ING Banking Analysis

Comparative study of Banking Operations with special reference to Retail Banking at ING Vysya Bank and SBI Bank, Hubli.

EXECUTIVE SUMMARY

Title of the ProjectComparative study of Banking Operations with special reference to Retail Banking at ING Vysya Bank and SBI Bank

Need for Study

The Indian economy is growing at the rate of 9% p.a. There are various factors contributing for the development of economy. One of the industries which have revolutionized the economy is banking. Change in the IT & faster growth has changed the banking operations to a great extent. Banking operations have led to a great development of economy & meeting customers needs.

Among various sectors that bank is involved, retail banking is one area has changed gradually in meeting dynamic needs of customers. I have undertaken my study in area of retail banking in order to get the basic understanding of banking operations especially retail banking. As retail banking activity has been changing & very completive in nature in meeting needs of customers. Being nationalized bank & in spite of competition from private & other nationalized bank, ING Vysya bank has been focus on retail banking. The idea of undertaking this project is to understand the customers present expectation from ING Vysya bank & even to know their perception about retail banking in this competitive banking scenario. The study even takes into consideration aspects of comparative analysis of retail banking between ING Vysya bank and SBI bank.About The ProjectRetail Banking

Retail banking is a banking service that is geared primarily toward individual consumers. Retail banking is usually made available by commercial banks, as well as smaller community banks. Unlike wholesale banking, retail banking focuses strictly on consumer markets. Retail banking entities provide a wide range of personal banking services, including offering savings and checking accounts, bill paying services, as well as debit and credit cards. Through retail banking, consumers may also obtain mortgages and personal loans. Although retail banking is, for the most part, mass-market driven, many retail banking products may also extend to small and medium sized businesses. Today much of retail banking is streamlined electronically via Automated Teller Machines (ATMs), or through virtual retail banking known as online banking.

The annual growth in bank credit to the commercial sector is at 25.4% as on March 31, 2007 and was lower than 27.2% against previous year. Till 2010, retail banking is expected to grow at a CAGR of 28% to touch a figure of INR 9,700 billion. This requires expansion and diversification of retail product portfolio, better penetration and faster service mechanism

The report on Retail Banking Industry in India covers industry segments like housing loan, auto loan, personal loan, education loan, consumer durable loan, credit card and regulatory frame work for retail banks is also discussed. The report gives retail banking industrys current performance and future outlook. Total 22 major retail banks in India are covered in terms of their performance, strategy and outlook. Key Highlights Covered - During 2006-07, gross credit extended by Indian commercial banks grew by 34.83% to touch INR19, 495 billion.- Retail credit constitutes about 25% of the total credit and has grown by 28.0% to INR4,218.3 billion- The annual growth in bank credit to the commercial sector is at 25.4% as on March 31, 2007 and was lower than 27.2% against previous year.- Till 2010, retail banking is expected to grow at a CAGR of 28% to touch a figure of INR 9,700 billion.Retail banking is typical mass-market banking where individual customers use local branches of larger commercial banks. Services offered include: savings and checking accounts, mortgages, personal loans, debit cards, credit cards, and so on.

The Retail Banking environment today is changing fast. The changing customers demographics demand to create a differentiated application based on scalable technology, improved service and banking convenience. Higher penetration of technology and increase in global literacy levels has set up the expectations of the customer higher than never before. Increasing use of modern technology has further enhanced reach and accessibility.SCOPE FOR RETAIL BANKING IN INDIA It helps in enhancing the economic development of a country. Increase in the purchasing power. The rural areas have the large purchasing power at their disposal and this is an opportunity to market Retail Banking.

India has 200 million households and 400 million middleclass population more than 90% of the savings come from the house hold sector. Falling interest rates have resulted in a shift. Now People Want To Save Less And Spend More.

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

Retail banking provides the tax benefits viz., in case of housing loans the borrower can avail tax benefits for the loan repayment and the interest charged for the loan.

ADVANTAGES OF RETAIL BANKING:Retail banking has inherent advantages outweighing certain disadvantages. Advantages are analyzed from the resource angle and asset angle.

Resource angle Retail deposits are stable and constitute core deposits.

They are interest insensitive and less bargaining for additional interest.

They constitute low cost funds for the banks.

Effective customer relationship management with the retail customers built a strong customer base.

Retail banking increases the subsidiary business of the banks.Assets angle Retail banking results in better yield and improved bottom line for a bank.

Retail segment is a good avenue for funds deployment.

Consumer loans are presumed to be of lower risk and NPA perception.

Helps economic revival of the nation through increased production activity.

Improves lifestyle and fulfils aspirations of the people through affordable credit.

Innovative product development credit.

Retail banking involves minimum marketing efforts in a demanddriven economy.

Diversified portfolio due to huge customer base enables bank to reduce their dependence on few or single borrower

Banks can earn good profits by providing non fund based or fee based services without deploying their funds.

DISADVANTAGES OF RETAIL BANKING: Designing own and new financial products is very costly and time consuming for the bank.

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

Customers are attracted towards other financial products like mutual funds etc.

Though banks are investing heavily in technology, they are not able to exploit the same to the full extent.

A major disadvantage is, monitoring and follow-up of huge volume of loan accounts inducing banks to spend heavily in human resource department.

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

The volume of amount borrowed by a single customer is very low as compared to wholesale banking. This does not allow banks to to exploit the advantage of earning huge profits from single customer as in case of wholesale banking.OPPORTUNITIESRetail banking has immense opportunities in a growing economy like India. As the growth story gets unfolded in India, retail banking is going to emerge a major driver. The rise of Indian middle class is an important contributory factor in this regard. The percentage of middle to high-income Indian households is expected to continue rising. The younger population not only wields increasing purchasing power, but as far as acquiring personal debt is concerned, they are perhaps more comfortable than previous generations. Improving consumer purchasing power, coupled with more liberal attitudes towards personal debt, is contributing to Indias retail banking segment. The combination of above factors promises substantial growth in retail sector, which at present is in the nascent stage. Due to bundling of services and delivery channels, the areas of potential conflicts of interest tend to increase in universal banks and financial conglomerates. Some of the key policy issues relevant to the retail-banking sector are: financial inclusion, responsible lending, and access to finance, long-term savings, financial capability, consumer protection, regulation and financial crime prevention.

CHALLENGES TO RETAIL BANKING IN INDIA The issue of money laundering is very important in retail banking. This compels all the banks to consider seriously all the documents which they accept while approving the loans. The issue of outsourcing has become very important in recent past because various core activities such as hardware and software maintenance, entire ATM set up and operation (including cash, refilling) etc., are being outsourced by Indian banks.

Banks are expected to take utmost care to retain the ongoing trust of the public.

Customer service should be at the end all in retail banking. Someone has rightly said, It takes months to find a good customer but only seconds to lose one. Thus, strategy of Knowing Your Customer (KYC) is important. So the banks are required to adopt innovative strategies to meet customers needs and requirements in terms of services/products etc.

The dependency on technology has brought IT departments additional responsibilities and challenges in managing, maintaining and optimizing the performance of retail banking networks. It is equally important that banks should maintain security to the advance level to keep the faith of the customer.

The efficiency of operations would provide the competitive edge for the success in retail banking in coming years. The customer retention is of paramount important for the profitability if retail banking business, so banks need to retain their customer in order to increase the market share. One of the crucial impediments for the growth of this sector is the acute shortage of manpower talent of this specific nature, a modern banking professional, for a modern banking sector. If all these challenges are faced by the banks with utmost care and deliberation, the retail banking is expected to play a very important role in coming years, as in case of other nations.Objectives of the Study To study retail banking at ING Vysya bank and SBI bank

To study the customers satisfaction level at ING Vysya bank and SBI bank

To understand perception of customers about retail banking in selected banks

To know expectation of customers from ING Vysya bank and SBI bankMethodologyData collection method

Following are the types of data used for fulfilling the study objectives.

Primary dataQuestionnaire survey of 100 customers (50 each bank)

Interaction with bank officials

Secondary dataBank websites, Journals, Bank books and Records

Study Area

Hubli city ING Vysya (Regional Office) And SBI (Regional Office)

Research Design

Exploratory Research

Proposed Outcome

To the Bank

- They will come to know about the perception of customers about retail banking

- They will come to know about expectations and scope of retail banking at ING Vysya, if any

Limitations

- Only SBI and ING Vysya Bank are taken for comparison purpose

- The study is restricted to Hubli city only.

- The study of objectives are complied related to retail banking.

FINDINGS: SBI charges relating to commission, interest rates etc are less as compared to ING Vysya. The services of SBI Bank appeal more to the customers and the customers are satisfied with the services of SBI Bank more as compared to ING Vysya. As regards safety, ING Vysya seems to provide more safety to its customers as compared to SBI. SBI hits close to 100% as 94% customers out of 50 have Savings Bank A/c with it where as ING Vysya has moderate amount of Saving Bank A/c customers. SBI has more customers for Current A/c as compared to ING Vysya Bank. SBI seems to provide better interest rates to the customers than ING Vysya bank and hence it is 20% more than ING Vysya. As far as Advances are concerned ING Vysya Bank takes the lead with 30% customers opting for it where as SBI has less customers for Advances. The charges at ING Vysya bank less moderate than that of SBI bank i.e., 52% of the people say that the charges are moderate at ING Vysya and 66% say that charges are moderate at SBI. 76% out of 50 customers of ING Vysya bank are satisfied with the services provided by the bank and 90% of 50 customers of SBI are satisfied with the services provided by the bank. The satisfaction level of the customers is higher in SBI than that of ING Vysya Bank. The transactions related to the services provided by ING Vysya and SBI are almost similar. But 10% of 50 ING Vysya customers state that the transactions are slow and 14% of 50 SBI customers say the transactions are slow. And 30% of ING Vysya Customers say that service is quick whereas in SBI it is 26%. Out of 100 customers, 56% say that SBI is Good at its services, 15% say it is Best, 25% say it is moderate and only 4% say that it is poor whereas, about ING Vysya 31% say service is good, 13% say it is best, 39% say it is moderate, 13% say it is poor and 4% do not prefer it.

Recommendations ING Vysya bank needs to expand the financial services being offered to retail customers to increase the size and diversification of the deposit base. Implement an automated delivery system for payment services. More number of ATMs to be opened by ING Vysya Bank. Customer queries should be answered should be attended immediately. To facilitate internet banking. Product Innovation:Customers look for new products which offer stable returns coupled with total protection. ING Vysya will need to innovate in terms of product development to meet ever changing customer needs.

Customer Education and Services:In the present competitive scenario a key differentiator would be professional customer service in terms of quality of advice on product choice. Servicing should focus on enhancing the customer experience and maximizing customer convenience. This calls for effective CRM system which eventually would create long lasting relationship with the customer.

Untapped Market Segment:It is important for ING Vysya to increase customer base in semi urban and rural areas which offer huge potential.Conclusion

Annual growth in bank credit to the commercial sector is at 25.4% as on March 31, 2007 and was lower than 27.2% against previous year. Till 2010, retail banking is expected to grow at a CAGR of 28% to touch a figure of INR 9,700 billion. This requires expansion and diversification of retail product portfolio, better penetration and faster service mechanism.

SBI and ING Vysya bank has contributed a lot towards financial growth of the Indian economy. SBI has created a niche for itself and ING Vysya bank has to strive for the same.

Based on all the analysis it is concluded that SBI wins over ING Vysya bank in most of the aspects.

The Retail Banking has immense opportunities in a growing economy like India. As the growth story gets unfolded in India, retail banking is going to emerge a major driver. The rise of Indian middle class is an important contributory factor in this regard. The percentage of middle to high-income Indian households is continuously rising. The younger population not only wields increasing purchasing power, but as far as acquiring personal debt is concerned, they are perhaps more comfortable than previous generations.

And therefore, ING Vysya bank has encash this opportunity by providing excellent customer service at an economical cost

Thus, in this competitive market and global marketing ING Vysya should not leave any stone unturned to strive for maximum customer service.

BANKING INDUSTRY OVERVIEW

INDUSTRY OVERVIEW

History:

Banking in India has its origin as carry as the Vedic period. It is believed that the transition from money lending to banking must have occurred even before Manu, the great Hindu jurist, who has devoted a section of his work to deposits and advances and laid down rules relating to the interest. During the moghal period, the indigenous bankers played a very important role in lending money and financing foreign trade and commerce. During the days of East India Company, it was to turn of the agency houses top carry on the banking business. The general bank of India was the first joint stock bank to be established in the year 1786.The others which followed were the Bank of Hindustan and the Bengal Bank. The Bank of Hindustan is reported to have continued till 1906, while the other two failed in the meantime. In the first half of the 19th Century the East India Company established three banks; The Bank of Bengal in 1809, The Bank of Bombay in 1840 and The Bank of Madras in 1843.These three banks also known as presidency banks and were independent units and functioned well. These three banks were amalgamated in 1920 and The Imperial Bank of India was established on the 27th Jan 1921, with the passing of the SBI Act in 1955, the undertaking of The Imperial Bank of India was taken over by the newly constituted SBI. The Reserve Bank which is the Central Bank was created in 1935 by passing of RBI Act 1934, in the wake of swadeshi movement, a number of banks with Indian Management were established in the country namely Punjab National Bank Ltd, Bank of India Ltd, Canara Bank Ltd, Indian Bank Ltd, The Bank of Baroda Ltd, The Central Bank of India Ltd .On July 19th 1969, 14 Major Banks of the country were nationalized and in 15th April 1980 six more commercial private sector banks were also taken over by the government. The Indian Banking industry, which is governed by the Banking Regulation Act of India 1949, can be broadly classified into two major categories, non-scheduled banks and scheduled banks. Scheduled Banks comprise commercial banks and the co-operative banks.

The first phase of financial reforms resulted in the nationalization of 14 major banks in 1969 and resulted in a shift from class banking to mass banking. This in turn resulted in the significant growth in the geographical coverage of banks. Every bank had to earmark a min percentage of their loan portfolio to sectors identified as priority sectors the manufacturing sector also grew during the 1970s in protected environments and the banking sector was a critical source. The next wave of reforms saw the nationalization of 6 more commercial banks in 1980 since then the number of scheduled commercial banks increased four- fold and the number of bank branches increased to eight fold.After the second phase of financial sector reforms and liberalization of the sector in the early nineties. The PSBs found it extremely difficult to complete with the new private sector banks and the foreign banks. The new private sector first made their appearance after the guidelines permitting them were issued in January 1993.

The Indian Banking System:

Banking in our country is already witnessing the sea changes as the banking sector seeks new technology and its applications. The best port is that the benefits are beginning to reach the masses. Earlier this domain was the preserve of very few organizations. Foreign banks with heavy investments in technology started giving some Out of the world customer services. But, such services were available only to selected few- the very large account holders. Then came the liberalization and with it a multitude of private banks, a large segment of the urban population now requires minimal time and space for its banking needs.

Automated teller machines or popularly known as ATM are the three alphabets that have changed the concept of banking like nothing before. Instead of tellers handling your own cash, today there are efficient machines that dont talk but just dispense cash. Under the Reserve Bank of India Act 1934, banks are classified as scheduled banks and non-scheduled banks. The scheduled banks are those, which are entered in the Second Schedule of RBI Act, 1934. Such banks are those, which have paid- up capital and reserves of an aggregate value of not less than Rs.5 lacs and which satisfy RBI that their affairs are carried out in the interest of their depositors. All commercial banks Indian and Foreign, regional rural banks and state co-operative banks are Scheduled banks. Non Scheduled banks are those, which have not been included in the Second Schedule of the RBI Act, 1934.

The organized banking system in India can be broadly classified into three categories: (i) Commercial Banks (ii) Regional Rural Banks and (iii) Co-operative banks. The Reserve Bank of India is the supreme monetary and banking authority in the country and has the responsibility to control the banking system in the country. It keeps the reserves of all commercial banks and hence is known as the Reserve Bank.

Current scenario:-

Currently (2007), the overall banking in India is considered as 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. Even in terms of quality of assets and Capital adequacy, Indian banks are considered to have clean, strong and transparent balance sheets - as compared to other banks in comparable economies in its region. The Reserve Bank of India is an autonomous body, with minimal pressure from the Government. 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. Mergers & Acquisitions., takeovers, are much more in action in India.

One of the classical economic functions of the banking industry that has remained virtually unchanged over the centuries is lending. On the one hand, competition has had considerable adverse impact on the margins, which lenders have enjoyed, but on the other hand technology has to some extent reduced the cost of delivery of various products and services.

Bank is a financial institution that borrows money from the public and lends money to the public for productive purposes. The Indian Banking Regulation Act of 1949 defines the term Banking Company as "Any company which transacts banking business in India" and the term banking as "Accepting for the purpose of lending all investment of deposits, of money from the public, repayable on demand or otherwise and withdrawal by cheque, draft or otherwise".

Banks play important role in economic development of a country, like:

Banks mobilise the small savings of the people and make them available for productive purposes.

Promotes the habit of savings among the people thereby offering attractive rates of interests on their deposits.

Provides safety and security to the surplus money of the depositors and as well provides a convenient and economical method of payment.

Banks provide convenient means of transfer of fund from one place to another.

Helps the movement of capital from regions where it is not very useful to regions where it can be more useful.

Banks advances exposure in trade and commerce, industry and agriculture by knowing their financial requirements and prospects.

Bank acts as an intermediary between the depositors and the investors. Bank also acts as mediator between exporter and importer who does foreign trades.Thus, Indian banking has come from a long way from being a sleepy business institution to a highly pro-active and dynamic entity. This transformation has been largely brought about by the large dose of liberalization and economic reforms that allowed banks to explore new business opportunities rather than generating revenues from conventional streams (i.e. borrowing and lending). The banking in India is highly fragmented with 30 banking units contributing to almost 50% of deposits and 60% of advances.The Structure of Indian Banking:The Indian banking industry has Reserve Bank of India as its Regulatory Authority. This is a mix of the Public sector, Private sector, Co-operative banks and foreign banks. The private sector banks are again split into old banks and new banks.

Chart Showing Three Different Sectors of Banks:

i) Public Sector Banks

ii) Private Sector Banks

Public Sector Banks

SBI and Nationalized Regional Rural

SUBSIDIARIES

Banks Banks

SBI and subsidiaries:

This group comprises of the State Bank of India and its seven subsidiaries viz., State Bank of Patiala, State Bank of Hyderabad, State Bank of Travancore, State Bank of Bikaner and Jaipur, State Bank of Mysore, State Bank of Saurashtra, State Bank of India

State Bank of India (SBI) 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 1806as Bank of Bengal 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 in1955, with the Reserve bank of India taking a 60% ownership stake. In recent years the bank has focused on two priorities, 1), reducing its huge staff through Golden handshake schemes known as the Voluntary Retirement Scheme, which saw many of its best and brightest defects to the private sector, and 2), computerizing its operations.The State Bank of India traces its roots to the first decade of19th century, when the Bank of Calcutta, later renamed the Bank of Bengal, was established on 2nd, June 1806. The government amalgamated Bank of Bengal and two other Presidency banks, namely, the Bank of Bombay and the bank of Madras, and named the reorganized banking entity the Imperial Bank of India. All these Presidency banks were incorporated as companies, and were the result of the royal charters. The Imperial Bank of India continued to remain a joint stock company. Until the establishment of a central bank in India the Imperial Bank and its early predecessors served as the nation's central bank printing 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 State Bank of India on30th April 1955.

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.

Nationalized banks:

This group consists of private sector banks that were nationalized. The Government of India nationalized 14 private banks in 1969 and another 6 in the year 1980. In early 1993, there were 28 nationalized banks i.e., SBI and its 7 subsidiaries plus 20 nationalized banks. In 1993, the loss making new bank of India was merged with profit making Punjab National Bank. Hence, now only 27 nationalized banks exist in India.

Regional Rural banks:

These were established by the RBI in the year 1975 of banking commission. It was established to operate exclusively in rural areas to provide credit and other facilities to small and marginal farmers, agricultural laborers, artisans and small entrepreneurs. Private Sector Banks:

Private Sector Banks

Old private

new private

Sector Banks Sector Banks

Old Private Sector Banks:

This group consists of the banks that were establishes by the privy sectors, committee organizations or by group of professionals for the cause of economic betterment in their operations. Initially, their operations were concentrated in a few regional areas. However, their branches slowly spread throughout the nation as they grow.

New private Sector Banks:

These banks were started as profit orient companies after the RBI opened the banking sector to the private sector. These banks are mostly technology driven and better managed than other banks.

Foreign banks:

These are the banks that were registered outside India and had originated in a foreign country. The major participants ofthe Indian financial system are the commercial banks, the financial institutions (FIs), encompassing term-lending institutions, investment, Institutions, specialized financial institutions and the state-level development banks, Non-Bank Financial Companies (NBFCs) and other market intermediaries such as the stock brokers and money-lenders. The commercial banks and certain variants of NBFCs are among the oldest of the market participants. The FIs, on the other hand, are relatively new entities in the financial market place.IMPORTANCE OF BANKING SECTOR IN A GROWING ECONOMYIn the recent times when the service industry is attaining greater importance compared to manufacturing industry, banking has evolved as a prime sector providing financial services to growing needs of the economy.

Banking industry has undergone a paradigm shift from providing ordinary banking services in the past to providing such complicated and crucial services like, merchant banking, housing finance, bill discounting etc. This sector has become more active with the entry of new players like private and foreign banks. It has also evolved as a prime builder of the economy by understanding the needs of the same and encouraging the development by way of giving loans, providing infrastructure facilities and financing activities for the promotion of entrepreneurs and other business establishments for a fast developing economy like ours, presence of a sound financial system to mobilize and allocate savings of the public towards productive activities is necessary. Commercial banks play a crucial role in this regard.

The Banking sector in recent years has incorporated new products in their businesses, which are helpful for growth. The banks have started to provide fee-based services like, treasury operations, managing derivatives, options and futures, acting as bankers to the industry during the public offering, providing consultancy services, acting as an intermediary between two-business entities etc.At the same time, the banks are reaching out to other end of customer requirements like, insurance premium payment, tax payment etc. It has changed itself from transaction type of banking into relationship banking, where you find friendly and quick service suited to your needs. This is possible with understanding the customer needs their value to the bank, etc. This is possible with the help of well organized staff, computer based network for speedy transactions, products like credit card, debit card, health card, ATM etc. These are the present trend of services. The customers at present ask for convenience of banking transactions, like 24 hours banking, where they want to utilize the services whenever there is a need. The relationship banking plays a major and important role in growth, because the customers now have enough number of opportunities, and they choose according to their satisfaction of responses and recognition they get. So the banks have to play cautiously, else they may lose out the place in the market due to competition, where slightest of opportunities are captured fast.

Another major role played by banks is in transnational business, transactions and networking. Many leading Indian banks have spread out their network to other countries, which help in currency transfer and earn exchange over it. These banks play a major role in commercial import and export business, between parties of two countries. This foreign presence also helps in bringing in the international standards of operations and ideas. The liberalization policy of 1991 has allowed many foreign banks to enter the Indian market and establish their business. This has helped large amount of foreign capital inflow & increase our Foreign exchange reserve.

Another emerging change happening all over the banking industry is consolidation through mergers and acquisitions. This helps the banks in strengthening their empire and expanding their network of business in terms of volume and effectiveness.

EMERGING SCENARIO IN THE BANKING SECTOR:The Indian banking system has passed through three distinct phases from the time of inception. The first was being the era of character banking, where you were recognized as a credible depositor or borrower of the system. This era come to an end in the sixties. The second phase was the social banking. Nowhere in the democratic developed world, was banking or the service industry nationalized. But this was practiced in India. Those were the days when bankers has no clue whatsoever as to how to determine the scale of finance to industry. The third era of banking which is in existence today is called the era of Prudential Banking. The main focus of this phase is on prudential norms accepted internationally.

Current Scenario

The industry is currently in a transition phase. On the one hand, the PSBs, which are the mainstay of the Indian Banking system are in the process of shedding their flab in terms of excessive manpower, excessive non Performing Assets (Npas) and excessive governmental equity, while on the other hand the private sector banks are consolidating themselves through mergers and acquisitions.PSBs, which currently account for more than 78 percent of total banking industry assets are saddled with NPAs (a mind-boggling Rs 830 billion in 2000), falling revenues from traditional sources, lack of modern technology and a massive workforce while the new private sector banks are forging ahead and rewriting the traditional banking business model by way of their sheer innovation and service. The PSBs are of course currently working out challenging strategies even as 20 percent of their massive employee strength has dwindled in the wake of the successful Voluntary Retirement Schemes (VRS) schemes.The private players however cannot match the PSBs great reach, great size and access to low cost deposits. Therefore one of the means for them to combat the PSBs has been through the merger and acquisition (M& A) route. Over the last two years, the industry has witnessed several such instances. For instance, Hdfc Banks merger with Times Bank Icici Banks acquisition of ITC Classic, Anagram Finance and Bank of Madura. Centurion Bank, Indusind Bank, Bank of Punjab, Vysya Bank are said to be on the lookout. The UTI bank- Global Trust Bank merger however opened a pandoras box and brought about the realization that all was not well in the functioning of many of the private sector banks. Private sector Banks have pioneered internet banking, phone banking, anywhere banking, and mobile banking, debit cards, Automatic Teller Machines (ATMs) and combined various other services and integrated them into the mainstream banking arena, while the PSBs are still grappling with disgruntled employees in the aftermath of successful VRS schemes.Also, following Indias commitment to the W To agreement in respect of the services sector, foreign banks, including both new and the existing ones, have been permitted to open up to 12 branches a year with effect from 1998-99 as against the earlier stipulation of 8 branches.A talk of government diluting their equity from 51 percent to 33 percent in November 2000 has also opened up a new opportunity for the takeover of even the PSBs. The FDI rules being more rationalized in Q1FY02 may also pave the way for foreign banks taking the M& A route to acquire willing Indian partners.Meanwhile the economic and corporate sector slowdown has led to an increasing number of banks focusing on the retail segment. Many of them are also entering the new vistas of Insurance. Banks with their phenomenal reach and a regular interface with the retail investor are the best placed to enter into the insurance sector. Banks in India have been allowed to provide fee-based insurance services without risk participation invest in an insurance company for providing infrastructure and services support and set up of a separate joint-venture insurance company with risk participation.Aggregate Performance of the Banking IndustryAggregate deposits of scheduled commercial banks increased at a compounded annual average growth rate (CAGR) of 17.8 percent during 1969-99, while bank credit expanded at a CAGR of 16.3 percent per annum. Banks investments in government and other approved securities recorded a CAGR of 18.8 percent per annum during the same period.In FY01 the economic slowdown resulted in a Gross Domestic Product (GDP) growth of only 6.0 percent as against the previous years 6.4 percent. The WPI Index (a measure of inflation) increased by 7.1 percent as against 3.3 percent in FY00. Similarly, money supply (M3) grew by around 16.2 percent as against 14.6 percent a year ago.The growth in aggregate deposits of the scheduled commercial banks at 15.4 percent in FY01 percent was lower than that of 19.3 percent in the previous year, while the growth in credit by SCBs slowed down to 15.6 percent in FY01 against 23 percent a year ago.The industrial slowdown also affected the earnings of listed banks. The net profits of 20 listed banks dropped by 34.43 percent in the quarter ended March 2001. Net profits grew by 40.75 percent in the first quarter of 2000-2001, but dropped to 4.56 percent in the fourth quarter of 2000-2001.On the Capital Adequacy Ratio (CAR) front while most banks managed to fulfill the norms, it was a feat achieved with its own share of difficulties. The CAR, which at present is 9.0 percent, is likely to be hiked to 12.0 percent by the year 2004 based on the Basle Committee recommendations. Any bank that wishes to grow its assets needs to also shore up its capital at the same time so that its capital as a percentage of the risk-weighted assets is maintained at the stipulated rate. While the IPO route was a much-fancied one in the early 90s, the current scenario doesnt look too attractive for bank majors.Consequently, banks have been forced to explore other avenues to shore up their capital base. While some are wooing foreign partners to add to the capital others are employing the M& A route. Many are also going in for right issues at prices considerably lower than the market prices to woo the investors.

Interest Rate SceneThe two years, post the East Asian crises in 1997-98 saw a climb in the global interest rates. It was only in the later half of FY01 that the US Fed cut interest rates. India has however remained more or less insulated. The past 2 years in our country was characterized by a mounting intention of the Reserve Bank Of India (RBI) to steadily reduce interest rates resulting in a narrowing differential between global and domestic rates.The RBI has been affecting bank rate and CRR cuts at regular intervals to improve liquidity and reduce rates. The only exception was in July 2000 when the RBI increased the Cash Reserve Ratio (CRR) to stem the fall in the rupee against the dollar. The steady fall in the interest rates resulted in squeezed margins for the banks in general.Governmental PolicyAfter the first phase and second phase of financial reforms, in the 1980s commercial banks began to function in a highly regulated environment, with administered interest rate structure, quantitative restrictions on credit flows, high reserve requirements and reservation of a significant proportion of lendable resources for the priority and the government sectors. The restrictive regulatory norms led to the credit rationing for the private sector and the interest rate controls led to the unproductive use of credit and low levels of investment and growth. The resultant financial repression led to decline in productivity and efficiency and erosion of profitability of the banking sector in general.This was when the need to develop a sound commercial banking system was felt. This was worked out mainly with the help of the recommendations of the Committee on the Financial System (Chairman: Shri M. Narasimham), 1991. The resultant financial sector reforms called for interest rate flexibility for banks, reduction in reserve requirements, and a number of structural measures. Interest rates have thus been steadily deregulated in the past few years with banks being free to fix their Prime Lending Rates(PLRs) and deposit rates for most banking products. Credit market reforms included introduction of new instruments of credit, changes in the credit delivery system and integration of functional roles of diverse players, such as, banks, financial institutions and non-banking financial companies (Nbfcs). Domestic Private Sector Banks were allowed to be set up, PSBs were allowed to access the markets to shore up their Cars.Implications of Some Recent Policy MeasuresThe allowing of PSBs to shed manpower and dilution of equity are moves that will lend greater autonomy to the industry. In order to lend more depth to the capital markets the RBI had in November 2000 also changed the capital market exposure norms from 5 percent of banks incremental deposits of the previous year to 5 percent of the banks total domestic credit in the previous year. But this move did not have the desired effect, as in, while most banks kept away almost completely from the capital markets, a few private sector banks went overboard and exceeded limits and indulged in dubious stock market deals. The chances of seeing banks making a comeback to the stock markets are therefore quite unlikely in the near future.The move to increase Foreign Direct Investment FDI limits to 49 percent from 20 percent during the first quarter of this fiscal came as a welcome announcement to foreign players wanting to get a foot hold in the Indian Markets by investing in willing Indian partners who are starved of networth to meet CAR norms. Ceiling for FII investment in companies was also increased from 24.0 percent to 49.0 percent and have been included within the ambit of FDI investment.The abolishment of interest tax of 2.0 percent in budget 2001-02 will help banks pass on the benefit to the borrowers on new loans leading to reduced costs and easier lending rates. Banks will also benefit on the existing loans wherever the interest tax cost element has already been built into the terms of the loan. The reduction of interest rates on various small savings schemes from 11 percent to 9.5 percent in Budget 2001-02 was a much awaited move for the banking industry and in keeping with the reducing interest rate scenario, however the small investor is not very happy with the move.Some of the not so good measures however like reducing the limit for tax deducted at source (TDS) on interest income from deposits to Rs 2,500 from the earlier level of Rs 10,000, in Budget 2001-02, had met with disapproval from the banking fraternity who feared that the move would prove counterproductive and lead to increased fragmentation of deposits, increased volumes and transaction costs. The limit was thankfully partially restored to Rs 5000 at the time of passing the Finance Bill in the Parliament.April 2001-Credit Policy ImplicationsThe rationalization of export credit norms in will bestow greater operational flexibility on banks, and also reduce the borrowing costs for exporters. Thus this move could trigger exports growth in the future. Banks can also hope to earn increased revenue with the interest paid by RBI on CRR balances being increased from 4.0 percent to 6.0 percent.The stock market scam brought out the unholy nexus between the Cooperative banks and stockbrokers. In order to usher in greater prudence in their operations, the RBI has barred Urban Cooperative Banks from financing the stock market operations and is also in the process of setting up of a new apex supervisory body for them. Meanwhile the foreign banks have a bone to pick with the RBI. The RBI had announced that forex loans are not to be calculated as a part of Tier-1 Capital for drawing up exposure limits to companies effective 1 April 2002. This will force foreign banks either to infuse fresh capital to maintain the capital adequacy ratio (CAR) or pare their asset base. Further, the RBI has also sought to keep foreign competition away from the nascent net banking segment in India by allowing only Indian banks with a local physical presence, to offer Internet bankingCrystal GazingOn the macro economic front, GDP is expected to grow by 6.0 to 6.5 percent while the projected expansion in broad money (M3) for 2001-02 is about 14.5 percent. Credit and deposits are both expected to grow by 15-16 percent in FY02. India's foreign exchange reserves should reach US$50.0 billion in FY02 and the Indian rupee should hold steady.The interest rates are likely to remain stable this fiscal based on an expected downward trend in inflation rate, sluggish pace of non-oil imports and likelihood of declining global interest rates. The domestic banking industry is forecasted to witness a higher degree of mergers and acquisitions in the future. Banks are likely to opt for the universal banking approach with a stronger retail approach. Technology and superior customer service will continue to be the imperatives for success in this industry.Public Sector banks that imbibe new concepts in banking, turn tech savvy, leaner and meaner post VRS and obtain more autonomy by keeping governmental stake to the minimum can succeed in effectively taking on the private sector banks by virtue of their sheer size. Weaker PSU banks are unlikely to survive in the long run. Consequently, they are likely to be either acquired by stronger players or will be forced to look out for other strategies to infuse greater capital and optimize their operations.

Foreign banks are likely to succeed in their niche markets and be the innovators in terms of technology introduction in the domestic scenario. The outlook for the private sector banks indeed looks to be more promising vis--vis other banks. While their focused operations, lower but more productive employee force etc will stand them good, possible acquisitions of PSU banks will definitely give them the much needed scale of operations and access to lower cost of funds. These banks will continue to be the early technology adopters in the industry, thus increasing their efficiencies. Also, they have been amongst the first movers in the lucrative insurance segment. Already, banks such as Icici Bank and Hdfc Bank have forged alliances with Prudential Life and Standard Life respectively. This is one segment that is likely to witness a greater deal of action in the future. In the near term, the low interest rate scenario is likely to affect the spreads of majors. This is likely to result in a greater focus on better asset-liability management procedures. Consequently, only banks that strive hard to increase their share of fee-based revenues are likely to do better in the future.

Banking in India:1Central BankReserve Bank of India

2Nationalized BanksState Bank of India, Allahabad Bank, Andhra Bank, Bank of Baroda, Bank of India, Bank of Maharastra,Canara Bank, Central Bank of India, Corporation Bank, Dena Bank, Indian Bank, Indian overseas Bank, Oriental Bank of Commerce, Punjab and Sind Bank, Punjab National Bank, State Bank of India, Union Bank of India, United Bank of India, UCO Bank, and Vijaya Bank.

3Private BanksBank of Rajastan, Bharath overseas Bank, Catholic Syrian Bank, Centurion Bank of Punjab, City Union Bank, Development Credit Bank, Dhanalaxmi Bank, Federal Bank, Ganesh Bank of Kurundwad, HDFC Bank, ICICI Bank, IDBI, IndusInd Bank, ING Vysya Bank, Jammu and Kashmir Bank, Karnataka Bank Limited, Karur Vysya Bank, Kotek Mahindra Bank, Lakshmivilas Bank, Lord Krishna Bank, Nainitak Bank, Ratnakar Bank, Sangli Bank, SBI Commercial and International Bank, South Indian Bank, Tamil Nadu Mercantile Bank Ltd., United Western Bank, UTI Bank, YES Bank.

COMPANY PROFILE

ING Vysya Bank Ltd. provides its 1.5 million customers with a variety of full-service retail banking products including deposits and loans, mutual funds, investments, debit cards and credit cards. ING Vysya also provides credit services,cash management services, foreign exchange and foreign trade services along with treasury, investment and wealth management services. It is one of Indias leading and largest private sector banks.ING Vysya Bank, incorporated in 1930 as Vysya Bank Ltd and renamed ING Vysya Bank in December 2002, is headquartered in Bangalore, India and is an associate of ING Group of the Netherlands, a global customer of Fidelity. ING Vysya has occupied the premier position among Indian private sector banks since 1985. Since that time, ING Vysya has enjoyed a series of firsts the first private sector bank to launch credit cards in 1989 and the first to launch a housing finance subsidiary in 1990. In 1992, ING Vysya was also the first private sector bank to join SWIFT and in 1997, the bank achieved the highest net worth among all Indian private sector banks. GEOGRAPHY

Although more concentrated in affluent, southern India, ING Vysya has more than 480 branches located throughout the country including metro, urban, semi-urban and rural centers spread over 15 states of India.

BENEFITS

Allows the bank to offer customers AAA Banking

(Anywhere, Anytime, Anyhow)

Automates back-office operations, reducing required staffing

Reduces time to market for new products

New customer-centric architecture dramatically improves customer service

Less bandwidth requirements and little system overhead

Global expertisePROJECT AMULA

At the beginning of 2000, ING Vysya was still using legacy branch automation systems when the decision was made to migrate to a centralized banking solution. The bank had two overwhelming requirements: timely information for decision making and new product development, and the ability to offer new retail delivery channels. In addition, the bank needed a solution that would be compatible with existing IT systems. Because the Indian banking industry is highly competitive, banks are trying to improve levels of service to attract new customers and improve retention. This led ING Vysya to create an aggressive business plan to modernize the banks retail and corporate banking operations in south India where the bank has prominent brand equity. Bank executives felt that if they could accomplish this goal, they would be well on their way to becoming the leading customer-centric bank in India.

ING Vysya decided that their first step was to migrate from legacy architecture to a new, customer-centric, core-processing solution. The project was nicknamed VysAmulya meaning invaluable, showing the banks level of committment to the migration efforts.AAA BANKING

With its integration of Profile, ING Vysya was able to offer Internet banking services to its customers in June 2002. Named mi-b@nk, the service allows bank customers to conduct transactions from their location of choice at home, in the office or wherever they are able to access a PC with Internet connectivity. With a simple mouse-click, ING Vysyas customers can now use mi-b@nk to view account status and details, authorize fund transfers, retrieve a statement of accounts, order demand drafts, run what-if scenarios for monthly installments, and compute interest and maturity amounts for deposits and loans.ING Vysya Life Insurance

ING Vysya Life Insurance Company Limited a part of the ING Group the worlds largest financial services provider^ entered the private life insurance industry in India in September 2001. Headquartered at Bangalore, ING Vysya Life is currently present in 246 cities and has a network of over 300 branches, staffed by 7,000 employees and over 51,000 advisors, serving over 5.5 lakh customers

In fact, the company has developed the LifeMakerTM a simple tool which can be used to choose a plan most suitable to a specific customer based on his needs, requirements and current life stage. This tool helps you build a complete financial plan for life at every lifestage, whether the requirement is Protection, Savings, Investment or Retirement. Suitable products from ING Vysya Life Insurances product portfolio for each such requirement, makes selection of your plan an easy exercise.

The Company aims to make customers look at life insurance afresh, not just as a tax saving device but as a means to live life to the fullest. It believes in enhancing the very quality of life, in addition to safeguarding an individual's security.

Distribution Channel

ING Vysya Life has a diversified distribution platform. While Tied Agency remains the strongest channel, the Alternate Channels business within ING Vysya Life is one of the fastest growing distribution channels. ING Vysya Life has strengthened its position as the unparallel leader in the life insurance industry in cooperative banks tie ups. The company currently has tie ups with 130 cooperative banks across the country. The Alternate Channels division has Bancassurance, ING, Corporate Agents and SMINCE

The Brand Positioning

In 2007, ING Vysya Life developed its unique brand positioning Mera farz. This positioning means, ING Vysya Life helps its customers fulfil their responsibilities towards themselves and their families. This powerful positioning has helped ING Vysya Life create a distinct identity for itself. The latest brand campaign with a very catchy jingle dwells on how a little planning and a helping hand from ING Vysya life can help lighten the burden of responsibilities that often come with happy moments and let you enjoy your life without any worries.

ING Investment Management

Profile:

In India ING Investment Management (I) Pvt Ltd has an investor base of over 1,52,677 with Rs. 5080.97 crores as of June 30th, 07 (Source: www.amfiindia.com ). With a presence in 34 locations, we currently manage 21 schemes.

ING Investment Management (I) Pvt Ltd has been associated with innovation and responsive adaptability with sharp minds at work. ING Investment Management has sealed a position of strength and is considered as one of the top contenders to challenge the market leaders. ING Investment Management has enjoyed many firsts and has always maintained a pioneering outlook.

A few achievements are highlighted below:-

First Investment Manager to launch a packaged concept in Asset Management Industry.Awarded Abby Gold 2006 for its advertising Campaign

Corporate Social Responsibility

The bank as a part of its Corporate Social Responsibility has undertaken many purposeful activities. However, most of these are channelized at the group level under the aegis of the ING Vysya Foundation.ING Vysya Foundation:ING Vysya Foundation was set up almost three years ago actively supported by the three business units of ING Vysya (ING Vysya Bank, ING Vysya Life Insurance and ING Vysya Mutual Fund) to promote its Corporate Social Responsibility. The mandate for the Foundation is to promote primary education for under privileged children. This fits in well with ING Groups global vision of empowering children through education and INGs partnership with UNICEF.

PRODUCTS AND SERVICES

Retail Banking at ING Vysya1. Accounts & DepositsING has a portfolio of banking solutions and a range of offerings for people from all walks of life, with a view to making banking an effortless task. Whether you require a simple savings account or a sound banking partner, ING has the perfect solutions and products to ensure a wealthy future.

Platina Preferred Banking Everyday, the world gets smaller and faster. At ING, we understand how much you value time, and how little you have to spare, given your stature and responsibilities. The Platina suite of services is specially designed to relieve you of the effort involved in handling all your financial and banking needs, making life just a bit easier for you. Through these services you can enjoy advantages that stem from INGs vast geographical presence, global insight, investment expertise, experience across a diverse range of products and services, and financial tools that help you explore a wealth of opportunities across the globe. With ING Platina, you can breathe easier when it comes to handling your wealth.

Savings Account

The Savings accounts are primarily meant to inculcate a sense of saving for the future and take care of individuals day to day banking requirements. These accounts are meant to help individual customers protect their money. The Savings Accounts also help individuals to handle their financial transactions through a systematic banking channel.

Current Accounts

Small, medium and large businesses alike will find that ING's current account offerings come with all the benefits needed to stay ahead of competition. Whatever the size or scope, you will find a current account option exclusively designed for you.

Orange Current Account

Advantage Current Account

General Current Account

Comfort Current Account

Term Deposits

ING's attractive interest rates on term deposits help you fulfill your needs and keep your savings secure at the same time.

Overdue Deposits

The deposit which remains with the bank without renewal or maturity instructions will be treated as Overdue Deposits and shall not earn any interest from the date of maturity.

Demat Accounts

The ING Demat Account offers you a secure and convenient way to keep track of your shares and investments, how much you've bought and sold over a period of time, without the hassle of handling physical documents that get mutilated or lost in transit.

2. LoansLoans from ING range will help make a difference in your life, be it a home improvement or a long awaited vacation.

Personal LoanPersonal Loans scheme from ING presents you with an easy way to turn your dreams into reality. Home Loan

The ING Vysya Housing Loan, will help you guarantee that life's uncertainties do not affect your family's interests and your precious home. Home Equity LoanKeeping in mind, your needs, your concerns and worries, ING has come up with a Home Equity Loan that is a hassle-free and a low cost solution that makes finance available to you against your free, unencumbered residential property. NRI Home LoanNRI Home Loans from ING are offered to all NRI's on their return to India for the purchase, construction, repair /renovation /alteration of a house or a composite loan for self occupation.DATA ANALYSIS 1) Reasons for opting particular banka) ChargesFrequencyPercentCumulative Percent

ING VysyaYes1326.026.0

No3774.0100.0

Total50100.a0

SBIYes2142.042.0

No2958.0100.0

Total50100.0

Interpretation:

The above charges represent that SBI charges relating to commission, interest rates etc are less as compared to ING Vysya.

b) ServicesFrequencyPercentCumulative Percent


No2244.0100.0

Total50100.0

SBIYes3774.074.0

No1326.0100.0

Total50100.0

Interpretation:

The above chart depicts that the services of SBI Bank appeal more to the customers and the customers are satisfied with the services of SBI Bank more as compared to ING Vysya.

c) SafetyFrequencyPercentCumulative Percent


No3570.0100.0

Total50100.0

SBIYes1428.028.0

No3672.0100.0

Total50100.0

Interpretation:

As regards safety, ING Vysya seems to provide more safety to its customers as compared to SBI.2) Product/ Service used by the customers at their respective banks.

Savings A/cFrequencyPercentCumulative Percent


No1326.0100.0

Total50100.0

SBIYes4794.094.0

No36.0100.0

Total50100.0

Interpretation:

SBI hits close to 100% as 94% customers out of 50 have Savings Bank A/c with it where as ING Vysya has moderate amount of Saving Bank A/c customers. Current a/cFrequencyPercentCumulative Percent

ING VysyaYes36.06.0

No4794.0100.0

Total50100.0

SBIYes48.08.0

No4692.0100.0

Total50100.0

Interpretation:

SBI has more customers for Current A/c as compared to ING Vysya Bank.

Fixed DepositsFrequencyPercentCumulative Percent


No4080.0100.0

Total50100.0

SBIYes2040.040.0

No3060.0100.0

Total50100.0

Interpretation:

SBI seems to provide better interest rates to the customers than ING Vysya bank and hence it is 20% more than ING Vysya.

AdvancesFrequencyPercentCumulative Percent


No3570.0100.0

Total50100.0

SBIYes24.04.0

No4896.0100.0

Total50100.0

Interpretation:

As far as Advances are concerned ING Vysya Bank takes the lead with 30% customers opting for it where as SBI has less customers for Advances.3) Opinion about the charges of their bank by the customers

The charges of bankFrequencyPercentCumulative Percent

ING VysyaHigh918.018.0

Moderate2652.070.0

Low1530.0100.0

Total50100.0

SBIHigh36.06.0

Moderate3366.072.0

Low1428.0100.0

Total50100.0

Interpretation:

As per the chart the charges at ING Vysya bank less moderate than that of SBI bank i.e., 52% of the people say that the charges are moderate at ING Vysya and 66% say that charges are moderate at SBI.

4) Satisfaction level by the customers regarding the promptness of service of their bank.

Satisfied with the services by your bankFrequencyPercentCumulative Percent


No1224.0100.0

Total50100.0

SBIYes4590.090.0

No510.0100.0

Total50100.0

Interpretation:

As per the above chart, 76% out of 50 customers of ING Vysya bank are satisfied with the services provided by the bank and 90% of 50 customers of SBI are satisfied with the services provided by the bank. The satisfaction level of the customers is higher in SBI than that of ING Vysya Bank.5) Transaction related to the services with respective banks.

How are the transactions related to the serviceFrequencyPercentCumulative Percent

ING VysyaQuick1530.030.0

Moderate3060.090.0

Slow510.0100.0

Total50100.0

SBIQuick1326.026.0

Moderate3060.086.0

Slow714.0100.0

Total50100.0

Interpretation:

The transactions related to the services provided by ING Vysya and SBI are almost similar. But 10% of 50 ING Vysya customers state that the transactions are slow and 14% of 50 SBI customers say the transactions are slow. And 30% of ING Vysya Customers say that service is quick whereas in SBI it is 26%.6) Ranks given by the customers on the banks for the services provided by them.

SBI

FrequencyPercentCumulative

Percent

Poor44.04.0

Moderate2525.029.0

Good5656.085.0

Best1515.0100.0

Total100100.0

Interpretation:

Out of 100 customers, 56% say that SBI is Good at its services, 15% say it is Best, 25% say it is moderate and only 4% say that it is poor whereas, about ING Vysya 31% say service is good, 13% say it is best, 39% say it is moderate, 13% say it is poor and 4% do not prefer it.FINDINGSFINDINGS SBI charges relating to commission, interest rates etc are less as compared to ING Vysya. The services of SBI Bank appeal more to the customers and the customers are satisfied with the services of SBI Bank more as compared to ING Vysya. As regards safety, ING Vysya seems to provide more safety to its customers as compared to SBI. SBI hits close to 100% as 94% customers out of 50 have Savings Bank A/c with it where as ING Vysya has moderate amount of Saving Bank A/c customers. SBI has more customers for Current A/c as compared to ING Vysya Bank.

SBI seems to provide better interest rates to the customers than ING Vysya bank and hence it is 20% more than ING Vysya. As far as Advances are concerned ING Vysya Bank takes the lead with 30% customers opting for it where as SBI has less customers for Advances. The charges at ING Vysya bank less moderate than that of SBI bank i.e., 52% of the people say that the charges are moderate at ING Vysya and 66% say that charges are moderate at SBI.

76% out of 50 customers of ING Vysya bank are satisfied with the services provided by the bank and 90% of 50 customers of SBI are satisfied with the services provided by the bank. The satisfaction level of the customers is higher in SBI than that of ING Vysya Bank. The transactions related to the services provided by ING Vysya and SBI are almost similar. But 10% of 50 ING Vysya customers state that the transactions are slow and 14% of 50 SBI customers say the transactions are slow. And 30% of ING Vysya Customers say that service is quick whereas in SBI it is 26%. Out of 100 customers, 56% say that SBI is Good at its services, 15% say it is Best, 25% say it is moderate and only 4% say that it is poor whereas, about ING Vysya 31% say service is good, 13% say it is best, 39% say it is moderate, 13% say it is poor and 4% do not prefer it.

RECOMMENDATIONS

Recommendations

Expand the financial services being offered to retail customers to increase the size and diversification of the deposit base. Implement an automated delivery system for payment services. More number of ATMs to be opened by ING Vysya Bank. Customer queries should be answered should be attended immediately. To facilitate internet banking. Product Innovation:Customers look for new products which offer stable returns coupled with total protection. ING Vysya will need to innovate in terms of product development to meet ever changing customer needs.

Customer Education and Services:In the present competitive scenario a key differentiator would be professional customer service in terms of quality of advice on product choice. Servicing should focus on enhancing the customer experience and maximizing customer convenience.

This calls for effective CRM system which eventually would create long lasting relationship with the customer.

Untapped Market Segment:It is important for ING Vysya to increase customer base in semi urban and rural areas which offer huge potential.CONCLUSION

Conclusion

The annual growth in bank credit to the commercial sector is at 25.4% as on March 31, 2007 and was lower than 27.2% against previous year. Till 2010, retail banking is expected to grow at a CAGR of 28% to touch a figure of INR 9,700 billion. This requires expansion and diversification of retail product portfolio, better penetration and faster service mechanism.

Based on all the analysis it is concluded that SBI wins over ING Vysya bank in most of the aspects.

SBI has created a niche for itself and ING Vysya bank has to strive for the same.

The Retail Banking has immense opportunities in a growing economy like India. As the growth story gets unfolded in India, retail banking is going to emerge a major driver. The rise of Indian middle class is an important contributory factor in this regard. The percentage of middle to high-income Indian households is continuously rising. The younger population not only wields increasing purchasing power, but as far as acquiring personal debt is concerned, they are perhaps more comfortable than previous generations.

And therefore, ING Vysya bank has encash this opportunity by providing excellent customer service at an economical cost

Thus, in this competitive market and global marketing ING Vysya should not leave any stone unturned to strive for maximum customer service.

BIBILOGRAPHY

WEB SITES

1. www.ingvysya.com

2. www.sbi.co.inANNEXURE

QUESTIONNAIRE

Respected Sir/Madam,

I Miss Preeti Patil, the student of MBA-IV Sem of KLESs Institute of Management Studies & Research, Hubli has undertaken a Comparative study of Banking Operations with special reference to Retail Banking at ING Vysya Bank and SBI Bank and to understand the customers expectations and to know their perceptions about services related to retail banking. Feel free to answer & the result will be used only for the purpose set. Thank you for your help & participation.

1. Name:

2. Age:a) less than 20 yrsb) 21-40 yrsc) 41-60 yrsd) 60 yrs & above

3. Contact:

4. Gender:Male

Female

5. Marital Status: a) Married b) Unmarried

6. Occupation:a) Student b) Housewifec) Businessman d) Salaried

e) Self employed Professionalf) Retired g) others

7. Which of the following bank do you use?

a) ING Vysya

b) SBI

8. Why have you opted for the above mentioned bank?

a) Chargesb) Servicesc) Safetyd) Any other.

9. Which of the Products/Services you always use?

a) Savings A/Cb) Current A/Cc) Fixed Depositsd) Advances

e) Others if any specify.

10. What do you think about the charges of your bank?

a) High

b) Moderate

c) Low

11. Are you satisfied with the promptness of services provided by your bank?

a) Yes

b) No

12. What is your opinion about the services provided by your bank?

_______________________________________________________________

13. How are the transactions related to the services provided by your bank?

a) Quick b) Moderate

c) Slow

14. What is the extra service that you want to avail in future related to the bank

preferred by you?

15. Rank the followings banks in terms of all the services provided by the bank based on the following parameters.

Best (5) good (4)Moderate (3) Poor (2) Not preferred (1)

a) SBI

b) ING Vysya bank

THANK YOU.Reserve Bank of India

[Central Bank]

Scheduled Banks

Scheduled Co-operative Banks

Scheduled Commercial Banks

Foreign Banks

Regional

Rural Banks

Public Sector Banks

Private Sector Banks

Scheduled State Co-Operative Banks

Scheduled Urban Co-Operative Banks

Nationalized Banks

SBI & its Associates

Old Private Sector Banks

New Private Sector Banks

ING Vysya bank

FrequencyPercentCumulative

Percent Not preferred44.04.0 Poor1313.017.0 Moderate3939.056.0 good3131.087.0 Best1313.0100.0 Total100100.0

KLEs Institute of Management Studies and Research, Hubli Page 66

ING Banking Analysis

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