INTRODUCTION TO THE STUDY

What is customer satisfaction?

Customer satisfaction refers to how satisfied customers are with the products or services they
receive from a particular agency. The level of satisfaction is determined not only by the quality
and type of customer experience but also by the customers expectations.
A customer may be defined as someone who

has a direct relationship with, or is directly affected by your agency and

Receives or relies on one or more of your agencys services or products.

Customers in human services are commonly referred to as service users, consumers or clients.
They can be individuals or groups. An organization with a strong customer service culture places
the customer at the centre of service design, planning and service delivery. Customer centric
organizations will:
Determine the customers expectations when they plan listen to the customer as they
design.
Focus on the delivery of customer service activities value customer feedback when they
measure performance.

Why is it important?
There are a number of reasons why customer satisfaction is important in Banking Sector:
Meeting the needs of the customer is the underlying rationale for the existence of
community service organizations. Customers have a right to quality services that
deliver outcomes.
Organizations that strive beyond minimum standards and exceed the expectations
of their customers are likely to be leaders in their sector.
Customers are recognized as key partners in shaping service development and
assessing quality of service delivery.
The process for measuring customer satisfaction and obtaining feedback on organizational
performance are valuable tools for quality and continuous service improvement.

INTRODUCTION TO BANKING
Banking means accepting the deposits from the customers for lending to the needy and
extending the other services as to issue of demand draft etc. nowadays after introduction of
private sector banks the banks have become a profit centre and the functions become changed
and now banks are doing the insurance and mutual funds also. but nationalised banks are still
service oriented in extending loans for Education loan, and rural development activities.
A Bank is an organization which lends money to the borrowers for a purposeful task,
provides a facility to deposit and withdraw money when needed and charge for it.

and

HISTORY OF BANKING IN INDIA

Phase I
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 1920 and 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 Banking Authority.
During those days public has lesser confidence in the banks. As an aftermath deposit
mobilisation was slow. Abreast of it the savings bank facility provided by the Postal department
was comparatively safer. Moreover, funds were largely given to traders.
Phase II
Government took major steps in this Indian Banking Sector Reform after independence. In 1955,
it nationalised Imperial Bank of India with extensive banking facilities on a large scale 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 nationalised in 1960 on 19th July,
1969, major process of nationalisation 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
nationalised.
Second phase of nationalisation Indian Banking Sector Reform was carried out in 1980 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: Nationalisation of State Bank of India.
1959: Nationalisation of SBI subsidiaries.
1961: Insurance cover extended to deposits.
1969: Nationalisation of 14 major banks.

1971: Creation of credit guarantee corporation.

1975: Creation of regional rural banks.
1980: Nationalisation of seven banks with deposits over 200 crore.
After the nationalisation of banks, the branches of the public sector bank India rose to
approximately 800% in deposits and advances took a huge jump by 11,000%.
Banking in the sunshine of Government ownership gave the public implicit faith and immense
confidence about the sustainability of these institutions.
Phase III
This phase has introduced many more products and facilities in the banking sector in its reforms
measure. In 1991, under the chairmanship of M Narasimham, a committee was set up by his
name which worked for the liberalisation of banking practices.
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.

BANKING STRUCTURE IN INDIA

Scheduled Banks in India

(A) Scheduled Commercial Banks
Public sector
Banks
(28)
Nationalized
Bank
Other Public
Sector Banks
(IDBI)
SBI and its
Associates

Private sector
Banks

Foreign Banks
in India

Regional Rural
Bank

(27)

(29)

(102)

(B) Scheduled Cooperative Banks

Scheduled Urban Cooperative
Banks (55)

Scheduled State Cooperative

Banks (31)

Here we more concerned about private sector banks and competition among them. Today, there
are 27 private sector banks in the banking Sector: 19 old private sector banks and 8 new private
sector banks. These new banks have brought in state-of-the-art technology and aggressively
marketed their products. The Public sector banks are facing a stiff competition from the new
private sector banks. The banks which have been setup in the 1990s under the guidelines Of the
Narasimham Committee are referred to as NEW PRIVATE SECTOR BANKS.

INDIAN BANKING INDUSTRIES

The Indian banking market is growing at an astonishing rate, with Assets expected to reach US$1
trillion by 2010. An expanding Economy, middle class, and technological innovations are all
Contributing to this growth.

The countrys middle class accounts for over 320 million people. In correlation with the growth
of the economy, rising income levels, increased standard of living, and affordability of banking
products are promising factors for continued expansion.

The Indian banking Industry is in the middle of an IT revolution, focusing on the expansion of
retail and rural banking. Players are becoming increasingly customer - centric in
their
approach, which has resulted in innovative methods of offering new banking products and
services. Banks are now realizing the importance of being a big player and are beginning to
focus their attention on mergers and acquisitions to take advantage of economies of scale
and/or comply with Basel II regulation. Indian banking industry assets are expected to
reach US$1 trillion by 2010 and are poised to receive a greater infusion of foreign capital,
says Prathima Rajan, analyst in Celent's banking group and author of the report.The banking
industry should focus on having a small number of large players that can compete globally rather
than having a large number of fragmented players."

NEW FOREIGN BANKS IN INDIA AFTER RECESSION

By 2009 to 2010 few more names is going to be added in the list of foreign banks in India. This
is as an aftermath of the sudden interest shown by Reserve Bank of India paving roadmap for
foreign banks in India greater freedom in India. Among them is the world's best private bank by
Euro Money magazine, Switzerland's UBS.

The following are the list of foreign banks going to set up business in India:-

Royal Bank of Scotland

Switzerland's UBS

US-based GE Capital

Credit Suisse Group

Industrial and Commercial Bank of China

The great recession 2008-13- A UK-US perspective

(Source: economichelp.org)

The great recession refers to the economic downturn between 2008 and 2013. The recession
began after the 2007/08 global credit crunch and led to a prolonged period of low/negative
growth and rising unemployment. In particular, the great recession highlighted problems within
the Eurozone leading to a double dip recession and higher unemployment.

Thi
s shows the sharp fall in real GDP in the UK economy in 2008 and 2009. It was also the slowest
recovery on record.

Recession in US and EU. Source: Eurostat

Output gap

Graph showing how much real GDP fell behind trend growth in the UK.
Causes of great recession
The primary cause of the great recession was the credit crunch (2007-08). See: Credit crunch for
a short background to why bad debts in the US housing market had such a big effect on
economies in US and Europe.
In summary:
1.

Credit crunch led to a fall in bank lending, due to shortage of liquidity.

2.

Fall in consumer and business confidence resulting from the financial instability.

3.

Fall in exports from global recession.

4.

Fall in house prices leading to negative wealth effects.

5.

Fiscal austerity compounding the initial fall in GDP.

6.

In Europe, the single currency created additional problems because of over-valued

exchange rates, and high bond yields.
More details on causes of great recession

1.

Great Moderation. The period 2000-2007 was a time of strong economic growth, low
inflation and falling unemployment. Central Banks appeared to be successful in targeting low
inflation and ensuring economic stability. However, underneath the macro-economic stability,
there was growing instability in terms of credit and financial markets.

2.

Housing bubble. Many countries experienced a rapid growth in house prices. House
price rose faster than inflation and faster than incomes. This boom in housing was encouraged by
a growth in bank lending and high confidence. Several countries, such as Ireland and Spain also

experienced a boom in house building.

Irish and UK housing price fall in 2008.