CHAPTER-1 INTRODUCTION

1.1. An overview of Banking Industry: The Banking Industry is a reliable business that took deposits from investors at a lower interest rate and loaned it out to borrowers at a higher rate. The Banking Industry at its core provides access to credit. In the lenders case, this includes access to their own savings and investments, and interest payments on those amounts. In the case of borrowers, it includes access to loans for the creditworthy, at a competitive interest rate. Banking is generally a highly regulated industry, and government restrictions on financial activities by banks have varied over time and location. The current set of global bank capital standards are called Basel II. A bank is a financial intermediary that accepts deposits and channels those deposits into leng activities, either directly or through capital markets. A bank connects customers with capital deficits to customers with capital surpluses Banks have played an important role in the economic development of many developed country and also emerging economies such as India. Banks are important not only from the point of view of economic growth but also financial stability. In India, banks are important mainly for the following three reasons: a. They take a leading role in the development of other financial intermediaries and markets. b. Due to the absence of well developed equity and bond market, corporate sector depends heavily on banks to meet its financing needs. c. In India, banks cater to the need of a vast number of savers from the household sector, who prefer assured income, liquidity & safety of funds.
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History
Banking in India originated in the last decades of the 18th century. The first banks were The General Bank of India which started in 1786, and the Bank of Hindustan, both of which are now defunct. The oldest bank in existence in India is the State Bank of India, which originated in the Bank of Calcutta in June 1806, which almost immediately became the Bank of Bengal. This was one of the three presidency banks, the other two being the Bank of Bombay and the Bank of Madras, all three of which were established under charters from the British East India Company. For many years the Presidency banks acted as quasi-central banks, as did their successors. The three banks merged in 1921 to form the Imperial Bank of India, which, upon India's independence, became the State Bank of India. Foreign banks too started to arrive, particularly in Calcutta, in the 1860s. The Comptoire d'Escompte de Paris opened a branch in Calcutta in 1860, and another in Bombay in 1862; branches in Madras and Puducherry, then a French colony, followed. HSBC established itself in Bengal in 1869. Calcutta was the most active trading port in India, mainly due to the trade of the British Empire, and so became a banking center. The first entirely Indian joint stock bank was the Oudh Commercial Bank, established in 1881 in Faizabad. It failed in 1958. The next was the Punjab National Bank, established in Lahore in 1895, which has survived to the present and is now one of the largest banks in India. Around the turn of the 20th Century, the Indian economy was passing through a relative period of stability. Around five decades had elapsed since the Indian Mutiny, and the social, industrial and other infrastructure had improved. Indians had established small banks, most of which served particular ethnic and religious communities. The presidency banks dominated banking in India but there were also some exchange banks and a number of Indian joint stock banks. All these banks operated in different segments of the economy. The exchange banks, mostly owned by Europeans, concentrated on financing foreign trade. Indian joint stock 9

banks were generally under capitalized and lacked the experience and maturity to compete with the presidency and exchange banks. The period between 1906 and 1911, saw the establishment of banks inspired by the Swadeshi movement. The Swadeshi movement inspired local businessmen and political figures to found banks of and for the Indian community. A number of banks established then have survived to the present such as Bank of India, Corporation Bank, Indian Bank, Bank of Baroda, Canara Bank and Central Bank of India. The fervour of Swadeshi movement lead to establishing of many private banks in Dakshina Kannada and Udupi district which were unified earlier and known by the name South Canara ( South Kanara ) district. Four nationalised banks started in this district and also a leading private sector bank. Hence undivided Dakshina Kannada district is known as "Cradle of Indian Banking". Liberalisation In the early 1990s, the then Narsimha Rao government embarked on a policy of liberalization, licensing a small number of private banks. These came to be known as New Generation tech-savvy banks, and included Global Trust Bank (the first of such new generation banks to be set up), which later amalgamated with Oriental Bank of Commerce, Axis Bank(earlier as UTI Bank), ICICI Bank and HDFC Bank. This move, along with the rapid growth in the economy of India, revitalized the banking sector in India, which has seen rapid growth with strong contribution from all the three sectors of banks, namely, government banks, private banks and foreign banks. The next stage for the Indian banking has been set up with the proposed relaxation in the norms for Foreign Direct Investment, where all Foreign Investors in banks may be given voting rights which could exceed the present cap of 10%,at present it has gone up to 74% with some restrictions. 10

1.2. Banking structure in India: The Reserve Bank of India(RBI) is the central banking and monetary authority of India and also act as the regulator and supervisor of commercial banks in India. Scheduled Banks in India: Scheduled banks comprise both the Scheduled Commercial bank and Scheduled Co-operative banks. Scheduled commercial banks form the bedrock of the Indian financial system, currently accounting for more then 3/4th of all financial institution assets. SCB/s branches have increased four-fold since the time of independence. Public Sector Banks: In India, there are 27 Public Sector banks which includes SBI and its six associates and 19 nationalized banks and IDBI. 11

Private Sector Banks: As on March 2011, there were 7 new privates sector banks and 15 old private sector banks. Foreign Banks: In India, there are 32 foreign banks with 293 branches. Regional Rural Banks: As on 31st March, 2011, the total number of RRBs stand at 86. 1.3. Present Situation of Banking Industry: Banking industry is one of the fastest growing industry. In India, it has increased manifold and this is mainly because of the growing middle class population whose aspirations and dreams are financed by the banks. Banking industry is expected to grow in the coming years as the government is inclined towards its expansion. In the Budget 2010-11, the government has made the announcement that more licenses will be provided to those industries who wants to venture into the Banking industry which is a positive indication. 1.4. New Generation Banking: The Indian Banking Industry saw dramatic changes in the last decade and so ever since the advent of liberalization and Indias integration with the worked economy. This economic reforms and the advent of the private players saw nationalized banks revamp their services and product portfolio to incorporate new, innovative and customer- centric schemes. The need to become highly customer focused forced the slow moving public sector banks to adopt a fast track approach. These customer friendly programs included revamping the product and the services schemes like credit cards, hassle free housing loan 12

scheme, educational loans and Flexi- deposits. The objective of all these strategies was very clear to bridge the gap between service and product gap that was inherent in the banking system.

CHAPTER 2 INTRODUCTION TO THE STUDY

2.1. Theoretical Background of the Study: The Banking industry in India has undergone a sea of change since the period of economic reforms since 1991. From an industry almost monopolized by the nationalized bank till the 90s, it has now emerged as a conglomerate of nationalized, foreign and private banks setting new trends in the way banking is carried out. The deregulation of interest rates, grant of functional autonomy to the banks in the area of credit, entry of foreign banks and emergence of private banks has raised the level of competition fiercely. Lately, Indian banks are diverting from their bread and butter business of lending and accepting deposits to other related activities. To sustain the market share and to maintain profitability, nationalized banks are also trying to incorporate product diversity and with more focus on customer needs. More and more banks are adopting the model of Universal Banking. Universal banking means the banks have all the financial products and services for its customers. 13

2.2. Objectives of the study: The objective of the study was: To study the customer Services provided by IDBI Bank To analyze the growth in IDBI bank To know the services and products being offered by IDBI Bank Compare the performance of IDBI Bank with its competitors 2.3. Research Methodology: The study is mainly based on quantitative data which was provided by the banks. It is mainly based on unstructured and undisguised observation. METHODOLOGY OF REASERCH:a) Type of research-Descriptive &conclusive

b) Data type Primary data

c) Data size -100

d) Data collection method questionnaire

e) Data collection instruments-structured questionnaire

f) Sample unit-All

g) Sample technique Random

h) Data analysis Tools and techniques Bar and Pie Charts

4.2. Types of Data: Primary Data: In my study I will be using both primary and secondary data. For primary data collection I have prepared a questionnaire consisting of both open ended and close ended questions. Questions are prepared in such a way that maximum information can be obtained from the respondents. This data will be collected from discussions and interactions by: 14

Observation method. Interviewing method. Through questionnaires Secondary Data: Secondary data means data that are already available that is they refer to the data which have already been collected and analyzed by someone else. The sources of secondary data can be given as under. Books, magazines and newspapers, Internet etc. Reports and publications of various associations connected with business and industry banks stock exchanges etc.
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CHAPTER 3 COMPANY PROFILE

3.1. Brief Introduction of IDBI: Today, Industrial Development Bank of India(IDBI) is one of Indias largest bank. It has essayed a significant role in the countrys industrial and economic progress for over 40 years-first as a development financial institution and now as a full service commercial bank. Post the 2004 merger of the erstwhile IDBI bank with its parent company(IDBI ltd),IDBI is now a universal bank. The merger was aimed at consolidating business across the value chain and reaping the benefits of economies of scale, thus enabling it to offer an array of customer-friendly service to its existing and prospective clients. Today IDBI is the 10th largest bank in India in terms of reach with 1210 ATMs, 720 branches and 474 centres. 3.2. IDBI Bank: A journey from Development banking to Commercial banking: 1st July 1964: IDBI was established by an Act of Parliament, as a wholly owned subsidiary of Reserve Bank of India, to catalyze the development of a diversified and efficient structure in the country, in tune with national priorities. 1976: 100% ownership of IDBI was transferred from RBI to the Govt. of India(GOI) 1995: Domestic IPO reduced the GOI stake, initially to 72% and post capital restructuring to 58.1%. The current GOI holding is 53% 2004: On 1st October, IDBI was converted into a banking company( as Industrial Development Bank of India ltd) to take the entire gamut of banking activities while continuing to play its secular DFI role 16

2005: On 2nd April, IDBI merged its hitherto banking subsidiary(IDBI Bank ltd.) with itself. 2006: IDBI announced its foray into life insurance business jointly with Federal Bank and Fortis Insurance International. A memorandum of Understanding was signed by the three partners on 11th July, 2006 to this effect followed by a joint venture agreement on November 23, 2006. 2006: IDBI Gilts Ltd was incorporated as a wholly owned subsidiary of the bank on 13th Dec, 2006 to undertake primary dealership issues. 3.3. Capital Structure: As on 31st March,2011, the authorized capital was Rs.20101 crores and reserves and surplus was Rs.9438 crores. Total loan funds stood at Rs. 138202 crores. Total fixed assets including leased assets stood at Rs.2997 crores. Total deposits stood at Rs. 167667 crores. Total assets of Rs. 13903 crores is with RBI in the form of SLR and CRR. 3.4. Highlights: As on 31st March, 2011 Business stands at Rs. 3.06 lakh crore. Deposits at Rs. 1,67,667 crore which shows a growth rate of 49 %. CASA deposits at 14.59% of the total deposits. Advances at Rs. 1,38,202 crore, showing a growth of 34% over the previous financial year. Total business (deposits + advances) grew by 42% to Rs.3,05,869 crore. Branches increased to 720. ATMs increased to 1210. Profit after tax stood at Rs.1031 crore which shows an increase of 20%.
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0 200 400 600 800 1000 1200 2007-08 2008-09 2009-10

PAT(in crores)
PAT(in

Fig 3(a): Graph showing the value of PAT(Profit after tax) for the past 3 financial years. Conclusion: In 2009-10, PAT has increased by 20% while in 2008-09, it increased by 18%. 3.5. SWOT of IDBI: STRENGHTS: A well diversified customer profile, including blue chip companies, SMEs, high net worth individual, retail customers, trusts, self help groups, etc. A strong capital base with a capital adequacy ratio of 11.31% well above the regulatory minimum of 9% which ensures that it is well placed for growth of business. IDBI has been a robust builder and has helped erect many reputed institutions like EXIM, SIDBI, NSE, CARE etc. The value of Non performing assets as a percentage of net advances has decreased rapidly