Professional Documents
Culture Documents
CHAPTER-1 INTRODUCTION
REVIEW OF LITERATURE: RETAIL BANKING DEFINITION: Retail banking is typical mass-market banking where individual customers use local branches of larger commercial banks. Services offered include: savings and checking accounts, mortgages, personal loans, debit cards, credit cards, and so
The Retail Banking environment today is changing fast. The changing customer demographics demands to create a differentiated application based on scalable technology, improved service and banking convenience. Higher penetration of technology and increase in global literacy levels has set up the expectations of the customer higher than never before. Increasing use of modern technology has further enhanced reach and accessibility. The market today gives us a challenge to provide multiple and innovative contemporary services to the customer through a consolidated window as so to ensure that the banks customer gets Uniformity and Consistency of service delivery across time and at every touch point across all channels. The pace of innovation is accelerating and security threat has become prime of all electronic transactions. High cost structure rendering mass-market servicing is prohibitively expensive.
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Constant
customer segments The customer database available with the banks is the best source of their demographic and financial information and can be used by the banks for targeting certain customer segments for new or modified product. The banks should come out with new products in the area of
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Tapping
business
This will compensate for the thin margins. The Indian retail banking market still remains largely untapped giving a scope for growth to the banks and financial institutions. With changing psyche of Indian consumers, who are now comfortable with the idea of availing loans for their personal needs, banks have tremendous potential lying in this segment. Marketing departments of the banks be geared up and special training be imparted to them so that banks are successful in grabbing more and more of retail business in the market.
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Cross-selling of products
PSBs have an added advantage of having a wide network of branches, which gives them an opportunity to sell third-party products through these branches.
Tie-up arrangements
PSBs with regional concentration can reap the benefit of reaching customers across the country by entering into strategic alliance with other such banks with intensive presence in other regions. In the
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KNOWING CUSTOMER
Know your Customer is a concept which is easier said than practiced. Banks face several hurdles in achieving this. In order to that the product lines are targeted at the right customers-present and prospective-it is imperative that an integrated view of customers is available to the banks. The benefits flowing out of cross-selling and up-selling will remain a far cry in the absence of this vital input. In this regard the customer databases available with most of the public sector banks, if not all, remain far from being enviable. What needs to be done is setting up of a robust data warehouse where from meaningful data on customers, their preferences, there spending patterns, etc. can be mined. Cleansing of existing data is the first step in this direction. PSBs have a long way to go in this regard.
ORGANIZATIONAL
ALIGNMENT
It is of utmost importance that the culture and practices of an institution support its stated goals. Having decided to take a plunge into retail banking, banks need to have a well defined business strategy based on the competitive of the bank and its potential. Creation of a proper organization structure and business operating models which would facilitate easy work flow are the needs of the hour. The need for building the organizational capacity needed to achieve the desired results cannot be overstated. This would mean a strong commitment at all levels, intensive training of the rank and file, putting in place a proper incentive scheme, etc. As a part of organizational alignment, there is also the need for setting up of an effective Corporate Marketing Division. Most of the public sector banks have only publicity departments and not marketing setup. A fully fledged marketing department or division would help in evolving a brand strategy, address the issue of alienation from the upwardly mobile, high net worth customer group and improve the recall value of the institution and its products by arresting the trend of getting receded from public memory. The much needed tie-ups with
manufacturers/distributors/builders will also facilitated smoothly. It is time to break the myth PSBs are not customer friendly. The attention is to be diverted to vast databases of customers lying with the PSBs till unexploited for marketing.
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PRODUCT INNOVATION
Product innovation continues to be yet another major challenge. Even though bank after bank is coming out with new products, not all are successful. What is of crucial importance is the need to understand the difference between novelty and innovation? Peter Drucker in his path breaking book: Management Challenges for the 21st Century has in fact sounded a word of caution: innovation that is not in tune with the strategic realities will not work; confusing novelty with innovation (should be avoided), test of innovation is that it creates value; novelty creates only amusement. The days of selling the products available in the shelves are gone. Banks need to innovate products suiting the needs and requirements of different types of customers. Revisiting the
features of the existing products to continue to keep them on demand should not also be lost sight of.
PRICING OF PRODUCT
The next challenge is to have appropriate policies in place. The industry today is witnessing a price war, with each bank wanting to have a larger slice of the cake that is the market, without much of a scientific study into the cost of funds involved, margins, etc. The strategy of each player in the market seems to be: under cutting others and wooing the clients of others. Most of the banks that use rating models for
determining the health of the retail portfolio do not use them for pricing the products. The much needed transparency in pricing is also missing, with many hidden charges. There is a tendency, at least on the part of few to camouflage the price. The situation cannot remain his way for
Retail Banking in India With a jump in the Indian economy from a manufacturing sector, that never really took off, to a nascent service sector, Banking as a whole is undergoing a change. A larger option for the consumer is getting translated into a larger demand for financial products and customisation of services is fast becoming the norm than a competitive advantage. With the Retail banking sector expected to grow at a rate of 30% [Chanda Kochhar, ED, ICICI Bank] players are focussing more and more on the Retail and are waking up to the potential of this sector of banking. At the same time, the banking sector as a whole is seeing structural changes in regulatory frameworks and securitisation and stringent NPA norms expected to be in place by 2004 means the faster one adapts to these changing dynamics, the faster is one expected to gain the advantage. In this article, we try to study the reasons behind the euphemism regarding the Retail-focus of the Indian banks and try to assess how much of it is worth the attention that it is attracting.
Potential for Retail in India: Is sky the limit? The Indian players are bullish on the Retail business and this is not totally unfounded. There are two main reasons behind this. Firstly, it is now undeniable that the face of the Indian consumer is changing. This is
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But how competitive are the players? The fact that the statistics reveal a huge potential also brings with it a threat that is true for any sector of a country that is opening up. Just how competitive are our banks? Is the threat of getting drubbed by foreign competition real? To analyze this, one needs to get into the shoes of the foreign banks. In other words, how do they see us? Are we good takeover targets? Going by international standards, a large portion of the Indian population is simply not bankable taking profitability into consideration. On the other hand, the financial services market is highly over-leveraged in India. Competition is fierce, particularly from local private banks such as HDFC and ICICI, in the business of home, car and consumer loans. There, precisely lie the pitfalls of such explosive
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INDUSTRY PROFILE
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BANKING BASICS The Indian banking industry which is governed by the Banking Regulation Act of India, 1949 can be broadly classified into two major categories. Scheduled Banks Non-scheduled Banks
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COMMERCIAL BANKS
CO-OPERATIVE BANKS
FIGURE:-1 STRUCTRE OF INDIAN BANKING INDUSTRY Scheduled banks comprise commercial banks and the co-operative banks. In terms of ownership commercial banks can be further grouped into nationalized banks, the State Bank of India and its group banks, regional rural banks and private sector banks(old/new domestic and foreign) Banking regulation act of India, 1949 defines banking as accepting, for the purpose of lending or investment of deposits of money from the
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In addition, Banks are allowed to perform certain activities which are ancillary to this business of accepting deposits and lending. A banks relationship with the public, therefore, revolves around accepting deposit and lending money. Another activity which is assuming increasing importance is transfer of money, both domestic and foreign, from one place to another. This activity is generally known as Remittance Business in banking parlance. The so called forex (foreign exchange) is largely a part of remittance. It involves buying and selling o0f foreign currencies. The law governing Banking Activities in India is called Negotiable Instrument Act 1881. The banking activities can be classified as: Accepting deposits from public/others Transferring money from one place to another Acting as trustees Keeping valuable in safe custody Collection business Deposits Loans Lending money to public HISTORY Banking in India originated in the last decades of the 18th century with The General Bank of India which came into existence in 1786. This was followed by The Bank of Hindustan. Both of these are now defunct. The oldest bank in existence in India is the State Bank of India, which originated in the Bank of Calcutta (later Bank of Bengal) in June 1806. A
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By the 1900s, the market expanded with the establishment of banks such as Punjab National Bank, in 1895 in Lahore and Bank of India in 1906, in Mumbai. Both these were founded under private ownership. The Reserve Bank of India formally took on the responsibility of regulating the Indian banking sector from 1935. After Indias independence in 1947, the
POST-INDEPENDENCE The partition of India in 1947 adversely impacted the economies of Punjab and West Bengal, paralyzing banking activities for months. India's independence marked the end of a regime of the Laissez-faire for the Indian banking. The Government of India initiated measures to play an active role in the economic life of the nation. This resulted into greater involvement of the state in different segments of the economy including banking and finance. The major steps to regulate banking included:
In 1948, the Reserve Bank of India, India's central banking authority, was nationalized, and it became an institution owned by the Government of India.
The Banking Regulation Act also provided that no new bank or branch of an existing bank could be opened without a license from the RBI, and no two banks could have common directors.
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Customer
Customer
Customer
Central clearing
Central clearing
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Shared Information
Clearing systems
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Analysis is the process of critically examining in detail accounting information given in the financial statements. For the purpose of financial analysis, individual items are studied, their
interrelationships with other related figures established, the data is sometimes rearranged to have better understanding of the information with the help of different techniques or tools for the purpose. Analyzing financial statements is a process of evaluating relationships between component parts of financial statements to obtain a better understanding of firms position and performance. Objectives Of Analysis Of The Financial Statements : The present and future earnings capacity or profitability of the concern. The operational efficiency of the concern as a whole and of its various parts or departments.
The short term and long term solvency of the concern for the benefit of the debenture holders and trade credit.
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Techniques (Tools Or Methods) Of Analysis And ANALYSIS AND INTERPRETATION: The following techniques can be used in connection with analysis and ANALYSIS AND INTERPRETATION of financial statements: a. Comparative financial statements b. Common measurement statements c. Trends percentages analysis d. Fund flow statement e. Net working capital analysis f. Cash flow statement g. Ratio analysis
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another. A ratio can be used as a yardstick for evaluating the financial position and performance of a concern, because the absolute accounting data cannot provide meaningful understanding and ANALYSIS AND INTERPRETATION. A ratio is the relationship between two accounting items expressed mathematically. Ratio analysis helps the analyst to make
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accounting data supplied by financial statements are worked out, they are known as accounting ratios.
Importance Of Ratio Analysis: Ratio analysis stands for the process of determining and presenting the relationship of items and groups of items in the financial statements. It is an important technique of financial analysis. It is a way by which
financial stability and health of a concern can be judged. The following are the main points of importance of ratio analysis: 1)Useful in financial position analysis: Accounting ratios reveal the financial position of the concern. This helps the banks, insurance
companies and other financial institutions in lending and making investment decisions. 2)Useful in simplifying accounting figures: According ratios simplify, summarize and systematize the accounting figures in order to make them more understandable and in lucid form. They highlight the
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comparison in order to know the proper had smooth functioning of such departments. organization. Limitations Of Accounting Ratios : Ratio analysis is very important in revealing the financial position and soundness of the business. But, in spite of its advantages, it also has some limitations which restrict its use. These limitations should be kept in mind while making use of ratio analysis for interpreting the financial statements. The following are the main limitations of accounting ratios: 1) False results if based on incorrect accounting data: Accounting ratios can be correct only if the data is correct. Sometimes, the information given in the financial statements is affected by window dressing i.e. showing position better than what actually is. Ratios also help him to make any change in the
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surmount the quantitative aspects. The calculations derived from the ratio analysis may be distorted. 3) No idea of probable happenings in future: Ratios are an attempt to make an analysis of the past financial statements, they are historical documents. In the present scenario of complexities of the business, it is important to have an idea of the happenings in future. 4) Variation in accounting methods: The tow firms results are compatible with the help of accounting ratios only if they follow the same accounting methods or bases. Comparison will become difficult if the two concerns follows the different methods of providing depreciation or valuing stock. 5) No common standards: It is very difficult to lay down a common standard for comparison because circumstances differ from concern to concern and the nature of each industry is different. For example, a business with current ratio of more than 2:1 might not be in a position to pay current liabilities in time because of an unfavorable distribution of current assets in relation to liquidity.
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atios These are ratios, which show the extent that debt is used in a company's capital structure.
These are ratios which give a picture of a company's short term financial situation or solvency.
These are ratios which use turnover measures to show how efficient a company is in its operations and use of assets.
These are ratios which use margin analysis and show the return on sales and capital employed
Solvency Ratios These are ratios which give a picture of a company's ability to generate cash flow and pay it financial obligations
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Type
Industry
Founded Headquarters
1927 Dhanlaxmi Bank Ltd, Dhanalakshmi Buildings, Naickanal Thrissur, Kerala, India
GN Bajpai, PG Jayakumar Investment Banking Commercial Banking Retail Banking Private Banking Mortgage
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Website
Dhanbank.com
Dhanlaxmi Bank Ltd. was incorporated in 1927 at Thrissur, Kerala by a group of ambitious and enterprising entrepreneurs. Over the 86 years that followed, Dhanlaxmi Bank with its rich heritage has earned the trust and goodwill of clients. It is due to their strong belief in the need to seek innovation, deliver best service and demonstrate responsibility that they have grown from strength to strength. Be it in the number of customers, the scale of business, the breadth of our product offerings, the banking experience we offer or the trust that people invest in them. With more than 670 touch points across India at your service; their focus has always been on customizing services and personalizing relations.
Dhanlaxmi Bank Ltd (BSE: 532180, NSE: DHANBANK) is an old private sector bank headquartered in Thrissur City, Kerala, India. The bank was focusing mostly on Southern states like Karnataka, Tamil Nadu, Andhra Pradesh and Kerala but it is looking for a pan India presence since the last few years.
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AFFILIATIONS
Major Exchange Houses UAE Exchange Centre LLC Al Ahalia Money Exchange Bureau
Foreign Correspondent Banks Deutsche Bank Trust Company Americas Wachovia Bank NA - A Wells Fargo Company Commerzbank AG National Westminister Bank PLC Insurance Partner Bajaj Allianz
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2005 - Dhanalakshmi Bank joins IDRBT managed ATM network -Dhanalakshmi Bank inks rupee-drawing agreement with Oman firm -Dhanalakshmi Bank appoints Mr Prasad as new CEO -Dhanalakshmi Bank unveils new housing loan product 2007- Dhanalakshmi Bank Ltd has appointed Mr. K Srikanth Reddy as Additional Director, at the Board meeting held on October 29, 2007. 2008 - Dhanalakshmi Bank Ltd has appointed Mr. S Santhanakrishnan as Additional Director, at the Board meeting held on June 30, 2008. -The company has issued rights in the ratio of 1:1 at a premium of Rs. 52/-Per Share. 2009 - Dhanalakshmi Bank has appointed Mr Bipin Kabra as Chief Financial Officer (CFO), who has over 16 years of experience in financial services industry. His past assignments include stints in ICICI as well as SBI and Reliance group. Prior to joining the Dhanalakshmi Bank, he was associated with Zee group. He has spent considerable period in banking, insurance, merchant banking and treasury.
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Name change The bank has also changed its name from Dhanalakshmi Bank to Dhanlaxmi Bank which will have a new corporate identity. FITCH, a leading international branding and design consultancy had designed the new identity for the bank.
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Credit cards In March, 2010, the bank launched Dhanlaxmi Bank Platinum and Gold Credit cards. ACHIEVEMENTS Serviced business worth Rs. 21,595 crores as on 31 March 2011, comprising deposits of Rs. 12,530 crores and advances of Rs. 9,065 crores. Earned a net profit of Rs. 26.1 crores for the financial year ended 31st March 2011, with a capital adequacy ratio of 11.8% (Basel II) during the same period. Put in place the Real Time Gross Settlement (RTGS) and National Electronic Fund Transfer (NEFT) systems to facilitate large value payments and settlements online in real time, on a transaction-bytransaction basis. Set up NRI Boutiques (Relationship Centres) across nine locations in Kerala and Tamil Nadu, with plans to open specialized NRI outlets at potential locations with emphasis on impeccable service levels. Bank is a major player in micro credit in Kerala and the Bank's outstanding under micro credit was Rs. 266 crores at the end of March 2011. Attained ISO 9001-2000 certification for the Bank's corporate office at Trissur and industrial finance branch at Kochi.
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The matrix organization is an attempt to combine the advantages of the pure functional structure and the product organizational structure. This form is identically suited for companies, such as construction, that are project-driven. In a matrix organization, each project manager reports directly to the vice president and the general manager. Since each project represents a potential profit centre, the power and authority used by the project manager come directly from the general manager. Information sharing is mandatory in such an organization, and several people may be required for the same piece of work. However, in general, the project manager has the total responsibility and accountability for the success of the project. The functional departments, on the other hand, have functional responsibility to maintain technical excellence on the
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Because key people can be shared, the project cost is minimized Conflicts are minimal, and those requiring hierarchical referrals are more easily resolved There is a better balance between time, cost and performance Authority and responsibility are shared Stress is distributed among the team
One advantage of a matrix structure is that it facilitates the use of highly specialized staff and equipment. Rather than duplicating functions as would be done in a simple product department structure, resources are shared as needed. In some cases, highly specialized staff may divide their time among more than one project. In addition, maintaining functional departments promotes functional expertise, while at the same time working in project groups with experts from other functions fosters crossfertilization of ideas. The disadvantages of a matrix organization arise from the dual reporting structure. The organization's top management must take particular care to establish proper procedures for the development of projects and to keep communication channels clear so that potential conflicts do not arise and hinder organizational functioning. In theory at least, top management is responsible for arbitrating such conflicts, but in practice power struggles between the functional and product manager can prevent successful implementation of matrix structural arrangements.
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BUSINESS MIX
MICRO/AGRI, 11% RETAIL, 13%
TAG, 14%
WBG, 62%
RETAIL
TAG
WBG
MICRO/AGRI
80% 70% 60% 50% 40% 30% 20% 10% 0% 31/03/2009 KERALA
Dhanalakshmi Bank Ltd. (Dhanbank) has vision to be one of the top 5 Indian private banks in the near future. To attain this goal, Dhanbank has huge expansion plans to tap the potential lying in other places outside Kerala. Dhanbank is expected to open up 66 new branches and 389 new ATMs in the current financial year. Dhanbank will convert its 26 extension counters into full fledge branches in the current year, taking the total no. of branches to 273 in the current year. Dhanbank is expected to have 400 branches & 600 ATMs by the end of FY2010-11.
GRAPH:-2.3 NETWORKING ANALYSIS Dhanbank has got a contract with a German company, AGS, to handle its new ATM opening based on only opex no capex model. As per this model, AGS would be responsible for setting up new ATMs at strategic locations and to maintain the ATMs. Cost incurred to Dhanbank would be on number of transactions Dhanbank has 65% of its branches in state of Kerala. Out of the new branches few would be located in rural areas of Kerala and other would be mainly in Maharashtra & Gujarat & Northern areas, as these areas has the highest portion of deposits and loan off-take, from the total business of Indian banks. Opening of new rural branches would help Dhanbank to tap the huge potential lying in the rural areas.
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2. Brand Transformation: Dhanbank is in process to strengthen its brand in the market. Ogilvy & Mather and Fitch have been appointed as marketing consultants; this would help the bank to reach to the new customers and to strengthen its brand image in the market. Dhanbank has appointed Ogilvy & Mather as its agency for the banking business to chart out a new brand proposition and communication strategy. O&M, Indias leading communication agency will help the Bank to design and implement a comprehensive go-to market communication approach. The agency will help the Bank in its endeavor to create an entirely new customer experience and to incorporate a young and contemporary look across all customer touch-points. 3. Margins heading north: Improvement in margins might be seen in the near future on the basis of: Increase in CASA: Increase in number of branches is expected to bring in 900 to 1000 accounts daily; this would help to grow the CASA deposits. Dhanbank targets to achieve CASA of 30% in medium span of time. As CASA deposits are low cost deposits this would lead to lower cost of deposits.
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Increase in NRI deposits: At present out of the total deposits, the NRI deposits are approx. 6%. Dhanbank has its major presence in Kerala and this area has huge potential of NRI deposits. Dhanbank plans to tap as much NRI deposits as possible, as these are low cost deposits. A special NRI deposit handling team is setup to tap this category of deposits Yield on Investments: In FY2008-09, yield on investments went down as Dhanbank had major holding in T-bills. Now Dhanbank plans to invest in the government securities, this is expected to increase the yield on investments, as the govt. securities yield better returns than T-bills. Repricing of deposits to decrease cost of deposits: In the present low interest rate scenario, Dhanbank is to benefit from the repricing of deposits. This will decrease the cost. Repricing could continue benefiting bank up to 1 year. 4. Venture into new business segments: Fee & Commission based business would be the focus of Dhanbank. This category of income leads to higher ROE & EPS as it does not require capital expenditure and it leads to regular stream of income. Dhanbank has taken various initiatives to increase its other income sources. With the increasing number of branches and deeper reach to retail clients would be a catalyst for the income from Fee & commission based income.
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Figure:-2- PRODUCT SUITE OF DHAN BANK PRODUCTS AND SERVICES OF DHAN BANK:1. Personal Banking
Accounts:- Saving Account, Current Account, Term Deposit Loans:-Personal Loans, Home Loans, Auto Loans, Other Loans Depository Services Locker Facilities Forex Services:- Foreign Currency Cash, Cheque Deposits, Foreign Currency DD, Remittances.
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2. Corporate Banking
Cash Management (CMS) Credit:- Industrial Advance, Trade Advance, Import Export, Agriculture Assistance Salary Account Forex & Trade:-Forex Services, Export Services, Import Services
3. NRI Banking
Accounts & Deposits:- NRE Account, NRO Account, Recurring & TD, FCNRY FD, Returning NRIs Money Transfer:-Draft Drawing, Rupee Drawing, Money Transfer, Overseas Corresp. NRI Home Loan Investments:-Portfolio, Repatriation, Non-repatriation, Immovable properties.
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Dhanam Kissan Vahana Kissan Card Agri gold Loan Micro Credit - MFI Micro Credit - SHGs
5. Financial Planning
HDFC BANK
VARY AS PER PRODUCT FREE CHARGEAB LE ON CHARGE BASIS Rs. 50 PER CHEQUE AS PER RBI NORMS FREE YES NO
AXIS BANK
VARY AS PER PRODUCT FREE CHARGEABL E ON CHARGE BASIS Rs. 50 PER CHEQUE AS PER RBI NORMS FREE YES NO
YES BANK
VARY AS PER PRODUC T FREE CHARGEA BLE ON CHARGE BASIS Rs. 50 PER CHEQUE AS PER RBI NORMS FREE YES NO
DHANLAX MI
VARY AS PER PRODUCT FREE FREE BOTH 5-5 FREE PER MONTH FREE 5 OUTSTATION CHEQUES PER MONTH 5 D.D. FREE PER MONTH FREE YES YES,FREE
2 3 4 5
6 7 8 9
10 11 12 13
CHARGEA FREE TO SOME BLE EXTENT CHARGE D AS PER NORMS YES 7% 5-25 P. O .FREE PER MONTH YES 7.75%
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YES
YES
YES
YES
YES
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S.No FEATURE .
1 MUTUAL FUND INVESTMENT GENERAL INSURANCE LIFE INSURANCE NRI BANKING AGRI BANKING HOME LOANS CORPORATE LOANS OTHER CREDIT SERVICES CUSTOMER CARE DEPARTMENT CREDIT CARD FACILITY ONLINE TRADING INTERNET BANKING MOBILE BANKING
ICICI BANK
YES,ICICI DYNAMIC,ICI CI GROWTH etc. ICICI LOMBARD ICICI LIFE INSURANCE YES YES YES YES YES YES YES YES
HDFC BANK
YES,HDFC TOP 200 YES YES YES YES YES YES YES YES YES YES
AXIS BANK
YES
YES BANK
YES
DHANLAXMI
THIRD PARTY PRODUCTS THIRD PARTY PRODUCTS THIRD PARTY PRODUCTS YES ONLY IN SOUTH INDIA ONLY IN SOUTH INDIA YES ONLY IN SOUTH INDIA YES ONLY IN SOUTH INDIA YES, IN ALLIANCE WITH DESTIMONEY SECURITIES LTD. YES YES
2 3 4 5 6 7 8 9 10 11
YES YES YES YES YES YES YES YES YES YES
YES YES YES YES YES YES YES YES YES YES
12 13
YES YES
YES YES
YES YES
YES YES
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S.No. FEATURE
1 BRANCHES
ICICI BANK
1544
HDFC BANK
1725
DHANLA XMI
273
ATM
4816
4232
3894
216
453
4 5
100,180. 00
94,942.22
52996 .04
9762.04
1149.27
286,059.7 7
139,011.39
156,74 8.35
31,688.8 9
6,795.02
NET SALES 25,706.93 IN CRORE Rs. (RECENT) NET PROFIT 4024.98 IN CRORE Rs. (RECENT)
16,332.26
534.57
2244.94
23.30
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MARKET CAPITALIZATION In crore Rs. 100,180.00 94,942.22 52,996.04 9,72.04 1149.27 63952.16 322981.73
20.97% 3% 16%
ICICI
DHANLAXMI, 0.03%
HDFC
AXIS
YES
DHANLAXMI
OTHERS
Graph:- 2.5-MARKET SHARE ANALYSIS Depiction:-ICICI is the market player of private commercial bank segment with highest market share of 31%. HDFC and AXIS bank are market followers with 29% & 16% market share respectively. Dhanlaxmi has very low market share in the segment (=0.03%), rest 20% share is from others including INDUSIND BANK, BANK OF RAJASTHAN, KOTAK MAHINDRA, FEDERAL BANK, KARNATAKA BANK etc.
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4.1 TABLE SHOWING KIND OF BANKS OPTED BY CUSTOMERS ON THE BASIS OF THEIR NEEDS:Table:- 4.1
KIND OF BANK PUBLIC SECTOR BANKS PRIVATE BANKS OTHERS NO. OF CUSTOMERS 35 55 10 PERCENTAGE 35% 55% 10%
Depiction:-The survey depicts that around 55% customers have opted public sector banks, while 35% are the customers of private banks. Rest 10% is from others including foreign banks and cooperative banks customers. Interpretation:- A large no. of customers still dont have faith in private banks, they still avail public sector nationalized banks for their banking requirements. Private sector banks can target these customers with better strategies.
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CHART NO.: 4.1 CHART SHOWING KIND OF BANKS OPTED BY CUSTOMERS ON THE BASIS OF THEIR NEEDS
10% 35% 0%
OTHERS
Chart no. -4.1 Interpretation:- A large no. of customers still dont have faith in private banks, they still avail public sector nationalized banks for their banking requirements. Private sector banks can target these customers with better strategies.
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Depiction:-As per survey about 30% respondents selected their bank on the basis of proximity of branch. Effective networking is the reason of selecting the bank for 21% customers, while 19% and 22% customers choosed their bank due to reference of known persons and products and services of the bank respectively. Rest 8% customers considered brand image of the bank while choosing it. Interpretation:-Survey depicts that proximity and products and services are the major factors which customer keeps in mind before selecting the bank. Some of the respondents selected the bank because it was referred to them by their relatives/friends etc.
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21%
19%
REFERENCE
22% 8%
30%
Interpretation:-Survey depicts that proximity and products and services are the major factors which customer keeps in mind before selecting the bank. Some of the respondents selected the bank because it was referred to them by their relatives/friends etc.
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Depiction:- Satisfaction level of public sector bank customers is about 75% as per the survey. Interpretation: - 25% respondents from public sector banks were not satisfied with the services. Some of the reasons for this dissatisfaction are as below: Poor customer relationship management Complex procedures.
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SATISFACTION LEVEL
VERY DISSATISFIED
4%
SOMEWHAT DISSATISFIED
18%
SOMEWHAT SATISFIED
60%
VERY SATISFIED
18%
Interpretation: - 25% respondents from public sector banks were not satisfied with the services. Some of the reasons for this dissatisfaction are as below: Poor customer relationship management Complex procedures.
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Depiction:- Survey depicts that 47% respondents from private bank customers were very satisfied with the bank while around 40% were somewhat satisfied. Interpretation:- As per survey satisfaction level is higher in private bank customers as compared to customers from public sector bank. following are the reasons of dissatisfaction of private bank customers: Process delay. Service quality. Hidden charges. Behavior of the employees at branch.
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SATISFACTION LEVEL
VERY DISSATISFIED
2%
SOMEWHAT DISSATISFIED
12%
SOMEWHAT SATISFIED
39%
VERY SATISFIED
VERY SATISFIED SOMEWHAT DISSATISFIED SOMEWHAT SATISFIED VERY DISSATISFIED
47%
Interpretation: As per survey satisfaction level is higher in private bank customers as compared to customers from public sector bank. following are the reasons of dissatisfaction of private bank customers: Process delay. Service quality. Hidden charges. Behavior of the employees at branch.
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19 30 8 22 21
3 6 4 12 5
Depiction:-Survey depicts that those respondents who choosed their bank on the basis products and services, 54% out of them were very satisfied with their bank. Respondents who choosed their bank on the basis of its brand image, 50% out of them were very satisfied. Interpretation:-As per survey results there is a relation between selection criteria and satisfaction level. A private commercial bank has to be strong in terms of following factors for 100% customer satisfaction:1. Brand image 2. Product differentiation 3. Network efficiency
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46% 77%
54% 23%
VERY SATISFIED
OTHERS
Interpretation:-As per survey results there is a relation between selection criteria and satisfaction level. A private commercial bank has to be strong in terms of following factors for 100% customer satisfaction:1. Brand image 2. Product differentiation 3. Network efficiency
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4.6 DOES YOUR BANK GIVE YOU REGULAR UPDATES ABOUT NEW PRODUCT AND SERVICES? Table:- 4.6
REGULAR UPDATES YES NO SOMETIMES NO. OF RESPONDENTS 64 17 19 PERCENTAGE 64% 17% 19%
Depiction:- As per survey 65% respondents say their bank give them regular updates on new products and services launched, while about 20% say their bank does not give them regular updates. Interpretation:-Regularly updating the customer about new products and services or any change in existing one is an effective tool of service positioning.
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17% 64%
YES NO SOMETIMES
Interpretation:- Regularly updating the customer about new products and services or any change in existing one is an effective tool of service positioning.
70
Depiction:- Survey depicts that only 35% respondents are using mobile banking and internet banking service regularly, whereas around 50% customers are still not using these services. Interpretation:- The reason behind lacking no. of mobile and ebanking users are : Hidden charges Unawareness. Complex procedures, etc
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SOMETIMES 17%
0% YES NO SOMETIMES
Interpretation: - The reason behind lacking no. of mobile and ebanking users are : Hidden charges Unawareness. Complex procedures, etc
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4.8 TABLE SHOWING AWARENESS ABOUT DHANLAXMI BANK IN BANGALORE:TABLE NO. 4.8
AWARENESS LEVEL YES NO SOMEWHAT NO. OF RESPONDENTS 37 54 9 PERCENTAGE 37 54 9
Depiction:- As per survey 54% respondents said that they dont know about Dhanlaxmi bank . 37% respondents said that they know about Dhanlaxmi bank through their personal sources. Interpretation:- Awareness level of Dhanlaxmi Bank is not so high in BANGALORE . Advertisement campaign has not started thats why people know about it through their personal sources.
73
SOMEWHAT
9%
NO
54%
YES
37%
YES
NO
SOMEWHAT
Interpretation: Awareness level of Dhanlaxmi Bank is not so high in BANGALORE . Advertisement campaign has not started thats why people know about it through their personal sources.
74
6 8 6
4 22 32
2 2 18
12 32 56
Depiction:- Survey depicts that : 50% respondents from very high income group can take high risk while investing, whereas around 35% respondents want to invest in those options which are less risky. Around 15% respondents from very this group wants to avoid risk while investing their money 65%customers from high income group are interested in investing those options having moderate risk whereas 20% can go for high risk categorized investment options; rest 15% wants to avoid the risk. 55% customers from middle income group can take moderate risk. Around 30% respondents want to avoid the risk of investment, rest 10% can go for high risky investment options. Interpretation: As we go from very high income group to middle income group risk taking ability decreases. Customers from middle income group want to avoid investment in ULIPS, equity market and other equity market linked investment options. Customers from very high income can take high risk while investing their money as compared to respondents from other income groups.
75
66%
57% 50%
60
50
40
34%
30
20
10
MODERATE
Interpretation: As we go from very high income group to middle income group risk taking ability decreases. Customers from middle income group want to avoid investment in ULIPS, equity market and other equity market linked investment options. Customers from very high income can take high risk while investing their money as compared to respondents from other income groups.
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Depiction:- Survey depicts that: 31% respondents from, 40 yrs age group wants to invest money in high risky investment options. 50% wants to be in moderate risk category. Only 10% respondents from >40 age group want to put their money in high risk categorized options whereas around 30% want to avoid risk. Interpretation:- There is a relationship between risk taking ability and age of the respondent. Risk taking ability decreases with increasing age.
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CHART NO.: 4.10 CHART SHOWING ANALYSIS OF RISK TAKING ABILITY IN INVESTMENT AT DIFFERENT LEVELS OF AGE
61%
60% NO. OF RESPONDENTS 50% 40%
50% HIGH RISK TAKER 29% 19% 10% MODERATE RISK TAKER RISK AVOIDER
31%
30% 20% 10% 0% <40 YEARS
Interpretation: There is a relationship between risk taking ability and age of the respondent. Risk taking ability decreases with increasing age.
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Strength
Weakness
Opportunity
79
Threats
Competitors
1. Lakshmi Vilas Bank 4. ICICI Bank 2. Karur Vyasa Bank 5. HDFC Bank 3. Federal Bank 6. Axis Bank
SWOT ANALYSIS - Strong Network in South India - Experience and Expertise - Late entry in to North, East & West Indian Markets
- Unlimited Transactions Through - Dhanlaxmi Bank Only Focused on ATM From Any Bank Without Kerala & South India Earlier Charge -ATM Card Can be - Less No. of Branches and ATMs As Used Compared to Competitors WEAKNESSES
- Expansion Option in North , East & - Big Players in the Industry West India - Customers are Service-oriented - A False Rumor of Reliance Taking Over the Bank
- Customers Keep Fluctuating From - Nationalized Banks are Growing Banks to Banks OPPORTUNITIES Fast - Economic Conditions In India - RBIs Policy Regarding CRR THREATS
80
81
Profitability Ratios
Interest Spread Adjusted Cash Margin(%) Net Profit Margin Return on Long Term Fund(%) Return on Net Worth(%) Adjusted Return on Net Worth(%) Return on Assets Excluding Revaluations Return on Assets Including Revaluations 85.54 99.21 68.64 -7.56 141.3 6 15.87 16.02 85.54 99.21 68.64 3.02 5.13 3.08 5.29 2.49 80.56 3.73 95.83 4.20 -5.70 4.03 3.93 3.26 5.27
82
83
LEVERAGE RATIOS
Current Ratio Quick Ratio 0.04 23.94 0.04 38.70 0.03 13.66
85
86
87
88
89
90
91
Dhanlaxmi Bank has been successful in satisfying its customers at the ground level. The bank has made the platform on which the bank is already in the process of its Business Review Process. Its standards are heading towards the global market with a competitive edge of technology.
Dhanlaxmi Bank is now among those few banks that are receiving World Bank loans for their technology up gradation and infrastructure.
From my research as indicated and my personal experience, I can state that Dhanlaxmi Bank has been working towards a progressive and healthy future towards the achievement of global banking standards by making an attempt towards up gradation of its infrastructure and services to cater its customers banking needs.
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BIBLIOGRAPHY
http://www.moneycontrol.com/financials/dhanalakshmibank/results/quart erly-results/DB01 http://www.dhanbank.com/aboutus/about_us.aspx http://www.dhanbank.com/investor_relations/inv_financials.aspx http://economictimes.indiatimes.com/dhanalakshmi-bankltd/stocks/companyid-8970.cms http://en.wikipedia.org/wiki/Dhanlaxmi_Bank http://www.business-standard.com/india/news/dhanlaxmi-bank-to-raisers-200-crore-by-early-january/198140/on http://money.rediff.com/companies/Dhanlaxmi-Bank-Ltd/14030067
BOOKS, JOURNALS: COMPANY BROCHURES ANNUAL REPORTES OF DHAN BANK BUSINESS ECONOMICS JOURNAL KOTHARI, C. R. ,RESEARCH METHODOLOGY
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Q. 10 WHAT IS YOUR PREFERENCE FOR INVESTMENT, STARTING FROM 1ST RANK TO SUBSEQUENT RANKINGS? MUTUAL FUNDS (.) INSURANCE (.) GOLD (.) REAL ESTATE (.) SHARES/BONDS (.) FIXED DEPOSITS (.) Q.11 HOW MUCH YOU SPEND YEARLY TOWARDS INVESTMENT ACTIVITIES? A) LESS THAN 1 LAC B) B/W 1-2LACS C) B/W 2-3 LACS D) MORE THAN 3 LACS Q. 12 DO THE INSURANCE PLAN YOU ARE INTO COVERING YOUR RISK PROPERLY? A) NO B) YES IF NO / YES, HOW? ......................................................................................................... Q. 13 HAVE YOU EVER HEARD ABOUT DHANLAXMI BANK? A) YES B) NO IF YES, HOW DID YOU COME TO KNOW ABOUT THE BANK?
95