Banking Service Sector
Content
BANKING SERVICE SECTOR
Ravindra -01 Faizan -02 Rasika -03 Udya- 04 Mahesh -06
INTRODUCTION OF A BANK
The Banking Companies Act of 1949, define
Banking Company as a company which transacts the business of banking in India. It defines banking as, accepting for the purpose of lending or investment of deposit money from the public, repayable on demand or otherwise and withdraw able by cheque draft , order or otherwise A bank as an institution dealing in money and credit. It safeguard of the savings of the public and gives loans and advances.
ORIGIN OF BANKING
´
The word of ´Bankµ is said to be of Germanic origin , cognate with the French word ´Banqueµ and theItalian word ´Bancaµ , both meaning ´benchµ.
´
Banking is as old as the authentic history and origins of modern Commercial banking tare traceable to ancient times. The New Testament mention about activities of the money changers in the temple of Jerusalem. In ancient Greece around 2000 B.C . The famous temples of Ephesus, Delphi and Olympia were used as depositories for peoples surplus funds and these temples were the centers of Money lending transaction.
´
In, India the ancient Hindu scriptures refer to money lending activities in the Vedic period. In India The Ramayana and Mahabharata eras, banking had become a full fledged activity and during the Smriti period which followed the Vedic period and Epic age the business of banking was carried on by the members of the Vanish community.
PRE INDEPENDENCE BANKING SYSTEM OF INDIA
´
Banking in India originated in the last decades of the 18th century. The first banks were The General Bank of India which started in 1786, and the Bank of Hindustan, both of which are now defunct. The oldest bank in existence in India is the State Bank of India, which originated in the Bank of Calcutta in June 1806, which almost immediately became the Bank of Bengal . This was one of the three presidency banks, the other two being the Bank of Bombay and the Bank of Madras, all three of which were established under charters from the British East India Company. Indian merchants in Calcutta established the Union Bank in 1839, but it failed in 1848 as consequence of the economic crisis of 1848-49. The Allahabad Bank, established in 1865 and still functioning today, is the oldest Joint Stock bank in India. The presidency banks dominated banking in India but there were also some exchange banks and a number of Indian joint stock banks. All these banks operated in different segments of the economy. The exchange banks, mostly owned by Europeans, concentrated on financing foreign trade. Indian joint stock banks were generally under capitalized and lacked the experience and maturity to compete with the presidency and exchange banks.The first entirely Indian joint stock bank was the Oudh Commercial Bank, established in 1881 in Faizabad. It failed in 1958. The next was the Punjab National Bank, established in Lahore in 1895, which has survived to the present and is now one of the largest banks in India.
´
´
POST INDEPENDENCE BANKING SYSTEM OF INDIA
´
In the post-independence period, India observed the emergence of large number of institutions for providing finance to different sectors of the economy.
´
There were two nationalizations of banks in India, one in 1969 and the other in 1980. The entry activities of private sector and foreign banks were restricted through branch licensing and regulation norms.
´
The over regulated and over administered polices eroded the capital base of most of the public Sector banks and recapitalization of 19 nationalized banks was made by government through of budgetary provision Nevertheless, acute problem arises in productivity, efficiency and profitability front of the commercial banks. The policy of directed investment in the form high SLR and CRR, directed credit programs, extra administrative interference in credit decision making, high operating costs, regulated interest rates, non-transparent accounting system coupled Non existence of operational flexibility, internal autonomy and absence of competition contaminated the health of the commercial banks and threatened their future survival.
´
Liberal policies facilitate to increase market competition among banks to augment efficiency and by productivity by the management to choose independent decisions about input-output and their prices individual banks. The Committee on Financial Systems (GOI, 1998) suggested the road map for second -generation reform to keep pace with liberalization of financial sector in other parts of the world.
The other remarkable developments to enhance competition in banking sector reforms 1) It abolished administered interest rate regime by allowing banks to determine lending and deposit rates. 2) Competition has infused by allowing the operation of new private sector banks and more liberal entry of foreign banks. 3) Measures to broaden the ownership base of PSBs have also taken. 4) The system has also observed greater levels of transparency and standards of disclosure. 5) It introduced ratification of the legal structure to strengthen banks position in the areas of loan and default loan.
NATIONALIZATION OF INDIAN BANKING SYSTEM
Indian marched towards the establishment of public sector banking through The progressive nationalisation of commercial banks. There were three phases of bank nationalisation:
´ ´ ´
Nationalization of Imperial Bank of India in1955 and its seven associate banks in 1959-60. Nationalizations of the 14 major commercial banks in 1969. Nationalization of 6 more commercial banks in 1980.
On July 1, 1955 the government of India nationalized the Imperial Bank of India and converted it into the State Bank of India. The establishment of the State Bank of India was a pioneering attempt in public introducing sector banking in the country. Later on in 1959-60, seven subsidiary State Banks were also nationalized to form the SBI Group. For a short period during December 1967 to June 1969, the Government of India pursued the banking of policy control of banks, aiming at an equitable and purposeful distribution of credit towards developmental needs. A such over 90 percent of the banking activity in the country is brought under into the public sector. In short, nationalization of banks implied a bold and major economic step in the process of banking reforms in the country. It has resulted in the evolution of public sector banking.
TYPES OF BANKS
1.
Central Bank
2.
Commercial Banks Types of Commercial Banks: a. Public Sector Banks E.g.
b. Private Sectors Banks E.g.
c. Foreign Banks E.g.
3.
Development Banks E.g. Industrial Finance Corporation of India (IFCI), State Financial Corporations (SFCs)
4.
Co-operative Banks Types of Co-operative Banks: a. b. c. Primary Credit Societies Central Co-operative Banks State Co-operative Banks
5.
Specialized Banks E.g.
7 P¶S OF BANKING SECTOR
Important to provide quality service to customer ´ Product ´ Price ´ Place ´ Promotion ´ People ´ Process ´ Physical evidence
PRODUCT
´
Bundle of utilities
Bank service not only things but also satisfaction they deliverE.g. bank account ´ bank products
´ ´
DEPOSITS: Savings, current, fixed etc.
ADVANCES: (a) Fund Oriented:
Term loan « Clean loan « Bill discounting « Advancing « Pre-shipment and post-shipment finance « Secured and unsecured lines of credit.
«
(b) Non-Fund Oriented:
Guarantees « Letter of credit.
«
International Banking:
« Letter
of credit « Foreign currency
Consultancy:
« Investment
counselling « Project counselling « Merchant banking « Tax consultancy
Miscellaneous: ´ Traveller cheques ´ Credit cards ´ Remittances ´ Collections ´ Sale of drafts ´ Standing instructions and ´ Trusteeship.
PRODUCT LEVEL
Core Product The basic necessity to use banking services in order to handle finance more efficiently Basic Product Safety of deposits Expected Product Timely service Augmented Product Goods waiting rooms Potential Product Mobile and internet Banking
Loanable funds etc.
Long banking hours
Extensive ATM network
New Schemes tailored for specific customers
Low interest Promotional rates Discounts
PRICE
Interest rate ´ compete in terms of annual fees for services like credit cards, DMAT etc ´ bank·s pricing policy today is the interest charged on the Home Loans and Car Loans
´
ATM Card Issue Free ² 2 ATM cards issued free if it joint account RS. 100 ² Beyond 2 cards Rs. 100
Add ² on Card Duplicate Card
PLACE
The Trade area ´ Population characteristics ´ Commercial structure ´ Industrial structure ´ Banking structure ´ Proximity to other convenient outlets
´
Real estate rates ´ Proximity to public ´ Transportation ´ Drawing time ´ Location of competition ´ Visibility ´ Access
´
PROMOTION
Internet Banking ´ Mobile Banking ´ Public Relations ´ Personal Selling ´ Sales Promotion ´ Word ² of ² mouth Promotion ´ Telemarketing
´
PROCESS
process mix constitutes the overall procedure ´ customer friendly ´ process for application for a car loan at HDFC bank. Now this mainly involves 3 things.
´
Producing of proper documents ´ Filling up of application form ´ Paying for the initial down payment.
´
PHYSICAL EVIDENCE
Physical evidence is the overall layout of the place ´ Design ´ placement
´
PEOPLE
People are the employees that are the service providers ´ Important role in providing customer satisfaction and good services ´ Employee must understand what customer needs ´ Employee attitude, appearance, behaviour
´
DIMENSIONS OF SERVICE QUALITY
´
Reliability: Perform promised service dependably and accurately. E.g. Receive mail at same time each day. Responsiveness : Willingness to help customer promptly. E.g. = avoid keeping customers waiting for no apparent reason. Assurance = Ability to convey trust & confidence. E.g.= Being polite showing response for customers.
´
Empathy : Ability to be approachable. E.g. = Being a good listener. Tangibles : Physical facilities & facilitating goods. E.g. : Cleanliness.
TECHNOLOGIES & INNOVATIONS IN BANKING
ELECTRONIC BANKING
1)
Automated Teller Machines (ATMs)
Eliminated the time limits of customer service Offer a host of banking services including deposits, withdrawals, requisitions, instructions & transactions It is issued to Current and Saving account holders of a bank who hold a certain minimum balance
2) Internet Banking
The delivery channels include dial-up connection, private network, public network etc
3) Mobile Banking
Through inter ²banking one can visit the web ²site of each bank by entering his password and can even pass his own credit and debit entries Customers can now make balance enquires, download statements and open fixed deposits over the net
4) Note & Coin Counting Machines
It counts a bundle of notes placed on it at top speed indicating the number counted on a digital display This machine does relieve the drudgery involved in counting One limitation of this machine is that the notes have to be in fairly good condition
5) Electromagnetic Cards
I. II. III. IV. V.
Charge Cards Debit Cards Credit Cards Smart Card Member card
APPRECIATE YOUR PATIENCE!
Ravindra -01 Faizan -02 Rasika -03 Udya- 04 Mahesh -06
INTRODUCTION OF A BANK
The Banking Companies Act of 1949, define
Banking Company as a company which transacts the business of banking in India. It defines banking as, accepting for the purpose of lending or investment of deposit money from the public, repayable on demand or otherwise and withdraw able by cheque draft , order or otherwise A bank as an institution dealing in money and credit. It safeguard of the savings of the public and gives loans and advances.
ORIGIN OF BANKING
´
The word of ´Bankµ is said to be of Germanic origin , cognate with the French word ´Banqueµ and theItalian word ´Bancaµ , both meaning ´benchµ.
´
Banking is as old as the authentic history and origins of modern Commercial banking tare traceable to ancient times. The New Testament mention about activities of the money changers in the temple of Jerusalem. In ancient Greece around 2000 B.C . The famous temples of Ephesus, Delphi and Olympia were used as depositories for peoples surplus funds and these temples were the centers of Money lending transaction.
´
In, India the ancient Hindu scriptures refer to money lending activities in the Vedic period. In India The Ramayana and Mahabharata eras, banking had become a full fledged activity and during the Smriti period which followed the Vedic period and Epic age the business of banking was carried on by the members of the Vanish community.
PRE INDEPENDENCE BANKING SYSTEM OF INDIA
´
Banking in India originated in the last decades of the 18th century. The first banks were The General Bank of India which started in 1786, and the Bank of Hindustan, both of which are now defunct. The oldest bank in existence in India is the State Bank of India, which originated in the Bank of Calcutta in June 1806, which almost immediately became the Bank of Bengal . This was one of the three presidency banks, the other two being the Bank of Bombay and the Bank of Madras, all three of which were established under charters from the British East India Company. Indian merchants in Calcutta established the Union Bank in 1839, but it failed in 1848 as consequence of the economic crisis of 1848-49. The Allahabad Bank, established in 1865 and still functioning today, is the oldest Joint Stock bank in India. The presidency banks dominated banking in India but there were also some exchange banks and a number of Indian joint stock banks. All these banks operated in different segments of the economy. The exchange banks, mostly owned by Europeans, concentrated on financing foreign trade. Indian joint stock banks were generally under capitalized and lacked the experience and maturity to compete with the presidency and exchange banks.The first entirely Indian joint stock bank was the Oudh Commercial Bank, established in 1881 in Faizabad. It failed in 1958. The next was the Punjab National Bank, established in Lahore in 1895, which has survived to the present and is now one of the largest banks in India.
´
´
POST INDEPENDENCE BANKING SYSTEM OF INDIA
´
In the post-independence period, India observed the emergence of large number of institutions for providing finance to different sectors of the economy.
´
There were two nationalizations of banks in India, one in 1969 and the other in 1980. The entry activities of private sector and foreign banks were restricted through branch licensing and regulation norms.
´
The over regulated and over administered polices eroded the capital base of most of the public Sector banks and recapitalization of 19 nationalized banks was made by government through of budgetary provision Nevertheless, acute problem arises in productivity, efficiency and profitability front of the commercial banks. The policy of directed investment in the form high SLR and CRR, directed credit programs, extra administrative interference in credit decision making, high operating costs, regulated interest rates, non-transparent accounting system coupled Non existence of operational flexibility, internal autonomy and absence of competition contaminated the health of the commercial banks and threatened their future survival.
´
Liberal policies facilitate to increase market competition among banks to augment efficiency and by productivity by the management to choose independent decisions about input-output and their prices individual banks. The Committee on Financial Systems (GOI, 1998) suggested the road map for second -generation reform to keep pace with liberalization of financial sector in other parts of the world.
The other remarkable developments to enhance competition in banking sector reforms 1) It abolished administered interest rate regime by allowing banks to determine lending and deposit rates. 2) Competition has infused by allowing the operation of new private sector banks and more liberal entry of foreign banks. 3) Measures to broaden the ownership base of PSBs have also taken. 4) The system has also observed greater levels of transparency and standards of disclosure. 5) It introduced ratification of the legal structure to strengthen banks position in the areas of loan and default loan.
NATIONALIZATION OF INDIAN BANKING SYSTEM
Indian marched towards the establishment of public sector banking through The progressive nationalisation of commercial banks. There were three phases of bank nationalisation:
´ ´ ´
Nationalization of Imperial Bank of India in1955 and its seven associate banks in 1959-60. Nationalizations of the 14 major commercial banks in 1969. Nationalization of 6 more commercial banks in 1980.
On July 1, 1955 the government of India nationalized the Imperial Bank of India and converted it into the State Bank of India. The establishment of the State Bank of India was a pioneering attempt in public introducing sector banking in the country. Later on in 1959-60, seven subsidiary State Banks were also nationalized to form the SBI Group. For a short period during December 1967 to June 1969, the Government of India pursued the banking of policy control of banks, aiming at an equitable and purposeful distribution of credit towards developmental needs. A such over 90 percent of the banking activity in the country is brought under into the public sector. In short, nationalization of banks implied a bold and major economic step in the process of banking reforms in the country. It has resulted in the evolution of public sector banking.
TYPES OF BANKS
1.
Central Bank
2.
Commercial Banks Types of Commercial Banks: a. Public Sector Banks E.g.
b. Private Sectors Banks E.g.
c. Foreign Banks E.g.
3.
Development Banks E.g. Industrial Finance Corporation of India (IFCI), State Financial Corporations (SFCs)
4.
Co-operative Banks Types of Co-operative Banks: a. b. c. Primary Credit Societies Central Co-operative Banks State Co-operative Banks
5.
Specialized Banks E.g.
7 P¶S OF BANKING SECTOR
Important to provide quality service to customer ´ Product ´ Price ´ Place ´ Promotion ´ People ´ Process ´ Physical evidence
PRODUCT
´
Bundle of utilities
Bank service not only things but also satisfaction they deliverE.g. bank account ´ bank products
´ ´
DEPOSITS: Savings, current, fixed etc.
ADVANCES: (a) Fund Oriented:
Term loan « Clean loan « Bill discounting « Advancing « Pre-shipment and post-shipment finance « Secured and unsecured lines of credit.
«
(b) Non-Fund Oriented:
Guarantees « Letter of credit.
«
International Banking:
« Letter
of credit « Foreign currency
Consultancy:
« Investment
counselling « Project counselling « Merchant banking « Tax consultancy
Miscellaneous: ´ Traveller cheques ´ Credit cards ´ Remittances ´ Collections ´ Sale of drafts ´ Standing instructions and ´ Trusteeship.
PRODUCT LEVEL
Core Product The basic necessity to use banking services in order to handle finance more efficiently Basic Product Safety of deposits Expected Product Timely service Augmented Product Goods waiting rooms Potential Product Mobile and internet Banking
Loanable funds etc.
Long banking hours
Extensive ATM network
New Schemes tailored for specific customers
Low interest Promotional rates Discounts
PRICE
Interest rate ´ compete in terms of annual fees for services like credit cards, DMAT etc ´ bank·s pricing policy today is the interest charged on the Home Loans and Car Loans
´
ATM Card Issue Free ² 2 ATM cards issued free if it joint account RS. 100 ² Beyond 2 cards Rs. 100
Add ² on Card Duplicate Card
PLACE
The Trade area ´ Population characteristics ´ Commercial structure ´ Industrial structure ´ Banking structure ´ Proximity to other convenient outlets
´
Real estate rates ´ Proximity to public ´ Transportation ´ Drawing time ´ Location of competition ´ Visibility ´ Access
´
PROMOTION
Internet Banking ´ Mobile Banking ´ Public Relations ´ Personal Selling ´ Sales Promotion ´ Word ² of ² mouth Promotion ´ Telemarketing
´
PROCESS
process mix constitutes the overall procedure ´ customer friendly ´ process for application for a car loan at HDFC bank. Now this mainly involves 3 things.
´
Producing of proper documents ´ Filling up of application form ´ Paying for the initial down payment.
´
PHYSICAL EVIDENCE
Physical evidence is the overall layout of the place ´ Design ´ placement
´
PEOPLE
People are the employees that are the service providers ´ Important role in providing customer satisfaction and good services ´ Employee must understand what customer needs ´ Employee attitude, appearance, behaviour
´
DIMENSIONS OF SERVICE QUALITY
´
Reliability: Perform promised service dependably and accurately. E.g. Receive mail at same time each day. Responsiveness : Willingness to help customer promptly. E.g. = avoid keeping customers waiting for no apparent reason. Assurance = Ability to convey trust & confidence. E.g.= Being polite showing response for customers.
´
Empathy : Ability to be approachable. E.g. = Being a good listener. Tangibles : Physical facilities & facilitating goods. E.g. : Cleanliness.
TECHNOLOGIES & INNOVATIONS IN BANKING
ELECTRONIC BANKING
1)
Automated Teller Machines (ATMs)
Eliminated the time limits of customer service Offer a host of banking services including deposits, withdrawals, requisitions, instructions & transactions It is issued to Current and Saving account holders of a bank who hold a certain minimum balance
2) Internet Banking
The delivery channels include dial-up connection, private network, public network etc
3) Mobile Banking
Through inter ²banking one can visit the web ²site of each bank by entering his password and can even pass his own credit and debit entries Customers can now make balance enquires, download statements and open fixed deposits over the net
4) Note & Coin Counting Machines
It counts a bundle of notes placed on it at top speed indicating the number counted on a digital display This machine does relieve the drudgery involved in counting One limitation of this machine is that the notes have to be in fairly good condition
5) Electromagnetic Cards
I. II. III. IV. V.
Charge Cards Debit Cards Credit Cards Smart Card Member card
APPRECIATE YOUR PATIENCE!
