up jointly by the central government,
commercial banks and the respective local governments of the states in which these are located.

The period following nationalisation was characterized by rapid rise in banks business and helped in
increasing national savings. Savings rate in the country leapfrogged from 10-12% in the two decades
of 1950-70 to about 25 % post nationalisation period. Aggregate deposits which registered annual
growth in the range of 10% to 12% in the 1960s rose to over 20% in the 1980s. Growth of bank
credit increased from an average annual growth of 13% in the 1960s to about 19% in the 1970s and
1980s. Branch network expanded significantly leading to increase in the banking coverage.

A) ORANGE SAVINGS ACCOUNT:

This account is the basic product of ING Vysya Bank. In this account minimum cash balance
required to open an account & the Quarterly Average Balance requirement is Rs5000. Some of the
major features and benefits of this account are:

FREE

Free issue of International Debit Card.

Unlimited ATM transactions at over 25,000 (Cirrus/Cashnet) ATMs in India, where QAB is
maintained.
Shopping convenience at over 2 Lakh merchant locations, with the ING Vysya International
Debit card.
Unlimited ATM transactions at over 196 ING Vysya ATMs.
2 Demand Drafts with a value not exceeding Rs.50,000 per annum, where QAB is
maintained.
Unlimited usage of payable at par (PAP) Cheques.
Transfer of funds across all branches.

5
 National Electronic Funds Transfer (NEFT) through the internet banking channel.
Electronic Bill Payment service.
Smartserv - Personal Assistance Service.
Statement of Account through E-mail.
Mi-b@nk - Internet banking facility.
RTGS (Real Time Gross Settlement) transactions at all branches.
AAA Cash deposit (Customers) Free up to 2 transactions per month and a value limit of
Rs. 50,000/-

BENEFITS

Free unlimited access to 25,000 + other bank ATMs- enhanced accessibility.

Free multi branch, Multi-city banking convenience.
Payable at par Cheques.
Smartserv- Personal Concierge Services.

B) ING FORMULA SAVINGS ACCOUNT:

This is the product of ING Vysya Bank which is targeted towards the upper middle class segment of
the society. Basically the targeted segment is the age group between 18-40 yrs. This product has its
significance particularly in Metropolitan/A grade cities. This product is also useful for people who
travel frequently particularly to Metropolitan/A grade cities.

Minimum cash balance required to open this account and Quarterly Average Balance requirement is
Rs. 25000/-

Some of the major features and benefits of this account are :

Maximum withdrawal limit from INGs ATM or any other banks ATM is Rs. 50,000.

Maximum shopping limit through INGs ATM/Debit card is Rs. 75,000.

6
 Free Payable at Par cheques.

Exclusive F1 themed, Internet Banking services.

Formula 1 International Debit card.

Free sms alerts on transactions above Rs. 1500.

SPECIAL BENEFITS CARD

FUEL GAUGE

Fill fuel across any petrol pump in India and get the 2.5% surcharge waived.

SPEED LAP

Shop using your ING Formula savings account and get Formula One merchandise.

RACE DAY

Whenever there is a Formula 1 race anywhere in the world, there is a race for u as well.
Shop using your ING Formula debit card on the day of the race and top 25 spenders for
the race day wins vouchers from ING.

3 winners Gift vouchers worth Rs. 5000/-

10 runner ups- Gift vouchers worth Rs. 2000/-

12 second runner ups- Gift vouchers worth Rs. 1000/-

C) PLATINA ACCOUNTS

This product (account) of ING Vysya Bank is a special product for special class of customers. This
can also be termed as Preferred Platina Banking. This product is designed to reduce the efforts put in
handling banking and financial needs. This product has special features which are mainly meant for
business class people who have to make large payments and have regular transactions. The Platina
account holder becomes the preferred customer of the bank.

The average quarterly balance (QAB) is Rs. 100,000

7
Features:

Dedicated Relationship Manager

Our dedicated relationship managers can help you manage your money; while you pursue your
passion, be it business or pleasure.

Wealth Management Service

Our preferred banking services offer you customized financial strategies on how to invest and where
to invest based on simple financial risk profiling.

ING Platina Debit Card

Use your ING Platina Gold Debit Card and withdraw cash up to Rs1 lac per day from any ATM,
Avail a 1% cash back on shopping with your Debit Card.

Account Representative Services

Now when you are out building a business empire or taking that well deserved vacation, just
nominate someone else to do your routine banking enquires.

Preferential rates on ING products

Get more out of the Platina relationship. Avail preferential rates on Demat, Bank Lockers, Personal
and Home loans.

1.3 TYPES OF SAVING ACCOUNTS OFFERED BY OTHER PRIVATE BANKS

ICICI BANK

A) ICICI Savings Bank Account:

ICICI Bank is also offering the saving accounts as their products.

8
 The ICICI Bank International debit card is a debit-cum-ATM card provides with the
convenience of acceptance at merchant establishments and cash withdrawals at ATM.

Money Multiplier Facility

Internet Banking is offered free of cost.

Anywhere Banking facility entitles the account holder to withdraw or deposit cash upto a
limit of Rs.50,000 across all ICICI Bank branches.

An average quarterly balance of Rs.10,000 only in metro and urban locations.

Nomination facility is available.

Interest is payable half-yearly.

Third party withdrawal limit is only Rs 15,000 and free demand draft making facility for a month is
only up to Rs 10,000. Free withdrawal limit from ATM card is only up to Rs 25,000 in all accounts.

B) GOLD PRIVILAGE ACCOUNTS

The Gold Privilege Account brings the customer exclusive benefits, especially created for valuable
customers. The minimum quarterly average balance (QAB) requirement for Gold Privilege account
is Rs.50, 000. Non-maintenance of the required QAB in any quarter attracts a charge as per the
following guidelines:

If QAB is between Rs.50, 000 and Rs.25, 000, charge of Rs.250 will be levied

If QAB is between Rs.25, 000 and Rs.10, 000, charge of Rs.500 will be levied

If QAB falls below Rs.10, 000, charge of Rs.750 will be levied

Your Gold Privilege account entitles you to select privileges and offers:

BENIFITS

9
 Jump Queue facility in ICICI Bank branches.

Free usage of payable-at-par chequebook.

International VISA Gold debit card with higher daily withdrawal and spend limit.

Waiver of annual fee for Debit card.

Free and Unlimited access (cash withdrawals and balance enquiry) to any Bank's ATM in the
country using ICICI Bank International Gold Debit card.

Waiver of DD/PO charges for up to Rs.100,000 per day.

Waiver of Anywhere Banking charges across all ICICI Bank branches.

Priority Processing through ICICI Bank Phone Banking.

Preferential rates for Gold Coins.

Better rates for Foreign Exchange Service.

Discounts on Safe deposit locker facility.

Special asset deals from time to time.

C) TITANIUM PRIVILAGED ACCOUNT

This product from ICICI is mainly to serve privileged customer (upper class)

In constant endeavor to fulfill all the banking needs and enhance exclusivity ICICI Bank launched
Titanium Privilege Account - tailored to take care of customers banking and investment
requirements and status. This account offers a dedicated Branch Relationship Manager supported
with a Phone Banking Relationship Manager.

Customer can realize the benefits of a Titanium Privilege Account on the basis of his total
relationship value (TRV) with the bank. Customer need to maintain a TRV of between Rs. 5 lac and
Rs. 10 lac and a quarterly average balance (QAB) of Rs.75,000. In addition to this, there is waiver of
QAB charges, subject to FD of min. 3.75 Lac.

BENIFITS

10
 Branch Relationship Manager supported with Phone Banking Relationship Manager.

Priority processing at all ICICI bank branches and through customer care.

A higher daily withdrawal and spend limit on a Titanium debit card.

Free International Titanium Debit Card.

Unlimited free access to any banks ATM throughout the country.

Free usage of multi-city cheque book.

Free physical monthly account statement.

Anywhere banking.

Complete waiver on DD/PO charges.

Preferential rate on purchase of ICICI Bank Pure Gold.

Preferential rates on purchase of foreign exchange with a complete waiver on commission

charges.

Discounted rates on safety locker charges.

HDFC BANK

A) REGULAR SAVING ACCOUNT

An easy-to-operate savings account that allows customer to issue cheques, draw Demand Drafts and
withdraw cash. Customer can check balances from the comfort of his home or office through
NetBanking, PhoneBanking and MobileBanking.

Withdrawal of cash from any of the 3275 ATM centers spread across the country.

FEATURES & BENEFITS

Facilities like NetBanking and MobileBanking.

11
 Customer can check the account balance, pay utility bills or stop cheque payment, through
SMS.

Personalized cheques with customers name printed on each cheque leaf for enhanced
security.

Advantage of BillPay, an instant solution to all frequent utility bill payments. Instructions for
payment over the phone or through the Internet.

Customers can avail the facilities like Safe Deposit Locker, Sweep-In and Super Saver
facility on their account.

Free cash withdrawals on any other Bank's ATM

Free Payable-at-Par chequebook, without any usage charges upto a limit of Rs.50,000/- per
month.

Free InstaAlerts for all account holders for lifetime of the account.

Free Passbook facility available at home branch for account holders (individuals).

Free Email Statement facility.

B) SAVING MAX ACCOUNT

Welcome to a world of convenience. HDFC has presented SavingsMax account, loaded with
maximum benefits to make banking experience a pleasure. By maintaining an average quarterly
balance of just Rs. 25,000/- customer can get a host of premium services from HDFC Bank.

FEATURES & BENIFITS

Free unlimited transactions: Cash withdrawal and balance enquiry, at all HDFC Bank ATMs
& on any other Bank's ATM using your HDFC Bank Debit Card.

Free Gold Debit Card for primary account holder for lifetime of the account. Gold Debit
Card for other account holders at Rs 250/- p.a.

12
 Free Woman's Advantage/International Debit Card for all account holders for lifetime of the
account.

Free Payable-at-Par (PAP) chequebook, without any usage charges upto a limit of 1 lac per
month.*

Free Demand Drafts on HDFC Bank locations, upto a limit of 50,000/- per day at home
branch.

Self/Third Party Cash Deposit/Withdrawal at non-home branches, upto Rs 50,000/- per day
free. Above Rs 50,000 a charge of Rs 2.90 per thousand on the full amount would be
applicable.

Optional sweep out facility to transfer extra savings to a Fixed Deposit, at the threshold of
Rs.50,000/-.In the event of the balance in SavingsMax account exceeding Rs 50,000/-, the
amount in excess of Rs 50,000/- will be swept out in to a Fixed Deposit with a minimum
value of Rs 25000/- for a 1year 1day period.

Free BillPay & InstaAlerts for all account holders for lifetime of the account.

Free Monthly Statement of Account.

50% off on the Locker rental for the 1st year only.

Folio maintenance charges on Demat account free for first year.

Free National Electronic Funds Transfer facility, NetBanking, MobileBanking.

Free Passbook facility available at home branch for account holders (individuals).

Free Email Statement facility

C) PREFERRED BANKING ACCOUNTS

This account has been offered by HDFC for its preferred customers, so as to give special benefits to
them. The minimum quarterly available balance (QAB) that has to be maintained in this account is
Rs. 2,00,000

13
FEATURES & BENIFITS

Dedicated Relationship Manager

Customized Investment Solutions

Investment Options

e-Broking

Expedited Tax Payments

Relationship Pricing

Business Solutions

On-demand exclusive privileges

Annual Service Charge Waiver

Indian banking, which experienced rapid growth following the nationalization, began to face
pressures on asset quality by the 1980s. Simultaneously, the banking world everywhere was gearing
up towards new prudential norms and operational standards pertaining to capital adequacy,
accounting and risk management, transparency and disclosure etc. In the early 1990s, India
embarked on an ambitious economic reform programme in which the banking sector reforms formed
a major part. The Committee on Financial System (1991) more popularly known as the Narasimham
Committee prepared the blue print of the reforms. A few of the major aspects of reform included (a)
moving towards international norms in income recognition and provisioning and other related
aspects of accounting (b) liberalization of entry and exit norms leading to the establishment of
several New Private Sector Banks and entry of a number of new Foreign Banks (c) freeing of deposit
and lending rates (except the saving deposit rate), (d) allowing Public Sector Banks access to public
equity markets for raising capital and diluting the government stake,(e) greater transparency and
disclosure standards in financial reporting (f) suitable adoption of Basel Accord on capital adequacy
(g) introduction of technology in banking operations etc. The reforms led to major changes in the
approach of the banks towards aspects such as competition, profitability and productivity and the
need and scope for harmonization of global operational standards and adoption of best practices.
Greater focus was given to deriving efficiencies by improvement in performance and rationalization

14
of resources and greater reliance on technology including promoting in a big way computerization of
banking operations and introduction of electronic banking.

The reforms led to significant changes in the strength and sustainability of Indian banking. In
addition to significant growth in business, Indian banks experienced sharp growth in profitability,
greater emphasis on prudential norms with higher provisioning levels, reduction in the non
performing assets and surge in capital adequacy. All bank groups witnessed sharp growth in
performance and profitability. Indian banking industry is preparing for smooth transition towards
more intense competition arising from further liberalization of banking sector that was envisaged in
the year 2009 as a part of the adherence to liberalization of the financial services industry.

1.4 STRUCTURE OF THE BANKING INDUSTRY

According to the RBI definition, commercial banks which conduct the business of banking in India
and which (a) have paid up capital and reserves of an aggregate real and exchangeable value of not
less than Rs 0.5 mn and (b) satisfy the RBI that their affairs are not being conducted in a manner
detrimental to the interest of their depositors, are eligible for inclusion in the Second Schedule to the
Reserve Bank of India Act, 1934, and when included are known as Scheduled Commercial Banks.
Scheduled Commercial Banks in India are categorized in five different groups according to their
ownership and/or nature of operation. These bank groups are (i) State Bank of India and its
associates, (ii) Nationalised Banks, (iii) Regional Rural Banks, (iv) Foreign Banks and (v) Other
Indian Scheduled Commercial Banks (in the private sector). All Scheduled Banks comprise Schedule
Commercial and Scheduled Co-operative Banks. Scheduled Cooperative banks consist of Scheduled
State Co-operative Banks and Scheduled Urban Cooperative Banks.

Banking Industry at a Glance

In the reference period of this publication (FY09), the number of scheduled commercial banks
functioning in India was 222, of which 133 were regional rural banks. There are 71,177 bank XIV
offices spread across the country, of which 43 % are located in rural areas, 22% in semi-urban areas,
18% in urban areas and the rest (17 %) in the metropolitan areas. The major bank groups (as defined
by RBI) functioning during the reference period of the report are State Bank of India and its seven
associate banks, 19 nationalised banks and the IDBI Ltd, 19 Old Private Sector Banks, 8 New Private
Sector Banks and 29 Foreign Banks.

Mergers & Acquisitions

15
During FY09, two domestic banks were amalgamated - Ganesh Bank of Kurundwad with Federal
Bank Ltd and Bank of Punjab Ltd with Centurion Bank Ltd to become Centurion Bank of Punjab
Ltd, while one Foreign bank UFJ Bank Ltd merged with Bank of Tokyo-Mitsubishi Ltd. ING Bank
NV closed its business in India. In Sept, 2008, The United Western Bank Ltd was placed under
moratorium leading to its amalgamation with Industrial Development Bank of India Ltd. in Oct,
2009. On Apr 1, 2007, Bharat Overseas Bank an old private sector bank was taken over by Indian
Overseas Bank and on Apr 19, 2007, Sangli Bank, another old private sector bank was merged with
ICICI Bank, a new private sector bank.

Shareholding Pattern
As of Mar 2009, only four Nationalised Bank had 100% ownership of the Government. These are
Central Bank of India, Indian Bank, Punjab and Sind Bank and United Bank of India. As of Mar
2006, the government shareholding in the State Bank of India stood at 59.7% and in between 51-77%
in other nationalised banks. In Feb 2007, Indian Bank came out with a public issue thus leaving only
three nationalised banks having 100% government ownership. Foreign institutional holding up to
20% of the paid up is allowed in respect of Public Sector Banks including State Bank of India and
many of the banks have reached the threshold level for FII investment. In respect of Private Sector
Banks where higher FII holding is allowed, threshold limit has been reached in the leading banks.

1.5 INDIAN BANKING AND INTERNATIONAL TRENDS

When compared to other emerging markets, the growth of Indian banking has been impressive and
compares favorably on several counts. A recent study by Bank for International Settlements on the
progress and the prospects of banking systems in emerging countries highlights the following
features of the performance of Indian banks:

Average growth rate of real aggregate credit in India rose from 6.1% during the period 1995-
99 to 14.6 % in 2000-04.

The average growth rate of real aggregate credit in India during 2000-04 in India is higher as
compared to major countries and regions in the emerging markets, such as China (13.3%),
Other Asia (4.7%), Latin America (4.5%), and Central Europe (9.6%).

16
 Commercial banks in India account for a major share of the bank credit (97%) as compared to
Latin America (68%), Other Asia (74%) and Central Europe (83%).

Real bank credit to the private sector has shown sustained growth in India, and has moved
from 3.9% a year in 1990-94 to 6.9% a year in 1995-99 to 13.5 % a year in 2000-04. In 2005,
real bank credit to the private sector in India showed a growth of 30% year-on-year as against
9.4% in China and 15.8% in emerging markets.

In India, during the period 1999 and 2004, non-performing loans as a percentage of total
commercial bank assets came down from 6.1% to 3.3%, capital asset ratios moved up from
11.3% to 12.9% and operating costs as a percentage of total assets reduced from 2.4% to
2.3%. NPAs in China in 2004 stood at 6%.

In India, return on assets of banks during the period 1999-2004 moved up from 0.4% to 1.1%,
and return on equity from 8.5% to 20.9% where as in China the former rose from 0.1% to
0.3%.

1.6 BUSINESS OF COMMERCIAL BANKS

1. Balance Sheet Growth

In FY08, the aggregate balance sheet of the scheduled commercial banks increased by 18.4%, over a
19.3 % growth registered in FY08. The ratio of bank assets to GDP rose to 86.9% as compared to
82.8% in FY08. Banking industry gained from the by rapid rise in the real economy, leading to surge
in several areas of business.

2. Capital and Reserves

The capital of the scheduled commercial banks as on Mar 31, 2008 stood at Rs 252040 mn. During
FY08, reserves and surplus of all scheduled commercial banks rose by 27.6%. Revenue and other
reserves nearly doubled for the banks as a whole, with SBI reporting four fold increase in this regard.

3. Deposits and Advances

Deposits of SCBs grew by 17.8 % in FY08 as against 16.6% in FY09, but the advances growth
outstripped this pace with a rise of 31.8% in FY09, over a 33.2% growth in FY08. As per a recent
RBI report, FY09 was the second consecutive year, when increase in credit in absolute terms was
more than the absolute increase in aggregate deposits.

17
 4. Group-wise Performance

The growth in deposits across the different bank groups showed substantial variation. Public Sector
Banks with a deposit growth of 12.9% and Old Private Sector Banks with 11.4% showed a relatively
subdued growth in deposits where as the New Private Sector Banks with 50.7% and Foreign Banks
with 31.7% showed a sharp rise. Borrowings of the Public Sector Banks grew at 24%, but that of the
Foreign Banks was much higher (30%). Due to redemption of the India Millennium Deposits in Dec
2005, banks non-resident foreign currency deposits showed a sizeable decline. Loans and advances
growth too was on similar trends. For Public Sector Banks, loan growth was 29.5% as compared to
34.9% in FY08, for Old Private Sector Banks, it was 21.5% as against 22.7% in the previous year,
for New Private Sector Banks it was 50.2 % as against 33% in FY08, and for Foreign Banks it was
29.5% as against 24 % in FY08. In the non-food credit, apart from retail credit which grew at 40.9%;
infrastructure (24%), basic metals (14.1%) and textiles (11.2%) were the other major sectors that
received higher levels of incremental credit.

5. Growth in Retail Lending

While total credit of the SCBs grew at 31% in FY09, credit to the new segments in the retail banking
showed still higher growth rates. In FY09, loans to housing rose by 33.4%, credit card receivables by
47.9%, auto loans by 75%, and other personal loans by 39.1% taking the growth of retail loans
during the FY09 to 40.9%. Retail loans in FY09 constituted 25.5% of the total loans and advances of
scheduled commercial banks. Lending to sensitive sectors also rose significantly. Loans to capital

18
market rose by 39.2%, to real estate markets by 81.78% and to commodities by 85.56% with the
growth in these three segments reaching to 77.65% in FY09.

6. Priority Sector Advances

Credit to priority sector increased at a robust rate of 33.7% in FY09 on the top of 40.3% in the
previous year. A major portion of the credit growth in the priority sector is accounted by agriculture
and housing. Credit to SSI also grew sizeably.

7. Market Share

The share of Public Sector Banks showed deceleration in respect of major areas of business, where
as that of the new private sector and Foreign Banks earned higher share of business. The market
share of the Old Private Sector Banks too came under pressure. Public Sector Banks hold 75%
market share in major areas of business.

8 Access to Equity Markets

Banks have been increasingly accessing primary equity capital markets for raising resources. In
FY09, resource mobilization of banks through public equity markets rose by 24%. Resources raised
by banks from public equity markets showed continuous increase, from Rs 24560 mn in FY04 to Rs
89220 mn in FY08 to Rs 110670 mn in FY09. Encouraged by the response to banks stocks, eleven
banks, six in the public sector and five in the private sector, raised Rs 110670 mn from the equity
markets. The Public Sector Banks which raised equity from the capital markets included Allahabad
Bank, Oriental Bank of Commerce, Syndicate Bank, Andhra Bank, Bank of Baroda and Union Bank
of India. The five Private Sector Banks were Lakshmi Vilas Bank Ltd, Yes Bank Ltd, ICICI Bank
Ltd., The South Indian Bank Ltd and The United Western Bank Ltd. The size of the share issue of
these banks was Rs 6270 mn where as the premium was at Rs 104400 mn. Banks also tapped private
placement market for resource mobilization in a big way by raising Rs 301510 mn of which Public
Sector Banks accounted for 74%.

Bank stocks also emerged as an important portfolio for investment giving significant returns. Returns
from bank stocks as measured through BSE Bankex rose from 28.6% in FY08 to 36.8 % in FY09 as
compared to the benchmark index. Bank stocks still have scope for further growth with lower
valuation prevailing at present in many banks.

19
 8. Asset Quality

There is a perceptible increase in the quality of bank assets. Standard assets as percent of all assets
for scheduled commercial banks moved from 94.9% in FY08 to 96.7% in FY 06, with decline in
reported sub standard, doubtful and loss assets. The proportion of standard assets rose across all the
bank groups in FY09, showing improved management of assets by banks. According to a report of
the Reserve Bank of India, the gross non performing assets of the scheduled commercial banks
declined by Rs 73090 mn over and above the decline of Rs 65610 mn in FY08.

As on 31 Mar 2006, gross NPAs of scheduled commercial banks stood at Rs 518150 mn of which
26.4% are with State Bank group, 53% with the nationalised banks, 7.1% with the Old Private Sector
Banks, 7.3% with the New Private Sector Banks and 3.7% with the Foreign Banks.

Scheduled commercial banks stepped up recovery efforts through numerous methods. In addition to
their own internal recovery processes, banks recovered to the tune of Rs 6080 mn through one-time
settlement and compromise schemes, Rs 2230 mn though Lok Adalats, Rs 47100 mn through Debt
Recovery Tribunals and Rs 34230 mn through SARFAESI Act. Asset Reconstruction Company of
India Ltd (ARCIL) acquired 559 cases amounting to Rs 211260 mn from banks.

9. Distribution of Network

The expansion in the distribution network of the banks is increasingly evident from the growth of the
automated teller machines. There is a surge in the growth of off-site ATMs with their share in the
total ATMs rising to 32% in respect of Public Sector Banks, 67% in State Bank group, 32% in Old
Private Sector Banks, 63% in New Private Sector Banks and 73% in Foreign Banks.
Computerization of public sector bank branches is also moving at rapid pace. In 2007 the pace of
computerization progressed much further. Public Sector Banks have 93 branches operating abroad in
26 countries. All scheduled commercial banks together have 106 branches abroad.

20
 10. Major Trends in Business

Indian banking, in addition to improvements in performance and efficiency, has also experienced
significant changes in the structure of asset and liabilities. The major changes on the liabilities side
include relatively higher growth of demand deposits over time deposits, and also, within time
deposits, greater preference for short term over the longer term deposits. The share of demand
deposits in total deposits increased from 14.7% in FY01 to 17% in FY09. The share of short term
deposits in total time deposits increased from 43.8% in FY00 to 58.2% in FY09. The narrowing of
interest rate spread between short and long term deposits has reduced the preference for long term
deposits.

Banks are moving away from investments to loans due to more lending opportunities offered by the
higher economic growth. The rate of bank credit growth which was at 14.4% in FY03 rose sharply to
reach 30% each in the FY08 and FY09. Bank credit has picked up momentum on the back of rising
growth of real economy. A period of low interest rates induced banks to shift their preference from
investments to advances, which led to the share of gross advances in total assets of all commercial
banks reaching 54.7% in FY09 from 45% in two years prior to that.

The sectors towards which the bank credit was directed has also shown significant changes. Retail
loans witnessed growth of over 40% in the last two years, and began driving the credit growth to a

21
significant extent. Retail loans as a percentage of Gross Advances rose from about 22% in FY04 to
25.5% in FY09. Within the retail loans, housing segment showed the highest growth of 50% in FY08
and 34% in FY09. As per the RBI data, banks direct exposure to commercial real estate more than
doubled in FY09.

Despite sharp rise in the credit growth, improved risk management processes and procedures of
banks contained the surge in bad debts which is evident from the lower levels of incremental
nonperforming assets reported by the banks as also the rise in the proportion of standard assets.
Further improvement in risk management systems could provide banks with more opportunities in
expanding credit and pursuing higher levels of growth in retail lending.

A few other major developments in the performance of the Indian banking industry are briefly
mentioned below.

1. Rise of Transactional Banking: Growth of retail lending including mortgage and personal
loans is leading to numerous transactions, which banks are able to manage efficiently with the
support of growing technology prowess and competencies. In FY09, growth of major
segments of the retail lending includes housing loans at 33%, consumer durables at 17%,
credit card receivables at 48%, auto loans at 75% and other personal loans at 39%. Except
consumer durables, all these segments have grown at a pace that is much higher than the
growth of total loans and advances which was at 31%. In view of the greater possibility of
personal banking services in India, transactional banking will assume significance, thus
giving scope for a new business model as also a wide range of technology solutions.

2. Outsourcing Gaining Significance: The rapid rise of personal banking, the need to service
and track it in a consistent manner, has led to the outsourcing of several of the follow-up and
customer service functions, with banks setting up separate processes and mechanisms to
manage them. This trend will increasingly be evident in the marketing of products,
maintaining client profiles, attending to customer requests and also in exploring new business
opportunities.

3. Focus on Fee Income: Indian banks, including the Public Sector Banks, have become
focused on the fee income, taking advantage of the enormous scope and potential for personal
banking and related services. Several banks have shown sizeable growth in the fee/non-
interest income in the recent period.

22
4. Thrust on SMEs and SSIs: The promotion and growth of small and medium enterprises
(SMEs) has become an issue of policy thrust in recent years, in view of their significance in
the domestic economy and contribution to the national output. The performance of the stock
markets in the last three years was also largely on the back of surge in the share prices of
stocks pertaining to SMEs. The environment governing SME financing has vastly improved
with the setting up of rating agencies for SME financing. Banks look at this segment as a
potential source of business and growth.

5. Product and Business Collaborations: Initiatives at deriving economies of scale are gaining
importance in Indian banking. There is growing collaboration and partnerships amongst
banks in promoting new business, distributing products and services as also in cross selling.
In the recent period, instances of even some Public Sector Banks coming together to jointly
develop business initiatives is increasingly evident In Sep 2006, Indian Bank, Corporation
Bank and Oriental Bank of Commerce announced a business alliance that is envisaged to
generate greater benefits to each of them, including expansion of international business.
Similarly, several banks are distributing insurance products in collaboration with insurance
companies.

6. Shared Services (ATM Networks): There is growing trend of pooling of resources for
providing some shared services, such as ATMs and credit cards. In the 1990s, the first of such
initiatives began under the aegis of the Indian Banks Association, with the setting up of
SWADHAN, a shared ATM Network. Following its dissolution, a new set up came into
being, under the aegis of the IDBRT, known as National Financial Switch (NFS) which has
24 banks sharing the network of 8371 ATMS, the largest of such network of ATMs in India.
Cash Tree is another ATM network with major public and private sector participating in it.
MITR is a network of ATMs between six Public Sector Banks.

7. NRI Banking/International Services: Total International liabilities of SCBs in FY09 rose

by 20.2% as compared to 15.5% in the previous year. International liabilities consist of
various items, including foreign currency deposits, non resident deposits, and equities of
banks held by non-residents etc. International borrowings are growing at a pace higher than
that of deposits. The strong surge in international liabilities has led to banks stepping up their
focus on external activities, in the form of opening new branches outside India and forging
business relationships and collaborations. The focus is more on the Middle East, European

23
 and North American markets, where significant presence of population of Indian origin is
prevalent. A few banks have begun to explore China and Vietnam as new markets.

8. Technology and Core Banking Solution: Core banking solution (CBS) is critical to offer
country-wide banking facilities, and has emerged as a key competitive and success factor for
banks. CBS is more of a challenge for the public and the Old Private Sector Banks, since the
New Private Sector Banks are already networked since their inception. Several public sector
and Old Private Sector Banks have made significant advances in extending core banking
solution to most of the branches, which will radically redefine the scope and quality of
delivery and distribution of bank products as also the customer service. Between 1999 and
2006, Public Sector Banks have spent about Rs 106760 mn on computerization and the
development of communication networks and at end March 2006, 77.5% of the branches of
these banks were fully computerized.

9. Cross Selling: Globally, cross selling is a major component of the business of banks. In India
too, it is catching up fast with several of the banks of the State Bank Group already making
headway in selling products of other group banks and subsidiaries in the insurance and capital
market services. Other banks are also building this business in an aggressive manner. Cross
selling would help in banks boosting the fee income.

10. Internet/Mobile Banking: Taking advantage of the vastly improved and innovative telecom
solutions, many banks are able to offer services on internet and mobile telephones. Internet
banking and phone banking are becoming quite common place amongst all groups of banks
that provide customers with ready information on certain banking services. Internet / and
mobile based banking is expected to grow further in view of the expansion of capacity in the
bandwidth and value added services introduced in the telecom sector.

11. Financial Inclusion: Following the governments policy initiative of pursuing inclusive
growth, banking institutions have been advised to offer products that will cater to a wide
spectrum of the population living in the rural areas. Following this, many banks have
introduced exclusive no-frills accounts, which will provide banking access to a large segment
of unbanked population. Banks, particularly in the public sector see a huge opportunity in this
segment, as more people will now seek banking services. The advances in technology and
computing could enable banks to manage growth of huge numbers in the accounts and
transactions.

24
12. Risk Management/Asset Liability Management: One of the positive features of the Indian
banking is its low cost of the turnaround. Following financial liberalization leading to the
banking crisis, many emerging and mature economies spent huge amounts, sometime costing
upto 50% of the GDP, in making successful banking turnaround. In India, however the cost of
the turnaround is relatively low, somewhere in the region of 3% of the GDP. A greater
challenge following the turnaround is keeping the loan book healthy. It is where banks are
taking proactive measures in setting up efficient risk management systems and robust asset
liability management processes. All banks have put in place several tiers of risk management
processes and procedures that are helping them to contain the growth of bad debts.

13. Capital Adequacy Norms: Indian banking system has been proactive in adopting global
standards in capital adequacy and are gearing up to adopt Basel II norms. Basel II norms
provide banks and the regulatory agencies a range of options for determining capital
requirements for credit and operational risk that are most suitable for the operations in
financial markets. This framework consists of a three-pillared approach viz., minimum capital
requirements, supervisory review of capital adequacy, and market discipline. The Reserve
Bank of India stipulated that Foreign Banks operating in India and Indian banks with
operational presence outside India should adopt the new standards in computing capital
adequacy with effect from Mar 31, 2008 and all other scheduled commercial banks to move
towards this system not later than Mar 31, 2009

14. Corporate Governance and Disclosures: There is a distinct improvement in the corporate
governance norms and the disclosure standards in the banking industry. All listed banks are
now required to follow Clause 49 of the listing agreement of stock exchanges that stipulates
the structure of the corporate governance as also disclosure standards. All listed banks now
disclose details of the governance and their functioning through various committees and
forums and follow norms on reporting the financial details, consisting of quarterly
announcements, segmental reporting etc. Enhanced quality of governance and disclosure
standards have made the banking sector an attractive option for investors in India and abroad.

15. Standards in Customer Service: In Feb 2006, the Reserve Bank of India, with 11 other
banks, set up the Banking Codes and Standards Board of India to monitor and ensure that
banking codes and standards are voluntarily adopted by the banks and strictly adhered to,
while providing customer services. The Code is a major development that would have
significant impact on the quality of customer services and in fulfilling the obligations of the

25
 bank. The Code sets out minimum standards of banking practices that banks should follow in
dealing with the customers. The Code envisages providing full information to the customers
before a product is sold. Similarly, guidelines on credit card operations were also issued by
the Reserve Bank of India in Nov 2005. These are envisaged to significantly enhance the
customer service standards in Indian banking

16. Growing Investor Interest in Indian Bank Stocks: In view of the great potential and
prospects, bank stocks have seen significant growth in the recent period with the support of
investor interest from India and abroad. Non resident holdings in the New Private Sector
Banks where foreign holding is allowed up to 74%, rose to 70.9% in ICICI Bank, 70.3% in
Centurion Bank of Punjab, 53.6% in KOTAK MAHINDRA Bank, 50% in YES Bank for
FY09. Among the Old Private Sector Banks, ING Vysya Bank (70.8%), Federal Bank
(45.8%) has sizeable non-resident holdings. Among the Public Sector Banks, non-resident
holdings vary across banks. The latest position in this regard indicates quite a few big banks
reaching the threshold levels (20%) of foreign institutional investment.

17. Growth of Off Balance Sheet Operations: There is a sharp increase in the offbalance sheet
operations of banks, particularly in the Foreign and New Private Sector Banks. Off-balance
sheet exposures of banks in India, of which derivatives form a major component, rose five
times in FY09 on the top of 58% growth registered in FY08. The share of off-balance sheet
exposures in total assets rose from 57% in FY02 to 152% in FY09. This trend, which refl ects
growing deregulation and new business opportunities for banks, also emphasizes the scope
for robust risk management to overcome the challenges of market dynamics.

26
27
CHAPTER - 2

COMPANY PROFILE

COMPANY PROFILE

2.1 Think Investment Think Kotak

Banks like Kotak Mahindra, standard chartered, ICICI, KOTAK MAHINDRA, and Citibank now
bring your Bank Account and Debit card to your fingertips. With Mobile commerce, you can perform
a wide range of query-based transactions from your Mobile Phone, without even making a call.
Kotak Mahindra is one of India's leading financial institutions, offering complete financial solutions
that encompass every sphere of life. From commercial banking, to stock broking, to mutual funds, to
life insurance, to investment banking, the group caters to the financial needs of individuals and
corporate. The group has a net worth of over Rs.1, 800 crore and employs over 4,400 employees in
its various businesses. With a presence in 82 cities in India and offices in New York, London, Dubai
and Mauritius, it services a customer base of over 5, 00,000.

Kotak Mahindra has international partnerships with Goldman Sachs (one of the world's largest
investment banks and brokerage firms) and Old Mutual (a large insurance, banking and asset
management conglomerate). The Kotak Mahindra Group was born in 1985 as Kotak Capital

28
Management Finance Limited. This company was promoted by Uday Kotak, Sidney A. Pinto and
Kotak & Company. Industrialists Harish Mahindra and Anand Mahindra took a stake in 1986, and
that's when the company changed its name to Kotak Mahindra Finance Limited. Since then it's been
a steady and confident journey to growth and success.

1986 : Kotak Mahindra Finance Limited starts the activity of Bill Discounting

1987 : Kotak Mahindra Finance Limited enters the Lease and Hire Purchase market

1990 : The Auto Finance division is started

1991 : The Investment Banking Division is started. Takes over FICOM, one of Indias
largest financial retail marketing networks

1992 : Enters the Funds Syndication sector

1995 : Brokerage and Distribution businesses incorporated into a separate company -

Kotak Securities. Investment Banking division incorporated into a separate company - Kotak
Mahindra Capital Company

1996 : The Auto Finance Business is hived off into a separate company - Kotak Mahindra
Primus Limited. Kotak Mahindra takes a significant stake in Ford Credit Kotak Mahindra
Limited, for financing Ford vehicles. The launch of Matrix Information Services Limited
marks the Groups entry into information distribution.

29
 1998 : Enters the mutual fund market with the launch of Kotak Mahindra Asset
Management Company.

2000 : Kotak Mahindra ties up with Old Mutual plc. for the Life Insurance business.
Kotak Securities launches kotakstreet.com - its on-line broking site. Formal commencement
of private equity activity through setting up of Kotak Mahindra Venture Capital Fund.

2003 : Kotak Mahindra Finance Ltd. Converts to bank

Established in 1984, The Kotak Mahindra Group has long been one of Indias most reputed financial
organizations. In Feb 2003, Kotak Mahindra Finance Ltd., the groups flagship company was given
the license to carry on banking business by the Reserve Bank of India (RBI).This approval creates
banking history since Kotak Mahindra Finance Ltd is the first company in India to convert to a bank.
The license authorizing the bank to carry on banking business has been obtained from the RBI in
tune with Section 22 of the Banking Regulation Act 1949.

KMBL was promoted by Mr. Uday.S.Kotak, Kotak and Company Ltd and Mr. Sidney &A.A.Pinto
under the name of Kotak Capital Management Finance Ltd on 21st Nov 1985 and obtained a
Certificate of Commencement of Business on 11th Feb 1986.

The bank customers have access to entire VISA network of 4500 ATMS in India and 800000ATMS
worldwide accepted in more than 56000 establishments across India and 10 million worldwide. The
customer also has access to over 800 ATMs with sharing arrangements with UTI BANK, of these
125 are in the NCR.

2.2 KEY GROUP COMPANIES AND THEIR BUSINESSES

Kotak Mahindra Bank

The Kotak Mahindra Group's flagship company, Kotak Mahindra Finance Ltd which was established
in 1985, was converted into a bank- Kotak Mahindra Bank Ltd in March 2003 becoming the first
Indian company to convert into a Bank. Its banking operations offer a central platform for customer
relationships across the group's various businesses. The bank has presence in Commercial Vehicles,
Retail Finance, Corporate Banking, Treasury and Housing Finance.

Kotak Mahindra Capital Company

30
Kotak Mahindra Capital Company Limited (KMCC) is India's premier Investment Bank. KMCC's
core business areas include Equity Issuances, Mergers & Acquisitions, Structured Finance and
Advisory Services.

Kotak Securities

Kotak Securities Ltd. is one of India's largest brokerage and securities distribution houses. Over the
years, Kotak Securities has been one of the leading investment broking houses catering to the needs
of both institutional and non-institutional investor categories with presence all over the country
through franchisees and coordinators. Kotak Securities Ltd. offers online and offline services based
on well-researched expertise and financial products to non-institutional investors.

Kotak Mahindra Prime

Kotak Mahindra Prime Limited (KMP) (formerly known as Kotak Mahindra Primus Limited) has
been formed with the objective of financing the retail and wholesale trade of passenger and multi
utility vehicles in India. KMP offers customers retail finance for both new as well as used cars and
wholesale finance to dealers in the automobile trade. KMP continues to be among the leading car
finance companies in India.

Kotak Mahindra Asset Management Company

Kotak Mahindra Asset Management Company Kotak Mahindra Asset Management Company
(KMAMC), a subsidiary of Kotak Mahindra Bank, is the asset manager for Kotak Mahindra Mutual
Fund (KMMF). KMMF manages funds in excess of Rs 20,800 crore and offers schemes catering to
investors with varying risk-return profiles. It was the first fund house in the country to launch a
dedicated gilt scheme investing only in government securities.

Kotak Mahindra Old Mutual Life Insurance Limited

Kotak Mahindra Old Mutual Life Insurance Limited is a joint venture between Kotak Mahindra
Bank Ltd. and Old Mutual plc. Kotak Life Insurance helps customers to take important financial
decisions at every stage in life by offering them a wide range of innovative life insurance products, to
make them financially independent.

2.3 BOARD OF DIRECTORS

Mr. K.M.Gherda Executive Chairman

31
 Mr. Uday Kotak Executive Vice Chairman and Managing Director

Mr. Anand Mahindra Co Promoter of Kotak Mahindra Bank and

Vice Chairman and Managing Director of Mahindra and Mahindra

Mr. Cyril Shroff Co Promoter

Mr. Pradeep N Kotak Agri Division of Kotak and Company Limited

Dr. Shanker Acharya

Mr. Shivaji Dam Managing Director Kotak Mahindra Old Mutual Life Insurance Limited

Mr. C.Jayaram Executive Director

Mr. Dipak Gupta Executive Director

2.4 Product Detail

Kotak Mahindra Bank is one of the prominent subsidiaries of Kotak Mahindra group. The activities
of the company being parallel to its objective are very wide and cover all the components of a Bank.
The Basic area of Operations is the Banking business, other products are meant for the regular
revenue generation. Being a Banking house, the company is in regular touch with Banking Accounts,
Investment Services, Convenience Banking and Other Services. They offer complete solutions that
address all your financial requirements, whether you're an individual or a firm. From everyday
banking to long term investments their offering covers it all. This wide range of products is
delivered to you with a genuine understanding of your specific need and warm, personalised service.

Kotak Mahindra Bank, it's not about selling you many different products it's about working out a
holistic, pragmatic solution that addresses your financial needs. Through their varied products,they
commit themselves to becoming banker to the customer rather than being asset financier to our
customers.

2.5 Banking Accounts

There are three types of banking account:

32
 Savings Account

Current Account

Term Deposit

SAVINGS ACCOUNT

Choose from our range of Savings Accounts

KOTAK MAHINDRA has got a variety of options of savings accounts to choose from for its
customers according to their convenience and requirements .These savings accounts offer attractive
returns along with personalized banking services at three convenient average quarterly
balances(AQB)levels of Rs. 10000 (KOTAK EDGE SAVINGS ACCOUNT),Rs. 20000 (KOTAK
PRO SAVINGS ACCOUNT) and at Rs75000(KOTAK ACE SAVINGS ACCOUNT).The average
quarterly balance levels as well the corresponding services and benefits try to ensure the various
customer needs and requirements.

Thus the three account opening options in savings account are as mentioned above:

EDGE SAVINGS ACCOUNT: Kotak Mahindra Banks Edge Savings Account is a complete
financial package customized to suit individual banking needs. Its constant endeavour is to
enable regular financial transactions through online platform so that most of payments can be
made directly through your account or card.

Features & Benefits

Wide ATM access through the Kotak Mahindra Bank Debit Card

One can walk into any KOTAK or KOTAK MAHINDRA Bank ATMs to withdraw cash or enquire
balance at no extra charge!

Multiple Access Channels Access

33
An account through phone, mobile phone or internet to get information about account balance or
track transactions. One can even transfer funds through Phone Banking or Net Banking.

Financial payments facilitated through the savings account

Use the free Payment Gateway to make online payments for utility bills, credit cards, online trading
of shares or even online shopping.

Quick and easy funds transfer

Quick funds transfer to a third party account with another Bank is available across 15 locations
through Net Banking. Also get a multi-city cheque book so that money from account is received by
the beneficiary in the fastest possible time.

Free investment account

One can open an investment account, and use the Net Banking facility to purchase/redeem mutual
funds online while directly debiting / crediting your Bank Account. Besides this you get a
consolidated view of all your mutual fund investments across schemes with updated returns status,
latest NAV information and research reports.

Attractive returns

Earn better returns in your savings account, with our 2-Way Sweep facility that automatically sweeps
out idle funds, above a threshold, from your account into Term Deposits. These Term Deposits sweep
back into your account to meet fund requirements when your withdrawals exceed the balance
available in your account, thereby providing you maximum liquidity.

PRO SAVINGS ACCOUNT:

Kotak Mahindra Banks Pro Savings Account is an account packed with powerful features to provide
a superior banking experience at a very comfortable balance requirement. They provide a
relationship manager who will specifically take care of banking and investment needs.

Features & Benefits

Free ATM access all domestic VISA ATM network

34
Walk into any VISA ATM in India to check balance or withdraw cash absolutely free. no longer have
to worry about locating your Bank or Partner Bank ATM Use the first VISA ATM that you spot, for
cash withdrawal or balance enquiry transactions.

Multiple access channels

Access your account through phone, mobile phone or internet to get information on your account
balance or track your transactions. You can even transfer funds through Phone Banking or Net
Banking.

Free investment account

One can open an investment account, and use the Net Banking facility to purchase/redeem mutual
funds online while directly debiting / crediting bank account. Besides this get a consolidated view of
all the mutual fund investments across schemes with updated returns status, latest NAV information
and research reports.

Financial payments facilitated through the savings account

Use our free Payment Gateway to make online payments for utility bills, credit cards, online trading
of shares or even online shopping.

Quick and easy funds transfer

Quick funds transfer to a third party account with another Bank is available across 15 locations
through Net Banking. Also get a multi-city cheque book so that money from account is received by
the beneficiary in the fastest possible time

Attractive returns

Earn better returns in your savings account, with our 2-Way Sweep facility that automatically sweeps
out idle funds, above a threshold, from your account into Term Deposits. These Term Deposits sweep
back into your account to meet fund requirements when your withdrawals exceed the balance
available in your account, thereby providing you maximum liquidity.

Dedicated relationship manager

You get a one point contact for all your banking related queries and transactions. Your relationship
manager will also help you with financial planning and sound investment decisions.

35
Free banking transactions

You can issue demand drafts or send cheques for collection on branch locations without any charge
to your account.

ACE SAVINGS ACOUNT:

Kotak Mahindra Bank's Ace Savings Account has been designed as a gateway to a world of financial
benefits and privileged banking transactions. The account carries benefits ranging from personal
investment advisory services to concierge services to free banking transactions. Onewill find that this
package of services and privileges is unmatched by any other savings account in the market.

Features & Benefits

Free access at all domestic and international VISA ATMs

No longer have to worry about locating your Bank or Partner Bank ATM - Use the first VISA ATM
that you spot, for free cash withdrawal or balance enquiry transactions. So walk into any VISA ATM
in India or abroad to withdraw cash or for balance enquiry.

Multiple access channels

Access the account anytime through land line, mobile phone or internet to get information on
account balance or track transactions. One can even transfer funds through Phone Banking or Net
Banking.

Financial payments facilitated through the savings account

Use the free Kotak Payment Gateway to make online payments for utility bills, credit cards, online
trading of shares or even online shopping. All this at the click of a mouse!

Quick and easy funds transfer

Transfer funds easily and with speed, to a beneficiary account at another bank. One can avail of this
facility by walking into any of branches or by simple logging on to Net Banking. Also get a free
multi-city cheque book so that money from your account is transferred to the beneficiary's account at
any of branch locations, in the fastest possible time.

Free banking transactions

One can issue demand drafts or send cheques for collection at all branches for no extra charge.

36
Attractive returns

Earn better returns in your savings account, with our 2-Way Sweep facility that automatically sweeps
out idle funds, above a threshold, from your account into Term Deposits. These Term Deposits sweep
back into account to meet fund requirements when withdrawals exceed the balance available in the
account, thereby providing maximum liquidity.

CURRENT ACCOUNT

Kotak Mahindra Bank offers unparalleled advantages with its three Current Account offerings.
Whether small/ mid size business or an enterprise spread across multiple locations in the country,
would find a Current Account that's just designed for you. These Current accounts offer attractive
returns along with personalized banking services at three convenient average quarterly
balances(AQB)levels of Rs. 25000 (KOTAK EDGE SAVINGS ACCOUNT),Rs. 50000 (KOTAK
PRO SAVINGS ACCOUNT) and at Rs250000(KOTAK ACE SAVINGS ACCOUNT).The average
quarterly balance levels as well the corresponding services and benefits try to ensure the various
customer needs and requirements. With features ranging from Free DDs, Free Cheque Collection,
Free At -Par Cheque facility to Free Trading Account & free Demat Account, and more!

Thus the three account opening options in savings account are as mentioned above:

Edge Current Account

In need of a well equipped bank account to keep pace in all the business endeavors. They offer the
Kotak Edge Current Account, armed with Kotak 2-Way Sweep and the entire gamut of Banking
Privileges, providing that extra edge to get ahead. The feature rich Kotak Edge Current Account is
the ideal way to make money work harder.

Features & Benefits

Multi City Banking

Current account/s with Kotak Mahindra Bank will be recognized in every other branch. One can just
walk into a Kotak Mahindra Bank branch in any of our branches across country to satisfy all the
banking needs.

2 - Way Sweep* : Term Deposit linked Current Account

37
Kotak 2-Way Sweep ensures that money never stops working for you. Daily balances, above a
threshold level, in Current Account are automatically swept out into Term Deposits (TD). This 'swept
out amount' is brought back into account to meet fund requirements when withdrawals exceed the
balance available in the account (or when the account balance goes below the specified threshold
level.) With Kotak 2-Way Sweep you enjoy the twin advantages of attractive returns & maximum
liquidity.

Free Demand Drafts and Pay Orders

Enjoy the benefit of our free Demand Drafts, payable at Kotak Mahindra Bank Branch location in
India.

At-par Cheques

Get free At-par Cheques that are treated as 'local clearing' cheques across all branch locations. All
these at nominal costs.

Cheque Collection

All Outstation cheques, drawn on any of branch locations, are collected 'at nominal charge' for you.
The strong network of correspondent banks enables us to collect cheques from 1600 locations across
India at faster speed and minimal cost

Mobile Banking and Alerts

Our Mobile Banking & Alerts service enables to access bank account on Mobile Phone. One can
access all your standing instructions (SI), any large credits or debits, available balance, balance
below AQB, any SI failure and SIs successfully executed will be intimated to you via SMS

PRO Current Accountt

You need a well equipped bank account to keep pace with you in the ever changing business
scenario. We offer you the Kotak Pro Current Account, armed with Kotak 2-Way Sweep, as well as
an entire gamut of Banking Privileges and 'user-friendly' Convenience Banking facilities. The feature
rich Kotak Pro Current Account is the ideal way to make your money work harder.

Key Features

Dedicated Relationship Manager

38
 Free Demand Drafts & Pay Orders>

Free At Home Services

Better Forex rates and Efficient Trade Services

ACE Current Account

In the need of a well equipped bank account to keep pace with you in the ever changing business
scenario. They offer you the Kotak Ace Current Account, armed with Business benefits and
exclusive Ace Privileges and an entire gamut of banking conveniences especially designed for you.
The feature rich Kotak Ace Account is the ideal way to make money work harder

39
CHAPTER - 3

LITERATURE
REVIEW

LITERATURE REVIEW
The Indian banking industry showed great resilience in springing back to shape as also adjusting to
the impact of the reforms. From a high overhang of bad debts and large loan delinquency in the early
1990s, Indian banks turned the corner in a decades time with a stronger balance sheet and surging
profitability. Not deterred by the burden of bad debts that emerged in the aftermath of banking sector
reforms and introduction of prudential norms, the banking industry showed sound growth and
expansion in the post reform period. Capital levels have increased, profitability has risen, and
productivity improved and so has several developments in enhancing the quality of customer service.
Integration of banking industry with other major segments of finance, notably the securities markets

40
is also growing. Integration with international markets is also on the rise, where Indian banks are
increasing their presence and operations. All these augur well for the prospects of the Indian banking
in the future. An important aspect of the Indian economy at present is having a vibrant domestic
financial system and a strong external sector. Given the growing pace of globalization of finance,
Indian domestic financial system in general and banking industry in particular, stand to gain from
opportunities arising within the country and outside. The Union Budget and the Monetary Policy
statements in the recent period have greatly enhanced the scope and significance of the Indian
financial sector by encouraging greater integration among the domestic and international financial
markets. In this context the constitution of a Committee on Financial Sector Assessment by the
Government and the Reserve Bank to undertake comprehensive self assessment of the Indian
financial sector as per global standards and laying down a road map for further reforms is an
important initiative. RBI announced constitution of an internal working group to examine the report
of the High Powered Expert Committee on Making Mumbai as an International Financial Centre and
implement the recommendations as appropriate. Making Mumbai as an international financial centre
would be of great significance for Indian finance and banking in view of the enormous opportunities
such a development could bring in. The stance of the monetary policy to get a hold on rapidly rising
asset prices and growing inflationary tendencies in the back of high economic growth, though might
appear to impact the business of banks, but could prove helpful in the long run since the prudential
measures could ensure appropriate pace of business and better risk management.

At the same time there are challenges that may appear daunting. Banks in Asia, particularly in China
have phenomenal size as compared to Indian banks. Liberalisation is leading to creation of global
banks through growth and consolidation. In this background, an important and most urgent challenge
for Indian banks is to create a size that would be effective in dealing with the global competition.
Indian banking also needs larger amounts of capital to sustain their growth in the future for which
they need to step up performance and efficiency that would attract investors. Another equally
important challenge would be harnessing the benefits of technology. Though progress is made,
technology solutions integrating the banking operations to derive synergies and efficiencies in Public
Sector Banks need to move at a much faster pace. Similarly, Public Sector Banks need to step up the
use of infrastructure related to Real Time Gross Settlement and Electronic Fund Transfer Systems
that could benefit their customers. There is much scope to further increase the share of non-interest
income, which will raise profitability and productivity.

In the next two years (2009) there would be significant changes in the banking landscape as per the
road map announced for the presence of Foreign Banks in India. From Arpil 2009 onwards, the

41
limitations on the Wholly Owned Subsidiaries of the Foreign Banks would be removed. Wholly
Owned Subsidiaries of the Foreign Banks will also be allowed to list and dilute their stake and will
be allowed to enter into mergers and acquisitions with the Private Sector Banks in India. These
measures will greatly enhance the opportunities for Foreign Banks that will further intensify the
competition for the domestic banks.

Notwithstanding these challenges, the Indian banking industry can look forward to a promising
period ahead. High economic growth offers banks a host of opportunities in new businesses and also
in expanding the existing ones. Growing international operations of Indian business will provide
Indian banks with global opportunities in banking. Rising income levels of people will give scope to
design and develop a wide range of personal financial products and fee based services. Focus on
infrastructure development and certain key sectors like rural economy, health and education offer
exciting business opportunities for the extensive branch network of Public Sector Banks located in
the rural and semi-urban areas.

While opportunities could be numerous, responding to them positively and realizing them to a
desired extent would be a great challenge. With right strategies in harnessing technology and human
resources developing market segments, design of new generation products and services, focus on
efficient customer service and pursuing global aspirations can take Indian banks to the next
generation banking.

42
CHAPTER - 4

RESEARCH
METHODOLOGY

43
 RESEARCH METHODOLOGY

OBJECTIVES

To understand the customer services being provided by the KOTAK MAHINDRA BANK
To about the expectations & requirements of the customer from KOTAK MAHINDRA
BANK
To find out whether customer are fully satisfied with the services of KOTAK MAHINDRA
BANK
To know about the deficiencies felt by the customer
To make Recommendations for improvement on KOTAK MAHINDRA BANK customer
services

IMPORTANCE OF THE STUDY

By the help of this study, the bank will be able to know its present situation. Thus, the
management will be able to take necessary measures by paying more attention on the sectors
which are outperforming and by this study they will also come to know what all things the
customers want.
With the help of this study the company will be able to attract and build a large customer base as
they will be able to know the taste and preferences of the customers.

RESEARCH DESIGN

I have used a Descriptive Research design in my study as I have described all the features and
characteristics of different direct banking channels of kotak and its competitors to arrive on a
particular conclusion.

SAMPLE DESIGN

The sampling design adopted for this study is probability proportional to size as it has following
advantages:

o It reduces the heavily expected non response of many smaller operators.

o It provides a simple sample selection rule that allows flexibility in using most up-to-date data
from a variety of sources, thus minimizing the sample size.

44
 o The study involved finding the responses of the customers of Kotak Mahindra Bank in the
Delhi/ NCR region specifically. For that we administered the questionnaire to the customers
of Kotak as well as to its competitors.

SAMPLE SIZE

Determining sample size is a very important issue because samples that are too large may waste time,
resources and money, while samples that are too small may lead to inaccurate results. In many cases,
we can easily determine the minimum sample size needed to estimate a process parameter, such as
the population mean . When sample data is collected and the sample mean is calculated, that
sample mean is typically different from the population mean . This difference between the
sample and population means can be thought of as an error. The margin of error is the
maximum difference between the observed sample mean and the true value of the
population mean :The sample size for the region has been taken to be 100. Research methodology is
the method or the entire procedure involved in carrying out a research for a specific purpose.
Research is a way to systematically solve the research problem. In it we study the various steps that
are generally adopted by a research to know not only the research methods or techniques and they
need to know the criteria by which they can decide technique and procedure will be applicable to
certain problems and other will not. Research is thus an original contribution to the existing stock of
knowledge making for its advancement. Te purpose of research is to discover answer to questions
application of scientific procedures.

Research always starts with a question or a problem.

Its purpose is to find answers to questions through the application of the scientific method.

It is a systematic and intensive study towards study a more complete knowledge of the studied.

As marketing does not address itself to basic or fundamental questions, it does not qualify. On the
contrary, it tackles problems, which seem to have immediate commercial potential. In the view of the
major consideration, marketing research should be regarded as applied research. We may also say
that marketing research is of both types problem solving oriented.

TYPES OF RESEARCH

The approach followed in his type of research, the researcher has to contact the person directly to
know about the available information and analyze these to make a critical evaluation. The facts and

45
information required to analyze the data was available in the interviewers statements. It is called
descriptive as it in the present. The researcher has no control over the variable. He can report what
has happened or what is happening.

DATA COLLECTION

PRIMARY DATA:

Primary data are data freshly gathered for specific purpose or for a specific research project. When
the needed do not exist or are dated, inaccurate, incomplete, unreliable, the researcher will have to
collect primary data. The normal procedure is to interview some people individually or in groups, to
get a sense of how people feel about the topic in question and develop a formal research instrument
into field. It is also called as the first hand data.

SECONDARY DATA:

It refers to data that is collected from some other sources, probably for similar purpose already exists
somewhere. The research assignment under was aimed at gathering some vital information Alliance
for Debit Card Customer used by kotak Mahindra bank in attracting the customer and the reasons
for enormous success. Among all the available ways, survey was the most feasible option to carry in
the cores of carrying out the research as it was more economical and keeping the limited time in hand
it thus proved to be the best option.

Survey was the best option as:

It provides larger and fast coverage

Low cost is involved

Direct interface with people

The analysis can be done on the basis of structured questionnaire

Data is easier to compile and categorize

RESEARCH INSTRUMENTS

A structured questionnaire was used as tool for data collection. To capture the consumer, preferences,
questionnaire having two type of question were used areas follows:

46
 Close ended question

Open ended question

The questionnaire covers aspects like:

Kotak Mahindra bank popularity among the customer

The impact of scheme like tie up with the shop keeper or big organization

The prospective and potential customer of the kotak Mahindra bank

Exiting bankers and main bankers and the facilities of the current banker

Earn interest on your current account

Exiting bankers offer dedicated relationship manager to service the a/c

SAMPLE TECHNIQUE

It is all about a study of relationships existing between debit card customer and kotak Mahindra
bank. After taking the consideration of Patna city population it was decided to use non probability
sampling method to use.

SAMPLE ELEMENT

(To whom this survey concern) To know the promotional strategy and its impact on customers

Sample frame

The research consists of list of items from which sample is to be drawn. In this case sample is to
premises of kotak Mahindra bank in exhibition road in Patna region.

Sample design

It is definite plan for obtaining a sample frame. It refers to technique or procedure the researcher
would adopt in selecting some sampling units from which references about the population are drawn.
It is a definite plan determined before data are actually collected for obtaining a sample from a given
customer population.

Sample method

47
End consumers: Random sampling

In this research

The information is based on primary data.

The quantitative measures have been used.

The tools used were observation personal interview and questionnaire.

Data collection and analysis

All the analysis and findings of the project is based on the data which has been collected from the
survey of the market. The analysis of data requires a number of closely related operations into raw
data through tabulation chart and then draws inferences. Analysis of work is generally based on
computation of various percentages.

Preparation of report

After analysis is the next step is in the preparation of report has been prepared according to the report
writing principals. The objective, clarity in presentation of ideas and the use of charts have been
maintained throughout the report. Once the data has been collected the researcher has to process
analysis and interpret the same. Sufficient attention is often not given to these aspects with the result
that the quality of report suffers.

Tabulation

It comprise of sorting of data into different categories and counting the number of cases that belongs
to each categories.

Analysis and interpretation

These are central steps in the research process. The goal of this analysis is to summarize the collected
data in such a way that they provide answers to the question that triggered the research. Hence the
questionnaire prepared was then done to bring the meaning an implication study. All result is
interpreted from raw data which was collected through survey, while results have been filtered from
the interview of the bank and customers through questionnaires. For convince and easy interpretation
all the data has been presented in graphical method.

48
CHAPTER - 5

DATA ANALYSIS AND

INTERPRETATION

49
 DATA ANALYSIS AND INTERPREATION

Q1. Do you have a bank account

1. Yes ( )

2. No ( )

BANK ACCOUNT

YES 100

NO 0

BANK ACCOUNT
YES NO

100%

As our study suggested that 100% of the people who is contributed to the survey has the bank
account which helps us to find out the objective of the project.

50
Q2. If Yes in which bank you have Account

1. Kotak Mahindra Bank ( )

2. ING Vysya ( )

3. Any Other Bank,Pls Specify the Name___________

SERVICE TAKEN
FROM THE BANK

KOTAK MAHINDRA BANK 50

ING VYSYA 50

OTHERS 0

SERVICE TAKEN FROM THE BANK

KOTAK MAHINDRA BANK ING VYSYA OTHERS

50% 50%

As per our primary data suggested that we have taken 50% of the people form the ING VYSYA
BANK and the 50% from the Kotak Mahindra bank this is done by us because we want to take true
representation of these two bank towards the loan potential towards the objective of the study.

51
Q3. How much are you aware of the services offered by Kotak Bank.

1) Very much ( )

2) Not aware ( )

3) Cant Say ( )

Kotak Bank Loan Schemes

Awareness

Very Much 55

Not Aware 44

Can't Say 1

This question tells the product awareness by the people for Kotak Bank, focus of the study is to
understand different Loan product provided by the Kotak bank and being of the customer of bank
they knew the Loan product offering or not. 55% of the people suggested that they know about
Kotak bank Loan product very much while almost 44% of the people either does not know about the
loan product provided by the company or they are not sure about that.

52
KOTAK MAHINDRA BANK SERVICES AWARENES

Can't Say; 1%

Not Aware; 44%

Very Much ; 55%

As per our study suggested it is clear that nearly 60% customers are aware of the services provided
by kotak Mahindra bank. Almost 40% were not aware of the services provided by the bank .

53
Q4. What do you feel about the quality of services offered by Kotak Mahindra Bank?

1. Excellent ( )

2. Good ( )

3. Satisfactory( )

4. Poor ( )

5. Very poor ( )

PERCENTAGE OF RESPONDENTS
EXCELLENT GOOD SATISFACTORY POOR VERY POOR

4% 10%
8%

18%

60%

Almost 78% of the customer were happy with the kind of service provided by the bank to the
customer which is good sign of the bank. Adding to this almost 12% of the customer were not happy
with the current service provided by the organization.

54
Q5 Are you aware of the type of loan provide by the Kotak Mahindra Bank.

1. Home Loans
2. Personal Loans
3. Commercial Loans
4. Loan Against Property
A. Yes ( )
B. No ( )

C. Cant Say ( )

Yes No Can't Say

Home Loan 67 23 10

Personal Loans 89 10 1

Commercial Loans 69 30 1

Loans Against property 59 30 11

Yes No Can't Say

89
67 69
59

23 30 30
10 10 11
1 1

55
This finding is based on the product category which is provided by the Kotak bank to the end
consumer as loan facility, almost 67% of the people out of 100 aware about the Kotak bank is
providing the Home loan same manner almost 89% of the people are aware about he Kotak bank also

OPTION Responses
N Percentage
Lessen a/c opening time 8 13.33%
Lower min. Bal. in saving a/c 12 20%
Feed back facility 10 16.66%
Increase branches 20 33.33%
Advertise more 10 16.66%
Total 60 100.0%
facilitate the Personal Loans to the end customer over all it is good sign for the new Kotak bank to
providing there loan services to the end customer.

Q6 What are your recommendations for improvement in customer services?

1. Lessen a/c opening time = 1
2. Lower min. Bal. in saving a/c = 2
3. Feedback facility = 3
4. Increase branches = 4
5. Advertise more = 5

Responses
17% 13%

20%
les. a/c opn. Tm min. Bal. a/c feedback facility increase branches advertise more

33%

17%

Inference

56
It is clear from the above data that retailer want more distribution channels amd also feed
back from them and also want the company to perform demand survey at regular intervals

CONCLUSION

A roof over one's head and ground beneath one's feet count as the bare necessities of life.
Theres nothing quite like owning a home, however humble, to give one that warm and
glowing feeling. But when one buys a home, one has much more than a feel-good purchase
in mind: its also a crucial investment decision, perhaps the biggest spending decision of
one's life. There are ample opportunities today for young salaried investors to plan their
moves early and buy a house at the right time and at the right price. In the process, not
only do they fulfill that cherished dream of owning a house, but also put themselves on the
path to acquiring property that would meet the needs and aspirations of their growing
family, even as it leads to wealth creation. Every individual aspires to own a home. But
many either spend a lifetime saving to purchase a house or exhaust money on monthly
house rents.

Take a house loan and let the monthly rent (easily converted into affordable EMIs) build
dream home.

Profitable Proposition
The overall demand in the residential sector has grown by about 7-8 per cent in the past
few months as compared to the same period last year. The growth is on account of two main
factors:
One, income-tax exemption;
Two, with no similar rebates available for individuals in the high-income group, they are
creating a second asset.

Add to this the stable property prices over the last year and plunging interest rates, planning
for dream home could not have been better timed. Rock-bottom interest rates,

57
standardization of the periodicity of interest calculation across lenders (which makes it
easier to compare loans), lower interest charges, waiver of loan application processing fees
and, a customer-friendly attitude is reason enough to celebrate the ascension of the home
loan consumer as the king.

In response, private players like ICICI Bank, KOTAK Bank, ING Bank and a few others
too lowered their rates. Market leader ICICI also brought down its interest rates to 8.0%,
very recently, to participate in the interest rate war. If one is still not satisfied with the
lowered loan rates, theres more. Some industry watchers believe the floating home loan
rate will slip to 8 per cent for long-term loans in another two to three years.

Most banks have changed the way interest is calculated from annual rests to monthly rests.
Under the annual rests method, the EMIs (equated monthly installments) one pays through
a year are factored in as part-repayment of the principal component only at the end of each
year. In other words, one has to pay interest even on the installments one has paid until
theyre reduced from the principal at the end of each year. Under monthly rests, the
principal is lowered by the appropriate amount each month. The thumb rule being that the
more frequently interest is calculated, the better for the creditor. Recently, ICICI added
monthly rests on its fixed-interest loans apart from annual rests. As a result, the fall in EMIs
on fixed-interest loans (where the interest rate is constant for the entire tenure of the loan,
irrespective of changes in the lending rates) is more pronounced than on floating-rate loans
(where the loan interest rate varies with changes in the interest rates). For example, the EMI
on a 15-year, fixed-interest loan for Rs 15 lakhs has come down by Rs 840; the
corresponding fall in the EMI on a floating-rate loan is only Rs 465. Apart from lowering
the cost of one's loan, the switchover to monthly rests has another advantage: it makes it
easier to compare loans.

58
 RECOMMENDATION

The following suggestions are strongly recommended:

1. To broaden the customer base the vast middle income strata should be fully exploited

2. Simplify the procedure, reduce service charges, and demand only the basic essential proof.

3. Most banks are reluctant to advance loan to the service class e.g. lawyers, police officers etc..

This aspect must be exploited.

4. Adoption of flexible and more lenient penalty should the customer fail to deposit the payment on

time. The penalty should be on case to case basis rather then the same for the entire customer

base.

5. Restriction to be reduced to bare minimum for loan advances and for repayment. For e.g. offer

long-term repayment facilities and have no age restriction to choosing repayment.

6. The maximum age for repayment could be increase to 65-70 years of age. Such facility will help

grow fast retail segment of the bank.

7. Offer multiple repayment loans.

8. Service class to be exploited by offering special reduced rates and linking the repayment from

the source from where the pay-cheque to the employee is issued. This needs to undergo special

contract with government organisation to ensure implementation.

59
 BIBLIOGRAPHY

1. Isnt it time Banks Score their Retail Applicants, by TS Rama Krishna Rao, 2005 The ICFAI
University Press
2. Retail Banking in India The key growth driver, by Manoranjan Sharma, 2005 The ICFAI
University Press
3. Pricing of Products: The Bankers Dilemma, by P.P.Pathrose, April 2005 IBA Bulletin
4. Management of Non-Performing Assets in Banks, by Dr. Bashir Ahmed Rao, 2003 The
Business Review
5. Retail Loan A Risk Management Perspective, by Shyam Ji Mehrotra, 2005 The ICFAI
University Press
6. Channelising Retail Credit, by T.M.Bhasin, August 2005 IBA Bulletin
7. Retail Loans: Is a Bubble in the Making? by Vinod Sharma, 2005 The ICFAI University
Press
8. KMBLs Internal Manuals
9. www.google.com
10. http://www.ingvysyabank.com

11.http://www.kotak.com

60
61