1. Summer Training Project on Banks
Introduction:
Bank plays an important role in the economic development of the country. The entire
commercial and industrial activities are well knitted with the banks. One cannot imagine
the cessation of the banking activities even for a day. There may be an economic crisis in
the country if the banks stop functioning for some days.
In the early days, the banking business was confined to receiving of deposits and lending
of money. But the modern bankers undertake wide variety of functions to assist their
customers. In countries like United Kingdom, banking development preceded industrial
development and in United States of America, the Banking development followed the
industrial development. But in many other countries including India, the development has
almost been simultaneous. The peculiarity of Indian Banking is that the banks were
started, funded and managed by industrialists to enable them get adequate finance for
their businesses or industries, we can see a direct relationship between banks and the
business houses. The Tata group was associated with Central Bank of India; House of
Birla with United Commercial Bank.
It is often said that a banker is one who deals with other people’s money. The term
“Banking” has been understood differently by different people at different times. Even
mills and industrial concerns, which accepted public deposits, were classified as banks
between 1932-1943. According to Sir John Pagget, “no person or body, corporate
otherwise, can be a banker who does not – take deposit accounts; take current accounts;
issue and pay cheques; and collect cheques, crossed and uncrossed, for his customers.”
But a statutory definition was introduced through the Banking Regulation Act, 1949.
Accordingly, “a bank is a company which accepts deposits of money from the public, for
the purpose of lending or investment, repayable on demand or otherwise.” This definition
excludes mere money lending from the banking business. Similarly, mills and industrial
concerns, which accept deposits, are also excluded from the classification of the term
“Banks”. Commercial banks play an important role in directing the affairs of the
economy in various ways. As a matter of fact the operations of commercial banks record

2. the economic pulse of the country. The size and composition of their transactions mirror
the economic happenings in a country. Long back the well-known 19th century
economist David Ricardo had stated that a bank was a dealer or transactor in money.
Banks are thus financial intermediaries collecting “deposits” and lending “loans”. But
now they are not only the purveyors of money but also the creators or manufacturers of
money in a financial system. It is the bank who set the tempo of aggregate economic
activity in any economy. A bank is an institution that deals with money and credit.
Different people understand the meaning of a bank in different ways. For a common man
bank means a storehouse where money is stored; for a businessman it is financial
institution and for a day to day customer it is an institution where he can deposit his
savings. In reality banks are service organization selling banking services. Banks play an
important role in the economy of any country as they hold the savings of the public.
Provide means of payment for goods and services and provide necessary finance for the
development of business and trade. Thus bank is a link in the flow of funds from savers
to the users. Hence they should render an efficient customer service in order to retain the
present customers and also to attract the potential customers.
In the past the banks did not find any attraction in the Indian economy because of the low
level of economic activities and little business prospects. Today we find positive changes
in the national business development policy. Earlier, the moneylenders had a strong hold
over the rural population. This resulted in exploitation of small and marginal savers. The
private sector banks failed in serving the society. This resulted in ht nationalization of 14
commercial banks in 1969. Nationalization of commercial banks paved ways for the
development of Indian economy and channelized financial resources for the upliftment of
weaker sections of the society. In 1980, the government was induced to nationalize more
commercial banks. There was felt that bankers review their services not only as financial
intermediary but also a pacesetter. Adequate financial resources are required for
completing welfare projects. The entrepreneurs need large-scale credit facilities on liberal
terms and conditions, an individual has developed new hopes and aspirations, from banks
and the rural population and backward regions strongly claim their right for a sound and
balanced development. For the accomplishment of all these tasks a rational approach is
essential.

3. MARKETING OF BANKING SERVICES:
Marketing of banking services is concerned with product, place, distribution, pricing and
promotion decisions in the changing, socio-economic and business environment.
It means organizing right activities and programmes at the right place, at the right time, at
a right price with right communication and promotion.
The users of banking services or prospects play a very significant role in the promotion of
overall marketing strategies. The bank marketing activities are concerned with the
designing of product strategies keeping in view the need and requirement of prospects. It
is also related with the place decisions.
It has unique features:
Intangibility
Inseparability
Variability and
Pershibality
Banking is one industry where there are no middlemen serving the customer. The bank
deals with the customers directly. However with liberalization and globalization of the
economy, middlemen are gradually emerging from the banking industry. Foreign banks
and new private banks like City banks, Global Trust Bank and ICICI Bank are offering
their franchise in marketing their services. This has introduced the middlemen in
marketing of banking services.
In banking services, the marketing strategy starts with developing customer profiles by
which the bank can collect and analyze all relevant information on customers. The
preferences and prejudices of the customers are identified with the help of these profiles
and this enables the bank to enhance its marketing activities. In order to satisfy the
customers needs new services may be introduced or the existing services of the bank may
be modified. Customer satisfaction prays an important role in banking services.

4. BANKING STRUCTURE IN INDIA:
Reserve bank is the Central Banking Authority in India. All the activities of banks and
non-finance companies are regulated and controlled by RBI through the credit and
monetary policy.
Commercial and Co-operative Banks which are scheduled banks are included in the
second schedule to the Banking Regulation Act. They are entitled to some facilities with
RBI.
SBI and subsidiaries
Nationalized Banks
Regional Rural Banks
Old Private Sector Banks
New Private Sector Banks
(A) PUBLIC SECTOR BANKS
(B) PRIVATE SECTOR BANKS

5. RBI NORMS FOR NEW BANKS
The RBI came our with new guideline for setting up of new banks in Jan 2001.
The following are the guidelines:
Minimum Net worth requirement for private banks Rs.200 crores.
NBFCs of high net-worth and good track record to convert themselves into regular banks.
It is necessary for promoters to have minimum net-worth of Rs. 200 crores to set up a
bank by they should raise it to Rs. 300 crores in three years. They should have NPAs of
less than 5% and capital adequacy requirement (CAR) above 12%. Triple credit rating is
also needed.Corporates will not be permitted to set up banks irrespective of their net-
worth. New banks cannot set up a subsidiary or mutual fund during the initial three years
The newly licensed bank has to observe all existing requirements of priority sector.
Additionally they should commit to having 25% of their branches in rural and semi urban
areas.NRIs are allowed to pick up their equity share upto 40% of the total.
The Users of Banking Services
The users/customers constitute a place of outstanding significance. The line of services,
the planning and development services, the offering of services, the pricing strategies or
the interest charged for the services made available and the promotional strategies depend
substantially upon the nature type of users using the services of the organization. It is
against the background that a study of different categories of users is found significant.
The emerging trends in the level of expectation affect the formulation of marketing mix.
Innovative efforts become essential the moment we find a change in the level of
expectations. Yesterday the users didn’t expect fast decent services but today they expect.
Yesterday, the consumer financing was not so much important but. Today the banks
appear to think about the same on priority basis. These changes make it clear that the
level of expectation containing dynamism vis-à-vis influence the marketing decision.
We find two types of customers using the services of banks, such as general Customers
and the industrial customer as shown below:

6. General user: Person having an account in the bank and using the banking facilities at
the terms and condition fixed by a bank are know as general user of the banking services
they are found small sized customer
Industrial user: The industrialist, entrepreneurs having an account in the bank and using
the credit facilities and other services for the establishment and expansion of their
business are known as industrial users. They are found large sized
Prospects: It is also essential to clarify the term,” prospects! The general or industrial
prospects do not use the banking services at present but they have the potential to become
customers if induced or motivated in a right fashion. The aforesaid facts make it clear that
the banking organization transact with different types of customers. The behavioral
profile of the two of customers can’t be identical. Both the customer is found important to
marketer and their professional excellence is coiled in the essence of studying and
understanding the customer in a right perspective. The marketing resources
instrumentalist the process of transforming the prospect into customers /users.
CONTROL ON BANKS:
Following the recommendations of Narasimham Committee on Financial reforms, the
regulatory framework for banks by RBI was liberalized in stages. The licensing of branch
location or branch expansion or contraction was removed. Some controls on deposits
interest rates and lending rates were removed by stages. In order to free the banks
precommitted funds, the cash reserve ratio and the statutory ratio were reduced
Refinance by RBI was also rationalized and only Export credit finance was provided.
Refinance against Treasury bills and Government Securities etc. was discontinued.
Interest rate charges were also made more frequently to suit the conditions in the
economy. Government Securities were issued at market determined rates.

7. BANKS SOURCES AND USE OF FUNDS:
Sources:
1. Deposits from public:
Saving deposits.
Current Deposits.
Fixed deposits.
2.Borrowings from banks:
Inter-bank borrowings and
Inter-bank deposits.
3. Borrowings from RBI
4. Borrowings from financial institutions.
5. Borrowings from abroad.
6. Paid-up Capital/Reserves.
Uses:
Term loans.
Overdraft.
Cash credit.
Loans and advances.
Packing credit
Bill Purchase and Discounting.
Inland and foreign Investment in Approved Securities and other Shares and Securities.
Current accounts do not carry any interest. They are generally deposits from Corporates
and Business Executives. Overdraft facility is given to Current Account holders. Savings
Accounts are for individuals, Hindu Undivided Families, partnership etc. they earn a
modest rate of interest but do not carry any overdraft facility. Both the accounts get credit
card facility and 24 hour banking and electronic mode of transfer.

8. REFORMS IN BANKING SECTOR:
Banks are allowed to access the capital market funds directly.
SCR and CRR cut down drastically, with the result that banks are left with larger
discretionary funds for lending on commercial lines and improve profitability of banks.
Deregulation of interest rate both in respect of deposits and advances.
Capital Adequacy income Recognition and provision for bad and doubtful debts.
Improving the loan delivery system by increasing the loan component of Maximum
Permissible Bank Finance (MPBA) which will replace the cash credit system.
Greater autonomy for PSBs to operate on Commercial lines and increase their
profitability.
MARKETING MIX FOR THE BANKING SERVICES
The formulation of marketing mix for the banking services is the prime responsibility of
the bank professional who based on their expertise and excellence attempt to market the
services and scheme profitably. The innovative efforts of the professionals become
essentials to make the services internationally competitive. it is in this context that we
talk about the formulation of marketing mix .
The need and requirements, the like and dislike, the preferences, the attitudes the
expectation and the life style cant remain static. There are a number of factors influencing
The process of change. Today we sell credibility and therefore a basic change in the
perception of marketing is quite natural. This is essential for fulfilling the increasing level
of expectation and even for increasing the market share. Innovation makes the way for
perfection which help you substantially in maximizing profitability and establishing
leadership .The bank professional having world class excellence make possible frequency
in the innovation process which simplify their task of selling more but spending less. It is
against this background that we go through the formulation process. The marketing mix,
a combination of different submixes, has been discussed and deliberated by a number of
experts. The four submixes of the marketing mix ,such as product mix the promotion
mix, and the place mix no doubt , are found significant even to the banking organization
but in addition to the traditional combination of recipes, the marketing experts have also

9. been talking about some more mixes for getting the best result. The “Peoples” as
submixes is now found getting a new place in the management of marketing mix. It is
right to mention that quality of people /employees serving an organization assumes a
place of outstanding significance. This requires a strong emphasis on the development of
personally-committed, value-based, efficient employees who contribute substantially to
the process of making the efforts cost effective. In addition, we also find some of the
marketing experts talking about a new mix, i.e. physical appearance. This draws our
attention on the physical make up of the employees serving an organization. To be more
specific in the service generating organization, we find this dimension impact since the
employees looking impressive, smart and having aesthetic sense are found more effective
in attracting the customers. In the corporate world, the personal care dimension thus
becomes important. The employees are supposed to be well dressed, smart and active.
Beside, we also find emphasis on “Process” which gravitates our attention on the way of
offering the services. It is only not sufficient that you promise quality services. It is much
more impact generating that your promises reach to the to the ultimate user without any
distortion. This makes a strong advocacy in favor of decent behavior of the employees
responsible for offering the services. The marketing experts also talk about Empathy in
the very context which focuses on sharing the mental pressure or diffusing the mental
tension of your customer by using soft word. This necessitates an in depth knowledge of
behavior management. All the mixes need a detailed analysis. The banking organization
of late, face a number of challenges and the organization assigning an overriding priority
to the formulation processes get a success. The formulating of marketing mix is just like
the combination of ingredients, spices in the cooking process.
.
THE PRODUCT
The banks primarily deal in services and therefore, the formulation of product mix is
required to be in the face of changing business environment condition. Of course the
public sector commercial banks have launched a number of policies and programmers for
the development of backward regions and welfare of the weaker section of the society but
at same time it is also right to mention that their development-oriented welfare

10. programmes are not optional to the national socio-economic requirements. A
proportionate contraction in the number of customer is found affecting the business of
public sector commercial banks. The changing psychology, the increasing expectation,
the rising income, the changing lifestyle, the increasing domination of foreign banks and
changing needs and requirements of customer at large make it essential that the innovate
their service mix and make them of world class. The development of new generic
product, especially when the business environment is regulated found a difficult task.
However, it is pertinent that banks formulate a package in tune with the changing
business condition. Against this background we find it significant that the banking
organization minify, magnify, combine and modify their service mix.
In the formulation of services mix, the banks can follow two guidelines, first is
related to the processing of product to market needs and the second is concerned with the
processing of market needs to product. In the first process, the needs of the target
segment are anticipated and visualized and therefore, we expect the process likely to be
productive. In the second process, the banks react to the expressed needs and therefore
we consider it reactive. It is essential that every product is measured up to the accepted
technical standards. This is due to the fact that no consumer would buy a product which
contain technical faults. Technical perfection in service is meant prompt delivery, quick
disposal, and presentation of right facts and figures, right filing, proper documentation or
so. If computer start disobeying the command and the customer get wrong fats, the use of
technology would be a minus point, and you don’t have any excuse for your faults.
Marketing aims not only offering but also at creating/innovating the
services/schemes found new to the competitors vis-à-vis to the customers. The enhanced
customer patronage would be a reward to the bank. The additional attractions, the product
attractiveness would help you in many ways. This makes it essential that the banking
organizational are sincere to the innovation process and try to enrich their peripheral
services much earlier than the competitors. The product portfolio of banks. While
formulating the services mix, it is also pertinent that the bank professional make possible
a fair synchronization of core and peripheral services. To be more specific, the peripheral
services need an intensive care since the core services are found by and large the same.
Innovating the peripheral services thus appears to be an important functional

11. responsibility of marketing professionals. We can t deny the fact that if the foreign banks
have been getting a positive response; the credibility goes to their innovative peripheral
services. Thus the formulation of product mix is found to be a difficult task that requires
world class professionalism.
Promotion mix
In the formulation of marketing mix, the bank professionals are also supposed to blend
the promotion mix which different component of promotion, such as advertising,
publicity, sales promotion, word of mouth promotion, personal selling and telemarketing
are given due weight age. The different component of promotion help bank professional
in promoting the banking business.
Advertising:
We are well aware of the fact that advertising is a paid form of communication. Like
other organizations, the banking organization also use this component of the promotion
mix with the motto of informing, sensing and persuading the customers. While
advertising, it is instrumentality helps bank organizations both at micro and macro levels.
Finalizing the budget:
This is related to the formulation of a budget for advertisement. The bank professional,
senior executive and even the policy planners are found involved in the process. The
formulation of a sound budget is essential to remove the financial constraint in the
process. The business of a bank determines the scale of advertisement budget. In
addition, the intensity of competition also plays a decisive role since in a majority of the
cases; we find an increase in the budget due to a change in the competitor’s strategies.
Selecting a suitable vehicle:
Another task at apex level of the bank is to select a suitable vehicle for traveling the
messages. There are number of devices to advertise, such as broadcast media, telecast
media and the print media. For promoting the banking business, the print media is found
economic as well as effective. The messages, appeals can be presented in a very effective
way.
Making possible creativity:In advertising, we find creativity playing a decisive role in
making the process effective. The advertising professionals bear the responsibility of

12. making the appeal, slogans, and messages more creative. The banking organization
should seek the cooperation of leading advertising professional for that very purpose. By
creativity, we mean making the advertisement programmes distinct to the competitive
organizations which are active in influencing the impulse of customer and successful in
informing and sensing the customer. This requires in depth knowledge of the receiving
capacity of the target market for which the advertisement are designed.
Testing the effectiveness:
It is not only sufficient that we advertise. It bears an analogue significance that our
advertisements are effective in influencing the impulse of customer by energizing
persuasion. For making the process effective, it is essential that we test the effectiveness
before launching of the commercial advertisement. The life expectancy if increased
makes advertisement are found productive.
Instrumentality of branch manager:
At micro level, a branch manager bear the responsibility of advertising locally in his/her
command area so that the messages, appeals reach to the target customers of the
command area. Of course we find a budget for advertisement at the apex level but the
business of a particular branch is considerably influenced by the local advertisements. If
we talk about the cause-related marketing, it is the instrumentality of branch manager that
makes possible the identification of local events, moments and make advertisements
condition-oriented.
Characters and themes:
At the apex, it is also important that while advertising, the senior executive watch the
process minutely and select events, characters having a regional orientation. The popular
characters and sensational moments are likely to be impact generating. The theme for
appeals and messages also need due attention. Of course, they have a legitimate right of
advertising but it is not meant that like the goods manufacturing organization, the service
generating organization also start making invasions on our culture. We need to regulate a
bias to gender, profession, region or so.
The aforesaid facts make it clear that while advertising, the banks need to assign due
weight age to the limitation failing which the advertisements would outlive their utility.
We consider advertisement the most sensitive component of the promotion mix but in a

13. majority of the cases, we find misuse of this tool. In addition to other negative effects the
unproductive advertisement would also increase the financial burden therefore utmost
precaution are needed to make the entire process productive. The professional bear the
responsibility of determining the share of this component to the promotion mix since we
can t be proportionate
MARKET SEGMENTATION:
In banking services, the banks are expected to satisfy rural customers, urban customer,
high-earning and low-earning, small-scale and large-scale entrepreneurs and so on.
Hence segmentation of market is considered to be important.
According to Philip kotler, market segmentation is the sub-division of market into
homogenous sub-sets of customers where any sub-sets may conceivably be selected on a
market target to be reached with a distinct marketing mix.
INPORTANCE OF SEGMENTATION IN BANKING SERVICES:
Since the banks have to deal with different types of customers from different fields and
localities, Banking Services need segmentation.
The purchasing power of potential customers is different. In respect of term deposits of
different maturities or deposit schemes the potential customers are required to be
influenced.
These potential customers may be located in some packets of the urban areas.
In the Indian setting we find the emergence of rural market which is wider. Here it is
necessary that that segmentation should be done in tune with the changing socio-
economic conditions of the rural users
Therefore market segmentation is important not only from the viewpoint of expanding
the market but also with the motto of satisfying the user. If the marketing decisions of the
banks are on the basis of micro-level market segment, then only a fine blending of service
and profit elements are possible.

14. Major Players
Nationalized Banks:
The Government of India with effect from 19 July 1969 nationalized 14 major Indian
Banks, each with an aggregate deposit of Rs-50 crores or more with a view to “to serve
better the needs of development of the economy, in conformity with National Priorities
and Objectives.
The following were considered to be the compelling reasons for the Bank
Nationalization:
Concentration of wealth and economic power in industrialists and businessmen;
Branch expansion was confined only to urban areas with rural areas being neglected;
Sectors like agriculture, small scale industries and the other deserving sectors were
outside the purview of lending operations of the bank;
Various malpractices indulged in by banks under private ownership and management to
favor big businessmen and industrialists and
To give a re-orientation in attitude and outlook of the bankers so as to make them
conscious of social objectives and to make them embrace social banking.
The ordinance through which the Banks were nationalized was struck down by Supreme
Court as unconstitutional and invalid, on grounds of “hostile discrimination” and
“illusory compensation”. So the Government addressed these lacunae and Banking
Companies {Acquisition and Transfer of Undertakings} Act, 1970 was introduced.
The fourteen banks covered under this Act of Nationalization were
Central Bank of India Ltd.
Bank of India Ltd.
Punjab National Bank Ltd.
Bank of Baroda Ltd.
United Commercial Bank Ltd.
Canara Bank Ltd.
United Bank of India Ltd.
Dena Bank Ltd.

15. Syndicate Bank Ltd.
Union Bank of India Ltd.
Allahabad Bank Ltd.
Indian Bank Ltd.
Bank of Maharashtra Ltd.
Indian Overseas Bank Ltd.
Eleven years after nationalization of 14 commercial banks the Government on April 15,
1980 took over six schedule Commercial Banks each with demand and time liabilities
exceeding Rs-200 crores through an ordinance issued by the President. These banks were
1. Andhra Bank Ltd.
Corporation Bank Ltd.
New Bank of India Ltd.
Oriental Bank of Commerce Ltd.
Punjab and Sind Bank Ltd.
Vijaya Bank Ltd.
Of these twenty banks nationalized in two installments, New Bank of India got merged
with Punjab National Bank in September 1993. Thus as of today, there are 19
nationalized banks operating in our country.
Thus, as on date there are totally 19 nationalized banks existing as on date. Nationalized
banks have been permitted to offer their equity shares to the public to the extent of 49%
of their capital. Accordingly, the following nationlised banks offered shares to the public -
1. Corporation Bank
Bank of India
Bank of Baroda
Oriental Bank of Commerce
Dena Bank
Apart from the above, the following banks coming under the State Bank of India Group,
have also offered shares to the public –
State Bank of India
State Bank of India
State Bank of Travancore

16. State Bank of Bikaner and Jaipur
As of September’05, nationalised banks contribute 55% of the aggregate deposits of the
Banking System. The contribution of the nationalised banks in the domain of credit of the
entire Banking System is to the extent of 48.5%.
Similarly, as of September’05, State Bank of India and its associates, contribute to 25%
of the aggregate deposits of the Banking System and 28.4% of the aggregate credit of the
banking system.
2. Private Sector Bank:
By private sector banks we mean those banks where equity is held by private
shareholders that is to say there is no government holding of the equity shares.
This category of banks also occupies a significant position in the Banking Scenario.
There are already 25 private sector banks operating in our country for quite some time.
These banks are listed as under-
The Vysya Bank Ltd.
The Federal Bank Ltd.
The Jammu & Kashmir Bank Ltd.
Bank of Rajasthan Ltd.
Karnataka Bank Ltd.
The South Indian Bank Ltd.
The United Western Bank Ltd.
Bank of Madura Ltd.
The Catholic Syrian Bank Ltd.
The Karur Vysya Bank Ltd.
Tamilnad Mercantile Bank Ltd.
The Lakshmi Vilas Bank Ltd.
The Sangli Bank Ltd.
The Dhanalakshmi Bank Ltd.
Development Credit Bank Ltd.
Bharat Overseas Bank Ltd.
City Union Bank Ltd.

17. The Benares State Bank Ltd.
The Nedungadi Bank Ltd.
Lord Krishna Bank Ltd.
Bareily Corporation Bank Ltd.
Nainital Bank Ltd.
The Ratnakar Bank Ltd.
The Ganesh Bank of Kurundwad Ltd.
SBI Comm. & Int. Bank Ltd.
There has been a growing presence of private sector banks, more so, after the
introduction of financial sector reforms from 1991. Six new private banks listed as under
were issued licenses in 1994-95 and commenced operations during the same year.
UTI Bank Ltd.
IndusInd Bank Ltd.
ICICI Banking Corporation Ltd.
Global Trust Bank Ltd.
Centurion Bank Ltd.
HDFC Bank Ltd.
Again, during 1995-96, the following three banks were issued the licenses and
commenced their operations:
Times Bank Ltd.
Bank of Punjab Ltd.
IDBI Bank Ltd.
Thus, apart from the twenty-five old private sector banks (already listed above), we have
got nine new private sector banks.
During the period Times Bank ltd. was merged with HDFC bank. However The
Nedungadi Bank Ltd. was merged with one of the nationalize bank i.e. Andra Bank Ltd.
Private sector banks have been rapidly increasing their presence in the recent times and
offering a variety of newer services to the customers and posing a stiff competition to the
group of public sector banks.

18. 3. Foreign Banks:
The other important segment of commercial banking system is that of foreign banks.
Foreign Banks, being banks registered and headquartered in Overseas Centres, have
opened branches in our country on a continual basis. Even in the initial decades of the
century, we had the presence of foreign banks in our country albeit in a smaller way.
Here again, the presence of foreign banks has rapidly improved after 199, after the advent
of the financial sector reforms.
The increasing presence of foreign banks in our country has accentuated the competition
in the Banking Industry bringing in the process newer products as well as resulting in
improved customer service. They are employing and enhancing the impact of technology
for the growth of business volumes along with sophisticated service delivery mechanism
to the clientele.
As per the present policy measures in force, all the foreign banks together cannot have
more than 15% of the total business of the banking industry as a whole.
ADDITIONAL SERVICES
AGENCY SERVICES
In order to facilitate the customers, the banks accept standing instructions from their
customers either to make payments on their behalf or collect money or effect transfer of
money. The relationship between the banker and customer, in this case, is that of
principal and agent. The customer directs the banker as to what he should do. The banker
acts according to his direction. In case of any loss, the customer alone will bear this as his
directions are carries out by the banker. The banker will charge the customer for doing
such services. Some of the agency functions are as follows:
The banker pays rent, insurance premium, subscription etc. on behalf of the customer as
per his prior instructions on the appropriate dates. The payment will be made from the
customer’s account.

19. In the same way the bank undertakes to collect such income on behalf of the customer.
The banker also collects cheques/bills etc. on behalf of the customer.
In India, we do not have banks exclusively dealing in foreign exchange. The commercial
banks, in addition to their normal functions, undertake the business in foreign exchange.
They buy and sell foreign exchange currencies as per the regulations. They also discount
the foreign exchange bills.
The financial stability of the bank and complete confidence of the customers, dealing
with it has made the bank a natural and trusted friend for undertaking executorship and
trusteeship. In addition to this, an increasing reluctance of customers to trust individuals,
combined with insufficient knowledge of law on their part has led commercial banks to
act as trustees/executors to their customers. As a trustee, the banker takes care of the
management trust and administers the trust funds effectively. The functions undertaken
under the executor/trustee services are as follows:
To handle the investments/estates during the life time of the owner; and distribute them
according to the terms of the will after his death; To manage the property during the
owner’s life time and after his death on behalf of his dependants through their life time or
till such property is distributed/ applied according to the instructions of the deceased; To
manage movables and also act as a guardian of a minor’s property; Guide customers in
filing estate duty returns and appear before Estate Duty Authorities when called upon to
do so; Administration of public trusts; Acting as trustees for debentureholders.
GENERAL UTILITY SERVICES
A number of incidental functions are carried on by the commercial banks to help his
customers.
Safe Custody of valuables:

20. One of the important services which a bank renders to his customers is that of keeping
valuables of customers is that of keeping valuables of customers in safe custody
including jewellery, share certificates, insurance policy, title deeds, gold ornaments, ‘will’
etc. while banker accepts anything for safe custody he accepts them under duly sealed
box, and banker passes receipt for such deposits. The safe deposit receipt has to be
returned duly discharged when the banker redelivers the boxed/pocket. The relationship
between banker and customer is that of a bailor and bailee. The contract entered into is a
contract of ‘Bailment’. In present day banking, bankers are offering locker facility, which
is superior, and hence becoming popular. However, at centers where locker facility is still
not available the articles in safe custody are a service of great value to customers.
Under this facility, banker’s responsibility is higher, because if there is any damage to
property bailed he would be responsible. This facility is used by bankers themselves to
deposit their branch ‘duplicate keys’ in some other bank/branch. In the event of any loss
of keys or other problem, the duplicate keys can be withdrawn to ensure smooth
functioning of the branch.
The articles in safe custody facility is utilized by the people for depositing their “will”,
their last wish as to how to deal with their property.
Except in States of MP and UP in all other states probate or letters of administration will
be necessary to deliver the articles.
Safe Deposit Locker Facilities:
Many banks offer safe deposit locker facility. Under the arrangement, a customer hires a
locker cabinet, which is kept by the bank for the purpose. Lockers are generally kept in
strong room, which is a water proof/ fireproof place. There are different sizes of lockers
like small, medium, large and extra large, etc. The locker rent is recovered for a year in
advance and depends on the size of the locker.
A locker hirer has to sign an ‘agreement’ on Rs-10/- stamp paper with the bank.
Thereafter, a locker is allotted to him. The locker has two keys. The ‘master key’ is kept
by the bank whereas the other key is given to the customer. There is no duplicate key
available for the customer. In case, it is lost, the locker has to be broken open at the cost
of the customer.

21. The locker is a most essential facility in cities and urban places and even in villages for
safe keeping of valuables. The locker system is superior to safe custody system because
customer can keep anything the customer chooses to keep, he need not inform banker
about the contents. It can be operated on locker, no need to seal, pack the contents etc. the
charges are very nominal. Small locker with SBI costs Rs-100/- per annum.A locker can
be opened jointly and access to the locker can be had by ‘either’ of the joint account
holder.
If there is defaults in payment of locker, persistently, say more than 3 years, then bank
can give notice to locker hirer and if he does not respond, with due notice break open the
locker in presence of witnesses. The banker is at liberty to recover its locker rent from the
proceeds of contents. The relationship of the banker and customer in the safe deposit
locker is that of licensor and licensee. While surrendering the locker, the original locker
holder has to come personally to surrender the key. At the time of allowing access to the
locker, the hirer has to sign ‘access register’ his signature is verified and thereafter access
to locker is allowed.
Telebanking:
This is a secure, fast & convenient way to obtain a range of services by using a telephone
without visiting the branch e.g. information on account, conduct of selected transactions,
report loss of ATM card, order a cheque book, draft etc.
What are the services available under "Telebanking"?
Online balance inquiry.
Details of transactions
1. Last five transactions
2. Transactions from a recent date
Request for service
1. Cheque book request
2. Funds transfer request
3. Drafts request

22. Request for statement of account
1. From the date of last statement
2. From a specific date Change on PIN...etc.
The facility is protected with two level passwords in addition to the Customer's account
number, which is his login ID. The Customer should be careful to maintain secrecy of his
password & PIN number.
All individual customers in Personal segment except those whose accounts are operated
through joint signature and whose accounts are not running satisfactorily, can avail the
facility. Even the minors who are allowed to open and operate account can seek to avail
the facility.
The Customer is required to apply for the facility in the application form prescribed for
the purpose. After scrutiny, the Branch will register the name & allot the PIN &
Transaction password, which the Customer will change on his first log in for a number of
his choice. Presently the facility is available in select fully computerized branches. The
service is provided 'free of charge'.

23. TYPES OF ACCOUNTS
FIXED DEPOSITS
Fixed deposits are made by the customers for a specified period, ranging from 15 days to
5 years or more, the rate of interest ranges from ½% to 11%. The longer the period of
deposit, higher is the rate of interest. The depositor is assured of the safety of the funds,
apart from higher returns. The depositor, as per the terms, agrees not withdraw the
amount earlier. In acknowledgement of the fixed deposit, the customer is given a receipt
called fixed deposit receipt popularly known as ‘FDR’ in the business circle. The rules
governing fixed deposits are printed on the reverse side of the FDR.
At the end of the term, the customer may either withdraw the amount along with interest
or renew the deposit for a further period at this convenience. Since the customer would
withdraw the funds at the end of the period, the banker can lend the money confidently
without keeping any reserve to meet the withdrawals. In case the customer needs money
prior to the due date, although he may not be able to withdraw from the Fixed Deposit, he
can obtain a loan from the bank on the strength of the Fixed Deposit Receipt. The banker
charges an interest for this loan.
RECURRING DEPOSIT ACCOUNT
This is a type of account, which is a combination of the characters of saving bank account
and fixed deposit accounts. In this account, the depositors can pay a fixed sum of money
every month for various periods, say 12 to 120 months. This account is normally opened
by salaried persons or individuals who get regular income. Deposits may be paid in easy
installments. The commercial banks have introduced the Recurring Deposit Scheme to
enable the small depositors to save for a predetermined period. In one way it may be
viewed as compulsory savings to enable them to build up sizeable amount. The bankers
allow compound rate of interest. In case the depositor needs the money even before the
stipulated period he can get back the money. In such cases, the banker may pay a lesser
rate of interest than it was agreed upon.
Saving Bank Account: -
As the name indicates, the purpose of opening a savings bank account is to save money to
meet the future contingencies. A person is allowed to open a savings bank account

24. provided he is properly introduced. The customer is expected to maintain a minimum
balance of rs-20/- in his account. Nowadays, any savings bank account holder who agrees
to maintain a minimum balance of Rs-500/- in his account may make use of the cheque
facilities. The interest is allowed at the rate of 5% on the minimum balance as in the case
of any date as stipulated and the last day of each calendar month. The rate allowed on
savings bank account is 5% p.a. there are some restrictions relating to the number and
amount of withdrawals. The number of withdrawals are generally restricted 100 per year
and the total amount of withdrawals at any time should not exceed Rs-10000 or 10% of
the balance whichever is higher. But if he wants to withdrawal large sum, he should give
prior notice to the banker.
Saving Bank Accounts are usually opened in the name of individuals. No saving bank
account is opened for a trading company or a business concern whether such a concern is
a proprietary concern, partnership firm, a company or association.
Nowadays, a banker facilitates the collection of cheques drawn in the name of the
customer through the savings bank account. However, he does not collect third party
cheques. A third party cheque is one, which is drawn in the name of a person other than
the customer.
Current Account: -
A businessman for the purpose of his business normally opens a current account. He
should always maintain such minimum balance in the account. A banker should be
doubly cautious to get an introduction letter from the customer at the time of opening
such account. He should also see that such introductory letters are verified, due to the
following reasons: -
(1) The RBI has given a direction that the prospective customers should produce
Introductory letter at the time of opening the account;
(2) The banker should ascertain the bonafides of the customer;
(3) Since third party cheques are collected through the account, there is a chance for fraud
by unscrupulous elements;
(4) Since overdraft and cash credit facilities are available, the banker should not be
exploited by an unscrupulous customer.

25. In a current account the banker is obliged to honour the cheques drawn on him if there is
sufficient balance to his credit. One of the peculiar features of the current account is that
the banker does not allow any interest on the deposits whatever the balance is. However,
if the customer overdraws the account he may have to pay interest to the banker.
Overdraft may be granted for a temporary period of one moth or more depending upon
the requirements of a customer. Cash credit facility is also available in the current
account. Bankers allow certain special facilities such as free collection of outstation
cheques, issue of demand drafts and mail transfers without any extra charges.
TYPES OF MICELLANEOUS ACCOUNTS
(1) Pigmy/Janata Deposits: -
(2) Insurance Linked Deposits: -
(3) People Saving Plan: -
(4) Daily Saving Schemes: -
Minor’s Savings: -
Annuity /Retiring Scheme: -
Farmer’s Deposit Scheme:-
Monthly Income Plan: -
(9) Cash Certificate Scheme: -
(10) Housing Deposit Scheme: -
(11) Amudha Surabi Deposit Scheme: -
VARIOUS TYPES OF CARDS
Various types of Cards:
Following types of cards are available in India:
Credit Card:

26. The credit card is an instrument, which enables the cardholder to obtain goods or services
from shops and establishments where arrangements have been made by issuing bank to
reimburse them. The goods and services are bought by the cardholders from shops and
establishments upon presentation of card instead of cash or cheque for settlement of their
bills up of specified amount fixed the card-issuing bank. Such bills are sent for settlement
by the shops and establishments to the card-issuing bank, monthly or periodically for
obtaining reimbursement. Card issuing bank upon receipt of such bills from shops and
establishments for reimbursement settle it by debiting the customer’s account. Thus
cardholder gets credit for 30 to 45 days free of cost.
Cash Card:
Certain banks issue Cash Cards in addition to Credit Card which enable holder of card to
draw certain amount of cash from the branch office, of the card issuing bank or now from
ATM installed by the bank at various places.
Smart Card:
This type of cards is also known as Chip Card. With the increasing computerized
network, banks extend the Chip Card facilities to the select customers. The Smart Card is
a microcomputer chip giving its intelligence and a memory capacity much more than
usual magnetic cards. Smart card has much computing power of Personal Computers. It
has storage capacity of all types of personal data of the cardholder. Smart Card can be
used with a Personal Identification Number (PIN). The Smart Card can be programmed
to do any task within its processing power and memory capacity. It is a Data Carrier
Identity Card and also meant for using for monetary transactions like payment of hotel
bills, electricity bills.
Co-Branded Cards:
This type of credit cards are those which banks promotes jointly with another financial
agencies, like Master Card, BOB Card, Diners Card, , Bank of Taj Card India BOI Card.
These types of Cards are used with other non-financial institutions, which enables the
cardholder to claim discount in price for the use of card.
Debit Card:
Debit Card is also known as a Payment Card used to obtain cash, goods and services
automatically debiting the payments to the cardholder’s bank account immediately.

27. Charge Card:
Charge Card is a type of card in which card holder is required to settle the outstanding in
full at the end of a short period within 25-30 days to the extent of certain amount say Rs-
5000/- to Rs-10000/- at one time.
PLACE
Selection of suitable place in an important element in the overall marketing decision. The
locational decision helps in activation the business. The means searching a suitable point
for offering the banking services or location the branch at a sensitive point.
Location of bank at places accessible to the actual and potential users will bring
momentum in the banking activities while making a place decision the availability of
transport communication, electricity and other necessary facilities for the smooth
functioning of the bank should be considered.
Neat and clean premises attract people. Of late the banks have been facing the problems
of robbery. It is essential that branches are located at the points where security
arrangements can be made available within a few minutes
The banks have to be careful that the General of Industrial users of services coming to the
banks return safely.
In order to serve all customers segment round the clock the banks have introduced ATM,
tele-banking, home-banking and now Inter.net banking
Nationalised Banks:
Parameter: Nationalised
banks
SBI and its
Associates
No of banks( as march’06) 19 8
No of branches 71,398 52,995
Amount of deposits (as 6,37,512 3,13,163 crores

28. march’05) crores
Amount of advances 2,28,644
crores
1,24,419 crores
Private Sector Bank:
The size of the private sector banks in our country as on date is furnished hereunder. (As
at June’06)
Number of Private Sector Banks in operation 35
Number of Bank branches of Private Sector
Banks
4,473
Amount of Deposits ( as at march’05) 31,692 crores
Amount of Advances ( as at march’05) 91,588 crores
Private sector banks have been rapidly increasing their presence in the recent times and
offering a variety of newer services to the customers and posing a stiff competition to the
group of public sector banks.
PROMOTION
Banking services can be promoted in two ways:
Personal promotion i.e. person to person, person to persons, persons to persons and
conferences.
Impersonal promotion i.e. advertising, publicity and sales promotion measures.
Personal promotion hips in creating impulse buying and generates selling with the help of
impersonal communication.
With the help of different promotional tools a manager can transform a potential
customer into actual customer.
In banking service the success of personal selling depends on the behavior and activities
of the bankers
Today Advertising has occupied a place of significance. It is used for mass-
communication. Advertisement can serve the purpose if it is well read, heard, believed,
remembered and acted upon by the potential users or target audience. It can create
awareness and bring about attitudinal change in the target market.

29. Publicity is different to advertising. It is an editorial comment about the ideas, products
and organizations. It is an important part of public relation. Today when we find that
social welfare to be an important part of banking services, the publicity measures need
due care.
Displays, show, exhibitions, gifts are some of the important measures to stimulate the
user action and bankers effectiveness. Word of mouth is the best form of publicity
In order to lure the customers to buy the services of the bank, bank often tend to provide
services which are beneficial to customers. Shown below are the special services offered
to customers other then the regulatory services.
Excellent service and lower costs. A quick survey of similar schemes available
elsewhere and find out that SBI Car Loans for new and old vehicles offer:
Lowest interest rates
Longer repayment period of upto 84 months.
No processing charges.
No hidden costs or administrative charges.
Free Personal Accident Insurance
No advance EMIs. (Some Banks/companies ask to pay one or more EMIs at the time of
disbursement of loan, thereby effectively reducing loan amount.)
Complete transparency: SBI levy interest on daily reducing balance method. When
customer pay one installment, the interest is automatically calculated on the reduced
balance thereafter. When one pay interest on an annual reducing balance, as charged by
many other companies/banks, the interest amount for the coming year is determined on
the amount outstanding at the beginning of the year. Customer continues to pay interest
even on the amounts he repays during the year.
PROCESS
The process involves all the activities of banking service from the product conception
stage till it’s marketing at all branch level. It also includes the accounting procedure.
Previously banks were more activity oriented by due to the technological advances they
have shifted their approach to customer oriented service delivery.

30. The improvement in the process comes from reengineering of the process in order to
reduce delays in processing the transaction e.g. loan applications, cheques clearing etc.
The products and the seller together constitute the banking product. Bank products cannot
be separated from people who market them. While designing the product due care should
to given to both the product and the seller. A well conceived product could fail it it is not
implemented properly. The bank products can be implemented only through people.
Banks should adopt internal marketing in order to make the whole business customer-
oriented. The bank products should be marketed to the employees first before they are
marketed to customers.
The corporate mission must be communicated effectively to all the employees by the top
level management. The recruits should not only be conversant with all the aspects of
banking but also have the skill for social interaction and tolerance for inter-personal
contact. Most of the banks are moving towards technology-based banking. But still
matters like investment banking deposit, mobilization, and credit evaluation, etc. can be
done through persona contact. The process involves all the activities of banking service
from the product conception stage till it’s marketing at all branch level. It also includes
the accounting procedure. Previously banks were more activity oriented by due to the
technological advances they have shifted their approach to customer oriented service
delivery.
The improvement in the process comes from reengineering of the process in order to
reduce delays in processing the transaction e.g. loan applications, cheques clearing etc.
Separate registration is required in case the accounts are maintained at different branches.
Separate registration is allowed for single and joint accounts at the option of the user.
Normally the account holders can access his accounts through the www.onlinesbi.com
only after he/she acknowledges to the respective Branch(es) the receipt of the User-Id and
Password sent to him/her.
Each account holder in a joint account with “Either or Survivor” type mode of operation
may register himself/ herself as a USER of the www.onlinesbi.com facility.
All other accounts not listed in the registration form will be available on the
www.onlinesbi.com for the purpose of enquiry only. The customers may approach
Branch for enabling transaction rights on such accounts any time.

31. Bank’s Terms:
All requests received from the USERS are logged and transmitted to the User’s Branch
for their fulfillment. The requests become effective from the time these are recorded/
registered at the respective branch. While registering the request, the USER is informed
about the time normally taken by the Bank for fulfillment such requests.
The www.onlinesbi.com service is a ‘VeriSign’ certified secure site. It assures that during
the session user is dealing with web site of SBI. The two-way communication is secured
with 128-bit SSL encryption technology, which ensures the confidentiality of the data
during transmission. .
PEOPLE
The products and the seller together constitute the banking product. Bank products cannot
be separated from people who market them. While designing the product due care should
to given to both the product and the seller. A well conceived product could fail it it is not
implemented properly. The bank products can be implemented only through people.
Banks should adopt internal marketing in order to make the whole business customer-
oriented. The bank products should be marketed to the employees first before they are
marketed to customers.
The corporate mission must be communicated effectively to all the employees by the top
level management. The recruits should not only be conversant with all the aspects of
banking but also have the skill for social interaction and tolerance for inter-personal
contact.
Most of the banks are moving towards technology-based banking. But still matters like
investment banking deposit, mobilization, and credit evaluation, etc. can be done through
persona contact. Bank offer different schemes for different target segments. They exactly
know what their customers want and accordingly provide services to their customers. For
example – Students a/c, which targets the people within the age group of 5-21, students
Account, is opened. The bank also provides special accounts for special people who are
associated with the bank for many years. Apart from these services banks also provide a
host of other services as laid down by the RBI. Banks also offer Banking services
according the target segment they are associated with; when any person comes to open a

32. new bank account their executives try and explain to them Terms and Conditions while
opening their account. Banks also provide special consencial rates to senior citizens they
are provided with more interest rates which are offered to other citizens. Banks also tend
to provide special accounts for Specific Industries or companies who have a particular
niche in the market. Similarly, these guidelines are also followed when a corporate
executive or any particular executive applies for loan is provided with at special
consencial rates. In this way banks often tend to segment their market and offer rates to
special rates at special prices.
PRICING
Pricing is factor that majority of banks sustain in the market. Pricing is done in banks
according to its services that they do offer. Nationalized banks charge low price for their
services because the services that they provide are not up to the mark and also they
provide low rate of interest as compared other than those provided by other private sector
banks. On the other hand Private sector banks provide a host of essential services and
even charge a price for that but in return they provide the customers with the services
which they don’t except. In the banks, pricing relates to interest paid by the bankers on
deposits, interest charged on loans, overdraft, cash credit, charges for various types of
services rendered on standing instructions given to the bank and commission charged.
The Reserve Bank of India and the Indian Banking Association are concerned with this
aspect. Pricing policy of a bank is considered important for raising the number of actual
customers.
The potential customer or investors generally frame their investment decisions on the
basis of interest to be received on the investment. While framing a pricing policy
different pricing methods can be used, in cost plus pricing a detailed analysis of cost
structure of various banks products and services is to be done.
In case of competition related approach, the price is decided on the competitor’s price.
The banks are required to frame two fold strategies. Strategies concerned with interest
and commission to be paid to the customer and interest or commission to be paid by the
customer for different types of services.

33. The banks also have to take the value satisfaction variable into consideration while
formulation pricing strategies. RBI has to be more liberal so that the commercial banks
make decisions in tune with the changing savings and investment behavior
PHYSICAL EVIDENCE:
Physical evidence focuses the banker’s attention because banking products are intangible.
The environment is changing. It is becoming friendlier. Most of the private and foreign
banks portray a new welcoming and friendly look to the customer. Flashy cheques books
with the nave of the account holder printed, imaginative design of bank brochure,
statement of accounts with details of transaction are other tangible aspects.
Logos, symbols, attractive brand names etc. add to the customer’s perception of service
quality. There is an urgent need to implement technologies in order to raise productivity
as well as to enable the banking system to cop with the increasing complexities of
business.It is also important for the banks to promote specialized services like credit
analysis, foreign exchange dealings etc. by appointing persons who are conversant in
such specialized activities.In order to improve financial viability and profitability of the
banks the major task before the banking industry is to consolidate its progress by
improving its operational efficiency and customer service.
Various Opportunities for Banking Sector in INDIA
THE Indian financial sector is undergoing rapid change. Structural reforms aimed at
improving the productivity and efficiency of the economy are apace. The $28-billion
sector, growing at roughly 15 per cent, has displayed remarkable stability over the years
even when other markets in the Asian region were facing a crisis. The Indian financial
sector has kept pace with the growing needs of its borrowers.
Changing environment
The most important factor shaping today's world is globalization. Companies are
constantly in search of low-cost markets. Technology is driving growth in production and
productivity and competition is stiff. Secondly, rapid development in communication

34. technology has lead to greater integration of global financial markets, in turn boosting
private capital flows and foreign direct investment.
A third factor is the increasing share of emerging market economies in world trade.
Another fallout of globalization is the increase in volatility and vulnerability of markets.
This calls for the adoption of international standards and global benchmarks.
Aligning with global standards
To strengthen India's banking system in an increasingly competitive environment and
guard against financial fragility, financial sector reforms were initiated as part of the
economic reforms launched in the country since 1991-92. Significant progress has been
made in the past few years to bring the Indian Banking system closer to international
standards.
India has adopted international prudential norms and practices with regard to capital
adequacy, income recognition, provisioning requirement and supervision and these norms
have been progressively tightened over the years. There has been a steady decline in the
level of resource pre-emption from the banking system in the form of CRR (cash reserve
ratio) and SLR (statutory liquidity ratio). Interest rates in various segments of financial
markets have been deregulated in a phased manner.
The mark-to-market practice for valuation of government securities has been gradually
enhanced and further refinement, in line with international best practices, carried out in
valuation and classification of investment by banks.
Risk management in banks has been strengthened and measures put in place to mitigate
credit and market risks and efforts are on to measure and control operational risk. Banks
have been given greater freedom in investing as also raising funds abroad and managing
their external liability, subject to prudential guidelines.
In the area of supervision, the Basel core principles for effective banking supervision are
being followed. Along with off-site surveillance there is periodic on-site monitoring of
the risk profile of banks and their compliance with prudential guidelines and a
"CAMELS"-based rating system is being followed.
The Reserve Bank of India's regulatory and supervisory responsibility has been widened
to include banking institutions and non-banking financial companies.

35. The end result is that the Indian banking sector has been considerably strengthened; there
is greater transparency and closer convergence of Indian financial system with practices
prevailing in international financial markets.
There is special focus on corporate governance and the setting up of specialized board-
level panels such as the executive, risk management, audit, compensation, asset-liability
management committees, and so on.
The RBI's Standing Committee on International Financial Standards and Codes under the
Chairmanship of Dr Y. V. Reddy has identified global standards and codes as part of the
efforts to create a sound financial architecture aligned with global practices.
Moving forward
But there are some areas that need greater attention.
Need to check NPAs: The biggest challenge is the problem of NPAs (non-performing
assets). Around 12 per cent of bank credit is locked in NPAs, which means that banks do
not earn any interest on NPA accounts. This is a drain on the financial health of banks. If
banks have to cut their costs and improve performance, they must reduce their NPAs.
The Government has re-promulgated the ordinance to help banks expedite recovery. This
calls for strengthening credit appraisal and risk management and developing review and
control systems in tune with the changing requirements.
Strengthening internal controls: While the information technology explosion has been
beneficial, it has also brought with it some unsavory side-effects. The increase in frauds
and scams in the financial sector is a cause for concern and calls for the strengthening of
internal controls of banks and financial institutions.
Focus on Indian economy: Even as banks move closer to international standards, they
cannot lose touch with the realities of the Indian economy. In this context, agriculture,
small industries/businesses and the services sectors, must be given special consideration
and credit flow to the rural sector increased. In an age where the world has become
smaller and money moves as quickly as information, achieving global benchmarks is
important for global players.
But underlying this is the need to have sound fundamentals. There is no doubt that only
banks and financial institutions that are focused on efficiency, productivity and

36. profitability have a chance to survive in a highly competitive environment and therefore
need to equip themselves thoroughly to face the future competition.