Harsh Final Project.docx

CHAPTER : 1 INTRODUCTION

 Introduction Of Indian Banking System  Need of the Banks  History of Indian Banking System  Nationalisation  Government policy on banking industry  Law of banking  Acts Regarding Banking Industry  Classification of Banking Industry in India  Services provided by banking organizations

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Introduction of Indian banking system

A bank is a financial institution that provides banking and other financial services to their customers. A bank is generally understood as an institution which provides fundamental banking services such as accepting deposits and providing loans. There are also non-banking institutions that provide certain banking services without meeting the legal definition of a bank. Banks are a subset of the financial services industry. A banking system also referred as a system provided by the bank which offers cash management services for customers, reporting the transactions of their accounts and portfolios, throughout the day. The banking system in India, should not only be hassle free but it should be able to meet the 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 Banks are the main participants of the financial system in India. The Banking sector offers several facilities and opportunities to their customers. All the banks safeguards the money and valuables and provide loans, credit, and payment services, such as checking accounts, money orders, and cashier’s cheques. The banks also offer investment and insurance products. As a variety of models for cooperation and integration among finance industries have emerged, some of the traditional distinctions between banks, insurance companies, and securities firms have diminished. In spite of these changes, banks continue to maintain and perform their primary role—accepting deposits and lending funds from these deposits

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Need of the Banks

Before the establishment of banks, the financial activities were handled by money lenders and individuals. At that time the interest rates were very high. Again there were no security of public savings and no uniformity regarding loans. So as to overcome such problems the organized banking sector was established, which was fully regulated by the government. The organized banking sector works within the financial system to provide loans, accept deposits and provide other services to their customers. The following functions of the bank explain the need of the bank and its importance: •

To provide the security to the savings of customers.

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To control the supply of money and credit

• To encourage public confidence in the working of the financial system, increase savings speedily and efficiently. • To avoid focus of financial powers in the hands of a few individuals and institutions. • To set equal norms and conditions (i.e. rate of interest, period of lending etc) to all types of customers

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History of Indian Banking System

The first bank in India, called The General Bank of India was established in the year 1786. The East India Company established The Bank of Bengal/Calcutta (1809), Bank of Bombay (1840) and Bank of Madras (1843). The next bank was Bank of Hindustan which was established in 1870. These three individual units (Bank of Calcutta, Bank of Bombay, and Bank of Madras) were called as Presidency Banks. Allahabad Bank which was established in 1865, was for the first time completely run by Indians. Punjab National Bank Ltd. was set up in 1894 with head quarters 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. In 1921, all presidency banks were amalgamated to form the Imperial Bank of India which was run by European Shareholders. After that the Reserve Bank of India was established in April 1935. At the time of first phase the growth of banking sector was very slow. Between 1913 and 1948 there were approximately 1100 small banks in India. 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 a Central Banking Authority. After independence, Government has taken most important steps in regard of Indian Banking Sector reforms. In 1955, the Imperial Bank of India was nationalized and was given the name "State Bank of India", to act as the principal agent of RBI and to handle banking transactions all over the country. It was established under State Bank of India Act, 1955. Seven banks forming subsidiary of State Bank of India was nationalized in 1960. On 19 th July, 1969, major process of nationalization was carried out. At the same time 14 major Indian commercial banks of the country were nationalized. In 1980, another six banks were nationalized, and thus raising the number of nationalized banks to 20. Seven more banks were nationalized with deposits over 200 Crores. Till the year 1980 approximately 80% of the banking segment in India was under government’s ownership. On the suggestions of Narsimhan Committee, the Banking Regulation Act was amended in 1993 and thus the gates for the new private sector banks were opened. The following are the major steps taken by the Government of India to Regulate Banking institutions in the country. 4

Nationalisation By the 1960s, the Indian banking industry has become an important tool to facilitate the development of the Indian economy. At the same time, it has emerged as a large employer, and a debate has ensured about the possibility to nationalise the banking industry. Indira Gandhi, the-then Prime Minister of India expressed the intention of the Government of India (GOI) in the annual conference of the All India Congress Meeting in a paper entitled "Stray thoughts on Bank Nationalisation". The paper was received with positive enthusiasm. Thereafter, her move was swift and sudden, and the GOI issued an ordinance and nationalised the 14 largest commercial banks with effect from the midnight of July 19, 1969. Jayaprakash Narayan, a national leader of India, described the step as a "Masterstroke of political sagacity" Within two weeks of the issue of the ordinance, the Parliament passed the Banking Companies (Acquisition and Transfer of Undertaking) Bill, and it received the presidential approval on 9 August, 1969. A second step of nationalisation of 6 more commercial banks followed in 1980. The stated reason for the nationalisation was to give the government more control of credit delivery. With the second step of nationalisation, the GOI controlled around 91% of the banking business in India. Later on, in the year 1993, the government merged New Bank of India with Punjab National Bank. It was the only merger between nationalised banks and resulted in the reduction of the number of nationalised banks from 20 to 19. After this, until the 1990s, the nationalised banks grew at a pace of around 4%, closer to the average growth rate of the Indian economy. The nationalised banks were credited by some; including Home minister P. Chidambaram, to have helped the Indian economy withstand the global financial crisis of 2007-2009.

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Liberalisation In the early 1990s, the then NarsimhaRao government embarked on a policy of liberalisation, licensing a small number of private banks. These came to be known as New Generation tech-savvy banks, and included Global Trust Bank (the first of such new generation banks to be set up), which later amalgamated with Oriental Bank of Commerce, Axis Bank(earlier as UTI Bank), ICICI Bank and HDFC Bank. This move along with the rapid growth in the economy of India revolutionized the banking sector in India which has seen rapid growth with strong contribution from all the three sectors of banks, namely, government banks, private banks and foreign banks. The next stage for the Indian banking has been setup with the proposed relaxation in the norms for Foreign Direct Investment, where all Foreign Investors in banks may be given voting rights which could exceed the present cap of 10%, at present it has gone up to 49% with some restrictions. The new policy shook the banking sector in India completely. Bankers, till this time, were used to the 4-6-4 method (Borrow at 4%; Lend at 6%; Go home at 4) of functioning. The new wave ushered in a modern outlook and tech-savvy methods of working for the traditional banks. All this led to the retail boom in India. People not just demanded more from their banks but also received more. Currently (2007), banking in India is generally fairly mature in terms of supply, product range and reach-even though reach in rural India still remains a challenge for the private sector and foreign banks. In terms of quality of assets and capital adequacy, Indian banks are considered to have clean, strong and transparent balance sheets as compared to other banks in comparable economies in its region. The Reserve Bank of India is an autonomous body, with minimal pressure from the government. The stated policy of the Bank on the Indian Rupee is to manage volatility but without any fixed exchange rate-and this has mostly been true. With the growth in the Indian economy expected to be strong for quite some time-especially in its services sector-the demand for banking services, especially retail banking, mortgages and investment services are expected to be strong. In March 2006, the Reserve Bank of India allowed Warburg Pincus to increase its stake in Kotak Mahindra Bank (a private sector bank) to 10%. This is the first time an investor has been allowed to hold more than 5% in a private sector bank since the RBI announced norms in 2005 that any stake exceeding 5% in the private sector banks would need to be voted by them. In recent years critics have charged that the non-government owned banks are too aggressive in their loan recovery efforts in connection with housing, vehicle and personal loans. There are press reports that the banks' loan recovery efforts have driven defaulting borrowers to suicide. 6

Classification ofBanking Industry In India Indian banking industry has been divided into two parts, organized and unorganized sectors. The organized sector consists of Reserve Bank of India, Commercial Banks and Co-operative Banks, and Specialized Financial Institutions (HDFC, ICICI, IFC etc). The unorganized sector, which is not homogeneous, is largely made up of money lenders and indigenous bankers. An outline of the Indian Banking structure may be presented as follows: 1. Reserve banks of India. 2. Indian Scheduled Commercial Banks. a) State Bank of India and its associate banks. b) Twenty nationalized banks. c) Regional rural banks. d) Other scheduled commercial banks. 3. Foreign Banks 4. Non-scheduled banks. 5. Co-operative banks.

Classification of Banking Industry In India Reserve banks of India.

State Bank of India and its associate banks.

Indian Scheduled Commerc ial Banks.

Twenty nationalied banks

Foreign Banks

Regional rural banks.

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Nonscheduled banks

Other scheduled commercial banks.

Cooperative banks.

Functions Of Banking System In India The functions of a commercial banks are divided into two categories: i) Primary functions, and ii) Secondary functions including agency functions. i) Primary functions: The primary functions of a commercial bank include: a) accepting deposits; and b) granting loans and advances; a) Accepting deposits The most important activity of a commercial bank is to mobilise deposits from the public. People who have surplus income and savings find it convenient to deposit the amounts with banks. Depending upon the nature of deposits, funds deposited with bank also earn interest. Thus, deposits with the bank grow along with the interest earned. If the rate of interest is higher, public are motivated to deposit more funds with the bank. There is also safety of funds deposited with the bank. b) Grant of loans and advances The second important function of a commercial bank is to grant loans and advances. Such loans and advances are given to members of the public and to the business community at a higher rate of interest than allowed by banks on various deposit accounts. The rate of interest charged on loans and advances varies depending upon the purpose, period and the mode of repayment. The difference between the rate of interest allowed on deposits and the rate charged on the Loans is the main source of a bank’s income.

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i)Loans A loan is granted for a specific time period. Generally, commercial banks grant short-term loans. But term loans, Functions of Commercial Banks :: 23 that is, loan for more than a year, may also be granted. The borrower may withdraw the entire amount in lumpsum or in instalments. However, interest is charged on the full amount of loan. Loans are generally granted against the security of certain assets. A loan may be repaid either in lumpsum or in instalments. ii)Advances An advance is a credit facility provided by the bank to its customers. It differs from loan in the sense that loans may be granted for longer period, but advances are normally granted for a short period of time. Further the purpose of granting advances is to meet the day to day requirements of business. The rate of interest charged on advances varies from bank to bank. Interest is charged only on the amount withdrawn and not on the sanctioned amount. ii) Secondaryfunctions Besides the primary functions of accepting deposits and lending money, banks perform a number of other functions which are called secondary functions. These are as follows a) Issuing letters of credit, travelers cheques, circular notes etc. b) Undertaking safe custody of valuables, important documents, and securities by providing safe deposit vaults or lockers; c) Providing customers with facilities of foreign exchange. d) Transferring money from one place to another; and from one branch to another branch of the bank. e) Standing guarantee on behalf of its customers, for making payments for purchase of goods, machinery, vehicles etc. f) Collecting and supplying business information; g) Issuing demand drafts and pay orders; and, h) Providing reports on the credit worthiness of customers.

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Types of bank The banking industry can be divided into following sectors, based on the clientele served and products and services offered: 1. 2. 3. 4. 5. 6.

Retail Banks Commercial banks Cooperative banks Investment Banks Specialized banks Central banks- Learn more at www.technofunc.com. Your online source for free professional tutorials.

1. Retail Banks: Retail banks provide basic banking services to individual consumers. Examples include savings banks, savings and loan associations, and recurring and fixed deposits. Products and services include safe deposit boxes, checking and savings accounting, certificates of deposit (CDs), mortgages, personal, consumer and car loans. 2. Commercial Banks: Banking means accepting deposits of money from the public for the purpose of lending or investment. Commercial Banks provide financial services to businesses, including credit and debit cards, bank accounts, deposits and loans, and secured and unsecured loans. Due to deregulation, commercial banks are also competing more with investment banks in money market operations, bond underwriting, and financial advisory work. Commercial banks in modern capitalist societies act as financial intermediaries, raising funds from depositors and lending the same funds to borrowers. The depositors’ claims against the bank, their deposits, are liquid, meaning banks are expected to redeem deposits on demand, instantly. Banks’ claims against their borrowers are much less liquid, giving borrowers a much longer span of time to repay money owed banks. Because a bank cannot 10

immediately reclaim money lent to borrowers, it may face bankruptcy if all its depositors show up on a given day to withdraw all their money. There are two types of commercial banks, public sector and private sector banks. Public Sector Banks: Public sectors banks are those in which the government has a major stake and they usually need to emphasize on social objectives than on profitability. Private sector banks: Private sector banks are owned, managed and controlled by private promoters and they are free to operate as per market forces. 3. Investment Banks: An investment bank is a financial institution that assists individuals, corporations and governments in raising capital by underwriting and/or acting as the client's agent in the issuance of securities. An investment bank may also assist companies involved in mergers and acquisitions, and provide ancillary services such as market making, trading of derivatives, fixed income instruments, foreign exchange, commodities, and equity securities. Investment banks aid companies in acquiring funds and they provide advice for a wide range of transactions. These banks also offer financial consulting services to companies and give advice on mergers and acquisitions and management of public assets. 4. Cooperative Banks: Cooperative Banks are governed by the provisions of State Cooperative Societies Act and meant essentially for providing cheap credit to their members. It is an important source of rural credit i.e., agricultural financing in India. 5. Specialized Banks: Specialized banks are foreign exchange banks, industrial banks, development banks, export-import banks catering to specific needs of these unique activities. These banks provide financial aid to industries, heavy turnkey projects and foreign trade. 6. Central Banks: Central banks are bankers’ banks, and these banks trace their history from the Bank of England. They guarantee stable monetary and financial policy from 11

country to country and play an important role in the economy of the country. Typical functions include implementing monetary policy, managing foreign exchange and gold reserves, making decisions regarding official interest rates, acting as banker to the government and other banks, and regulating and supervising the banking industry.

Acts Regarding Banking Industry

1949: Enactment of Banking Regulation Act. 1955: Nationalisation of State Bank of India. 1959: Nationalization of SBI subsidiaries. 1961: Insurance cover extended to deposits. 1969: Nationalisation of 14 major Banks. 1971: Creation of credit guarantee corporation. 1975: Creation of regional rural banks. 1980: Nationalisation of seven banks with deposits over 200 Crores.

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CHAPTER: 2 REVIEW OF LITERATURE 

Sharma (1974) said, "The expansion of banking facilities was uneven and lopsided and banks were concentrating their operations in metropolitan cities and towns. A fairly large number of rural and semi urban centre with reasonable potentialities of growth failed to attract the attention of commercial banks. As far as the deposit mobilization in the rural areas is concerned, much remains to be done."This gives emphasis on the rural and semi urban growth of banks.

 Gopal Karkal(1977) said, "Some regions have done well in spreading the banking facilities, while some regions have still very backward. Further, our clients are larger merchants and big industrialists. They approach with their demand for larger loans and advances, and in return give large business. If we transfer our limited resources to small industry, agriculture etc., how can we increase our deposits, advances etc., and how can we survive." As it give emphasis on a policy of planned and systematic branch expansion laying stress not only on opening branches in the underdeveloped and neglected areas but also in the providing additional banking facilities to the growing metropolitan and urban areas to cope with the ever-increasing requirements of trade, industry and commerce is more desirous. 

Raghupathy (1977), gave his view on the system of banking sector that "if the objectives are not fully achieved, the fault does not lie entirely with the bankers. The fault lies in our, not being able to integrate all powerful instruments of development into an effective system".

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Shah (1977) gave his view regarding bank profitability and productivity. He has expressed concern about increased expenses and overheads. Slow growth in productivity and efficiency is due to wasteful work of the banks. He concludes that the higher profitability can be result from increased spread and innovations have a limited role. He favored written job descriptions for improvement of staff productivity. He also emphasized reduction of costs, creation of a team spirit improvement in the management for improving bank profitability and productivity

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 Uppal (2009) in his study found that in the post-LPG (Liberalization, Privatization and Globalization) era and Information Technology (IT) era, transformation in Indian banks is taking place with different parameters and the contours of banking services are dynamically altering the face of banking, as banks are stepping towards e-banking from traditional banking. On the basis of five-point likert-type scale, this paper empirically analyzes the quality of ebanking services in the changing environment. With different statistical tools such as weighted average method and ranking, the paper concludes that most of the customers of e-banks are satisfied with the different e-channels and their services, but the lack of awareness is a major obstacle in the spread of ebanking services. The paper also suggests some measures to make e-banking services more effective in the future.  Girdhar (2009) observed that by satisfying the internal customers and buildinggood relationship with them, the relationship with the external customers can also be retainedand satisfied by the banks. Kumar & Rajesh (2009) reveals that any bank that wishes to eithergrow in size of its banking operation or improve its profitability must consider the challengesaffecting its customer relationship.The challenge before the banks is not only to obtain updatedinformation for each customer, but also to use the information to determine the best time to offerthe most relevant products (Lau et al., 2003). It is also important to understand that if customersbring in profits for the bank, it becomes imperative for the bank to provide excellent services tothose customers, otherwise they switch to other banks (Ray, 2007). Service quality in bankingimplies consistently anticipating and satisfying the needs and expectations of customers.  Curry and Kkolou (2004) refer to the major benefits and reasons for adoption of CRM which include: customers from the competition will come prefer the organization; a simplified, customer – focused internal organization will simplify the infrastructure, shrinking the work flow and eliminating nonproductive information flow; and profits will increase from satisfied customers which will lead to more compact & focused company.  Suresh chander and Rajendran (2003)In their paper, focused on investigating the important factors of customers’ perceived quality in banks of developing economy like India. The researchers found that there seems to be a great variation in respect of services offered by three groups of banks. They used core 14

services such as human element, systemization of services, tangibility of services and social responsibility as critical factors. They analyzed that three groups of banks in India seem to vary significantly in terms of service quality factors but from the customer perception of service quality, it could be acceptable only if customers’ need could be satisfied at the right time in a right manner • Manoharan (2007)Highlighted the e-payment system in India and its performance impact on Indian banking sector. The author described that competition in banking industry had forced the banks to rethink the way they operate their business. So, e-banking has made it possible to find alternate banking practices. In the paper, the author divided the payment system in India into three parts, i.e., large value payment system, retail payment system, and retail electronic system. Each one includes different categories of e-payment. The study focused that having a huge opportunity of e payment system in India still 90 per cent of transactions were cash based. So, an effort should be made to increase the use of e-payment, and RBI should make efforts to strengthen the legal framework of electronic banking system.

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CHAPTER 3:RESEARCH METHODOLOGY & OBJECTIVES

To study the advantages of CRM schemes introduced by HDFC Bank to its customers To study the various customers oriented schemes introduced by HDFC Bank in the interest of its customers. Majority of customers are satisfied with the services provided by HDFC Bank. HDFC is always taking initiative for providing maximum satisfaction to its customers.

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METHODOLOGY The study was conducted by the means of personal interview with respondents and the information given by them were directly recorded on questionnaire. For the purpose of analyzing the data it is necessary to collect the vital information. There are two types of data, this arePrimary Data Secondary data SECONDARY DATA:Secondary data is collected from magazines, newspaper, etc. Eg; social networking sites, books, newspaper, etc.

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CHAPTER 4:ANALAYSIS AND INTERPRETATION Introduction to HDFC Bank

The Housing Development Finance Corporation Limited (HDFC) was amongst the first to receive an 'in principle' approval from the Reserve Bank of India (RBI) to set up a bank in the private sector, as part of the RBI's liberalisation of the Indian Banking Industry in 1994. The bank was incorporated in August 1994 in the name of 'HDFC Bank Limited', with its registered office in Mumbai, India. HDFC Bank commenced operations as a Scheduled Commercial Bank in January 1995. MD received the Asian Banker Best Bank in India Award at a function on March 23, 2012 at

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Singapore. Mr. Puri is flanked by Mr. Emmanuel Daniel, CEO, The Asian Banker, on his right and Mr.Philippe Paillart, Chairman, Advisory Council. Key Executives Key Executives Director

Ashim Samanta

Chairman (Non-Executive)

C M Vasudev

Director

Pandit Palande

Managing Director

Aditya Puri

Banking Services HDFC Bank began operations in 1995 with a simple mission: to be a "World-class Indian Bank". They realised that only a single-minded focus on product quality and service excellence would help us get there. Today, they are proud to say that they are well on the way towards that goal. It is extremely gratifying that the efforts towards providing customer convenience have been appreciated both nationally and internationally.6 Promoters HDFC is India's premier housing finance company and enjoys an impeccable track record in India as well as in international markets. Since its inception in 1977, the Corporation has maintained a consistent and healthy growth in its operations to remain the market leader in mortgages. Its outstanding loan portfolio covers well over a million dwelling units. HDFC has developed significant expertise in retail mortgage loans to different market segments and also has a large corporate client base for its housing related credit facilities. With its experience in the financial markets, a strong market reputation, large shareholder base and unique consumer franchise, HDFC was ideally positioned to promote a bank in the Indian environment. Business Focus HDFC Bank's mission is to be a WorldClass Indian Bank. The objective is to build sound customer franchises across distinct businesses so as to be the preferred provider of banking services for target retail and wholesale customer segments, and to achieve healthy growth in 19

profitability, consistent with the bank's risk appetite. The bank is committed to maintain the highest level of ethical standards, professional integrity, corporate governance and regulatory compliance. HDFC Bank's business philosophy is based on four core values - Operational Excellence, Customer Focus, Product Leadership and People. Capital Structure As on 31st March, 2012 the authorized share capital of the Bank is ` 550 crore. The paid-up capital as on the said date is ` 469,33,76,540 (234,66,88,270 equity shares of ` 2/- each). The HDFC Group holds 23.15% of the Bank's equity and about 17.29 % of the equity is held by the ADS / GDR Depositories (in respect of the bank's American Depository Shares (ADS) and Global Depository Receipts (GDR) Issues). 30.68 % of the equity is held by Foreign Institutional Investors (FIIs) and the Bank has 4,47,924 shareholders. The shares are listed on the Bombay Stock Exchange Limited and the National Stock Exchange of India Limited. The Bank's American Depository Shares (ADS) are listed on the New York Stock Exchange (NYSE) under the symbol 'HDB' and the Bank's Global Depository Receipts (GDRs) are listed on Luxembourg Stock Exchange under ISIN No US40415F2002. Centurion Bank of Punjab amalgamation with HDFC On May 23, 2008, the amalgamation of Centurion Bank of Punjab (CBoP) with HDFC Bank was formally approved by Reserve Bank of India to complete the statutory and regulatory approval process. As per the scheme of amalgamation, shareholders of CBoP received 1 share of HDFC Bank for every 29 shares of CBoP. The merged entity will have a strong deposit base of around ` 1, 22,000 crores and net advances of around ` 89,000 crores. The balance sheet size of the combined entity would be over ` 1, 63,000 crores. The amalgamation added significant value to HDFC Bank in terms of increased branch network, geographic reach, and customer base, and a bigger pool of skilled manpower. In a milestone transaction in the Indian banking industry, Times Bank Limited (another new 20

private sector bank promoted by Bennett, Coleman & Co. / Times Group) was merged with HDFC Bank Ltd., effective February 26, 2000. This was the first merger of two private banks in the New Generation Private Sector Banks. As per the scheme of amalgamation approved by the shareholders of both banks and the Reserve Bank of India, shareholders of Times Bank received 1 share of HDFC Bank for every 5.75 shares of Times Bank. Distribution Network HDFC Bank is headquartered in Mumbai. The Bank at present has an enviable network of 2,544 branches spread in 1,399 cities across India. All branches are linked on an online real-time basis. Customers in over 500 locations are also serviced through Telephone Banking. The Bank's expansion plans take into account the need to have a presence in all major industrial and commercial centres where its corporate customers are located as well as the need to build a strong retail customer base for both deposits and loan products. Being a clearing/settlement bank to various leading stock exchanges, the Bank has branches in the centres where the NSE/BSE has a strong and active member base. The Bank also has 8,913 networked ATMs across these cities. Moreover, HDFC Bank's ATM network can be accessed by all domestic and international Visa/MasterCard, Visa Electron/Maestro, Plus/Cirrus and American Express Credit/Charge cardholders. Business HDFC Bank offers a wide range of commercial and transactional banking services and treasury products to wholesale and retail customers. The bank has three key business segments: Wholesale Banking Services The Bank's target market ranges from large, blue-chip manufacturing companies in the Indian corporate to small & midsized corporate and agri-based businesses. For these customers, the Bank provides a wide range of commercial and transactional banking services, including working capital finance, trade services, transactional services, cash management, etc. The bank is also a leading provider of structured solutions, 21

which combine cash management services with vendor and distributor finance for facilitating superior supply chain management for its corporate customers. Based on its superior product delivery / service levels and strong customer orientation, the Bank has made significant inroads into the banking consortia of a number of leading Indian corporates including multinationals, companies from the domestic business houses and prime public sector companies. It is recognised as a leading provider of cash management and transactional banking solutions to corporate customers, mutual funds, stock exchange members and banks. Retail Banking Services The objective of the Retail Bank is to provide its target market customers a full range of financial products and banking services, giving the customer a one-stop window for all his/her banking requirements. The products are backed by world-class service and delivered to customers through the growing branch network, as well as through alternative delivery channels like ATMs, Phone Banking, Net Banking and Mobile Banking. The HDFC Bank Preferred program for high net worth individuals, the HDFC Bank Plus and the Investment Advisory Services programs have been designed keeping in mind needs of customers who seek distinct financial solutions, information and advice on various investment avenues. The Bank also has a wide array of retail loan products including Auto Loans, Loans against marketable securities, Personal Loans and Loans for Two-wheelers. It is also a leading provider of Depository Participant (DP) services for retail customers, providing customers the facility to hold their investments in electronic form. HDFC Bank was the first bank in India to launch an International Debit Card in association with VISA (VISA Electron) and issues the Master card Maestro debit card as well. The Bank launched its credit card business in late 2001. By March 2010, the bank had a 22

total card base (debit and credit cards) of over 14 million. The Bank is also one of the leading players in the “merchant acquiring” business with over 90,000 Point-of-sale (POS) terminals for debit / credit cards acceptance at merchant establishments. The Bank is well positioned as a leader in various net based B2C opportunities including a wide range of internet banking services for Fixed Deposits, Loans, Bill Payments, etc. Treasury Within this business, the bank has three main product areas Foreign Exchange and Derivatives, Local Currency Money Market & Debt Securities, and Equities. With the liberalisation of the financial markets in India, corporates need more sophisticated risk management information, advice and product structures. These and fine pricing on various treasury products are provided through the bank's Treasury team. To comply with statutory reserve requirements, the bank is required to hold 25% of its deposits in government securities. The Treasury business is responsible for managing the returns and market risk on this investment portfolio.

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CUSTOMER RELATIONSHIP MANAGEMENT

+  Introduction  Types of CRM  CRM In Banking : Indian Scenario  Needs of CRM  Objectives  Process For Delivering CRM  CRM Implementation Of HDFCBank

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INTRODUCTION

Customer relationship management (CRM) is a system for managing a company’s interactions with current and future customers. It involves using technology to organize, automate and synchronize sales, marketing, customer service, and technical support.In the modern times, the existence of the civilized world cannot be imagined without banks. The banking activities have become not only an integral part of the human civilization but also have directed the flow of progress over the lifetime of human civilization so far. in today’s competitive world, banks, like any other industry, are struggling hard to maintain the old clientele while attracting new customers. it is in this scenario that establishing a relationship with the customers and managing it well has become the need of the hour. how successful a bank is at managing a good relationship with its customers determines how well it does. customer relationship management (CRM) is a widely implemented strategy for managing a company’s interactions with customers, clients and sales prospects. it involves using technology to organize, automate, and synchronize business processesprincipally sales activities, but also those for marketing, customer service, and technical support. the overall goals are to find, attract, and win new clients, nurture and retain those the company already has, entice former clients back into the fold, and reduce the costs of marketing and client service. one of the largest challenges that customer relationship management systems face in banks is poor usability. with a difficult interface for a user to navigate, 26

implementation can be fragmented or not entirely complete. CRM systems for marketing departments in banks help the enterprise identify and target potential clients and generate leads for the sales team. a key marketing capability is tracking and measuring multichannel campaigns, including email,search, social media, telephone and direct mail. metrics monitored include clicks, responses, leads, deals, and revenue.

CRM can drive service revenue and profitability with support for service sales and marketing.customer relationship management (CRM) in the banking system is fundamental to building a customer-centric organization

Retail banks are facing greater challenges than ever before in executing their customer management strategies. Intensifying competition, proliferating customer contact channels, escalating attacks on customer information, rising customer expectations and capitalizing on new market opportunities are at the top of every bank executive’s agenda. In looking for ways to drive growth, banks need to evaluate their customer management strategy.

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Types of CRM

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Broadly, three types of CRM are adopted by banks: (1) Operation CRM – In this, CRM software packagesare used to track and efficiently organise inboundand outbound interactions with customers includingthe management of marketing campaigns and callcentres. Operational CRM supports frontlineprocesses in sales, marketing and customer service,automating communications and interactions withthe customers. They record contact history and storevaluable customer information to ensure a consistentpicture of customer’s relationship with the bank thatcan be retrieved by staff as per requirement. Themajor benefits of operational CRM to banks are: (a) Sales Force Automation (b) Customer Service and Support (c) Enterprise Marketing Automation (2) Analytical CRM – It is about analysing customerinformation to better address marketing andcustomer service objectives and deliver the right message to the right customer at the right timethrough the right channel. It involves the use of dataanalysis to extract knowledge for optimizing customer relationships. The major benefits of Analytical CRM to banks are : (a) Customer Retention (b) Fraud Detection (c) Optimising marketing efforts as per customer life time value (d) Credit Risk Analysis (e) Segmentation and targeting (f) Development of customised new productsmatching the specific preferences and prioritiesof customers. 29

(3) Collaborative CRM - These involve systemsfacilitating customers to perform services on theirown through a variety of communication and\ interactive channels. It brings people process anddata together and enables channeling of data andinformation appropriately to bank staff for proactivedecision making and enhanced informed customerservice and support activities. It provides a means of information sharing to all concerned in timelymanner and includes customer as a creator ofservice. The major benefits of collaborative CRM tobanks are (a) Providing efficient customer communicationacross a variety of channels (b) Online services to reduce customer service costs (c) Providing access to customer data whileinteracting with customers. Thus, CRM can be understood as a catalyst enablingtransformation of Banking from traditional

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CRM In Banking: Indian Scenario Although significance of Relationship Marketingpractices and optimising and maintaining customerrelationships across diverse customer segments has beenrealised and practiced by all banks in India, thetechnology enabled CRM is still at a developing stage.Different Banks are at different levels of CRM adoptionand implementation and majority of them can beconsidered to be at preliminary stages. Operational CRMis the most wide spread, but collaborative CRM is mostevident in internet banking, mobile banking, ATMfunctions, POS devices and initiatives like availability ofpass book printing machines to enable customers toupdate their passbooks themselves. Also SMS alerts atvarious significant customer service events areproliferating. Analytical CRM is being utilized but not byall banks. Here also a few illustrations of Indian banksusing CRM will define a clearer picture of CRM in Indianbanking.

31

Need of CRM in the Banking Industry

A Relationship-based Marketing approach has the following benefits: 1. Over time, retail bank customers tend to increase their holding of the other products from across the range of financial products / services available. 2. Long-term customers are more likely to become a referral source. 3. The longer a relationship continues; the better a bank can understand the customer and his/her needs & preferences, and so greater the opportunity to tailor products and services and cross-sell the product / service range. 4. Customers in long-term relationships are more comfortable with the service,the organization, methods and procedures. This helps reduce operating cost and costs arising out of customer error. With increased number of banks, products andservices and practically nil switching costs, customers are easily switching bankswhenever they find better services and products. Banks are finding it tough to get new customers, and more importantly, retain existing customers.

32

The Processes for Delivering CRM

33

The tools and the processes are as follow – Customer application form Centralized software where the whole data is collected. Wide range of offerings Cross – selling Feedback forms

1) Customer Application Forms: Bank collects all the data from customer application form and gets thepersonalized information to know which product to offer to which customer. This process helps in collecting the data and knowing what the customer wants.

2) Centralized Software where the Whole Data is Collected: The data collected through customer application forms is available at one server and canbe accessed anytime, anywhere. So, this helps in the further process of customized offerings and cross –selling.

3) Wide Range of Offerings: After collecting the data from the customer, team decides what product to offer to which customer. In case the bank recognizes you as a valuable customer then is offers a more customized service.

4) Cross – Selling: It refers to offering another product from the service offering of the bank to the customer which he has not gone for. For example If customer has savings account with the bank then they offer him a insurance, fixed deposits etc. This depends on the value of the customer to the bank. Cross selling is not offered to

34

every customer. It depends on how loyal the customer is to the bank. The more business he gives us, the more are his chances of being special services offered.

5) Feedback Forms: The bank distributes feedback forms at all its branches. The customers feedbacks on the service, technology used, employee behavior and promptness in solving customer’s problems, are taken and they are analyzed. CRM helps to know the needs and wants of the customer .So, on the basis of this company can decide which product to offer to which customer. It has beenobserved that cross – selling is the best weapon. It enhances the relationship value with the customer. This satisfies the customer and that is the reason why the customer keeps on coming again and again to the company. This helps in retaining the market share. Now ,the satisfied customers help in the word- of – mouth promotion of the bank, which eventually increases our market share.

35

CRM Implementation Of HDFC Bank HDFC has transformed itself into a technology intensive financial services group in the last decade. To achieve its long term goal of being in a position to practice One-to-One marketing. HDFC has taken a series of initiatives. As 0part of the plans, it is implementing various projects to establish world-class CEM practices which would provide0 an integrated view of its customers to everyone in the organization. The paper discusses some of the lessons learnt while implementing these projects.

1. Introduction: The success of any organization, particularly of a service-oriented organization, likea Bank depends on the quality of service offered to customers. Customers seek aBank not for the catchy slogans and colourful brochures, but for the efficient and prompt service offered to them. Efficient service helps to retain the customers. Today, Bank is essentially an institution engaged in meeting financial as well as nonfinancialservice needs of the society. Given this, customer service takes the centrestage in the Banking business. 2. Aims and Objectives: 2.1 Aims: HDFC Bank Ltd offers various products and services to its customers (i.e. Corporate Banking, Retail Banking and Priority Sector Banking customers). It aims to provide easy access across different channels (Corporate and Retail Branches, Retail Asset Centres, etc.) It is the vision of the Bank to be the most preferred and trusted Bank enhancing value for all stakeholders. The mission of the Bank is • Delighting customers with our excellent service and comprehensive suite of best-in- class financial solutions; 36

• Touching more people’s lives with our expanding retail footprint while maintaining our excellence in corporate and infrastructure financing; • Continuing to act in an ethical, transparent and responsible manner, becoming the role model for corporate governance; • Deploying world class technology, systems and processes to improve business efficiency and exceed customers' expectations; • Encouraging a positive, dynamic and performance-driven work culture to nurture employees, grow them and build a passionate and committed work force; • Expanding our global presence; • Relentlessly striving to become a greener Bank. In our endeavor to provide the best services to our customers the Bank has formulated its Customer Care Policy. The policy guidelines will assist the staff in rendering high-quality customer services consistently and to continually improve its

2.Objectivs: Theobjectiveofthispolicy istohighlightthequality standardstobe adoptedby HDFCBankLtd.andidentify principlesandpracticestorenderhighquality customer services.

3.Customer Care Policy: 3.1 Well-designedcustomerservicemustbeaccompaniedbygooddelivery.The CustomerCarePolicy ofHDFCBankstrivesto ensureCustomerDelightandisthus based onthefollowing7 principles:a) Speed–Customer'sneedsshouldbetakencareofassoonaspossible. Delayedhandlingofthecustomer'srequests isamajorblock inthe delivery of goodcustomer service. b) Timeliness–Commencementofbankingbusinessandopeningofcounterservicesintime andrendering uninterrupted serviceduring 37

businesshoursis anintegral aspectofensuring goodcustomerservice. c) Accuracy –TheinformationrenderedbytheBanktothecustomershouldbe factual,accurateandunambiguous.Acronyms,ifused,shouldbeexplained to the customer. Wherethereisany doubtabouttheaccuracyofany information,thedetailswill becheckedandvalidated prior torelease. d) Courtesy –Theleastthatanyvisitortoabranchexpectsiscourtesyfromthe Bankstaff.Therefore, firstandforemost,everycustomershallbeextended duecourtesies,whetherornot theBankisin apposition tomeethis/herneeds.Courtesywillbeshowninallcircumstances,evenindifficultsitu ationswhere the customerdoesnotshowsimilarcourtesyinreturn.Staffwillalwaysbe politeintheir spokenwords,bodylanguageanddemeanour. e) Concern–Anticipatingthecustomer'sproblemsandguidingthemshowsthatBank caresfor them andis equallyconcerned. f) Communication–Animportantpartofcustomerservice iscommunicating effectively withthecustomersand personal interactionplaysavery effective roleindevelopingtherelationshipwithcustomers.HDFCBank welcomes opinionandsuggestions fromcustomers andsuchopinions/suggestions are placed beforespecially appointedCommitteetolookintocustomer suggestions.If foundto befeasible,thesuggestionsare acceptedand subsequently implemented. g) Transparency-Clearandpreciseinformationneedstobeprovidedtothe customersinresponsetotheirqueriesandcomplaints,as per theextant policies oftheBank. 3.2The aboveprinciples formthecornerstoneofgoodcustomerservice.Customer serviceandcustomersatisfactionarenotstaticconcepts.Theconceptvarieswith thechangingtimesandchanginglevelsofexpectationsofthecustomers. Whatwas hithertoconsideredassatisfactory customerservicecould now be perceived as unsatisfactory,inthecontextofglobally competitivemarket.Itis notthat oncea customeris accorded duecourtesies,he /shecan beignoredthe nexttime.Good 38

customer serviceis acontinuousprocess.

4.CustomerServiceCommitmentfor Staff HDFC Bank alsoemphasizes thatits staffstayfocused andbecustomerfriendly.TheServiceCommitment ofthestaffshouldbeto: a) Behonest,transparent, equitableandfair indealingwithcustomers. b) Listentowhatcustomerhavetosayanddeterminetheexactnatureofthe request. c) Explainourproductsandservicesandkeepthecustomerinformedofany changes. d) Respondtocustomerenquiries promptlyand efficiently. e) Seek theviews ofthecustomer,ifrequired. f) Providerelevant and timelyfeedback. g) Make decisionsusing processes that are consultative, impartial and otherwise ethical. h) Adoptfair,lawful and appropriate procedureswhen arrivingatresolutions. i) Betolerantand accommodative eveninthe eventofprovocation. j) Sensitivetocustomerswithphysicaldisabilities,seniorcitizensandweaker sectionsofsociety. k) Seentobeactinginaccordancewith Banks’extantguidelines

5. CustomerServiceForSpecialCustomers 5.1PensionersandSeniorCitizens:a) TheBankwouldstrivetoprovideprioritizedservicetoseniorcitizensand differently abledcustomersby effectivecrowd/peoplemanagementat allits branches. b) Incasethesenior citizen/ differentlyablecustomers has registered his /her 39

mobile numberwiththeBankand has availedtheSMS facility,theBank wouldprovidethebalanceintheaccountthroughSMSonaweekly basisas well as providetransactiondetails,as is providedtoanormal customer. c) Thepensioner will be allowedtosubmitthe annual life certificate atanyofthe branches andnotnecessarilyatthehome branch. d) TheBankcommitstocreateawarenessaboutReverseMortgageScheme amongpensioners/senior citizens. e) MostofHDFCBank'soffice buildings areaccessibletopersonwithdisabilities andsenior citizens.Ramps have been providedinthese buildings andatoilet forwheelchairusershasbeenprovidedatourCorporateOffice,Mumbai.Allo therofficesoftheBankhavebeensuitably sensitized toextendthefacilities intheir respectiveoffice buildings. 5.2 VisuallyImpaired Persons: TheBank withoutanydiscriminationprovidesbankingfacilitiessuchascheque book facility /operationofATM /locker,etc. to the visuallychallengedcustomers who arecapable of usingthosefacilities. Inthisregard,allthe branchesare duly advisedtorenderallpossibleassistanceto thevisuallychallengedcustomersfor availingthevariousbankingfacilities. 5.3Deceased Depositors:Settlement of Claims InlinewiththeRBIguidelinesandtheBank'sOperationalProcedureforsettlement of claimsofdeceased depositors,theBankwillensure thatthere isquickand hasslefreesettlement ofamount/dues tothenominee/legalheir. Asper Bank’s Policy onSettlementofDeceasedClaim, accountswithnomination wouldbesettledwithinaperiodnotexceeding15daysand accountswithout nominationwouldbesettledwithinaperiod notexceeding1monthfromthedateof receipt ofthe claimapplication withcomplete documentation tothe satisfaction ofthe Bank. 5.4Customersin Rural andSemi-urbanareas: 40

a) Bankwillensurepropercurrencyexchangefacilitiesandalsothequalityof notesincirculationinrural areas. b) The Bank will ensure that the branches would be opened as per the scheduledtimeandoperatedforfull hours. 6. Initiativestaken to providebettercustomerservice Inorderthatthecustomersareprovidedwithexcellentserviceatallthebranches, thefollowing guidelines have beenadopted: a) Providing infrastructure facilities by ensuring adequate space, proper furniture, drinking water facilities, with specific emphasis on pensioners, senior citizens, disabled persons,etc. b) EnsuringthatallbranchesofourBankareopenedasperthescheduled timesandareoperatedfor thefull hours. c) Providingseparateenquirycountersatourlargebranchesinadditiontoa regular "MayIHelpYou"counter. d) Displaying indicator boards at all the counters in English,Hindi as well as in theconcernedregional language.Itshall also be our endevaour to provide business postersatsemi-urban andrural branchesintheconcernedregional languages. e) UseofHindiandregionallanguagesintransactingbusinessbyBankswith customers,includingcommunicationsenttocustomers. f) MysteryShoppingexerciseisundertakenperiodicallyatthecustomertouch pointstoensurethatemployeesareproperlyrespondingtothecustomers andprovidingthemnecessary advice/guidanceforexecution oftheir transactions. g) Reviewingandimprovingupontheexistingsecuritysystemin branches soas toinstill confidenceamongsttheemployeesandthepublic. h) Wearing anidentificationbadgedisplayingphoto, name anddesignation thereon bytheemployees. 41

i) Periodic changeofdesk toensurejobrotation. j) Trainingofstaffinlinewithcustomerserviceorientation. Trainingintechnical areas ofbanking andproductknowledgetothestaffatdeliverypoints. k) Visit bysenior officials fromcontrollingofficesandHeadOfficeto branches at periodicalintervalsfor onthespotstudy ofthequality ofservicerenderedby thebranches. l) Conductingcustomer surveys atregular intervals. m) Holdingcustomerrelationprogrammesandperiodicalmeetingstointeract with differentcross-sectionsof customersfor identifyingaction pointsto enhancecustomer service. n) Havinga ProductandServices Approval Process. o) Appointingofficerswhowillensurethattheintentofpolicyistranslatedinto properprocedures. p) Displayingtime normsfor various bankingtransactions/services. TheBankalsohas acustomer friendly complaintformwhichhasbeenhostedonthe Bank'swebsitetoenablecustomerstolodgetheir complaints/queries.Further,the contactdetailsofthe ChiefGrievanceRedressalOfficer are also madeavailableon theBank's websitewww.hdfc.com.

7.CustomerEducation a)

TheBankplacesutmostimportanceonsafetyoffundsofitscustomersand

alsomakes efforts toinculcatesafebanking practicesamongstitscustomersto protectthem from losingtheir hardearnedmoney. b)

TheBankhasbeenusing various meansofcommunication suchasleaflets,

brochures, material printed on statements and account opening kits,Website, Emails, SocialMedia etcinorderto educatethecustomerstousetechnology / alternatechannelsin

banking.

Thecustomers

arealsoinformedaboutthe

precautions tobetakenintheuse ofsuch alternatechannels. c)

To educatethecustomersonsafeguardsofBanking,theBankhas put upalist 42

of"Do'sandDon’tsof Banking"onits website. d)

TheBankensuresfulltransparency tothecustomerinlevyingofvarious fees,

servicecharges and penalties. Communicationonchangesintheschedule of chargesisinformedtotheaccountholders

andisalso

highlightedonourwebsite

www.hdfc.com. e)

ComprehensivePosterandCitizen'sCharterareavailableinallthebranches

inordertoeducatethecustomersaboutvariouspolicies,guidelinesandavenues forcomplaintescalation. f)

CustomerMeets,titledas "Grahak SahyataAbhiyaan"areheld atvarious

locations wherein senior officials of the customers,

educatethemabouttheir

Bank

directly

rights

interact with andreceivetheir

suggestions/viewstoimproveour products/services. g)

Withaview toincreaseawareness amongthefarmersonmodernfarming

techniquesandemerging trends,theBankhasbeenundertaking variousprograms. Thisincludes

organizing

offarmersmeetingwithexpertsintherelevantfield,

participation in Agriexhibitions,formationof Farmers’ Clubs in association with NABARD etc. h)

TheBankhasintroducedKisanCreditCardinformofATMcumDebitCard for

thefarmers.Thefarmers can,therefore,withdrawcashfrom anyoftheATMs.

8.BankingOmbudsman ReserveBankof India.

Schemeof

Incasethecustomerisnotsatisfiedwiththereply receivedfromthe Bankorhasnot receivedareply withinaperiodofonemonthoflodgingthecomplaintwiththeBank, the customer can approach the Banking Ombudsman under the Banking OmbudsmanSchem e. TheBankingOmbudsmanSchemehasbeenformulatedbythe Indiatoprovideanexpeditiousgrievance

43

ReserveBankof

9. Initiativestaken to providebettercustomerservice. Inorderthatthecustomersareprovidedwithexcellentserviceatallthebranches, thefollowing guidelines have beenadopted: a) Providing infrastructure

facilities by ensuring

adequate space,

proper furniture, drinking water facilities, with specific emphasis on pensioners, senior citizens, disabled persons,etc. b)

EnsuringthatallbranchesofourBankareopenedasperthescheduled timesandareoperatedfor thefull hours.

c) Providingseparateenquirycountersatourlargebranchesinadditiontoa regular "MayIHelpYou"counter. d) Displayingindicator boards at all thecounters in English,Hindi as well as in theconcernedregional language.Itshall also be our endevaour to provide

business

postersatsemi-urban

andrural

branchesintheconcernedregional languages. e)

UseofHindiandregionallanguagesintransactingbusinessbyBankswith customers,includingcommunicationsenttocustomers.

f)

MysteryShoppingexerciseisundertakenperiodicallyatthecustomertouch pointstoensurethatemployeesareproperlyrespondingtothecustomers andprovidingthemnecessary

advice/guidanceforexecution

oftheir

transactions. g) Reviewingandimprovingupontheexistingsecuritysystemin branches soas toinstill confidenceamongsttheemployeesandthepublic. h) Wearing anidentificationbadgedisplayingphoto, name anddesignation thereon bytheemployees. i) Periodic toensurejobrotation.

changeofdesk

j) Trainingofstaffinlinewithcustomerserviceorientation. Trainingin technical areas ofbanking andproductknowledgetothestaff atdelivery points. k) Visit bysenior officials fromcontrollingofficesandHeadOfficeto 44

branches

at

periodicalintervalsfor

onthespotstudy

ofthequality

ofservicerenderedby thebranches. l) Conductingcustomer surveys atregular intervals. m)

Holdingcustomerrelationprogrammesandperiodicalmeetingstointeract with different crosssectionsof customersfor

identifying

action

pointsto enhancecustomer service. n) Havinga ProductandServices Approval Process. o)

Appointingofficerswhowillensurethattheintentofpolicyistranslatedinto properprocedures.

p) Displayingtime normsfor various bankingtransactions/services. TheBankalsohas acustomer friendly complaintformwhichhasbeenhostedonthe Bank'swebsitetoenablecustomerstolodgetheir

complaints/queries.Further,the

contactdetailsofthe ChiefGrievanceRedressalOfficer are also madeavailableon theBank's websitewww.hdfc.com.

10. CustomerServicefor SpecialCustomers. 10.1PensionersandSeniorCitizens:a)

TheBankwouldstrivetoprovideprioritisedservicetoseniorcitizensand differently

abledcustomersby

effectivecrowd/peoplemanagementat

allits branches. b) Incasethesenior citizen/ differentlyabledcustomers has registered his / her mobile numberwiththeBankand hasavailedtheSMS facility,theBank wouldprovidethebalanceintheaccountthroughSMSonaweekly

basisas

well as providetransactiondetails,as is providedtoanormal customer. c) Thepensioner

will

be

allowedtosubmitthe

annual

lifecertificateatanyofthe branches andnotnecessarilyatthehome branch. d)

TheBankcommitstocreateawarenessaboutReverseMortgageScheme amongpensioners/senior citizens.

e)

MostofHDFCBank'soffice 45

buildings

areaccessibleto

personwithdisabilities

andsenior

citizens.Ramps

have

been

providedinthese buildings andatoilet forwheelchairusershasbeenprovidedatourCorporateOffice,Mumbai.All otherofficesoftheBankhavebeensuitablysensitisedtoextendthefacilities intheir respectiveoffice buildings.

10.2 VisuallyImpaired Persons: TheBank

withoutanydiscriminationprovidesbankingfacilitiessuchascheque

book facility /operationofATM /locker,etc.,tothevisuallychallengedcustomers who arecapable of usingthosefacilities. Inthisregard,allthe branchesare duly advisedtorenderallpossibleassistanceto thevisuallychallengedcustomersfor availingthevariousbankingfacilities.

10.3Deceased Depositors:Settlement of Claims InlinewiththeRBIguidelinesandtheBank'sOperationalProcedureforsettlement of claimsofdeceased depositors,theBankwillensure thatthere isquickand hasslefreesettlement ofamount/dues tothenominee/legalheir. Asper Bank’s Policy onSettlementofDeceasedClaim, accountswithnomination wouldbesettledwithinaperiodnotexceeding15daysand nominationwouldbesettledwithinaperiod

accountswithout

notexceeding1monthfromthedateof

receipt ofthe claimapplication withcomplete documentation tothe satisfaction ofthe Bank.

10.4Customersin Rural andSemi-urbanareas: a)

Bankwillensurepropercurrencyexchangefacilitiesandalsothequalityof notesincirculationinrural areas.

b) The Bank will ensure that the branches would be opened as per the 46

scheduledtimeandoperatedforfull hours.

11.Productsand Services The Bank offers various products andservices tomeet the needs of customers. The

Bankalsoconstantly

endeavorstointroduce

productsaswellasimproveupon the existing products based on conditions

and

feedback

from

all

purpose,aseparatehighpoweredCommitteeheadedby ManagingDirector

andconsistingofsenior

setup.TheCommitteeapprovesnew

new market

stakeholders.Forthe the

Deputy

executivesoftheBankhasbeen

productsoftheBankandalsoperiodically

reviews the products being offeredtothecustomers. ThedetailsofalltheproductsandservicesofferedbytheBank targetsegments arementionedinthe Appendixtothis Policy.

47

andtheintended

CRM Implementation Of ICICI Bank

ICICI has transformed itself into a technology intensive financial services group in the last decade. To achieve its long term goal of being in a position to practice One-to-One marketing. ICICI has taken a series of initiatives. As 0part of the plans, it is implementing various projects to establish world-class CEM practices which would provide0 an integrated view of its customers to everyone in the organization. The paper discusses some of the lessons learnt while implementing these projects.

Introduction ICICI set up as a Development bank over four decades ago to provide products and services for the corporate segment, diversified into retail segment of the financial markets in the early 1990s. In the last decade it has transformed itself to a technology intensive financial services group. The first such move came in the mid-nineties when ICICI raised debt from the retail market. Since then, ICICI has been increasing its reach to this segment in terms of resources mobilization, and by offering quality investor services through ICICI Infotech services, its subsidiary. In 1994, it established ICICI Bank as a commercial bank that is flexible, in addition to the bank, the retail initiative include (a) Prudential ICICI AMC- a tie up with the prudential Group of UK for its foray into the mutual funds business. (b) ICICI Personal finance services (PFS) – to offer retail assets products like home finance, automobile finance, durables finance ets. (c) ICICI Capital services – to services retail liability products like bonds and deposits. (d) ICICI web trade – to facilitate end to end integrated web based trading services through the web site www.icicidirect .com

48

(e) Prudential ICICI life insurance – to offer the insurance services, and (f) ICICI Lombard General Insurance – the latest venture to offer non-life insurance services. This apart the retail initiatives of ICICI also inc;lude a plethora of web-based businesses including cith portals and various other utility sites such as billjunction.com, icicimoneymanager.com, magiccart.com, among others. All these group companies are jointly spearheading ICICI Group’s foray into th retail market.

49

ICICI- Retail Strategy ICICI’s retail strategy was centered around intensive deployment of technology to help reduce cost of service, increase customer retention, help in cross selling and up-selling while improving process efficiencies. The bank looked towards allowing the customers use multiple electronic channels including internet, ATMs, call centers, contact centers, desktops, kiosks, mobiles and other hand held devices for conducting financial transactions. ICICI has ambitious plans for its retail business initiatives. The retail strategy revolves around intensive deployment of technology. Information technology will help reduce cost of service, increase customer retention, help in crossselling and up-selling while improving process of efficiencies. Electronic channels including internet, ATMs, call centers, contact centers, desktops, kiosks, mobiles and other hand held devices will perform financial activities while ensuring that customer has multiple options for access and transaction. The group has adopted a ‘click and brick’ strategy to leverage the power of electronic channels and physical presence to ensure rapid product delivery, fulfillment of financial deals and documentation. As part of the plans, it is implementing various projects to establish world class CRM practices, which would provide an integrated view of its customer to everyone in the organization. CRM at ICICI involves increased communication between the virtual universal banks and its customer and prospects, as well as within the group itself. The underlying idea is to enhance every instance of contact with the customer. ICICI believes that a true customer-centric relationships can only be accomplished by considering the unique perspectives of every single customer of the organization. Hence the pressing need to put in place a technology enabled CRM solution.

50

CRM Road Map Of ICICI

CRM is viewed as a discipline as well as a set of discrete software technologies, which will focus on automating and improving the business processes associated with managing customer relationships in the areas of sales, marketing, customer service and support. The organizations aims to achieve the end goal of one-to-one marketing. The CRM Software applications will facilitate the coordination of multiple business functions. Coordinate multiple channels of communication with the customer to carry out customer management more efficiently. It should allow ICICI to engage in one-to-one marketing by tracking complete customer life-cycle history. To begin with, it will automate process-flow tracking in the product sales process, and be able to generate customized reports and promote cross selling. It will also enable efficient campaign management by providing a software interface for definition, tracking, execution and analysis of campaigns.

51

Implementing CRM

A very detailed and comprehensive CRM actions plan was developed based on the understanding that CRM will require an enterprises wide transformation. The CRM Business Transformation Map below shows the various aspects of that change. There are five inter-related areas. These include: 1. 2. 3. 4. 5.

Business Focus Organizational structure Business Metrics Marketing Focus Technology

The key to building the CRM action plan was in understanding where the organization stood relative to each of the five aspects of change. Interviews with key individuals throughout the organization helped identify different initiatives that have been launched, al focused on CRM. While all of these initiatives may have merit, failure to address the total business transformation requirements can lead to very short - lived success. The next step in the planning process was a Gap Analysis. This analysis essentially and specifically describes the gaps. In addition to the more obvious gaps, this analysis helped identify the CRM organizational holes: 1. Marketing Sales and services practices 2. Collections, capture, processing and development of customer information. 3. Distribution and operations effectiveness at customer touch points

52

Another key factor I n identifying gaps is to understand how the organization functions relative to the CRM Business Cycle. There is a universal, underlying cycle of activity that should drive all CRM initiatives and infrastructure development. All initiatives and infrastructure development should somehow be tied to this core cycle of activity. Careful evaluation of the organization’s ability to execute this cycle will pinpoint and qualify additional organizational gaps.

53

Chapter:5 comparison of CRM between HDFC & ICICI Bank. Difference of crm in HDFC and ICICI bank.

HDFC

ICICI

Outlook on marketing

Customer retention

Aggressive

Focus area in CRM

Customer oriented

Marketing and

approach

competitive sales approach.

Online popularity

Reached the top position

It is now ranked as 2nd

beating its competitors Customer market

Upper middle class, high

Bank young stars, bank

segment.

net worth individual.

@campus, and women account.

CRM technology and tool

CRM next

used in bank.

54

Revamp with CRM

CONCLUSION Banking is also now being regarded as a versatile financial planning tool. Research indicates that Indians have four basic financial needs during their life asset accumulation (such as buying a house or car), protecting their family, securing their children’s education, and provision for their retirement. India being a country having a huge population of around one billion people with only 32% of the banking population in India possessing banking the country has a vast potential, which has been left untapped till now. For Banking company Banking advisors are the lifeline and a very huge asset so each company try to recruit and select a potential force of Banking advisors because this is the advisors who generate maximum business for the Bank . Banking advisors provide a very strong support to the Bank and do all possible efforts to generate huge amount of profit to the company and for him. HDFCBankvaluesevery interactionmadewithour esteemedcustomersandpledges toinnovatein designanddelivery ofproducts andservices,leveraging onthestate- of-the-arttechnologyatourcommand. The Bankendeavourstoensuresimplicity, safety andsecurity incustomertransactionandalsotrains theofficialstolessenthe responsetime.TheBankalsorelentlesslystrivestofurtherenhancetheservice levels laid downinthePolicyandsurpass theexpectations of our valuedcustomers.

55

BIBLOGRAPHY Reference Books: 1. Customer Centricity: Focus On The Rights Of Customers. 2. Digital Marketing. 3. Successful Channel Distribution Sales And Management. Websites: 1. 2. 3. 4. 5.

www.rbi.org.in www.wikipedia.Com www.googal.com www.hdfc.com www.icici.com

Newspaper. 1. The Times Leader. 2. The Times Of India. 3. Economics Times.

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