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COMPARATIVE ANALYSIS OF SBI & HDFC BANK REGARDING PERSONAL LOAN

A Project Submitted to

University of Mumbai for partial completion of the degree of

Bachelor of Management Studies

Under the Faculty of Commerce

ANURAG PAL

Under the Guidance of

Pro.TUSHAR…..

PUNE VIDYARTHI GRIHA’S COLLEGE OF SCINECE & TECHNOLOGY

CTS NO -218, BR NATH PAI NAGAR ,GHATKOPER EAST, MUMBAI -400077

TEL-02225069115/118

COMPARATIVE ANALYSIS OF SBI & HDFC BANK REGARDING PERSONAL LOAN

A Project Submitted to
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University of Mumbai for partial completion of the degree of

Bachelor of Management Studies

Under the Faculty of Commerce

ANURAG PAL

Under the Guidance of

Pro.TUSHAR…..

PUNE VIDYARTHI GRIHA’S COLLEGE OF SCINECE & TECHNOLOGY

CTS NO -218, BR NATH PAI NAGAR ,GHATKOPER EAST, MUMBAI -400077

TEL-02225069115/118

PUNE VIDYARTHI GHRIHA’S COLLEGE OF SCIENCE AND TECHONOGY

CERTIFICATE

This is to certify that Ms/Mr PAL ANURAG NAGENDRA has worked

and duly completed her/his Project Work for the degree of Bachelor of Management

Studies under the Faculty of Commerce in the subject of MARKETING and her/his project is
entitled, “COMPARATIVE ANALYSIS OF SBI & HDFC BANK
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REGARDING PERSONAL LOAN” under my supervision.

I further certify that the entire work has been done by the learner under my guidance and that
no part of it has been submitted previously for any Degree or Diploma of any University.

It is her/ his own work and facts reported by her/his personal findings and investigations.

Name and Signature of

Seal of the Guiding Teacher
College

Date of submission:

DECLARATION BY LEARNER

I the undersigned Miss / Mr. PAL ANURAG NAGENDRA here by,

declare that the work embodied in this project work titled “COMPARATIVE

ANALYSIS OF SBI & HDFC BANK REGARDING PERSONAL LOAN”,

forms my own contribution to the research work carried out under the guidance of Pro.

TUSHAR……… is a result of my own research work and has not been previously submitted
to any other University for any other Degree/ Diploma to this or any other University.
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Wherever reference has been made to previous works of others, it has been clearly indicated as
such and included in the bibliography.

I, here by further declare that all information of this document has been obtained and

presented in accordance with academic rules and ethical conduct.

Name and Signature of the learner

Certified by

Name and signature of the Guiding Teacher

SYNOPSIS OF TYBMS 2019-2020

ON

Comparative Analysis of SBI & HDFC Bank Regarding personal loan

PREPARED BY:
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NAME: PAL ANURAG NAGENDRA

ROLL NO: 17-515

COLLEGE: PUNE VIDYARTHI GHRIHA’S COLLEGE OF SCIENCE AND

TECHONOGY

RESEARCH GUIDE:

MR. TUSHAR

This synopsis includes the abstract and the other important information related
the project.

ACKNOWLEDGEMENT

Tolist who all have helped me is difficult because they are so numerous and the depth is so enormous.

I would like to acknowledge the following as being idealistic channels and fresh dimensions in
the completion of this project.

I take this opportunity to thank the University of Mumbai for giving me chance to do this project.

I would like to thank my Principal,MR. AJAY KUMR PATHAK for providing the necessary facilities
required for completion of this project.

I take this opportunity to thank our Coordinator MRS. TUSHAR……, for her moral support and
guidance.
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I would also like to express my sincere gratitude towards my project guideMR TUSHAR………….. whose
guidance and care made the project successful.

I would like to thank my College Library, for having provided various reference books and magazines
related to my project.

Lastly, I would like to thank each and every person who directly or indirectly helped me in
the completion of the project especially my Parents and Peers who supported me
throughout my project.

EXECUTIVE SUMMARY

There should be comparison between two biggest bank of India namely State Bank of India
(SBI) and Housing Development Financial Corporation(HDFC) on Personal loan provided by
them.

Today Personal loan is necessity for fulfil the requirement of family and provide good life.

Everyone wants a life in which all facilities are present which are so costly so they move towards to
various banks both public as well as private bank for loan.

SBI banks is basically prefer by most of the people who are in government jobs/public sectors
because of :-
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1.Tax rebate

2.Lack of much funds

3.Interest rate

HDFC Bank also choice of people because of:-

1.Easiness and Low documentation

2.Services

3.Cooperative and Relationship

In this project study peoples are satisfied by both the banks but also wants more things like Updating
of services, technological enhancement and ethics.

If all the banks focus on these things they get better growth in Personal loan as well as better
response of people as today Personal loan is required for fulfil the requirement of life.

INDEX

Sr. No TOPIC Page No

Chapter INTRODUCTION 9- 57
1
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Chapter 2 RESEARCH METHDOLOGY 58-68

Chapter 3 LITERATURE REVIEW 69-72

Chapter 4 DATA ANALYSIS, INTERPRETATION AND 73-83

PRESENTATION

Chapter 5 CONCLUSION AND BIBLOGRAPHY 84-87

INTRODUCTION OF BANKING INDUSTRY

1.1 Bank
A bank is license by a government. Its primary activity is to lend money. Many other financial activities
were allowed over time.

For example banks are important players in financial markets and offer financial services such
as investment funds

In some countries such as Germany, banks have historically owned major stakes in
industrial corporations while in other countries such as the United States banks are
prohibited from owning non-financial companies.
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In Japan, banks are usually the nexus of a cross-shareholding entity known as the zaibatsu.
In France, bank assurance is prevalent, as most banks offer insurance services (and now real
state services) to their clients.

The level of government regulation of the banking industry varies widely, with counties such
as Iceland, the United Kingdom and the United States having relatively light regulation of
the banking sector, and countries such as China having relatively heavier regulation
(including stricter regulations regarding the level of reserves).

The Reserve Bank of India (RBI), as the central bank of the country, closely monitors developments in

the whole financial sector.

The banking sector is dominated by Scheduled Commercial Banks (SCBs).

As at end-March2002, there were 296 Commercial banks operating in India. This included 27
Public Sector Banks (PSBs), 31 Private, 42 Foreign and 196 Regional Rural Banks.

Also, there were 67scheduled co-operative banks consisting of 51 scheduled urban cooperative
banks and 16scheduled state co-operative banks.

Scheduled commercial banks touched, on the deposit front, a growth of 14% as against 18%registered

in the previous year.

And on advances, the growth was 14.5% against 17.3% of the earlier year.
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1.2 CLASSIFICATION OF BANKS

The Indian banking industry, which is governed by the Banking Regulation Act of India,
1949can be broadly classified into two major categories, non-scheduled banks and
scheduled banks.

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
(the old /new domestic and foreign).

These banks have over 67,000 branches spread across the country.

The Indian banking industry is a mix of the public sector, private sector and foreign banks.
The private sector banks are again spilt into old banks and new banks.
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1.3 Banking System in India

Development Financial institutions Banks

IFCI IDBI ICICI NABARD NHB IRBI EXIM Bank ISIDBI

Commercial Regional Rural Land Development Co-operative

Banks Banks Banks Banks

Public Sector Banks Private Sector Banks

SBI Groups Nationalized Banks Indian Banks Foreign Banks

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1.4 PRODUCTS AND SERVICES

➢ Deposits

Public Sector Banks

➢ Nationalized Banks

State Bank Group

➢ Private Sector Banks

➢ Foreign Banks
➢ Financial Cards

Credit Cards Debit Cards

➢ Loans and Advances

➢ ATMs and Branch Network

LEADING PLAYERS

➢Public sector banks:

• Bank of Baroda
• Canara Bank
• Punjab National Bank

➢Private Sector Bank

• HDFC
• ICICI Bank
• Axis Bank Ltd.

➢Foreign Sector Banks

• Citi Bank
• Standard Chartered Bank
• HSBC Bank
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1.5 MARKET STRUCTURE

Public Sector Banks:

Almost 80% of the business is still controlled by Public Sector Banks (PSBs). PSBs are still
dominating the commercial banking system. Shares of the leading PSBs are already listed on
the stock exchanges.

The PSBs will play an important role in the industry due to its number of branches and
foreign banks facing the constraint of limited number of branches. Hence, in order to
achieve an efficient banking system, the onus is on the Government to encourage the PSBs
to be run on professional lines.

Private Sector Banks:

The RBI has given licenses to new private sector banks as part of the liberalization process.
The RBI has also been granting licenses to industrial houses. Many banks are successfully
running in the retail and consumer segments but are yet to deliver services to industrial
finance, retail trade, small business and agricultural finance.

Foreign banks:

Foreign banks have been operating in India for decades with a few of them having
operations in India for over a century. The number of foreign bank branches in India has
increased significantly in recent years since RBI issued a number of licenses - well beyond
the commitments made to the World Trade Organization. The presence of foreign banks in
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India has benefited the financial system by enhancing competition, resulting in higher
efficiency.
There has also been transfer of technology and specialized skills which has had some
"demonstration effect" as Indian banks too have upgraded their skills, improved their scale
of operations and diversified into other activities.

At a time when access to foreign currency funds was a constraint for the Indian companies,
the presence of foreign banks in India enabled large Indian companies to access foreign
currency resources from the overseas branches of these banks.

Also with the presence of foreign banks, as borrowers in the money market and their
operation in the foreign exchange market has resulted in the creation and deepening of the
inter-bank money market.

Now, it is the challenge for the supervisors to maximize the advantages and minimize the
disadvantages of the foreign banks' local presence.
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1.6 HISTORY

Banks have influenced economies and politics for centuries. Historically, the primary
purpose of a bank was to provide loans to trading companies.

Banks provided funds to allow businesses to purchase inventory, and collected those funds
back with interest when the goods were sold.

For centuries, the banking industry only dealt with businesses, not consumers. Banking
services have expanded to include services directed at individuals, and risk in these much
smaller transactions are pooled.

Silver drachm coin from Trapezus, 4th century BC

The name bank derives from the Italian word Banco "desk/bench", used during the
Renaissance by Florentine bankers, who used to make their transactions above a desk
covered by a green tablecloth. However, there are traces of banking activity even in ancient
times.
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ABOUT BANKING:-

Section 5(b) of the Banking Regulation Act, 1949defines banking as ‘the accepting, for the
purpose of lending or investment, of deposits of money from the public, repayable on
demand or otherwise, and withdrawal by cheque, draft, order or otherwise.”

Section 5(c) of the Banking Regulation Act, 1949 defines a banking company’ as “any

company which transacts the business of banking in India”.

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1.7 Definition of Banking

The definition of a bank varies from country to country. Under English common law, a
banker is defined as a person who carries on the business of banking, which is specified as:

• Conducting current accounts for his customers

• Paying cheques drawn on him, and

• Collecting cheques for his customers.

The borrowing, raising or taking up of money, the lending or advancing of money either with
or without security; Acting as agents for any government or local authority or any other
person or persons.

Contracting for public and private loans and negotiating and issuing the same. The effecting,
insuring, guaranteeing, underwriting, participating in managing and carrying out of any
issue, public or private, of state, municipal or other loans or of shares, stock, debentures or
debenture stock of any company, corporation or association and the lending of money for
the purpose of any such issue.
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1.8 Commercial role

The commercial role of banks is not limited to banking, and includes:

• Issue of banknotes(promissory notes issued by a banker and payable to bearer on

demand)

• Processing of payments by way of telegraphic transfer, EFTPOS, internet banking or other

means

• Issuing bank draft sandbank cheques

• Accepting money on term deposit

• Lending money by way of overdraft, instalment loan or otherwise

• Providing documentary and standby letters of credit(trade finance),guarantees,

performance bonds, securities underwriting commitments and other forms of off-balance
sheet exposures

• Safekeeping of documents and other items in safe deposit boxes

• Currency exchange
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• Acting as a 'financial supermarket' for the sale, distribution or brokerage, with or without
advice, of insurance, unit trusts and similar financial products

1.9 Economic functions

The economic functions of banks include:

1. Issue of money, in the form of bank note sand current accounts subject to cheque or
payment at the customer's order.
These claims on banks can act as money because they are negotiable and/or repayable on
demand, and hence valued at par.
They are effectively transferable by mere delivery, in the case of banknotes, or by drawing a
cheque that the payee may bank or cash.

2. Netting and settlement of payments – banks act as both collection and paying agents
for customers, participating in interbank clearing and settlement systems to collect, present,
be presented with, and pay payment instruments.

This enables banks to economise on reserves held for settlement of payments, since inward
and outward payments offset each other.

It also enables the offsetting of payment flows between geographical areas, reducing the
cost of settlement between them.

3. Credit intermediation – banks borrow and lend back-to-back on their own account as
middle men
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4. Credit quality improvement – banks lend money to ordinary commercial and

personal borrowers (ordinary credit quality), but are high quality borrowers. The
improvement comes from diversification of the bank's assets and capital which provides a
buffer to absorb losses without defaulting on its obligations.

5. Maturity transformation– banks borrow more on demand debt and short term debt,
but provide more long term loans. In other words, they borrow short and lend long.
With a stronger credit quality than most other borrowers, banks can do this by aggregating
issues (e.g. accepting deposits and issuing banknotes) and redemptions (e.g. withdrawals ).
1.10 Law of banking

Banking law is based on a contractual analysis of the relationship between the bank (defined
above) and the customer —defined as any entity for which the bank agrees to conduct an
account.

The law implies rights and obligations into this relationship as follows:

1.The bank account balance is the financial position between the bank and the customer:
when the account is in credit, the bank owes the balance to the customer; when the
account is overdrawn, the customer owes the balance to the bank.

2.The bank agrees to pay the customer's cheques up to the amount standing to the credit of
the customer's account, plus any agree overdraft limit.

3.The bank may not pay from the customer's account without a mandate from the
customer, e.g. a cheque drawn by the customer.

4.The bank agrees to promptly collect the cheques deposited to the customer's account as
the customer's agent, and to credit the proceeds to the customer's account.
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5.The bank has a right to combine the customer's accounts, since each account is just an
aspect of the same credit relationship.

6.The bank has alien on cheques deposited to the customer's account, to the extent that the
customer is indebted to the bank.

7.The bank must not disclose details of transactions through the customer's account—
unless the customer consents, there is a public duty to disclose, the bank's interests require
it, or the law demands it.

1.11 Entry regulation

Currently in most jurisdictions commercial banks are regulated by government entities and
require a special bank licence to operate.

Usually the definition of the business of banking for the purposes of regulation is extended
to include acceptance of deposits, even if they are not repayable to the customer's order
although money lending, by itself, is generally not included in the definition.

Unlike most other regulated industries, the regulator is typically also a participant in the
market, i.e. a government-owned (central) bank. Central banks also typically have a
monopoly on the business of issuing banknotes.

However, in some countries this is not the case. In the UK, for example, the Financial
Services Authority licenses banks, and some commercial banks (such as the Bank of
 P a g e | 22

Scotland) issue their own banknotes in addition to those issued by the Bank of England, the
UK government's central bank.

Some types of financial institution, such as building societies And credit unions, may be
partly or wholly exempt from bank licence requirements, and therefore regulated under
separate rules.

The requirements for the issue of a bank licence vary between jurisdictions but typically
include:

1. Minimum capital

2. Minimum capital ratio'

Fit and Proper' requirements for the bank's controllers, owners, directors, and/or senior
officers The requirements for the issue of a bank licence vary between jurisdictions but
typically include:

3. 'Fit and Proper' requirements for the bank's controllers, owners, directors, and/or senior
officers
4. Approval of the bank's

5. Business plan as being sufficiently prudent. The economic functions of banks include:

6. Issue of money, in the form of banknotes and current accounts subject to cheque or
payment at the customer's order.
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These claims on banks can act as money because they are negotiable and/or repayable on
demand, and hence valued at par.

They are effectively transferable by mere delivery, in the case of banknotes, or by drawing a
cheque that the payee may bank or cash.

7. Netting and settlement of payments – banks act as both collection and paying agents for
customers, participating in interbank clearing and settlement systems to collect, present,
be presented with, and pay payment instruments.

This enables banks to economise on reserves held for settlement of payments, since inward
and outward payments offset each other.

It also enables the offsetting of payment flows between geographical areas, reducing the
cost of settlement between them.
8. Credit intermediation – banks borrow and lend back-to-back on their own account as
middle men

9. Credit quality improvement – banks lend money to ordinary commercial and personal
borrowers (ordinary credit quality), but are high quality borrowers.

The improvement comes from diversification of the bank'sassets and capital which provides
a buffer to absorb losses without defaulting on its obligations.

However, banknotes and deposits are generally unsecured; if the bank gets into difficulty
and pledges assets as security, to raise the funding it needs to continue to operate, this puts
the note holders and depositors in an economically subordinated position.

10. Maturity transformation:- Banks borrow more on demand debt and short term debt,
but provide more long term loans. In other words, they borrow short and lend long.
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With a stronger credit quality than most other borrowers, banks can do this by aggregating
issues (e.g. accepting deposits and issuing banknotes) and redemptions (e.g. withdrawals
and redemptions of banknotes), maintaining reserves of cash, investing in marketable
securities that can be readily converted to cash if needed, and raising replacement funding
as needed from various sources (e.g. wholesale cash markets and securities markets).

Banking law is based on a contractual analysis of the relationship between thebank (defined
above) and the Customer:-defined as any entity for which the bank agrees to conduct an
account. The law implies rights and obligations into this relationship as follows:

11. The bank agrees to promptly collect the cheques deposited to the customer's
account as the customer's agent, and to credit the proceeds to the customer's account.

12. The banks have a right to combine the customer's accounts, since each account is
just an aspect of the same credit relationship.

13. The bank has alien on cheques deposited to the customer's account, to the extent
that the customer is indebted to the bank.

14. The bank must not disclose details of transactions through the customer's account—
unless the customer consents, there is a public duty to disclose, the bank's interests
require it, or the law demands it.

15. The banks must not close a customer's account without reasonable notice, since
cheques are outstanding in the ordinary course of business for several days.
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1.12 History of Banking in India

The first bank in India, though conservative, was established in 1786. From 1786till today,
the journey of Indian Banking System can be segregated into three distinct phases.

They are as mentioned below:-Early phase from 1786 to 1969 of Indian Banks
Nationalization of Indian Banks and up to 1991 prior to Indian banking sector Reforms.

New phase of Indian Banking System with the advent of Indian Financial &Banking Sector
Reforms after 1991.

To make this write-up more explanatory, I prefix the scenario as Phase Ι, Phase ΙΙ and
Phase ΙΙΙ
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Phase Ι

The General Bank of India was set up in the year 1786. Next came Bank of Hindustan and
Bengal Bank.

The East India Company established Bank of Bengal(1809), Bank of Bombay (1840) and
Bank of Madras (1843) as independent units and called it Presidency Banks.

These three banks were amalgamated in 1920and Imperial Bank of India was established
which started as private shareholders banks, mostly Europeans shareholders.

In 1865 Allahabad Bank was established and first time exclusively by Indians, Punjab
National Bank Ltd. was set up in 1894 with headquarters at Lahore.

Between 1906 and 1913, Bank of India, Central Bank of India, Bank of Baroda, Canara Bank,
Indian Bank, and Bank of Mysore were set up. Reserve Bank of India came in 1935.

During the first phase the growth was very slow and banks also experienced periodic failures
between 1913 and 1948. There were approximately 1100 banks, mostly small.
To streamline the functioning and activities of commercial banks, the Government of India
came up with The Banking Companies Act, 1949 which was later changed to Banking
Regulation Act 1949 as per amending Act of 1965 (Act No. 23 of 1965).

Reserve Bank of India was vested with extensive powers for the supervision of banking in
India as the Central Banking Authority.

Phase ΙΙ

Government took major steps in this Indian Banking Sector Reform after independence.
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In 1955, it nationalized Imperial Bank of India with extensive banking facilities on a

largescale especially in rural and semi-urban areas.

It formed State Bank of India to act as the principal agent of RBI and to handle banking
transactions of the Union and State Governments all over the country.

Seven banks forming subsidiary of State Bank of India was nationalized in 1960 on19th July,
1969, major process of nationalization was carried out.

It was the effort of the then Prime Minister of India, Mrs. Indira Gandhi.14 major
commercial banks in the country were nationalized.

Second phase of nationalization Indian Banking Sector Reform was carried out in1980 with
seven more banks.

This step brought 80% of the banking segment in India under Government ownership.

The following are the steps taken by the Government of India to Regulate Banking
Institutions in the Country:-

1949: Enactment of Banking Regulation Act.

1955: Nationalization of State Bank of India.

1959: Nationalization of SBI subsidiaries.

1961: Insurance cover extended to deposits.

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1969: Nationalization of 14 major banks.

1971: Creation of credit guarantee corporation.

1975: Creation of regional rural banks.

1980: Nationalization of seven banks with deposits over 200 crore.

After the nationalization of banks, the branches of the public sector bank India raised to
approximately 800% in deposits and advances took a huge jump by11,000%.

Banking in the sunshine of Government ownership gave the public implicit faith and
immense confidence about the sustainability of these institutions.

Phase ΙΙΙ

This phase has introduced many more products and facilities in the banking sector in its
reforms measure.

In 1991, under the chairmanship of M Narasiman, a committee was set up by his name
which worked for the liberalization of banking practices.
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The country is flooded with foreign banks and their ATM stations. Efforts are being put to
give a satisfactory service to customers.

Phone banking and net banking is introduced. The entire system became more convenient
and swift. Time is given more importance than money.

The financial system of India has shown a great deal of resilience. It is sheltered from any
crisis triggered by any external macroeconomics shock as other East Asian Countries
suffered.

This is all due to a flexible exchange rate regime, the foreign reserves are high, the capital
account is not yet fully convertible, and banks and their customers have limited foreign
exchange exposure.

1.13 INTRODUCTION TO THE ORGANIZATION

BANKING SYSTEM IN INDIA

The Banking System in India consists of:

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1. Reserve Bank

2. Development Banks

3. Public Sector Bank.

4. Foreign Banks

5. Private Sector Banks

6. Cooperative Banks

7. Regional Rural Banks

The Reserve Bank of India:-

The Reserve Bank of India is the Central Bank of the Country and came into being by the
Reserve Bank of India Act 1934. It was nationalized in 1948.Reserve Bank of India is the bank
that issues and regulates the issue of currency in India.

The banker to the Government of India and the State governments. It manages the public
debt. It has the obligation to transact the banking business of the Central Government. It
undertakes to accept money on behalf of the Government and make payment on its behalf.
The banker’s bank. Commercial banks maintain their current account with the Reserve Bank
of India The bank that manages the volume of credit created by the commercial banks to
ensure price stability.
The bank that manages the external value of the currency (Indian rupee).

Development Banks:-
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These were set up to give long term finance for the development of the country. These are
the Industrial Finance Corporation of India and the Industrial Development Bank of India,
The Industrial Reconstruction Bank of India and the National Bank for Agriculture and Rural
Development.

A former development bank, the Industrial Credit and Investment Corporation of India Ltd.
by a reverse merger in 2002,became a normal commercial bank. It is expected that the
other development banks, having outlived their utility would also be either converted to
commercial banks or merged with commercial banks.

Public Sector Banks:-

These are banks which the Government either owns or has a majority stake in it. The largest
is the State Bank of India which was formed by the merger of the Presidency Banks – the
Bank of Bengal, the Bank of Bombay and the Bank of Madras in 1921.

It was then known as the Imperial Bank. It was nationalized in 1955 by the passing of the
State Bank of India Act, 1955. It has seven subsidiaries or associates.

Foreign Banks:-

These are branches of banks incorporated outside India. In 1995/ 96many other foreign
banks
(optimistic in view of India’s liberalization) opened branches in India.

However, after banking began to become increasingly competitive and margins began to be
squeezed coupled with large nonperforming assets, many banks closed their branches.
Private Sector Banks:-

These are banks which are not government owned or controlled. Their shares are freely
traded in the Stock Markets.
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Cooperative Banks:-

Cooperative Banks are those that are created by a group of individual to support either a
community or a religious group. They operate in metropolitan, urban and semi urban
centres to cater to the needs of small borrowers.

Regional Rural Banks:-

These came into being on October 2, 1975 when 5 regional rural banks were established
under what became the Regional Rural Banks Act 1975.

These were to bridge the gap in rural credit granting loans and advances to small and
marginal farmers, artisans, small entrepreneur and persons of small means engaged in
trade, commerce, industry or other productive ,activities within their area of operation.

Local Area Banks:-

Local Area Banks came into existence in 1999 and licenses were given for these banks as it
was felt that regular commercial banks were not financial the rural/agricultural sector
adequately.

Licenses were given to open branches in three districts. Branches in urban/ semi urban
areas were granted only after ten branches were established in rural areas/ villages.

1.14 INTRODUCTION OF SBI BANK

Sectors Banks
Central Bank:- Reserve Bank of India
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Nationalized

Banks:- State Bank of India, Allahabad Bank, Andhra Bank, Bank of

Baroda, Bank of India, Bank of Maharashtra, Canara Bank ,Central Bank of India ,
Corporation Bank , Dena Bank , Indian Bank , Indian Overseas Bank , Oriental Bank of
Commerce ,Punjab
& Sind Bank , Punjab National Bank , Syndicate Bank, IDBI Bank, Union Bank of India , United
Bank of India , UCO Bank , Vijaya Bank.,

Private Banks:- Axis Bank , Bank of Rajasthan · Bharat Overseas Bank. Catholic
Syrian Bank · Centurion Bank of Punjab ·City Union Bank .Development Credit Bank · Dhana
Lakshmi Bank· Federal Bank ·Ganesh Bank of Kurundwad · HDFC Bank ·ICICI Bank
·IndusInd Bank ·ING Vysya Bank· Jammu & Kashmir Bank ·Karnataka Bank Limited · Karur
Vysya Bank ·Kotak Mahindra Bank ·Lakshmi Vilas Bank· Nainital Bank ·Ratnakar Bank· SBI
Commercial and International Bank ·South Indian Bank· Thailand Mercantile Bank Ltd..
Foreign Banks:- Citibank · HSBC ·Standard Chartered
Regional Rural
Banks:- South Malabar Garmin Bank
Cooperative

Banks:- The Andaman and Nicobar State Co-operative Bank Ltd. The
Arunachal Pradesh State co-operative Apex Bank Ltd. The Assam Co-operative Apex Bank
Ltd The Bihar State Co-operative Bank Ltd. The Chandigarh State Co-operative Bank Ltd.

1.15 HISTORY OF SBI BANK

The evolution of State Bank of India can be traced back to the first decade of the19th
century.
It began with the establishment of the Bank of Calcutta in Calcutta, on 2 June 1806.
 P a g e | 34

The bank was redesigned as the Bank of Bengal, three years later, on 2 January 1809. It was
the first ever joint-stock bank of the British India, established under the sponsorship of the
Government of Bengal.

Sub sequent, the Bank of Bombay (established on 15 April 1840) and the Bank of
Madras(established on 1 July 1843) followed the Bank of Bengal. An important turning point
in the history of State Bank of India is the launch of the first Five Year Plan of independent
India, in 1951.

The Plan aimed at serving the Indian economy in general and the rural sector of the country,
in particular. Until the Plan, the commercial banks of the country, including the Imperial
Bank of India, confined their services to the urban sector.

Moreover, they were not equipped to respond to the growing needs of the economic
revival taking shape in the rural areas of the country. Therefore, in order to serve the
economy as a whole and rural sector in particular.

The All India Rural Credit Survey Committee proposed the take over of the Imperial Bank of
India, and integrating with it, the former state-owned or state-associate banks.
Subsequently, an Act was passed in the Parliament of India in May 1955. As a result, the
State Bank of India (SBI) was established on 1 July1955.

This resulted in making the State Bank of India more powerful, because as much as a
quarter of the resources of the Indian banking system were controlled directly by the State.
Later on, the State Bank of India (Subsidiary Banks) Act was passed in 1959.
The State Bank of India emerged as a pacesetter, with its operations carried out by the 480
offices comprising branches, sub offices and three Local Head Offices, inherited from the
Imperial Bank.
 P a g e | 35

Instead of serving as mere repositories of the community's savings and lending to

creditworthy parties, the State Bank of India catered to the needs of the customers, by
banking purposefully.

(LSE:SBID)is the largest banking India.

The bank traces its ancestry back through the Imperial Bank of India to the founding
in1806of the Bank of Calcutta, making it the oldest commercial bank in the Indian
Subcontinent.

The Government of India nationalised the Imperial Bank of India in1955, with the Reserve
Bank of India taking a 60% stake, and rename edit the State Bank of India. In 2008, the
Government took over the stake held by the Reserve Bank of India.

SBI provides a range of banking products through its vast network in India and overseas,
including products aimed at NRIs. With an asset base of $126 billion and its reach, it is a
regional banking behemoth.

SBI has laid emphasis on reducing the huge manpower through Golden handshake schemes,
which led to a flight of its best and brightest managers which took to retirement allowances
and then went on the become senior managers at new private sector banks, and
computerizing its operations.

The roots of the State Bank of India rest in the first decade of 19th century, when the Bank
of
Calcutta, later renamed the Bank of Bengal, was established on2 June 1806. The Bank of
Bengal and two other Presidency banks, namely, the Bank of Bombay(incorporated on15
April 1840) and the Bank of Madras (incorporated on1 July 1843)..

These three banks received the exclusive right to issue paper currency in 1861 with the
Paper Currency Act, a right they retained until the formation of the Reserve Bank of India.
 P a g e | 36

The Presidency banks amalgamated on27 January 1921, and the reorganized banking entity
took as its name Imperial Bank of India.

The Imperial Bank of India continued to remain a joint stock company. Pursuant to the
provisions of the State Bank of India Act (1955), the Reserve Bank of India, which is India's
central bank, acquired a controlling interest in the Imperial Bank of India.

On30 April 1955the Imperial Bank of India became the State Bank of India. In 1959 the
Government passed the State Bank of India (Subsidiary Banks) Act, enabling the State Bank
of India to take over eight former State-associated banks as its subsidiaries.

On Sept 13, 2008,State Bank of Saurashtra, one of its Associate Banks, merged with State
Bank of India.

1.16 Associate banks

•SBI Capital Markets Ltd

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•SBI Mutual Fund(A Trust)

•SBI Factors and Commercial Services Ltd

•SBI DFHI Ltd

•SBI Cards and Payment Services Pvt Ltd

•SBI Life Insurance Co. Ltd-Bancassurance(Life Insurance)

•SBI Funds Management Pvt Ltd

•SBI Canada

Establishment

The establishment of the Bank of Bengal marked the advent of limited liability, joint-stock
banking in India. So was the associated innovation in banking, viz. the decision to allow the
Bank of Bengal to issue notes, which would be accepted for payment of public revenues
within a restricted geographical area.

This right of note issue was very valuable not only for the Bank of Bengal but also its two
siblings, the Banks of Bombay and Madras. It meant an accretion to the capital of the banks,
a capital on which the proprietors did not have to pay any interest.

The concept of deposit banking was also an innovation because the practice of accepting
money for safekeeping (and in some cases, even investment on behalf of the clients) by the
indigenous bankers had not spread as a general habit in most parts of India.
 P a g e | 38

But, for a long time, and especially up to the time that the three presidency banks had a
right of note issue, bank notes and government balances made up the bulk of the investible
resources of the banks.

The three banks were governed by royal charters, which were revised from time to time.
Each charter provided for a share capital, four-fifth of which were privately subscribed and
the rest owned by the provincial government.

The members of the board of directors, which managed the affairs of each bank, were
mostly proprietary directors representing the large European managing agency houses in
India. The rest were government nominees, invariably civil servants, one of whom was
elected as the president of the board.

Major change in the conditions

A major change in the conditions of operation of the Banks of Bengal, Bombay and Madras
occurred after 1860.

With the passing of the Paper Currency Act of 1861, the right of note issue of the
presidency banks was abolished and the Government of India assumed from 1 March 1862
the sole power of issuing paper currency within British India.

The task of management and circulation of the new currency notes was conferred on the
presidency banks and the Government undertook to transfer the Treasury balances to the
banks at places where the banks would open branches.

None of the three banks had till then any branches(except the sole attempt and that too a
short-lived one by the Bank of Bengal at Mirza pore in 1839) although the charters had
given them such authority. But as soon as the three presidency bands were assured of the
free use of government
 P a g e | 39

Presidency Banks of Bengal

The presidency Banks of Bengal, Bombay and Madras with their 70 branches were merged
in 1921 to form the Imperial Bank of India. The triad had been transformed into a monolith
and a giant among Indian commercial banks had emerged.

The new bank took on the triple role of a commercial bank, a banker's bank and a banker to
the government. But this creation was preceded by years of deliberations on the need for a
'State Bank of India'.

What eventually emerged was a 'half-way house' combining the functions of a commercial
bank and a quasi-central bank.
The establishment of the Reserve Bank of India as the central bank of the country in 1935
ended the quasi-central banking role of the Imperial Bank.

The latter ceased to be bankers to the Government of India and instead Became agent of
the Reserve Bank for the transaction of government business at centres at which the central
bank was not established.

But it continued to maintain currency chests and small coin depots and operate the
remittance facilities scheme for other banks and the public on terms stipulated by the
Reserve Bank.

It also acted as a bankers' bank by holding their surplus cash and granting them advances
against authorized securities.

The management of the bank clearing houses also continued with it at many places where
the Reserve Bank did not have offices.

The bank was also the biggest tendered at the Treasury bill auctions conducted by the
Reserve Bank on behalf of the Government.
 P a g e | 40

The establishment of the Reserve Bank simultaneously saw important amendments being
made to the constitution of the Imperial Bank converting it in to a purely commercial bank.
Subsidiaries

The State Bank Group includes a network of eight banking subsidiaries and several
nonbanking subsidiaries.

Through the establishments, it offers various services including merchant banking

services, fund management, factoring services, primary dealership in government
securities, credit cards.

The eight banking subsidiaries are

1. State Bank of Bikaner and Jaipur (SBBJ)

2. State Bank of Hyderabad (SBH)

3. State Bank of India (SBI)

4. State Bank of Indore (SBIR)

5. State Bank of Mysore (SBM)

6. State Bank of Patiala (SBP)

7. State Bank of Saurashtra (SBS)

8. State Bank of Travancore (SBT)

 P a g e | 41

Products Personal Banking

• SBI Term Deposits SBI Loan For Pensioners

• SBI Recurring Deposits Loan Against Mortgage Of Property

• SBI Housing Loan Loan Against Shares & Debentures

• SBI Car Loan Rent Plus Scheme

• SBI Educational Loan Medi-Plus Scheme

Other Services

• Agriculture/Rural Banking

• NRI Services

• ATM Services

• Demat Services

• Corporate Banking

• Internet Banking

• Mobile Banking

• International Banking
 P a g e | 42

• Safe Deposit Locker

• RBIEFT
•
• E-Pay

• E-Rail

• SBI Vishwa Yatra Foreign Travel Card

• Broking Services

• Gift Cheques

NETWORK OF SBI BANK

SBI Bank India has 52 Foreign Offices in 34 countries. SBI India serves the international
needs of its foreign customers, in addition to conducting retail operations.

The focus of the offices of SBI is India-related business. Few of the countries where SBI Bank
has branches are as under:

• Australia

• Bahamas

• Bahrain

• Bangladesh
 P a g e | 43

• Belgium

• Bhutan

• Canada

• France

• Germany

• Hong Kong

• Japan

• Maldives

• Corporate Banking

• Internet Banking

• Mobile Banking

• International Banking

• Safe Deposit Locker

• RBIEFT

• E-Pay

• E-Rail

• SBI Vishwa Yatra Foreign Travel Card

 P a g e | 44

• Broking Services

• Gift Cheques

NETWORK OF SBI BANK

SBI Bank India has 52 Foreign Offices in 34 countries. SBI India serves the international
needs of its foreign customers, in addition to conducting retail operations.

The focus of the offices of SBI is India-related business. Few of the countries where SBI Bank
has branches are as under:

• Australia

• Bahamas

• Bahrain

• Bangladesh

• Belgium

• Bhutan

• Canada

• France

• Germany
 P a g e | 45

• Hong Kong

• Japan

• Maldives

• Mauritious

• Muscat

• Nepal

• Nigeria

• Oman

• Russia

• Singapore

• Sri Lanka

• South Africa

• UK

• USA
 P a g e | 46

1.17 PERFORMANCE OF SBI BANK

INVESTOR RELATIONS

State Bank of India, the country’s largest commercial Bank in terms of profits, assets,
deposits, branches and employees, welcomes you to its ‘Investors Relations’ Section. SBI,
with its heritage dating back to the year 1806, strives to continuously provide latest and up
to date information on its financial performance.

It is our endear or to walk on the path of transparency and allow complete access to all the
stakeholders enabling total awareness about the Bank. The Bank communicates with the
stakeholders through a variety of channels, such as through e-mail, website, conference call,
one-on-one meeting, analysts’ meet and attendance at Investor Conference throughout the
world.

Please find below Bank’s financial results, analysis of performance and other highlights
which will be of interest to Investors, Fund Managers and Analysts. SBI has always been
fundamentally strong in its core business which is mirrored.
 P a g e | 47

SBI Personal Loans

SBI Personal Loans also known as State Bank of India personal finance schemes, aim to
provide the necessary financial assistance to as many people as possible to help them
realize their dreams or come out of situations of financial need.

State Bank of India being India's largest bank is a trusted name and the SBI personal loan
rates of interest are kept at the most competitive level to make a personal loan as approach
able.

The most popular SBI personal loans include housing loans, car loans, education loan, loans
against property, shares or debentures, reverse mortgage loans and more.

State Bank of India Housing Loan or SBI Home Loan is available in complete transparency
and at no hidden costs. The interest rates are charged on daily reducing basis.

SBI Car Loans offer a lucrative deal of low interest rates, easy repayment facilities and
inclusion of all additional charges like vehicle registration, insurance, one-time road tax and
car accessories.

State Bank of India offers car loans for purchase of all kinds of personal use and commercial
vehicles. State Bank of India offers Education Loanto Indian nationals for pursuing higher
studies within the country or abroad.

The SBI education loan covers the travel expenses, tuition fees, examination fees, costs of
books and other course material and stationery,
 P a g e | 48

refundable caution deposits, expenses for purchase of computers necessary for the course
and also a two-wheeler conveyance up to Rs. 50, 000 in costs along with any other major
expenses mandatory to the course.

1.18 INTRODUCTION OF HDFC BANK

Background
HDFC was incorporated in 1977 with the primary objective of meeting a social Need that
of promoting home ownership by providing long-term finance to households for their
housing needs.

HDFC was promoted with an initial share capital of Rs. 100 million.

Business Objectives
The primary objective of HDFC is to enhance residential housing stock in the Country
through the provision of housing finance in a systematic and professional Manner, and
to promote home ownership.

Another objective is to increase the flow of resources to the housing sector by integrating
the housing finance sector with the overall domestic financial markets.

Organizational Goals

HDFC’s main goals are to

 P a g e | 49

a) Develop close relationships with individual house holds.

b) Maintain its position as the premier housing finance institution in the country,

c) Transform ideas into viable and creative solutions.

d) Provide consistently high returns to shareholders.

e) To grow through diversification by leveraging off the Existing client

1.19 HISTORY OF HDFC BANK

The Housing Development Finance Corporation Limited (HDFC) was amongst the first to
receive an 'in principle' approval from the Reserve Bank of India (RBI) to setup a bank in the
private sector, as part of the RBI's liberalization of the Indian Banking Industry in 1994.

The bank was incorporated in August 1994 in the name of 'HDFC Bank Limited', with its
registered office in Mumbai, India.

HDFC Bank commenced operations As a Scheduled Commercial Bank on 16th January

1995.In the year 1998 HDFC Bank had tied up with the Ahmadabad Stock Exchange(ASE) to
act as its clearing bank
 P a g e | 50

Business Focus

HDFC Bank's mission is to be a World-Class Indian Bank.

The objective is to build sound customer franchises across distinct businesses so as to be the
preferred provider of banking services for target retail and wholesale customer segments,
and to achieve healthy growth in profitability, consistent with the bank's risk appetite.

The bank is committed to maintain the highest level of ethical standards, professional
integrity, corporate governance and regulatory compliance.

Subsidiary and Associate Companies

The subsidiaries of HDFC consists of

1. HDFC Bank

2. HDFC Mutual Fund

3. HDFC Standard Life Insurance Company

4. HDFC Realty

5. HDFC Chubb General Insurance Company Limited.

6. Intel net Global Services Limited

7. Credit Information Bureau (India) Limited 8. Other Companies Co – Promoted by HDFC

▪ HDFC Trustee Company Ltd.

▪ GRUH Finance Ltd.
▪ HDFC Developers Ltd.
▪ HDFC Venture Capital Ltd. ▪HDFC Venture Trustee Company Ltd ▪HDFC Securities
Ltd.
 P a g e | 51

▪ HDFC Holding Ltd.

▪ Home Loan Services India Pvt. Ltd.

HDFC BANK

Capital Structure

The authorized capital of HDFC Bank is Rs.450 crore (Rs.4.5 billion).

The paid-up capital is Rs.311.9 crore (Rs.3.1 billion).

The HDFC Group holds 22.1% of the bank's equity and about 19.4% of the equity is held by
the ADS Depository (in respect of the bank's American Depository Shares (ADS) Issue).

Roughly 31.3% of the equity is held by Foreign Institutional Investors (FIIs) and the bank has
about190,000 shareholders.

The shares are listed on the The Stock Exchange, Mumbai and the National Stock Exchange.
 P a g e | 52

1.20 Products and Services – HDFC Bank

Product range
The following is the product range offered at HDFC: While various deposit products offered
by the bank are assigned different names, the deposit products can be categorized broadly
into the following types. Definition of major deposit schemes are as under

1. Demand deposits

"Demand Deposits" means a deposit received by the bank which is withdrawable on

demand; a)Savings Account:

"Savings Deposits" means a form of Demand Deposit which is subject to restrictions as

to the number of withdrawals as also the amounts of withdrawal spermatid by the bank
during any specified period;

HDFC provides with saving bank account with the usual facilities, and one also gets a free
ATM card, interbranch banking, bill payment facilities, phone banking and mobile banking.

2. Term Deposits

"Term Deposit" means a deposit received by the bank for a fixed period withdrawable only
after the expiry of the fixed period and includes deposits such as Recurring / Double Benefit
Deposits .

3. Notice Deposit
 P a g e | 53

''Notice Deposit'' means Term Deposit for a specific period but which can be withdrawn on
giving at least one complete banking days’ notice.

4. Current Account

"Current Account" means a form of Demand Deposit wherefrom withdrawals are allowed
any number of times depending upon the balance in the account or up to a particular
agreed amount and will also include other deposit accounts which are neither Savings
Deposit nor Term Deposit;

The account holder gets a personalized cheque book, monthly account statements, and
Interbranch banking.

5. Corporate Account

These are more commonly known as Salary Accounts. These are account in HDFC bank with
zero balance. These are given to salaried people.

These accounts are opened by the employer for the employees to deposit the salary of the
employee directly to the account.

6. HDFC Bank Preferred

A preferential Savings Account where in, one is assigned with a dedicated Relationship

Manager, who’s you’re the one point contact.

One also get privileges like fee waivers, enhanced ATM withdrawal limit, priority locker
allotment, free Demat Account and lower interest rates on loans.

7. Sweep-In Account
 P a g e | 54

A Fixed Deposit linked to one’s Savings Account. So, even if one’s SavingsAccount runs a bit
short, one can issue a cheque (or use ATM Card).

8. Super Saver Account

It gives one an overdraft facility up to 75% of one’s fixed deposit. In an emergency, you can
access your funds while your fixed deposit continues to earn high interest.

9. HDFC Bank Plus

Apart from Regular and Premium Current Accounts HDFC also has HDFC Bank Plus, a
Current Account and then something extra for the HDFC bank customers. One can transfer
up to Rs. 50 lakh every month at no extra charges, between the four metros.

10.Demat Account

One can conduct hassle-free transactions on the stock market for one’s shares.

The shares held by the customer are protected from damage, loss and theft, by maintaining
these shares in electronic form. This account can be accessed through Internet too.

11.Loans

There are a variety of loan schemes offered like personal loans, new car loans, used car
loans, loan against shares, consumer loans, two wheeler loans, and home loans.
 P a g e | 55

1.21 Credit Rating

HDFC Bank has its deposit programmes rated by two rating agencies – Credit Analysis &
Research Limited. (CARE) and Fitch Ratings India Private Limited.

The bank's Fixed Deposit programme has been rated 'CARE AAA (FD)' [Triple A] by CARE,
which represents instruments considered to be "of the best quality, carrying negligible
investment risk".

CARE has also rated the bank's Certificate of Deposit (CD) programme "PR 1+"which
represents "superior capacity for repayment of short term promissory obligations".

Fitch Ratings India Pvt. Ltd. (100% subsidiary of Fitch Inc.) has assigned the "t AAA ( in d)"
rating to the bank's deposit programme, with the outlook on the rating as "stable".

This rating indicates "highest credit quality" where "protection factors are very high".

HDFC Bank also has its long term unsecured, subordinated (Tier II) Bonds of Rs.4billion rated
by CARE and Fitch Ratings India Private Limited.

CARE has assigned the rating of "CARE AAA" for the Tier II Bonds while Fitch Ratings India
Pvt. Ltd. has assigned the rating "AAA( in d )" with the outlook on the rating as "stable".

In each of the cases referred to above, the ratings awarded were the highest assigned by
the rating agency for those instruments.
 P a g e | 56

Personal Loan Policies

Personal Loan Features & Benefits

1. Borrow up to Rs 15,00,000 for any purpose depending on your requirements.

2. Flexible Repayment options, ranging from 12 to 60 months.

3. Repay with easy EMIs.

4. One of the lowest interest rates.

5. Hassle free loans - No guarantor/security/collateral required.

6. Speedy loan approval.

7. Convenience of service at your doorstep

8. Customer privileges

▪ If you are an HDFC Bank salary account holder , we have a special offer for you

▪ If you are an existing Auto Loan customer with a clear repayment of 12 months or
more from any of our approved financiers or us, you can get a has sle free personal
loan (without income documentation).

▪ If you are an existing HDFC Bank Personal Loan customer with a clear repayment
of 12 months or more, we can Top-Up your personal loan.
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Eligibility Criteria

• Minimum age of Applicant: 21 years

• Maximum age of Applicant at loan maturity: 60 years

• Minimum employment: Minimum 2 years in employment and minimum 1year in the

current organization

• Minimum Net Monthly Income: Rs. 10,000 per month (Rs. 15,000 in Mumbai, Delhi,
Bangalore, Chennai and Hyderabad & Rs. 12,000 in Calcutta, Ahmedabad and
Cochin)

Documents required

• Proof of Identity (Passport Copy/ Voters ID card/ Driving Licence)

• Address Proof (Ration card Tel/Elect. Bill/ Rental agr. / Passport copy/Trade
licence /Est./Sales Tax certificate)

• Bank Statements (latest 3 months bank statement / 6 months bank passbook)

• Latest salary slip or current dated salary certificate with latest Form 16
 P a g e | 58

1.22 Fees & Charges for Personal Loan

Description of Charges Personal Loan

Loan Processing Charges Up to 2% of the loan amount
Prepayment (up to 6 months of availing loan) No pre-payment permitted Pre-
payment charges(after 6 months of 4% of the Principal Outstanding
availing loan)
No Due Certificate / No Objection NIL
Certificate (NOC)
Duplicate no due certificate / NOC Rs 250/-
Solvency Certificate Not applicable
Charges for late payment of EMI @ 24 % p.a on amount outstanding
from date of default
Charges for changing from fixed to Not applicable floating
rate of interest
Charges for changing from floating Not applicable
To fixed rate of interest
Stamp Duty & other statutory charges As per applicable laws of the state
Credit assessment charges Not applicable
Non-standard repayment charges Not applicable
Cheque swapping charges Rs 500/- per event
Loan Re-booking charges / Re-scheduling Rs 1000/-
Charges
Loan cancellation charges Rs. 1000/-
Cheque Bounce Charges Rs 450/- per cheque bounce
Statement Charges (per statement)/ Rs 500/-
Repayment Schedule
Legal / incidental charges At actual
 P a g e | 59

METHODOLOGY OF THE STUDY

2.1 Research Methodology

Research as a mean of getting knowledge can be carried out either arbitrarily or in a

systematic fashion.

It is a purposive investigation. Research may be a mean to know the small change and time
forced upon us as individual or as a society.

Research as process involves defining the problem, formulating the hypothesis, organizing
and evaluating the data, deriving inference and conclusion after careful testing.

Data Collection

As data is required for any research activity, it is collected (for the Secondary) as follows:

Secondary Data

This data is collected from different sources available consolidated from book publication
reports, websites where used as a source of secondary data in order to do this project and
to collect necessary data.

I have used the manuals and leaf lets of the HDFC & S.B.I bank.
 P a g e | 60

Title of the study

“Comparative Analysis of SBI & HDFC Bank Regarding Personal Loan”

Duration of the Study

65 day from 1st Jan to 5th March

Objective of study

Primary

1. Analysis and evaluation of customer s satisfaction with respect to personal loan

performance.

2. To determine the main characteristic which customers look upon while taking
personal loan?

3. To determine the other bank those are competing with the same product rang in
personal loan.

Secondary

1. Service level and channel associate approach.

2. To find the level of brand awareness.

 P a g e | 61

3. To find out the company market share.

Types of research

Descriptive research

Primary data collection

Through Questionnaire are filled by respondents.

Secondary data collection

Data collection through – Internet, Magazines.

2.2 Scope of study

i. Special area to be focused for increasing the sales and for sales promotion activities to be
adopted.

ii. To make product more innovative and easy to understand

iii. For providing maximum satisfaction to the customer by knowing their need sand
requirement about product and services.

iv. Steps to be taken at present for survival and facing the competition with other
equivalent product.

v. Continues improvement and for better management.

 P a g e | 62

vi. Maintaining good relation between manager and customer.

2.3 Limitations of the study

1. The study was limited only Mumbai Hence findings may be differ from other part.

2. Many formalities and requirements during process of taking personal loan.

3. Many times respondents were so busy that they didn’t t give reply.

4. There were biased replies also.

5. Many formality and processor ,paper work

6. The cost of the project were bit higher then expected

 P a g e | 63

2.4 Personal Loans

A personal loan is a short-term loan to assist you with your finances. This payday loan is
secured against a future pay check.

These loans have become quite popular today, and now this is the main way to get financial
assistance in the form of a cash advance.

Personal loans are tricky - you never can quite make out whether it is absolutely necessary
or if it is just a luxury you will be paying back for the next few years.

That new computer or that credit card outstanding, or the house refurnishing...the need for
personal.

Advanced Personal Loans is your first stop for all your personal loan needs. We are
established, safe, secure, quick, and customer service oriented.

When you are looking for that perfect personal loan think of Advanced Personal Loans is
never ending.

Go on your dream holiday, buy the latest lifestyle gizmo, gift your wife a lovely diamond
ring, and renovate your house or just squash a temporary cash crunch.

Let us give you a helping hand. Our personal loans will meet all your personal requirements.

Personal Loans Includes

• Secured Personal Loan

A secured personal loan is that type of loan which is secured against any property of the
borrower.

The interest charged on secured personal loan is low because of the guarantee of collateral.
 P a g e | 64

The lender is assured of there payments and takes very little risk while providing such a
loan.

The monthly instalments are small and the repayment is long depending up on your choice
as well as the amount of loan.
• Unsecured Personal Loan

Unsecured personal Loan doesn’t involve any collateral. It comes with high interest rates.

This is because there is no involvement of collateral and the lender takes high risk while
providing such loans.

The monthly instalments are bigger and the repayments term is shorter.

But it has its own advantages too. Unsecured personal loans don’t involve any risk of
repossession act by the lender.

• Bad Credit Personal Loan

If you have bad credit history, you can avail bad credit personal loan.

If you have defaults, arrears, missed payments or County court judgments against you then
you will face difficulties in getting the loan.

It has higher interest rate.

• Guaranteed Personal Loan

Some loan lenders promise a guaranteed loan amount depending upon certain terms and
conditions.

• Personal Signature Loan

These are unsecured loans which require just a signature of the borrower and they have
shorter loan amount period.

• High Risk Personal Loan

If the borrower has bad credit history and do not have anything to offer as collateral, than
lender may have second thoughts about the borrower as lending to such a borrower could
be highly risk.
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Documents Required
Salaried

• KYC Documents

• Latest 3 months’ Salary slip

• Last 2 years form 16/ ITR & Bank statement which reflects 6 months’ salary credit

• photograph Self Employed

• KYC Documents

• Business proof in name of applicant

• Latest 3 years ITR along with computation statement

• Ownership proof of either office or residence

• Photograph

• Partnership Firm

• Application form

• Photograph of signing partner

• Last two years' income proof (audited account or ITRs + CA certified financials)

Partnership deed
• Partners authority letter

• Private / Public Ltd Co

• Application form

• Guarantor's photograph (for private limited company only)

• Last two years audited financials

• Certified true copy of the MOA & AOA

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• Board resolution (format available on request)

Application Process

• You may contact the nearest Bank branch for the best deal available on the car of
your choice.

• The loan will be disbursed within one day of submitting all there quired post-
sanction documents.

• If the vehicle is readily available with the dealer, you can get your car as soon as the
disbursal is made to the dealer.

However Bank is in no way responsible for car deliveries as they are regulated by the car
manufacturer's delivery schedules.

• You can retain the original Registration Certificate, Invoice and the Insurance Policy.
We simply require a photocopy of these documents.
 P a g e | 67

2.5 Loans for salaried individuals of select companies

• Special loans for doctors, chartered accountants, engineers, architects and ICWA

• Loans are available from Rs 1 lac to Rs 20 lacs

• Repayment tenures from 12 to 60 months

• Attractive interest rates

• A balance transfer facility available for those who want to entire any higher cost debt

• Loans available against repayments track record of any existing auto, personal or home
loan

• Zero balances SB account facility for personal loan customers

• Simple procedure, minimal documentation and quick approval

 P a g e | 68

2.6 SWOT ANALYSIS OF SBI BANK

STRENGTH WEAKNESSES

• BRAND NAME • LESS MODERNISATION

• MARKET LEADER • HIGHER NPA

• GOVERNMENT OWNED. • CUSTOMER HAVE NOT

FULLINFORMATION ABOUT
• DIVERSIFIED PORTFOLIO GETTINGFACILITIES

OPPURTUNITIES THREAT

• HIGH APPROCH OF ATM • EMPLOYEE STRIKE

• 2000 BRANCHES COMING • OTHER NATIONALIZED BANKAND

ONVARIOUS LOCATION PRIVATE BANKS

• MERGED WITH ASSOCITEDBANK • ADVENT OF MNC BANK

 P a g e | 69

2.7 SWOT ANALYSIS OF HDFC BANK

STRENGTH WEAKNESSES

• SEGMENTATION • TIMING SHORT

• PRODUCT FEATURES • MAINTENANCE CHARGES HIGH

• WORK ENVIRONMENT • HIGH INTEREST RATE

• LOW DOCUMENTATION • CUSTOMER HAVE NOT

FULLINFORMATION ABOUT
GETTINGFACILITIES

OPPURTUNITIES THREAT

• MERGED WITH CENTURIANBANK • SBI BANK

• 1300 BRANCHES COMING • OTHER PRIVATE BANK(ICICI,AXSIS

ONVARIOUS LOCATION etc)

• NAME AND LOGO WILL BE NEW

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REVIEW OF LITERATURE

3.1 Review of Literature

A number of studies have been conducted in India and abroad on various aspects of banking
especially retail banking. Some worthwhile studies relating to the present topic are
reviewed here.

Birla Institute of Scientific Research (1981) in its study makes a comparative assessment of
the performance of public sector banks and major private sector banks since
nationalisation.They find that the performance of public sector banks is not satisfactory in
rural development activities when compared to the private sector banks.

Jain, Pinson and Malhotra (1987) in their study “Customer loyalty as a construct in the
marketing of bank services” feel that customer loyalty is a very useful construct. Their
contention is that the human aspect of banking should be given utmost importance by the
loyal segment for the marketing of bank services.

R Jayakumar (1993) in his study of “Performance of private sector banks in Kerala” makes a
comparative examination of performance of public sector banks and private sector banks in
Kerala. He finds that in Kerala private sector banks perform better than their public sector
counterparts.

Delvin James (1995) makes a case study of the retail banking services in UK using First
Direct, a subsidiary of Midland Bank. He concludes that banks can increase their market
share through proper communication and prompt delivery of their products.

Govindarajalu (1996) in his article “Satisfaction and dissatisfaction with bank services” views
that the Indian banks have lost the quality of customer service. The dissatisfaction of
customers with bank services is an important issue to be considered by banks and policy
makers for the development of banking sector.
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Sarkar and Das (1997) make a comparison of the performance of the three bank sectors -
public, private and foreign - for the year 1995-1996. These banks are compared in terms of
profitability, productivity and financial management. They find that the public sector banks
are very poor in performance on the basis of these variables than the other two sectors.
D Mishra (1997) makes a study on the performance of commercial banks in India choosing
relevant parameters like quality of service, risk management, profitability etc. His conclusion
is that the banks should try to increase quality, balance risk management, and optimise
profitability in order to survive and succeed. He identifies four challenges for the bank
namely competition, credit, customer and control.

Gaganjot Singh (1998) in his study “New innovations in banking industry – a study of new
private sector banks” views that the new private sector banks in India are using better
technology and are offering better services to the customers. The new private banks have
emerged as a model to the banking industry in terms of service levels, ambience, technology
etc. As the public sector banks have already established a huge customer base, they become
complacent and are slow to become customer friendly. They are also less innovative in the
use of technology-assisted customer service. Because of their huge customer base they feel
that they can withstand competitions from new generation banks.

N. S. Varghese (2000) is of the opinion that new generation private sector banks with their
latest technology are able to implement e-banking and are highly preferred by investors in
the stock market. He also points out that prominent new generation private sector banks
like HDFC and ICICI have entered into internet banking through which greater convenience
is offered with lower transaction cost.

The study carried out by P Verma (2000) is in tune with the findings of Varghese. Analysing
the impact of information technology on new generation banks Verma feels that new
generation banks are far ahead of traditional public sector banks. He finds that information
technology is posing a threat to the public sector banks. He observes that the business per
employee of major public sector banks in India is a mere fraction of the business per
employee of new generation banks. So the public sector banks have to improve their
productivity and efficiency to compete with the new generation banks which are fully
computerized.
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But Eapen Varghese (2001) finds no such difference between the services rendered by
public sector and private sector banks.

Mini Joseph’s (2001) view is that new generation banks have created a spirit of competition
in the banking industry by fully utilizing the facilities and amenities available from
technology and computerization, and by accepting customer satisfaction as the core aspect.
For preventing the erosion in the market share of old private sector banks and public sector
banks, they are also providing quality service now in a competitive spirit.
Anantha Swamy (2001) makes an appraisal of the performance of different bank groups in
India in the backdrop of competition, deregulation and changes in the field of banking. He
classifies banks into public sector, old private sector, new private sector and foreign banks.
His focus has been on profitability, NPA, contingent liabilities, spread etc. for the last five
years and arrives at the conclusion that the new private sector banks are performing better
than the banks in other sectors.

Jamal and Naser (2002) makes a study on “The factors influencing customer satisfaction in
the retail banking sector of Abu Dhabi”. He collected the necessary data using structured
questionnaire. Customer response to questionnaire shows that the customer expectations
from the bank and service quality provided by the banks are the major determinants of
customer satisfaction. Their investigation on factors influencing customer satisfaction in the
Pakistan retail banking sector15 also reveals that service quality is the important
determinant of customer satisfaction.

P. D. Jeromi (2002) who studied “The trends and issues of bank credit in Kerala” finds that
the absolute rate of growth of credit is reasonably good. But in relation to deposits, per
capita credit, credit per account, disbursement by all India Financial Institutions the level of
credit is lower. He also observes that more attention should be given to mobilization of
deposits than to expansion of credit.

Pushpangadharan’s (2002) study on “The quality of customer service in public sector banks”
also shows that public sector banks lag behind private sector banks in customer service. The
parameters he used in the study are facilities and amenities, speed in completing
transactions and providing deposit related and credit related services. The customers of
public sector banks are not much satisfied with branch managers’ and employees’ attitudes.
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The public sector banks are very poor in respect of customer feedback system and redress
of grievances.

3.2 References

1 Birla Institute of Scientific Research. (1981). Banks Since Nationalization, Allied Publishers
Ltd, New Delhi.

2 Jain, A.K., Pinson, C. and Malhotra, N. K.(1987). Customer Loyalty as a Construct in the
Marketing of Bank Services. The International Journal of Bank Marketing, 5 (3), 49-72.

3 Jayakumar, R. (1993). A Study of Performance of Private Sector Banks In Kerala. Ph D

Thesis, Kerala University.

4 Devlin, James F. (1995). Technology and Innovation in Retail Banking Distribution. The
International Journal of Bank marketing, 13 (4), 19-25.

5 Govindarajalu, S. (1996). Satisfaction and Dissatisfaction with Bank Services. SBI Monthly
Review, 35 (7), 362.

6 Sarkar, P. C. and Das, A. (1997). Development of Composite Index of Banking Efficiency,

the Indian Case. Occasional papers 18, RBI central office Mumbai.

7 Mishra, D. (1997). Fundamentals for Banks. IBA Bulletin, XIX (8), .

8 Singh, Gaganjot. (1998). New Innovations in Banking Industry – A study of New Private
Sector Banks. Deep and Deep Publications, New Delhi, 36-63.

9 Varghese, N. S. (2000 March 15). New Private Sector Banks: New Kids on the Block.
Business line, Kochi.

10 Verma, P. (2000). Banking on a Change. ICFAI Reader, ICFAI University press, Benjara
Hills, Hyderabad, 69-72.

11 Eapen, Varghese. (2001). Marketing of Bank Services. PhD Thesis, Kerala University.
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12 Mini, Joseph. (2001). Performance Effectiveness of New Generation Banks. M Phil

Dissertation, Kerala University.

13 Ananthaswamy, R. (2001). New Competition, Deregulation, and Emerging Changes in the

Field of Indian Banking- An Analysis of Comparative Performance of Different Bank
Groups.

Bank Quest, 72 (3), 3.

DATA ANALYSIS AND INTERPRETATION

4.1 Data Analysis And Interpretation

Q.1 Type of customers.

SBI HDFC

a)Businessman 12 20

b)Self-employed 20 20

c)Working professional 28 35

d)Govt. service employee 40 25

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SBI HDFC

45

40
40
35
35
30

25 28
25
20
20 20 20
15

10 12
5

0
Businessman Self employed working professionalGovt.service employee

Interpretation:-
As per the study the govt. employees are main customers of SBI bank and businessman are
less minimum.

On the other side working professional are main customers of HDFC bank.

Q.2 Bank preference for personal loan.

a)HDFC 30

b)SBI 45

c)OTHERS 25
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50

45

30

25

45

40

35

30

25

20

15

10

0
HDFC SBI OTHERS

Interpretation:-
Maximum number of customers prefer SBI bank for taking personal loan compare to HDFC
bank bcoz of low interest rate, good image, and public sector bank.

25% customers prefer other bank like ICICI, PNB, and Bank of Broad.
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Q.3 Sours of communication (From where customers get the Information about bank).

a)Advertisement 30

b)Friend 25

c)Family member 35

d)Others 10

10%

30%
Advertisemen
Friend

35% Family member

Others

25%

Interpretation:-
As per as my the study the family members are the main sources of Communication about
bank and advertisement is other sources.

Family members influence the decision related to taking personal loan.

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Q.4 Factors consider by customers while taking loan.

a)Interest rate 70

b)Scheme 20

c)Duration 8

d)Others 2

Interest rate
32%

Others
55%

Scheme
9%
Duration
4%

Interest rate Scheme Duration Others

Interpretation:-
When any customers planning for taking personal loan from any bank they mainly consider
the interest rate of the particular bank and they give second preference to duration &
schemes.
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Q.5 Loan duration preferred by customers

a)2 years 12

b)3 years 28

c) 4 years 24

d)More than 5years 36

12%

36%
2 yers
3 yers
28% 4 yers
more then 5 yers

24%

Interpretation:-
Maximum customers prefer the more than 5 years duration for personal loan because of
long duration monthly instalment can be affordable by the customers.
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Q.6 Consideration on policies of bank regarding personal loan by customers.

a) YES 72

b) NO 28

Yes No

28%

72%

Interpretation:-
As per the my study when any customers planning for taking personal loan they consider
the policies of bank regarding personal Customers want to about the all formalities and
close related with loan process.
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Q.7 Rating of HDFC bank.

a)Good 44

b)Very good 30

c)Average 26

d)Below average 0

Below average
0%
average
26%

Good
44%

Very good
30%
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Interpretation:-
According to my study 75% customers are agree that HDFC bank is very good & good
because of good services, more numbers of scheme.

Q.8 Rating the SBI bank.

a)Good 50

b)Very good 40

c)Average 10

d)Below average 0

Good Very good Average Below average

10% 0%

50%

40%
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Interpretation:-
90% of customers agree that SBI bank is very good & good. because of good image, public
sector bank, low interest rate.

Compression to HDFC bank more customers agree that SBI bank is very good.

Q.9 Over all preference on the basis of interest rate, image and scheme.

a)HDFC 35

b)SBI 65

35% HDFC
SBI

65%
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Interpretation:-
65% of customers prefer the SBI bank and 35 % prefer HDFC bank on the basis of interest
rate, image and schemes.

The main reason is that the SBI bank is public sector bank so customers trust on SBI bank
more than HDFC bank.

Q.10 Comment on bank formalities regarding to personal loan.

Interpretation:-

Maximum numbers of customers give the comment that the bank formalities should be
reduce.

They agree that the bank formalities are very strict so it must be easy.

Some of the comments are follows

1. Reduce the loan formalities.

2. Bank formalities are very high.

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4.2 FACTS AND FINDINGS

1. 45% customers are prefer the SBI Bank when taking personal loan and only
30%customersprefer HDFC Bank.

2. Family members are creating more effect on decisions regarding personal loan.

3. Interest rate is main factor consider by customers when taking loan.

4. Most of the customer prefers the repayment of loan in higher duration.

5. Most of the customers consider the policies of bank regarding personal loan

6. 50 % customer’s give the higher rating to SBI Bank.

7. In HDFC Bank only 30 % customers give the higher rating to HDFC Bank8Only
governments employees are prefer the SBI Bank.

8. Similarly self-employed & businessman’s are prefer the HDFC Bank.

9. Low income class people face difficulty to taking personal loan

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CONCLUSION

Areas in Research:-

In my report I have tried to show the basic different between the Personal Loan of HDFC &
SBI Banks.

Both the Banks are good in terms of customer satisfaction’s has an edge because it is the
leading Government regulated bank in India.

HDFC is new to this segment (when compared to SBI) .

SBI is preferred because it’s a government bank. Procedure of loan financing is easy in HDFC
Bank.

Family members & increasing standard of living plays an important role in influencing the
decision of taking home loan.

1. SBI Bank is Leading Bank in the country, it provides a variety of products and services to
different segments of customers.
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2. The Bank aims to serve customers from teenagers to senior citizens, hence different
products designed to suit specific requirements of the above.

3. Aims to serve all classes of the society from the salaried middle class to the high income
business class. Customers are categorized and segmented according to their
requirements and needs.

For Example , the Saving Regular and Plus Account aims to serve middle class customers so
minimum balance required to be maintained is RS.5,000/- or RS. 10000.While the Saving
Max Account is targeted at high income customers, the minimum balance requirement is
RS.25,000.

4. SBI Bank provides personal loan at low interest rate which good for customers.

5. The Bank prides itself with the ability to provide differentiate products in the crowded
market of saving accounts.

Bank offers free insurance, special co-branded debit cards which makes its product unique.
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BIBLIOGRAPHY

MAGAZINES

• Business world

• Business today

NEWSPAPER

• Economic times

• Times of India
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• The Hindu

WEBSITES

• www.hdfcbank.com

• www.sbibank.com

• www.google.com

KNOWLEDGE THROUGH T.V.:-

Watched Ads of Both the Banks, they helped us in Knowing about the banks &
raised our interest in the topic. This Ads were the first source of information
about the banks. They helped in choosing the topic.

TELEVISION

• NDTV PROFIT

• ZEE BUSINESS
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• TIMES NOW

• IBN7