CHAPTER.

1.1 Introductions
When you sit back and think about it, banks are often a huge part of our lives.
We deposit our paychecks, take out loans, and set up savings accounts, all at a
bank. But what do banks do? What are the different types of banks? Let's start
finding some answers to these questions by looking at the different types of
banks that make up a banking system.

A banking system is a group or network of institutions that provide financial

services for us. These institutions are responsible for operating a payment
system, providing loans, taking deposits, and helping with investments

Banking systems perform several different functions, depending on the

network of institutions. For example, payment and loan functions at
commercial banks allow us to deposit funds and use our checking accounts and
debit cards to pay our bills or make purchases. They can also help us finance
our cars and homes.

By comparison, central banks or systems distribute currency and establish

money-related policies. Investment banks or systems conduct trades or deal
with capital markets.

Many banks are profit-seeking entities with stockholders. They obtain profits
by charging more interest for loans and paying less interest on deposits. For
example, a bank may charge a 3.91% interest rate on a 30-year, fixed rate

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mortgage, but offer an interest rate of only 0.15% on a savings account of
$100,000.

Banking systems perform several different functions, depending on the

network of institutions. For example, payment and loan functions at
commercial banks allow us to deposit funds and use our checking accounts and
debit cards to pay our bills or make purchases. They can also help us finance
our cars and homes.

By comparison, central banks or systems distribute currency and establish

money-related policies. Investment banks or systems conduct trades or deal
with capital markets.

Many banks are profit-seeking entities with stockholders. They obtain profits
by charging more interest for loans and paying less interest on deposits. For
example, a bank may charge a 3.91% interest rate on a 30-year, fixed rate
mortgage, but offer an interest rate of only 0.15% on a savings account of
$100,000.

1.2 DIFFERENT TYPES OF BANK ACCOUNTS

Current Account: Current account is mainly for business persons, firms,

companies, public enterprises etc. and are never used for the purpose of
investment or savings. These deposits are the most liquid deposits and there
are no limits for number of transactions or the amount of transactions in a day.

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While, there is no interest paid on amount held in the account, banks charge
certain service charges, on such accounts.

Savings Account: Savings Account is meant for saving purposes. Any

individual either single or jointly can open a savings account. Most of the
salaried persons, pensioners and students use Savings Account. The advantage
of having Savings Account is Banks pay interest for the savings. The saving
account holder is allowed to withdraw money from the account as and when
required. The rate of interest ranges between 4% to 6% per annum in India .

Recurring Deposit Account: Recurring deposit account or RD account is

opened by those who want to save certain amount of money regularly
for a certain period of time and earn a higher interest rate. In
RD account a fixed amount is deposited every month for a specified
period and the total amount is repaid with interest at the end of the
particular fixed period.

Fixed Deposit Account: In Fixed Deposit Account (also known as FD

Account), a particular sum of money is deposited in a bank for
specific period of time. It’s one time deposit and one time take away
(withdraw) account. The money deposited in this account cannot be
withdrawn before the expiry of period.

1.3 IMPORTANCE OF BANKS

The banking sector was always deemed to be one of the most vital sectors for
the economy to be able to function. Its importance as the “lifeblood” of

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economic activity, in collecting deposits and providing credits to states and
people, households and businesses is undisputable.
In all economic systems, banks have the leading role in planning and
implementing financial policy. The difference lies with prioritizing goals and
their way of achievement. Based on the neo-liberal model, achieving greater
profits by using all means is an end in itself, while in the socialistic systems
bank operations also aim at improving economy in general and at satisfying
social needs.
The financial crisis of 2008, and the way the governments chose to save the
banks by laying the burden on taxpayer shoulders while exercising austerity
policies, triggered a cycle of discussion over many crucial issues.

One of the basic questions was bank ownership, especially since banks were
recapitalized using state money.

The European leaders and institutional bodies have been promoting the idea of
total privatization of the production means and state owned enterprises,
among which the bank sector, especially in the countries under memorandum
obligations, because, as they claim, the state cannot be a businessman and
privatization will contribute in reducing the national debt
There is however a strong opposition claiming that state owned enterprises –
particularly those whose character is monopolistic – and among these the
banks that were recapitalized using taxpayer money, must remain under state
control because that is the only way for the economy to really recover, and for
the social interest to be placed over the pursuit of profitability.

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In the following lines I will try to prove that there is indeed need for at least
one state bank, especially in the current demanding environment, and I will
address the creation of a proper institutional framework to avoid phenomena
similar to those of the recent past.

Banking plays an important role in the financial life of a business, and the
importance of banks can be seen from the fact that they are considered as to
be the life-blood of modern economy. Although no wealth is created by Bank,
but their essential activities facilitates the process of production, exchange and
distribution of wealth.

In this way they become the effective partners in the process of economic
development and growth. In the words of Stephenson & Britain “Banks are the
custodians and distribution of liquid capital, which is the life-blood of our
commercial and industrial activities and upon the prudence of their
administration depend the economic well-being of the nation”.

1.4 IMPORTANCE OF BANKS FOR BUSINESS

Collections of Savings and Advancing Loans

Acceptance of deposit and advancing the loans is the basic function of

commercial banks. On this function, all other functions depend accordingly.
Bank operates different types of accounts for their customers.

Money Transfer

Banks have facilitated the making of payments from one place or persons to
another by means of cheques, bill of exchange and drafts, instead of cash.

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Payment though cheques, draft is more safe and convenient, especially in case
of huge payments, this facility is a great help for traders and businessmen. It
really enhances the importance of banks for business community.

Encourages Savings

Banks perform an invaluable service by encouraging savings among the people.

They induce them to save for profitable investment for themselves and for
national interest. These savings help in capital formation.

Transfer Savings into Investment

Bank transfer the savings collected from the people into investment and thus
increase the amount of effective capital, which helps the process of economic
growth.

1.5 FUND BASED SERVICES

Working Capital Financing : A firm's working capital is the money available to

meet current obligations (those due in less than a year) and to acquire earning
assets. China trust Commercial Bank offers corporations Working Capital
Finance to meet their operating expenses, purchasing inventory, receivables
financing, either by direct funding or by issuing letter of credit.

Short Term Financing : The bank can structure low cost credit programmes and
cash flow financing to meet your specific short-term cash requirements. The
loans are structured to enhance your profitability by scheduling the repayment
to match the cash flow available to repay the debt.

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Bill Discounting: Bill discounting is a short tenure financing instrument for
companies willing to discount their purchase / sales bills to get funds for the
short run and as for the investors in them. These are customized to suit your
requirement for short-term finance, from the date of sale to the date of receipt
of payment there on. We consider two types of bills facility viz. where
documents are delivered on payment, i.e. D/P Bills and where the documents
are delivered against acceptance i.e. D/A Bills.

Export Credit : We offer short-term working capital finance both at the pre-
shipment and post-shipment stages Pre-shipment finance facility provides
liquidity for procuring raw materials, processing, packing, transporting, meant
for export.

Post-shipment finance is a credit facility extended from the date of shipment of

goods till the realization of the export proceeds. The different types of post-
shipment advances include:

 Export bills purchased/discounted

 Export bills negotiated (against letter of credit)
 Advances against bills sent on collection basis
 Advances against exports on consignment basis

Structured Finance : Structured Finance describes any "non-standard" way of

raising money. These tailor-made securities go beyond "standard" securities
like conventional loans, debentures, debt, and equity. The reason to structure a

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more advanced security may be that conventional securities may be
unattractive, unavailable or too expensive. These products are structured for
both long and short tenor with exit options at intervals for both parties.

Term Lending: CTCB offers very competitive rates for term financing. We also
provide advisory services to companies for syndication of the term loans to a
wide spectrum of financial institutions.

Under Term Finance, china trust Commercial Bank, offers the following:

 Fund Based Finance for capital expenditure acquisition of fixed assets

towards starting or expanding a business to swap with high cost existing
debt from other bank / financial institution
 Non-Fund Based Finance in the form of Deferred Payment Guarantee for
acquisition of fixed assets towards starting / expanding a business or
industrial unit.

1.6 NON FUND BASED

Letter of Credit: We offer import as well as domestic Letter of Credit facility to

our clients for procurement of goods on DA/DP basis as per their needs at very
competitive rates. Considering our international network of branches / offices
coupled with worldwide correspondent relationship arrangements, our clients
enjoy market acceptability and comfort in business deals.

Bank Guarantee : We offer Bank Guarantee facility to our clients guaranteeing

their performance / financial obligations in the domestic as well as
international market.

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LC Advising / Confirming Services : In case of Letters of Credit received by our
clients, we offer LC advising as well as LC confirmation services under our
correspondent relationships with domestic as well as international banks.

Co-acceptance facilities : Sometimes in business deals on credit basis, buyers

are required to offer adequate comforts to the sellers such as bank guarantee
or co-acceptance of bills by the bankers. Bank of Baroda offers co-acceptance
of bills facility to the top rated clients.

Banc assurance: Bank of Baroda has tie-up arrangement with National

Insurance Company (NIC), under which we arrange for issuance of general
insurance policies to our clients thereby taking away their worries of timely
and adequate insurance cover of the assets.

Solvency Certificate: We provide Solvency Certificate to our clients in case it is

required for providing to Government authorities, other corporates in business
deals / bids etc.

Credit Reports: We provide Credit Reports on our clients to other banks/FIs

and we also obtain Credit information required by our clients on their counter
parties, through our correspondent relationship.

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1.7 Types of Banks
RETAIL BANKS: are probably the banks you’re most familiar with: Your
checking and savings accounts are held at a retail bank, which focuses
on consumers (or the general public) as customers.

COMMERCIAL BANKS: focus on business customers. Businesses need

checking and savings accounts just like individuals do. But they also need
more complex services, and the dollar amounts (or the number of
transactions) can be much larger.

INVESTMENT BANKS: help businesses work in financial markets. If a

business wants to go public or sell debt to investors, they’ll often use an
investment bank. Learn more about investment banks.

CENTRAL BANKS: manage the monetary system for a government. For

example, the Federal Reserve Bank is the US central bank responsible for
managing economic activity and supervising banks. Learn more about
central banks.

CREDIT UNIONS: are similar to banks, but they are not-for-profit

organizations owned by their customers (most banks are owned by
investors). Credit unions offer products and services more or less
identical to most retail and commercial banks

1.8 LIST OF NATIONALISED BANK IN INDIA (ANY 7)

1 Allahabad Bank

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2 Andhra Bank
3 Bank of Baroda
4 Bank of India
5 Bank of Maharashtra
6 Canara Bank
7 Central Bank of India

1.9 FUNCTIONS OF BANK

1.9.1 Primary Functions of Banks: The primary functions of a bank are also
known as banking functions. They are the main functions of a bank.
1. Accepting Deposits: The bank collects deposits from the public. These
deposits can be of different types, such as
a. Saving Deposits
b. Fixed Deposits
c. Current Deposits d. recurring Deposits

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SAVING DEPOSITS
This type of deposits encourages saving habit among the public. The rate of
interest is low. At present it is about 4% p.a. Withdrawals of deposits are
allowed subject to certain restrictions. This account is suitable to salary
and wage earners. This account can be opened in single name or in joint
names.

FIXED DEPOSITS
Lump sum amount is deposited at one time for a specific period. Higher rate of
interest is paid, which varies with the period of deposit. Withdrawals are
not allowed before the expiry of the period. Those who have surplus
funds go for fixed deposit.

CURRENT DEPOSITS

This type of account is operated by businessmen. Withdrawals are freely

allowed. No interest is paid. In fact, there are service charges. The account
holders can get the benefit of overdraft facility.

RECURRING DEPOSITS

This type of account is operated by salaried persons and petty traders. A

certain sum of money is periodically deposited into the bank. Withdrawals are
permitted only after the expiry of certain period. A higher rate of interest is
paid.

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2. GRANTING OF LOANS AND ADVANCES: The bank advances loans to the
business community and other members of the public. The rate charged is
higher than what it pays on deposits. The difference in the interest rates
(lending rate and the deposit rate) is its profit.
The types of bank loans and advances are:-
a. Overdraft
b. Cash Credits
c. Loans
d. Discounting of Bill of Exchange

OVERDRAFT
This type of advances is given to current account holders. No separate account
is maintained. All entries are made in the current account. A certain
amount is sanctioned as overdrafts which can be withdrawn within a
certain period of time say three months or so. Interest is charged on
actual amount withdrawn. An overdraft facility is granted against a
collateral security. It is sanctioned to businessman and firms.

CASH CREDITS

The client is allowed cash credit up to a specific limit fixed in advance. It can be
given to current account holders as well as to others who do not have an
account with bank. Separate cash credit account is maintained. Interest is
charged on the amount withdrawn in excess of limit. The cash credit is given
against the security of tangible assets and / or guarantees. The advance is

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given for a longer period and a larger amount of loan is sanctioned than that of
overdraft.

LOANS

It is normally for short term say a period of one year or medium term say a
period of five years. Now-a-days, banks do lend money for long term.
Repayment of money can be in the form of installments spread over a period
of time or in a lump sum amount. Interest is charged on the actual amount
sanctioned, whether withdrawn or not. The rate of interest may be slightly
lower than what is charged on overdrafts and cash credits. Loans are normally
secured against tangible assets of the company.

DISCOUNTING OF BILL OF EXCHANGE

The bank can advance money by discounting or by purchasing bills of exchange

both domestic and foreign bills. The bank pays the bill amount to the drawer or
the beneficiary of the bill by deducting usual discount charges. On maturity,
the bill is presented to the drawee or acceptor of the bill and the amount is
collected.

1.9.2 SECONDARY FUNCTIONS OF BANKS: The bank performs a number of

secondary functions, also called as non-banking functions.
1. AGENCY FUNCTIONS: The bank acts as an agent of its customers. The bank
performs a number of agency functions which includes:-
a. Transfer of Funds

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 b. Collection of Cheques
c. Periodic Payments
d. Portfolio Management
e. Periodic Collections
f. Other Agency Functions

TRANSFER OF FUNDS

The bank transfer funds from one branch to another or from one place to
another.

COLLECTION OF CHEQUES

The bank collects the money of the cheques through clearing section of its
customers. The bank also collects money of the bills of exchange.

PERIODIC PAYMENTS

On standing instructions of the client, the bank makes periodic payments in

respect of electricity bills, rent, etc.

PORTFOLIO MANAGEMENT

The banks also undertake to purchase and sell the shares and debentures on
behalf of the clients and accordingly debits or credits the account. This facility
is called portfolio management.

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PERIODIC COLLECTIONS

The bank collects salary, pension, dividend and such other periodic collections
on behalf of the client.

OTHER AGENCY FUNCTIONS

They act as trustees, executors, advisers and administrators on behalf of its

clients. They act as representatives of clients to deal with other banks and
institutions.

2. GENERAL UTILITY FUNCTIONS: The bank also performs general utility

functions, such as:-
a. Issue of Drafts, Letter of Credits, etc.
b. Locker Facility
c. Underwriting of Shares
d. Dealing in Foreign Exchange
e. Project Reports
f. Social Welfare Programmers
g. Other Utility Functions

ISSUE OF DRAFTS AND LETTER OF CREDITS

Banks issue drafts for transferring money from one place to another. It also
issues letter of credit, especially in case of, import trade. It also issues
travellers' cheques.

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LOCKER FACILITY

The bank provides a locker facility for the safe custody of valuable documents,
gold ornaments and other valuables.

UNDERWRITING OF SHARES

The bank underwrites shares and debentures through its merchant banking
division.

DEALING IN FOREIGN EXCHANGE

The commercial banks are allowed by RBI to deal in foreign exchange.

PROJECT REPORTS

The bank may also undertake to prepare project reports on behalf of its clients.

SOCIAL WELFARE PROGRAMMES

It undertakes social welfare programs, such as adult literacy programs, public

welfare campaigns, etc.

OTHER UTILITY FUNCTIONS

It acts as a referee to financial standing of customers. It collects

creditworthiness information about clients of its customers. It provides market
information to its customers, etc. It provides travellers' cheque facility.

As the financial markets continue to evolve, financial institutions are working

to grow and maintain profits while adjusting to ever-changing regulations and

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the downturn’s effects on profitability and performance.. The main challenges
banking institutions face nowadays can be categorized as follows:

Industry strategic challenges: Banks in Luxembourg have to face significant

strategic challenges. Private banking industry professionals need to
reinvent themselves in order to reinforce Luxembourg as a leading pole
in private banking services. Retail bankers also have to face a growing
competition from abroad as well as from non-traditional institutions.

Industry regulatory challenges: The constant evolution of local and

international regulations is a major driving force in the banking and securities
industry. The likely introduction of Basel III standards, as an example, will have
a major impact on the way institutions run their business..

Industry operational efficiency challenges: To appropriately address strategic

and regulatory challenges, impeccable execution is a must. Constantly
improving operational efficiency has to be high on the agenda of bankers. Now
more than ever, institutions have to optimize their processes, control their cost
structure, and explore new operating models using all the tools now at their
disposal.

Asset quality: The biggest risk to India's banks is the rise in bad loans. The
slowdown in the economy in the last few years led to a rise in bad loans
or non-performing assets (NPAs). These are loans which are not repaid
back by the borrower.

Capital adequacy: One way a bank tries to ensure it is protected from bad
loans is by setting aside money as a 'provision'. This money cannot be used for

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any other purposes including lending. As a result, banks have lower capital
available to use for its various operations.

1.10 WEAKNESSES OF BANKING INDUSTRY

Lack Of coordination: The global banking industry faces short-term uncertainty

due to the debt crises that challenge several major economies. Industry assets
stand at $143 trillion (2013)&the EU is the largest regional market, with over
57% of the global market.

Vulnerable to risk: Since this sector deals with finances, it is the most risky
sector which can change the fate of any business/Industry

High NPA’s: Rise in Retail & corporate NPA’s (Non-performing assets) is the
single major issue this sector is going through worldwide.

Can’t reach to Under-penetrated market: Due to several conflicting objectives

of government & banks which goes hand in hand, rural areas of developing
nations are still not in the shadow of banks.

Structural weaknesses: such as a fragmented industry structure, restrictions

on capital availability and deployment, lack of institutional support
infrastructure, restrictive labor laws, weak corporate governance, Political
pressure and ineffective regulations.

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1.11 OPPORTUNITIES OF BANKING INDUSTRY
1. Expansion: Penetrating to the rural markets & bringing the rural masses
under the purview of organized banking will be the objective of the
Banks in decades to come.

2. Changing Socio-cultural & demographic factors: Given the demographic

shifts resulting from changes in age profile and household income,
consumers will increasingly demand enhanced institutional capabilities
and service levels from banks.

3. Rise in Private Sector Banking: Banking Industry across the world is

highly regulated &lead by PSU’s with their respective central banks. With
the advent of private sector banks this sector is going through structural
& functional changes mainly due to the adaptation of the advanced
technologies & increased competition thereby benefiting to the end
customers.

1.12 BANKING INDUSTRY CHALLENGES

As the financial markets continue to evolve, financial institutions are working

to grow and maintain profits while adjusting to ever-changing regulations and
the downturn’s effects on profitability and performance.. The main challenges
banking institutions face nowadays can be categorized as follows:

[20]
Industry strategic challenges: Banks in Luxembourg have to face significant
strategic challenges. Private banking industry professionals need to
reinvent themselves in order to reinforce Luxembourg as a leading pole
in private banking services. Retail bankers also have to face a growing
competition from abroad as well as from non-traditional institutions.

Industry regulatory challenges: The constant evolution of local and

international regulations is a major driving force in the banking and securities
industry. The likely introduction of Basel III standards, as an example, will have
a major impact on the way institutions run their business..Industry operational
efficiency challenges: To appropriately address strategic and regulatory
challenges, impeccable execution is a must. Constantly improving operational
efficiency has to be high on the agenda of bankers. Now more than ever,
institutions have to optimize their processes, control their cost structure, and
explore new operating models using all the tools now at their disposal.Asset
quality: The biggest risk to India's banks is the rise in bad loans. The slowdown
in the economy in the last few years led to a rise in bad loans or non-
performing assets (NPAs). These are loans which are not repaid back by the
borrower.

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 CHAPTER.2
REVIEW OF LITRETURE ON BANK
A number of studies related to performance of co-operative banking sector in
India have been conducted. Here, an attempt is being made to provide
an overview of various aspects and issues of this study through the
review of existing literature. Some of the main studies selected for
review have been discussed below.

Bhatia (1978), in his study titled, “Banking Structure and Performance − A Case
Study of the Indian Banking System” attempted to analyze the economic
performance of Indian banking system as reflected by its output, price
and profitability during the period 1950-68. He found that profit of the
Indian banking system during the said period had an upward trend. The
study suggested deregulation of interest rates to Enhance the
profitability of financial institutions and to ensure a competitive banking
environment which would ultimately result in better services.

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Kulkarni (1979), in his study titled, “Development Responsibility and
Profitability of Banks” stressed upon social responsibilities of banking
sector. He was of the view that looking for profit maximization only was
not true profitability of banks as social benefits arising out of bank
operations cannot be ignored. He observed that while fulfilling the social
responsibility, banks should try to make the basic banking business as
successful as possible, reduce cost, improve banking system and increase
the overall profitability.

Markand (1979), in his book titled, “Social Priority Index of Public Sector
Banks” evaluated the performance of public sector banks. With the help of
performance index consisting six quantitative indicators such as branch
expansion, priority sector credit and wage cost, he concluded that the
priority sector financing was essential, and necessary.
Performance in this sector he suggested that lending power should be
delegated to the branch managers.

Kayaker(1983) in his study titled, “Willful Default in Loans of Co-operatives

“examined the trends in deposits, share capital, working capital, loans
outstanding, advances, over dues and recoveries at the district level financing
institutes. Socio-economic factors responsible in projecting and promoting
future development in the operations and approaches of the co-operative
credit organizations were also considered to examine the specific progress
made by Central Co-operative Bank ofParbhani District. The study revealed
that the cropping intensity, irrigation facility and working capital of the

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societies were the major factors for explaining over dues at primary
agricultural credit societies’ level.

Kurulkar (1983), in his published work on agricultural finance in backward

region, reported glaring defects in the set-up of co-operative credit system.
He pointed that out of the ten sample owners who obtained long- term
credit from the co-operative banks, 30% could not secure short- term credit.
Lack of short- term or production credit to the farmers who availed long-
term credit resulted in lower output per acre, thereby resulting in over
dues.

Reddy (1985), in his study titled, “Overdoes Appraisal And

Management in Banking” analyses the relationship between the lending
and recovery of an ape bankHis findings suggested that the lending and
recovery of the apex bank had not been proportionate, i.e., either the apex
bank could not meet the entire credit needs of the primary banks or the
latter could not borrow the funds from the apex bank. The primary banks
were constituted by people not for co-operative services but for their vested
interests.

Chopra (1987), in her book, studied operational efficiency of

some selected public sectors banks. She found the lack of
professionalism in banking industry and stressed for the
introduction scientific management practices to enhance
profits and profitability of public sector banks.

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She recommended comprehensive management of costs as
well as earning of the bank

Divides (1987), in his book titled, “Co-operative Banking and

Economic Development” studied the role of Assam Co-
operative Apex Bank Ltd. in economy of the State. He found
that apart from working as a commercial bank it had to
discharge three other functions, i.e., to finance primary credit
societies, to act as banking Centre for primary societies, and
to undertake supervision of primary societies.

Ramachandaran (1992), in his paper titled, “Profit Planning

as a Management Tool for Profit Maximization” tried to
analyses profitability position of the banks. Increasing
emphasis on goals, increase in establishment cost, NPAs,
amount locked in sick units, unfavorable deposit mix,
compliance to statutory requirements were some reasons,

Identified by him, for declining profitability. He

suggested the following measures to redress the said
problem:

(i) Diversification of business,

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(ii) Interest to be paid by RBI on CRR/SLR
balances,

(iii) Opting utilization of scarce resources by asset

management,

(iv) Better funds management,

(v) Management of non-performing advances,

(vi) Professionalization of bank management,

(vii) Identification of loss centers,

(viii) Better role of government, and

(ix) Up gradation of skills and mechanism.

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Balister et al. (1994) conducted a study of overdues of loans in agriculture
to examine the repayment performance of defaulters in three blocks of
Agra district in Uttar Pradesh. They found that well-to-do agriculture
families accounted for a largeshare of overdues. They accounted 37 per
cent of total defaulters and 57 per cent of total overdues. Total amount of
overdues and its relative share also increased duringthe period of study.
Lack of proper supervision over end use of loan was identified a major
reason for mis-utilisation of credit which leads to increase in overdues.
Hundekar (1995) suggested following points to improve the productivity of
RRBs:

(a) Profit planning and cost control measures should be improved;

(b) Labour productivity improvement measures to be taken;

(c) To promote customer service by product development and

diversification strategies;

(d) Market development strategies for mobilizing more savings to be

initiated;

(e) Management audit for controlling other administrative costs to be

conducted;

(f) Streamline the recovery process; and

 (g)The funds of banks should be effectively managed.
Patel (1995), in his paper on viability of rural banking, inferred that low volume
of business per branch and per employee and high level of credit deposit ratio
were twomajor factors causing losses in rural banking system. He observed
that relative share of non-farm sector loans in rural banks was going up.

Murtha and Sara Swati (1996), in their paper titled, “Reducing over dues in
Credit Co-operatives Some Alternatives” undertook a study to evaluate the
Quantitative Progress made in respect of supply of Institutional Credit.
Using the secondary data made available by RBI in Statistical Statements
relating to Co-operative Movement in India for a period of 6 years from
1978 to 1983 and assessing the Loaning Policies ofGirijan Co-operative
Corporation, Visakhapatnam, the study concluded that the progress in
respect of supply of credit was phenomenal over the period of study but
this progress pales into significance, if the magnitude of over dues was
considered. It pointed out that the most unnerving aspect of institutional
credit was the alarmingly high percentage of over dues,
Making them homogeneous would not result in decline in over dues, as
mere homogeneity was not a sufficient condition. Further, regarding the
Revamping of Loaning Policies, the results were quite impressive as it
resulted in significant improvement in the Recovery Performance.

Satyanarayane (1996) studied productivity beyond per employee business,

and suggested a model to measure overall efficiency of the banks. He
emphasized that the size of the bank should be squared off while measuring
efficiency of bank. According to him, Productivity of bank = (Average index
market share of all the output factors/Average index market share of all the
input factors) X 100 where, output factors were deposits, non-deposit
working funds, loans & advances, investments, interest spread, non-interest
income and the net profit. The input factors were network of branches,
number of staff, wage bill, non-wage operating expenses, etc. In order to
facilitate comparison of one bank with the other, irrespective of size, the
market share of each factor in percentage terms has to be taken into
account instead of absolute levels.
 CHAPTER.3
HOME LOAN SERVICES PROVIDED BY ICICI BANK

ICICI bank understands the needs of its customers of owning their own
house and hence provides for loans for buying houses. ICICI offers home
loans at lower interest rates, higher repayment period and simple
documentation. In order to offer convenience to the customer ICICI bank
offers doorstep service and also smart-phone applications, thus
preventing the customer from making frequent personal visits to the
bank.

3.1 Key Offerings of ICICI Ltd. Home Loan:

o Home Loan from ICICI Limited is offered at an interest rate of

8.65% onwards.
o ICICI bank gives its customers the freedom of choosing their
dream homes by choosing from its database of approved projects
at around 12 cities in India.
o Loan against Property: ICICI bank also facilitates Loan against
property. It allows the user to make funds easily available. Loans
offered by ICICI Bank against property are available at an interest
rate of 12.25%p.a. and repayment tenure lasts up to 15 years. The
loan is provided only against Residential/commercial property.
ICICI bank understands the needs of its customers of owning their own
house and hence provides for loans for buying houses. ICICI offers home
loans at lower interest rates, higher repayment period and simple
documentation. In order to offer convenience to the customer ICICI bank
offers doorstep service and also smart-phone applications, thus
preventing the customer from making frequent personal visits to the
bank.

3.2 Types of ICICI Bank Home Loans and Features

ICICI Pre-Approved Loan: ICICI bank also facilitates pre-approved loans

for its selected customer, thus reducing the burden of heavy
documentation.

ICICI Ltd. Home Loan Insurance: ICICI bank keeping in mind any
unforeseen incident in the user’s life provides for Home Loan insurance
in order to make ICICI Home loan repayment easier for the user’s loved
ones.These products come in two variants:

a. Home Safe Plus: It’s a single premium long term insurance plan
which ensures insured sum remain constant during the policy
period.It also ensures monthly payment of sum insured in case of
PA or Permanent& total disability claims.
b. Loan Protect: Provides for tax benefit and also gives the flexibility
to continue life cover even after loan closure.
 Personal Loan linked to Home Loan schemes: A customer already
having an ICICI bank housing loan scheme can directly apply for a
personal loan in linkage with the existing ICICI Bank Home loan. This
provides the customer with some extra cash for meeting certain sudden
expenses.The tenure period of the personal loan is same as the ICICI
Bank home loan period.This kind of loan can also be referred to as top up
loan and this ICICI Bank housing loan can be taken by both individuals as
well as non individual customers.The top up can amount up to 100% of
the existing amount and the tenure can range upto 20 years or the
outstanding period of the original ICICI Bank Home loan.

ICICI Home Loan Transfer and Top Up: This is an extended facility for
customers transferring their loan from other banks and non banking
financial institutions to ICICI.This facility provides customer s with the
power to apply for an additional top up loan at the time of transfer.The
top up amount can be upto 100% of the transferred amount and the
interest rates are also kept low.

ICICI bank Saral Rural Housing Loan: Ranging between Rs5.00 lakhs to
RS.15.00 lakhs and a tenure of 3-20 years with an interest rate of 9.70%
(of the base value), this loan is directed towards developing the rural
area and empowering women and the weaker sections of the society.The
ICICI rural home loan is generally sanctioned for acquisition,
construction, repairs, renovation or up-gradation of a house in rural
areas. ICICI Rural Housing Finance is meant for the welfare of the rural
population.
 Lease Rental Discounting: It facilitates raising loans against future
expected rentals of self owned commercial property.The property should
be occupied by a lessee. This loan is very helpful in raising funds for
wedding, child’s education, business expansion or renovation work.

Office Premises Loan (Non Residential Property): With this loan, ICICI
bank caters to the needs of its customers of owning their own business
premises or office.This loan provides for purchase, construction,
extension and improvement of its customer’s office premises. The loan
may also be packaged to include the estimated renovation
expenses .However; the loan can be extended only towards non
residential property.

Land Loan: Contrary to the above mentioned loans, Land Loans can only
be applied for purchase of residential property and can only be utilized
for self construction. The plot must be within municipal limits of hub
locations or outside municipal limits in case of direct allotment by
Development Authority. However, the applicant must keep in mind that
the construction has to be completed within two years of the first
amount disbursement of the sanctioned loan.

ICICI NRI Home Loans: ICICI Bank Home Loan is also available to NRI’S
At an attractive interest rate,easy home loan application and tracking
facility and doorstep service this loan gives NRI’S the freedom to
purchase a land, Home, Flat or any residential Property.The applicant
must be minimum 21 years of age.The maximum age limit for an NRI
candidate is 60 years or retirement age (whichever is earlier) at the time
of maturity. The applicant if Salaried should have stayed abroad for a
minimum period of 1 year and if Non-salaried,should have had spent a
minimum of 3 years abroad.

The processing fee stands at 0.5% of the loan amount and the surcharges
& applicable service tax.

The repayment of the loan amount can be done only in Indian Rupee
through remittances from abroad, through normal banking channels or
through NRE/NRO accounts.ICICI allows three modes of Repayment
under NRI Loans:

 Before availing full disbursement of loan

 After availing full disbursement of loan
 Prepayment

Pradhan Mantri Awas Yojana – in keeping with the vision of our

honorable Prime Minister, ICICI bank offers Personal Loans under the
Pradhan MantriAwasYojana Scheme which is for the welfare of the
economically challenged class of individuals. This ICICI Bank home loan
offers a ‘Credit Linked Subsidy Scheme’ which is meant for Economically
Weaker Sections (EWS) and Lower Income Group (LIG) sector of the
population. Tis scheme allows these economically weaker individuals
avail a home loan to fulfill their housing needs. The beneficiaries of this
scheme are those families which do not own a pucca house and belong
to the Economically Weaker Sections (EWS) and Lower Income Group
(LIG) part of the society. The family in question should consist of a
husband, wife and unmarried children. The subsidy promised under this
scheme would be in the form of a lower interest rate which would be
6.5% per annum for those who are buying their first house. This
subsidized rate would be applicable for a period of 15 years of the loan
for loans amounting up to Rs.6 lakhs. Loans higher than this amount
would not attract the interest subsidy. An upfront subsidy benefit is given
on the amount of principal outstanding as loan. The ICICI Bank Home
loan granted under this scheme can be used for purchasing or
constructing a new house and also for enhancing an existing dwelling
unit.

The categories of individuals who can avail this subsidy, namely the EWS
and LIG should comply with the prescribed income norms. Such income
norms state that EWS households should have an annual household
income of up to Rs.3 lakhs while LIG households should have an annual
income of Rs.3 lakhs to Rs.6 lakhs. Documents supporting this income
proof would be required to be submitted or else an Affidavit for the
same is required. Moreover, the individuals not owning the pucca house
and applying for the loan should also make a declaration of not owning a
pucca house.

Balance Transfer: ICICI Bank also allows its customer to transfer their
existing loans from other banks and non-banking financial institutions to
ICICI at amazingly lower rates of interest,thus saving the customer a lot
of money in terms of interest and also gives them longer tenure.
3.3 Additional Features of ICICI Bank Home Loans

Apart from the home loans sanctioned, ICICI bank also provides the
facility of enhancing one’s ICICI Limited home loan by about 20% and
also lets one extend the ICICI Bank Home loan tenure to up to 50 years of
age. This extended facility is known as ICICI Bank Extra Home loans and is
available under three variants suitable to everyone’s needs.

 For middle age, salaried customers: Home loan from ICICI Bank is
suitable for salaried individuals up to 48 years of age. Unlike
regular home loan, which gives a repayment schedule until the
age of retirement, this facility provides for the extension of the
loan tenure up to 65 years of age.

 Self Employed customers: Beneficial for self-employed

professionals whose income varies time to time depending upon
the seasonality of the business. This facility allows them to earn
extra time for repayment in case of slowdown in their business or
work.

 For young, salaried customers: This facility is extended to the

young salaried individuals, up to the age limit of 37 years. It allows
the individual to enhance the repayment tenure up to 67 years of
age.
3.4 Fees and Charges applicable for ICICI Limited Home Loans

Charges Mortgage Loans

Loan Processing Charges

/ Renewal Charges (Non0.50% - 1.00% of the loan amount
Refundable)

Nil for ICICI Home Loans and ICICI Home

Improvement Loans with floating rate of
interest.
2% plus applicable taxes on the outstanding
principal on full repayment forICICI Bank Home
Loan with fixed rate of interest.
Prepayment Charges 2% plus applicable taxes on the outstanding
principal on full repayment for Top Up loan if the
applicant or co-applicant is Non Individual.
4% plus applicable taxes on the outstanding
amount of loan where loan is given to Non
Individual borrowers or with fixed rate of
interest to Individual borrowers.

2% per month Home OD: 1.5% of the

Charges for late
outstanding amount subject to minimum of Rs.
payment
500/- & Maximum of Rs.5000/-

Conversion charges forFloating to Floating 0.5% of the principal

ICICI home loans outstanding plus applicable taxes
Dual fixed rate to Floating 0.5% of the principal
 outstanding plus applicable taxes
Floating to Dual fixed rate 0.5% of the principal
outstanding plus applicable taxes
Life time fixed to floating 1.75% of the principal
outstanding plus applicable taxes

Repayment mode swap

Rs 500
Charges

Document Retrieval
Rs 500
Charges

Cheque bounce charges Rs 500

Amortisation Schedule Nil

Statement of Account Nil

Final prepayment
Nil
statement

Duplicate No Objection
Certificate / No DueRs 100(inclusive of S.T)
Certificate

Revalidation of No
Rs 100 per Noc(inclusive of S.T)
Objection Certificate

Provisional Income Tax

Nil
Certificate
Nil
Final Income Tax
Certificate
Interest Certificate N.A

Change of Address Nil

Agreement Copy Nil

No Objection
Certificate / No DueNil
Certificate

o Services taxes and other applicable charges will be charged above

these charges on the ICICI Home Loans

o The ICICI Limited Home Loan interest rate on Home loans and
Non-Home loans starts from 9.15% and ranges from 9.35%-
12.50% respectively for the quarter ended Dec2016.

ICICI bank understands the needs of its customers of owning their own
house and hence provides for loans for buying houses. ICICI offers home
loans at lower interest rates, higher repayment period and simple
documentation. In order to offer convenience to the customer ICICI bank
offers doorstep service and also smart-phone applications, thus
preventing the customer from making frequent personal visits to the
bank.
 CHAPTER.4
LARGE EXPLANATION ABOUT HOME LOANS
4.1 Home Loan Characteristics
Here we have enumerated different features of a home loan to help you
understand the home loans in a better way.

 When granting a home loan, the lender uses your property (home)
in order to secure the loan. Due to use of your house as collateral,
home loans are secured loans that involve a low level of risk for
the lender. If you are unable to pay the loan for any reason, the
lender can legally auction off your property to retrieve the
outstanding loan amount.
 Being a secured loan, interest rate of a home loan is comparatively
lower than the interest rate of an unsecured loan, such as a
personal loan.
 The amount of the home loan can vary based on your income,
credit history, the locality/city you are planning the purchase in
and various other factors. You can apply for a home loan jointly
with your spouse, family members or others as co-applicants.
 Home loans usually have longer repayment tenures which
range from 5 years to 30 years. The repayment time period for a
home loan is fixed at the time you apply for home loan.
  Prepayment of a home loan can also be done. Some home loan
providers charge a prepayment fee if you prepay a loan while
some do not. Therefore, home buyers should compare the home
loans available to find the best home loan offers.
 The Equated Monthly Installment (EMI) is the money you pay each
month to repay your home loan principal amount and its interest
amount. Thus when calculating the Home Loan EMI, both the
accrued interest on the loan and the principal amount are taken
into account. You can use the home loan EMI calculator to
calculate the EMI which you will have to pay for your home loan.
 Home loan includes a number of associated charges, such as
registration charge, processing fee, penalty on prepayment,
commitment charge and miscellaneous charges
(documentation/consultation).
 Banks usually maintain a margin of at least 20% when sanctioning
a home loan. Thus, the home loan amount provided to you only
covers a maximum of 80% of the estimated value of the house
being purchased. Additional costs such as down payment,
registration costs, etc. have to be borne by you.
 You can avail tax benefits on your home loan as per provisions of
the IT Act, 1961, which are subject to change.

4.2 Types of Home Loans

With people becoming more and more open to home loans, loan
providers are coming up with better and more attractive home loans.
With a host of cheaper home loans on the offer, it is best to compare
home loans first and then make a purchase.

Home loan is a relatively broad category, as it not only includes a bank

loan for purchasing a new or existing house. Loan providers are offering
Home loans for different purposes according to the changing needs of
the customer.

Home loan can be of the following sub-types:

 Home Purchase Loans: As evident by the name, this type of home

loan can be availed when buying a new home. You can find the
best home loans in India at Paisabazaar and compare home loans
against various criterions.
 Land Purchase Loans/Plot Loans: The land purchase loan may be
availed in order to complete the purchase of a plot of land for
construction or as an investment. Land purchase loans are just like
a home loan, the only difference being that this loan is used to
purchase a vacant plot. The term, the interest rate and procedure
for both home loan and land purchase loan are similar.
 Home Construction Loans: This type of home loan can be availed
for the construction of a house. Such a loan is granted only if you
already own a plot of land and plan to start construction of your
house on it.
 Home Improvement Loans: Home improvement loans are
increasingly becoming popular as its interest rates are similar to
home loans interest rates. These loans can be availed when you
are planning to renovate or make repairs to your current home.
  Home Conversion Loans: If you already own a house with an
existing home loan and are planning to purchase a new house, you
can opt for a home conversion loan.
 Home Extension Loans: With time you might feel the need to add
more space to your house for varied reasons, such as a growing
family. Opt for this home loan type when you plan to increase your
living area and extend your existing home.

4.3 OBJECTIVE OF THE STUDY OF HOME LOANS

The study was mainly conducted to understand the concept of home

loan scheme and the eligibility criteria of the customers.

 The study is done to understand the documents involved in the

home loan scheme and the repayment methodology adopted by
various banks and the HFC‘s (Housing Finance Corporations).

 The innovative home loan schemes and the risk capturing

mechanism adopted by the HFIs and the future of the home loan
segment has been undertaken as a part of this study.

4.4 HOME LOAN SCHEME AND ITS EXTENSIONS

A home loan scheme is generally offered to the person to accommodate

finance for purchasing the house or for renovation or extension of the
existing house.
The various extensive schemes, which are included in the home loan
portfolio, are:

4.4.1 Home Purchase Loan:

This is the basic home loan for the purchase of a new home.
4.4.2 Home Improvement Loans:
These loans are given for implementing repair works and renovations in
a home that has already been purchased by you.
4.4.3 Home Construction Loan:
This loan is available for the construction of a new home.
4.4.4 Home Extension Loan:
This is given for expanding or extending an existing home.
For eg: addition of an extra room etc.
4.4.5 Home Conversion Loan:
This is available for those who have financed the present home with a
home loan and wish to purchase and move to another home for with
some extra funds are required. Through home conversion loan, the
existing loan is transferred to the new home including the extra amount
required, eliminating the need of pre-payment of the previous loan.

ICICI offers:

 Attractive loan interest rates.

  Home Loan amounts starting from Rs.2 lacks and ends up to
20lakhs.
 Tern loans up to 20 years.
 Free personal Accident loan at attractive premium.
 Special 100% funding for select properties.
 Insurance (Terms & Conditions).
 Insurance options for your home
4.5ELIGIBILITY CRITERIA FOR HOME LOANS

How much can you borrow?

Griha Home Loans range from Rs.1lakh to Rs. 50lakhs. Your repayment period
can vary from 1 year to 20 years depending upon your capacity to repay.
Eligibility:
Age: - Min: You should be at least 21 years of age.
Max: At the time of loan maturity, you should not exceed 65 years or
your
retirement age, whichever is earlier.
Individuals:
You should have completed a minimum of 2 years of service (with a minimum
of 1 year in the current job)

4.6 Businesspersons/Self-employed professionals:

You must have an established business or professional practice of not
less than 3 years, with a positive net worth and must have posted a net
profit for the last 2 years.
Note: Minimum net take home salary of Rs. 6000/- p.m. for salaried
employees or annual income of not less than Rs. 1.20lakh for
businesspersons/ self-employed professionals. (Spouse/co-applicant’s
income can be included in the income computation).

1. Individuals who are salaried or self employed, professionals,

businessmen are eligible. Proprietary concerns, HUF, partnership firms or
limited companies are not eligible for this loan, where partners at their
individual capacity are free to avail this loan.

2. As a customer to enhance the loan eligibility, all HFIs lay down

conditions to who be co applicants, al co owners to the property should
necessarily be co-applicant. Income of the co owners can be clubbed
together to get higher loan eligibility. Minors are not eligible to become
co owners, as also friend and relative’s only blood relatives are eligible to
take a property jointly.
Some of the acceptable relationships where loan clubbing is possible:
Income clubbing of co – applicants

Combinations Income clubbing

Husband – wife YES
parent – Son YES (if only son)
Parent – Daughter YES (If only child)
Brother- Brother YES (if currently staying together and
intend staying together in the new
property)
Brother – Sister NO
Sister – Sister NO
Parent – Minor child Not eligible for loan

3. The minimum age for the applicant and the co applicant to become
eligible for the commencement oft eh loan is 23 years, and co
applicant can be of 18 years of age if their income is not clubbed to
calculate the loan eligibility.
 4. The maximum age at the time of loan maturity for applicant or co-
applicant is 60 years or the retirement age whichever is earlier.

4.7 The documents required to be submitted by the businessmen as

follows:

a. Last three years Profit & Loss Account Statement duly attested
by a Charted Accountant
b. Last three years Balance Sheets duly attested by a Chartered
Accountant
c. Last three years Income Tax Returns duly filed and certified by
Income Tax authorities

4.8 Proof of Investments:

1. Bank statements for the last six months of all current
accounts.

2. Any other photocopies of investments held, as required

by the HFI.
The above are the various documents required by the businessman in
addition to the documents, which are common to the entire category.

The businessman is also judged on the basis of the business conducted

by him, if his Business profile is in the negative list, he will be thoroughly
considered for his credibility before dispersing loan, the organization and
property location should not be in the negative list.

These are the additional documents which are required to be looked at

before going on for completing the pre sanction formalities with respect
to dispersing of the home loans to the business class.
4.9 The following diagram indicates the loan procedure at the bank

Customer

For large borrows

Branch manager

Loan Department

Branch manager

Regional Officer
 Legal opinion, valuation
And Technical

4.10 Home Loan Tax Saving Calculator

By applying for Home Loans with ICICI bank,an individual can also earn
benefits by saving tax on the principal and interest payments made
towards the loan taken. This facility proves to be beneficial for the user
as he/she can easily get a substantial amount deducted from his total tax
liability. Here is a simple illustration on Home Loan Tax Saving Calculator:

Mr.Verma With a gross annual income of RS 1500000 wants to purchase

a property of worth Rs 5000000 at certain area. HE approaches ICICI
bank and applies for aICICI Bank Home Loan with a repayment period of
20 years and at an interest rate of 10.4% p.a. He now,wishes to know the
amount of tax that will be saved during the aforesaid loan period. With
the HOME LOAN TAX SAVING CALCULATOR,he finds out that he can save
a total amount of RS. 1467743 as deductions from the total tax payable.

4.11 Apply for ICICI Bank Home Loan Online through Paisa
bazaar

Apart from visiting the branch personally, the user can also apply for
ICICI Bank home loans online. All that is required for the online
application is visiting the Paisabazaar.com website, and selecting the
Home Loan option. After having selected Home Loans option, he needs
to choose the type of loan he is looking for. Having selected his type of
loan, he/she needs to fill up the form and submit his details such as
name, age, occupancy and his requirement.

After having submitted all the necessary details and having submitted all
the documents, the customer has to wait for the bank to respond. The
bank then on having completed all the formalities, like cross checking the
documents, and checking the credit worthiness of the customer,
sanctions the loan at the earliest. However, it is very important for the
individual to fulfill all the eligibility criteria’s and also he/she has to make
sure that all the information provided is true and correct.

ICICI bank also facilitates discounts on online processing fees. The online
application process is very easy and convenient and also allows the
applicant to check his loan eligibility status online without having to
undertake any unnecessary hassles.
ICICI bank also facilitates pre-approved loans for its existing customer.
The bank has certain offers for all of its existing customers, depending
upon their relationship with the bank. All the customer has to do is click
on home loans tab and choose CHECK YOUR OFFER tab under the
existing customeroptions. A pop-up comes which asks for certain details
like the customer’s debit card no and PIN.

Afterfilling the necessary details the customer can get a preview of

special offers available only for them. Such Loans generally provide for
lower rate of interest, and higher tenures. However, the eligibility criteria
must be matched and the customer should have had sufficient credit
worthiness in the books of the bank.
 CHAPTER.5
RESEARCH AND MATHDOLOGY

5.1 RESEARCH METHODOLOGY

ICICI bank in India plays a major prerequisite for the healthy economic
growth of a country. The economic significance of any development
programmer cannot be assessed without proper reference to banking
sector development. In study efforts are made to examine in detail the
types of loan of ICICI bank in economic development of the country. The
objective with which this study is taken up and the methods by which
the secondary data is required to be collected are discussed in this
chapter.

5.1.1 OBJECTIVE OF THE STUDY

1. To study the ICICI loan facilities are available to customer.
2. To study the establishment, growth and progress of customer service
provided by bank.
3. To make study of types of loan provided by ICICI bank.
4. To know the effective utilization facilities provided by bank.

5.1.2 SCOPE OF THE STUDY

Though this study is purely explorative in nature, it cannot be denied
that it could be of numerous uses to researcher and enthusiasts.
1. It would pave the way for the growth of similar studies in the area of
performance of ICICI bank.
2. It would create awareness among the nationalized bank types of loan
providing by ICICI bank.
3. Finally it can be used as a basic for numerous scientific and innovative
studies on performance of ICICI bank.

5.1.3 LIMITATIONS OF THE STUDY

Though this study is purely explorative in nature, it is brought with a
number of limitations. The most outstanding among them could be listed
as follows.
1. This study concentrates more on the types of loan of ICICI bank
without considering the private sector bank in India.
2. Adequate secondary data are not available regarding performance of
ICICI bank in India.
3. This study does not analyze the preambles of ICICI bank in India.
 CHAPTER.6
SWOT Analysis of ICICI Bank

6.1 Strengths of ICICI Bank

 ICICI is the second largest bank in terms of total assets and market
share
 Total assets of ICICI is Rs. 4062.34 Billion and recorded a maximum
profit after tax of Rs. 51.51 billion and located in 19 countries
 One of the major strength of ICICI bank according to financial
analysts is its strong and transparent balance sheet
 ICICI bank has first mover advantage in many of the banking and
financial services. ICICI bank is the first bank in India to introduce
complete mobile banking solutions and jewelry card
 The bank has PAN India presence of around 2,567 branches and
8003 ATM’s

6.2 Weaknesses of ICICI Bank

 Customer support of ICICI section is not performing well in terms

of resolving complaints
 There are lot of consumer complaints filed against ICICI
 The ICICI bank has the most stringent policies in terms of
recovering the debts and loans, and credit payments. They employ
third party agency to handle recovery management
 There are also complaints of customer assault and abuse while
recovering and the credit payment reminders are sent even before
the deadlines which annoys the customers
 The bank service charges are comparatively higher
  The employees of ICICI are bank in maximum stress because of the
aggressive policies of the management to win ahead in the race.
This may result in less productivity in future years.

6.3 Opportunities of ICICI Bank

 Banking sector is expected to grow at a rate of 17% in the next

three years
 The concept of saving in banks and investing in financial products
is increasing in rural areas as more than 62% percentage of India’s
population is still in rural areas.
 As per 2010 data in TOI, the total number b-schools in India are
more than 1500. This can ensure regular supply of trained human
power in financial products and banking services
 Within next four years ICICI bank is planning to open 1500 new
branches
 Small and non performing banks can be acquired by ICICI because
of its financial strength
 ICICI bank is expected to have 20% credit growth in the coming
years.
 ICICI bank has the minimum amount of non- performing assets

6.4 Threats of ICICI Bank

 RBI allowed foreign banks to invest up to 74% in Indian banking

 Government sector banks are in urge of modernizing the
capacities to ensure the customers switching to new age banks are
minimized
 HDFC is the major competitor for ICICI, and other upcoming banks
like AXIS, HSBC impose a major threat
 In rural areas the micro financing groups hold a major share
 Though customer acquisition is high on one side, the unsatisfied
customers are increasing and make them to switch to other banks
 CHAPTER.7
FINDING CONCLUSION AND SUGGESTIONS

First chapter comprises introduction about Indian banking industry, its

development, technology more particularly e-channels. The Indian
banking industry is explained under various reforms taken place,
phases of transformation and role of technology in banking gains
more attention.
Chapter highlights various e-channels along with benefits to customers
and banks. The discussion demonstrates the profile of various
private bank and their banking services. Second chapter explains
the growth & technological development in banking.
It also explain the development of ICT based products / services,
Changes in banking system and services, Impact of IT in banks,
opportunities, emerging challenges and issues faced in adopting
banking technology.

1. The home loan segment can be extended to the lucrative NRI

segment; this would provide the bank a cutting edge and larger share of
the home loan market.

2. The bank can provide the benefits like SMS alert and other features so
as to make the home loans more attractive.
 BIBLIOGRAPHY
 Websites

 http://www.icicibank.com/pfsuser/loans/homeloans/hlhomepage.
htm
 Online Home loan. In/ICICI Bank.
 https://www.paisabazaar.com/axis-bank
 https://www.Introduction-of-Banking-Industry
 www.businessstudynotes.com/others/banking-finance/discuss-
importance-banks-detail.
 https://www.affairscloud.com/different-types-bank-accounts/

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 REFERANCES

Books Name with Authors Name and Editions

 Dr. C. Satyadevi ( S. Chand Publication)- Financial Services

Banking and insurance
 E. Gordon , P.K Gupta ( Himalaya Publication )- Banking And
Insurance
 H R Machiraju ( New Age International publication)- Modern
Commercial Banking
 Sonali Jain ( First Published on July 2014)- Banking Industry in
India
 G Gopal Krishna Murthy- Customer Services In Indian Banks An
Overview-
 R.K Uppal ( First Edition July 2008)- Banking Services And IT The
Indian Experience
 Design , Development & Implementation of information System
2nd Edition 2007, Banking Course book, Indian Institute of banking
& Insurance Macmillan.
 Giriappasomu (2002)” impact of IT on banks” “ Mohit Publication.