IDBI BANK LTD.

A Project Report On

“New Customer Acquisition of IDBI Bank”

Submitted by:

ARINDAM DAS

Reg. No.- 9212400147

Submitted to:

Prof. Narayan Prasad

International Institute Of Business Studies, Bangalore

(In Partial Fulfillment Of The Requirement To MBA)

(2009-2011)
 IDBI BANK LTD.

Certificate

This is to be certified that Mr. Arindam Das , student of fourth semester of MBA from
International Institute of Business Studies, Bangalore has under taken two month final
project program with IDBI Bank Ltd. from 14th of November 2010 to 18th of January 2011.
 IDBI BANK LTD.

With the bank and for the bank he himself offered the project title “'New Customer
Acquisition'”, and given his all efforts in spite of hectic schedule of job. His contribution
through this project is really commendable.

Project Coordinator: Prof. Narayan Prasad Sir (College)

Mrs. Vasundhara kushwa (Bank)

 IDBI BANK LTD.

Acknowledgement

To acknowledge all the persons who had helped for the fulfillment of the project is not possible for

any researcher but in spite of all that it becomes the foremost responsibility of the researcher and

also the part of research ethics to acknowledge those who had played a great role for the

completion of the project.

So in the same sequence at very first, I would like to acknowledge my parents

because of whom I got the existence in the world for the inception and the conception of this

project. Later on I would like to confer the flower of acknowledgement to prof. Narayan Prasad

and other faculty members who taught me that how to do project through appropriate tools and

techniques. Because IDBI bank has trusted me and given me a chance to do my integrated research

study, I would like to give thanks to the organization and especially to Mrs. Jyoti mohan (Branch

Manager), Mrs. Vasundhara Kushuwa (Relationship Manager) from the depth of my heart.

Rest all those people who helped me are not only matter of acknowledgment but also authorized

for sharing my success.

 IDBI BANK LTD.

Table of content

Certificate of the company

Acknowledge

Chapter 1 :- Introduction: Executive summary of the project

Chapter 2 :- Industry Introduction & IDBI Bank

Industry introduction

IDBI Bank: All about

Industry/Bank

performance

Correlation between Industry and IDBI bank’s movement

Chapter 3 :-Research Methodology

Objective of the study

Scope of the study

Tools & techniques used

Applied principles and concepts

Sources of primary and secondary data

Data collection

Statistical analysis

Theoretical interpretation

Findings

Chapter 4:- Conclusions and Recommendations

Appendix 1: Questionnaire
 IDBI BANK LTD.

Appendix 2: Reference material

Introduction: Executive summary of the project Chapter 1

Executive Summary

Banking Industry around which my project has to be revolved is really a very complex

industry. And to work for this was really a complex and hectic task and few times I felt so

frustrated that I thought to left the project and go for any new industry and new project.

Challenges which I faced while doing this project were following-

- Banking sector was quite similar in offering and products and because of that it was very

difficult to discriminate between our product and products of the competitors.

- Target customers and respondents were too busy persons that to get their time and view

for specific questions was very difficult.

- Sensitivity of the industry was also a very frequent factor which was very important to

measure correctly.

- Area covered for the project (i.e JC Nagar, RT Nagar, Hebbal, Sanjay nagar, Sultanpalya,

Kavalbyrasandra, Ganganagar, CBI) while doing job also was very large and it was very

difficult to correlate two different customers/respondents views in a one.

- Every financial customer has his/her own need and according to the requirements of the

customer product customization was not possible.

So above challenges some time forced me to leave the project but any how I did my project in all

circumstances. Basically in this project I analyzed that-What factors are really responsible for

performance of IDBI Bank’s performance in this competitive era.

 IDBI BANK LTD.

INTRODUCTION
Customer acquisition is the first stage of customer lifecycle. New customers have to be
acquired to build the companies. Even in well-managed companies there can be significant level of
customer attrition. These lost customers need to be replaced. Several important matters are which
potential customers to target, how to approach them and what to offer them.
Customer acquisition is always the most important goal during new product launches and with
new business start-ups. For small businesses with ambitions to grow, customer acquisition is
again very important for their survival.
Even with well-developed and implemented customer retention plans, customers still need
replacement. In a B2C context, customer may shift out of a targeted demographic as they age and
progress through the family life cycle; their personal circumstances may change and they may no
longer need or find value in products; they may even die. In a B2B context, they may lose
corporate customers because they have been acquired by another company with established
buying practices and supplier preferences; they may have stopped producing the goods and
services for which your companyprovided input; they may have ceased trading. Customers lost to
these uncontrollable causes indicate that customer acquisition will always be needed to replace
natural attrition.
Several important questions have to be answered when a company puts together a customer
acquisition plan. These questions concern targets, channels and offers:
(1)Which prospects(potential new customers) will be targeted?
(2)How will these prospects be approached?
(3)What offer will be made?
These issues need to be carefully considered and programmed into a properly resourced
customer acquisition plan.
What is a new customer?
A customer can be new in one of these senses:
(1) New to the product category
(2) New to the company.
 IDBI BANK LTD.

New-to –category
Customers are customers who have either identified a new need or have found a new category
of solution for an existing need. In the B2C context, when a couple has their first child they have a
completely new set of needs connected to the growth and nurturing of their child. This includes
baby clothes, food and toys, for example. As the child grows, the parents are faced with additional
new-to-category decisions, such as preschool and elementary education. Sometimes, customers
also become new-to-category because they find a new category to replace an existing solution.
Mobile phones have now significantly replaced card or cash-operated pay-phones in many
countries. Environmentally friendlier detergents and diapers are growing their share of market, as
customer switch from current products.
Sometimes, customers beat marketers to the punch by adopting established products for new
uses. Marketers then catch on and begin to promote the new use. Arm and Hammer baking soda
was used by customers to deodorize fridges and rubbish bins, and as a mild abrasive for whitening
teeth. The manufacturer, church and dwight, responded to this revelation and began promoting a
variety of different applications. It is now an ingredient in toothpaste. Automobile manufacturers
noticed that many utility vehicles were not being bought by tradesmen, but as fun vehicles for
weekend use. They began promoting this use, while at the same time trying to innovate in product
design to meet the requirements of that market segment. The result has been the emergence of a
completely new market segment: the market for sports utility vehicles
The same distinction between new needs and new solutions also exists in the B2B
marketplace. A customer can be new-to-category if they begin an activity that requires resources
that are new to the business. For example, when McDonald’s entered the coffee shop market, they
needed to develop a new set of supplier relationships. New-to-category customers may also be
customer who find a new solution for an existing problem. For example, some clothing
manufacturers now use computer-operated sewing machines to perform tasks that were
previously performed by skilled labour using traditional sewing machines.
 IDBI BANK LTD.

New-to-company
The second category of new customers is customers that are new to the company. New-to-
company customers are won from competitors. They might switch to your company because they
feel you offer a better solution or because they value variety. Generally, new-to-company
customers are the only option for growing customer They advertise heavily in mass media,
communicate direct to students, offer free gifts and low or zero-cost banking for the duration of
the studentship. On the other hand, supermarket retailers incur no direct costs in attracting these
same students to their local stores.
New-to-company customers can be very expensive to acquire, particularly if they are strongly
committed to their current supplier. Commitment is reflected in a strong positive attitude to,or
high levels of investment in, the current supplier can be difficult, and often too expensive, to break.
High potential value customers are not always the most attractive prospects, because of this
commitment and investment. A lower value customer with a weaker commitment to the current
supplier may be a better prospect.
Portfolio purchasing
New customers can be difficult to identify in markets where customers exhibit portfolio
purchasing behavior’s. Customers buy on a portfolio basis when they buy from a choice set of
several more or less equivalent alternatives. A customer who has not bought from one of the
portfolio suppliers for a matter of months, or even years, may still regard the unchosen supplier as
a part of the portolio. The supplier, on the other hand, may have a business rule that says: ‘If a
customer has not bought for three months, mail out a special offer’. In the UK many grocery
customers shop at both Tesco and Sainsbury’s
Strategic switching
These are customers who shift their allegiances from one supplier to another in pursuit of a better
deal. Banks know that their promotional pricing stimulates hot money. This is money that is
moved from account to account across the banking industry in search of a better rate of interest.
Sometimes the money may only be in an account overnight.
 IDBI BANK LTD.

Sometimes, a customer may have regained a second or further time as a new customer. For
example, if the new parents mentioned previously were to have a second child after four years,
they would most likely have been removed from mother and baby databases. A new customer
record would have to be created. The customer would need to be targeted afresh. In portfolio
markets, a customer who has not purchased in quarter 1 may be treated as a new customer for
promotional purposes in quarter 2, as the company attempts to reactivate the customer.
Customer value estimates
Companies must choose which of several potential customers or customer segments to target for
acquisition. Not all prospects have similar potential. The final choice will depend on a number of
considerations.
(1)What is the estimated value of the customer? This depends on the margins earned from the
customer’s purchase over a given time period.
(2)If that customer switches from his current suppliers, what proportion of category spending will
your company earn?
(3)What is the probability that the customer will switch from current suppliers.
Committed customers
 Entrenched customers are unlikely to switch in the foreseeable future.
 Average customers are unlikely to change in the short term, but may switch in the medium
term.

Uncommitted customers
 Shallow customer have a lower commitment than average, and some of them are already
considering alternatives.
 Convertible customers are most likely to defect.

companies can measure customer commitment by asking just four questions:

(1)How happy are you with( whatever it is)?
(2)Is this relationship something that you care about?
(3)Is there any other(whatever it is) that appeals to you?
(4)Is so, how different is the one(whatever) from the other?
 IDBI BANK LTD.

Non-customers are also segmented according to commitment scores into four availability subsets:
available, ambivalent, weakly unavailable and strongly unavailable. There are two clusters that are
open and two that are unavailable:
Open non-customers
 Available non-customers prefer the alternative to their current offer though they have not
yet switched, and are ready to switch
 Ambivalent non-customers are as attracted to the alternative as they are to their current
brand.

Unavailable non-customers
 Weakly unavailable non-customers prefer their current brands
 Strongly unavailable non-customers have a strong preference for their current brands.

In the B2B environment it is very often the task of marketers to generate leads for the salesperson
to follow up. Leads are individuals or companies that might be worth approaching. The leads then
needs to be qualified. The qualification process submits all leads to a series of questions, such as:
 Does the lead have a need for my company’s product?
 Does the lead have the ability to pay?
 Is the lead authorized to buy?

If the answers are yes, yes and yes, the lead becomes a genuine prospect. Ability to pay covers
both cash and credit. The ability to pay of prospective customers can be accessed by subscribing to
credit rating services.
Once leads are qualified, companies need to decide the best channels for initiating contact. A
distinction can be made between direct to customer channels, such as salesperson, direct mail, e-
mail and telemarketing, and channels that are indirect, either because they use partners or other
intermediaries or because they bought time and space in media. The improved quality of
databases has meant that direct channels allow access to specified named leads in target
businesses.
 IDBI BANK LTD.

Sources of B2B leads

Leads come from a variety of sources. In a B2B context this includes the sources identified.
 Satisfied customers
Referrals from satisfied customers
 Networking
Personal contacts with well-connected and co-operative people
 Promotional activities
Exhibitions, seminars, tradeshows and conferences
Delegate and attendee lists
Advertising response inquiries
Publicity
 Websites
 Lists and directories
SIC listing, telephone directories
 Canvassing
 Tele-marketing
 E-mail

Many companies are turning to satisfied customers who may be willing to generate personal
referrals. Customer-related data enables many companies to identify which customers are very
satisfied. These special customers can then be proactively approached for a referral. They may be
prepared to write a letter or e-mail of introduction, provide a testimonial or receive a call to verify
the credentials of a salesperson.
Networking can be defined as follows:
Networking is the process of establishing and maintaining business-related personal
relationships.
A network might include members of a business association, friends from universities or
professional colleagues in other companies. In some countries it is essential to build and maintain
personal networks.
 IDBI BANK LTD.

Referral networks are common in professional services. Accountants, banks, lawyers, auditors, tax
consultants, estate agents will join together into a referral network in which they undertake to
refer clients to other members of the network.
Promotional activities can also generate useful leads. Exhibitions, seminars, trade shows and
conferences can be productive sources. Companies that pay to participate in these events may be
able to obtain privileged access to delegate and attendee lists, or to generate lists of their own
stand at a trade show.
B2B marketers generally do little advertising, even though this can generate leads. B2B
advertising is generally placed in highly-targeted specialist media such as trade magazines.
An important activity for some B2B companies is publicity. Publicity is an outcome of public
relations activity. Publicity can be defined as follows:
Publicity is the generation of free editorial content relevant to a company’s interests
Successful public relations can generate publicity for your product or company in appropriate
media. This coverage, unlike advertising, is unpaid. Though unpaid, publicity does create costs.
Someone has to be paid to write the story and submit it to the media. Many magazines, trade
papers and online communities are run on a shoestring. They employ very few staff and rely
heavily on stories submitted by companies and their public relations staff to generate editorial
matter. Editors are looking for newsworthy items, such as stories about product innovation,
original customer applications or human-interest stories about product innovation, original
customer applications or human-interest stories about inventors and entrepreneurs. Editorial
staff generally will edit copy to eliminate deceptive or brazen claims.
Prospecting on the internet
Company websites can also be fruitful sources of new customers. Anyone with access to the
internet is a prospective customer. The internet enables potential customers to search globally for
products and suppliers. To be effective in new customer generation, websites must take into
account the way prospects search for information. There are four ways:
(1)Keying in a page’s URL
(2)Using search engines
(3)Exploring directories, web catalogues or portals
(4)Surfing
 IDBI BANK LTD.

A URL is a website address. URL stand for uniform(or universal) resource locator. By tying it
into a web browser’s address window, you move straight to the website. URL’s can be saved as
favorites once you are sure of the address.
Search engines provide an indexed guide to websites. Users searching for information type
keywords into a web-based form. The engine then reports the number of hits, that is,webpages
that feature the keypad word or words. Users can be click on a hyperclick to take them to relevant
pages. To ensure that your site is hit when a prospect is searching, your website needs to be
registered with appropriate search engines. There are hundreds of search engines.
Directories or web catalogues such as yahoo! Provide a structural hierarchical listing of
websites, grouped into categories such as business, entertainment and sport. Companies choose
under which category to register.
Surfing is a term used to describe a more intuitive and less structured approach to website
searching.

When prospective customers reach your site they need to be able to do what they want. This
may mean searching for a product, registering for information, requesting a quotation, describing
their requirements and preferences.
Lists of prospects can be developed from many sources such as telephone directories, business
lists, chamber of commerce memberships, professional and trade association memberships, and
magazine circulation data. Lists can also be bought readymade from lists compilers and brokers.
Lists of prospects, organized by their standard industrial classification code are widely used. Some
lists are of poor quality: out of date, containing duplications, omissions, and other errors. High
quality lists with full contact details, including phone and e-mail address tend to be more
expensive. Lists can support direct marketing efforts by phone, mail, e-mail, fax or face-to-face.
Canvassing involves making unsolicited calls, sometimes known as cold calls. This can be a very
wasteful use of an expensive asset: the salesperson. Some companies have banned their
salespeople from cold calling. Others outsource this activity to third parties. Some hotel chains, for
example, use hospitality students to conduct a sales blitz that is essentially a telephone-based cold
calling campaign.
 IDBI BANK LTD.

Telemarketing is widely used as a more cost-effective way of prospecting than use of a

salesperson. Telemarketing, sometimes called telesales, is a systematic approach to prospecting
using the telephone, and, sometimes, other electronic media such as fax and e-mail. Telemarketing
is usually performed by staff of customer contact centers. These are either in-house or outsourced.
Outbound telemarketers make outgoing calls to identify and qualify leads. Inbound telemarketers
receive calls from prospective customers. In addition to prospecting, telemarketing can be used to
manage other parts of the customer lifecycle: cross-selling, handling complaints and winning back
at-risk or lost customers, for example.
A growing number of companies are using e-mail for new customer acquisition. E-mail offers
several clear advantages. A very large proportion of business decision makers have e-mail,
although this does vary by country and industry. It is cheap, costing about the same to send one
thousand e-mails as it does to send a single e-mail. It is quick and simple for recipients to respond.
Content can be personalized. Production values can be matched to audience preferences: you can
use richly graphical or simple textual content. It is an asynchronous prospecting tool, in other
words it is not tied to a particular timeframe like a sales call.
 IDBI BANK LTD.

Industry status & IDBI Bank’s interface Chapter 2

Industry introduction

The Indian Banking industry, which is governed by the Banking Regulation Act of India, 1949 can

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 in every city and villages of all

nook and corners of the land.

The first phase of financial reforms resulted in the nationalization of 14 major banks in 1969 and

resulted in a shift from Class banking to Mass banking. This in turn resulted in a significant growth

in the geographical coverage of banks. Every bank had to earmark a minimum percentage of their

loan portfolio to sectors identified as “priority sectors”. The manufacturing sector also grew

during the 1970s in protected environs and the banking sector was a critical source. The next

wave of reforms saw the nationalization of 6 more commercial banks in 1980. Since then the

number of scheduled commercial banks increased four-fold and the number of bank branches

increased eight-fold. And that was not the limit of growth.

After the second phase of financial sector reforms and liberalization of the sector in the early

nineties, the Public Sector Banks (PSB) s found it extremely difficult to compete with the new

private sector banks and the foreign banks. The new private sector banks first made their

appearance after the guidelines permitting them were issued in January 1993. Eight new private
 IDBI BANK LTD.

sector banks are presently in operation. These banks due to their late start have access to state-of-

the-art technology, which in turn helps them to save on manpower costs.

During the year 2000, the State Bank Of India (SBI) and its 7 associates accounted for a 25 percent

share in deposits and 28.1 percent share in credit. The 20 nationalized banks accounted for 53.2

percent of the deposits and 47.5 percent of credit during the same period. The share of foreign

banks (numbering 42), regional rural banks and other scheduled commercial banks accounted for

5.7 percent, 3.9 percent and 12.2 percent respectively in deposits and 8.41 percent, 3.14 percent

and 12.85 percent respectively in credit during the year 2000.about the detail of the current

scenario we will go through the trends in modern economy of the country.

 IDBI BANK LTD.

Current Scenario:

The industry is currently in a transition phase. On the one hand, the PSBs, which are the mainstay

of the Indian Banking system are in the process of shedding their flab in terms of excessive

manpower, excessive non Performing Assets (Npas) and excessive governmental equity, while on

the other hand the private sector banks are consolidating themselves through mergers and

acquisitions.

PSBs, which currently account for more than 78 percent of total banking industry assets are

saddled with NPAs (a mind-boggling Rs 830 billion in 2000), falling revenues from traditional

sources, lack of modern technology and a massive workforce while the new private sector banks

are forging ahead and rewriting the traditional banking business model by way of their sheer

innovation and service. The PSBs are of course currently working out challenging strategies even

as 20 percent of their massive employee strength has dwindled in the wake of the successful

Voluntary Retirement Schemes (VRS) schemes.

The private players however cannot match the PSB’s great reach, great size and access to low cost

deposits. Therefore one of the means for them to combat the PSBs has been through the merger

and acquisition (M& A) route. Over the last two years, the industry has witnessed several such

instances. For instance, HDFC Bank’s merger with Times Bank Icici Bank’s acquisition of ITC

Classic, Anagram Finance and Bank of Madurai. Centurion Bank, Indusind Bank, Bank of Punjab,

Vysya Bank are said to be on the lookout. The UTI bank- Global Trust Bank merger however

opened a pandora’s box and brought about the realization that all was not well in the functioning

of many of the private sector banks.

 IDBI BANK LTD.

Private sector Banks have pioneered internet banking, phone banking, anywhere

banking, mobile banking, debit cards, Automatic Teller Machines (ATMs) and combined various

other services and integrated them into the mainstream banking arena, while the PSBs are still

grappling with disgruntled employees in the aftermath of successful VRS schemes. Also, following

India’s commitment to the W To agreement in respect of the services sector, foreign banks,

including both new and the existing ones, have been permitted to open up to 12 branches a year

with effect from 1998-99 as against the earlier stipulation of 8 branches.Tasks of government

diluting their equity from 51 percent to 33 percent in November 2000 has also opened up a new

opportunity for the takeover of even the PSBs. The FDI rules being more rationalized in Q1FY02

may also pave the way for foreign banks taking the M& A route to acquire willing Indian partners.

Meanwhile the economic and corporate sector slowdown has led to an increasing number of

banks focusing on the retail segment. Many of them are also entering the new vistas of Insurance.

Banks with their phenomenal reach and a regular interface with the retail investor are the best

placed to enter into the insurance sector. Banks in India have been allowed to provide fee-based

insurance services without risk participation, invest in an insurance company for providing

infrastructure and services support and set up of a separate joint-venture insurance company with

risk participation.
 IDBI BANK LTD.

Aggregate Performance of the Banking Industry

Aggregate deposits of scheduled commercial banks increased at a compounded annual average

growth rate (Cagr) of 17.8 percent during 1969-99, while bank credit expanded at a Cagr of 16.3

percent per annum. Banks’ investments in government and other approved securities recorded a

Cagr of 18.8 percent per annum during the same period.

In FY01 the economic slowdown resulted in a Gross Domestic Product (GDP) growth of only 6.0

percent as against the previous year’s 6.4 percent. The WPI Index (a measure of inflation)

increased by 7.1 percent as against 3.3 percent in FY00. Similarly, money supply (M3) grew by

around 16.2 percent as against 14.6 percent a year ago.

The growth in aggregate deposits of the scheduled commercial banks at 15.4 percent in FY01

percent was lower than that of 19.3 percent in the previous year, while the growth in credit by

SCBs slowed down to 15.6 percent in FY01 against 23 percent a year ago.

The industrial slowdown also affected the earnings of listed banks. The net profits of 20

listed banks dropped by 34.43 percent in the quarter ended March 2001. Net profits grew by

40.75 percent in the first quarter of 2000-2001, but dropped to 4.56 percent in the fourth quarter

of 2000-2001.

On the Capital Adequacy Ratio (CAR) front while most banks managed to fulfill the norms, it

was a feat achieved with its own share of difficulties. The CAR, which at present is 9.0 percent, is

likely to be hiked to 12.0 percent by the year 2004 based on the Basle Committee

recommendations. Any bank that wishes to grow its assets needs to also shore up its capital at the

same time so that its capital as a percentage of the risk-weighted assets is maintained at the

stipulated rate. While the IPO route was a much-fancied one in the early ‘90s, the current scenario

doesn’t look too attractive for bank majors.

 IDBI BANK LTD.

Consequently, banks have been forced to explore other avenues to shore up their capital base.

While some are wooing foreign partners to add to the capital others are employing the M& A

route. Many are also going in for right issues at prices considerably lower than the market prices

to woo the investors.

Interest Rate Scene

The two years, post the East Asian crises in 1997-98 saw a climb in the global interest rates. It

was only in the later half of FY01 that the US Fed cut interest rates. India has however remained

more or less insulated. The past 2 years in our country was characterized by a mounting intention

of the Reserve Bank Of India (RBI) to steadily reduce interest rates resulting in a narrowing

differential between global and domestic rates.

The RBI has been affecting bank rate and CRR cuts at regular intervals to improve liquidity and

reduce rates. The only exception was in July 2000 when the RBI increased the Cash Reserve Ratio

(CRR) to stem the fall in the rupee against the dollar. The steady fall in the interest rates resulted

in squeezed margins for the banks in general.

 IDBI BANK LTD.

Governmental Policy:

After the first phase and second phase of financial reforms, in the 1980s commercial banks

began to function in a highly regulated environment, with administered interest rate structure,

quantitative restrictions on credit flows, high reserve requirements and reservation of a

significant proportion of lendable resources for the priority and the government sectors. The

restrictive regulatory norms led to the credit rationing for the private sector and the interest rate

controls led to the unproductive use of credit and low levels of investment and growth. The

resultant ‘financial repression’ led to decline in productivity and efficiency and erosion of

profitability of the banking sector in general.

This was when the need to develop a sound commercial banking system was felt. This was worked

out mainly with the help of the recommendations of the Committee on the Financial

System (Chairman: Shri M. Narasimham), 1991. The resultant financial sector reforms called for

interest rate flexibility for banks, reduction in reserve requirements, and a number of structural

measures. Interest rates have thus been steadily deregulated in the past few years with banks

being free to fix their Prime Lending Rates(PLRs) and deposit rates for most banking products.

Credit market reforms included introduction of new instruments of credit, changes in the credit

delivery system and integration of functional roles of diverse players, such as, banks, financial

institutions and non-banking financial companies (Nbfcs).

 IDBI BANK LTD.

Implications Of Some Recent Policy Measures:

The allowing of PSBs to shed manpower and dilution of equity are moves that will lend greater

autonomy to the industry. In order to lend more depth to the capital markets the RBI had in

November 2000 also changed the capital market exposure norms from 5 percent of bank’s

incremental deposits of the previous year to 5 percent of the bank’s total domestic credit in the

previous year. But this move did not have the desired effect, as in, while most banks kept away

almost completely from the capital markets, a few private sector banks went overboard and

exceeded limits and indulged in dubious stock market deals. The chances of seeing banks making a

comeback to the stock markets are therefore quite unlikely in the near future.

The move to increase Foreign Direct Investment FDI limits to 49 percent from 20 percent

during the first quarter of this fiscal came as a welcome announcement to foreign players wanting

to get a foot hold in the Indian Markets by investing in willing Indian partners who are starved of

net worth to meet CAR norms. Ceiling for FII investment in companies was also increased from

24.0 percent to 49.0 percent and have been included within the ambit of FDI investment.
 IDBI BANK LTD.

IDBI bank: all about

The economic development of any country depends on the extent to which its financial system

efficiently and effectively mobilizes and allocates resources. There are a number of banks and

financial institutions that perform this function; one of them is the development bank.

Development banks are unique financial institutions that perform the special task of fostering the

development of a nation, generally not undertaken by other banks.

Development banks are financial agencies that provide medium-and long-term financial assistance

and act as catalytic agents in promoting balanced development of the country. They are engaged in

promotion and development of industry, agriculture, and other key sectors. They also provide

development services that can aid in the accelerated growth of an economy.

The objectives of development banks are:

To serve as an agent of development in various sectors, viz. industry, agriculture, and

international trade

To accelerate the growth of the economy

To allocate resources to high priority areas

To foster rapid industrialization, particularly in the private sector, so as to provide

employment opportunities as well as higher production

To develop entrepreneurial skills

To promote the development of rural areas

To finance housing, small scale industries, infrastructure, and social utilities.

In addition, they are assigned a special role in:

Planning, promoting, and developing industries to fill the gaps in industrial sector.
 IDBI BANK LTD.

Coordinating the working of institutions engaged in financing, promoting or developing industries,

agriculture, or trade, rendering promotional services such as discovering project ideas,

undertaking feasibility studies, and providing technical, financial, and managerial assistance for

the implementation of projects

Industrial development bank of India

The industrial development bank of India(IDBI) was established in 1964 by parliament as wholly

owned subsidiary of reserve bank of India. In 1976, the bank’s ownership was transferred to the

government of India. It was accorded the status of principal financial institution for coordinating

the working of institutions at national and state levels engaged in financing, promoting, and

developing industries.

IDBI has provided assistance to development related projects and contributed to building up

substantial capacities in all major industries in India. IDBI has directly or indirectly assisted all

companies that are presently reckoned as major corporates in the country. It has played a

dominant role in balanced industrial development.

IDBI set up the small industries development bank of India (SIDBI) as wholly owned subsidiary to

cater to specific the needs of the small-scale sector.

IDBI has engineered the development of capital market through helping in setting up of the

securities exchange board of India(SEBI), National stock exchange of India limited(NSE), credit

analysis and research limited(CARE), stock holding corporation of India limited(SHCIL), investor

services of India limited(ISIL), national securities depository limited(NSDL), and clearing

corporation of India limited(CCIL)

 IDBI BANK LTD.

In 1992, IDBI accessed the domestic retail debt market for the first time by issuing innovative

bonds known as the deep discount bonds. These new bonds became highly popular with the

Indian investor.

In 1994, IDBI Act was amended to permit public ownership up to 49 per cent. In July 1995, it

raised over Rs 20 billion in its first initial public (IPO) of equity, thereby reducing the government

stake to 72.14 per cent. In June 2000, a part of government shareholding was converted to

preference capital. This capital was redeemed in March 2001, which led to a reduction in

government stake. The government stake currently is 51 per cent.

In august 2000, IDBI became the first all India financial institution to obtain ISO 9002: 1994

certification for its treasury operations. It also became the first organization in the Indian financial

sector to obtain ISO 9001:2000 certification for its forex services.

 IDBI BANK LTD.

Milestones

 July 1964: Set up under an Act of Parliament as a wholly-owned subsidiary of Reserve

Bank of India.

 February 1976: Ownership transferred to Government of India. Designated Principal

Financial Institution for co-coordinating the working of institutions at national and State

levels engaged in financing, promoting and developing industry.

 March 1982: International Finance Division of IDBI transferred to Export-Import Bank of

India, established as a wholly-owned corporation of Government of India, under an Act of

Parliament.

 April 1990: Set up Small Industries Development Bank of India (SIDBI) under SIDBI Act as

a wholly-owned subsidiary to cater to specific needs of small-scale sector. In terms of an

amendment to SIDBI Act in September 2000, IDBI divested 51% of its shareholding in

SIDBI in favour of banks and other institutions in the first phase. IDBI has subsequently

divested 79.13% of its stake in its erstwhile subsidiary to date.

 January 1992: Accessed domestic retail debt market for the first time with innovative

Deep Discount Bonds; registered path-breaking success.

 December 1993: Set up IDBI Capital Market Services Ltd. as a wholly-owned subsidiary to

offer a broad range of financial services, including Bond Trading, Equity Broking, Client

Asset Management and Depository Services. IDBI Capital is currently a leading Primary

Dealer in the country.

 IDBI BANK LTD.

 September 1994: Set up IDBI Bank Ltd. in association with SIDBI as a private sector

commercial bank subsidiary, a sequel to RBI's policy of opening up domestic banking sector

to private participation as part of overall financial sector reforms.

 October 1994: IDBI Act amended to permit public ownership upto 49%.

 July 1995: Made Initial Public Offer of Equity and raised over Rs.2000 crore, thereby

reducing Government stake to 72.14%.

 March 2000:Entered into a JV agreement with Principal Financial Group, USA for

participation in equity and management of IDBI Investment Management Company Ltd.,

erstwhile a 100% subsidiary. IDBI divested its entire shareholding in its asset management

venture in March 2003 as part of overall corporate strategy.

 March 2000: Set up IDBI Intech Ltd. as a wholly-owned subsidiary to undertake IT-related

activities.

 June 2000: A part of Government shareholding converted to preference capital, since

redeemed in March 2001; Government stake currently 58.47%.

 August 2000: Became the first All-India Financial Institution to obtain ISO 9002:1994

Certification for its treasury operations. Also became the first organisation in Indian

financial sector to obtain ISO 9001:2000 Certification for its forex services.
 IDBI BANK LTD.

 March 2001: Set up IDBI Trusteeship Services Ltd. to provide technology-driven

information and professional services to subscribers and issuers of debentures.

 Feburary 2002: Associated with select banks/institutions in setting up Asset

Reconstruction Company (India) Limited (ARCIL), which will be involved with the

 Strategic management of non-performing and stressed assets of Financial Institutions and

Banks.

 September 2003: IDBI acquired the entire shareholding of Tata Finance Limited in Tata

Homefinance Ltd, signalling IDBI's foray into the retail finance sector. The housing finance

subsidiary has since been renamed 'IDBI Homefinance Limited'.

 December 2003: On December 16, 2003, the Parliament approved The Industrial

Development Bank (Transfer of Undertaking and Repeal Bill) 2002 to repeal IDBI Act 1964.

The President's assent for the same was obtained on December 30, 2003. The Repeal Act is

aimed at bringing IDBI under the Companies Act for investing it with the requisite

operational flexibility to undertake commercial banking business under the Banking

Regulation Act 1949 in addition to the business carried on and transacted by it under the

IDBI Act, 1964.

 July 2004: The Industrial Development Bank (Transfer of Undertaking and Repeal) Act

2003 came into force from July 2, 2004.

 IDBI BANK LTD.

 July 2004: The Boards of IDBI and IDBI Bank Ltd. take in-principle decision regarding

merger of IDBI Bank Ltd. with proposed Industrial Development Bank of India Ltd. in their

respective meetings on July 29, 2004.

 September 2004: The Trust Deed for Stressed Assets Stabilisation Fund (SASF) executed

by its Trustees on September 24, 2004 and the first meeting of the Trustees was held on

September 27, 2004.

 September 2004: The new entity "Industrial Development Bank of India" was

incorporated on September 27, 2004 and Certificate of commencement of business was

issued by the Registrar of Companies on September 28, 2004.

 September 2004:Notification issued by Ministry of Finance specifying SASF as a financial

institution under Section 2(h)(ii) of Recovery of Debts due to Banks & Financial Institutions

Act, 1993.

 September 2004:Notification issued by Ministry of Finance on September 29, 2004 for

issue of non-interest bearing GoI IDBI Special Security, 2024, aggregating Rs.9000 crore, of

20-year tenure.

 September 2004: Notification for appointed day as October 1, 2004, issued by Ministry of

Finance on September 29, 2004.

 September 2004:RBI issues notification for inclusion of Industrial Development Bank of

India Ltd. in Schedule II of RBI Act, 1934 on September 30, 2004.

 IDBI BANK LTD.

 October 2004: Appointed day - October 01, 2004 - Transfer of undertaking of IDBI to IDBI

Ltd. IDBI Ltd. commences operations as a banking company. IDBI Act, 1964 stands

repealed. January 2005:The Board of Directors of IDBI Ltd., at its meeting held on January

20, 2005, approved the Scheme of Amalgamation, envisaging merging of IDBI Bank Ltd.

with IDBI Ltd. Pursuant to the scheme approved by the Boards of both the banks, IDBI Ltd.

will issue 100 equity shares for 142 equity shares held by shareholders in IDBI Bank Ltd.

EGM has been convened on February 23, 2005 for seeking shareholder approval for the

scheme.

Then its going on and on….

PERSONAL SAVING

SAVING ACCOUNT

RETAIL BANKING

IDBI Bank Business Chart

CORPORATE SAVING

CURRENT ACCOUNT

IDBI BANK
INVESTM

DEVELOPM
 ENT BANK.
NT
IDBI BANK LTD.

IDBI Bank Organizational Chart

 IDBI BANK LTD.

Chairman

President

Vice president Vice president Vice president Vice president

Finance H. R. Marketing Operations

Regional Head

Zonal Head

Divisional Sales
Manager

Territory In charge

Chapter 3
Research Methodology

Objective of the study

Project study which is being conducted by me for the last two month is not only a formality for the
fulfillment of the two year MBA. But being a management student I tried my best to extract best of
 IDBI BANK LTD.

the information available in the market and used all resources to sell the CASA products for the
benefit of the bank as well as to expand the business. The objectives have been classified by me in
this project form personal to professional, but here I am not disclosing my personal objective
which have been achieved by me while doing the project. Only professional objectives which are
being covered by me in this project are as following-
To know the opinion of new customers about the newly launched scheme for new customer.
To assess the satisfaction level of existing customers about the services of the bank.
To know the intention of the customers for maintaining a healthy relationship with the Bank in
future.

To know the perception and conception of customers towards banking products and specially
focused for IDBI Bank’s product.

Scope of the Study

Each and every project study along with its certain objectives also have scope for future. And this

scope in future gives to new researches a new need to research a new project with a new scope.
 IDBI BANK LTD.

Scope of the study not only consist one or two future business plan but sometime it also gives idea

about a new business which becomes much more profitable for the researches then the older one.

Scope of the study could give the projected scenario for a new successful strategy with a

proper implementation plan. Whatever scope I observed in my project are not exactly having all

the features of the scope which I described above but also not lacking all the features.

- Research study could give an idea of network expansion for capturing more market

and customer with better services and lower cost, with out compromising with quality.

- In future customer requirements could be added with the product and services for

getting an edge over competitors.

- Consumer behavior could also be used for the purpose of launching a new product with

extra benefits which are required by customers for their account (saving or current )

and/or for their investments.

- Factors which are responsible for the performance for bank can also be used for the

modification of the strategy and product for being more profitable.

- Factors which I observed while doing project study are following-

Competitors

Customer Behaviour

Advertisement/promotional activities

Attitude of manpower and

Economic conditions

These all could also be interchanged with each other for each other in banks strategies

for making a final business plan to effect the market with a positive way without
 IDBI BANK LTD.

disturbing a lot to market, customers and competitors with disturbance in market

shares.

Tools and Techniques

As no study could be successfully completed without proper tools and techniques, same with my

project. For the better presentation and right explanation I used tools of statistics and computer

very frequently. And I am very thankful to all those tools for helping me a lot

Applied Principles and Concepts

While I started to do the project the main thing which was the matter of concern was that around

what principles I have to revolve my project. Because with out having any hypothesis and

objective we can not determine that what output or result we are expecting form the project.

And second thing is that having only tools and techniques for the purpose of project is not relevant

until unless we have the principals for which we have to use those tools and techniques.

Sources of Primary and Secondary data:

 IDBI BANK LTD.

For the purpose of project data is very much required which works as a food for process which

will ultimately give output in the form of information. So before mentioning the source of data for

the project I would like to mention that what type of data I have collected for the purpose of

project and what it is exactly.

1. Primary Data:

Primary data is basically the live data which I collected on field while doing cold calls with the

customers and I shown them list of question for which I had required their responses. In some

cases I got no response form their side and than on the basis of my previous experiences I

filled those fields.

Source: Main source for the primary data for the project was questionnaires which I got filled

by the customers or some times filled myself on the basis of discussion with the customers.

2. Secondary Data:

Secondary data for the base of the project I collected from intranet of the Bank and from

internet, RBI Bulletin etc.

 IDBI BANK LTD.

Statistical Analysis

In this segment I will show my findings in the form of graphs and charts. All the

data which I got form the market will not be disclosed over here but extract of that in

the form of information will definitely be here.

Detail:

Size of Data : 250

Area : RT Nagar

Type of Data : 1. Primary 2. Secondary

Industry : Banking

Respondent : Customers
 IDBI BANK LTD.

Table1: Correlation between awareness of customers about IDBI bank & their

Age

AGE NO. OF RESPONSE

20-25 25
25-30 46
30-35 34
35-40 23
40-45 21
45-50 22
50-60 24
60-ABOVE 55

60
RESPONSES

50
40
30 NO. OF RESPONSE
20
10
0
VE
5

0
0

-A 0
-2

-3

-5
-3

-4

-4

60 -6
BO
20

25

30

35

40

45

50

AGE GROUP
 IDBI BANK LTD.

TABLE 2: PERCEPTION OF IDBI AS A BANK

TYPE OF BANK RESPONSES

PRIVATE 50
PUBLIC 45
PRIVATE/PUBLIC 100
DON'T KNOW 55

RESPONSES

DON'T KNOW PRIVATE PRIVATE

PUBLIC
PUBLIC PRIVATE/PUBLIC
PRIVATE/PUB DON'T KNOW
LIC
 IDBI BANK LTD.

TABLE 3 : RATING OF CUSTOMERS FOR IDBI BANK AS A GOOD BANK

PARAMETER RESPONSES
EFFICIENCY 75%
INTERNET BANKING/ATMs 25%
PRODUCT RANGE 95%
NETWORK 33%
PHONE BANKING 22%
 IDBI BANK LTD.

22%
33% EFFICIENCY
75% INTERNET
BANKING/ATMs
PRODUCT RANGE

NETWORK
95% PHONE BANKING
25%
 IDBI BANK LTD.

TABLE 4: MARKET SHARES IN RT NAGAR IN COMPARISION TO COMPETITORS

BANK NAME % OF SHARE

SBI 30%
IDBI 15%
ICICI 25%
PNB 10%
HDFC 5%
HSBC 5%
OTHERS 10%
 IDBI BANK LTD.

SBI
30%
ICICI
25% SBI
IDBI
20%
IDBI ICICI
15% PNB
PNB OTHERS HDFC
10%
HSBC
HDFCHSBC
5% OTHERS

0%
% OF SHARE
 IDBI BANK LTD.

TABLE 5: FACTORS RESPONSIBLE FOR PERFORMANCE OF IDBI BANK IN

BANGALORE

PARAMETERS % OF SHARE
PRODUCT 50%
ADVERTISMENT 5%
MANPOWER 25%
NET-BANKING 2%
PHONE BANKING 5%
INVESTMENT SCHEME 10%
NETWORK 3%

60%
50%
50% PRODUCT
P E RS E NT AG E

ADVERTISMENT
40%
MANPOWER
30% 25% NET-BANKING
PHONE BANKING
20%
INVESTMENT SCHEME
10%
10% 5% 5% NETWORK
2% 3%
0%
% OF SHARE
PARAMETERS
 IDBI BANK LTD.

TABLE 6 : COMPARATIVE STUDY WITH MAJOR COMPETITORS ON BASIC

PARAMETERS

CANAR
PARAMETERS/BANKS IDBI ICICI SBI PNB HSBC
A BANK
PRODUCT 20% 15% 30% 15% 10% 10%
ADVERTISMENT 3% 45% 15% 20% 7% 10%
MANPOWER 10% 50% 2% 3% 25% 10%
NET-BANKING 3% 50% 10% 12% 8% 17%
PHONE BANKING 10% 40% 5% 5% 30% 10%
INVESTMENT SCHEME 5% 25% 50% 10% 5% 5%
NETWORK 2% 40% 40% 5% 3% 10%
CREDIBILITY 20% 10% 40% 20% 5% 5%

COMPARATIVE GRAPHS

60%
50%
PERCENTAGE

PRODUCT
40%
30% ADVERTISMENT
20% MANPOWER
10%
0% NET-BANKING
PHONE BANKING
INVESTMENT SCHEME
NETWORK
CREDIBILITY
BANKS
 IDBI BANK LTD.

TABLE 7: THE EFFECTIVENESS OF COMMERCIALS OF IDBI BANK

DAYS AFTER THE AD IS

SEEN POSITIVE RESPONSE
0-5 days 100
6-10 days 67
11-15 days 43
more than 15 days 40

POSITIVE RESPONSE
REMEMBERED THE AD

120
NO. OF PEOPLE

100
80
60 POSITIVE RESPONSE
40
20
0
0-5 days 6-10 11-15 more
days days than 15
days
NO. OF DAYS AFTER AD
 IDBI BANK LTD.

Findings

1. The credibility of IDBI bank is good in comparison to its competitors as GOI

(Government Of India) is a major share holder in the company.

2. IDBI bank has potential a tapped market in RT NAGAR in region and hence has

opportunities for growth.

3. The products of IDBI bank have good credibility in the region compare to its

competitors.

4. The initial payment for opening a new A/C (both Current & Savings A/C) is Rs.5000/- with

totally free banking services with no minimum balances and that’s why people are reluctant

in opening the same.

 IDBI BANK LTD.

Chapter 4

Conclusions and Recommendations

Conclusions

1. Consumers of IDBI bank have good awareness level about IDBI bank as well as about

its services and products.

2. The advertising campaign has successfully been able to increase the market share of

IDBI bank.

3. The modern days technology like internet banking, phone banking, used by IDBI

bank for providing banking services has sent positive signals in the mind of

consumes.

4. The network of IDBI is lagging behind a little than its competitors like ICICI bank

and HDFC bank.

5. It can be distilled from data that IDBI bank has good market share as compared to its

competitors considering the amount of resources deployed by them in the market.

 IDBI BANK LTD.

Recommendations

1. Since there is only three ATMs in RT NAGAR area, so it is necessary for IDBI bank to

install more ATMs to serve the vast market in this area especially.

2. More resources should be allocated in the market of RT NAGAR as there is big

untapped market, so it becomes necessary for IDBI bank for taking an edge over the

competitors.

3. A short advertising campaign in RT NAGAR has produced good results in a short

span of times, so to gain long term benefits is very necessary for IDBI bank to carry

on this campaign with more intensity.

4. As Government is the majority share holder in the shares of IDBI bank, which makes

this bank more reliable than other private banks, this thing can be used in the favour

of IDBI bank by making people aware about this fact and winning their faith.
 IDBI BANK LTD.

Appendix1: Questionnaire

NAME………………………………………………………………………………

AGE……………………………………. SEX: MALE/FEMALE

ADDRESS:……………………………………………………………………………...…

……………………………………………………………………………………………

CITY………………………………………PIN CODE………………………………....

CONTACT NO. …………………………………………………………………………

1. DO YOU KNOW ABOUT IDBI BANK LTD.?

YES NO

2. IDBI BANK IS A –

PRIVATE BANK PRIVATE/PUBLIC BANK

PUBLIC BANK DON’T KNOW

3. RANK THE IDBI BANK ON THE FOLLOWEING FEATURES –(RANK 1 FOR BEST AND 5 FOR

WORSE ON 1 TO 5 SCALE)

EFFICENCY MANPOWER

INTERNET BANKING/ATMs NETWORK

PRODUCT RANGE PHONE BANKING

4. YOU WOULD LIKE TO BE A CUSTOMER OF BANK BECAUSE –

…………………………………………………………………………………………………………

5. YOU WOULD NOT LIKE TO BE A CUSTOMER BANK BECAUSE-

 IDBI BANK LTD.

……………………………………………………………………………………………………………

6. NAME THE BANK WHICH COMES IN YOUR MIND AT VERY FIRST AND WHY?

………………………………………………………………………………………………………….

7. DO YOU THINK IDB IBANK IS A SAFE PLACE FOR YOUR MONEY?

YES NO

8. DO YOU THINK IDBI BANK NEED MORE ADVERTISMENT?

YES NO

9. YOUR LEVEL OF SATISFACTION WITH IDBI BANK-

VERY SATISFIED SATISFIED NORMAL DISSATISFIED VERY DISAT.

10. IF YOU WILL HAVE OPTION AGAINEST IDBI BANK YOU WILL GO FOR –

SBI PNB

ICICI OTHER

11. DO YOU REMEMBER THE COMMERCIAL OF IDBI BANK?

YES NO

12. WHEN DID YOU LAST SEE THE ADVERTISEMENT OF IDBI BANK?

0-5 DAYS BACK 6-10 DAYS BACK

11-15 DAYS BACK MORE THAN 15 DAYS BACK

13. DO YOU KNOW WHERE THE BRANCH OF IDBI LOCATED IN RT NAGAR IS?

…………………………………………………………………………………………………………

14. IDBI BANK LTD. IN RT NAGAR IS EFFECTIVE BECAUSE-

………………………………………………………………………………………………………….

15. IDBI BANK LTD. IN RT NAGAR IS NOT EFFECTIVE BECAUSE-

 IDBI BANK LTD.

………………………………………………………………………………………………………….

16. IDBI BANK LTD. IS A GOOD BANK FOR-

SERVICE PEOPLE BUSINESS PERSONS

POLITICIANS GENERAL PUBLIC

ALL OF ABOVE

17. NAME IDBI BANK LTD. GIVE BLUE-PRINT IN YOUR MIND OF-

HIGH NETWORK FINANCILALLY EFFICIENT BANK

HI-TECH BANK CUSTOMER FRIENDLY

OTHER (PLEASE SPECIFY)……………………………………………………………………….

 IDBI BANK LTD.

Appendix 2: Reference Material

 www.idbibank.com

 www2.idbibank.com

 www.google.com

 ICFAI Journal of Banking

 The Economics times

 The Times of India

IDBI BANK LTD.