CHAPTER 1

INTRODUCTION TO BANKING IN INDIA

The banking section will navigate through all the aspects of the Banking
System in India. It will discuss upon the matters with the birth of the
banking concept in the country to new players adding their names in the
industry in coming few years.
The banker of all banks, Reserve Bank of India (RBI), the Indian Banks
Association (IBA) and top 20 banks like IDBI, HSBC, ICICI, ABN AMRO,
etc. has been well defined under three separate heads with one page
dedicated to each bank.
However, in the introduction part of the entire banking cosmos, the past has
been well explained under three different heads namely:
History of Banking in India
Nationalization of Banks in India
Scheduled Commercial Banks in India
The first deals with the history part since the dawn of banking system in
India. Government took major step in the 1969 to put the banking sector into
systems and it nationalized 14 private banks in the mentioned year. This has
been elaborated in Nationalization Banks in India. The last but not the least
explains about the scheduled and unscheduled banks in India. Section 42 (6)
(a) of RBI Act 1934 lays down the condition of scheduled commercial
banks.

HISTORY OF BANKING IN INDIA

Without a sound and effective banking system in India it cannot have a

healthy economy. The banking system of India should not only be hassle
free but it should be able to meet new challenges posed by the technology
and any other external and internal factors.
For the past three decades India's banking system has several outstanding
achievements to its credit. The most striking is its extensive reach. It is no
longer confined to only metropolitans or cosmopolitans in India. In fact,
Indian banking system has reached even to the remote corners of the
country. This is one of the main reasons of India's growth process.
The government's regular policy for Indian bank since 1969 has paid rich
dividends
With the nationalization of 14 major private banks of India.
Not long ago, an account holder had to wait for hours at the bank counters
for getting a draft or for withdrawing his own money. Today, he has a
choice. Gone are days when the most efficient bank transferred money from
one branch to other in two days. Now it is simple as instant messaging or
dials a pizza. Money has become the order of the day.
The first bank in India, though conservative, was established in 1786. From
1786 till today, the journey of Indian Banking System can be segregated into
three distinct phases. They are as mentioned below:

Early phase from 1786 to 1969 of Indian Banks

Nationalization of Indian Banks and up to 1991 prior to Indian
banking sector Reforms.
New phase of Indian Banking System with the advent of Indian
Financial
& Banking Sector Reforms after 1991.

To make this write-up more explanatory, I prefix the scenario as Phase I,

Phase II and Phase III.

Phase I

The General Bank of India was set up in the year 1786. Next came Bank of
Hindustan and Bengal Bank. The East India Company established Bank of
Bengal (1809), Bank of Bombay (1840) and Bank of Madras (1843) as
independent units and called it Presidency Banks. These three banks were
amalgamated in 1920 and Imperial Bank of India was established which
started as private shareholders banks, mostly Europeans shareholders.
In 1865 Allahabad Bank was established and first time exclusively by
Indians, Punjab National Bank Ltd. was set up in 1894 with headquarters at
Lahore. Between 1906 and 1913, Bank of India, Central Bank of India, Bank
of Baroda, Canara Bank, Indian Bank, and Bank of Mysore were set up.
Reserve Bank of India came in 1935.
During the first phase the growth was very slow and banks also experienced
periodic failures between 1913 and 1948. There were approximately 1100
banks, mostly small. To streamline the functioning and activities of
commercial banks, the Government of India came up with The Banking
Companies Act, 1949 which was later changed to Banking Regulation Act
1949 as per amending Act of 1965 (Act No. 23 of 1965). Reserve Bank of
India was vested with extensive powers for the supervision of banking in
India as the Central Banking Authority.
During those days public has lesser confidence in the banks. As an
aftermath deposit mobilisation was slow. Abreast of it the savings bank
facility provided by the Postal department was comparatively safer.
Moreover, funds were largely given to traders.
Phase II
Government took major steps in this Indian Banking Sector Reform after
independence. In 1955, it nationalized Imperial Bank of India with extensive
banking facilities on a large scale especially in rural and semi-urban areas. It
formed State Bank of India to act as the principal agent of RBI and to handle
banking transactions of the Union and State Governments all over the
country.
Seven banks forming subsidiary of State Bank of India was nationalized in
1960 on 19th July, 1969, major process of nationalization was carried out. It
was the effort of the then Prime Minister of India, Mrs. Indira Gandhi. 14
major commercial banks in the country were nationalized.

Second phase of nationalization Indian Banking Sector Reform was carried

out in 1980 with seven more banks. This step brought 80% of the banking
segment in India under Government ownership.
The following are the steps taken by the Government of India to Regulate
Banking Institutions in the Country:

1949: Enactment of Banking Regulation Act.

1955: Nationalization of State Bank of India.
1959: Nationalization of SBI subsidiaries.
1961: Insurance cover extended to deposits.
1969: Nationalization of 14 major banks.
1971: Creation of credit guarantee corporation.
1975: Creation of regional rural banks.
1980: Nationalization of seven banks with deposits over 200 crore.

After the nationalization of banks, the branches of the public sector bank
India rose to approximately 800% in deposits and advances took a huge
jump by 11,000%.
Banking in the sunshine of Government ownership gave the public implicit
faith and immense confidence about the sustainability of these institutions.
Phase III
this phase has introduced many more products and facilities in the banking
sector in its reforms measure. In 1991, under the chairmanship of M
Narasimham, a committee was set up by his name which worked for the
liberalisation of banking practices.
The country is flooded with foreign banks and their ATM stations. Efforts
are being put to give a satisfactory service to customers. Phone banking and
net banking is introduced. The entire system became more convenient and
swift. Time is given more importance than money.
The financial system of India has shown a great deal of resilience. It is
sheltered from any crisis triggered by any external macroeconomics shock as
other East Asian Countries suffered. This is all due to a flexible exchange
rate regime, the foreign reserves are high, the capital account is not yet fully

convertible, and banks and their customers have limited foreign exchange
exposure.

SCHEDULED COMMERCIAL BANKS IN INDIA

The commercial banking structure in India consists of:
Scheduled Commercial Banks in India
Unscheduled Banks in India
Scheduled Banks in India constitute those banks which have been included
in the Second Schedule of Reserve Bank of India (RBI) Act, 1934. RBI in
turn includes only those banks in this schedule which satisfy the criteria laid
down vide section 42 (6) (a) of the Act.
As on 30th June, 1999, there were 300 scheduled banks in India having a
total network of 64,918 branches. The scheduled commercial banks in India
comprise of State bank of India and its associates (8), nationalized banks
(19), foreign banks (45), private sector banks (32), co-operative banks and
regional rural banks.
"Scheduled banks in India" means the State Bank of India constituted under
the State Bank of India Act, 1955 (23 of 1955), a subsidiary bank as defined
in the State Bank of India (Subsidiary Banks) Act, 1959 (38 of 1959), a
corresponding new bank constituted under section 3 of the Banking
Companies (Acquisition and Transfer of Undertakings) Act, 1970 (5 of
1970), or under section 3 of the Banking Companies (Acquisition and
Transfer of Undertakings) Act, 1980 (40 of 1980), or any other bank being a
bank included in the Second Schedule to the Reserve Bank of India Act,
1934 (2 of 1934), but does not include a co-operative bank".
"Non-scheduled bank in India" means a banking company as defined in
clause (c) of section 5 of the Banking Regulation Act, 1949 (10 of 1949),
which is not a scheduled bank".
The following are the Scheduled Banks in India (Public Sector):
State Bank of India
State Bank of Bikaner and Jaipur

State Bank of Hyderabad

State Bank of Indore
State Bank of Mysore
State Bank of Saurashtra
State Bank of Travancore
Andhra Bank
Allahabad Bank
Bank of Baroda
Bank of India
Bank of Maharashtra
Canara Bank
Central Bank of India
Corporation Bank
Dena Bank
Indian Overseas Bank
Indian Bank
Oriental Bank of Commerce
Punjab National Bank
Punjab and Sind Bank
Syndicate Bank
Union Bank of India
United Bank of India
UCO Bank
Vijaya Bank

The following are the Scheduled Banks in India (Private Sector):

ING Vysya Bank Ltd
Axis Bank Ltd
Indusind Bank Ltd
ICICI Bank Ltd
South Indian Bank
HDFC Bank Ltd
Centurion Bank Ltd
Bank of Punjab Ltd
IDBI Bank Ltd
The following are the Scheduled Foreign Banks in India:
American Express Bank Ltd.

ANZ Gridlays Bank Plc.

Bank of America NT & SA
Bank of Tokyo Ltd.
Banquc Nationale de Paris
Barclays Bank Plc
Citi Bank N.C.
Deutsche Bank A.G.
Hongkong and Shanghai Banking Corporation
Standard Chartered Bank.
The Chase Manhattan Bank Ltd.
Dresdner Bank AG.

BANKING SERVICES IN INDIA

With years, banks are also adding services to their customers. The Indian
banking industry is passing through a phase of customers market. The
customers have more choices in choosing their banks. A competition has
been established within the banks operating in India.
With stiff competition and advancement of technology, the services provided
by banks have become more easy and convenient. The past days are witness
to an hour wait before withdrawing cash from accounts or a cheque from
north of the country being cleared in one month in the south.
This section of banking deals with the latest discovery in the banking
instruments along with the polished version of their old systems.
BANK ACCOUNT
The most common and first service of the banking sector. There are different
types of bank account in Indian banking sector. The bank accounts are as
follows:

Bank Savings Account - Bank Savings Account can be opened for

eligible person / persons and certain organizations / agencies (as
advised by Reserve Bank of India (RBI) from time to time)

Bank Current Account - Bank Current Account can be opened by

individuals / partnership firms / Private and Public Limited
Companies / HUFs / Specified Associates / Societies / Trusts, etc.
Bank Term Deposits Account - Bank Term Deposits Account can be
opened by individuals / partnership firms / Private and Public Limited
Companies / HUFs/ Specified Associates / Societies / Trusts, etc.
Bank Account Online - With the advancement of technology, the
major banks in the public and private sector has faciliated their
customer to open bank account online. Bank account online is
registered through a PC with an internet connection. The advent of
bank account online has saved both the cost of operation for banks as
well as the time taken in opening an account.

PLASTIC MONEY
Credit cards in India are gaining ground. A number of banks in India are
encouraging people to use credit card. The concept of credit card was used
in 1950 with the launch of charge cards in USA by Diners Club and
American Express. Credit card however became more popular with use of
magnetic strip in 1970.
Credit card in India became popular with the introduction of foreign banks
in the country.
Credit cards are financial instruments, which can be used more than once to
borrow money or buy products and services on credit. Basically banks, retail
stores and other businesses issue these.
LOANS
Banks in India with the way of development have become easy to apply in
loan market. The following loans are given by almost all the banks in the
country:
Personal Loan
Car Loan or Auto Loan
Loan against Shares
Home Loan
Education Loan or Student Loan

In Personal Loan, one can get a sanctioned loan amount between Rs 25,000
to 10, 00,000 depending upon the profile of person applying for the loan.
SBI, ICICI, HDFC, HSBC are some of the leading banks which deals in
Personal Loan.
Almost all the banks have jumped into the market of car loan which is also
sometimes termed as auto loan. It is one of the fast moving financial
products of banks. Car loan / auto loan are sanctioned to the extent of 85%
upon the ex-showroom price of the car with some simple paper works and a
small amount of processing fee.
Loan against shares is very easy to get because liquid guarantee is involved
in it.
Home loan is the latest craze in the banking sector with the development of
the infrastructure. Now people are moving to township outside the city.
More number of townships is coming up to meet the demand of 'house for
all'. The RBI has also liberalised the interest rates of home loan in order to
match the repayment capability of even middle class people. Almost all
banks are dealing in home loan. Again SBI, ICICI, HDFC, HSBC are
leading.
The educational loan, rather to be termed as student loan, is a good banking
product for the mass. Students with certain academic brilliance, studying at
recognised colleges/universities in India and abroad are generally given
education loan / student loan so as to meet the expenses on tuition fee/
maintenance cost/books and other equipment.
MONEY TRANSFER
Beside lending and depositing money, banks also carry money from one
corner of the globe to another. This act of banks is known as transfer of
money. This activity is termed as remittance business. Banks generally issue
Demand Drafts, Banker's Cheques, Money Orders or other such instruments
for transferring the money. This is a type of Telegraphic Transfer or Tele
Cash Orders.
It has been only a couple of years that banks have jumped into the money
transfer businesses in India. The international money transfer market grew

9.3% from 2003 to 2004 i.e. from US$213 bn. to US$233 bn. in 2004.
Economists say that the market of money transfer will further grow at a
cumulative 12.1% average growth rate through 2009.
FUTURE OF BANKING IN INDIA
A healthy banking system is essential for any economy striving to achieve
good growth and yet remain stable in an increasingly global business
environment. The Indian banking system has witnessed a series of reforms
in the past, like deregulation of interest rates, dilution of government stake in
PSBs, and increased participation of private sector banks. It has also
undergone rapid changes, reflecting a number of underlying developments.
This trend has created new competitive threats as well as new opportunities.
This paper aims to foresee major future banking trends, based on these past
and current movements in the market.
Given the competitive market, banking will (and to a great extent already
has) become a process of choice and convenience. The future of banking
would be in terms of integration. This is already becoming a reality with
new-age banks such as YES Bank, and others too adopting a single-PIN.
Geography will no longer be an inhibitor. Technology will prove to be the
differentiator in the short-term but the dynamic environment will soon lead
to its saturation and what will ultimately be the key to success will be a
better relationship management.
OVERVIEW
If one were to say that the future of banking in India is bright, it would be a
gross understatement. With the growing competition and convergence of
services, the customers (you and I) stand only to benefit more to say the
least. At the same time, emergence of a multitude of complex financial
instruments is foreseen in the near future (the trend is visible in the current
scenario too) which is bound to confuse the customer more than ever unless
she spends hours (maybe days) to understand the same. Hence, I see a
growing trend towards the importance of relationship managers. The success
(or failure) of any bank would depend not only on tapping the untapped
customer base (from other departments of the same bank, customers of
related similar institutions or those of the competitors) but also on the

effectiveness in retaining the existing base.

India has witness to a sea change in the way banking is done in the past
more than two decades. Since 1991, the Reserve Bank of India (RBI) took
steps to reform the Indian banking system at a measured pace so that growth
could be achieved without exposure to any macro-environment and systemic
risks. Some of these initiatives were deregulation of interest rates, dilution of
the government stake in public sector banks (PSBs), guidelines being issued
for risk management, asset classification, and provisioning. Technology has
made tremendous impact in banking. Anywhere banking and Anytime
banking have become a reality. The financial sector now operates in a more
competitive environment than before and intermediates relatively large
volume of international financial flows. In the wake of greater financial
deregulation and global financial integration, the biggest challenge before
the regulators is of avoiding instability in the financial system.
RISK MANAGEMENT
The future of banking will undoubtedly rest on risk management dynamics.
Only those banks that have efficient risk management system will survive in
the market in the long run. The effective management of credit risk is a
critical component of comprehensive risk management essential for longterm success of a banking institution.
Although capital serves the purpose of meeting unexpected losses, capital is
not a substitute for inadequate decontrol or risk management systems.
Coming years will witness banks striving to create sound internal control or
risk management processes.
With the focus on regulation and risk management in the Basel II framework
gaining prominence, the post-Basel II era will belong to the banks that
manage their risks effectively. The banks with proper risk management
systems would not only gain competitive advantage by way of lower
regulatory capital charge, but would also add value to the shareholders and
other stakeholders by properly pricing their services, adequate provisioning
and maintaining a robust financial structure.
The future belongs to bigger banks alone, as well as to those which have
minimized their risks considerably.

CHAPTER 2

INTRODUCTION
Punjab National Bank of India, the first Indian bank started only with
Indian capital, was nationalized in July 1969 and currently the bank has
become a front-line banking institution in India with 4525 Offices including
432 Extension Counters. The corporate office of the bank is at New Delhi.

Punjab National Bank of India has set up representative offices at Almaty

(Kazakhistan), Shanghai (China) and in London and a full fledged Branch in
Kabul (Afghanistan).
Punjab National Bank with 4497 offices and the largest nationalized bank is
serving its 3.5 crore customers with the following wide variety of banking
services:
Corporate banking
Personal banking
Industrial finance
Agricultural finance
Financing of trade
International banking
Punjab National Bank has been ranked 38th amongst top 500 companies by
The Economic Times. PNB has earned 9th position among top 50 trusted
brands in India.
Punjab National Bank India maintains relationship with more than 200
leading international banks world wide. PNB India has Rupee Drawing
Arrangements with 15 exchange companies in UAE and 1 in Singapore.
HISTORY OF THE BANK
Punjab National Bank (PNB) was registered on May 19, 1894 under the
Indian Companies Act with its office in Anarkali Bazaar Lahore. The Bank
is the second largest government-owned commercial bank in India with
about 4,500 branches across 764 cities. It serves over 37 million customers.
The bank has been ranked 248th biggest bank in the world by Bankers
Almanac, London. The bank's total assets for financial year 2007 were about
US$60 billion. PNB has a banking subsidiary in the UK, as well as branches
in Hong Kong and Kabul, and representative offices in Almaty, Dubai, Oslo,
and Shanghai.
1895: PNB commenced its operations in Lahore. PNB has the
distinction of being the first Indian bank to have been started solely
with Indian capital that has survived to the present. (The first entirely
Indian bank, the Ouch Commercial Bank, was established in 1881 in
Faizabad, but failed in 1958.) PNB's founders included several leaders
of the Swadeshi movement such as Dyal Singh Majithia and Lala

HarKishen Lal,[1] Lala Lalchand, Shri Kali Prosanna Roy, Shri E.C.
Jessawala, Shri Prabhu Dayal, Bakshi Jaishi Ram, and Lala Dholan
Dass. Lala Lajpat Rai was actively associated with the management of
the Bank in its early years.
1904: PNB established branches in Karachi and Peshawar.
1940: PNB absorbed Bhagwan Dass Bank, a scheduled bank located
in Delhi circle.
1947: Partition of India and Pakistan at Independence. PNB lost its
premises in Lahore, but continued to operate in Pakistan.
1951: PNB acquired the 39 branches of Bharat Bank (est. 1942);
Bharat Bank became Bharat Nidhi Ltd.
1961: PNB acquired Universal Bank of India.
1963: The Government of Burma nationalized PNB's branch in
Rangoon (Yangon).
September 1965: After the Indo-Pak war the government of Pakistan
seized all the offices in Pakistan of Indian banks, including PNB's
head office, which may have moved to Karachi. PNB also had one or
more branches in East Pakistan (Bangladesh).
1960s: PNB amalgamated Indo Commercial Bank (est. 1933) in a
rescue.
1969: The Government of India (GOI) nationalized PNB and 13 other
major commercial banks, on July 19, 1969.
1976 or 1978: PNB opened a branch in London.
1986 The Reserve Bank of India required PNB to transfer its London
branch to State Bank of India after the branch was involved in a fraud
scandal.
1986: PNB acquired Hindustan Commercial Bank (est. 1943) in a
rescue. The acquisition added Hindustan's 142 branches to PNB's
network.
1993: PNB acquired New Bank of India, which the GOI had
nationalized in 1980.
1998: PNB set up a representative office in Almaty, Kazakhstan.
2003: PNB took over Nedungadi Bank, the oldest private sector bank
in Kerala. Rao Bahadur T.M. Appu Nedungadi, author of Kundalatha,
one of the earliest novels in Malayalam, had established the bank in
1899. It was incorporated in 1913, and in 1965 had acquired selected
assets and deposits of the Coimbatore National Bank. At the time of
the merger with PNB, Nedungadi Bank's shares had zero value, with
the result that its shareholders received no payment for their shares.

PNB also opened a representative office in London.

2004: PNB established a branch in Kabul, Afghanistan.
PNB also opened a representative office in Shanghai.
PNB established an alliance with Everest Bank in Nepal that permits
migrants to transfer funds easily between India and Everest Bank's 12
branches in Nepal.
2005: PNB opened a representative office in Dubai.
2007: PNB established PNBIL - Punjab National Bank (International)
- in the UK, with two offices, one in London, and one in South Hall.
Since then it has opened a third branch in Leicester, and is planning a
fourth in Birmingham. Gatin Gupta became Chairmen of Punjab
National Bank.
2008: PNB opened a branch in Hong Kong.
2009: PNB opened a representative office in Oslo, Norway.

ACHIEVEMENTS
Punjab National Bank announced its Q1FY2010 results on 29 July
2009, delivering 62% y-o-y growth in net profits to Rs832 crore
(Rs512cr), substantially ahead of expectations on account of large
treasury gains, apart from healthy operating performance.
While the banks deposit growth was reasonably robust at 4.4%
sequentially and 26.5% y-o-y, unlike the peers its growth in
advances also remained strong at 38% y-o-y.
In spite of being at the forefront of PLR cuts, the bank posted a
healthy growth in Net Interest Income (NII) of 29% y-o-y.
Other Income surged 113% y-o-y, driven by strong treasury gains
of Rs355 crore during the quarter in line with industry trends, even
as Fee income was also robust at 45% y-o-y, on the back of strong
balance sheet growth.

 Operating expenses were higher than expected on account of

Rs150 crore of provisions for imminent wage hikes.
Gross and Net NPA ratios remained stable sequentially at 1.8% and
0.2%, with the bank not adopting the guidelines of treating floating
provisions as part of tier 2 capital instead of adjusting against
NPAs on express permission from the RBI.

VISION AND MISSION

Vision
To evolve and position the bank as a world class, progressive, cost
effective and customer friendly institution providing
comprehensive financial and related services.

Integrating frontiers of technology and serving various segments of

society especially weaker section.

Commited to excellence in serving the public and also excelling in

corporate values

Mission
To provide excellent professional services and improve its position
as a leader in financial and related services.

Build and maintain a team of motivated workforce with high work

ethos.

 Use latest technology aimed at customer satisfaction and act as an

effective catalyst for socio economic development.

VALUES AND ETHICS

Bonding and Integrity

Ethical conduct

Periodic disclosure

Confidentiality and fair dealing

Compliance with rules and regulations

PRODUCTS AND SERVICES

Savings Fund Account - Total Freedom Salary Account, PNB
Prudent Sweep, PNB Vidyarthi SF Account, PNB Mitra SF

 Account Current Account - PNB Vaibhav, PNB Gaurav, PNB Smart

Roamer
Fixed Deposit Schemes - Spectrum Fixed Deposit Scheme, Anupam
Account, Mahabachat Schemes, Multi Benefit Deposit
Scheme Credit Schemes - Flexible Housing Loan, Car Finance,
Personal Loan, Credit Cards
Social Banking - Mahila Udyam Nidhi Scheme, Krishi Card, PNB
Farmers Welfare Trust
Corporate Banking - Gold Card scheme for exporters, EXIM finance
Business Sector - PNB Karigar credit card, PNB Kushal Udhami,
PNB Pragati Udhami, PNB Vikas Udhami
Apart from these, and the PNB also offers locker facilities, senior
citizens schemes, PPF schemes and various E-services.

AWARDS AND DISTINCTIONS

Ranked among top 50 companies by the leading financial daily,
Economic Times.
Ranked as 323rd biggest bank in the world by Bankers Almanac
(January 2006), London.
Earned 9th place among India's Most Trusted top 50 service brands in
Economic Times- A.C Nielson Survey.
cccccIncluded in the top 1000 banks in the world according to The
Banker, London.
Golden Peacock Award for Excellence in Corporate Governance 2005 by Institute of Directors.
FICCI's Rural Development Award for Excellence in Rural
Development 2005

ORGANIZATIONAL STRUCTURE
Head Office

Zonal Office

Regional Office

Branches

SWOT ANALYSIS
STRENGTH

 Wide network
Large number of customers
Fast adaptability to technology
Brand image

WEAKNESS
Casual behaviour
Corruption and red tapism
Slow decision making due to large hierarchy
High gross NPA

OPPORTUNITIES
Home to home banking services
Diversification towards other fields
Globalization

THREATS
Stiff competition from SBI and other private players.

Chapter 3
CUSTOMER SATISFACTION
Customer satisfaction refers to the extent to which customers are happy with
the products and services provided by a business.
Customer satisfaction levels can be measured using survey techniques and
questionnaires
DEFINITIONS:
Customer satisfaction is equivalent to making sure that product and service
performance meets customer expectations.
Gaining high levels of customer satisfaction is very important to a
business because satisfaction customers are most likely to be loyal and to
make repeat orders and to use a wide range of services offered by a business
There are many factors which lead in high levels of customer satisfaction
including.
Products and services which are customer focused and hence provide high
levels of value for money.
What is clear about customer satisfaction is that customers are most
likely to appreciate the goods and services that they buy if they are made to
feel special. This occurs when they feel that the products and services that
they buy have been specially produced for them or for people like them.

BENEFITS OF CUSTOMER SATISFACTION

The importance of customer satisfaction and support is increasingly
becoming a vital business issue as organization realize the benefits of
Customer Relationship Management (CRM) for providing effective
customer service. Professionals working within customer-focused business
or those running call centers or help desks, need to keep informed about the
latest customer satisfaction techniques for running a valuable customer
service function. From small customer service departments to large call
centers, the importance of developing a valued relationship with customers
using CRM is essential to support customer and long-term business growth.
Major Attributes of customer satisfaction in banking industry can be
summarized as:
Product quality
Premium Outflow
Return on Investment
Services
Responsiveness and ability to resolve complaints and reject reports.
Overall communication, accessibility and attitude.

TOOLS

Customer expectations can be identified using various methods such as:

Periodic contract reviews
Market research
Telephonic interviews
Personal visits
Warranty records
Informal discussions
Satisfaction surveys

Depending upon the customer base and available resources, we can

choose a method that is most effective in measuring the customers
perceptions. The purpose of the exercise is to identify priorities for
improvements. We must develop a method or combination of methods that
helps to continually improve service.

WAYS FOR MAINTAINING RELATIONS WITH THE

CUTOMERS ADOPTED BY PNB

The ability of the banking industry to achieve the socio-economic objectives

and in the process bringing more and more customers into its fold will
ultimately depend on the satisfaction of the customers. We have a strong

belief that a satisfied customer is the foremost factor in developing our

business.
A need was felt by us at Punjab National Bank that in order to become more
customers friendly the Bank should come out with Charter of its services for
the customers. Citizens' Charter concept was considered as a base instrument
to fill this need and accordingly this document was prepared. This document
was made in consultation with the users and highlights our Bank's
commitments towards the customer satisfaction, thus ensuring accountability
and responsibility amongst its officials and staff. This Code for customers
not only explains our commitment and responsibilities along with the
redressed methods but also specifies the obligation on the part of customers
for healthy practices in Customer-Banker relationships.
This is not a legal document creating rights and obligations. The Code has
been prepared to promote fair banking practices and to give information in
respect of various activities relating to customer service.
We wish to acknowledge the initiative taken by the Ministry of Finance,
Government of India and Ministry of Administrative Reforms and Public
Grievances for encouraging us to bring out this Code.
We maintain constant consultations with our clientele through various
Seminars, Customer Meets, etc. to evaluate improve and widen the range of
service to customer. However, all our customers are requested to keep us
informed of their experiences about the various services rendered by the
Bank and feel free to comment on this Code. We intend to bring it out in
many Regional Languages in subsequent years.

COMMON PRACTICES FOLLOWED BY PNB BRANCHES

Display business hours.

Render courteous services.
Attend to all customers present in the banking hall at the close of
business hours.
Provide separate 'Enquiry' or 'May I help you' counter at large branches.
Offer nomination facility to all deposit accounts (i.e. account opened in
individual capacity) and all safe deposit locker hirers (i.e. individual hirers).
Display interest rates for various deposit schemes from time to time.
Notify change in interest rates on advances.
Provide details of various deposit schemes/services of the Bank.
Issue Demand Drafts, Pay Orders, etc.
Display Time-Norms for various banking transactions.
Pay interest for delayed credit of outstation cheques, as advised by
Reserve Bank of India (RBI) from time to time.
Accord immediate credit in respect of outstation and local cheques upto a
specified limit subject to certain conditions, as advised by RBI from time to
time.
Provide complaint/suggestion box in the branch premises.
Display address of Regional/Zonal and Central Offices as well as Nodal
Officer dealing with customer grievances/complaints.

CHAPTER 5

5.1 STATEMENT OF THE PROBLEM

This Study will help us to understand the consumers satisfaction

about banking services and products. This study will help banks to
understand, how a consumer selects, organizes and interprets the Quality of
service and product offered by banks.
The market is more aware and realistic about investment and returns from
financial products. In this background this study tries to analyze the
customer satisfaction towards banking services in general and PNB in
particular.
5.2 NEED FOR THE STUDY
The deeper the company understands of consumers needs and
satisfaction, the earlier the product or service is introduced
ahead of competition, the greater the expected contribution
margin. Hence the study is very important.
This study will help companies to customize the service and
product, according to the consumers need.
This study will also help the companies to understand the
experience and expectations of the existing customers.

5.3 SCOPE OF THE STUDY

This study is limited to the consumers with in New Delhi city. The
study will be able to reveal the preferences, needs, satisfaction of the
customers regarding the banking services, It also help banks to know
whether the existing products or services the are offering are really
satisfying the customers needs.

5.4 OBJECTIVE OF THE STUDY

To have an insight into the attitudes and behaviors of customers.
To find out the differences among perceived service and expected
service.
To produce an executive service report to upgrade service
characteristics.
To understand consumers preferences.
To access the degree of satisfaction of the consumers

5.5 REASERCH METHODOLOGY

A descriptive study tries to discover answers to the questions who,
what, when, where, and, sometimes, how. The researcher attempts to
describe or define a subject, often by creating a profile of a group of
problems, people, or events.
Such studies may involve the collection of data and the creation of a
distribution of the number of times the researcher observes a single event or
characteristic (the research variable), or they may involve relating the
interaction of two or more variables. Organizations that maintain databases
of their employees, customers, and suppliers already have significant data to
conduct descriptive studies using internal information. Yet many firms that
have such data files do not mine them regularly for the decision-making
insight they might provide.
This descriptive study is popular in business research because of its
versatility across disciplines. In for-profit, not-for-profit and government
organizations, descriptive investigations have a broad appeal to the
administrator and policy analyst for planning, monitoring, and evaluating. In
this context, how questions address issues such as quantity, cost, efficiency,
effectiveness, and adequacy.
Descriptive studies may or may not have the potential for drawing powerful
inferences. A descriptive study, however, does not explain why an event has
occurred or why the variables interact the way they do.

5.6 SAMPLE METHOD

Convenience sampling method is used for the survey of this project. It
is a non-probability sample. This is the least reliable design but normally the
cheapest and easiest to conduct .In this method Researcher have the freedom
to choose whomever they find, thus the name convenience. Example
includes informal pools of friends and neighbours or people responding to a
newspapers invitation for readers to state their position on some public
issue.

5.6.1 SAMPLE SIZE

Sample size denotes the number of elements selected for the study.
For the present study, 100 respondents were selected at random. All the 100
respondents were the customers of different branches of PNB.
5.7 SAMPLING METHOD
A sample is a representative part of the population. In sampling
technique, information is collected only from a representative part of the
universe and the conclusions are drawn on that basis for the entire universe.

A convenience sampling technique was used to collect data from the

respondents.

5.8 METHOD OF DATA COLLECTION

To know the response, the researcher used questionnaire method. It
has been designed as a primary research instrument. Questionnaires were
distributed to respondents and they were asked to answer the questions given
in the questionnaire.
The questionnaires were used as an instrumentation technique,
because it is an important method of data collection. The success of the
questionnaire method in collecting the information depends largely on
proper drafting. So in the present study questions were arranged and
interconnected logically. The structured questionnaire will reduce both
interviewers and interpreters bias.
Further, coding and analysis was done for each questions response to
reach into findings, suggestions and finally to the conclusion about the topic.

5.9 TYPES OF DATA

Every decision poses unique needs for information, and relevant
strategies can be developed based on the information gathered through

research. Research is the systematic objective and exhaustive search for and
study of facts relevant to the problem
Research design means the framework of study that leads to the
collection and analysis of data. It is a conceptual structure with in which
research is conducted. It facilitates smooth sailing of various research
operations to make the research as effective as possible.
PRIMARY DATA
Primary data are those collected by the investigator himself for the first time
and thus they are original in character, they are collected for a particular
purpose.
A well-structured questionnaire was personally administrated to the selected
sample to collect the primary data.
SECONDARY DATA
Secondary data are those, which have already been collected by some other
persons for their purpose and published. Secondary data are usually in the
shape of finished products.
Two types of secondary data were collected for the preparation of the project
work:
Internal Data was generated from companys brochures, manuals and
annual reports
External Data, on the other hand, was generated from magazines, research
books, intranet and internet (websites).

5.10 LIMITATIONS OF THE STUDY

Although the study was carried out with extreme enthusiasm and careful
planning there are several limitations, which handicapped the research viz,
1. Time Constraints:
The time stipulated for the project to be completed is less and thus there are
chances that some information might have been left out, however due care is
taken to include all the relevant information needed.
2. Sample size:
Due to time constraints the sample size was relatively small and would
definitely have been more representative if I had collected information from
more respondents.
3. Accuracy:

It is difficult to know if all the respondents gave accurate information; some

respondents tend to give misleading information.
4. It was difficult to find respondents as they were busy in their schedule,
and collection of data was very difficult. Therefore, the study had to be
carried out based on the availability of respondents.

CHAPTER 6

TABLE 6.1
SHARE OF DIFFERENT TYPES OF ACCOUNTS
SL. No.

NATURE OF
ACCOUNTS

NUMBER OF
RESPONDENTS

1.
2.

Saving A/Cs
Current A/Cs

78
9

PERCENTAGE
OF
RESPONDENTS
78%
9%

3.
4.
5.
Total

Fixed Deposits
Loans
Others

4
3
6
100

4%
3%
6%
100%

Analysis: Above table shows that 78% respondents have Saving A/Cs, and
9% have Current A/Cs and rest of the respondents have 13% share of other
A/Cs in total (which includes fixed deposits, loans, and other products)
Interpretation: This means most of the respondents are having Saving A/Cs
which means the bank deposits are enriching as Saving A/Cs share is most.
TABLE 6.2
SATISFACTION OF RESPONDENTS WITH SERVICES OFFERED
BY PNB BRANCH
SL. No.

RESPONSE

1.
2.
TOTAL

Satisfied
Not satisfied

NUMBER OF
RESPONDENTS
89
11
100

PERCENTAGE OF
RESPONDENTS
89%
11%
100 %

Analysis: From the above table it could be inferred that 89% of the
consumers are satisfied with the service and quality of products of their
bank. Only 11% of consumers are not satisfied.
Interpretation: Most of the respondents are satisfied with the service
offered by PNB. Presently the bank offers varieties of services and the
customers are getting a good rate of return from their deposits. Customers
are getting good service from the bank.

TABLE 6.3
RATINGS OF THE SERVICES OFFERED BY THE RESPONDENTS
LIFE INSURANCE COMPANY
SL. No.

RATINGS

1.

EXCELLENT

NUMBER OF
RESPONDENTS
05

PERCENTAGE OF
RESPONDENTS
5%

2.
3.
4.
5.
TOTA

VERY GOOD
GOOD
AVERAGE
POOR

09
76
06
04
100

9%
76%
6%
4%
100 %

Analysis: From this table it could be inferred that 76% of the consumers
have rated service offered as good, 9% of them have rated them as very
good, and 05% of them have rated as excellent and average while only 4%
have rated as poor
.
Interpretation: Service offered by the bank is improving day by day.
Returns consumers are getting are also attractive. Majority of the customers
rates good, very good and excellent because of the customer service offered
by the bank. Banks are providing a good service to the customers due to
increased competition in the market. This may be the reason for more
satisfaction
TABLE 6.4

TABLE SHOWING MOTIVE BEHIND THE SELECTING PNB

SL.NO
1.
2.
3.
4.

ATTRIBUTE
Brand name
Customer service
Interest
Others

SCORE
56
30
12
2

RANK
1
2
3
4

Analysis: This table show the strengths and weaknesses of the brand, and
what are the important criteria or factors on which decision-making is done.
From this table we can infer that consumers give more importance for
Brand name, secondly they prefer satisfaction, and then returns on
investment.
Interpretation: This purely shows that people are now looking forward for
better customer service in addition to the brand name in which they are
investing and the returns they are getting.

TABLE 6.5
CONSUMERS WILLINGNESS TO RECOMMEND THEIR LIFE
INSURANCE COMPANY TO OTHERS
SL. No.

RESPONSES

NUMBER OF
RESPONDENTS

1.
2.
TOTAL

Recommended
Not recommended

92
08
100

PERCENTAGE
OF
RESPONDENTS
92%
8%
100 %

Analysis: From this table it can be noted that the majority of consumers
(92%) would like to recommend their bank services to others and only 8% of
consumers would not like to recommend it to others.

Interpretation: Since the competition has increased in the field of benefits

and service of banking. So customers are getting good service, so that they
are willing to recommend their bank services to others.

TABLE 6.6
CONSUMERS WILLINGNESS TO SHIFT THEIR A/Cs TO OTHER
BANKS
SL. No.

RESPONSES

NUMBER OF
RESPONDENTS

1.
2.
TOTAL

Shift
Doesnt shift

8
92
100

PERCENTAGE
OF
RESPONDENTS
8%
92%
100 %

Analysis: From this table it can be noted that the majority of consumers
(92%) doesnt like to shift their A/Cs to other banks.

Interpretation: The reason can be increasing customer satisfaction and

quality services offered by the bank.

CHAPTER 7

SUGGESTIONS & RECOMMENDATIONS

With regard to banking products and services, consumers respond at
different rates, depending on the consumers characteristics. Hence I PNB
should try to bring their new product and services to the attention of
potential early adopters.
Due to the intense competition in the financial market, PNB should
adopt better strategies to attract more customers.

Return on investment company reputation and premium outflow are

most preferred attributes that are expected by the respondents. Hence
greater focus should be given to these attributes.

 PNB should adopt effective promotional strategies to increase the

awareness level among the consumers.
PNB should ask for their consumer feedback to know whether the
consumers are really satisfied or dissatisfied with the service and
product of the bank. If they are dissatisfied, then the reasons for
dissatisfaction should be found out and should be corrected in future.
The PNB brand name has earned a lot of goodwill and enjoys high
brand equity. As there is intense competition, PNB should work hard
to maintain its position and offer better service and products to
consumers.
The bank should try to increase the Brand image through performance
and service then, only the customers will be satisfied.
Majority of the people find banking important in their life, so PNB
should employ the strategies to convert the want in to need which will
enrich their business.

CHAPTER 8

CONCLUSION:
The project entitled A STUDY TO UNDERSTAND THE
CUSTOMER SATISFACTION AT PNB has helped me in studying
satisfaction about services and products offered to consumers.

Since the opening up of the banking sector, private banks are in the
fray each one trying to cover more market share than the other.

Yet, PNB is far behind SBI. PNB must also be alert what with Private
Banks (ICICI, HDFC) breathing down its neck.
I am sure the bank will find my findings relevant and I sincerely hope
it uses my suggestions enlisted, which I hope will take them miles ahead of
competition.
In short, I would like to say that the very act of the concerned
management at PNB in giving me the job of critically examining consumer
satisfaction towards financial products and services of the company is a step
in their continual mission of making all round improvements as a means of
progress.
I am sure the bank has a very bright future to look forward to and will
be a trailblazer in its own right.