Professional Documents
Culture Documents
1
EXECUTIVE SUMMARY
The report “Consumer Behavior Towards Third Party Products in Indian Private
Sector Banking” aims to the assimilate data about the various aspects of the
consumers behavior regarding the behaviors of the consumers towards the Third
Party Products of the Indian Private Sector Banking and to know the acceptance
of and the expectations of the consumers from Third Party Products of the
Indian Private Sector Banking.
HDFC Bank
ICICI Bank
The report is a mixture of secondary and primary data with Questionnaires being
our major instrument to collect primary data.
2
INDUSTRY PROFILE
3
INDIAN BANKING SECTOR
Banking in India has its origin as early as the Vedic period. It is believed that the
transaction from money lending to banking must have occurred even before
menu, the great Hindu jurist, who has devoted a section of his work to deposit
his advances and laid down rules relating to rest of interest. During the Mogul
period, the indigenous bankers played a very important role in lending money
and financing foreign trend commerce. During the day of east India Company, it
was the turn of the agency houses to carry on banking business. The general
bank of India was the first joint stock bank to t be established in the year
1786.the other which followed where the bank of Hindustan and Bengal bank.
The bank of Hindustan is reported to have continued till 1906 while the other
two failed in mean time. In the first half of the 19 century the east India company
established three bank, the bank of Bengal in 1809, the bank of Bombay in
1840,the bank of madras in 1843. This three banks also known as residency
bank, where independent units and functioned well. this tree banks where
amalgamated in 1920 and new bank, the imperial bank of India was established
on 27th jan,1921.with passing of the state bank of India act in 1955the
undertaking of the imperial bank of India was taken by the newly constituted
state bank of India. The reserve bank which is the central bank was creatsd in
1935 by passing reserve bank of India act 1934.in the wakw of the Swadeshi
movement, a numbers of banks with Indian management were established in the
country namely, Punjab national bank ltd, bank of India ltd. canara bank ltd,
Indian bank ltd,the bank of Baroda ltd, central bank of India ltd. On July
19,1969,14 major banks of the country were nationalized and 15th April 1980 six
more commercial private sector banks were also taken over by the government.
4
Public sector bank
a. state bank of India and its associated banks called the state bank group
b. 20 nationalized bank
Co operative sector
5
The co-operative banking sector has been developed in the country to the
supplement the village money lender. the co operative banking sector in India is
devided into 4 components:
Development banks
6
1. Industrial finance corporation (IFCI)
6. SCICI LTD.
7
It is useful to note some telling facts about the Indian banking industry
juxtaposed with other countries, recognizing the differences between the
developed and the emerging economies.
First, the structure of the industry: In the world’s top 1000 banks, the there are
many more large and medium-sized domestic banks from the developed
countries than from the emerging economies. Illustratively, according to The
Banker 2004, out of the top 1000 banks globally, over 200 are located in USA,
just above 100 in Japan, over 80 in Germany, over 40 in Spain and around 40 in
the UK. Even China has as many as 16 banks within the top 1000, out of which,
as many as 14 are in the 500, India, on the other hand, had 20 banks within the
top 500 banks. This is perhaps reflective of differences in size of economies and
of financial sectors.
Second, the share of bank assets in the aggregate financial sector assets: In most
emerging markets, banking sector assets comprise well over 80 per cents of total
financial sector assets, whereas these figures are much lower in the developed
economies. Furthermore, deposits as a share of total bank liabilities have
declined since 1990 in many developed countries, while in developing countries
public deposits continue to be dominant in banks. In India, the share of banking
assets is around 75 per cent, as of end-March 2004. There is, no doubt, merit in
recognizing the importance of diversification in the institutional and instrument
specific aspects of financial intermediation in the interest of wider choice,
competition and stability.
8
banks will continue to be special for a long time. In this regard, it is useful t
emphasis the dominance of the banks in the developing countries in promoting
non-bank financial intermediaries and service including in development of debt
market. Even where role of banks is apparently diminishing in the emerging
markets, substantively, they continue to play a leading role in non-banking
financial activities, including the development of finance markets.
Fourth, the Share of state owned banks in total banking sector assets: Emerging
economies with predominantly government owned banks, tend to have much
9
higher state ownership of banks compared to their developed counterparts. while
many emerging countries choose to privatized their public sector banking
industries after a process of absorption of the overhang problems by the
government, we have encouraged state run banks to diversify ownership by
inducting private share capital through public offerings rather than by strategic
sales and still absorb the overhang problems. the process has helped reduced the
burden on the govt, enhance transparency, encourage market displined and
improved efficiency as reflected in stock market valuation promote efficient new
private sector banks, while drastically reducing the share of the wholly
government owned public sector banks is a good example of a dynamic mix of
public and privet ownership in banks.
10
BANK SYSTEM
Introduction
The reserve bank of India (RBI) is India’s central bank. Through the banking
industry is currently dominated by public sector banks, numerous privet and
foreign banks exist. India’s govt owned banks dominate the market. Their
performance has been mixed with a few being consistently profitable. Several
public sector banks are being restructured, and in some the govt either already
has or will reduce its ownership.
Banking
India has an extension banking network, in both urban and rural areas. All large
Indian banks are nationalized, and all Indian financial institutes are in the public
sector.
RBI Bank
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The reserve bank of India is the central banking institutions. It is the sole
authority for issuing bank notes and the supervisory for banking operations in
India.
It supervises and administers exchange control and banking regulations, and
administers the govt’s monitory policy. It is also responsible granting licenses for
new bank branches. 25 foreign banks operate in India with full banking licenses.
Several licenses for private bank have been approved. Despite fairly broad
banking coverage nation wide, the financial system remains inaccessible to the
poorest people in India.
Logical financing
12
All sources of local financing are available to foreign-participation companies in
corporate in India, regardless of the extent of foreign participation. Under
foreign exchange regulations, foreigners and non-residents, including foreign
companies,
Require the permission of the reserv bank of India to borrow from a person or
company resident in india
13
THIRD PARTY PRODUCTS
14
Today Indian Private Sector Banks started to deal with the Third Party Products.
Now a days Private Banks are selling the Third Party Products like Mutual
Funds and Insurance mainly.
MUTUAL FUNDS
History of the Indian Mutual Fund Industry
1987 marked the entry of non- UTI, public sector mutual funds
set up by public sector banks and Life Insurance Corporation of
India (LIC) and General Insurance Corporation of India (GIC).
SBI Mutual Fund was the first non- UTI Mutual Fund established
in June 1987 followed by Canbank Mutual Fund (Dec 87),
Punjab National Bank Mutual Fund (Aug 89), Indian Bank
Mutual Fund (Nov 89), Bank of India (Jun 90), Bank of Baroda
Mutual Fund (Oct 92). LIC established its mutual fund in June
1989 while GIC had set up its mutual fund in December 1990.
At the end of 1993, the mutual fund industry had assets under
management of Rs.47,004 crores.
15
Third Phase – 1993-2003 (Entry of Private Sector Funds)
The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB,
BOB and LIC. It is registered with SEBI and functions under the
Mutual Fund Regulations. With the bifurcation of the erstwhile
UTI which had in March 2000 more than Rs.76,000 crores of
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assets under management and with the setting up of a UTI
Mutual Fund, conforming to the SEBI Mutual Fund Regulations,
and with recent mergers taking place among different private
sector funds, the mutual fund industry has entered its current
phase of consolidation and growth. As at the end of September,
2004, there were 29 funds, which manage assets of Rs.153108
crores under 421 schemes.
Note:
Erstwhile UTI was bifurcated into UTI Mutual Fund and the Specified Undertaking of the Unit Trust
of India effective from February 2003. The Assets under management of the Specified
Undertaking of the Unit Trust of India has therefore been excluded from the total assets of the
industry as a whole from February 2003 onwards.
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Introduction
A mutual fund is the ideal investment vehicle for today’s complex and
modern financial scenario. Markets for equity shares, bonds and other
fixed income instruments, real estate, derivatives and other assets have
become mature and information driven. Price changes in these assets
are driven by global events occurring in faraway places. A typical
individual is unlikely to have the knowledge, skills, inclination and time to
keep track of events, understand their implications and act speedily. An
individual also finds it difficult to keep track of ownership of his assets,
investments, brokerage dues and bank transactions etc.
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in most countries, these sponsors need approval from a regulator, SEBI
(Securities exchange Board of India) in our case. SEBI looks at track
records of the sponsor and its financial strength in granting approval to
the fund for commencing operations.
19
BENEFITS OF MUTUAL FUNDS
Professional Management
Diversification
Convenient Administration
Investing in a Mutual Fund reduces paperwork and helps you avoid many
problems such as bad deliveries, delayed payments and follow up with
brokers and companies. Mutual Funds save your time and make
investing easy and convenient.
Return Potential
Low Costs
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Liquidity
In open-end schemes, the investor gets the money back promptly at net
asset value related prices from the Mutual Fund. In closed-end schemes,
the units can be sold on a stock exchange at the prevailing market price
or the investor can avail of the facility of direct repurchase at NAV related
prices by the Mutual Fund.
Transparency
Flexibility
Affordability
Choice of Schemes
Mutual Funds offer a family of schemes to suit your varying needs over a
lifetime.
Well Regulated
All Mutual Funds are registered with SEBI and they function within
theprovisions of strict regulations designed to protect the interests of
investors. The operations of Mutual Funds are regularly monitored by
SEBI.
21
Structure of the Indian mutual fund industry
The Indian mutual fund industry is dominated by the Unit Trust of India
which has a total corpus of Rs700bn collected from more than 20 million
investors. The UTI has many funds/schemes in all categories i.e equity,
balanced, income etc with some being open-ended and some being
closed-ended. The Unit Scheme 1964 commonly referred to as US 64,
which is a balanced fund, is the biggest scheme with a corpus of about
Rs200bn. UTI was floated by financial institutions and is governed by a
special act of Parliament. Most of its investors believe that the UTI is
government owned and controlled, which, while legally incorrect, is true
for all practical purposes.
The second largest category of mutual funds are the ones floated by
nationalized banks. Canbank Asset Management floated by Canara Bank
and SBI Funds Management floated by the State Bank of India are the
largest of these. GIC AMC floated by General Insurance Corporation and
Jeevan Bima Sahayog AMC floated by the LIC are some of the other
prominent ones. The aggregate corpus of funds managed by this
category of AMCs is about Rs150bn.
The third largest category of mutual funds are the ones floated by the
private sector and by foreign asset management companies. The largest
of these are Prudential ICICI AMC and Birla Sun Life AMC. The
aggregate corpus of assets managed by this category of AMCs is in
excess of Rs250bn
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Some of the AMCs operating currently are:
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Reliance Capital Asset Management Company Private Indian
Limited
State Bank of India Funds Management Limited Banks
Shriram Asset Management Company Limited Private Indian
Sun F and C Asset Management (I) Private Limited Private foreign
Sundaram Newton Asset Management Company Private foreign
Limited
Tata Asset Management Company Limited Private Indian
Credit Capital Asset Management Company Limited Private Indian
Templeton Asset Management (India) Private Limited Private foreign
Unit Trust of India Institutions
Zurich Asset Management Company (I) Limited Private foreign
24
Recent trends in mutual fund industry
The most important trend in the mutual fund industry is the aggressive
expansion of the foreign owned mutual fund companies and the decline
of the companies floated by nationalized banks and smaller private
sector players.
Many nationalized banks got into the mutual fund business in the early
nineties and got off to a good start due to the stock market boom
prevailing then. These banks did not really understand the mutual fund
business and they just viewed it as another kind of banking activity. Few
hired specialized staff and generally chose to transfer staff from the
parent organizations. The performance of most of the schemes floated by
these funds was not good. Some schemes had offered guaranteed
returns and their parent organizations had to bail out these AMCs by
paying large amounts of money as the difference between the
guaranteed and actual returns. The service levels were also very bad.
Most of these AMCs have not been able to retain staff, float new
schemes etc. and it is doubtful whether, barring a few exceptions, they
have serious plans of continuing the activity in a major way.
The foreign owned companies have deep pockets and have come in
here with the expectation of a long haul. They can be credited with
introducing many new practices such as new product innovation, sharp
improvement in service standards and disclosure, usage of technology,
broker education and support etc. In fact, they have forced the industry to
upgrade itself and service levels of organizations like UTI have improved
dramatically in the last few years in response to the competition provided
by these.
25
Regulatory Aspects
Schemes of a Mutual Fund
• Every mutual fund shall along with the offer document of each
scheme pay filing fees.
(i) If the mutual fund fails to receive the minimum subscription amount
referred to in clause (a) of sub-regulation (1);
(ii) If the moneys received from the applicants for units are in excess of
subscription as referred to in clause (b) of sub-regulation (1).
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Rules Regarding Advertisement:
• The price at which the units may be subscribed or sold and the
price at which such units may at any time be repurchased by the
mutual fund shall be made available to the investors.
General Obligations:
• The financial year for all the schemes shall end as of March 31 of
each year. Every mutual fund or the asset management company
shall prepare in respect of each financial year an annual report and
annual statement of accounts of the schemes and the fund as
specified in Eleventh Schedule.
• Every mutual fund shall have the annual statement of accounts
audited by an auditor who is not in any way associated with the
auditor of the asset management company.
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Restrictions On Investments:
• A mutual fund scheme shall not invest more than 15% of its NAV in
debt instruments issued by a single issuer, which are rated not
below investment grade by a credit rating agency authorized to
carry out such activity under the Act. Such investment limit may be
extended to 20% of the NAV of the scheme with the prior approval
of the Board of Trustees and the Board of asset management
company.
• A mutual fund scheme shall not invest more than 10% of its NAV in
unrated debt instruments issued by a single issuer and the total
investment in such instruments shall not exceed 25% of the NAV of
the scheme. All such investments shall be made with the prior
approval of the Board of Trustees and the Board of asset
management company.
• No mutual fund under all its schemes should own more than ten
per cent of any company's paid up capital carrying voting rights.
• Such transfers are done at the prevailing market price for quoted
instruments on spot basis.
The securities so transferred shall be in conformity with the
investment objective of the scheme to which such transfer has
been made.
• A scheme may invest in another scheme under the same asset
management company or any other mutual fund without charging
any fees, provided that aggregate interscheme investment made
by all schemes under the same management or in schemes under
the management of any other asset management company shall
not exceed 5% of the net asset value of the mutual fund.
• The initial issue expenses in respect of any scheme may not
exceed six per cent of the funds raised under that scheme.
• Every mutual fund shall buy and sell securities on the basis of
deliveries and shall in all cases of purchases, take delivery of
relative securities and in all cases of sale, deliver the securities and
shall in no case put itself in a position whereby it
has to make short sale or carry forward transaction or engage in
badla finance.
• Every mutual fund shall, get the securities purchased or transferred
in the name of the mutual fund on account of the concerned
scheme, wherever investments are intended to be of long-term
nature.
• Pending deployment of funds of a scheme in securities in terms of
investment objectives of the scheme a mutual fund can invest the
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funds of the scheme in short term deposits of scheduled
commercial banks.
• No mutual fund scheme shall make any investment in;
• No mutual fund scheme shall invest more than 10 per cent of its
NAV in the equity shares or equity related instruments of any
company. Provided that, the limit of 10 per cent shall not be
applicable for investments in index fund or sector or industry
specific scheme.
• A mutual fund scheme shall not invest more than 5% of its NAV in
the equity shares or equity related investments in case of open-
ended scheme and 10% of its NAV in case of close-ended
scheme.
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Types of Mutual Funds
Mutual fund schemes may be classified on the basis of its structure and
its investment objective.
By Structure:
Open-ended Funds
An open-end fund is one that is available for subscription all through the
year. These do not have a fixed maturity. Investors can conveniently buy
and sell units at Net Asset Value ("NAV") related prices. The key feature
of open-end schemes is liquidity.
Closed-ended Funds
Interval Funds
By Investment Objective:
Growth Funds
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Income Funds
Balanced Funds
The aim of balanced funds is to provide both growth and regular income.
Such schemes periodically distribute a part of their earning and invest
both in equities and fixed income securities in the proportion indicated in
their offer documents. In a rising stock market, the NAV of these
schemes may not normally keep pace, or fall equally when the market
falls. These are ideal for investors looking for a combination of income
and moderate growth.
Load Funds
A Load Fund is one that charges a commission for entry or exit. That is,
each time you buy or sell units in the fund, a commission will be payable.
Typically entry and exit loads range from 1% to 2%. It could be worth
paying the load, if the fund has a good performance history.
No-Load Funds
A No-Load Fund is one that does not charge a commission for entry or
exit. That is, no commission is payable on purchase or sale of units in the
fund. The advantage of a no load fund is that the entire corpus is put to
work.
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Other Schemes:
Special Schemes
• Index Schemes
• Sectoral Schemes
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Market Trends
A lone UTI with just one scheme in 1964, now competes with as many as
400 odd products and 34 players in the market. In spite of the stiff
competition and losing market share, UTI still remains a formidable force
to reckon with.
Last six years have been the most turbulent as well as exiting ones for
the industry. New players have come in, while others have decided to
close shop by either selling off or merging with others. Product innovation
is now passé with the game shifting to performance delivery in fund
management as well as service. Those directly associated with the fund
management industry like distributors, registrars and transfer agents, and
even the regulators have become more mature and responsible.
Funds have shifted their focus to the recession free sectors like
pharmaceuticals, FMCG and technology sector. Funds performances are
improving. Funds collection, which averaged at less than Rs100bn per
annum over five-year period spanning 1993-98 doubled to Rs210bn in
1998-99. In the current year mobilization till now have exceeded
Rs300bn. Total collection for the current financial year ending March
2000 is expected to reach Rs450bn.
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Mutual funds are now also competing with commercial banks in the race
for retail investor’s savings and corporate float money. The power shift
towards mutual funds has become obvious. The coming few years will
show that the traditional saving avenues are losing out in the current
scenario. Many investors are realizing that investments in savings
accounts are as good as locking up their deposits in a closet. The fund
mobilization trend by mutual funds in the current year indicates that
money is going to mutual funds in a big way. The collection in the first
half of the financial year 1999-2000 matches the whole of 1998-99.
India is at the first stage of a revolution that has already peaked in the
U.S. The U.S. boasts of an Asset base that is much higher than its bank
deposits. In India, mutual fund assets are not even 10% of the bank
deposits, but this trend is beginning to change. Recent figures indicate
that in the first quarter of the current fiscal year mutual fund assets went
up by 115% whereas bank deposits rose by only 17%. (Source:
Thinktank, The Financial Express September, 99) This is forcing a large
number of banks to adopt the concept of narrow banking wherein the
deposits are kept in Gilts and some other assets which improves liquidity
and reduces risk. The basic fact lies that banks cannot be ignored and
they will not close down completely. Their role as intermediaries cannot
be ignored. It is just that Mutual Funds are going to change the way
banks do business in the future.
BANKS MUTUAL FU
Returns Low Better
Administrative exp. High Low
Risk Low Moderate
Investment options Less More
Network High penetration Low but imp
Liquidity At a cost Better
Quality of assets Not transparent Transparent
Interest calculation Minimum balance between 10th. & 30th. Of every month Everyday
Guarantee Maximum Rs.1 lakh on deposits None
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Global Scenario
Some basic facts-
•
• The money market mutual fund segment has a total corpus of $
1.48 trillion in the U.S. against a corpus of $ 100 million in India.
• In the U.S. the total number of schemes is higher than that of the
listed companies while in India we have just 277 schemes
• In the U.S. about 9.7 million households will manage their assets
on-line by the year 2003, such a facility is not yet of avail in India.
• 72% of the core customer base of mutual funds in the top 50-
broking firms in the U.S. are expected to trade on-line by 2003.
Internationally, on- line investing continues its meteoric rise. Many have
debated about the success of e- commerce and its breakthroughs, but it
is true that this aspect of technology could and will change the way
financial sectors function. However, mutual funds cannot be left far
behind. They have realized the potential of the Internet and are equipping
themselves to perform better.
In fact in advanced countries like the U.S.A, mutual funds buy- sell
transactions have already begun on the Net, while in India the Net is
used as a source of Information.
35
Such changes could facilitate easy access, lower intermediation costs
and better services for all. A research agency that specializes in internet
technology estimates that over the next four years Mutual Fund Assets
traded on- line will grow ten folds from $ 128 billion to $ 1,227 billion ;
whereas equity assets traded on-line will increase during the period from
$ 246 billion to $ 1,561 billion. This will increase the share of mutual
funds from 34% to 40% during the period.
Here are some of the basic changes that have taken place since the advent of the Net.
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• Net based advertisements: There will be more sites involved in
ads and promotion of mutual funds. In the U.S. sites like AOL offer
detailed research and financial details about the functioning of
different funds and their performance statistics. a is witnessing a
genesis in this area . There are many sites such as
indiainfoline.com and indiafn.com that are doing something similar
and providing advice to investors regarding their investments.
In the U.S. most mutual funds concentrate only on financial funds like
equity and debt. Some like real estate funds and commodity funds also
take an exposure to physical assets. The latter type of funds are
preferred by corporate’s who want to hedge their exposure to the
commodities they deal with.
For instance, a cable manufacturer who needs 100 tons of Copper in the
month of January could buy an equivalent amount of copper by investing
in a copper fund. For Example, Permanent Portfolio Fund, a conservative
U.S. based fund invests a fixed percentage of it’s corpus in Gold, Silver,
Swiss francs, specific stocks on various bourses around the world, short
–term and long-term U.S. treasuries etc.
In U.S.A. apart from bullion funds there are copper funds, precious metal
funds and real estate funds (investing in real estate and other related
assets as well.).In India, the Canada based Dundee mutual fund is
planning to launch a gold and a real estate fund before the year-end.
INSURANCE
37
Today concept of Banc assurance is getting very common, selling
Insurance of another company to the Bank customers.
Bancassurance
Introduction
But, insurance not being an off the shelf product and one which
requiring personal counseling and persuasion, distribution posed
a major challenge for the insurance companies. Further
insurable population of over 1 billion spread all over the country
has made the traditional channels of the insurance companies
costlier. Also due to heavy competition, insurers do not enjoy
the flexibility of incurring heavy distribution expenses and
passing them to the customer in the form of high prices.
What is Bancassurance?
38
Bancassurance is the distribution of insurance products through
the bank's distribution channel. It is a phenomenon wherein
insurance products are offered through the distribution channels
of the banking services along with a complete range of banking
and investment products and services. To put it simply,
Bancassurance, tries to exploit synergies between both the
insurance companies and banks.
Advantages to banks
Advantages to insurers
39
• Insurers can exploit the banks' wide network of branches
for distribution of products. The penetration of banks'
branches into the rural areas can be utilized to sell
products in those areas.
• Customer database like customers' financial standing,
spending habits, investment and purchase capability can
be used to customize products and sell accordingly.
• Since banks have already established relationship with
customers, conversion ratio of leads to sales is likely to be
high. Further service aspect can also be tackled easily.
Advantages to consumers
Bancassurance in India
40
• Joint ventures will be allowed for financially strong banks
wishing to undertake insurance business with risk
participation;
• For banks which are not eligible for this joint-venture
option, an investment option of up to 10% of the net
worth of the bank or Rs.50 crores, whichever is lower, is
available;
• Finally, any commercial bank will be allowed to undertake
insurance business as agent of insurance companies. This
will be on a fee basis with no-risk participation.
41
Insurance Company Bank
Bank of Rajasthan, Andhra Bank, Bank of
Birla Sun Life
Muscat, Development Credit Bank,
Insurance Co. Ltd.
Deutsche Bank and Catholic Syrian Bank
Dabur CGU Life Canara Bank, Lakshmi Vilas Bank,
Insurance Company American Express Bank and ABN AMRO
Pvt. Ltd Bank
HDFC Standard Life
Union Bank of India
Insurance Co. Ltd.
Lord Krishna Bank, ICICI Bank, Bank of
ICICI Prudential Life India, Citibank, Allahabad Bank, Federal
Insurance Co Ltd. Bank, South Indian Bank, and Punjab and
Maharashtra Co-operative Bank.
Corporation Bank, Indian Overseas Bank,
Centurion Bank, Satara District Central
Life Insurance Co-operative Bank, Janata Urban Co-
Corporation of India operative Bank, Yeotmal Mahila Sahkari
Bank, Vijaya Bank, Oriental Bank of
Commerce.
Met Life India Karnataka Bank, Dhanalakshmi Bank and
Insurance Co. Ltd. J&K Bank
SBI Life Insurance
State Bank of India
Company Ltd.
Bajaj Allianz General
Karur Vysya Bank and Lord Krishna Bank
Insurance Co. Ltd.
National Insurance
City Union Bank
Co. Ltd.
Royal Sundaram
Standard Chartered Bank, ABN AMRO
General Insurance
Bank, Citibank, Amex and Repco Bank.
Company
United India
South Indian Bank
Insurance Co. Ltd.
Issues to be tackled
42
Given the roles and diverse skills brought by the banks and
insurers to a Bancassurance tie up, it is expected that road to a
successful alliance would not be an easy task. Some of the
issues that are to be addressed are:
43
1. Strategies consistent with the bank's vision, knowledge of
target customers' needs, defined sales process for
introducing insurance services, simple yet complete
product offerings, strong service delivery mechanism,
quality administration, synchronized planning across all
business lines and subsidiaries, complete integration of
insurance with other bank products and services,
extensive and high-quality training, sales management
tracking system for reporting on agents' time and results
of bank referrals and relevant and flexible database
systems.
2. Another point is the handling of customers. With customer
awareness levels increasing, they are demanding greater
convenience in financial services.
3. The emergence of remote distribution channels, such as
PC-banking and Internet-banking, would hamper the
distribution of insurance products through banks.
4. The emergence of newer distribution channels seeking a
market share in the network.
Conclusion
44
With huge untapped market, insurance sector is likely to
witness a lot of activity - be it product innovation or distribution
channel mix. Bancassurance, the emerging distribution channel
for the insurers, will have a large impact on Indian financial
services industry. Traditional methods of distributing financial
services would be challenged and innovative, customized
products would emerge.
LIFE INSURERS:
45
2. AMP SANMAR ASSURANCE CO. LTD.
NON-LIFE INSURERS:
46
2. ICICI LOMBARD GENERAL INSURANCE CO.
REINSURERS:
47
worldwide phenomenon. The Universal Banking is evolving
on these lines in India.
48
• Insurance distribution helps to increase the fee-based
earnings of banks to a considerable extent.
– Internationally, insurance activities contribute significantly to
banks’ total domestic retail revenues.
49
– Portability of pension accounts is a vital requirement which
banks can fulfill in a credible framework.
50
• Bringing relevance, motivation and skill development at the
operating level at bank branches.
• Resolving possible conflicts of interest between the bank and the
insurer.
• Setting up distribution procedures consistent with the manual
systems in most banks.
• Establishing credible service level agreements between the bank
and the insurer.
51
COMPANY PROFILE
52
HDFC BANK
53
RESEARCH DESIGN
54
Objectives of the Project:
Research Methodology:
Sample Unit:
Ahmedabad Area was surveyed i.e. the branches of the Ahmedabad city.
Sample Size:
100 Samples from the all three banks are to be surveyed and analysed
Sampling Technique:
Convenience Sampling was used to collect the data from the various
banks and from the various bank customers.
55
LIMITATIONS:
56
ANALYSIS
57
In which sector’s bank do you have bank account?
Co-operative 42%
70%
60%
Percentages
50%
40%
Series1
30%
20%
10%
0%
public private co-
sector sector operative
Banking Sector
The above diagrame stat that 60% customer having bank account in public sector,
56% customer having bank account in privat sector and 42% customer having
account in co-operative bank. Which indicate that major coustemer having account
in public sector.
58
Which type of Bank Account do you have?
100%
80%
60%
40% Series1
20%
0%
Current Saving Fixed
Account Account Deposits
59
Are you aware about the Third Party Products?
Yes 52%
No 48%
52%
51%
50%
49% Series1
48%
47%
46%
yes no
60
If yes, then have you ever invested for the same?
Yes 85%
No 15%
100%
80%
60%
Series1
40%
20%
0%
yes no
61
If yes, then in which product had you invested?
Insurance 78%
80%
60%
40% Series1
20%
0%
insurance Mutual fund
62
Do you think Banks need to deal with Third Party Products?
Yes 72%
No 28%
80%
60%
40% Series1
20%
0%
yes no
63
Which Criteria you consider before taking the decision of investment through
particular Bank?
Service 44%
Relations 62%
80%
70%
60%
50%
40%
30% Series1
20%
10%
0%
servise credit relations
worthiness
64
How will you rate the Satisfaction level from the services provided to you by the
Bank through which you made your investment?
Satisfied 42%
Moderate 15%
Dissatisfied 5%
Highly Dissatisfied 4%
50%
40%
30%
Series1
20%
10%
65
Are you satisfied with the products which are provided to you by your Bank?
Yes 82%
No 18%
100%
80%
60%
Series1
40%
20%
0%
yes no
66
Before this have you ever made investment in any TPP of Banks?
Yes 36%
No 64%
80%
60%
40% Series1
20%
0%
yes no
67
Which factor leads you to shift to this Bank?
Services 10%
Product 42%
Relations 08%
Return 18%
50%
40%
30%
20% Series1
10%
0%
service product relation credit return
w orthiness
68
Do you think you may shift to any other Bank for Investment in TPP in
future?
Yes 68%
No 32%
80%
60%
40% Series1
20%
0%
yes no
69
What factors might lead you to shift to some other bank?
Services 15%
Product 25%
Relations 18%
Return 26%
30%
25%
20%
15% Series1
10%
5%
0%
service product relation credit return
worthiness
70
Do you think you are getting the perceived product satisfaction?
Yes 52%
No 48%
52%
50%
Series1
48%
46%
yes no
71
If No, then in which features it differs from your perceived product features?
Return 54%
Trustworthiness 30%
60%
50%
40%
30% Series1
20%
10%
0%
return management trustworthiness
pattern
72
OBJECTIVES
- To know the Acceptance of TPP in Banking by Customers
- To get the knowledge about the Expectations of the customers from Banking
sector towards TPP
- To get knowledge about the Management of Customer Relationship towards
TPP in different Private Sector Banks
- To know the Satisfaction Level of the Customers from the TPP
- To get the knowledge of the Perception Gap related to TPP
_____________________________________________________________________
73
9. How will you rate the Satisfaction level from the services provided to you
by the Bank through which you made your investment?
□Highly Satisfied □Satisfied
□Moderate □Dissatisfied
□Highly Dissatisfied
10. Are you satisfied with the products which are provided to you by your
Bank?
□Yes □No
13. Before this have you ever made investment in any TPP of Banks?
□Yes □No
14. If yes, then from the same Bank or any other Bank?
□Same □Another
17. Do you think you may shift to any other Bank for Investment in TPP in
future?
□Yes □No
74
19. What factors might lead you to shift to some other bank?
□Services □Product
□Relations □Credit worthiness
□Return □Trust
Any other then please specify
______________________________________
20. Do you think you are getting the perceived product satisfaction?
□Yes □No
21. If No, then in which features it differs from your perceived product features?
□Return □Management Pattern
□Trustworthiness □Any Other
_________________________
Name : ____________________________________________________
Address :
____________________________________________________
_____________________________________________________
Contact No :(O) (R)
(M)
Held Bank Accounts with
1)
2)
3)
4)
5)
75