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CHAPTER-1 INTRODUCTION OF THE TOPIC

BANKS

A bank is a financial intermediary and appears in several related basic forms:
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a central bank issues money on behalf of a government, and regulates the money supply a commercial bank accepts deposits and channels those deposits into lending activities, either directly or through capital markets. A bank connects customers with capital deficits to customers with capital surpluses on the world's open financial markets. a savings bank, also known as a building society in Britain is only allowed to borrow and save from members of a financial cooperative



Banks often start as microcredit or savings clubs which become formalized, first as credit unions and later savings banks which transform themselves from cooperatives to limited liability companies. A fuller description of these forms appears below. Banking is generally a highly regulated industry, and government restrictions on financial activities by banks have varied over time and location. The current set of global bank capital standards are called Basel II. In some countries such as Germany, banks have historically owned major stakes in industrial corporations while in other countries such as the United States banks are prohibited from owning non-financial companies. In Japan, banks are usually the nexus of a cross-share holding entity known as the keiretsu. In Iceland banks had very light regulation prior to the 2008 collapse. The oldest bank still in existence is Monte dei Paschi di Siena, headquartered in Siena, Italy, and has been operating continuously since 1472. Banking in the modern sense of the word can be traced to medieval and early Renaissance Italy, to the rich cities in the north like Florence, Venice and Genoa. TheBardi and Peruzzi families dominated banking in 14th century Florence, establishing branches in many other parts of Europe. Perhaps the most famous Italian bank was the Medici bank, set up by Giovanni Medici in 1397. The earliest known state deposit bank, Banco di San Giorgio (Bank of St. George), was founded in 1407 atGenoa, Italy. Banks can be traced back to ancient times even before money when temples were used to store commodities. During the 3rd century AD, banks in Persia and other territories in the Persian Sassanid Empire issued letters of credit known as Ṣakks.[citation needed] Muslim traders are known to have used the cheque or ṣakk system since the time of Harun alRashid (9th century) of the Abbasid Caliphate. In the 9th century, a Muslim businessman could cash an early form of the cheque in Chinadrawn on sources in Baghdad, [verification needed] a tradition that was significantly strengthened in the 13th and 14th centuries, during the Mongol Empire.[citation needed] Fragments found in the Cairo Geniza indicate that in the 12th century cheques remarkably similar to our own were in use, only smaller to save costs on the paper. They contain a sum to be paid and then the order "May so and so pay the bearer such and such an amount". The date and name of the issuer are also apparent.

The word bank was borrowed in Middle English from Middle French banque, from Old Italian banca, from Old High German banc, bank "bench, counter". Benches were used as desks or exchange counters during the Renaissance by Florentine bankers, who used to make their transactions atop desks covered by green tablecloths. The earliest evidence of money-changing activity is depicted on a silver Greek drachm coin from ancient Hellenic colony Trapezus on the Black Sea, modern Trabzon, c. 350–325 BC, presented in the British Museum in London. The coin shows a banker's table (trapeza) laden with coins, a pun on the name of the city. In fact, even today inModern Greek the word Trapeza (Τράπεζα) means both a table and a bank.

The definition of a bank varies from country to country. See the relevant country page (below) for more information. Under English common law, a banker is defined as a person who carries on the business of banking, which is specified as:
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conducting current accounts for his customers paying cheques drawn on him, and Collecting cheques for his customers.

In most common law jurisdictions there is a Bills of Exchange Act that codifies the law in relation to negotiable instruments, including cheques, and this Act contains a statutory definition of the term banker: banker includes a body of persons, whether incorporated or not, who carry on the business of banking' (Section 2, Interpretation). Although this definition seems circular, it is actually functional, because it ensures that the legal basis for bank transactions such as cheques does not depend on how the bank is organised or regulated. The business of banking is in many English common law countries not defined by statute but by common law, the definition above. In other English common law jurisdictions there are statutory definitions of the business of banking or banking business. When looking at these definitions it is important to keep in mind that they are defining the business of banking for the purposes of the legislation, and not necessarily in general. In particular, most of the definitions are from legislation that has the purposes of entry regulating and supervising banks rather than regulating the actual business of banking. However, in many cases the statutory definition closely mirrors the common law one. Examples of statutory definitions:


"banking business" means the business of receiving money on current or deposit account, paying and collecting cheques drawn by or paid in by customers, the making of advances to customers, and includes such other business as the Authority may prescribe for the purposes of this Act; (Banking Act (Singapore), Section 2, Interpretation). "banking business" means the business of either or both of the following: 1. receiving from the general public money on current, deposit, savings or other similar account repayable on demand or within less than [3 months] ... or with a period of call or notice of less than that period; 2. paying or collecting cheques drawn by or paid in by customers



Since the advent of EFTPOS (Electronic Funds Transfer at Point Of Sale), direct credit, direct debit and internet banking, the cheque has lost its primacy in most banking systems as a payment instrument. This has led legal theorists to suggest that the cheque based definition should be broadened to include financial institutions that conduct current accounts for

customers and enable customers to pay and be paid by third parties, even if they do not pay and collect cheques.

A bank can generate revenue in a variety of different ways including interest, transaction fees and financial advice. The main method is via charging interest on the capital it lends out to customers[citation needed]. The bank profits from the differential between the level of interest it pays for deposits and other sources of funds, and the level of interest it charges in its lending activities. This difference is referred to as the spread between the cost of funds and the loan interest rate. Historically, profitability from lending activities has been cyclical and dependent on the needs and strengths of loan customers and the stage of the economic cycle. Fees and financial advice constitute a more stable revenue stream and banks have therefore placed more emphasis on these revenue lines to smooth their financial performance. In the past 20 years American banks have taken many measures to ensure that they remain profitable while responding to increasingly changing market conditions. First, this includes the Gramm-Leach-Bliley Act, which allows banks again to merge with investment and insurance houses. Merging banking, investment, and insurance functions allows traditional banks to respond to increasing consumer demands for "one-stop shopping" by enabling crossselling of products (which, the banks hope, will also increase profitability). Second, they have expanded the use of risk-based pricing from business lending to consumer lending, which means charging higher interest rates to those customers that are considered to be a higher credit risk and thus increased chance of default on loans. This helps to offset the losses from bad loans, lowers the price of loans to those who have better credit histories, and offers credit products to high risk customers who would otherwise be denied credit. Third, they have sought to increase the methods of payment processing available to the general public and business clients. These products include debit cards, prepaid cards, smart cards, and credit cards. They make it easier for consumers to conveniently make transactions and smooth their consumption over time (in some countries with underdeveloped financial systems, it is still common to deal strictly in cash, including carrying suitcases filled with cash to purchase a home). However, with convenience of easy credit, there is also increased risk that consumers will mismanage their financial resources and accumulate excessive debt. Banks make money from card products through interest payments and fees charged to consumers and transaction fees to companies that accept the cards. This helps in making profit and facilitates economic development as a whole.

INDIAN BANKING
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 Bank of Hindustan, which started in 1790; both 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. For many years the Presidency banks acted as quasi-central banks, as did their successors. The three banks merged in 1921 to form the Imperial Bank of India, which, upon India's independence, became the State Bank of India. The partition of India in 1947 adversely impacted the economies of Punjab and West Bengal, paralyzing banking activities for months. India's independence marked the end of a regime of the Laissez-faire for the Indian banking. The Government of India initiated measures to play an active role in the economic life of the nation, and the Industrial Policy Resolution adopted by the government in 1948 envisaged a mixed economy. This resulted into greater involvement of the state in different segments of the economy including banking and finance. The major steps to regulate banking included:


The Reserve Bank of India, India's central banking authority, was nationalized on January 1, 1949 under the terms of the Reserve Bank of India (Transfer to Public Ownership) Act, 1948 (RBI, 2005b).[Reference www.rbi.org.in] In 1949, the Banking Regulation Act was enacted which empowered the Reserve Bank of India (RBI) "to regulate, control, and inspect the banks in India." The Banking Regulation Act also provided that no new bank or branch of an existing bank could be opened without a license from the RBI, and no two banks could have common directors.






Despite the provisions, control and regulations of Reserve Bank of India, banks in India except the State Bank of India or SBI, continued to be owned and operated by private persons. By the 1960s, the Indian banking industry had become an important tool to facilitate the development of the Indian economy. At the same time, it had emerged as a large employer, and a debate had ensued about the nationalization of the banking industry. Indira Gandhi, then Prime Minister of India, expressed the intention of the Government of India in the annual conference of the All India Congress Meeting in a paper entitled "Stray thoughts on Bank Nationalisation." The meeting received the paper with enthusiasm. Thereafter, her move was swift and sudden. The Government of India issued an ordinance and nationalised the 14 largest commercial banks with effect from the



midnight of July 19, 1969. Jayaprakash Narayan, a national leader of India, described the step as a "masterstroke of political sagacity." Within two weeks of the issue of the ordinance, the Parliament passed the Banking Companies (Acquisition and Transfer of Undertaking) Bill, and it received the presidential approval on 9 August 1969. A second dose of nationalization of 6 more commercial banks followed in 1980. The stated reason for the nationalization was to give the government more control of credit delivery. With the second dose of nationalization, the Government of India controlled around 91% of the banking business of India. Later on, in the year 1993, the government merged New Bank of India with Punjab National Bank. It was the only merger between nationalized banks and resulted in the reduction of the number of nationalised banks from 20 to 19. After this, until the 1990s, the nationalised banks grew at a pace of around 4%, closer to the average growth rate of the Indian economy.



In the early 1990s, the then Narsimha Rao government embarked on a policy of liberalization, licensing a small number of private banks. These came to be known as New Generation tech-savvy banks, and included Global Trust Bank (the first of such new generation banks to be set up), which later amalgamated with Oriental Bank of Commerce, Axis Bank(earlier as UTI Bank), ICICI Bank and HDFC Bank. This move, along with the rapid growth in the economy of India, revitalized the banking sector in India, which has seen rapid growth with strong contribution from all the three sectors of banks, namely, government banks, private banks and foreign banks. The next stage for the Indian banking has been set up with the proposed relaxation in the norms for Foreign Direct Investment, where all Foreign Investors in banks may be given voting rights which could exceed the present cap of 10%,at present it has gone up to 74% with some restrictions. The new policy shook the Banking sector in India completely. Bankers, till this time, were used to the 4-6-4 method (Borrow at 4%;Lend at 6%;Go home at 4) of functioning. The new wave ushered in a modern outlook and tech-savvy methods of working for traditional banks.All this led to the retail boom in India. People not just demanded more from their banks but also received more. Currently (2007), banking in India is generally fairly mature in terms of supply, product range and reach-even though reach in rural India still remains a challenge for the private sector and foreign banks. In terms of quality of assets and capital adequacy, Indian banks are considered to have clean, strong and transparent balance sheets relative to other banks in comparable economies in its region. The Reserve Bank of India is an autonomous body, with minimal pressure from the government. The stated policy of the Bank on the Indian Rupee is to manage volatility but without any fixed exchange rate-and this has mostly been true.

With the growth in the Indian economy expected to be strong for quite some time-especially in its services sector-the demand for banking services, especially retail banking, mortgages and investment services are expected to be strong. One may also expect M&As, takeovers, and asset sales. In March 2006, the Reserve Bank of India allowed Warburg Pincus to increase its stake in Kotak Mahindra Bank (a private sector bank) to 10%. This is the first time an investor has been allowed to hold more than 5% in a private sector bank since the RBI announced norms in 2005 that any stake exceeding 5% in the private sector banks would need to be vetted by them. In recent years critics have charged that the non-government owned banks are too aggressive in their loan recovery efforts in connection with housing, vehicle and personal loans. There are press reports that the banks' loan recovery efforts have driven defaulting borrowers to suicide.

GROWTH OF INDIAN BANKING INDUSTRY

The growth in the Indian Banking Industry has been more qualitative than quantitative and it is expected to remain the same in the coming years. Based on the projections made in the "India Vision 2020" prepared by the Planning Commission and the Draft 10th Plan, the report forecasts that the pace of expansion in the balance-sheets of banks is likely to decelerate. The total assets of all scheduled commercial banks by end-March 2010 is estimated at Rs 40,90,000 crores. That will comprise about 65 per cent of GDP at current market prices as compared to 67 per cent in 2002-03. Bank assets are expected to grow at an annual composite rate of 13.4 per cent during the rest of the decade as against the growth rate of 16.7 per cent that existed between 1994-95 and 2002-03. It is expected that there will be large additions to the capital base and reserves on the liability side. The Indian Banking Industry can be categorized into non-scheduled banks and scheduled banks. Scheduled banks constitute of commercial banks and co-operative banks. There are about 67,000 branches of Scheduled banks spread across India. As far as the present scenario is concerned the Banking Industry in India is going through a transitional phase. The Public Sector Banks(PSBs), which are the base of the Banking sector in India account for more than 78 per cent of the total banking industry assets. Unfortunately they are burdened with excessive Non Performing assets (NPAs), massive manpower and lack of modern technology. On the other hand the Private Sector Banks are making tremendous progress. They are leaders in Internet banking, mobile banking, phone banking, ATMs. As far as foreign banks are concerned they are likely to succeed in the Indian Banking Industry. In the Indian Banking Industry some of the Private Sector Banks operating are IDBI Bank, ING Vyasa Bank,SBI Commercial and International Bank Ltd, Bank of Rajasthan Ltd. and banks from the Public Sector include Punjab National bank, Vijaya Bank, UCO Bank, Oriental Bank, Allahabad Bank among others. ANZ Grindlays Bank, ABN-AMRO Bank, American Express Bank Ltd, Citibank are some of the foreign banks operating in the Indian Banking Industry.

COMMERCIAL BANKS
Commercial banks provide a variety of important products and services. In contrast to investment banks, which deal primarily with the securities markets, commercial banks accept a variety of deposit types, make various kinds loans and provide other services including checking and savings accounts, credit cards, ATM networks, safe deposit boxes, and custodial and trustee services. Liability Products


Liability products are one category of products that commercial banks provide. So named because they represent liabilities of the bank, these products include checking and savings accounts, certificates of deposit and other types of deposit products. Except for checking accounts, liability products normally earn interest for the depositor, which varies according to the type and term of the deposit. Commercial banks provide these products to individuals, businesses and non-profit organizations. Asset Products



Asset products are another service that commercial banks provide. Called asset products because they represent the primary assets of the banks, these products normally take the form of personal and business loans, mortgages, auto loans and credit cards. Asset products also have a variety or rates and terms, and the interest revenue in them is the main way that commercial banks earn profits. Electronic Banking



Electronic banking services provided by commercial banks include the maintenance and expansion of 24-hour ATM networks, wire transfers and banking websites that allow consumers and business to obtain account information, open new accounts, order checks, transfer funds between accounts and make bill payments. The added convenience these websites offer has proven to be a great benefit to bank customers. Other Services



Commercial banks also provide other services to businesses and consumers for which they earn various fees. These include investment advisory services, corporate finance consulting, custodial services for estates and trusts, safekeeping of securities and other valuable items, and money transfer services.

Size of global banking industry
Assets of the largest 1,000 banks in the world grew by 6.8% in the 2008/2009 financial year to a record $96.4 trillion while profits declined by 85% to $115bn. Growth in assets in adverse market conditions was largely a result of recapitalisation. EU banks held the largest share of the total, 56% in 2008/2009, down from 61% in the previous year. Asian banks' share increased from 12% to 14% during the year, while the share of US banks increased from 11% to 13%. Fee revenue generated by global investment banking totalled $66.3bn in 2009, up 12% on the previous year. The United States has the most banks in the world in terms of institutions (7,085 at the end of 2008) and possibly branches (82,000). This is an indicator of the geography and regulatory structure of the USA, resulting in a large number of small to medium-sized institutions in its banking system. As of Nov 2009, China's top 4 banks have in excess of 67,000 branches (ICBC:18000+,BOC:12000+, CCB:13000+, ABC:24000+) with an additional 140 smaller banks with an undetermined number of branches. Japan had 129 banks and 12,000 branches. In 2004, Germany, France, and Italy each had more than 30,000 branches —more than double the 15,000 branches in the UK.

Regulation
Currently in most jurisdictions commercial banks are regulated by government entities and require a special bank licence to operate. Usually the definition of the business of banking for the purposes of regulation is extended to include acceptance of deposits, even if they are not repayable to the customer's order— although money lending, by itself, is generally not included in the definition. Unlike most other regulated industries, the regulator is typically also a participant in the market, being either a publicly or privately governed central bank. Central banks also typically have a monopoly on the business of issuing banknotes. However, in some countries this is not the case. In the UK, for example, the Financial Services Authority licences banks, and some commercial banks (such as the Bank of Scotland) issue their own banknotes in addition to those issued by the Bank of England, the UK government's central bank. Banking law is based on a contractual analysis of the relationship between the bank (defined above) and the customer—defined as any entity for which the bank agrees to conduct an account. The law implies rights and obligations into this relationship as follows: 1. The bank account balance is the financial position between the bank and the customer: when the account is in credit, the bank owes the balance to the customer; when the account is overdrawn, the customer owes the balance to the bank. 2. The bank agrees to pay the customer's cheques up to the amount standing to the credit of the customer's account, plus any agreed overdraft limit. 3. The bank may not pay from the customer's account without a mandate from the customer, e.g. a cheque drawn by the customer. 4. The bank agrees to promptly collect the cheques deposited to the customer's account as the customer's agent, and to credit the proceeds to the customer's account. 5. The bank has a right to combine the customer's accounts, since each account is just an aspect of the same credit relationship. 6. The bank has a lien on cheques deposited to the customer's account, to the extent that the customer is indebted to the bank. 7. The bank must not disclose details of transactions through the customer's account— unless the customer consents, there is a public duty to disclose, the bank's interests require it, or the law demands it. 8. The bank must not close a customer's account without reasonable notice, since cheques are outstanding in the ordinary course of business for several days.

These implied contractual terms may be modified by express agreement between the customer and the bank. The statutes and regulations in force within a particular jurisdiction may also modify the above terms and/or create new rights, obligations or limitations relevant to the bank-customer relationship. Some types of financial institution, such as building societies and credit unions, may be partly or wholly exempt from bank licence requirements, and therefore regulated under separate rules. The requirements for the issue of a bank licence vary between jurisdictions but typically include: 1. Minimum capital 2. Minimum capital ratio 3. 'Fit and Proper' requirements for the bank's controllers, owners, directors, or senior officers 4. Approval of the bank's business plan as being sufficiently prudent and plausible.

Types of banks
Banks' activities can be divided into retail banking, dealing directly with individuals and small businesses; business banking, providing services to mid-market business; corporate banking, directed at large business entities; private banking, providing wealth management services to high net worth individuals and families; and investment banking, relating to activities on the financial markets. Most banks are profit-making, private enterprises. However, some are owned by government, or are non-profit organizations.

Types of retail banks


Commercial bank: the term used for a normal bank to distinguish it from an investment bank. After the Great Depression, the U.S. Congress required that banks only engage in banking activities, whereas investment banks were limited to capital market activities. Since the two no longer have to be under separate ownership, some use the term "commercial bank" to refer to a bank or a division of a bank that mostly deals with deposits and loans from corporations or large businesses.



Community banks: locally operated financial institutions that empower employees to make local decisions to serve their customers and the partners. Community development banks: regulated banks that provide financial services and credit to under-served markets or populations. Credit unions: not-for-profit cooperatives owned by the depositors and often offering rates more favorable than for-profit banks. Typically, membership is restricted to employees of a particular company, residents of a defined neighborhood, members of a certain labor union or religious organizations, and their immediate families.





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Postal savings banks: savings banks associated with national postal systems. Private banks: banks that manage the assets of high net worth individuals. Historically a minimum of USD 1 million was required to open an account, however, over the last years many private banks have lowered their entry hurdles to USD 250,000 for private investors. Offshore banks: banks located in jurisdictions with low taxation and regulation. Many offshore banks are essentially private banks. Savings bank: in Europe, savings banks took their roots in the 19th or sometimes even in the 18th century. Their original objective was to provide easily accessible savings products to all strata of the population. In some countries, savings banks were created on public initiative; in others, socially committed individuals created foundations to put in place the necessary infrastructure. Nowadays, European savings banks have kept their focus on retail banking: payments, savings products, credits and insurances for





individuals or small and medium-sized enterprises. Apart from this retail focus, they also differ from commercial banks by their broadly decentralised distribution network, providing local and regional outreach—and by their socially responsible approach to business and society.
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Building societies and Landesbanks: institutions that conduct retail banking. Ethical banks: banks that prioritize the transparency of all operations and make only what they consider to be socially-responsible investments. A Direct or Internet-Only bank is a banking operation without any physical bank branches, conceived and implemented wholly with networked computers.



Types of investment banks


Investment banks "underwrite" (guarantee the sale of) stock and bond issues, trade for their own accounts, make markets, and advise corporations oncapital market activities such as mergers and acquisitions.



Merchant banks were traditionally banks which engaged in trade finance. The modern definition, however, refers to banks which provide capital to firms in the form of shares rather than loans. Unlike venture capital firms, they tend not to invest in new companies.

Both combined


Universal banks, more commonly known as financial services companies, engage in several of these activities. These big banks are very diversified groups that, among other services, also distribute insurance— hence the term bancassurance, a portmanteau word combining "banque or bank" and "assurance", signifying that both banking and insurance are provided by the same corporate entity.

Other types of banks


Central banks are normally government-owned and charged with quasi-regulatory responsibilities, such as supervising commercial banks, or controlling the cash interest rate. They generally provide liquidity to the banking system and act as the lender of last resort in event of a crisis.



Islamic banks adhere to the concepts of Islamic law. This form of banking revolves around several well-established principles based on Islamic canons. All banking activities must avoid interest, a concept that is forbidden in Islam. Instead, the bank earns profit (markup) and fees on the financing facilities that it extends to customers.

CHAPTER-2 INTRODUCTION OF THE CAMPANIES

THE STATE BANK OF INDIA

STATE BANK OF INDIA
State Bank of India (Hindi: भारतीय स्टे ट बैंक) (SBI) (NSE: SBIN, BSE: 500112, LSE: SBID) is the largest state-owned banking and financial services company in India. The bank traces its ancestry to British India, through the Imperial Bank of India, to the founding in 1806 of the Bank of Calcutta, making it the oldest commercial bank in the Indian Subcontinent. Bank of Madras merged into the other two presidency banks, Bank of Calcutta and Bank of Bombay to form Imperial Bank of India, which in turn became State Bank of India. The government of India nationalized the Imperial Bank of India in 1955, with the Reserve Bank of India taking a 60% stake, and renamed it the State Bank of India. In 2008, the government took over the stake held by the Reserve Bank of India. SBI provides a range of banking products through its vast network of branches in India and overseas, including products aimed at non-resident Indians(NRIs). The State Bank Group, with over 16,000 branches, has the largest banking branch network in India.Its also considered as the best bank even abroad ,having around 130 branches overseas [including 1 ADB]and one of the largest financial institution in the world . With an asset base of $352 billion and $285 billion in deposits, it is a regional banking behemoth. It has a market share among Indian commercial banks of about 20% in deposits and advances, and SBI accounts for almost one-fifth of the nation's loans. As of 31 December 2009, the bank had 131 overseas offices spread over 32 countries. It has branches of the parent in Colombo, Dhaka, Frankfurt, Hong Kong, Tehran, Johannesburg, London, Los Angeles, Male in the Maldives, Muscat, New York, Osaka, Sydney, and Tokyo. It has offshore banking units in theBahamas, Bahrain, and Singapore, and representative offices in Bhutan and Cape Town1 ADB In Boston USA SBI operates several foreign subsidiaries or affiliates. In 1990, it established an offshore bank: State Bank of India (Mauritius). In 1982, the bank established a subsidiary, State Bank of India (California), which now has eight branches - seven branches in the state of California and one in Washington, D.C., that it opened on 23 November 2009. The seven branches in California are located in Los Angeles, Artesia, San Jose, Canoga Park, Fresno, San Diego and Bakersfield. The Canadian subsidiary, State Bank of India (Canada) also dates to 1982. It has seven branches, four in the Toronto area and three in British Columbia. In Nigeria, SBI operates as INMB Bank. This bank began in 1981 as the Indo-Nigerian Merchant Bank and received permission in 2002 to commence retail banking. It now has five branches in Nigeria.

In Nepal, SBI owns 50% of Nepal SBI Bank, which has branches throughout the country. In Moscow, SBI owns 60% of Commercial Bank of India, with Canara Bank owning the rest. In Indonesia, it owns 76% of PT Bank Indo Monex. The State Bank of India already has a branch in Shanghai and plans to open one in Tianjin. In Kenya, State Bank of India owns 76% shareholding in Giro Commercial Bank, which it acquired for US$8 million in October 2005.
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State Bank of India has 131 foreign offices in 32 countries across the globe. SBI has about 21,000 ATMs; and SBI group(including associate banks) has about 45,000 ATMs. SBI has 26,500 branches, including branches that belong to its associate banks.



Earliar SBI had only seven associate banks that, with SBI, constitute the State Bank Group. All use the same logo of a blue keyhole and all the associates use the "State Bank of" name, followed by the regional headquarters' name. Originally, the then seven banks that became the associate banks belonged to princely states until the government nationalised them between October 1959 and May 1960. In tune with the first Five Year Plan, emphasizing the development of rural India, the government integrated these banks into the State Bank of India to expand its rural outreach. There has been a proposal to merge all the associate banks into SBI to create a "mega bank" and streamline operations. The first step towards unification occurred on 13 August 2008 when State Bank of Saurashtra merged with SBI, reducing the number of state banks from seven to six. Then on 19 June 2009 the SBI board approved the merger of its subsidiary, State Bank of Indore, with itself. SBI holds 98.3% in State Bank of Indore. (Individuals who held the shares prior to its takeover by the government hold the balance of 1.77%.) The acquisition of State Bank of Indore added 470 branches to SBI's existing network of 12,448 and over 21,000 ATMs. Also, following the acquisition, SBI's total assets will inch very close to the Rs 10-lakh crore mark. Total assets of SBI and the State Bank of Indore stood at Rs 998,119 crore as on March 2009. The process of merging of State Bank of Indore was completed by April 2010, and the SBI Indore Branches started functioning as SBI branches on 26 August 2010.

State Bank of India offers the following services for safe and secure paperless banking: State Bank ATM-cum-Debit Card: State Bank of India offers unparalleled convenience through State Bank ATM-cum-Debit card. With this card, there is no need to carry cash in your wallet. You can now withdraw cash and make purchases anytime you wish to with your ATM-cum-Debit card. You can use your ATM-cum-Debit card to transact for FREE at any of over 20,000 ATMs of any bank in State Bank Group within the country. Verified by Visa (VBV) is an easy to use, secured online payment service from State Bank of India in association with VISA that lets you shop securely online with your existing State Bank of India Visa Debit Card. This service through a simple checkout process, confirms your identity when you make purchases on the Internet. Verified By VISA Service allows you to create a password and it protects your online transactions just like you use your PIN at the ATM. Maestro Card/MasterCard Secure Code is a new service from State Bank of India, in association with MasterCard® that lets you shop online securely with your existing State Bank of India Debit Card which may be used only on merchant websites that subscribe to services of "MasterCard® SecureCode™". Secure Code Service confirms your identity through a simple check process when you make online purchases. Secure Code Service allows you to create a password and it protects your online transactions just like you use your PIN at the ATM.

SWOT ANALYSIS

STRENGTHS:



BRAND NAME: SBI Bank has earned a reputation in the market over the period of time(Being the oldest bank in India tracing history back to 1806)



Market Leader: SBI is ranked at 380 in 2008 Fortune Global 500 list, and ranked 219 in 2008 Forbes Global 2000. With an asset base of $126 billion and its reach, it is a regional banking behemoth. Wide Distribution Network:Excellent penetration in the country with more than 10000 core branches and more than 5100 branches of associate banks (subsidiaries).



Diversified Portfolio: SBI Bank has all the products under its belt, which help it to extend the relationship with existing customer.SBI Bank has umbrella of products to offer their customers, if once customer has relationship with the bank. Some Products, which SBI Bank is offering are: Retail Banking Business Banking Merchant Establishment Services (EDCMachine) Personal loans & Car loans Insurance Housing Loans.



Government Owned: Government owns 60% stake in SBI. This givesSBI an edge over private banks in terms of customer security.



Low Transition Costs-SBI offers very low transition costs which attracts small customers.

WEAKNESSES:



The existing hierarchical management structure of the bank, although strength in some respects, is a barrier to change.



Though SBI cards are the 2nd largest player in the credit card industry, it has the highest non performing assets (NPAs) in the industry, which stand out to be at 16.28 % (Dec 2007).



Modernisation: SBI lags with respect to private players in terms of modernisation of its processes, infrastructure, centralisation, etc.

OPPORTUNITIES:



Merger of associate banks with SBI: Merger of all the associate banks (like SBH, SBM, etc) into SBI will create a mega bank which streamlines operations and unlocks value.



Planning to add 2000 branches and 3000 ATMs in 2008-2009. This will further increase its reach.



Increasing trade and business relations and a large number of expatriate populations offers a great opportunity to expand on foreign soil.

THREATS:



Advent of MNC banks: Large numbers of MNC banks are mushrooming in the Indian market due to the friendly policies adopted by the government. This can increase the level of competition and prove a potential threat for the market share of SBI bank.



Consumer expectations have increased many folds in last few years and the bank has not been responsive enough to meet them on time.



Private banks have started venturing into the rural and semi-urban sector, which used to be the bastion of the State Bank and otherPSU banks.



Employee Strike: There was an employee strike in the year 2006 which disrupted SBI’s activities. This can be repeated in the future.

STATE BANK OF INDIA- HOME LOAN

The Most Preferred Home Loan provider SBI Bank offers a Home Loan with Attractive Interest Rates with Latest Schemes and Benefits. SBI also provides a Housing loan with different schemes. Schemes Are:1. SBI Easy Home Loan 2. SBI Advantage Home Loan 3. SBI Housing Finance Scheme 4. SBI Happy Home Loans 5. SBI Life Style Loan 6. SBI Green Home Loan 7. SBI Home Plus 8. SBI Home Line 9. SBI MY HOME CAMPAIGN Features & Benefits of SBI Home Loan • Purchase/ Construction of House/ Flat • Purchase of a plot of land for construction of House • Lowest Home Loan Interest Rate.. • Extension/ repair/ renovation/ alteration of an existing House/ Flat • Purchase of Furnishings and Consumer Durables as a part of the project cost. • Takeover of an existing loan from other Banks/ Housing Finance Companies. • Interest charged on the daily reducing balance • No penalty on prepayments of home loan • No hidden costs • Option to club income of your spouse and children to compute eligible loan amount • Provision to club depreciation, expected rent accruals from property proposed to compute eligible loan amount • Provision to finance cost of furnishing and consumer durables as part of project cost.

STATE BANK OF INDIA- CAR LOANS

SBI Car Loan – You have an Option to go through SBI Car Loans Scheme which offers: – Lowest interest rate, Low processing fee, processed through speedy delivery channels with total transparency. SBI – Financing for ON ROAD PRICE which include vehicle registration charges, insurance, one-time road tax and accessories. SBI Car Loan scheme offers to purchase:


A new car, jeep, Multi Utility Vehicle (MUV) or SUV (any make or model) Benefits of SBI Advantage Car Loan Scheme: outstanding service and lower costs. A quick survey of similar schemes available elsewhere and you will find that SBI Car Loans for new and old vehicles offer you:

     

Lowest interest rates Longer repayment period of upto 84 months or 7 years. No hidden costs or administrative charges. Finance for one-time road tax, registration fee, insurance premium and accessories No advance EMIs Complete clearness: Interest on daily reducing balance method. When you pay one instalment, the interest is automatically calculated on the reduced balance thereafter. Always compare the Equated Monthly Instalments (EMIs) and the total payments you would be required to make and not the rates of interest. The SBI Advantage Car Loan Scheme Purpose Term Loans & Overdraft will be sanctioned by the Bank for purchase of new passenger cars, Multi Utility Vehicles (MUVs) and SUVs with minimum loan component of Rs. 5.0 lakh and above. Take over of existing loan from other Bank/Financial institution (Conditions apply) Eligibility To avail an Car Loan, you should be:

   

Individual between the age of 21-65 years of age. A Permanent employee of State / Central Government, Public Sector Undertaking, Private company or a reputed establishment or A Professionals or self-employed individual proprietary/partnership firms who is an income tax assessee Net Annual Income Rs. 2,50,000/- and above.

Salient Features Loan Amount There is no upper limit for the amount of a car loan. A maximum loan amount of 4 times the net annual income can be sanctioned. If married, your spouse’s income could also be considered provided the spouse becomes a co-borrower in the loan. The loan amount includes finance for one-time road tax, registration and insurance! No ceiling on the loan amount for new cars. Type of Loan 1. Term Loan 2. Overdraft – a) For New vehicles only b) Minimum loan amount: Rs. 5 lakhs Documents Required You would need to submit the following documents along with the completed application form if you are an existing SBI account holder: 1. 2. 3. 4. 5. 6. 7. Statement of Bank account of the borrower for last 12 months. 2 passport size photographs of borrower(s). Signature identification from bankers of borrower(s). A copy of passport /voters ID card/PAN card. Proof of residence. Latest salary-slip showing all deductions I.T. Returns/Form 16: 2 years for salaried employees and 3 years for professional/selfemployed/businessmen duly accepted by the ITO wherever applicable to be submitted. 8. Proof of official address for non-salaried individuals. If you are not an account holder with SBI you would also need to furnish documents that establish your identity and give proof of residence. Margin New / Used vehicles : 15% of the on the road price. Repayment You enjoy the longest repayment period in the industry with SBI. Repayment period: For Salaried, For Self-employed & Professionals : Maximum of 84 months Prepayment Penalty: Prepayment fee of 2% of the amount of the loan prepaid will be levied subject to certain conditions.

Processing Fee 0.50% of Loan amount and to be paid upfront. Minimum: Rs. 500/Maximum Rs. 10,000 25% of Processing fee will be retained if application is rejected after pre-sanction survey. Security As per bank’s extant instructions.

ICICI BANK

ICICI BANK
In 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. In 1994, ICICI established Banking Corporation as a banking subsidiary. Formerly known as Industrial Credit and Investment Corporation of India, ICICI Banking Corporation was later renamed as 'ICICI Bank Limited'. ICICI founded a separate legal entity, ICICI Bank, to undertake normal banking operations - taking deposits, credit cards, car loans etc. In 2001, ICICI acquired Bank of Madura (est. 1943). Bank of Madura was a Chettiar bank, and had acquired Chettinad Mercantile Bank (est. 1933) and Illanji Bank (established 1904) in the 1960s. In 2002, The Boards of Directors of ICICI and ICICI Bank approved the reverse merger of ICICI, ICICI Personal Financial Services Limited and ICICI Capital Services Limited, into ICICI Bank. After receiving all necessary regulatory approvals, ICICI integrated the group's financing and banking operations, both wholesale and retail, into a single entity. At the same time, ICICI started its international expansion by opening representative offices in New York and London. In India, ICICI Bank bought the Shimla and Darjeeling branches that Standard Chartered Bank had inherited when it acquired Grindlays Bank. In 2003, ICICI opened subsidiaries in Canada and the United Kingdom (UK), and in the UK it established an alliance with Lloyds TSB. It also opened an Offshore Banking Unit (OBU) in Singapore and representative offices in Dubai and Shanghai. In 2004, ICICI opened a representative office in Bangladesh to tap the extensive trade between that country, India and South Africa. In 2005, ICICI acquired Investitsionno-Kreditny Bank (IKB), a Russia bank with about US$4mn in assets, head office in Balabanovo in the Kaluga region, and with a branch in Moscow. ICICI renamed the bank ICICI Bank Eurasia. Also, ICICI established a branch in Dubai International Financial Centre and in Hong Kong. In 2006, ICICI Bank UK opened a branch in Antwerp, inBelgium. ICICI opened representative offices in Bangkok, Jakarta, and Kuala Lumpur. In 2007, ICICI amalgamated Sangli Bank, which was headquartered in Sangli, in Maharashtra State, and which had 158 branches in Maharashtra and another 31 in Karnataka State. Sangli Bank had been founded in 1916 and was particularly strong in rural areas. With respect to the international sphere, ICICI also received permission from the government of Qatar to open a branch in Doha. Also, ICICI Bank Eurasia opened a second branch, this time in St. Petersburg. In 2008, The US Federal Reserve permitted ICICI to convert its representative office in New York into a branch. ICICI also established a branch in Frankfurt. In 2009, ICICI made huge changes in its organisation like elimination of loss making department and restreching outsourced staff or renegotiate their charges in consequent to the recession. In addition to this, ICICI adopted a massive

approach aims for cost control and cost cutting. In consequent of it, compesation to staff was not increased and no bonus declared for 2008-09. On 23 May ICICI Bank announced that it would merge with Bank of Rajasthan through a share-swap in a non-cash deal that values the Bank of Rajasthan at about 3,000 crore. ICICI announced that the merger expand ICICI Bank's branch network by 25%. On 18h October 2010, ICICI will inaugurate I-Express, an instant cross-border money transfer option for Non-Resident Indians (NRIs). This service will be available through the ICICI Bank's select partners in the Gulf Cooperation Council.

ICICI ATM SERVICES
ICICI Bank ATM network, one of the largest in India operates through 24 hour ATMs spread across all residential and commercial areas, major landmarks like petrol pumps, airports, railway stations and other easily accessible places in the country. ICICI Bank provides ATM cum debit cards to its customers that enable them to access the banking services through a network of over 3300 ATMs. You can find an ICICI ATM locator on their official website that gives you the exact ICICI ATM locations across the country. Some cities like Delhi, Chennai, Gurgaon, Bangalore, Hyderabad, Mumbai, Noida, Pune etc. have multiple ICICI ATM locations. The ICICI ATMs constitute of user-friendly graphic screens that provide instructions on a simpler and easy to follow pattern. A unique feature introduced in this are the 'Interactive ATMs' that interact in the local dialect for increased user compatibility. This service is making private banks like ICICI popular in remote areas as the language barrier is gradually dissolving. The facilities available at ICICI Bank India ATM include:
      

Cash Withdrawal of upto Rs. 25, 000 per day Balance Enquiry and Mini Statement Generation Deposit of Cash and Cheque Funds Transfer Pin Change Payments Cheque Book Requests

The entire services of ICICI Bank available in these mini-banks are totally free of cost for ICICI bank customers and absolutely no additional charges are levied. For any further info on ICICI bank and its services you can browse through our subsequent pages on ICICI bank India. For details on the ATM sharing services and charges for ICICI bank ATMs, refer to their official website.

SWOT ANALYSIS

STRENGTHS:

 

Brand name: earned a reputation for extending quality services. Huge network: ICICI Bank has the highest number of linked branches in the country. The bank operates through a network of 450 BRANCHES AND over 1800 ATMs across India.



Diversified portfolio: ICICI Bank has umbrella of products to offer their customers like retail banking, Insurance, Demat services, personal loans etc.



Aggressive Marketing: ICICI Bank is known for its aggressive marketing of its products. Recent Endorsement of its product by AMITABH BAHCHAN proves the same.



Technology: ICICI bank’s technology platform has been acknowledged globally as one of the best in terms of robustness, flexibility and cost efficiency.



Salary accounts: ICICI is having an edge over other banks in case of Salary Accounts because of huge network

WEAKNESSES:



Poor customer service: Though most of the companies are satisfied with the products offered by ICICI bank, the poor customer support/ service is creating a lot of dissatisfaction among the customers.



Little presence outside India: ICICI Bank is having little presence Outside India, because of which companies prefer MNC Bank, mainly Citibank.



High transaction costs: ICICI Bank charges high cost for its transactions. Customers are using only those facilities of ICICI Bank which are provided at cheaper rates (Salary Account) and for other services they are going to nationalize banks and MNCs (Foreign exchange).



Focus mainly on high end customers: The bank targets only the top bracket of clients and does not cater to the needs of small customers. Due to this reason the bank may sometimes loose good clients.

OPPORTUNITIES:

 

Increasing individual incomes in India. New companies: Sectors like IT and ITES are on a boom in the Indian market context, with new companies mushrooming in the market.



Banking sectors that are planned by Indian government increase the possibility of lots of new services in banking.

THREATS:



Advent of MNC banks: Large numbers of MNC banks are mushrooming in the Indian market due to the friendly policies adopted by the government.



Ever improving nationalized banks: With PSU banks like SBI going all out to compete with the private banks and government giving them a free hand to do increases competition from nationalized banks as well.

ICICI BANK- CAR LOANS

Icici Bank is the most preferred financier for car loans in the country.They have network of more than 604 channel partners in over 200 locations. Tie-ups with all leading automobile manufacturers to ensure the best deals. Icici Bank is most Preferred Financier for Car Loans in India Icici Bank offer loans up to 90% of the ex-showroom price of the car.There interest rates would pleasantly surprise you. What’s more, you can take up to 5 years to repay the loan. Worried about paperwork? Relax. The process for getting a loan involves only a few simple steps and we will tailor-make the loan to suit your needs. Pick your choice. Loan on the Strength of Your Income: Submit income proofs as required and avail finance up to 90% of the ex-showroom price of the car.* Car Loans with Fixed Interest Rates: ICICI Bank offers new car loans with fixed rate option only. Loan Amount The minimum loan amount for taking a new car loan is Rs. 1,00,000. The maximum loan amount will depend upon the price of the car, model variant, profile of the customer, etc. New Car
 

Icici Bank finance up to 90% of the ex-showroom price of the car. The Loan amount also depends on the car model. Higher loan amounts are available under specific enhanced income eligibility criteria. Service Charges: Icici Bank car loan interest charges differ according to the car model, the tenure of the loan, the customer and his location.

ICICI BANK- HOME LOANS

ICICI Bank Home Loan offers you Home Loan for following purposes

1. Home Loan- If you want to purchase a new home then you can apply individually or jointly. 2. Home Improvement Loan- For your home improvement you can take the Home Improvement Loan from ICICI Bank. 3. EMI under Construction- EMI under Construction helps you to make payments in EMI, in a partly sanctioned loan for an under construction project. 4. Balance Transfer-ICICI Bank Home Loan gives you facility to transfer your running loan from another Bank 5. Top-Up Loan- ICICI Bank Home Loan facilitates the Top-Up Loan, an additional funding against the security of your property.

Features & Benefits of ICICI Bank Home Loan • Attractive Home Loan Rates • No charges on part pre-payment of your Home Loan • Top Up & Home Improvement Loan facility available on existing Home Loan • Home loan amounts suited to your needs • Home Loan tenure upto 25 years • Simplified Documentation • Doorstep Delivery of home loan papers • Sanction approval without having selected a property. • Free Personal Accident Insurance policies • Insurance options for your home loan at attractive premium

CHAPTER-3 OBJECTIVES OF THE STUDY

Objectives of the Proposed Research: 1. To determine the kind of transactions taking place in both the banks. 2. To know the frequency of these transactions. 3. To determine the preference of the customers amongst these two banks. 4. To know the basis and the reason for this preference.

CHAPTER-4

CHAPTER-5 DATA COLLECTION AND INTERPRETATION

QUESTIONNAIRE

Please read the following instructions:   Please tick the answer for each of the following questions. Please take your time in answering the questions.

Name:.................................................................................. Age:................................................Gender:  Are you a bank account holder? a. Yes  In which bank do you have your account? a. ICICI c. HDFC  Which type of account do you have? a.Current c.Fixed deposit  Which bank provides you more rate of interest? a. SBI  b. ICICI b.Savings d.Other b.SBI d. Other b. No Male( ) Female( )

Are you interested in opening an account in ICICI bank in future? a. Yes b. No



Are you interested in opening an account in SBI in future? a. Yes b. No



What are the reasons for opening an account with ICICI bank? a. Interest rate b. Fast service

c. Accessibility 

d. Others

What are the reasons for opening an account with SBI? A. Interest rate c. Accessibility b. Fast service d. Others



How often do you do transactions in your bank? a. Every week c. Once a month b. Every 2 weeks d. Other



How do you find the ease of transactions in your bank? a. Easy c. Efficient b. Average d. Very good



How is the attitude of the staff towards you at your bank? a. Friendly c. Efficient b. Formal d. Insufficient



How long does it take to complete one transaction( in case of deposits & withdrawals)? a. Less than 15 mins c. 30 mins to 1 hour b. 15-30 mins d. More than 1 hour



Are you satisfied by the time taken during a transaction? a. Yes b. No



Have you ever made any telephone enquiries at the bank? a. Yes b. No



Were you satisfied with the telephone service provision of the bank? a. Yes b.. No



Does your bank provides ATM facility? a. Yes b. No



How frequently do you avail ATM service? a. Every month c. Once in 2 months b. Every week d. More often



How efficient is the ATM service? a. Quite efficient c. Fairly efficient

c. Average Would you recommend this bank to any of your friends, family, etc.? a. Yes b. No



Why or why not?

________________________________________________________________________  Do you have any suggestions or remarks?

_____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________

INTERPRETATION
Q1: Are you a bank account holder? a. Yes b. No

Q1

YES NO

Q2: In which bank do you have your account? a. ICICI c. HDFC b.SBI d. Other

Q2

ICICI SBI HDFC OTHER

Q3: Which type of account do you have? a. Current c.Fixed deposit b.Savings d.Other

Q3

CURRENT SAVINGS FIXED DEPOSIT OTHER

Q4: Which bank provides you more rate of interest? a. SBI b. ICICI

Q4

SBI ICICI

Q5: Are you interested in opening an account in ICICI bank in future? a. Yes b. No

Q5

YES NO

Q6: Are you interested in opening an account in SBI in future? a. Yes b. No

Q6

YES NO

Q7: What are the reasons for opening an account with ICICI bank? a. Interest rate b. Fast service

c. Accessibility

d. Others

Q7

INTEREST RATE FAST SERVICE ACCESSIBILITY OTHERS

Q8: What are the reasons for opening an account with SBI? A. Interest rate c. Accessibility b. Fast service d. Others

Q8

INTEREST RATE FAST SERVICE ACCESSIBILITY OTHERS

Q9: How often do you do transactions in your bank? a. Every week c. Once a month b. Every 2 weeks d. Other

Q9

EVERY WEEK EVERY 2 WEEKS ONCE A MONTH OTHER

Q10: How do you find the ease of transactions in your bank? a. Easy c. Efficient b. Average d. Very good

Q10

EASY AVERAGE EFFICIENT VERY GOOD

Q11: How is the attitude of the staff towards you at your bank? a. Friendly c. Efficient b. Formal d. Insufficient

Q11

FRIENDLY FORMAL EFFICIENT INEFFICIENT

Q12: How long does it take to complete one transaction ( in case of deposits & withdrawals)? a. Less than 15 mins c. 30 mins to 1 hour b. 15-30 mins d. More than 1 hour

Q12

LESS THAN 15 MINS 15-30 MINS 30 MINS- 1 HR MORE THAN 1 HR

Q13: Are you satisfied by the time taken during a transaction? a. Yes b. No

Q13

YES NO

Q14: Have you ever made any telephone enquiries at the bank? a. Yes b. No

Q14

YES NO

Q15: Were you satisfied with the telephone service provision of the bank? a. Yes b.. No

Q15

YES NO

Q16: Does your bank provides ATM facility? a. Yes b. No

Q16

YES NO

Q17: How frequently do you avail ATM service? a. Every month c. Once in 2 months b. Every week d. More often

Q17

EVERY MONTH EVERY WEEK ONCE IN 2 MONTHS MORE OFTEN

Q18: How efficient is the ATM service? a. Quite efficient c. Average c. Fairly efficient

Q18

QUITE EFFICIENT FAIRLY EFFIIENT AVERAGE

Q19: Would you recommend this bank to any of your friends, family, etc.? a. Yes b. No

Q19

YES NO

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