Amity Business School

Amity University Haryana

IMPACT OF REMOVAL OF MINIMUM BALANCE REQUIREMENT IN

SAVING BANK ACCOUNT

Internship Report submitted to SBI in completion of the requirement of Summer

Internship at State Bank of India

NAME OF THE STUDENT:

PROJECT MENTOR/ REPORTING OFFICER

Mr. Amit Kumar

ANKIT GUPTA

Chief Manager
(Defence Services Banking)

MAY 20 2013TO JULY 15 2013

1

CERTIFICATE OF COMPLETION

Date:

TO WHOMSOEVER IT MAY CONCERN

This is to certify that Mr. / Ms. of Master of Business
Administration Final Year has successfully completed eight weeks Summer Training on the topic
..With State Bank of India
from. to .

As per our assessment and reporting structure, we found him/ her hard working and excellent
performer during the training programme.

We wish him/ her all the success for his/ her future.

Signature

(Name of Concerned Person)

Designation

(With seal of the company)

ACKNOWLEDGEMENT
Its my proud privilege to release my feeling of gratitude on people who trusted me and relied on
me to complete this project. I would also thank all people whom I met during the course of
Project Completion. I would especially thank my Industry Guide Mr. Amit Kumar, S.B.I for his
guidance and extreme support.

I would also thanks Mr. Vikas Madhukar, Deputy Director, Amity Business School, Gurgaon for
his vision and kind support to all students and creating a platform where one could know the
Industry requirements beforehand.

I would also like to thanks CRC (Corporate Resource Centre) for our Summer Internship and
subsequent worry for our well being and Completion Status so that we could complete the
Project within stipulated time frame.

I would like to thanks Mr. P.K.Sharma for his teaching in classes which we could easily
implement at Industry level .Also thanks for other Faculty Members for their teachings.

At last I would like to thanks Mr. Prabuddha Banerji, Faculty Guide for his guidance and he
shared his experience so that we could learn from that and incorporate those learning into our
real life.

TABLE OF CONTENTS
TOPICS:

PAGE.NO

CERTIFICATE OF COMPLETION............................................................02.
ACKNOWLEDGEMENT..............................................................................03.

1.

INTRODUCTION:.....................................................................................( 05 -09 )
Brief profile of student......................................................................................06.
Brief profile of project mentor at the bank (optional)...................................06.
Brief profile of organization.............................................................................06.
Nature of the project.........................................................................................08.
Brief objectives/ responsibilities assigned by the project mentor................09.

2.

FRAMEWORK OF STUDY.....................................................................( 10 38 )
Theoretical framework ....................................................................................11.
Specific objectives of the project.................................................................36.
Limitations of study.........................................................................................37.
Period of study.................................................................................................38.

3.

METHODOLOGY AND ANALYSIS....................................................( 39 48 )

Methodology....................................................................................................40.
Observations....................................................................................................44.
Analysis...........................................................................................................45.

4. LIST OF CHARTS
Table I........................................................................................................45.
Table II......................................................................................................46.
Table III.....................................................................................................47.
Table IV.....................................................................................................48
5. Conclusions................................................................................................(49 51 )
Conclusions/....................................................................................................50.
Recommendations...........................................................................................51.
6. BIBLIOGRAPHY.........................................................................................55.

INTRODUCTION

INTRODUCTION:
Brief profile of student:
I am Ankit Gupta, and I am a resident of Siliguri, West Bengal. My father Mr. Suresh Kr. Gupta
is a businessman and my mother Mrs.Nirmala Gupta, is a house wife. Currently I am pursuing
MBA (Banking & Finance) from Amity Business School, Amity University Haryana. I am
member of Corporate Resource Centre of University and I always take a keen part in all the
college activities. I completed my graduation in B.Com (Accountancy Hons) from Gyan Jyoti
College, North Bengal University. I have done my intermediate from Mahbert High School
affiliated to ICSE board and my high school from Modella Caretaker Centre and School
affiliated to Cbse board from Siliguri. I am a keen worker who likes surfing internet, playing
sports, reading blogs. I have been runner up in Quiz competition and Cricket during my
graduation and presently I am working as an intern in State Bank of India for 2 months.

Brief profile of project mentor at the bank

Our project mentor is Mr. Amit Kumar, Chief Manager, (Defence Services Banking) and is a seasoned
Bank Official serving in State Bank of India, Local Head Office, G.S.Road, Dispur.

Brief profile of organization

State Bank of India (SBI) is a multinational banking and financial services company based in
India. It is a government-owned corporation with its headquarters in Mumbai, Maharashtra. As
of December 2012, it had assets of US$501 billion and 15,003 branches, including 157 foreign
offices, making it the largest banking and financial services company in India by assets.
The bank traces its ancestry to British India, through the Imperial Bank of India, to the founding
in 1806 of the Bank of Calcutta, making it the oldest commercial bank in the Indian
Subcontinent. Bank of Madras merged into the other two presidencies banksBank of Calcutta
and Bank of Bombayto form the Imperial Bank of India, which in turn became the State Bank
of India. Government of India nationalized the Imperial Bank of India in 1955, with Reserve
6

Bank of India taking a 60% stake, and renamed it the State Bank of India. In 2008, the
government took over the stake held by the Reserve Bank of India. SBI was ranked 285th in
the Fortune Global 500 rankings of the world's biggest corporations for the year 2012.

HISTORY
The roots of the State Bank of India lie in the first decade of 19th century, when the Bank of
Calcutta, later renamed the Bank of Bengal, was established on 2 June 1806. The Bank of Bengal
was one of three Presidency banks, the other two being the Bank of Bombay (incorporated on 15
April 1840) and the Bank of Madras (incorporated on 1 July 1843). All three Presidency banks
were incorporated as joint stock companies and were the result of the royal charters. These three
banks received the exclusive right to issue paper currency till 1861 when with the Paper
Currency Act; the right was taken over by the Government of India. The Presidency banks
amalgamated on 27 January 1921, and the re-organized banking entity took as its name Imperial
Bank of India. The Imperial Bank of India remained a joint stock company but without
Government participation.
Pursuant to the provisions of the State Bank of India Act of 1955, the Reserve Bank of India,
which is India's central bank, acquired a controlling interest in the Imperial Bank of India. On 30
April 1955, the Imperial Bank of India became the State Bank of India. The government of India
recently acquired the Reserve Bank of India's stake in SBI so as to remove any conflict of
interest because the RBI is the country's banking regulatory authority.
In 1959, the government passed the State Bank of India (Subsidiary Banks) Act, which made
eight state banks associates of SBI. A process of consolidation began on 13 September 2008,
when the State Bank of Saurashtra merged with SBI.

Associate banks
a) State Bank of Bikaner & Jaipur
b) State Bank of Hyderabad
c) State Bank of Mysore
d) State Bank of Patiala
e) State Bank of Travancore
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 NATURE OF THE PROJECT

The project titled Impact of Removal of Minimum Balance Requirement in Saving Bank
Account is extremely important Subject in modern Banking Scenario as Government of
India strongly feels the need to Bank the Unbanked through special drives and measures.

So this scheme of Removal of Minimum Balance Requirement in Saving Account has

been launched by RBI directives. With relaxed KYC (Know your Customer norms ) this
scheme is extremely successful. The projects involves the study as to how this scheme
would affect the different sections of societies like Students , Housewives ,
Government Officials , Bank Staffs , Salaried Class and Retired Employees .

The study would also help us in analyzing Psychological and Behavioral patterns of
saving and depositing it in banks, Measures undertaken by banks to Increase Financial
Literacy and Awareness of the Program.

We would discuss the different Marketing Programs launched by SBI along with
discussion with different BC (Business Correspondents).

The study would include impact of Minimum Balance Removal on CASA and Cross
Selling.

We would discuss the Dormancy effects of accounts because as there is no minimum

balance lot of customers just open their account but do not do any transaction.

We would also aware customers during our visit to different branches because one of the
bottleneck we felt during our visits was the level of awareness is not up to the optimum
level from where branch managers would motivate the customers to open the account .

One of the greatest achievements of this scheme is that the customer base is tremendously
increasing and we would like to study the same.

The study would also include the impact of income on SBI different products and
services like Insurance and Debit Cards and Credit Cards through Cross Selling and Price
Bundling Mechanisms.

At last visiting across all the branches of Guwahati we would study the impact of SBI on
Banking with market share against the competitors and various products and services.

 Brief objectives/ responsibilities assigned by the project mentor.

Saving account is not just any other account, and it varies greatly from the other accounts such as
current account and fixed account. In saving account an individual can deposit as many money as
it wants and can withdraw it as and when he wants to. Banks even give interest on such accounts
and now with the removal of minimum balance requirement more and more people are going to
come under the banking sector and will open their account and with it the all sections of the
society will be covered by the banks. Financial inclusion is the delivery of financial services at
an affordable cost to the vast sections of disadvantaged and low income group of people who
have been excluded from it. In 2005-06, the RBI exhorted the banks to make available a basic
banking no frills savings account either with nil or very low minimum balances. Reserve Bank of
India advised banks, in November 2005, to make available basic banking no frills account. The
RBI, followed up, by urging the banks to make available such no frills savings account with
relaxed Know Your Customer (KYC) norms for any who does not have a bank account.
The Project involves meeting different types of customers having different aspirations and also
knowing their requirement and also knowing the impact of removal of minimum balance
requirement on them. The project objective is to study the impact on banks customer base
whether it has increased or decreased and also the banks overall business in terms of
deposits/loans and other services like cross selling. Our responsibility is to study the customers
thinking and their inclination to open the saving account with SBI where no minimum balance is
required in comparison to other banks where minimum balance requirement still prevails.
The project objective is to study the impact on different segments of the society viz students,
small labourers, businessman, traders, employees of state or central or semi Government sector,
small income groups, housewives etc. Our other objective is to study the impact on banks
business or customers delight with a light on change of installed application in Saving Bank
account from monthly average to daily balance method.

Theoretical Framework

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 Theoretical Framework
Overview of Savings Account

For most of us, the first association with a bank is through a savings account. There was a
time not long ago when you needed an existing account holder's endorsement to open the
account, whose only aim was keeping liquid money. The account, like the banking
system, has evolved a lot since.

Know-your-customer norms have replaced the introduction system, making account

opening easier. Earlier, there was just one type of savings account where you could
deposit money and earn some interest.

Now, you have a lot of options. Similarly, after the Reserve Bank of India, or RBI,
deregulated the interest rate on savings accounts, some banks have started offering 5-6%
per year on these deposits. The account can get you facilities such as an insurance cove.
In order to attract new customers, State Bank of India (SBI) has done away with
minimum balance criteria for savings bank account.

The bank will not levy any charge for breaching minimum balance criteria.

The facility is available to existing customers also, SBI said in an advertisement.

For the normal SBI savings account with cheque book facility, a customer had to
maintain a minimum balance of Rs 1,000 in his or her account failing which it attracted
penalty.

There are certain saving account products of the bank where the minimum monthly
balance is as low as Rs 50.

Depending on features and facility, the minimum average monthly balance varies.

The waiver would help the bank in improving customer base, an official said, adding, it
will also help the bank in generating low cost deposits as the savings bank account earns
interest rate of just 4 per cent.

As of March 2012, SBI had 15.39 crore saving banks accounts. During 2011-12, the bank
opened 2.19 crore such accounts.

11

On the other hand, the minimum balance requirement for savings bank account of private
sector bank like ICICI Bank and HDFC Bank is Rs 10,000. This is for an individual
having account in any branch in a metro centre..

Definition of Savings Account

A deposit account held at a bank or other financial institution that provides principal security and
a modest interest rate. Depending on the specific type of savings account, the account holder
may not be able to write checks from the account (without incurring extra fees or expenses) and
the account is likely to have a limited number of free transfers/transactions. Savings account
funds are considered one of the most liquid investments outside of demand accounts and cash. In
contrast to savings accounts, checking accounts allow you to write checks and use electronic
debit to access your funds inside the account. Savings accounts are generally for money that you
don't intend to use for daily expenses. To open a savings account, simply go down to your local
bank with proper identification and ask to open an account.
These deposits accounts are one of the most popular deposits for individual accounts. These
accounts not only provide cheque facility but also have lot of flexibility for deposits and
withdrawal of funds from the account. Most of the banks have rules for the maximum number
of withdrawals in a period and the maximum amount of withdrawal, but hardly any bank
enforces these. However, banks have every right to enforce such restrictions if it is felt that the
account is being misused as a current account.
Till 24/10/2011, the interest on Saving Bank Accounts was regulated by RBI and it was fixed at
4.00% on daily balance basis. However, weve 25th October, 2011, RBI has deregulated Saving
Fund account interest rates and now banks are free to decide the same within certain conditions
imposed by RBI.
Under directions of RBI, now banks are also required to open no frill accounts (this term is used
for accounts which do not have any minimum balance requirements). Although Public Sector
Banks still pay only 4% rate of interest, some private banks like Kotak Bank and Yes Bank pay
between 6% and 7% on such deposits. From the FY 2012-13, interest earned up to Rs 10,000 in
a financial year on Saving Bank accounts is exempted from tax.

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Types of Savings Account

State Bank of India offers two types of savings account savings account and savings plus
account. The savings account has been designed to help people save for their future financial
requirements. Under this account, bank gives free ATM cum debit card. The account can also be
accessed through SBI internet banking facility by downloading instant SBI. The rate of interest is
compounded half yearly under this account. On the other hand, savings plus account gives the
facility of savings account along with term deposit account.
Any surplus funds in the account exceeding the threshold limit, for a minimum amount of
Rs.10,000 and in multiple of Rs.1000 in any one instance, are transferred as term deposit and
earns interest as applicable to term deposits.
The two different types of Savings Account are:

1. Saving Account
2. Saving Plus Account

State Bank of India : Saving Account

Card Convenience.

Easy and Wide Accessibility.

Moderate Earning.

Money Multipliers.

Transfer of accounts between our wide networks of branches without any charge.

Facility to open your Savings Account in Single or Joint Names.

Low Minimum Balance Requirements.

Full Security of your money at all times.

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State Bank of India : Savings plus account

Open a Savings PlusAccount and set a threshold limit.

Any surplus funds in the account exceeding the threshold limit, for a minimum
amount of Rs.10000/- and in multiple of Rs.1000/- in any one instance, are transferred
as Term Deposit and earns interest as applicable to Term Deposits.

Flexibility to choose the period of deposit from 1 year to 5 years.

Flexibility to set any threshold limit of Rs.5000/- or above

Highlights
Bank

State Bank of India

Category

Privileged Account

Minimum AQB

Metro/Urban/Semi-Urban

(Average Quarterly Balance)

Cheque operated account- Rs.1000

Ordinary account - Rs. 500
Rural
Cheque operated account- Rs.500
Ordinary account -Rs. 250

Interest Rate

4%

Card Offered

ATM cum Debit Card

Free

Main Features
Open a Savings Plus Account and set a threshold limit.

Any surplus funds in the account exceeding the threshold limit, for a minimum amount of
Rs.10000/- and in multiple of Rs.1000/- in any one instance, are transferred as Term
Deposit and earns interest as applicable to Term Deposits.

Flexibility to choose the period of deposit from 1 year to 5 years.

Flexibility to set any threshold limit of Rs.5000/- or above.

Easy and Wide Accessibility.

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Transfer of accounts between our wide networks of branches without any charge.

THE IMPORTANCE OF HAVING A SAVINGS ACCOUNT

Many consumers have a checking account and usually have a debit card too but there are still
many people who do not have a savings account set up. For one reason or another, the majority
of consumers who open a checking account usually do not open a savings account at the same
time, but they really should. Listed below are some reasons why you should open a savings
account today, as well as the importance of managing your money in the savings account.\
a) Unforeseen Spending You can never recognize beforehand when an urgent situation will take place. A broken
major appliance or an expensive automobile repair can put a huge dent in your finances.
Although you have probably arranged your insurance coverage on all fronts, you almost
certainly will still encounter those nasty deductibles. A vehicle accident, a serious illness
or a fire at your residence can necessitate considerable out-of-pocket costs. Life can
damage the budgets of even the most financially disciplined people; nevertheless, a
savings account is almost always able to cover the gaps and help keep you out of debt.
b) Asset Protection The returns linked with savings accounts traditionally have been smaller than those of
other types of investments, for instance real estate, bonds, and stocks. However, tying up
all of your capital in illiquid or speculative investments for the likelihood of a superior
return means that you might be enforced to sell at an unfortunate time due to an
unexpected expense or emergency. Having a savings account open is a good way to
protect your investment collection from loss via forced selling.
c) Leveraging Chances Managing a savings account enables you to take advantage of possible profitable
monetary opportunities. If you happen to stagger upon a rare but wonderful business
opportunity, you might not be able to invest in that opportunity if you do not have
sufficient money to put forward. Furthermore, if you attempt to get credit with your bank
for whatever purpose, a vigorous savings account can improve your prospects of

15

achievement. A savings account is able to exchange a few words about discipline and
stability to a loan representative.
d) Security The capital that you deposit in a money market or savings account is protected by FDIC
insurance. Which means that even if your bank were to suddenly go bankrupt and close,
the government will substitute your funds up to a certain amount? Money can be lost,
destroyed or stolen but if you deposit that same money with a bank in a savings account,
more or less it is secured. You are also able to earn some interest while depositing your
money in an interest bearing savings account.
e) Self-Determination From Credit A savings account may enable you to attain your financial targets without employing the
use of credit or a loan. When you purchase something on credit, you are paying for the
freedom of being able to get the item right away, although you don't actually have the
money on hand to purchase it. If you amass a decent amount of money in a savings
account, it permits you to purchase some things that you desire without having to rely on
a loan or use credit and possibly lower your credit score.
Moreover, there is a general agreement throughout the financial expert community that
having a savings account will help to give you peace of mind, since it enables a person to
plan for whatever he/she desires to accomplish, purchase, or repair. So the next time you
set up a checking account or walk into your bank, ask them about their savings account
options. It really is one of the best financial decisions that you can make for yourself and
for your family.

Reason behind removal of minimum balance limit in SBI

A circular issued by the bank on April 25 2012 states that the bank has lifted all the restrictions
regarding minimum balance in all type of savings accounts with immediate effect. It is believed
that the bank has taken this step to attract more and more customers. Again, since other banks are
also coming up with special schemes for their clients, SBI do not want to lose its customers. An
important thing to note here is that other public sectors banks have increased the interest rates
recently just to attract more customers. Though SBI has not made any increase in interest rates
on savings account, the removal of minimum balance restriction seems to be a good initiative.
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Details of SBI minimum balance

State bank of India recently announced that no monthly minimum balance to be

maintained in savings bank accounts in their branched even on quarterly basis .Further
SBI Bank has directed its Branches to return (refund)charges debited in customer's
account due to non-maintenance of Average quarterly Balance (AQB) by customers in
quarter ended on 31.03.2012.

The State Bank of India has asked its branches to remove the minimum balance
stipulation and refund charges that were collected for failure to maintain the same.The
circular issued on April 25 said the bank has decided to waive the requirement of
maintenance of minimum balance for all types of savings bank accounts with immediate
effect.

Accordingly, no minimum balance charges would be levied every quarter henceforth, the
circular addressed to chief general managers of all SBI circles said.

Branches were advised to use approved publicity material to the effect and to have them
displayed prominently on branch premises. In a preceding circular sent only the day
before, the bank ordered refund of charges for non-maintenance of minimum balance of
personal segment' customers.

This was aimed at setting right an earlier order that sought to apply charges for nonmaintenance of minimum balances on all eligible accounts for the quarter ended March
31, 2012.

REFUND ORDERED
The circular said that the competent authority has since approved refund of minimum balance
charges recovered, if any, in respect of non-maintenance of minimum balance for the quarter. A
senior official of SBI said, We are doing this to help improve our customer base. It has been in
the offing for some time.

17

Banks, including SBI, fixed a higher minimum savings balance for customers in order to help
compensate for services they provided. The waiver of minimum balance therefore represents a
major departure from the bank's policy. The official did not elaborate on why the change was
done.

Details of Minimum Balance of Private Leading Banks(ICICI BANK, HDFC Bank , Axis
Bank)

On the reverse ICICI Bank, HDFC Bank, Axis Bank has instructed his customer to
maintain average minimum balance on Monthly basis instead of Quarterly Basis.Means
Now you have to pay charges if you have failed to maintain average monthly minimum
balance. As per earlier instructions if customers maintain average quarterly balance more
than the limit prescribed then no charges is to debited.

The top three private sector banks have tightened their minimum savings bank deposit
balance norm. Against the normal practice of maintaining minimum average quarterly
balance, these banks want customers to maintain minimum balance on a monthly basis.
What this means is that customers will have to keep higher balances.

The move to get customers to maintain minimum balance on a monthly basis follows the
Reserve Bank of India deregulating the savings bank deposit rate in October 2011.

The RBI has not stipulated any minimum balance to be maintained in savings accounts to
any bank. The RBI guidelines only state that account holders should get from their banks
a month's notice on any change in the minimum balance norm.

ICICI Bank's minimum monthly balance requirement is Rs 10,000 at metro and urban
locations; Rs 5,000 at semi-urban branches; and Rs 2,000 in rural areas.

Similarly, the minimum monthly balance requirement at metro and urban areas is Rs
10,000 for Axis Bank and HDFC Bank.

In the case of semi-urban areas, the minimum balance requirement is Rs 5,000 for the
two banks. In rural areas, the minimum balance requirement is Rs 5,000 in the case of
HDFC Bank and Rs 2,500 in the case of Axis Bank.

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Average Minimum Balance required

Sr

Bank

Metro Urban Rural

No
1

ICICI

area

areas

10000

5000

2000

10000

5000

5000

10000

5000

2500

BANK
2

HDFC
BANK

AXIS
BANK

These private sector lenders have also tweaked the penalty charge for non-maintenance of
minimum monthly balance. Charges for HDFC Bank and ICICI Bank range between Rs 250 and
Rs 350; while, those of Axis Bank are Rs 750 (metro and semi-urban) and Rs 500 (rural).
According to Ms Chitra Pandeya, Senior President, YES Bank, the lenders are targeting good
quality customers through the move. When minimum balance has to be maintained on a monthly
basis, customers will keep enough funds in their accounts to ensure that they do not have to pay
non-maintenance charges.
Analysts say the switch to monthly maintenance of balance is a positive for banks' margins.
This will generate higher float money via the saving account balances, a banking analyst said.
The largest PSU lender, State Bank of India, which had imposed charges for non-maintenance of
minimum balance a few months ago, rolled back the move.

Zero Balance Accounts

Usually Students and Youths Open bank accounts for saving Money, sometimes using Online
Services though Debit card and for getting Money transferred to their accounts by their parents.
Coming on to all this factors it seems the amount on their Accounts is always fluctuated. Hence

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Opening a Zero balance Account in a Nationalized Bank or most popular Private Sector bank is a
good deal for young generations.

How daily interest on savings bank a/cs is calculated

From April 1, 2010, interest on all savings bank account deposits is being calculated on a daily
basis, thereby earning account holders higher interest income. This is due to the fact that the
Reserve Bank of India has instructed banks to change the mechanism of interest income
calculation. The calculation is done on the 'daily balance method', with the rate of interest
remaining the same at 3.5% p.a.
Earlier method of interest rate calculation
Earlier, banks would pay interest at the rate of 3.5% p.a. on the lowest available balance in the
account between the tenth and the last day of the month.Any deposit in the account between the
tenth and the end of the month, would not earn the account holder any interest as it is not part of
the interest rate calculation. Any withdrawal between the same periods would result in lower
interest income as the lowest balance would be taken into account for the calculation.
Example: Ashwin had an account balance of Rs 85,000 on April 10. He received a payment of
Rs 300,000 on April 15 from the sale of some mutual fund units.
On April 29, he made a down payment of Rs 320,000 to a builder for a property. This resulted in
his account balance reducing to Rs 65,000. For the interest income calculation for the month of
April, the bank would take Rs 65,000 as the base and pay him interest on that amount. So interest
due to Ashwin would be on Rs 65,000 for 30 days @ 3.5% p.a. which would be Rs 187.
In spite of having a high account balance for most period of the month, Ashwin lost interest
income for the month.
Under this method of interest rate calculation, the best thing Ashwin could do is ensure that all
transactions are done between the first and ninth of any month so that he would get benefit of
interest. This required proper planning.

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New method of interest rate calculation

Interest will be paid @3.5% p.a. on the daily balance in the account at the end of the day. Here,
the account holder will get interest on the actual day end balance.
Under this method, Ashwin's interest income calculation would be:
a) For the first 14 days of April, interest to be paid would be calculated on Rs 85,000;
b) For the next 14 days of April, interest to be paid would be calculated on Rs 385,000 and;
c) For the balance 2 days, interest to be paid would be calculated on Rs 65,000.
So the total interest due to Ashwin would be Rs 643.
Under this method, Ashwin's interest income is higher by Rs 456!
Besides, he did not have to plan his withdrawals and deposits as he would receive interest on the
actual account balance.
As a savings bank account holder, you should be pleased with the latest change. Who would not
like to see higher balance on account of higher interest income?
PS: Interest rate calculation Formula
Daily interest = Amount (Daily balance) * Interest (3.5/100) / days in the year.

Example of how the new system will work:

For instance,an individual who earns Rs 50,000, which is credited to his account on the first of
every month. Assume the existing balance in the account at the start of the month was zero.
From the salary received, he withdraws Rs 25,000 for various household expenses on the 5th of
the month. So, the available balance on the 10th of the month will be Rs 25,000. Assuming there
is no regular payment to the account but a withdrawal of Rs 10,000 is likely on the 20th of the
month for some expense that may arise.
According to the present norm of calculating interest for savings account The balance on the
10th of the month is Rs 25,000. There is a reduction in the account balance by Rs 10,000 by the
21

20th of the month. Hence, the balance used for calculating interest is Rs 15,000 and the interest
for the month will be Rs 44.
By the new daily balance method, there will be a minute look at the changes that have taken
place and hence there will be a different method for the calculation. Lets assume a month of 30
days, there will be interest paid on Rs 50,000 for five days (1st to 5th of the month), then on Rs
25,000 for 15 days (5th to the 20th of the month) and lastly, on Rs 15,000 for 10 days (20th to
the 30th of the month). Therefore, the total interest earned on various available balances will
amount to Rs 75, higher than what is earned as per the present norm.

Now consider the same case, where instead of a withdrawal towards the end of the month, there
is a deposit of Rs 15,000 on the 25th of the month due to interest received on a fixed deposit. If
we go by the current norms, there will be no change in the interest, that is the interest earned will
be around Rs 44. The reason: The deposit does not impact the lowest balance figure between the
10th and the end of the month so the total interest received stands at Rs 43.75. The daily interest
method will compute interest on Rs 50,000 for 5 days, Rs 25,000 for 15 days, Rs 15,000 for 5
days (20th to 25th of the month) and then Rs 30,000 for 5 days (25th to 30th of the month, as the
deposit was made on the 25th). So, in this case, the total interest earned will be Rs 82 for the
month, almost double of what is earned by the old method.

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Impact of removal of minimum balance on banks

The removal of minimum balance requirement has effected banks CASA ratio i.e. Current
account to saving account ratio and also the cross selling done by banks. With the increase in the
number of account openings in Guwahati State Bank have increased its cross selling i.e. selling
such products to customer which they did not intend to buy. Below are the details of CASA and
Cross selling and how it is beneficial to banks.
CASA
The CASA (current and savings account) ratio is the ratio of deposits in the current and savings
accounts of a bank to its total deposits.A high CASA ratio indicates that a higher portion of the
banks deposits come from current and savings accounts. This means that the bank is getting
money at low cost, since no interest is paid on the current accounts and the interest paid on
savings account is usually low.
Current and Saving Accounts are demand deposits and therefore pay lower interest rates
compared to term deposits where the rates are higher. Thus higher CASA ratio means that more
of the money deposited in the bank is in the demand deposits i.e. the CASA, thus bank is getting
the money at lower cost.
Strategies for improvement OF CASA deposits
Based on the trends of CASA deposits of major Banks, trends inCircles of SBI and feedback
collected from officers of SBI from acrossthe country, following strategies are suggested, which
may be helpfulfor improving CASA deposits

(i) Improvement in services and technologies

- As we understandthat the potential is decided by the liquidity available in the country,in retail
and other segments, the competition starts with selection ofthe bank where these deposits will go.
In the current financialenvironment, the level of customer service and availability ofadvance
technologies are the most important factors which attract apotential deposit to any bank.On
customer service front, our level has increased a lot from theposition 4-5 years back. But the
standard is still not satisfactory, andwe have to walk a long way to achieve this, that too in a very
shorttime. For developing the employee into a knowledgeable, customerfriendly asset, training
process and training system are required to bedeveloped and strengthened. We may plan to have
a dedicatedhelpline for CASA accounts Circle wise.Technology is the aspect where we are far
23

behind the private sectorbanks. The products and tools are available in most of the cases, butdue
to knowledge gap, our staff is not able to use them properly.Training is required for the
employees to provide them properknowledge of the products and for customers, awareness
programmay be conducted through different media and through branchesregarding new
generation products like internet banking, mobilebanking etc.
On the banks website the facility may be provided tothe customers for putting up the technical
problems or queriesrelated with Internet banking, Mobile banking and ATM. Presentlyall kind of
requests can be generated through Internet bankingfacility, in addition to that facility may be
provided that the customercan refer the pending requests to the vertically higher office in case
ofabnormal delay.
(ii) Marketing and development of new hybrid products andproper marketing of the
existing products
Nowadays, customerdoes not want to come to the branch for every transaction and heexpects
from the banker his deposits will be kept in such a manner togive him maximum returns. Our
bank has very good hybrid productslike Savings plus, which is one of the best such products in
themarket. These kinds of products should be marketed vigorously. Allthe private banks are
capitalizing on the different variants of thesame products, only due to better marketing and better
technicalsupport.
(iii) Drives for opening more new accounts
For savings bankdeposits, opening of more and more new accounts is the bestalternative. Our
bank is planning to double its savings account basein rural area as on March 09 within two years.
The campaigns shouldbe designed and launched with suitable strategies matching to thedifferent
conditions prevailing during the period based on the factorsdiscussed earlier in the report.
(iv)Providing all financial services under one roof
Presently weare providing other facilities to our customers only for the companiesassociated with
the State Bank of India, viz. SBI life, SBI MF etc. Thisrestricts the opportunity for the customers
and the chances ofmigration of an urban customer start if he plans to invest in othercompanies.
Providing investment opportunity to the customer byoffering products of all the major companies
may be a good option.This is one of successful strategies applied by private banks likeHDFC
bank. If the complete financial planning will be provided forthe urban customers with excellent
customer service and supportedby better technology, it would certainly help in improving
thesavings bank deposits.
24

(v) Targets for each officer and reward for best performances
Monthly targets may be set for the officers and staff of each branchfor the number of accounts
and amount mobilized both. Higherreward and recognition schemes may be launched for the
bestperformers.
(vi)Popularizingdemat services
With the strong emergence ofelectronic media, interest of retail customers in the stock market
hasincreased significantly. The young and tech savvy generation alwayswant to do it themselves
while sitting in their office/ home. It isrequired to market our product but
Simultaneously it is also required toreduce the processing time for the opening of new accounts.
In urbancenter this product alone is sufficient to attract a huge amount of lowcost deposits.

Cross Selling by SBI

The cross selling is a strategy of pushing new products to current customers based on their past
purchases. Cross selling is designed to widen the customer reliance on the company. In other
words cross selling means to offer additional but relevant products to the existing customers.
Cross-selling is a marketing device used to increase sales by displaying products to the
customers that are closely related to the product he or she is interested in purchasing. It allows
the business to promote similar products that the customer may not be aware of, or offer a
complimentary product that the customer may be interested in as an impulse buy.
Cross selling is based on personal relationship, which is built slowly with the customer. For
example, Banks not only sell core banking products (saving a/c, current a/c) , but also sell
additional products such as credit cards, insurance products, mutual fund plans , government
securities. By selling these additional products they reduce per customer cost and increase per
customer earning. Similarly Post office also sells insurance products, saving products, etc.
besides providing postal services. .In case of electronic goods e.g. computer/laptop, sales
executive offers various types of software, cordless mouse / keyboard, ear phones, etc.

25

UP SELLING AND CROSS SELLING

UP SELLING
Up selling means selling same product at a higher price to a customer. In other words Up selling
occurs when the customer goes to buy something & the seller sells the similar product but the
costlier one .Up Selling is the up gradation to a higher product but of the similar item.
CROSS SELLING
in banks and how the banks are capable to increase their profit by using the concept of Cross
selling This paper also tells us about the meaning, existence, types, scope, , benefits, limitations
of Cross selling and also include suggestions to improve cross selling .Cross selling is a strategy
of pushing new products to current customers based on their past purchases. Cross selling is
designed to widen the customer reliance on the company. In other words cross selling means to
offer additional but relevant products to the existing customers. Cross-selling is a marketing
device used to increase sales by displaying products to the customers that are closely related to
the product he or she is interested in purchasing. It allows the business to promote similar
products that the customer may not be aware of, or offer a complimentary product that the
customer may be interested in as an impulse buy.(a) Customer goes to buy HCL laptop but seller
offers Apple laptop (which is more costly), it will be termed as up selling.
(b) Customer goes to buy 15 inch color T.V of PHILIPS but seller offers 21 inch color TV of the
same company.
On the other hand cross-selling is a technique of offering related products to a customer besides
the basic or core product. Cross selling simply means that seller can increase the size of the
customer's order by offering other related items which may be used alongwith the product
already purchased by customers.. For example, if the customer goes to buy mobile phones, seller
may also offer mobile cover, ear phones, memory card etc.

STRATEGIES FOR CROSS-SELLING

The existing client base of the bank can be used for the purpose of cross-selling after carefully
examining the profile of customers. For this purpose the bank can undertake studies for various
products and various geographical areas to understand the potential availability for cross- selling.
The banks may take some of the following steps -

26

1. Preparation of data base:- The bank should collect the required data and prepare the data
base of customers. The required information can be collected from the concerned customer when
he comes to the bank for opening an account in the bank. It is the data base of customers on
which the entire exercise of cross-selling is based. With the data-base banks can assess the credit
worthiness of the customer with more accuracy. Moreover, it is easier and cheaper to get
customers from one's own data- base than going out for getting new customers.
2. Identification of Customer:-On the basis of data-base and bank's relationship with
customers, possible customer for cross-selling should be identified. In the same way the product
should be identified which can be offered to the customer.
3. Selecting target customers:- After identification of possible customers, the targeted
customers should be selected and efforts should be made to narrow down the product-range. If
required, even new products may be developed to meet the specific need of the group of
customers.
4. Proper Training to Staff:- Proper training should be imparted to the staff entrusted with the
task of cross-selling It not only creates team spirit but also enables the staff to meet the
customer's needs in a better way. It also enables them to understand the complexities of product
and to identify the appropriate product to suit the specific requirement of the customer.
5. Proper selection of tools - Based on the market size, tools selected for targeting the customer
also matters. For large banks with large number of customers tools may be CRM (Customer
Relationship Management), Profitability Analysis, Complete Activity Management, Information
Support System, etc. Effective and economical tools should be selected keeping in mind the
market size, customers' preferences, etc.
6. Motivation and Incentives- Having proper tools and systems to cross-sell does not end the
process of selling. Getting the bank employees involved in this exercise and motivating them to
sell is also an important aspect. It is important for banks to provide reward for the cross sale that
is commensurate with profitability of the product to the bank. Efforts should also be made to
involve the staff in coming out with innovative campaign and also ideas which will stimulate
them to sell newer products.
7. Cross-selling as a part of employees' appraisal - As an initiative for employees involvement
for cross-selling, cross-selling can be made a part of an employee's performance appraisal along
with monetary and non-monetary rewards for employees.
27

8. Periodical Analysis of Data-Base - Cross selling is a continuous process. In order to make

cross-selling success, notonly to complete customer data should be maintained but it should also
be analyzed periodically so as to ascertain the number of customers visited the bank during a
particular period, how many of these customers did the sales representative meet, in how many
of these meetings was a cross-selling opportunity identified, how many of these were referred
and what was the outcome of these referrals. This process enables the bank management to set
objectives, monitor performance and take necessary action to make cross selling more effective
and successful.
9. Effective Delivery of the Product - Every possible effort on the part of the bank should be
made to ensure the timely and proper delivery of the product purchased by the customer.The
more relationships a bank has with a customer, the more loyal the customer will be and the bank
will be able to know more about the customer through these relationships. The credit quality of
the customer can be assessed in a better way. At the end it will be a win-win situation for both
the banks and customers. However, bank management should exploit this situation carefully
keeping in mind the overall profitability of the bank.

BENEFITS FROM CROSS-SELLING IN BANKS

Cross selling exists almost in every type of banks in general and in private banks in particular.
Cross-selling is beneficial not only for banks but also for its customers and insurance companies.
We can study the benefits from cross selling under the following headings:
Cross-selling is beneficial for banks in many ways

Under cross-selling existing customers are approached and cost of approaching existing
customer is much less than acquiring new customers. It reduces per customer cost and
increases the per customer earning.

Benefits of economies are available which reduces the cost further and increases the
profits.

It helps in building the brand value, if the loyalty of customer can be ensured for the
brand. In that case the likelihood of shifting the business dealings by the customer to
another bank is reduced substantially.

28

CROSS-SELLING IN STATE BANK OF INDIA

State Bank of India has been using the technique of cross-selling for the last several years.
Through cross selling it has been offering a banquet of the best financial and insurance solution
in addition to its vast array of banking products. The Bank as a corporate agent offers mainly life
insurance products of SBI Life Insurance Company, general insurance products of SBI General
Insurance Company, mutual fund products of SBI Mutual Funds and Credit Cards of SBI Cards.

Product

Company

URL

i) Life Insurance

SBI Life Insurance Co

www.sbilife.co.in

ii) General Insurance

SBI General Insurance Co. Ltd.

www.sbigeneral.in

iii) Mutual Funds

SBI Mutual Funds

www.sbimf.com

iv) Credit Cards

SBI Cards & Payment Services

Ltd.

www.sbicard.com

SBI DFHI LTD

www.sbidfhi.com

v)

Govt. Securities and Corp.

Bonds

29

Impact of removal of minimum balance requirement on different segments of

customers

The removal of minimum balance has not only affected banks but also customers.

The affect is different on different segments of customers such as students, teachers,

servicemen, employees of state or central Government and lastly the corporate.

The removal of minimum balance has induced customers to open more and more
accounts and it has increased banks customer base also.

Customers are now willing to open more accounts and with it the Government has also
succeeded in its policy of financial inclusion which means to include all the sections of
the society in the banking sector of the country.

The students are mostly affected by the removal and students have started opening more
and more accounts and it has helped them as students are not earning and so the money
they get from their parents is less and previously they had to keep Rs 1000 in their
account as minimum balance but now with this removal students are able to use those
money for their personal use and so it has impacted them a lot.

Salary employed persons are also affected by this removal and in Guwahati most of the
branches have account mostly opened by salary employed persons such as teachers,
lawyers, Government officials and so on and so with the removal of minimum balance
this segments of customers are mostly affected and with the research we came to know
that it is the salary employed person who are opening more and more accounts.

SMEs (Small and Medium Enterprise) and businessman are not affected as they have
their accounts maintained in current account and they cannot switch on to savings
account as there is a limit on the number of transactions in savings account and so
businessman prefer opening account in current accounts only. SMEs also have their
accounts maintained in current account and in Guwahati minimum balance requirement
for SMEs in current account are Rs 25000 and so the removal of minimum balance
requirement has had no affect on SMEs and businessman.

30

FINANCIAL INCLUSION
"Financial inclusion is delivery of banking services at an affordable cost ('no frills' accounts,) to
the vast sections of disadvantaged and low income group. Unrestrained access to public goods
and services is the sine qua non of an open and efficient society. As banking services are in the
nature of public good, it is essential that availability of banking and payment services to the
entire population without discrimination is the prime objective of the public policy."
Areas of concern by banks

The banking industry has shown tremendous growth in volume and complexity during
the last few decades.

Despite making significant improvements in all the areas relating to financial viability,
profitability and competitiveness, there are concerns that banks have not been able to
reach and bring vast segment of the population, especially the underprivileged sections of
the society, into the fold of basic banking services.

Internationally also efforts are being made to study the causes of financial exclusion and
design strategies to ensure financial inclusion of the poor and disadvantaged.

The reasons may vary from country to country and so also the strategy but all out efforts
are needed as financial inclusion can truly lift the standard of life of the poor and the
disadvantaged.

RBI's Policy on 'Financial Inclusion:

When bankers do not give the desired attention to certain areas, the regulators have to step in to
remedy the situation. This is the reason why the Reserve Bank of India places a lot of emphasis
on financial inclusion.
With a view to enhancing the financial inclusion, as a proactive measure, the RBI in its Annual
Policy Statement of the year 2005-2006, while recognizing the concerns in regard to the banking
practices that tend to exclude rather than attract vast sections of population, urged banks to
review their existing practices to align them with the objective of financial inclusion.

No-Frills' Account:
In the Mid Term Review of the Policy (2005-06), RBI exhorted the banks, with a view to
achieving greater financial inclusion, to make available a basic banking 'no frills' account either
with 'NIL' or very minimum balances as well as charges that would make such accounts
31

accessible to vast sections of the population. The nature and number of transactions in such
accounts would be restricted and made known to customers in advance in a transparent manner.
All banks are urged to give wide publicity to the facility of such 'no frills' account, so as to
ensure greater financial inclusion.

Simplification of 'Know Your Customer (KYC) Norms:

Banks are required to provide a choice of a 'no frills account' where the minimum balance is nil
or very small but having restrictions on number of withdrawals, etc., to facilitate easy access to
bank accounts.
Further, in order to ensure that persons belonging to low income group both in urban and rural
areas do not face difficulty in opening the bank accounts due to the procedural hassles, the 'KYC'
procedure for opening accounts for those persons who intend to keep balances not exceeding
rupees fifty thousand (Rs. 50,000/-) in all their accounts taken together and the total credit in all
the accounts taken together is not expected to exceed rupees one lakh (Rs. 1,00,000/-) in a year
has been simplified to enable those belonging to low income groups without documents of
identity and proof of residence to open banks accounts. In such cases banks can take introduction
from an account holder on whom full KYC procedure has been completed and has had
satisfactory transactions with the bank for at least six months. Photograph of the customer who
proposes to open the account and his address need to be certified by the introducer.

DIFFERENT TYPES OF ACCOUNT OFFERED BY SBI FOR CUSTOMERS,

SALARIED PERSON AND CORPORATE.

SBI offers different types of accounts for different segments of customers and the facilities
offered also varies among different customers. Below are the details of the different types of
accounts and how to apply for such accounts.

32

SBI STUDENT BANK ACCOUNT

How to Apply for SBI Student Bank Account

You can apply for a student bank account online through SBI's website
http://www.sbi.co.in

You can apply for a student bank account by a direct visit to the nearby SBI branch.

How to apply for the SBI student bank account online

Open the page

http://www.sbi.co.in/user.htm?action=viewsection&lang=0&id=0,18,225 and download
the bank account opening form

Take a print out of the form and fill the form will all the valid details.

Along with a filled form, the person also has to submit a photocopy of college ID proof,
two passport size photographs and identity proof like passport, voter id card as well as
any address proof (though for college students, address of hostel is sufficient).

Now you can submit the application form to the nearby SBI branch.

Your student bank account will be opened within few days of time.

A welcome kit will be given to you, containing ATM card and a check book. Though the
account gets open in matter of days, sometimes the check book and ATM card can take
couple of weeks to arrive. It normally ships to the address mentioned in the account form.

Apply for the SBI student bank account through SBI

Branches

If downloading and filling the form is not possible, the person can also get the form
directly from nearest SBI Branch.

As documents, the student has to provide Identity proof, college Id proof and 2 passport
size photographs.

Fill the form and submit it in the bank, students can fill their college room address as
temporary address and are required to fill their home address as permanent address.

A welcome kit will be given to you, containing ATM card and a check book.

33

Advantages of Student Bank Account

Minimum balance limit is often Rs 500 or in some cases Zero

No need for formal address proof

No need for Pan card (as often needed for big transactions)

Disadvantages of Student Bank Account

Student Bank accounts are normally get disabled after 4 years or gets upgraded to normal
bank account.

SBI SALARY ACCOUNT

For managing the employees salary and giving them urgent credit of their salaries SBI offers a
bunch of facilities to the employees of State Govt., Central Govt. sectors, Educational
Institutions, Corporate Sectors and service organizations like transport organizations, hotels,
hospitals etc.

Following are the features of SBI Salary Account

Account with Zero balance
Free Debit cum ATM card
Core Banking facility through all over India SBI branches
Multiple city cheque is totally free
Net banking facility
Overdraft facility
Utility bill payment through internet
Easy access of account statement using e-mail
Cheque book with 25pages for each year
SMS alert etc
On the basis of different salary structures SBI offered four various types of salary accounts
namely silver account, gold account, diamond account and platinum account.
Silver account: for the employee with gross salary (GS) Rs.5000 to Rs.20000
gold account: for the employee with gross salary (GS) Rs.20001 to Rs.50000
34

 diamond account: for the employee with gross salary (GS) Rs.50001 to Rs.100000
platinum account: for the employee with gross salary more than Rs.1 lac
Minimum requirements to open a SBI salary account are:
Minimum salary of the employee should be Rs. 5000
The organization/institution where he/she is employed should have 25 employees at least
Employer must have the tie-up with State Bank of India
Required documents:
Properly filled application form
Employee Identity card
Three copies of passport photographs
Latest three months salary slips
Proof of salary details
Residential proof

SBI CORPORATE SALARY PACKAGE

Anywhere banking through over 14,000 branches

Extensive alternate channels - 26,000+ ATMs, Internet Banking and Mobile Banking

Zero Balance Account facility

Free unlimited withdrawal from SBI ATMs

Free Personal Accident Insurance Cover

Maintain same account number even on transfer

Easy overdraft up to 2 months salary repayable within 6 months

Home Loan / Car Loan / Personal Loan with Lowest EMI.

35

 Specific objectives of the project

State Bank of India is the largest bank of India and its impact is also huge on the North East
States such as Assam, Tripura and Meghalaya. SBI has over 40 branches in Guwahati and with
such widespread branches SBI covers majority of the account holders in comparison to other
banks. Now, with RBI regulation of removal of minimum balance requirement SBI has attracted
more and more customers and specially the less potential customers who do not have enough
money to keep money in their accounts. Previously these customers didnt have accounts as
they had to keep minimum balance in their accounts failing which charges were deducted, so
with this new regulation of RBI of removal of minimum balance and also with the regulation of
financial inclusion SBI has attracted more and more customers and their customer base has also
increased in Guwahati in comparison to earlier years. In this project we need to study about the
details of the project and also the impact the regulation will have on Banks, customers and also
the people of Guwahati. Few specific objectives we need to study in the project are discussed
below:

The Project involves meeting different types of customers having different aspirations
and also knowing their requirement and also knowing the impact of removal of minimum
balance requirement on them.

The project objective is to study the impact on banks customer base whether it has
increased or decreased and also the banks overall business in terms of deposits/loans and
other services like cross selling.

Our objective is to study the customers thinking and their inclination to open the saving
account with SBI where no minimum balance is required in comparison to other banks
where minimum balance requirement still prevails.

The project objective is to study the impact on different segments of the society viz
students, small labourers, businessman, traders, employees of state or central or semi
Government sector, small income groups, housewives etc.

Our final objective is to study the impact on banks business or customers delight with a
light on change of installed application in Saving Bank account from monthly average to
daily balance method.

36

 Limitations of study
Though the benefits of removal of minimum balance are at large to Banks and customers the
limitations binding it restricts SBI from popularizing the regulation and also attracting much
more customers than it can attract. After going through the research and after interacting with
customers and employees of SBI of Guwahati there were few limitations that arose out of the
research.

Customers are unaware of the regulation issued by RBI on May 2012. Its been a year but
still majority of the customers are unaware of the regulation and it is due to lack of
advertisement by SBI in Guwahati.

SBI has mostly concentrated on advertisement on car loans and education loans in
Guwahati and not on removal of minimum balance requirement. Even the Government
employees are unaware of the scheme and no move made by RBI also to regulate this
scheme on national basis.

Customers are unwilling to open their accounts with SBI due to strict KYC norms in
comparison to other banks where there are relaxed KYC norms. SBI maintains strict
KYC norms for individuals who want to open their account with them and so many
people like the students who do have proper documents with are unwilling to open their
accounts with SBI.

There was a decrease in the profitability of SBI due to removal of minimum balance
requirement. Previously when such a regulation was not there than banks would have
charged fine against clients who failed to maintain minimum balance in their accounts
and those charges were an income for SBI but now with the regulation of removal of
minimum balance SBI is not able to earn from those charges and therefore its profitability
has decreased.

The dormancy of no-frill accounts (NFAs). With the removal of minimum balance
requirement more and more NFAs are being opened and banks study showed us that over
30% of banks clients in Guwahati with NFAs transacted at least once in 3 months,
while others who have zero balance accounts operate their accounts more infrequently or
not at all. A primary reason for this dormancy is the focus of banks on fulfillment of
financial inclusion requirement.
37

 Period of study
The project was given to us by SBI Guwahati. The topic of the project was communicated to us
by Mr. Amit Kumar. The topic of our project is to study the impact of removal of minimum
balance requirement in savings bank account. The duration of the project is eight weeks. Our
project commenced from 20th may and it was quite interesting and a new study for us. The topic
was very challenging as we had to visit different type of customers and also all the branches of
SBI in Guwahati and few other banks. And as we are not from Guwahati language also became
one of the barriers as while interacting with many customers, we were not able to understand
their language. During the period of study we interacted with various types of customers, and
also branch managers of different branches of SBI. While interacting with the bank employees
we came to know many things about savings account and also the other products offered by
banks that we did not knew earlier.
The project has ended on 20th July and we hope our work and research during the period of our
study will be beneficial to SBI.

38

METHODOLOGY AND
ANALYSIS

39

 METHODOLOGY

Research Methodology
Research Methodology is a methodology for collecting all sorts of information and data
pertaining to the subject in question. The objective is to examine all the issues involved and
conduct situational analysis.
The methodology includes the overall research design , sampling procedure and fieldwork done
and finally the analysis procedure . The methodology used in the study consistent of both
Primary data and Secondary data. Primary data has been collected with help of questionnaire.

The primary data has collected through:

1). Questionnaire which has been prepared by researcher.
2). Direct Contact Method and Interview Method with Bank Officials, Branch Managers and
other SBI officials.
The secondary data has been collected through various channels like
1) Websites
2) Journals
3) Articles
4) Reports.

SAMPLE SIZE
Sample Size of 80 was taken on basis of stratified sampling.
In statistical surveys, when subpopulations within an overall population vary, it is advantageous
to sample each subpopulation (stratum) independently.

40

Stratified Sampling
Stratification is the process of dividing members of the population into homogeneous subgroups
before sampling. The strata should be mutually exclusive: every element in the population must
be assigned to only one stratum. The strata should also be collectively exhaustive: no population
element can be excluded. Then simple random sampling or systematic sampling is applied within
each stratum. This often improves the representativeness of the sample by reducing sampling
error. It can produce a weighted mean that has less variability than the arithmetic mean of
a simple random sample of the population.
Advantages
If the population is large and enough resources are available, usually one will use multi-stage
sampling. In such situations, usually stratified sampling will be done at some stages. However
the main advantage remains stratified sampling being the most representative of a population.
Disadvantages
Stratified sampling is not useful when the population cannot be exhaustively partitioned into
disjoint subgroups. It would be a misapplication of the technique to make subgroups' sample
sizes proportional to the amount of data available from the subgroups, rather than scaling sample
sizes to subgroup sizes.

41

SAMPLING TECHNIQUE
We conducted the sampling on basis of Multi Stage Sampling Technique. Entire Population was
firstly divided into 80 by Stratified Sampling and then we chose Simple Random Sampling.
SAMPLING UNITS
House Wives

-09

Students

-17

Salaried Class

-27

Government Staff

-07

Bank Staff

-10

Retired People

-04

Business Class

-06

DATA COLLECTION
For PRIMARY DATA we conducted the Simple Random Sampling and asked the respondents
to fill the questionnaire.
Collection of secondary data was done through the following sources:
1.

Websites

2.

Journals

3.

Articles

4.

Reports

5.

Financial Papers
42

DATA ANALYSIS
After Collection of data we were able to analyze customer views, opinions and ideas related to
the removal of minimum balance requirement in saving bank account and also about other
products of SBI and we hope that the data will help SBI in knowing customer requirements.

DATA INTERPRETATION
Interpretation was done through various statistical tools like graphs and Line Charts to represent
our Conclusions.
Representations include:
1.

Pie Diagram

2.

Line Charts

3.

Bar Graph

Collection and classification of data

The data thus collected were classified according to the categories, counting sheets, and the
summary tables were prepared. The resultant tables were one dimensional and two dimensional.

Statistical tools used for analysis

Out of the total respondents, the respondents who responded logically were taken into account
while going into statistical details and analysis of data. The tools have been used for analyzing
data and inference drawings are mainly statistical tools like percentage, ranking, average etc.
As per questionnaire and market surveys I have found out different responses from different
customers. According to their responses I analyzed the findings and drew certain remarks.

43

 OBERVATION

We observed the impact, the removal had on different sections of people and also on the
banks. We also came to know what other products and services offered by SBI to its
customers.

Majority of the customers were unaware of the feature of zero balance account and this
was mainly due to lack of advertisements and lack of information among the customers.

There was no action taken by SBI or any other banks to promote this feature of saving
account.

Majority of account holders in savings account are serviceman and the impact was also
mostly on them.

Businessman had no affect by this new feature of savings account. Students appreciated
this new feature of savings account and started opening savings account by their name
itself.

The removal of minimum balance most of the branches of SBI in Guwahati have
increased their customer base.

The numbers of account openings have increased from last year in most of the branches
and with this more people are getting associated with SBI.

The employees of SBI had no affect on them by this new feature as all the employees
working in SBI get the benefit of opening zero balance account and this benefit was
given to them before the scheme was announced by RBI and after also.

We interacted with the branch managers and even the Chief Manager of SBI and we
found out the possible reasons for the removal of minimum balance.

The main reason given by majority of the branch managers was that in order to increase
the customers base RBI has issued such a norm and also to fulfil the feature of financial
inclusion RBI has given drive to account openings.

Overall the observation was very helpful to us and it provided us good knowledge about
banking services and products and we hope our observation and research help us and SBI
in near future.

44

 ANALYSIS

Analysis of data collected through questionnaire

I have analyzed the data collected through the questionnaire and have classified it into tables

Table 1:
The Bar graph given below shows the response of 80 customers towards the LEVEL OF
KNOWLEDGE ABOUT ZERO BALANCE FEATURE IN SAVINGS ACCOUNT.
Level of knowledge
GOOD

08

AVERAGE

29

POOR

43

TABLE 1
50
40

43

30
29

TABLE 1

20
10
8
0
GOOD

AVERAGE

POOR

45

Interpretation
Out of 80 customers only 08 people have good knowledge about zero balance features, 29 people
have average knowledge and remaining 43 people have poor or no knowledge about the feature.
Table 2:
The bar chart given below shows How do you come to know about zero balance features

Employees

17

Advertisements

25

Friends/Relatives

38

TABLE 2
40
35
30
25
TABLE 2

20
15
10
5
0
EMPLOYEES

ADVERTISEMENTS

FRIENDS/RELATIVES

INTERPRETATION
The above graph shows that only 17 customers came to know about the feature from bank
employees, 25 of them came to know from advertisements and the maximum awareness is from
friends and relatives that is 38 people.

46

TABLE 3:
The graph below shows the personal level of satisfaction of 80 customers for the scheme

Satisfied

61

Normal

13

Dissatisfied

06

Unsatisfied

Series 3
Series 2
Table 3

Normal

Satisfied

10

20

30

40

50

60

70

INTERPRETATION
The above graph shows that maximum number of customers that is 61 customers is satisfied with
the scheme and only 6 customers is dissatisfied and the remaining 13 are normal to the change.

Table 4:

The given below pie chart shows the response of 80 customers

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Services Expected from SBI

Quick Response

45

Good Customer Relation

23

Extra Facility for Existing Customer

12

Table 4

Quick Response
Good Customer Relation
Extra Facility for Existing
Customer

Interpretation
Out of 80 customers, 45 of them said they expect Quick Response from SBI bank, 23 said that
they expect Good Customer Relation and remaining 12 said that they expect Extra facility for
existing customer.

48

Conclusion &
Recommendations

49

 Conclusion
The project undertaken has helped us on gaining tremendous knowledge of Impact of Removal
of Minimum Balance on Saving Bank Account
The bank provides a framework for Financial Inclusion through this policy.
1) The Banking Sector and Saving Bank account Zero Balance feature is a very vast subject
and covering all aspects in such a small duration of time frame is difficult but we have
done our sincere and honest work to bring the Project to a conclusion.
2) In pursuance to RBI instruction and directives the SBI is granting the Zero Balance
Account feature.
3) The concerned efforts put by Management and staffs of bank has helped bank to achieve
a significant and remarkable progress in this field.
4) As of March 2012, SBI had 15.39 crore savings account. Duringn2011-12, the bank
opened 2.19 crore such accounts after regulation of such scheme.
5) With these figure the success of the scheme is well evident and self explanatory but as
they say It is better to take many small steps in the right direction than to make a great
leap forward only to stumble backward
6) The efforts have made SBI the No. 1 bank in Banking Industry.

50

 Recommendation
After going through entire Research and Project Study we recommend some suggestions
which might be beneficial to SBI.
Awareness

Outreach visit by SBI Executives, Marketing and Sales personnel, and other
support staff should be done to educate public about the new feature.

Opening of FLCs (Financial Literacy Centres) and Training Centres to train the
SBI officials about new schemes.

Schemes like SBI TINY for Urban Customer Service Point have to increase its
scope and no. of such staffs should increase.

Mass Marketing should be developed and proper advertisement using electronic

as well as print media should be done.

Cross Selling

Proper Training should be given to SBI Officials to educate them about how to
Cross Sell SBIs other products and schemes.

Manpower

No. of Branch officials should increase for proper and smooth functioning of the
Branch.

Marketing and Sales personnels should be increased for spreading proper

awareness among the people about different products and services.

Personalized Banking should be developed like other Private Banks to attract

more HNI customers.

General

Interest rates for Saving Account should increase so that more and more
customers bank with SBI.

Payments of subsidies and other Governmental Grants should be made

compulsory to be reimbursed through Account directly instead of Cheques.

ATM machine working should be user friendly and active at all times.

SBI should tie up with other organizations like Educational Institutes, Hospitals,
and Corporate for their entire Banking Solution
51

QUESTIONAIRE
Dear Sir/ Madam, A s p a r t o f my MB A c u r r i c u l u m, W e H a r s h
A g r aw a l a n d An ki t G u p t a a r e c onducting a market research regarding
the impact and awareness of Removal of Minimum Balance in Saving Account
for which I need your personal views regarding banking products
&services in shape of a questionnaire designed by us . The data being
collected are solely for academic purpose. I request you to kindly extend your
co-operation.

NAME
________________________________________________________
AGE

________________Yrs

OCCUPATION
_________________________________________________________
SEX

MALE _____ FEMALE ____

Q1.Do you know about Saving Bank Account?

(a) Yes

(b) No

Q2.What is the level of your knowledge about Zero Balance Feature of Saving
Account?
(a) Good

(b) Average

(c) Poor

52

Q3. If poor, what is the possible reason that you are unaware about Zero
Balance Feature?
Ans.
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
____________________________________

Q4. If yes, how do you know about Zero Balance Feature?

(a) Through SBI Employees (b) Advertisements (c) Relatives/friends

Q5.What kinds of services do you expect from SBI?

(a)Quick response (b)Good customer relation (c)Extra facility for existing
customer

Q6. Which bank you prefer for opening Savings Account?

a) SBI

b) HDFC

c) ICICI

d) Other bank specify______________

Q7.If you prefer SBI for opening your account than what influence you to
open account with SBI?
Ans.
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
____________________________________

53

Q8. What kind of training would you prefer to be given to SBI Officials, in
order to be educated about Zero Balance Feature?
(a)Intense

(b) Average

(c) Below average

Q9. What channel would you prefer to promote Zero Balance Feature in
Guwahati?
(a) Mass Marketing b) Camps (C) Business Correspondents (d) Personalized
Services

Q10. What is your personal level of satisfaction with this Scheme?

(a) Satisfied

(b) Normal

(c) Dissatisfied

Q11. Are you satisfied with the small session with us in which we have given
you a brief overview about Zero Balance Feature?
(a) Yes

(b) No

Q12. Did the SBI official when talked about zero Balance scheme also talked
about other SBI Products and services like
(a)Yes

(b) No

Q13. On behalf of SBI, any suggestion that you want to give to increase
Subscribers of Zero Balance
Ans._______________________________________________________________
__________________________________________________________________
_______________________

54

BIBLIOGRAPHY

55

BIBLIOGRAPHY

INTERNET
1. www.sbi.co.in
2. www.wikipedia.com
3. www.ekikrat.in
4. www.yahooindia.com

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