GROWTH IN INDIAN BANKING SECTOR

Submitted By: Vikrant Baghi Rohit Aggarwal Yogeshwar Dhaliwal Ravinder Kumar Garg

Declaration

I hereby declare that the project title "Growth in Indian Banking Sector" is a work of our own an all reference sources have been accurately reported and acknowledged. We would also mention that our information gathered, analyzed and documented for this project is entirely in our possession which is authentic and genuine. We will mention that the work done is not purchased or acquired by any unfair means or any external sources. The data and the information presented in the report are accurate and updated to the best of our knowledge. However, for the purpose of the project, information already compiled in many sources has been utilized.

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Acknowledgement

We are grateful to thank our Dean Mr. Amit Baruah for giving us this great opportunity to do this project.

We also extend our thankfulness to our beloved parents and friends for their continuous encouragement at every moment.

India's Growing Banking Sector India's banking sector is booming at a great pace in spite of its relatively small size in comparison of its counterparts in other leading economies. Indian banking sector has been found lucrative by eminent players from the international world. For e.g., In India, Citibank and Standard Chartered Bank has more than half of all credit card receivables and personal loans, which has generated more than Rs. 200 crore of profit for both banks. In 2003, Oriental Bank of Commerce was listed by Forbes magazine in its 'Global 200 Best Companies' list. In 1990s, after a long gap of more than 20 years, the apex bank, Reserve Bank of India (RBI) has issued licenses to 9 new private banks. In this, Times Bank got merged with the HDFC Bank. The RBI also allowed Kotak Mahindra Finance Company to become a bank. These banks have shown their edge over each others with the introduction of new products and technologies. Most of the banks paid their focus on the retail sector and provide internet banking, phone banking and mobile banking services to their customers and have cornered one of the largest segments of the India's banking sector by targeting the India's growing middle income class. The Indian banking sector has seen a proliferation of new services which has shown an improvement in customer service. What is a Bank? A banker or bank is a financial institution whose primary activity is to act as a payment agent for customers and to borrow and lend money. In other words, an institution where one can place and borrow money and take care of financial affairs. Function of Banks
Lending money to public (loans) Transferring money from one place to another (Remittances) Acting as trustees Keeping valuables in safe custody Government business

Types of Banks Public sector Banks Private sector Banks Co-operative Bank Development Bank/Financial institutions

Reserve Bank of India RBI is the banker to bankswhether commercial, cooperative, or rural. The relationship is established once the name of a bank is included in the Second Schedule to the Reserve Bank of India Act, 1934. Such bank, called a scheduled bank, is entitled to facilities of refinance from

RBI, subject to fulfillment of the following conditions laid down in Section 42 (6) of the Act, as follows: It must have paid-up capital and reserves of an aggregate value of not less than an amount specified from time to time. It must satisfy RBI that its affairs are not being conducted in a manner detrimental to the interests of its depositors. Services Provided By a Bank Demat Account Lockers Cash Management Insurance Product Mutual Fund Product Loans ECS El troni l r n Taxes

syst m

An Overview

Th ountrys middl l ss ounts for ov r 320 million p opl . In orr l tion with th growth of the economy, rising income levels, increased standard of living, and affordability of banking products are promising factors for continued expansion.

The Indian banking Industry is in the middle of an IT revolution, focusing on the expansion of retail and rural banking. Players are becoming increasingly customer-centric in their approach, which has resulted in innovative methods of offering new banking products and services. Banks are now realizing the importance of being a big player and are beginning to focus their attention on mergers and acquisitions to take advantage of economies of scale and/or comply with Basel II regulation. "Indian banking industry assets are expected to reach US$1 trillion by 2010 and are poised to receive a greater infusion of foreign capital. The banking industry should focus on having a small number of large players that can compete globally rather than having a large number of fragmented players." History of Indian Banking Sector Without a sound and effective banking system in India it cannot have a healthy economy. The banking system of India should not only be hassle free but it should be able to meet new challenges posed by the technology and any other external and internal factors. For the past three decades India's banking system has several outstanding achievements to its credit. The most striking is its extensive reach. It is no longer confined to only metropolitans or cosmopolitans in India. In fact, Indian banking system has reached even to the remote corners of the country. This is one of the main reasons of India's growth process. The government's regular policy for Indian bank since 1969 has paid rich dividends with the nationalization of 14 major private banks of India. Not long ago, an account holder had to wait for hours at the bank counters for getting a draft or for withdrawing his own money. Today, he has a choice. Gone are days when the most efficient bank transferred money from one branch to other in two days. Now it is simple as instant messaging or dial a pizza. Money has become the order of the day.

The first bank in India, though conservative, was established in 1786. From 1786 till today, the journey of Indian Banking System can be segregated into three distinct phases. They are as mentioned below: Early phase from 1786 to 1969 of Indian Banks Nationalization of Indian Banks and up to 1991 prior to Indian banking sector Reforms. New phase of Indian Banking System with the advent of Indian Financial & Banking Sector Reforms after 1991.

To make this write-up more explanatory, I prefix the scenario as Phase I, Phase II and Phase III. Foundation Phase The General Bank of India was set up in the year 1786. Next were Bank of Hindustan and Bengal Bank. The East India Company established Bank of Bengal (1809), Bank of Bombay (1840) and Bank of Madras (1843) as independent units and called it Presidency Banks. These three banks were amalgamated in 1920 and Imperial Bank of India was established which started as private shareholders banks, mostly Europeans shareholders. In 1865 Allahabad Bank was established and first time exclusively by Indians, Punjab National Bank Ltd. was set up in 1894 with headquarters at Lahore. Between 1906 and 1913, Bank of India, Central Bank of India, Bank of Baroda, Canara Bank, Indian Bank, and Bank of Mysore were set up. Reserve Bank of India came in 1935. During the first phase the growth was very slow and banks also experienced periodic failures between 1913 and 1948. There were approximately 1100 banks, mostly small. To streamline the functioning and activities of commercial banks, the Government of India came up with The Banking Companies Act, 1949 which was later changed to Banking Regulation Act 1949 as per amending Act of 1965 (Act No. 23 of 1965). Reserve Bank of India was vested with extensive powers for the supervision of banking in India as the Central Banking Authority. During thos d ys publi h s l ss r onfid n in th b nks. As n ft rm th d posit mobilization was slow. Abreast of it the savings bank facility provided by the Postal department was comparatively safer. Moreover, funds were largely given to traders. Expansion Phase Government took major steps in this Indian Banking Sector Reform after independence. In 1955, it nationalized Imperial Bank of India with extensive banking facilities on a large scale especially in rural and semi-urban areas. It formed State Bank of India to act as the principal agent of RBI and to handle banking transactions of the Union and State Governments all over the country.

Seven banks forming subsidiary of State Bank of India was nationalized in 1960 on 19th July, 1969, major process of nationalization was carried out. It was the effort of the then Prime Minister of India, Mrs. Indira Gandhi. 14 major commercial banks in the country was nationalized. Second phase of nationalization Indian Banking Sector Reform was carried out in 1980 with seven more banks. This step brought 80% of the banking segment in India under Government ownership. The following are the steps taken by the Government of India to Regulate Banking Institutions in the Country: 1949: Enactment of Banking Regulation Act. 1955: Nationalization of State Bank of India. 1959: Nationalization of SBI subsidiaries. 1961: Insurance cover extended to deposits. 1969: Nationalization of 14 major banks. 1971: Creation of credit guarantee corporation. 1975: Creation of regional rural banks. 1980: Nationalization of seven banks with deposits over 200 crore.

After the nationalization of banks, the branches of the public sector bank India rose to approximately 800% in deposits and advances took a huge jump by 11,000%. Banking in the sunshine of Government ownership gave the public implicit faith and immense confidence about the sustainability of these institutions. Consolidation Phase The phase started in 1985 when a series of policy initiatives were taken by RBI which saw marked slowdown in the branch expansion. Attention was paid to improving house-keeping, customer service, credit management, staff productivity and profitability of banks. Measures were also taken to reduce the structural constraints that obstructed the growth of money market. Reforms Phase This phase has introduced many more products and facilities in the banking sector in its reforms measure. In 1991, under the chairmanship of M Narasimham, a committee was set up by his name which worked for the liberalization of banking practices. The country is flooded with foreign banks and their ATM stations. Efforts are being put to give a

satisfactory service to customers. Phone banking and net banking is introduced. The entire system became more convenient and swift. Time is given more importance than money. The financial system of India has shown a great deal of resilience. It is sheltered from any crisis triggered by any external macroeconomics shock as other East Asian Countries suffered. This is all due to a flexible exchange rate regime, the foreign reserves are high, the capital account is not yet fully convertible, and banks and their customers have limited foreign exchange exposure.
BANK NATIONALISATION & PUBLIC SECTOR BANKING Organized banking in India is more than two centuries old. Till 1935 all the banks were in private sector and were set up by individuals and/or industrial houses which collected deposits from individuals and used them for their own purposes. In the absence of any regulatory framework, these private owners of banks were at liberty to use the funds in any manner, they deemed appropriate and resultantly, the bank failures were frequent. Move towards State ownership of banks started with the nationalization of RBI and passing of Banking Companies Act 1949. On the recommendations of All India Rural Credit Survey Committee, SBI Act was enacted in 1955 and Imperial Bank of India was transferred to SBI. Similarly, the conversion of 8 Stateowned banks (State Bank of Bikaner and State Bank of Jaipur were two separate banks earlier and merged) into subsidiaries (now associates) of SBI during 1959 took place. During 1968 the scheme of social control was introduced, which was closely followed by nationalization of 14 major banks in 1969 and another six in 1980. Keeping in view the objectives of nationalization, PSBs undertook expansion of reach and services. Resultantly the number of branches increased 7 fold (from 8321 to more than 60000 out of which 58% in rural areas) and no. of people served per branch office came down from 65000 in 1969 to 10000. Much of this expansion has taken place in rural and semi-urban areas. The expansion is significant in terms of geographical distribution. States neglected by private banks before 1969 have a vast network of public sector banks. The PSBs including RRBs, account for 93% of bank offices and 87% of banking system deposits.

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

. There are 71,177 bank 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 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.

Public Sector Banks in India Among the Public Sector Banks in India, United Bank of India is one of the 14 major banks which were nationalized on July 19, 1969. Its predecessor, in the Public Sector Banks, the United Bank of India Ltd., was formed in 1950 with the amalgamation of four banks viz. Comilla Banking Corporation Ltd. (1914), Bengal Central Bank Ltd. (1918), Comilla Union Bank Ltd. (1922) and Hooghly Bank Ltd. (1932). Oriental Bank of Commerce (OBC), a Government of India Undertaking offers Domestic, NRI and Commercial banking services. OBC is implementing a GRAMEEN PROJECT in Dehradun District (UP) and Hanumangarh District (Rajasthan) disbursing small loans. This Public Sector

Bank India has implemented 14 point action plan for strengthening of credit delivery to women and has designated 5 branches as specialized branches for women entrepreneurs. The following are the list of Public Sector Banks in India Allahabad Bank Andhra Bank Bank of Baroda Bank of India Bank of Maharashtra Canara Bank Central Bank of India Corporation Bank Dena Bank Indian Bank Indian Overseas Bank Oriental Bank of Commerce Punjab & Sind Bank Punjab National Bank Syndicate Bank UCO Bank Union Bank of India United Bank of India Vijaya Bank

Private Sector Banks Private banking in India was practiced since the beginning of banking system in India. The first private bank in India to be set up in Private Sector Banks in India was IndusInd Bank. It is one of the fastest growing Private Sector Bank in India. IDBI ranks the tenth largest development bank in the world as Private Banks in India and has promoted a world class institution in India. The first Private Bank in India to receive an in principle approval from the Reserve Bank of India was Housing Development Finance Corporation Limited, to set up a bank in the private sector banks in India as part of the RBI's liberalization of the Indian Banking Industry. It was incorporated in August 1994 as HDFC Bank Limited with registered office in Mumbai and commenced operations as Scheduled Commercial Bank in January 1995. ING Vysya, yet another Private Bank of India was incorporated in the year 1930. Bangalore has a pride of place for having the first branch inception in the year 1934. With successive years of

patronage and constantly setting new standards in banking, ING Vysya Bank has many credits to its account. List of Private Banks in India Bank of Punjab Bank of Rajasthan Catholic Syrian Bank Centurion Bank City Union Bank Dhanalakshmi Bank Development Credit Bank Federal Bank HDFC Bank ICICI Bank IDBI Bank IndusInd Bank ING Vysya Bank Jammu & Kashmir Bank Karnataka Bank Karur Vysya Bank Laxmi Vilas Bank South Indian Bank United Western Bank UTI Bank

Banking Industry at a Glance Table 1: Indian Banking at a Glance

Source: Reserve Bank of India

Table 2: Number of Banks, Group Wise

Source: Indian Banks Association/ Reserve Bank of India. * Includes Industrial Development Bank of India Ltd.

Table 3: Group Wise: Comparative Average

Source: Reserve Bank of India.

Table 4: Bank Groups: Key Indicators

Source: Reserve Bank of India. Major reforms initiatives Some of the major reform initiatives in the last decade that have changed the face of the Indian banking are:-

Interest Rate Deregulation-Interest rates on deposits and lending have been deregulated with banks enjoying greater freedom to determine their rates. Government equity in banks has been reduced and strong banks have been allowed to access the capital market for raising additional capital. New private sector banks have been set up and foreign banks permitted to expand their operations in India including through subsidiaries.

New areas have been opened up for bank financing like- insurance, credit cards, infrastructure financing, leasing, gold banking, besides of course investment banking, asset management, factoring, etc. Banks have specialized committees to measure and monitor various risks and have been upgrading their risk management skills and systems. Adoption of prudential norms in terms of capital adequacy, asset classification, income recognition, provisioning, exposure limits, investment fluctuation reserve, etc.

Emergence of New Competitive Spirit in context of the customers

Different economic reforms in the early 1990s have injected competition in the banking sector with the entrant of many new private and foreign players. The RBI issued new bank licenses with the motive of forming a new cohort of private players, which would ensure high level of service to customers and ensure unprecedented growth of the India. The last half of the nineties has witnessed the massive growth of the new private banking players, which has grown by approximately 50% per year and by 2001, they hold more than 6% of assets and nearly 10% of profits. Effect of New Technologies on Banks The Indian banking sector has seen an acceleration with the introduction of technological transformation like ATMs, telephone banking, online banking, web based products, e-cheques, call centers etc. Use of credit cards, debit cards has touched the sky of popularity. Even the old public sector banks are keeping themselves tune with the new technological changes. Like State Bank of India (SBI) has set aside more than Rs 500 crore during its 3 years of time span for the up gradation of its IT systems along with the computerization and networking of branches. Presently, SBI has more than 3000 computerized branches and over 1000 new ATMs. Similarly, United Bank of India (UTI) has started its computerization process in 1986 and so far it has completed its computerization work of more than 774 branches. It has also set up 25 ATMs in throughout the India and has signed agreement with other banks of the public sector for ATM sharing. In some of its branches, it has already started doing tele-banking and mobile banking. Banks and the Internet World Due to the advantages of inherent conveniences, 24x7 internet banking has proved to be an attractive service for the customers. Transactions done through the internet cost relatively less as compare to visit bank branch. Some banks also offer unique features of internet banking to their customers. Like Punjab National Bank has come up with their new online payment service, facilitating the online railway reservation. Notable features of the internet banking are Transfer of money to your account at the same bank's branch in another city. Opening of a fixed deposit.

Issuing of a banker's cheque or a demand draft. Checking of bank balance. Stopping the clearance of cheque. Request for the cheque book. Retail Sector Growth

Earlier the Indian mortgage market was minuscule- less than 1% of GDP. But after the introduction of economic reforms by the government, tremendous development has been seen in the mortgage market, getting an impetus from the declination of the interest rates. Many banks like HDFC, SBI and ICICI has put the housing finance on their priority list. As per an estimate, India's mortgage assets have reached to nearly 2% of the India's GDP, Which could heightened to the 20%. Credit card has emerged out as another important product of the personal finance which is growing rapidly. Personal loan is another area which is growing rapidly. HDFC Bank is quick enough in providing new products like car loans, personal loans, debit cards etc. The bank is also engage in loan pricing in various innovative ways for building healthy customer relationship. Mergers & Acquisitions There has been in recent months a renewed interest in mergers and acquisitions in the banking sector in view of the growing openness of the Indian financial system. The focal point of interest is about the size of the banking firm. The undercurrent of thinking is that the larger the bank the higher its competitiveness and better its prospects of survival. This argument implies that Indian banks are not in a position to compete for business internationally in terms of funds mobilization, credit disbursal, investments and rendering of financial services essentially because of their relatively small size. It is said that the only Indian bank that could compete internationally would be the State Bank of India, that too if consolidated with some mergers. In this background, one needs to know the why mergers and their impact. But the decisions about mergers would require that a view be taken of the optimal number of banks in the country in the context of the opening up of the financial sector for foreign banks to acquire, and amalgamate with banks in the foreign bank category as well as with Indian banks. Before dealing with these issues, let us have a bit of contemporary history of mergers in India. Mergers of banks took place in India in the 1960s under the direction of the Reserve Bank of India. From 566 reporting commercial banks (of which non-scheduled banks were 474) at the end of 1951, the number came down to 292 (of which 210 were non-scheduled) at end 1961, to 100 (27 non-scheduled) at the end of 1966; and to 85 (14 non-scheduled) by the end of 1969.

The number of bank offices increased sharply during this period: From 4151 in 1951 to 5012 in 1961, to 6593 in 1966 and to 9005 in 1969. The branch offices of scheduled commercial banks increased over this period while those of non-scheduled commercial banks declined. Unviable banks were weeded out, as recommended by the Travancore-Cochin Banking Inquiry Commission (1956). This meant either closure or amalgamation with other, relatively strong banks. This process was accelerated when two scheduled banks failed in 1960. The 1960 episode was essentially an exercise for preserving banking stability. Much of the general literature on mergers in banking relates to private banking. The complexities involved in mergers of public sector banking are rarely discussed. In the early 1990s when the then National Bank of India was merged with Punjab National Bank, problems of personnel integration cropped up. After this experiment, public sector bank mergers were not contemplated. On the other hand, there were private banks mergers since about the late 1990s for diverse reasons including building up financial strength, capturing larger portion of the growing retail business and securing better regional presence. Mergers of ICICI Bank and Bank of Madura, as well as HDFC Bank and Times Bank are important examples. These mergers, mooted by the merging banks in the first instance and approved by the authorities, were not entirely for reasons of banking stability as such. There were also mergers of private banks with public sector banks, the prominent among them being the mergers of Benares State Bank with Bank of Baroda in 2002; Nedungadi Bank with Punjab National Bank in 2003; and, more recently, Global Trust Bank with Oriental Bank of Commerce. But these mergers were at the initiative of the authorities, undertaken for preserving banking stability. The merger of ICICI with ICICI Bank and the reverse merger of IDBI Bank with IDBI served multiple objectives. First, the institutions were strengthened financially. Second, they helped to avoid the complex processes of restructuring the weaker of the units and to foster financial stability. Finally, they have opened the possibilities of actively promoting universal banking. The above examples of mergers have been facilitated to a large extent by banking sector reforms that helped relax some of the restrictions on asset portfolio distribution. Also, to an extent the advances in information technology have given banks the incentive to consolidate to scale up operations. However, they are not meant, at least in the short term, to cut costs, improve efficiency or raise profits. Implied is the argument that efficiency and profits would be assured once the economies of scale operate. On the other hand, mergers could lead to charging of higher fees for the services rendered, especially if there is no `effective' competition or if smaller banks exhibit `herd behaviour' in imitating the bigger entities. This negative aspect of mergers may not, however, be as serious as

when mergers lead to loss of availability of or access to credit or to lower employment, especially of female labour. Unfortunately, there is little of published empirical literature on the impact of mergers in banking in India. The general literature on the subject views the impact from two angles: One based on accounting data and the other based on stock price reaction. Till almost the mid-1990s, studies in the US suggested that mergers based on former did not lead to significant gains either in efficiency or cost-saving. More recently, however, empirical data supported the view that banks significantly improve their profit and operational efficiency following mergers. Studies that use stock market data did not show gains from consolidation. They, in fact, suggested that bidders often suffer negative returns partly because of high offer prices and partly because markets revise downward their expectations from the merger. In the present context of global financial market integration, Indian banks seeking international presence by exploiting the economies of scale and if possible of scope is an appealing argument. But this alone cannot be a good ground for consolidation. Banking stability is much more important. What is also important is that it should not lower the number of banks to levels that destroy competition. The proposition that banks would be `too large to fail' is pass as the 1990s financial crises experience shows. The question about the optimal number of banks in the country, and the associated issues of their capital adequacy and their capacity to help universalisation of banking are matters to be yet settled. There is no official view about the optimal number of banks in a country. The Banking Commission recommended in 1972 that national banks be reorganized into two or three all-India banks and six other entities, each specializing in developing services in a broad region. This was not pursued. But there is need for intense research on the issue, before one takes a judgmental view about the number of Indian banks that could have international presence and could compete for international banking business. While such a view would obviously be based on their financial strength, that by itself would not be enough. Good internal governance mechanisms and transparency practices need to be also in place. Besides the authorities should resist the temptation of taking a proactive stance in determining which Indian bank should have international presence. Instead they should allow banks to grow into international entities on their own internal dynamic impulses. The issue however could become complex if foreign banks are allowed to buy out Indian banks. The RBI has done well to be transparent by going in for public views on ownership and governance. One only hopes that political considerations do not influence the final view on the matter.

State Bank of India Company Profile of SBI: State Bank of India (SBI) is India's largest commercial bank. SBI has a vast domestic network of over 9000 branches (approximately 14% of all bank branches) and commands one-fifth of deposits and loans of all scheduled commercial banks in India. The State Bank Group includes a network of eight banking subsidiaries and several non-banking subsidiaries offering merchant banking services, fund management, factoring services, primary dealership in government securities, credit cards and insurance. The eight banking subsidiaries are: State Bank of Bikaner and Jaipur (SBBJ) State Bank of Hyderabad (SBH) State Bank of India (SBI) State Bank of Indore (SBIR) State Bank of Mysore (SBM) State Bank of Patiala (SBP) State Bank of Saurashtra (SBS) State Bank of Travancore (SBT)

The origins of State Bank of India date back to 1806 when the Bank of Calcutta (later called the Bank of Bengal) was established. In 1921, the Bank of Bengal and two other Presidency banks (Bank of Madras and Bank of Bombay) were amalgamated to form the Imperial Bank of India. In 1955, the controlling interest in the Imperial Bank of India was acquired by the Reserve Bank of India and the State Bank of India (SBI) came into existence by an act of Parliament as successor to the Imperial Bank of India. Today, State Bank of India (SBI) has spread its arms around the world and has a network of branches spanning all time zones. SBI's International Banking Group delivers the full range of cross-border finance solutions through its four wings - the Domestic division, the Foreign Offices division, the Foreign Department and the International Services division. State Bank of India (SBI) (LSE: SBID) is the largest bank in India. If one measures by the number of branch offices and employees, SBI is the largest bank in the world. Established in 1806 as Bank of Calcutta, it is the oldest commercial bank in the Indian subcontinent. SBI provides various domestic, international and NRI products and services, through its vast network in India and overseas. With an asset base of $126 billion and its reach, it is a regional banking behemoth. The government nationalized the bank in 1955, with the Reserve Bank of India taking a 60% ownership stake. In recent years the bank has focused on three priorities,

1), reducing its huge staff through Golden handshake schemes known as the Voluntary Retirement Scheme, which saw many of its best and brightest defect to the private sector, 2), computerizing its operations and 3), changing the attitude of its employees (through an ambitious programme aptly named 'Parivartan' which means change) as a large number of employees are very rude to customers. Roots: The State Bank of India traces its roots to the first decade of 19th century, when the Bank of Calcutta, later renamed the Bank of Bengal, was established on 2 June 1806. The government amalgamated Bank of Bengal and two other Presidency banks, namely, the Bank of Bombay (incorporated on 15 April 1840) and the Bank of Madras on 27 January 1921, and named the reorganized banking entity the Imperial Bank of India. All these Presidency banks had been incorporated as joint stock companies, and were the result of the royal charters. The Imperial Bank of India continued as a joint stock company. Until the establishment of a central bank in India the Imperial Bank and its early predecessors served as India's central bank, at least in terms of issuing the currency. The State Bank of India Act 1955, enacted by the Parliament of India, authorized the Reserve Bank of India, which is the central banking organization of India, to acquire a controlling interest in the Imperial Bank of India, which was renamed the Timeline: June 2, 1806: The Bank of Calcutta established. January 2, 1809: This became the Bank of Bengal. April 15, 1840: Bank of Bombay established. July 1, 1843: Bank of Madras established. 1861: Paper Currency Act passed. January 27, 1921: All three banks amalgamated to form Imperial Bank of India. July 1, 1955: nationalized. 1959: subsidiaries. State Bank of India formed; becomes the first Indian bank to be State Bank of India on 30 April 1955.

State Bank of India (Subsidiary Banks) Act passed, enabling the State Bank of India to take over eight former State-associated banks as its

1980s: When Bank of Cochin in Kerala faced a financial crisis, merged it with State Bank of India.

the government

June 29, 2007: The Government of India today acquired the entire Reserve Bank of India (RBI) shareholding in State Bank of India (SBI), consisting of over 314 million equity shares at a total amount of over 355 billion rupees. Associate Banks: There are seven other associate banks that fall under SBI. They all use the "State Bank of" name followed by the regional headquarters' name. These were originally banks belonging to princely states before the government nationalized them in 1959. In tune with the first Five the government integrated

Year Plan, emphasizing the development of rural India,

these banks with the State Bank of India to expand its rural outreach. The State Bank group refers to the seven associates and the parent bank. All the banks use the same logo of a blue keyhole. Currently, the group is merging all the associate banks into SBI, which will create a "mega bank", and one hopes, streamline operations and unlock value. State Bank of Bikaner & Jaipur State Bank of Hyderabad State Bank of Indore State Bank of Mysore State Bank of Patiala State Bank of Saurashtra State Bank of Travancore

Foreign Offices: State Bank of India is present in 32 countries, where it has 84 offices serving the international needs of the bank's foreign customers, and in some cases conducts retail operations. The focus of these offices is India-related business. Foreign Branches: SBI has branches in these countries: Australia Bahrain Bangladesh Belgium

Canada Dubai France Germany Hong Kong Israel Japan People's Republic of China Republic of Maldives Singapore South Africa Sri Lanka Sultanate of Oman The Bahamas U.K. U.S.A

Subsidiaries and Joint Ventures: In addition to the foreign branches above, SBI has these wholly owned subsidiaries and joint ventures: Nepal State Bank Limited SBI Mauritius Indian Ocean International Bank (Mauritius) SBI Canada SBI California

Growth: Mumbai, India. State Bank of India has often acted as guarantor to the Indian Government, most notably during Chandra Shekhar's tenure as Prime Minister of India. With more than 9400 branches and a further 4000+ associate bank branches, the SBI has extensive coverage. Following its arch-rival ICICI Bank, State Bank of India has electronically networked most of its metropolitan, urban and semi-urban branches under its Core Banking System (CBS), with over 4500 branches being incorporated so far. The bank has

the largest ATM network in the country having more than 5600 ATMs. The State Bank of India has had steady growth over its history, though the Harshad Mehta scam in 1992

marred its image. In recent years, the bank has sought to expand its overseas operations by buying foreign banks. It is the only Indian bank to feature in the top 100 world banks in the Fortune Global 500 rating and various other rankings. According to the Forbes 2000 listing it tops all Indian companies. Fortune Global 500 Ranking 2007: SBI debuted in the Fortune Global 500[2] at 498 in 2006. In 2007 it moved up to 495. As per fortune 500-2007 following are the data for SBI in $ million. Revenues 15,119.4. Profits 1,407.3. Assets 187,547.1. Stockholders' Equity 9,786.2 Group companies: SBI Capital Markets Ltd SBI Mutual Fund (A Trust) SBI Factors and Commercial Services Ltd SBI DFHI Ltd SBI Cards and Payment Services Pvt Ltd SBI Life Insurance Co. Ltd - Bancassurance (Life Insurance) SBI Funds Management Pvt Ltd SBI Canada

IT Initiatives: According to PM Network (December 2006, Vol. 20, No. 12), State Bank of India launched a project in 2002 to network more than 14,000 domestic and 70 foreign offices and branches. The first and the second phases of the project have already been completed and the third phase is still in progress. As of December 2006, over 10,000 branches have been covered. The new infrastructure serves as the bank's backbone, carrying all applications, such as the IP telephone network, ATM network, Internet banking and internal e-mail. The new infrastructure has enabled the bank to further grow its ATM network with plans to add another 3,000 by the end of 2007 raising the total number to 8,600. As of September 20, 2007 SBI has 7236 ATMs. Corporate Details: This site provides comprehensive information on State Bank of India or SBI Bank, the premier Nationalized Indian Bank. State Bank of India is actively involved since 1973 in non-profit activity called Community Services Banking.

State Bank of India is India's largest bank amongst all public and private sector banks operating in India. State Bank of India owns and operates the following subsidiaries and Joint Ventures State Bank Of India Credit Card State Bank Of India Online State Bank Of India USA State Bank Of India Services State Bank Of India Mutual Funds State Bank Of India Branch State Bank Of India NRI Account

Banking Subsidiaries: State Bank of Bikaner and Jaipur (SBBJ) State Bank of Hyderabad (SBH) State Bank of Indore (SBI) State Bank of Mysore (SBM) State Bank of Patiala (SBP) State Bank of Saurashtra (SBS) State Bank of Travancore (SBT)

Foreign Subsidiaries: State bank of India International (Mauritius) Ltd State Bank of India (California) State Bank of India (Canada) INMB Bank Ltd, Lagos

Non- banking Subsidiaries: SBI Capital Markets Ltd (SBICAP) SBI Funds Management Pvt Ltd (SBI FUNDS) SBI DFHI Ltd (SBI DFHI) SBI Factors and Commercial Services Pvt Ltd (SBI FACTORS) SBI Cards & Payments Services Pvt. Ltd. (SBICPSL)

Joint ventures: SBI Life Insurance Company Ltd (SBI LIFE).

Activities:

State Bank of India administrative structure is well equipped to oversee the large network of branches in India and abroad. The State Bank of India 14 Local Head Offices and 57 Zonal Offices are located at important cities spread throughout the country. State Bank of India has 52 foreign offices in 34 countries across the globe. The Corporate Accounts Group is a Strategic Business Unit of the Bank set up exclusively to fulfill the specialized banking needs of top corporate in the country. The main activities are Personal Banking. NRI Services. Agriculture. International. Corporate. SME. Domestic Treasury

State Bank of India offers the following services to its customers: Domestic Treasury. SBI Vishwa Yatra Foreign Travel Card. Broking Services Revised Service Charge. ATM Services. Internet Banking. E-Pay. E-Rail. RBIEFT. Safe Deposit Lockers. Gift Cheques. MICR Codes. Foreign Inward Remittances.

Moreover, State Bank of India has Colleges/Institutes/Training Centers that are the seats of learning and research and development. It caters not only to the employees of State Bank of India but also other banks/establishments in India and abroad. Performance:
State Bank of India, the countrys largest lender, today reported a 68.11 per cent rise in its consolidated net profit to Rs 2,758.53 crore during the first quarter of the current financial year, thanks largely to the performance of its treasury.

The banks total income went up 39.52 per cent to Rs 33,132.70 crore during April-June 2009, against Rs 23747.43 crore during the corresponding period last year. On a standalone basis, SBIs net profit went up 42.03 per cent to Rs 2,330.37 crore, while total income was 29.86 per cent higher at Rs 21,041.51 crore. While net interest income rose 4.30 per cent to Rs 5,025 crore, there was a 48.46 per cent rise in other income to Rs 3,568.75 crore during the first quarter of the current financial year. The treasury operations generated pre-tax profit of Rs 4,075 crore during the quarter-ended June 2009, as against a loss of Rs 817 crore during the corresponding period last year.

Exceeds Expectations: (Rs crore) Interest income Other income Total income Interest paid Total expenses Operating profit Non-tax provisions Net profit Gross NPA Net NPA Gross NPA % of advances Net NPA % of advances NPA data is for SBI standalone April-June 2008 20224.08 3523.35 23747.43 13509.96 18578.47 5168.96 2640.28 1640.92 10827.81 6298.44 2.42 1.42 2009 24641.11 8491.59 33132.70 17524.15 28238.18 4894.52 394.40 2758.53 15318.29 8402.48 2.79 1.55 Source: SBI % Change 21.84 141.01 39.52 29.71 51.99 (5.31) (85.06) 68.11 41.47 33.41

Th b nks n t int r st in om w s ff t d du to ris in int r st p ym nts th t w nt up 38.5 per cent due the deposit mobilization under the 1,000 day scheme, under which the bank was

paying 10.5 per cent interest in October. The scheme had resulted in a mop up of around Rs 1,000 crore on a daily basis for a few months. The pressure was also seen on the net interest margin (NIM), which fell by 73 basis points over the last 12 months to 2.30 per cent at the end of June 2009. Compared with the 2008-09, NIM, at the end of the first quarter of the current financial year, the decrease was to the tune of 63 basis points. SBI Chairman O P Bhatt said he expected NIM to improve by four to six basis points during the second quarter but it would still be below his comfort level of 3 per cent. With operating expenses rising 51 per cent, thanks mainly due to higher provision (of Rs 767 crore) for w g r vision nd high r p nsion li bility Rs 429 ror , SBIs op r ting profit for the quarter fell by 7.28 per cent to Rs 3,673.87 crore. On non-tax provisions, there was a decline of nearly 89 per cent to Rs 172.73 crore as it reversed provisions of Rs 1,200 crore on investment depreciation. During the first quarter of the last financial year, SBI had provided Rs 1,656 crore partly due erosion in the value of its bond and equity portfolio. In contrast during April-June 2009, bond yields were stable and the value of equities went up, reflected in an increase of almost 50 per cent in the BSE Sensex. The reversal of the provisions also masked the steep rise in provisions for bad debt, which went up to Rs 1,234 crore, as against a write-back of Rs 247 crore on loan-loss provisions. The level of gross non-performing assets went up over 41 per cent to Rs 15,318 crore. But compared with the March-end level of Rs 15,589 crore, there was an improvement. SBI said it had restructured loans to the tune of Rs 8,000 crore. Organization: State Bank of India is headed by Mr. Shri O. P. Bhatt, Chairman.

Company Profile of ICICI: ICICI Bank is India's second-largest bank with total assets of Rs. 3,849.70 billion (US$ 82 billion) at September 30, 2008 and profit after tax Rs. 17.42 billion for the half year ended September 30, 2008. The Bank has a network of about 1,400 branches and 4,530 ATMs in India and presence in 18 countries. ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialized subsidiaries and affiliates in the areas of investment banking, life and non-life insurance, venture capital and asset management. The Bank currently has subsidiaries in the United Kingdom, Russia and Canada, branches in United States, Singapore, Bahrain, Hong Kong, Sri Lanka, Qatar and Dubai International Finance Centre and representative offices in United Arab Emirates, China, South Africa, Bangladesh, Thailand, Malaysia and Indonesia. Our UK subsidiary has established branches in Belgium and Germany. ICICI Bank's equity shares are listed in India on Bombay Stock Exchange and the National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE). History: ICICI Bank was originally promoted in 1994 by ICICI Limited, an Indian financial institution, and was its wholly-owned subsidiary. ICICI's shareholding in ICICI Bank was reduced to 46% through a public offering of shares in India in fiscal 1998, an equity offering in the form of ADRs listed on the NYSE in fiscal 2000, ICICI Bank's acquisition of Bank of Madura Limited in an all-stock amalgamation in fiscal 2001, and secondary market sales by ICICI to institutional investors in fiscal 2001 and fiscal 2002. ICICI was formed in 1955 at the initiative of the World Bank, the Government of India and representatives of Indian industry. The principal objective was to create a development financial institution for providing medium-term and long-term project financing to Indian businesses. In the 1990s, ICICI transformed its business from a development financial institution offering only project finance to a diversified financial services group offering a wide variety of products and services, both directly and through a number of subsidiaries and affiliates like ICICI Bank. In 1999, ICICI become the first Indian company and the first bank or financial institution from non-Japan Asia to be listed on the NYSE. After consideration of various corporate structuring alternatives in the context of the emerging competitive scenario in the Indian banking industry, and the move towards universal banking, the managements of ICICI and ICICI Bank formed the view that the merger of ICICI with ICICI Bank would be the optimal strategic alternative for both entities, and would create the optimal legal structure for the ICICI group's universal banking strategy. The merger would enhance value for ICICI shareholders through the merged entity's access to low-cost deposits, greater opportunities for earning fee-based income and the ability to participate in the payments system and provide transaction-banking services. The merger would enhance value for ICICI Bank

shareholders through a large capital base and scale of operations, seamless access to ICICI's strong corporate relationships built up over five decades, entry into new business segments, higher market share in various business segments, particularly fee-based services, and access to the vast talent pool of ICICI and its subsidiaries. In October 2001, the Boards of Directors of ICICI and ICICI Bank approved the merger of ICICI and two of its wholly-owned retail finance subsidiaries, ICICI Personal Financial Services Limited and ICICI Capital Services Limited, with ICICI Bank. The merger was approved by shareholders of ICICI and ICICI Bank in January 2002, by the High Court of Gujarat at Ahmadabad in March 2002, and by the High Court of Judicature at Mumbai and the Reserve Bank of India in April 2002. Consequent to the merger, the ICICI group's financing and banking operations, both wholesale and retail, have been integrated in a single entity. ICICI Bank has formulated a Code of Business Conduct and Ethics for its directors and employees. ICICI Bank (BSE: ICICI) (formerly Industrial Credit and Investment Corporation of India) is India's largest private sector bank in market capitalization and second largest overall in terms of assets. Bank has total assets of about USD 100 billion (at the end of March 2008), a network of over 1,399 branches, 22 regional offices and 49 regional processing centres, about 4,485 ATMs (at the end of September 2008), and 24 million customers (at the end of July 2007). ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and specialised subsidiaries and affiliates in the areas of investment banking, life and non-life insurance, venture capital and asset management. (These data are dynamic.) ICICI Bank is also the largest issuer of credit cards in India. ICICI Bank has got its equity shares listed on the stock exchanges at Kolkata and Vadodara, Mumbai and the National Stock Exchange of India Limited, and its ADRs on the New York Stock Exchange (NYSE). The Bank is expanding in overseas markets and has the largest international balance sheet among Indian banks. ICICI Bank now has wholly-owned subsidiaries, branches and representatives offices in 18 countries, including an offshore unit in Mumbai. This includes wholly owned subsidiaries in Canada, Russia and the UK, offshore banking units in Bahrain and Singapore, an advisory branch in Dubai, branches in Belgium, Hong Kong and Sri Lanka, and representative offices in Bangladesh, China, Malaysia, Indonesia, South Africa, Thailand, the United Arab Emirates and USA. Overseas, the Bank is targeting the NRI (Non-Resident Indian) population in particular. Timeline: 1955: The Industrial Credit and Investment Corporation of India Limited (ICICI) was incorporated at the initiative of World Bank, the Government of India and representatives of Indian industry, with the objective of creating a development financial institution for providing

medium-term and long-term project financing to Indian businesses. Mr.A.Ramaswami Mudaliar is elected as the first Chairman of ICICI Limited. ICICI emerges as the major source of foreign currency loans to Indian industry. Besides funding from World Bank and other multi-lateral agencies, ICICI was also among the first Indian companies to raise funds from international markets. 1956: ICICI declared its first dividend, of 3.5%. 1958: Mr.G.L.Mehta appointed the second Chairman of ICICI Ltd. 1960: ICICI building at 163, Backbay Reclamation, inaugurated. 1961: The first West German loan of DM 5 million from Kredianstalt obtained. 1967: ICICI made its first debenture issue for Rs.6 crore, which was oversubscribed. 1969: The first two regional offices set up in Calcutta and Madras. 1972: ICICI becomes the second entity in India to set up merchant banking services. Mr. H. T. Parekh appointed the third Chairman of ICICI. 1977: ICICI sponsored the formation of Housing Development Finance Corporation and manages its first equity public issue. 1978: Mr. James Raj appointed the fourth Chairman of ICICI. 1979: Mr.Siddharth Mehta appointed the fifth Chairman of ICICI. 1982: ICICI became the first ever Indian borrower to raise European Currency Units. ICICI commences leasing business. 1984: Mr. S. Nadkarni appointed the sixth Chairman of ICICI. 1985: Mr. N.Vaghul appointed the seventh Chairman and Managing Director of ICICI. 1986: ICICI became the first Indian institution to receive ADB Loans. ICICI, along with UTI, set up Credit Rating Information Services of India Limited, India's first professional credit rating agency. ICICI promotes Shipping Credit and Investment Company of India Limited. The Corporation made a public issue of Swiss Franc 75 million in Switzerland, the first public issue by any Indian entity in the Swiss Capital Market.

1987: ICICI signed a loan agreement for Sterling Pound 10 million with Commonwealth Development Corporation (CDC), the first loan by CDC for financing projects in India. 1988: Promoted TDICI - India's first venture capital company. 1993: ICICI Securities and Finance Company Limited in joint venture with J. P. Morgan set up. ICICI Asset Management Company set up. 1994: ICICI Bank set up. 1996: ICICI Ltd became the first company in the Indian financial sector to raise GDR. SCICI merged with ICICI Ltd. Mr. K.V.Kamath appointed the Managing Director and CEO of ICICI Ltd 1997 : ICICI Ltd was the first intermediary to move away from a single prime rate structure to a three-tier prime rates structure and introduced yield-curve-based pricing. The name "The Industrial Credit and Investment Corporation of India Ltd" changed to "ICICI Ltd." ICICI Ltd. announced the takeover of ITC Classic Finance. 1998: A new logo symbolizing the common corporate identity for the ICICI Group was introduced. ICICI announced takeover of Anagram Finance. 1999 : ICICI launched retail finance - car loans, home loans and loans for consumer durables. ICICI becomes the first Indian company to get listed on the NYSE through an issue of American Depositary Shares. 2000 : ICICI Bank became the first commercial bank from India to get its stock listed on the NYSE. ICICI Bank announces merger with Bank of Madura. 2001: The Boards of ICICI Ltd and ICICI Bank approved the merger of ICICI Ltd. with ICICI Bank. 2002: ICICI Ltd m rg d with ICICI B nk Ltd to r t Indi s s ond-largest bank in terms of assets. ICICI assigned higher than "Sov r ign" r ting by Moodys. ICICI B nk l un h d Indi s first CDO Collateralized Debt Obligation) Fund named Indian Corporate Collateralized Debt Obligation Fund (ICCDO Fund). "E-Lobby", a self-service banking centre and a first of its kind in India, is inaugurated in Pune.

ICICI Bank launched Private Banking. A 1,100-seat Call Centre for Customer Care by phone and e-mail was set up in Hyderabad. ICICI Bank Home Shoppe, the first-ever permanent aggregation and display of housing projects in the county, launched in Pune. ATM-on-Wh ls, Indi s first mobil ATM, l un h d in Mumb i. 2003: The first Integrated Currency Management Centre launched in Pune. ICICI Bank announced the setting up of its first-ever offshore branch in Singapore. The first offshore banking unit (OBU) at SEEPZ Special Economic Zone, Mumbai, was launched. ICICI B nks r pr s nt tive office inaugurated in Dubai. Representative office set up in China. ICICI B nks UK subsidi ry l un h d. Indi s first v r "Vis Mini Cr dit C rd", r dit rd 43% sm ll r in dim nsions w s launched. A subsidiary of ICICI Bank was set up in Canada. Temasek Holdings acquired 5.2% stake in ICICI Bank. ICICI Bank became the market leader in retail credit in India. 2004: Max Money, a home loan product that offers the dual benefit of higher eligibility and affordability to a customer, introduced. Mobile banking service in India launched in association with Reliance Infocomm. Indi s first multi-branded credit card with HPCL and Airtel launched. Kisan Loan Card and innovative, low-cost ATMs were launched in rural India. ICICI B nk nd CNBC TV 18 nnoun d Indi s first v r w rds r ognizing th hi v m nts of SMEs, a pioneering initiative to encourage the contribution of Small and Medium Enterprises to the growth of the Indian economy. ICICI Bank opened its 500th branch in India. ICICI Bank introduced partnership model wherein ICICI Bank would forge an alliance with existing micro finance institutions (MFIs). The MFI would undertake the promotional role of identifying, training and promoting the micro-finance clients and ICICI Bank would finance the clients directly on the recommendation of the MFI. ICICI Bank introduced 8 to 8 Banking wherein all the branches of the Bank would remain open from 8a.m. to 8 p.m. from Monday to Saturday. ICICI Bank introduced the concept of floating rate for home loans in India.

2005: First rural branch and ATM launched in Uttar Pradesh at Delpandarwa, Hardoi. "Free for Life" credit cards launched wherein annual fees of all ICICI Bank Credit Cards were waived off. ICICI Bank and Visa jointly launched mChq a revolutionary credit card on the mobile phone. Private Banking Masters 2005, a nationwide Golf tournament for high networth clients of the Private Banking division launched. This event is the largest domestic invitation amateur golf event conducted in India. Becomes the first Indian company to make a simultaneous equity offering of $1.8 billion in India, the United States and Japan. Acquired IvestitsionnoKreditny Bank of Russia. ICICI Bank became the largest bank in India in terms of its market capitalization. ICICI Bank became the first private entity in India to offer a discount to retail investors for its follow-up offer. 2006: ICICI Bank became the first Indian bank to issue hybrid Tier-1 perpetual debt in the international markets. ICICI Bank subsidiary set up in Russia. Introduced a new product - NRI sm rt s v D posits a unique fixed deposit scheme for nonresident Indians. Representative offices opened in Thailand, Indonesia and Malaysia. ICICI Bank became the largest retail player in the market to introduce a biometric enabled smart card that allows banking transactions to be conducted on the field. A low-cost solution, this b m n ff tiv d liv ry option for ICICI B nks mi ro-finance institution partners. Financial counseling centre Disha launched. Disha provides free credit counseling, financial planning and debt management services. Bhoomi puja conducted for a regional hub in Hyderabad, Andhra Pradesh. 2007: ICICI Bank makes a USD 2 billion three-tranche international bond offering, which becomes the largest bond offering by an Indian bank. Sangli Bank was amalgamated with ICICI Bank. ICICI Bank raised Rs 20,000 crore (approx $5 billion) from domestic and international markets through a follow-on public offer.

ICICI B nks GBP 350 million int rn tion l bond off ring m rk d th in ugur l d l in th sterling market from an Indian issuer and also the largest deal in the sterling market from Asia. L un h d Indi s first v r j w ll ry rd in sso i tion with j w ll ry m jor Git nj li Group.

ICICI Bank became the first bank in India to launch a premium credit card -- The Visa Signature Credit Card. The foundation stone for a regional hub in Gandhinagar, Gujarat was laid. ICICI Bank introduced SME Toolkit, an online resource centre, to help small and medium enterprises start, finance and grow their business. ICICI Bank signed a multi-tranche dual currency US$ 1.5 billion syndication loan agreement in Singapore. ICICI Bank became the first private bank in India to offer both floating and fixed rate on car loans, commercial vehicles loans, construction equipment loans and professional equipment loans. In a first-of-its-kind, nationwide initiative to attract bright graduate students to pursue careers in banking, ICICI Bank launched the "Probationary Officer Programme". Launched Bank@Home services for all savings and current account customers residing in India ICICI Bank Eurasia LLC inaugurated its first branch at St Petersburg, Russia. 2008: ICICI Bank enters USA, launches its first branch in New York ICICI Bank enters Germany, opens its first branch in Frankfurt ICICI Bank launched iMobile, a breakthrough innovation in banking where practically all Internet banking transactions can now be done easily on the mobile phone. ICICI Bank concluded India's largest ever securitization transaction of a pool of retail loan assets aggregating to Rs. 48.96 billion (equivalent of USD 1.21 billion) in a multi-tranche issue backed by four different asset categories. It is also the largest deal in Asia (ex-Japan) in 2008 till date and the second largest deal in Asia (ex-Japan and Australia) since the beginning of 2007. ICICI Bank launches ICICIACTIVE-Banking Interactive Service - along with DISH TV, which will allow viewers to see information about the Bank's products and services and contact details on their DISH TV screens. ICICI Bank and British Airways launch a co-branded credit card, designed to earn cardholders accelerated reward points with every British Airways flight or by spending on everyday purchases

Personal Banking: Deposits Loans Cards Investments Insurance Demat Services Wealth management

NRI Banking: Money Transfer Bank Accounts Investments Property Solutions Insurance Loans

Business Banking: Corporate net banking Cash Management Trade services FXonline SME services Online taxes Custodial services

Performance: ICICI B nk, th ountrys s ond l rg st b nk, h s s n its n t profit f ll by round 35% during the fourth quarter of 2008-09 to Rs 744 crore against Rs 1,150 crore in the corresponding period last fiscal. With this, the bank is witnessing the sharpest decline in profit in over six years. Th b nks tot l in om for th r porting p riod w nt down by round 11% to Rs 9,203 ror against Rs 10,391 crore earned in the corresponding period of fiscal 2007-08. However, ICICI Bank board has declared a dividend of Rs 11 per share. In view of rising bad loans, ICICI Bank has scaled down its unsecured lending and would focus on enhancing the net interest income (NII), current and savings accounts (CASA) and feeincome.

The bank expects a 5-10% loan growth in retail and corporate portfolios in the current fiscal 2008-09. Th b nks provisioning for th fourth qu rt r of th fis l 2008-09 rose by around 15% to Rs 1,085 crore, against Rs 947 crore in the same period last fiscal. As on March 31, 2009, the b nks NPA r tio w s 1.96%. Th b nks tot l lo n book h s sh r of 49% of r t il, 37% of orpor t , 10% rur l nd 4% of SME. For the financial year 2008-09, ICICI B nks profit ft r t x PAT plung d by round 11% to Rs 3,758 crore, compared to Rs 4,158 crore earned in 2007-08. Th b nks tot l in om for th l st fin n i l y r w nt down by m rgin lly round 2% to Rs 38,696 crore, against Rs 39,599 crore in 2007-08. The net interest margin improved marginally to 2.4% in 2008-09, against 2.2% in 2007-08. The total deposits of the bank were Rs 218,348 crore as on March 31, 2009 against Rs 244,431 crore deposits as on March 31, 2008. The loan book of ICICI Bank also decreased to Rs 218,311 crore as on March 31, 2009 against Rs 226,616 crore as on March 31, 2008. During the last fiscal, the bank restructured loans aggregating to Rs 1,115 crore. Th b nks pit l d qu y r tio nd CASA s on M r h 31, 2009 w r 15.53% nd 28.7%, respectively. Organization: Chanda Kochhar has been appointed as non-executive chairperson of ICICI Life, ICICI General, ICICI Prudential Asset Management Company, ICICI Securities, ICICI Bank UK PLC and ICICI Bank Canada

Research Objective: To study whether the customers are satisfied with their services among ICICI bank and SBI bank To know about the Customer preferences among ICICI and SBI bank To give Suggestions to improve the services

Review of Literature: The banking sector in India has made remarkable progress since the economic reforms in 1991. New private sector banks have brought the necessary competition into the industry and spearheaded the changes towards higher utilization of technology, improved customer service and innovative products. Customers are now becoming increasingly conscious of their rights and are demanding more than ever before. The recent trends show that most banks are shifting from a produ t- ntri mod l to ustom r- ntri mod l s ustom r s tisf tion h s b om on of the major determinants of business growth. In this context, prioritization of preferences and close monitoring of customer satisfaction have become essential for banks. Keeping these in mind, an attempt has been made in this study to analyze the factors that are essential in influencing the investment decision of the customers of the public sector banks. For this purpose, Factor Analysis, which is the most appropriate multivariate technique, has been used to identify the groups of determinants. Factor analysis identifies common dimensions of factors from the observed variables that link together the seemingly unrelated variables and provides insight into the underlying structure of the data. Secondly, this study also suggests some measures to formulate marketing strategies to lure customers towards banks. Key Words: Mobile Banking: Mobile banking (also known as M-Banking, mbanking, SMS Banking etc.) is a term used for performing balance checks, account transactions, payments etc. via a mobile device such as a mobile phone. Mobile banking today (2007) is most often performed via SMS or the Mobile Internet but can also use special programs called clients downloaded to the mobile device. Internet Banking: Online banking (or Internet banking) allows customers to conduct financial transactions on a secure website operated by their retail or virtual bank, credit union or building society. Core Banking System: Core Banking is a general term used to describe the services provided by a group of networked bank branches. Bank Customers may access their funds and other simple transactions from any of the member branch offices.

Atm: An automated teller machine (ATM) is a computerized telecommunications device that provides the customers of a financial institution with access to financial transactions in a public space without the need for a human clerk or bank teller. On most modern ATMs, the customer is identified by inserting a plastic ATM card with a magnetic stripe or a plastic smartcard with a chip, that contains a unique card number and some security information, such as an expiration date or CVC (CVV). Security is provided by the customer entering a personal identification number (PIN). Using an ATM, customers can access their bank accounts in order to make cash withdrawals (or credit card cash advances) and check their account balances as well as purchasing mobile cell phone prepaid credit. ATMs are known by various other names including automated banking machine, money machine, bank machine, cash machine, hole-in-the-wall, cash point, Bancomat (in various countries in Europe and Russia), Multibanco (after a registered trade mark, in Portugal), and Any Time Money (in India).

Research Methodology

Sampling Design: Target Population: The target population in this research refers to the bank customers who are having an account in SBI bank and ICICI bank due to the convenience in collecting the data. The respondents can be any gender, any income level, any occupation and any education level. Sampling Unit: The sampling units are customers of ICICI bank and SBI bank.

Sampling Method: For this research we use non-probability sampling. Zikmund (1997) stated that in non-probability sampling, the probability of any particular member of the population being chosen is unknown. The element in the population does not have any probability attached to their being chosen as sample subjects.

Snow ball sampling will be applied in this research. Snow ball sampling is used to collect the data from the customers. Snow ball sampling refers to the procedure that involves the selection of additional respondents based on referrals of initial respondents. Sample Size: Sample size depends on the desired precision from the estimate. Precision is the size of the estimating interval when the problem is one of estimating a population parameter. This research selects 60 respondents as the sample size due to limited of time by asking them that they are having an account in SBI bank and ICICI bank due to the convenience in collecting the data. The respondents can be any gender, any income level, any occupation and any education level. Sampling Plan: The researcher is going to collect the data from the ATMS and also by visiting the bank. Pilot Study: A pilot study can refer to many types of experiments, but generally the goal of study is to replicate the full scale experiment, but only on a smaller scale. A pilot is often used to test the design of the full-scale experiment. The design can then be adjusted in time. This can turn out to be valuable: should anything be missing in the pilot, it can

be added to the experiment and chances are that the full-scale (and more expensive) experiment will not have to be re-done. Validity: The ability of a scale or a measuring instrument to measure what it is intended to measure can be termed as the validity of the measurement. Validity can be measured through several methods like face validity, content validity, criterion related validity and construct validity. For this comparative study the researcher has taken the face validity. Face Validity: Face validity refers to the collective agreement of the experts and researchers on the validity of the measurement scale. The researcher has gave the questionnaire to the experts in banking field.

Research Methodology: Sources of Data: The data is basically primary in nature. It was obtained from the customers.

Data Collection Method: Our communication approach was basically structured questioning, that is personal interview with the aid of printed questionnaires. Data Analysis: Appropriate statistical analysis will be adopted. The data will be tabulated and analyzed. Limitations of the Study: The study is limited to a particular branch of SBI and ICICI bank. Since the time is less the researcher has taken a sample of 30 people and it will not reveal the whole population of a country.

Data Analysis And Interpretation

Data Analysis and Interpretation: The following information contains the data interpretation of the questionnaires. The r spond nts r spons s for th qu stions h v b n int rpr t d nd finding h s b n m d based on the respondents responses. Frequency Table for the Demographic Details of the SBI Respondents Table: 1 Age of the Respondents Frequency 25-35 yrs 36-45 yrs 46-55 yrs Above 55 yrs Total 12 5 5 8 30 Percentage 38.7 16.1 16.1 25.8 100

Interpretation: From the above table 38.7% respondents are belonging to the age category of 25yrs-35yrs. And 16.1% respondents are belonging to the category of 36yrs-45yrs and 46yrs-55yrs. And 25.8% respondents are belonging to the category of above 55yrs.

Table: 2 Gender of the Respondents Frequency Female Male Total 15 15 30 Percentage 48.4 48.4 100

Interpretation: From the above table 48.4% respondents are belonging to the category of female. And the remaining 48.4% respondents are belonging to the category of male.

Table: 3 Educational Qualification of the Respondents Frequency School UG PG Professional Course M.phil/PhD Total 3 9 14 3 1 30 Percentage 9.7 29.0 45.2 9.7 3.2 100

Interpretation: From the above table 9.7% of respondents are belonging to the category of school and professional course. And 29.0% of respondents are belonging to the category of UG. And 45.2% of respondents are belonging to the category of PG. And 3.2% of respondents are belonging to the category of M.phil/PhD.

Table:4 Occupation of the Respondent Frequency Salaried Person Professionals Supervisor Managerial Total 25 1 1 3 30 Percentage 80.6 3.2 3.2 10.0 100

Interpretation: From the above table 80.6% of respondents are falling under the category of salaried person. And 3.2% of respondents are falling under the category of professionals and supervisor. And 10% of respondents are belonging to the category of managerial.

Table: 5 Income level of the Respondents Frequency Rs.5,000-Rs.15,000 Rs.15,001-Rs.25,000 Rs.25,001-Rs.35,000 Above Rs.45,000 Total 17 8 4 1 30 Percentage 54.8 25.8 12.9 3.2 100

Interpretation: From the above table 54.8% of respondents are falling under the income range between Rs.5, 000-Rs.15, 000. And 25.8% are falling under the income range between Rs.15, 001-Rs.25, 000. And 12.9% of respondents are falling under the income range between Rs.25, 001-Rs.35, 000. And 3.2% of respondents are falling under the income range between Above Rs.45, 000.

Table: 6 Reasons to Choose the Service Frequency Efficient Customer Service Time Saving Transaction Cost Technology More ATMs Total 14 8 3 1 4 30 Percentage 45.2 25.8 9.7 3.2 12.9 100

Interpretation: From the above table 45.2% of respondents are saying that the reason to choose SBI is they are providing efficient customer service. And 25.8% of respondents are saying that the reason to choose SBI is they are reducing our waiting time. And 9.7% of respondents are saying that the reason to choose SBI is Transaction costs. And 3.2% of respondents are saying that the reason to choose SBI is Technology. And 12.9% of respondents are saying that the reason to choose SBI is they are provided more ATM facility.

Table: 7 Type of Service Prefer the Most Frequency ATM Service Internet Banking Mobile Banking Core Banking System Total 19 3 3 5 30 Percentage 61.3 9.7 9.7 16.1 100

Interpretation: From the above table 61.3% of respondents prefer the ATM service. And 9.7% of respondents are preferred the internet banking and mobile banking. And 16.1% of respondents prefer the core banking system.

Frequency Graph for the Demographic Details of the SBI Respondents

Graph: 1
40 35 30 25 20 15 10 5 0 Frequency Percent 25YRS-35YRS 36YRS-45YRS 46YRS-55YRS ABOVE 55YRS

Graph: 2

50 45 40 35 30 FEMALE 25 20 15 10 5 0 Frequency Percent MALE

Graph: 3

50 45 40 35 30 25 20 15 10 5 0

Frequency Percent

Graph: 4

90 80 70 60 50 40 30 20 10 0 SALARIED PERSON PROFESSIONALS SUPERVISOR MANAGERIAL Frequency Percent

Graph: 5

60 50 40 30 20 10 0 Frequency Percent

Graph: 6
50 45 40 35 30 25 20 15 10 5 0 Frequency Percent

Graph: 7

70

60

50

40 Frequency 30 Percent

20

10

0 ATM SERVICE INTERNET BANKING MOBILE BANKING CORE BANKING SYSTEM

Frequency Table for the Demographic Details of the ICICI Respondents Table: 8 Age of the ICICI Respondents Frequency 25-35 yrs Above 55 yrs Total 29 1 30 Percentage 96.7 3.3 100

Interpretation: From the above table 96.7% of respondents are falling under the age group of 25yrs-35yrs. And 3.3% of respondents are falling under the group of above 55yrs.

Table: 9 Gender of the ICICI Respondents Frequency Female Male Total 12 18 30 Percentage 40 60 100

Interpretation: From the above table 40% of respondents are belonging to the female category. And 60% of respondents are belonging to the male category.

Table: 10 Education Level of ICICI Respondents Frequency UG PG Professional M.Phil/Ph.D Total 2 21 6 1 30 Percentage 6.7 70.0 20.0 3.3 100

Interpretation: From the above table 6.7% of respondents are belonging to the category of UG. And 70% of respondents are belonging to the category of PG. And 20% of respondents are belonging to the category of professionals. And 3.3% of respondents are belonging to the category of M.Phil/Ph.D.

Table 3.11 Occupation of the ICICI Respondents Frequency Salaried Person Businessman Professionals Managerial Total 23 3 3 1 30 76.7 10.0 10.0 3.3 100 Percentage

Interpretation: From the above table 76.7% of respondents belong to the category of salaried person. And 10% of respondents are belonging to the category of businessman and professionals. And 3.3% of respondents are belonging to the category of managerial.

Table: 12 Income Level of the ICICI Respondents Frequency Rs.5,000-Rs.15,000 Rs.15,001-Rs.25,000 Rs.25,001-Rs.35,000 Rs.35,001-Rs.45,000 Above Rs.45,000 Total 16 2 9 2 1 30 Percentage 53.3 6.7 30.0 6.7 3.3 100

Interpretation: From the above table 53.3% of respondents are falling under the income level of Rs.5, 000Rs.15, 000. And 6.7% of respondents are falling under the income level of Rs.15, 001-Rs.25, 000 and Rs.35, 001-Rs.45, 000. And 30% of respondents are falling under the income level of Rs.25, 001-Rs.35, 000. And 3.3% of respondents are falling under the income level of above Rs.45, 000.

Table: 13 Reason for Choosing ICICI Services Frequency Efficient Customer Service 8 Percentage 26.7 26.7 13.3 6.7 13.3 13.3 100

Efficient Complaints Handling 8 Time Saving Transaction Costs Technology Reliable Total 4 2 4 4 30

Interpretation: From the above table 26.7% of respondents are saying that the reason to choose ICICI is they are providing efficient customer service and efficient complaint handling. And 13.3% of respondents are saying that the reason to choose ICICI is they are reducing our waiting time, technology and reliable. And 6.7% of respondents are saying that the reason to choose ICICI is Transaction costs.

Table: 14 Type of Services Prefer the Most Frequency ATM Service Internet Banking Mobile Banking Core Banking System Total 13 9 4 4 30 Percentage 43.3 30.0 13.3 13.3 100

Interpretation: From the above table 43.3% of respondents prefer the ATM service. And 30% of respondents are preferred the internet banking. And 13.3% of respondents prefer the core banking system and mobile banking.

Graph: 8

100 90 80 70 60 50 40 30 20 10 0 Frequency Percent 25 YRS-35 YRS ABOVE 55 YRS

Graph: 9

60

50

40 Frequency 30 Percent

20

10

0 FEMALE MALE

Graph: 10

70 60 50 40 30 20 10 0 UG PG PROFESSIONALS M.Phil/Ph.D

Frequency Percent

Graph: 11

80 70 60 50 40 30 20 10 0 SALARIED PERSON BUSINESS MAN PROFESSIONALS MANAGERIAL Frequency Percent

Graph: 12
60 50 40 30 Frequency 20 10 0 Percent

Graph: 13

30 25 20 15 10 5 0 Frequency Percent

Graph: 14

45 40 35 30 25 Frequency 20 15 10 5 0 ATM SERVICE INTERNET BANKING MOBILE BANKING CORE BANKING SYSTEM Percent

Conclusion: Since both the banks are competing equally with each other. But SBI bank is little bit below the line in customer complaints handling when compared to ICICI bank. The ICICI bank is little bit below the line in concentrating on female customers when to SBI bank.

Findings: Sum Of the respondents to choose the SBI bank is because the bank is proving more ATM facility to the customers. Many of the respondents are saying the reason to choose the services of the SBI bank is because they are good in efficient customer service. The income level of the respondents who are having an account in SBI bank falling under the income level of Rs. 5,000 Rs.15.000. The age group of 25yrs 35yrs respondents mostly is having an account in SBI bank. The both gender are equally having an account in SBI bank. Many of the respondents are not aware of the many services rendered by the SBI bank. The few are deposit of cash in ATM, request for cheque book in ATM, end of the day balance in mobile, etc. Sum Of the respondents to choose the ICICI bank is because the bank is more reliable to the customers. Many of the respondents are saying the reason to choose the services of the ICICI bank is because they are good in efficient customer service and efficient complaint handling. The income level of the respondents who are having an account in ICICI bank falling under the income level of Rs. 5,000 - Rs.15.000. The age group of 25yrs - 35yrs respondents mostly is having an account in ICICI bank. The male gender is mostly having an account in ICICI bank. Many of the respondents are not aware of the many services rendered by the ICICI bank. The few are deposit of cash in ATM, request for cheque book in ATM, end of the day balance in mobile, etc.

Recommendation: Since many of the respondents are not aware of their key services. The bank has to take some initiatives. The bank can post a list of services that they are rendered to the customers inside the bank Premises. They can post demo of all these services in their bank website. They can concentrate more on the respondents are falling under the age group 25yrs 35yrs. The SBI bank can concentrate on customer complaints handling. The ICICI bank can concentrate on the female gender. The bank can also send a post to their customers by informing there services and how to proceed with that and all details they can mention it in the post.

BIBLIOGRAPHY:

Research Methodology Statistical Analysis S.P. Gupta

Websites: www.rbi.com www.iba.org.in www.wikipedia.com www.googlesearchengine.com

Questionnaire

Personal details

1. Name: 2. Ag : 3. G nd r: 25yrs- 35 yrs b 36 yrs - 45yrs M l b F m l UG d PG f Oth rs 46 55 yrs d bov 55 yrs

4. Edu tion l Qu lifi tion:

Illit r t b S hool Prof ssion l Cours

5. O up tion:

Hous wif b Stud nts

S l ri d p rson

d Busin ss m n

Prof ssion ls f Sup rvisor

g M n g ri l h p nsion r 6. Income level:

a) Rs.5,000 Rs.15,000 b) Rs.15,001-Rs.25,000 c) Rs.25,001- Rs.35,000 d) Rs.35,001-Rs.45,000 e) Above Rs. 45,000

7. In which bank do you have an account? ICICI b nk b SBI b nk

8. What is the reason to choose the services of the bank? Effi i nt ustom r s rvi b ffi i nt ompl ints h ndling t hnology

Tim s ving d tr ns tion osts f) Others _________ pls specify

9. What type of services do you prefer the most?

a) ATM service b) Internet Banking c) Mobile Banking d) Core banking system e) Others _____________ pls specify

Customer service questionnaire

Please use (/) mark to give your responses for the following questions

1=strongly disagree, 2= disagree, 3= neutral, 4= agree, 5= strongly agree

S.no ATM Service 1 2 3 4 5 I am facing problems in withdrawing cash from ATM. I am facing problems like insufficient cash in ATM. ATM services are useful for me to deposit cash and cheques ATM services are useful for me to request for cheque book ATM services are useful for me to get the enquiry statement of my account. Internet Banking 1 2 3 4 5 Internet banking helps me to transfer funds from the bank to the personalized transactions Internet banking saves me time for the banking transactions Internet banking helps me in bill payments Internet banking secures the money transactions Internet banking helps in online trading Mobile banking 1 Mobile banking is useful for me to know the end of day account balance. Mobile banking is useful for me to know the cheque details Mobile banking is useful for me to know the Debit/credit above certain limit in my account. Mobile banking is useful for me to Stop inward/outward cheques. Mobile banking is useful for my bill payments Mobile banking helps me to know about the debit/credit details Mobile banking provides me a support for ticketing,

1 2 3 4 5

2 3

5 6

recharging mobiles etc. Core Banking system 1 Core banking system helps me to transfer funds from different branches Core banking system makes me convenient to know about the deposit details Core banking system helps me to protect my personal information Core banking system helps me for the ATM service transactions Core banking system helps me for the internet banking transactions