Project on Customer Atitude
-
Upload
gurvi-singh -
Category
Documents
-
view
217 -
download
0
Transcript of Project on Customer Atitude
-
7/27/2019 Project on Customer Atitude
1/58
ING VYSYA BANK
INTRODUCTION
Banking system of a nation is the shadow of nations economy. A healthy and profitable
banking system is just like the backbone of nations economy. It is necessary for a nation to
achieve growth and remain stable in this global world and global economy. The Indian
banking system, with one of the largest banking networks in the world, has witnessed a series
of reforms over the past few years like the deregulation of interest rates, dilution of the
government stake in public sector banks (PSBs) and the increased participation of private
sector banks.
History of INDIAN BANKING SYSTEM
Banking in India originated in the last decades of the 18th century. The first banks The
Bankre THE GENERAL BANK OF INDIA, which started in 1786, and 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.
The first fully Indian owned bank was the ALLAHABAD BANK, established in 1865.
Until the early 1990s, the Indian financial system was strictly controlled. Interest rates were
administered, formal and informal parameters governed asset allocation, and strict controls
limited entry into and expansion within the financial sector. The Governments economic
reform program, which began in 1991, encompassed the financial sector. The first phase of
the reform process began with the implementation of the recommendations of the Committee
on the Financial System, the Narasimham Committee I. The second phase of the reform
process began in 1999.
Reserve Bank of India
RBI, established in 1935, is the central regulatory and supervisory authority for the Indian
financial system. RBI manages Indias money supply and foreign exchange and also serves as
a bank for the Government and for Indias commercial banks.
RBI issues guidelines on various areas including exposure standards, income recognition,
asset classification, provisioning for non-performing and restructured assets, investment
[Type text] Page 1
-
7/27/2019 Project on Customer Atitude
2/58
ING VYSYA BANK
valuation and capital adequacy standards for commercial banks, long-term lending
institutions and non-bank finance companies. RBI requires these institutions to furnish
information relating to their businesses to RBI on a regular basis.
Commercial Banks
Commercial banks in India have traditionally focused only on meeting the short-term
financial needs of industry, trade and agriculture. Commercial banks can be classified into
two categories namely Scheduled Commercial Banks and Non-Scheduled Commercial Banks
(Local Area Banks). Scheduled Commercial Banks are banks that are listed in the schedule to
the Reserve Bank of India Act, 1934, and may further be classified as public sector banks,
private sector banks, correspondent banks, foreign banks and regional rural banks.
Scheduled commercial banks have a presence throughout India, with approximately 70% of
bank branches belonging to the public sector banks are located in rural or semi-urban areas of
the country.
Public Sector Banks
Public sector banks constitute the largest category in the Indian banking system. They include
the State Bank of India and its 7 associate banks, 19 nationalised banks and 196 regional rural
banks. As of June 30, 2004, apart from the regional rural banks, the other public sector banks
have over 46,500 branches. Public Sector Banks collectively account for approximately
73.2% of the outstanding gross bank credit and 77.9% of the aggregate deposits of the
scheduled commercial banks. The large network of public sector bank branches enables them
to fund themselves out of low cost deposits. The State Bank of India is the largest public
sector bank in India.
Private Sector Banks
After the first phase of bank nationalization was completed in 1969, public sector banks made
up the largest portion of Indian banking. In July 1993, as part of the banking reform process
and as a measure to induce competition in the banking sector, RBI permitted entry by the
private sector into the banking system. This resulted in the introduction of nine private sector
banks. These banks are collectively known as the new private sector banks. There are ten
[Type text] Page 2
-
7/27/2019 Project on Customer Atitude
3/58
ING VYSYA BANK
new private sector banks at present. In addition, 20 private sector banks existing prior to
July 1993 are currently operating as on June 2004.
Foreign banks
As of June 30, 2004, there were 32 foreign banks with 215 branches operating in India. As
part of the liberalization process, RBI has permitted foreign banks to operate more freely,
subject to requirements largely similar to those imposed on domestic banks. Foreign banks
operate in India through branches of their parent banks. In fiscal 2003, the Government
announced that foreign banks would be permitted to incorporate subsidiaries in India.
Subsidiaries of foreign banks will have to adhere to all banking regulations, including priority
sector lending norms, applicable to domestic banks.
The primary activity of most foreign banks in India has been in the corporate segment.
However, in recent years, some of the larger foreign banks have started to make consumer
financing a larger part of their portfolios based on the growth opportunities in this area in
India. These banks offer products such as automobile, finance, home loans, credit cards and
household consumer finance. The government has also announced that foreign banks having
branch presence in India will be permitted subject to certain conditions to acquire up to
74.0% shareholding in private sector banks in India.
Cooperative Banks
Cooperative banks cater to the financing needs of agriculture, small industry and self-
employed businessmen in urban and semi-urban areas of India. The state land development
banks and the primary land development banks provide long-term credit for agriculture. In
the light of liquidity and insolvency problems experienced by some cooperative banks in
fiscal 2001, RBI undertook several interim measures, pending formal legislative changes,
including measures related to lending against shares, borrowings in the call market and term
deposits placed with other urban cooperative banks. Presently, RBI is responsible for
supervision and regulation of urban co-operative societies, and the National Bank for
Agriculture and Rural Development (NABARD) for State Co-operative Banks and District
Central Co-operative Banks.
Non-Bank Finance Companies
[Type text] Page 3
-
7/27/2019 Project on Customer Atitude
4/58
ING VYSYA BANK
There are over 13,671 non-bank finance companies in India as at end-June 2004, mostly in
the private sector. All non-bank finance companies are required to register with RBI in terms
of the Reserve Bank of India (Amendment) Act, 1997. The nonbank finance companies, on
the basis of their principal activities are broadly classified into four categories namely
Equipment Leasing, Hire Purchase , Loan and Investment Companies and deposits and
business activities of Residuary Non-Banking Companies (RNBCs). The Reserve Bank has
put in place a set of directions to regulate the activities of NBFCs under its jurisdiction. The
directions are aimed at controlling the deposit acceptance activity of NBFCs. The NBFCs
which accept public deposits are subject to strict supervision and capital adequacy
requirements of RBI. Out of 13,671 NBFCs registered with RBI as at end-June 2004, 584
NBFCs accept Public Deposits. The scope and activities of non-bank finance companies have
grown significantly over the years. The primary activities of the non-bank finance companies
are consumer credit including automobile finance, home finance and consumer durable
products finance, wholesale finance products such as bill discounting for small and medium-
sized companies, and fee-based services such as investment banking and underwriting. In
2003, Kotak Mahindra Finance Limited, a large non-bank finance company was granted a
banking license by RBI and converted itself into Kotak Mahindra Bank.
Housing Finance Companies
Housing finance companies form a distinct sub-group of the non-bank finance companies and
are regulated by National Housing Bank (NHB). As a result of the various incentives given
by the Government for investing in the housing sector in recent years, the scope of their
business has grown substantially. Until recently, Housing Development Finance Corporation
Limited was the premier institution providing housing finance in India. In recent years,
several other players including public and private sector banks have entered the housing
finance industry. The National Housing Bank and the Housing and Urban Development
Corporation Limited are the two Government-controlled financial institutions created to
improve the availability of housing finance in India. The National Housing Bank Act
provides for refinancing and securitization of housing loans, foreclosure of mortgages and
setting up of the Mortgage Credit Guarantee Scheme.
[Type text] Page 4
-
7/27/2019 Project on Customer Atitude
5/58
ING VYSYA BANK
Specialized Financial Institutions
In addition to the long-term lending institutions, there are various specialized financial
institutions that cater to the specific needs of different sectors. They include the National
Bank for Agricultural and Rural Development, Export Import Bank of India, Small Industries
Development Bank of India, Risk Capital and Technology Finance Corporation Limited,
Tourism Finance Corporation of India Limited, National Housing Bank, Power Finance
Corporation Limited and the Infrastructure Development Finance Corporation Limited.
Insurance Companies
Currently, there are 27 insurance companies in India, of which 13 are life insurance
companies, 13 are general insurance companies and one is a reinsurance company. Of the 13
life insurance companies, 12 are in the private sector and one is in the public sector. Among
the general insurance companies, eight are in the private sector and five are in the public
sector. The reinsurance company, General Insurance Corporation of India, is in the public
sector. Life Insurance Corporation of India, General Insurance Corporation of India and
public sector general insurance companies also provide long-term financial assistance to the
industrial sector.
In December 1999, the Insurance Regulatory and Development Authority Act 1999 was
passed. The insurance sector in India is regulated by the Insurance Regulatory and
Development Authority, which was established to protect the interests of holders of insurance
policies, to regulate promote and ensure orderly growth of the insurance industry and for
related matters. The IRDA Act opened up the Indian insurance sector for foreign and private
investors. The Act allows foreign equity participation in new insurance companies of up to
26.0%. A new insurance company is required to have a minimum paid up equity capital of
Rs. 1.0 crore to carry out the business of life insurance or general insurance or Rs. 2.0 crore
to carry out exclusively the business of reinsurance.
Mutual Funds
From 1963 to 1987, Unit Trust of India was the only mutual fund operating in India. It wasset up in 1963 at the initiative of the Government and RBI. From 1987 onwards; several other
[Type text] Page 5
-
7/27/2019 Project on Customer Atitude
6/58
ING VYSYA BANK
public sector mutual funds entered this sector. These mutual funds were established by public
sector banks, the Life Insurance Corporation of India and General Insurance Corporation of
India. The mutual funds industry was opened up to the private sector in 1993. The industry is
regulated by the SEBI (Mutual Fund) Regulation 1996.
Impact Of Liberalization On The Indian Financial Sector
Until 1991, the financial sector in India was heavily controlled and commercial banks and
long-term lending institutions, the two dominant financial intermediaries, had mutually
exclusive roles and objectives and operated in a largely stable environment, with little or no
competition. Long-term lending institutions were focused on the achievement of the
Governments various socio-economic objectives, including balanced industrial growth and
employment creation, especially in areas requiring development. Long-term lending
institutions were extended access to long-term funds at subsidized rates through loans and
equity from the Government and from funds guaranteed by the Government originating from
commercial banks in India and foreign currency resources originating from multilateral and
bilateral agencies.
The focus of the commercial banks was primarily to mobilize household savings through
demand and time deposits and to use these deposits to meet the short-term financial needs of
borrowers in industry, trade and agriculture. In addition, the commercial banks provided a
range of banking services to individuals and business entities. Since 1991, various financial
sector reforms have transformed the operating environment of the banks and long-term
lending institutions. In particular, the deregulation of interest rates, emergence of a liberalized
domestic capital market, and entry of new private sector banks, along with the broadening of
long-term lending institutions product portfolios, have progressively intensified the
competition between banks and long-term lending institutions. RBI has permitted the
transformation of long term lending institutions into banks subject to compliance with the
prudential norms applicable to banks.
[Type text] Page 6
-
7/27/2019 Project on Customer Atitude
7/58
ING VYSYA BANK
Banking Sector Reform
Most large banks in India were nationalized in 1969 and thereafter were subject to a high
degree of control until reform began in 1991. In addition to controlling interest rates and
entry into the banking sector, these regulations also channelled lending into priority sectors.
Banks were required to fund the public sector through the mandatory acquisition of low
interest-bearing Government securities or statutory liquidity ratio bonds to fulfil statutory
liquidity requirements. As a result, bank profitability was low, non-performing assets were
comparatively high, capital adequacy was diminished, and operational flexibility was
hindered.
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, a government-
owned bank that traces its origins back to June 1806 and that is the largest commercial bank
in the country. Allahabad Bank, established in 1865 and still functioning today, is the oldest
Joint Stock bank in India.
Central banking is the responsibility of the Reserve Bank of India, which in 1935 formally
took over these responsibilities from the then Imperial Bank of India, relegating it to
commercial banking functions. After India's independence in 1947,
the Reserve Bank was nationalized and given broader powers. In 1969 the government
nationalized the 14 largest commercial banks; the government nationalized the six next
largest in 1980.
In 1948, the Reserve Bank of India, India's central banking authority, was nationalized,
and it became an institution owned by the Government of India.
In 1949, the Banking Regulation Act was enacted which empowered the Reserve Bank
of India (RBI) "to regulate, control, and inspect the banks in India."
[Type text] Page 7
-
7/27/2019 Project on Customer Atitude
8/58
ING VYSYA BANK
The Banking Regulation Act also provided that no new bank or branch of an existing
bank could be opened without a license from the RBI, and no two banks could have
common directors
Committee on the Financial System (Narasimham Committee I)
The Committee on the Financial System (The Narasimham Committee I) was set up in
August 1991 to recommend measures for reforming the financial sector. Many of the
recommendations made by the committee, which addressed organisational
issues, accounting practices and operating procedures, were implemented by the Government.
The major recommendations that were implemented included the following:
With fiscal stabilization and the Government increasingly resorting to market
borrowing to raise resources, the statutory liquidity ratio or the proportion of a banks
net demand and time liabilities that were required to be invested in Government
securities was reduced from 38.5% in the pre-reform period to 25.0% in October
1997. This meant that the
significance of the statutory liquidity ratio shifted from being a major instrument for
financing the public sector in the pre-reform era to becoming a prudential
requirement;
similarly, the cash reserve ratio or the proportion of a banks net demand and time
liabilities that were required to be deposited with RBI was reduced from 15.0% in the
pre-reform period to 4.5% currently;
special tribunals were created to resolve bad debt problems
Most of the restrictions on interest rates for deposits were removed. Commercial
banks were allowed to set their own level of interest rates for all deposits except
savings bank deposits;
Substantial capital infusion to several state-owned banks was approved in order to
bring their capital adequacy closer to internationally accepted standards. By the end of
fiscal 2002, aggregate recapitalisation amounted to Rs. 217.5 crore. The stronger
public sector banks were given permission to issue equity to further increase capital;
and
[Type text] Page 8
-
7/27/2019 Project on Customer Atitude
9/58
ING VYSYA BANK
Banks were granted the freedom to open or close branches.
Committee on Banking Sector Reform (Narasimham Committee II)
The second Committee on Banking Sector Reform (Narasimham Committee II) submitted its
report in April 1998. The major recommendations of the committee were in respect of capital
adequacy requirements, asset classification and provisioning, risk management and merger
policies. RBI accepted and began implementing many of these recommendations in October
1998.
The ING Vysya Bank Ltd is one of the well known financial organizations in India. It is
applicable for both short term and long term financial solutions. It is mainly an entity or a
venture which has been formed with the global financial giant ING of Netherlands. The ING
Vysya Bank Ltd is a trusted name in the banking and commercial sector of the country.
The ING Vysya Bank Ltd was established in the month of October in the year 2002. The
bank came into existence when the Vysya Bank Ltd went into a venture with global financial
giant ING. Vysya Bank Ltd was one of the first private sector banks in the country and was
set up in the year 1930. The main objective of setting up the bank was to provide financial
support to the various sectors of the economy. In the year 1948, the Vysya Bank was listed
among the Scheduled Banks.
In order to increase its profit and add to its operations, the Vysya Bank Ltd merged with ING.
The headquarters of the bank is located in the city of Bangalore. Among the total number of
branches, there are 468 regular branches, 28 satellite offices, 13 extension counters. The
number of ATMs is around 357 which are expected to increase within the next few years.
The deposit of the bank amounts to around Rs. 25,865 crore while the net worth is around Rs
14260.00 millions. The profits of the bank amount to around Rs. 242.2 crore.
With 74 years of experience in the Indian banking segment and with ING Groups active
participation in managing the affairs of the Bank, the Bank is uniquely positioned as an
Indian made Foreign Bank.
Being a well known name in the domain of financial and banking services in the country, the
ING Vysya Bank Ltd has come up with a number of financial solutions and services in a
[Type text] Page 9
-
7/27/2019 Project on Customer Atitude
10/58
ING VYSYA BANK
number of areas. Some of the well known segments in which the bank offers customized and
specialized services are:
Accounts and deposits
Short and long term loans
Private banking
NRI services
Personal Banking:
The personal banking department of ING Vysya Bank Ltd offers high quality services and
solutions to cater to the financial needs and preferences. The high end solutions make them a
one stop organization to fulfill the needs and requirements of the customers. Some of the well
known services offered in the segment of personal banking are:
Mutual Funds
Tax Savings Bonds
Savings Account
NRI Services
Credit & Debit Card
Internet Banking
Phone Banking
Mobile Banking
Self Banking
Term deposits
Demat accounting
Wealth management
Debit and credit card accounting
[Type text] Page 10
-
7/27/2019 Project on Customer Atitude
11/58
ING VYSYA BANK
Payment services
Wealth Management services: The wealth management services of the ING Vysya Bank Ltd
offers the best services in order to take care of the needs and preferences of the consumers in
various wealth management sectors. The secure services offered by the bank also minimize
the risk processes and also offer the best of returns. In addition to these, ING Vysya Bank
Ltd also offers business banking facilities and services of high standards. The services are
meant to take care of the business needs and also provide high degree of financial stability to
the various corporate organizations and business sectors. Some of the well known services
that are offered include:
Long and term loans in the agro based sector
SME- Power Business account and loans
Financial market analysis
Market trading
Asset liability management services
Financial market sales
Cash management services
Corporate and investment banking services
Off shore borrowing services
Trade and community finance services
PROFILE
As of March 31, 2004, The Bank was the seventh largest private sector bank in India in terms
of assets with total assets of Rs. 13198 crore.
Our business has been organized into RETAILBANKING and WHOLESALE BANKING.
Our RETAIL BANKING business comprises four business units namely
1. Consumer Banking,
[Type text] Page 11
-
7/27/2019 Project on Customer Atitude
12/58
ING VYSYA BANK
2. Small and Medium Enterprises (SME)
3. Agriculture and Social Banking Unit (ASBU) and
4. Private Banking.
Consumer Banking
The Consumer Banking business consists of Consumer Lending and Consumer Liabilities,
which offers to retail consumer both asset based products such as home loans, personal loans,
credit cards and liability products, such as savings accounts, salary accounts and term
deposits. The Bank have focused our efforts, resources and talent to ensure that The Bank
capitalize fully on the opportunities available to us.
Consumer Lending
Consumer lending deals with granting secured loans to individuals, partnership firms,
and companies, as well as unsecured loans to individuals for various purposes. Our
business is primarily driven through 19 Asset Booking Centres spread over the
country, where consumer finance loans are disbursed.
The Bank has following consumer lending products in our portfolio.
Home Loans: In the year 2003, The Bank introduced customized home loans with
built in free life insurance for the full loan term and amount and a floating rate based
on market determined rate (MIBOR).
The bank Believe that compared to our competitors, this is a uniquely featured
product, which has already resulted in volumes of Rs. 77.74 crores
covering 884 accounts, as of September 30, 2004. Additionally, the Bank
is planning to add further features and flexibility to meet the demands of
the customer.
Credit Cards: Our credit card charges a relatively low nominal rate of 1.5% on cash
withdrawals. The Bank do not charge any transaction fee on fuel purchased and also
enables global access to over 30 million merchant establishments worldwide. The
card is issued in partnership with Citibank, which allows the bank and its customers tobenefit from the Citibanks experience in processing credit cards.
[Type text] Page 12
-
7/27/2019 Project on Customer Atitude
13/58
ING VYSYA BANK
Auto loans: The Bank introduced auto loans in 2000 to provide finance to individuals
and corporates for purchase of new and used cars. The average tenor of auto loan is
between three to five years. Auto loans are secured by a charge on the purchased
automobile. This business is managed by our distribution system supported with
Credit and Risk Management Teams, which has been instrumental in achieving
targeted volumes. The Bank have strong relationships with certain automobile
manufacturers and are the preferred financiers to 3 automobile manufacturers, in
India.
Two Wheeler loans: Two-wheeler loans were introduced in 2001 primarily to
facilitate purchase of two-wheelers for individual and corporate customers. Two
wheeler loans are secured by a charge on the moveable asset. The average tenure of
loan is between one to three years. Our business has recorded growth ever since its
inception owing to our distribution system, customer oriented schemes and fast
turnaround time.
Personal Loans: These are unsecured loans provided to customers for various
purposes such as higher education, medical expenses, social events and holidays.
Introduced in 2002, this product has witnessed growth owing to our customer
programs and distribution team.
Advances against Demat securities: The Bank introduced Advance against Demat
Securities in 2003, which has resulted in volumes of Rs. 1.88 crores, covering 58
accounts, as of September 30, 2004.
Loans for subscribing to IPOs: The loans for subscribing to IPOs came in 2003,
which has resulted in volumes of Rs. 0.05 crores as of September 30, 2004.
[Type text] Page 13
-
7/27/2019 Project on Customer Atitude
14/58
ING VYSYA BANK
Commercial Vehicle Loans: The Commercial Vehicle Loans was introduced in
2001. The Bank extend loans for purchase of new and used Commercial Vehicles -
MAVs (Multi Axle Vehicles), HCVs (Heavy Commercial Vehicles), MCVs (Medium
Commercial Vehicles) and LCVs (Light Commercial Vehicles), which include Buses,Trucks, Fully built vehicles & Tippers. The loan is generally granted for a maximum
term of 48 months.
Consumer Liabilities
Resource mobilization in Retail Banking is a core activity of our bank. Our Bank has a
customer base, of nearly one million with over Rs.10, 000 crores of deposits, with a mix of
Savings, Current and Term deposits.
The Bank have the following consumer liability products in our portfolio
Orange Savings Account: The Orange Savings Account was introduced in August
2003. It has secured more than 125,000 new customers. The key features of Orange
Savings Account are free personal accident insurance cover including medical
expenses for three years, free unlimited ATM transactions in over 9,000 MasterCard
networked ATMs in India and overseas, free membership to Smartserv (Personal
assistance service) and other facilities like Internet Banking, Tele banking, Anywhere
Banking and other privileges.
Orange Current Account: The Orange Current Account was launched in December
2003. Some of the distinct features of the account are free personal accident insurance
cover, free cash in transit insurance, free ATM transactions in MasterCard network,
and free DDs/PO/PAP cheques up to Rs 1.5 crore per month and many other facilities.
Since December
2003, this product has secured more than 2,500 customer accounts and
mobilized over Rs 150 crores
Mpower Salary Account: Introduction of the Mpower Salary Account came in
November 2002, which expedites the process of salary payments, facilitating both
employer and employees.
[Type text] Page 14
-
7/27/2019 Project on Customer Atitude
15/58
-
7/27/2019 Project on Customer Atitude
16/58
ING VYSYA BANK
ASBU deals with all banking business in rural branches and business related to Agricultural
activities and lending to government sponsored schemes in other non-rural branches.
Private Banking
In India, the erstwhile ING Bank was one among the firsts to offer private banking services.
After ING Group invested in the Bank, the private banking arm of ING Bank was integrated
into ING Vysya Bank. The client management team is supported by a product development
team, and a research team headed by the Chief Investment Officer.
The following key products and services are in the domain of our private banking:
Investment Solutions: The Bank has portfolio management services are
nondiscretionary in nature and include construction/ restructuring of the portfolios,
monitoring them and executing clients requests. Our investment products include
debt, equity, mutual funds and insurance.
The Bank Structuring for Diverse Needs: The Bank structuring services embrace
wills, trusts and other The Bank has established means of protecting and distributing
assets. The Bank also provide real-estate advisory services that focus on broad-basing
the clients The Bank has allocation and income streams, as the Bank provides tax and
legal planning services through specialized partners.
The Bank offers customers a choice of DELIVERY CHANNELS including:
physical branches,
Automated Teller Machine (ATMs),
telephone banking,
SMS
and the Internet.
[Type text] Page 16
-
7/27/2019 Project on Customer Atitude
17/58
ING VYSYA BANK
In recent years, the Bank have expanded our physical delivery channels, including bank
branches and ATMs, to currently cover a total of 866 outlets in 298 locations throughout
India.
The WHOLESALE BANKING is organized into three groups:
Client Coverage,
Products and Services and
Financial Markets.
While the Client Coverage group is responsible for managing relationships with identified
client sub-groups, the Products and Services and Financial Markets groups are responsible for
product and service delivery to the entire Wholesale Banking client base.
Wholesale Banking Products and Services
The Bank provides a range of commercial banking products and services to Indias leading
corporations and growth-oriented middle market businesses. Our key commercial banking
products and services to corporate customers include (a) Credit Products and Structured
Finance; (b) Cash Management; (c) Trade and Commodity Finance; (d) Investment Banking,
Local Debt Syndication and Securitisations, (e) Financial Markets and (f) Corporate
Deposits.
(a) Credit Products and Structured Finance
Credit Products of the Bank include products like Working Capital Finance, Term Finance
and Structured Finance. Our corporate loan portfolio primarily consists of term loans for
project and corporate finance, and working capital credit facilities.
(I) Working Capital Finance: Under working capital finance, The Bank offers the following
products and services to our customers.
Cash Credit / Overdraft Facilities: Cash credit facilities are the most common form
of working capital financing in India. Under the cash credit facility, a line of credit is
provided up to a pre-established amount based on the borrowers creditability and
[Type text] Page 17
-
7/27/2019 Project on Customer Atitude
18/58
ING VYSYA BANK
projected level of inventories, receivables and cash deficits. Up to this pre-established
amount, disbursements are made based on the actual level of inventories and
receivables. Cash credit / Overdraft facilities are running account facilities where the
borrower may remit and draw funds freely. These are typically given to companies in
the manufacturing, trading and service sectors on a floating interest rate basis. Interest
is earned on this facility on a monthly basis, based on the daily outstanding amounts.
The facility is generally given for a period of up to 12 months, with a review after that
period. Our cash credit facility is generally fully secured with full recourse to the
borrower. In most cases, the Bank has a first charge on the borrowers current assets,
which normally are inventory and receivables. Additionally, in some cases, the Bank
may take further security of a first or second lien on fixed assets including real estate,
a pledge of financial assets like marketable securities, corporate guarantees and
personal guarantees. Cash credit facilities are extended to borrower by a single bank,
multiple banks or a consortium of banks with a lead bank. The nature of the
arrangement is usually agreed between the bank and the borrowers and depends upon
the amount of working capital financing required by the borrower, the risk profile of
the borrower and the amount of loan exposure a single bank can take on the borrower.
Regardless of the arrangement, the Bank undertake our own due-diligence and follow
our credit risk policy to determine whether the Bank should lend money to the
borrower and, if so, the amount to be lent to the borrower and the rate of interest to be
charged.
Commercial paper: A commercial paper is an unsecured, short-term corporate paper
in the nature of a usance promissory note with fixed maturities and is negotiable by
endorsement and delivery. Under current guidelines, commercial paper can be issuedfor a minimum tenor of 15 days and a maximum tenor of 365 days. Commercial
papers are generally
issued by highly rated borrower and since they are tradable, they offer us
a liquid investment opportunity.
Bill Discounting: Bill discounting involves the financing of short-term trade
receivables through negotiable instruments. These negotiable instruments can then be
[Type text] Page 18
-
7/27/2019 Project on Customer Atitude
19/58
ING VYSYA BANK
discounted with other banks if required, providing us with liquidity. In addition to
traditional bill discounting, the Bank also provides customised solutions to our
corporate customers having large dealer networks. Loans are approved to dealers in
the form of working capital lines of credit, based on analysis of credit risk profiles of
dealers.
Short-term loan: Short-term loans are demand loans with a maturity of three to six
months provided by us to corporate borrowers to meet their temporary cash flow
mismatches or to avail of interest rate arbitrage. They can be denominated 43 in either
rupee or foreign currency and can be disbursed as fixed rate loans or floating rate
loans linked to our Banks reference rate called IVRR or money market benchmark
rates. Short term loans are usually provided to highly rated corporates and may be
unsecured.
Export Credit: The RBI requires banks to make loans to exporters at concessional
rates of interest. The Bank provides export credit for pre-shipment and post-shipment
requirements of exporter borrowers in rupees and foreign currencies. The RBI
provides export credit refinancing for an eligible portion of total outstanding export
loans at the bank rate prevailing from time to time. The interest income earned on
export credits is supplemented through fees and commissions earned from these
exporter customers from other fee-based products and services availed by them from
us, such as foreign exchange products.
Letters of Credit: Letter of credit facilities are being provided to our working capitalloan customers both for meeting their working capital needs as the Bank for capital
equipment purchases. For working capital purposes, the Bank issue letters of credits
on behalf of our borrowers for the sourcing of their raw materials and stock inputs.
Lines of credit for letters of credit are approved as part of a working capital loan
package provided to borrowers. These facilities, like cash credit facilities, are
generally given for a period up to 12 months, with review after that period. Typically,
the line is drawn down on a revolving basis over the term of the facility, resulting in a
fee payable to us at the time of each drawdown, based on the amount and term of the
[Type text] Page 19
-
7/27/2019 Project on Customer Atitude
20/58
ING VYSYA BANK
drawdown. The Bank issue letters of credit on behalf of borrowers both for domestic
and foreign purchases. Borrowers pay a fee to us based on the amount drawn down
from the facility and the term of the facility. This facility is generally secured by the
same collateral available for cash credit facilities. The Bank may also take collateral
in the form of cash deposits, in the range of 5.0% to 20.0% of the drawdown amount,
from our borrowers before each drawdown of the facility.
Guarantees: Guarantees are being provided, which can be drawn down any number
of times up to the committed amount of the facility. The Bank issue guarantees on
behalf of our borrowers in favour of corporations and government authorities.
Guarantees are generally issued for the purpose of bid bonds, guaranteeing the
performance of our borrowers under a contract as security for advance payments
made to our borrowers by project authorities and for deferral of and exemption from
the payment of import duties granted to our borrowers by the government against
fulfilment of certain export obligations by our borrowers. The term of these
guarantees is generally up to 36 months though in specific cases, the term could be
higher. This facility is generally secured by collateral similar to that of letters of
credit. In addition, as a part of our project financing activity, The Bank issueguarantees to foreign lenders, export credit agencies and domestic lenders on behalf
of our clients.
The Bank has one wholly owned subsidiary, being IVFSL and two affiliate/associate
companies being IIML and IVL. IIML is an Asset Management Company which
manages the ING Vysya Mutual Fund and IVL is a life insurance company which
provides a range of individual and group life insurance solutions, pension products,
employee benefits; IVFSL distributes life insurance policies of IVL, mutual funds
from ING Vysya Mutual Fund and third party investment products apart from
distributing our own products.
[Type text] Page 20
-
7/27/2019 Project on Customer Atitude
21/58
ING VYSYA BANK
BUSINESS STRATEGY
The objective is to build a recognizable position as a premier banking and other financial
services products provider to retail and wholesale customers.
The key elements of our business strategy are to:
Fully leverage the synergies (including support and commitment) available from ING
Focus on growth opportunities in the Retail banking business;
Strengthen Wholesale Banking operations;
Expand retail distribution capabilities; and
Use of technology for competitive advantage
TECHNOLOGY USED IN ING Vysya Bank
The Bank seeks to be at the forefront of technology usage in the financial services sector.
Information technology is a strategic tool for our business operations to gain competitive
advantage and to improve overall productivity and efficiency of the organization. All of our
technology initiatives are aimed at enhancing value, offering customer convenience and
improved service while optimizing costs.
The Bank expects to continue with our strategy of leveraging technology to achieve a
significant competitive advantage. This will be done by ING Vysya Bank leveraging on the
systems and processes that have already been developed by ING worldwide.
These cover many functions in the bank, including risk management (credit, market,
operational), financial markets, MIS, etc.
The key objectives behind our information technology strategy include:
building a cost-efficient distribution network in India to accelerate the development of
our retail distribution capability
Enhancing cross selling and client segmentation.
Improving credit and market risk management.
Introduction of customer centric products
[Type text] Page 21
-
7/27/2019 Project on Customer Atitude
22/58
ING VYSYA BANK
providing added value services to Tier 1 corporate clients by also leveraging on the
global product and service delivery capabilities of ING
Capitalising on the banks legacy in the SME business.
ACHIEVEMENTS AND MILESTONES
Details of key milestones achieved by us so far are as follows:
Year Key Events, Milestones and Achievements
March 1930 Incorporation of The Vysya Bank Limited, Bangalore
February 1948 Became a scheduled bank in terms of the RBI Act
September 1985 Achieved the no. one position among private sector banks as on
December 31, 1985
March 1987 Incorporation of The Vysya Bank Leasing Limited (now known as ING
Vysya Financial Services Limited) for leasing and merchant banking activities along
with Karur Vysya Bank Limited
January 1988 introduced co-branded credit cards by way of an affiliation with Central
Bank of India.
November 1990 Incorporation of Vysya Bank Housing Finance Limited for housing
finance activities
March 1991 Total deposits in the Bank crossed Rs.1000 crores.
Financial Markets / Treasury
Treasury is the Banks interface to all Financial Markets. The Bank has a well-equipped
Integrated Dealing Room at its Corporate Office in Bangalore. The latest technology,
information systems and risk management systems have been deployed, manned by
experienced market professionals.
The Bank has an experienced team of money market dealers who ensure that our Bank is
compliant with the Cash Reserve Ratio (currently at 5%) and Statutory Liquidity Ratio
(currently at 25%) stipulations of the RBI. Funds inflows and outflows of the Bank are
[Type text] Page 22
-
7/27/2019 Project on Customer Atitude
23/58
ING VYSYA BANK
carefully monitored to ensure that funds are available to meet the Banks requirements at all
times.
SWOT ANALYSIS
SWOT analysis is a simple framework for generating strategic alternatives from a situation
analysis. The SWOT analysis is useful when a very limited amount of time is available to
address a complex strategic situation.
The SWOT analysis classifies the internal aspects of the company as strengths or the
weaknesses and the external situational factors as opportunities or threats.
Strengths can serve as a foundation for building a competitive advantage, and the weaknesses
may hinder it. By understanding these four aspects of its situation, a firm can better leverage
its strengths, correct its The weaknesses, capitalize on golden opportunities, and deter
potentially devastating threats.
SWOT helps a company to set itself for better and for worse. SWOTs are a means by whicha company can better understand what it does very well and where its shortcomings are.
STRENGTHS
1. Instant Pre-generated Kit (includes Debit card, cheque book and Net Banking PIN)
2. ATM pin number security
3. Co- operative Staff
4. Personalized Services / Door step facilities
5. Cash access services till 5:30pm
6. Locker facility
7. ING Life Foundation (Social Responsibility)
8. ING Life Insurance
[Type text] Page 23
-
7/27/2019 Project on Customer Atitude
24/58
ING VYSYA BANK
9. Experienced Management Team
10. On-spot solution for any grievances of employees
WEAKNESS
1. Branch is in residential area and hence not-so-easy access to corporate, whereas the
same is turned into an opportunity by providing the door step services to the corporate
like check pick up/cash pick up and dedicated relationship managers.
2. More trained sales executives
3. Less promotional Activities/Advertising
4. Parking Inconvenience
OPPORTUNITIES
1. Grow our consumer base
2. Offer home loans and other consumer asset products to make it a complete product
offering.
3. Acquisition of accounts of existing employees of our competitors (same as point 1)
4. To come up with any USP product.
5. Designating (Teller counter, Customer Care .)
6. The weekend Training in terms of analysis (causes of unclosed calls) and future plans.
7. Survey
8. to leverage wide network of branches, that are increasingly sales and service oriented
THREAT:
1. High level of competition
2. A competitor has a new innovative product or service.
[Type text] Page 24
-
7/27/2019 Project on Customer Atitude
25/58
ING VYSYA BANK
Liberalization in Indian Banking System
In the early 1990s, the then government embarked on a policy of liberalization, licensing a
small number of private banks. These came to be known as New Generation tech-savvy
[Type text] Page 25
-
7/27/2019 Project on Customer Atitude
26/58
ING VYSYA BANK
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 setup 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 49%
with some restrictions.
The new policy shook the Banking sector in India completely. Bankers, till this time, were
used to the 4-6-4 method (Borrow at 4%; Lend at 6%; Go home at 4%) of functioning. The
new wave ushered in a modern outlook and tech-savvy methods of working for traditional
banks. All this led to the retail boom in India. People not just demanded more from their
banks but also received more.
Currently (2009), banking in India is generally fairly mature in terms of supply, product
range and reach-even though reach in rural India still remains a challenge for the private
sector and foreign banks. In terms of quality of assets and capital adequacy, Indian banks are
considered to have clean, strong and transparent balance sheets relative to other banks in
comparable economies in its region. The Reserve Bank of India is an autonomous body, with
minimal pressure from the government. The stated policy of the Bank on the Indian Rupee is
to manage volatility but without any fixed exchange rate-and this has mostly been true.
With the growth in the Indian economy expected to be strong for quite some time-especially
in its services sector-the demand for banking services, especially retail
banking, mortgages and investment services are expected to be strong. One may also expect
M&As, takeovers, and asset sales.
[Type text] Page 26
-
7/27/2019 Project on Customer Atitude
27/58
ING VYSYA BANK
Currently, India has 88 scheduled commercial banks (SCBs) - 27 public sector banks (that is
with the Government of India holding a stake), 31 private banks (these do not have
government stake; they may be publicly listed and traded on stock exchanges) and 38 foreign
banks. They have a combined network of over 53,000 branches and 17,000 ATMs. The
public sector banks hold over 75 percent of total assets of the banking industry, with the
private and foreign banks holding 18.2% and 6.5% respectively.
The Origin of ING Group
ING Vysya Bank Ltd is a premier private sector bank with retail, private and wholesale
banking platforms that serve over two million customers. With 80 years of history in India
and leveraging INGs global financial expertise, the bank offers a broad range of innovative
and established products and services, across its 527 branches. The bank, which has close to
10,000 employees, is also listed in Bombay Stock Exchange Limited and National Stock
Exchange of India Limited. ING Vysya Bank was ranked among top 5 Most Trusted Brands
among private sector banks in India in the Economic Times
The bank was formed from the 2002 acquisition of an equity stake in Indian Vysya Bank by
the Dutch ING Group. This merger marked the first between an Indian bank and a foreign
bank. Prior to this transaction, Vysya Bank had a seven-year old strategic alliance witherstwhile Belgian bank Banque Bruxelles Lambert, which was also acquired by ING Group
in 1998.
ING group originated in 1990 from the merger between Nationale Nederlanden the largest
Dutch Insurance Company and NMB Post Bank Group. Combining roots and ambitions,
the newly formed company called Internationale Nederlanden Group. Market circles soon
abbreviated the name to I-N-G. The company followed suit by changing the statutory name to
ING Group. ING is a global financial services company providing banking, investments, life
insurance and retirement services and operates in more than 50 countries.
PROFILE
ING is a global financial institution of Dutch origin offering banking, investments, life
insurance and retirement services. ING serve more than 85 million private, corporate and
institutional customers in Europe, North and Latin America, Asia and Australia. They draw
on their experience and expertise, their commitment to excellent service and their global scale
[Type text] Page 27
-
7/27/2019 Project on Customer Atitude
28/58
ING VYSYA BANK
to meet the needs of a broad customer base, comprising individuals, families, small
businesses, large corporations, institutions and governments
STRATEGY
INGs overall mission is to help customers manage their financial future. Capitalizing on
changing customer preferences and building on our solid business capabilities, INGs
strategic focus is on banking, investments, life insurance and retirement services. They
provide retail customers with the products they need during their lives to grow savings,
manage investments and prepare for retirement with confidence. With wide range of
products, innovative distribution models and strong footprints in both mature and developing
markets, ING has the long-run economic, technological and demographic trends on their side.
ING aligns its business strategy around a universal customer ideal: saving and investing for
the future should be easier. While steering the business through turbulent times, ING will
execute efforts across all its business lines to strengthen customer confidence and meet their
needs, preserve a strong capital position, further mitigate risks and bring its costs in line with
revenue expectations.
CORPERATE RESPOSIBILITY
ING wants to pursue profit on the basis of sound business ethics and respect for its
stakeholders. Corporate responsibility is therefore a fundamental part of INGs strategy:
ethical, social and environmental factors play an integral role in business decisions.
The ING Vysya BANK Ltd.
ING Vysya Bank Ltd., is an entity formed with the coming together of erstwhile, Vysya Bank
Ltd, a premier bank in the Indian Private Sector and a global financial powerhouse, ING of
Dutch origin, during Oct 2002.
The origin of the erstwhile Vysya Bank was pretty humble. It was in the year 1930 that a
team of visionaries came together to form a bank that would extend a helping hand to those
who weren't privileged enough to enjoy banking services.
[Type text] Page 28
-
7/27/2019 Project on Customer Atitude
29/58
ING VYSYA BANK
ING and ING Vysya Life Insurance are headquartered at Bangalore, while the corporate
office of ING Investment Management is situated at Mumbai. The synergies arising out of
the three distinct but complimentary businesses are bound to be an asset to the group in the
changing market dynamics of the future. The first such signs are already visible on the
horizon with combined products being successfully launched by the different entities of the
group in conjunction with each other
It's been a long journey since then and the Bank has grown in size and stature to encompass
every area of present-day banking activity and has carved a distinct identity of being India's
Premier Private Sector Bank.
In 1980, the Bank completed fifty years of service to the nation and post 1985; the Bank
made rapid strides to reach the coveted position of being the number one private sector bank.
In 1990, the bank completed its Diamond Jubilee year. At the Diamond Jubilee Celebrations,
the then Finance Minister Prof. Madhu Dandavate, had termed the performance of the bank
stupendous. The 75th anniversary, the Platinum Jubilee of the bank was celebrated during
2005.
The long journey of seventy-five years has had several milestones
[Type text] Page 29
-
7/27/2019 Project on Customer Atitude
30/58
ING VYSYA BANK
[Type text] Page 30
1930 Set up in Bangalore
1948 Scheduled Bank
1985 Largest Private Sector Bank
1987 The Vysya Bank Leasing Ltd. Commenced
1988 Pioneered the concept of Co branding of Credit Cards
1990 Promoted Vysya Bank Housing Finance Ltd.
1992 Deposits cross Rs.1000 crores
1993 Number of Branches crossed 300
1996 Signs Strategic Alliance with BBL., Belgium. Two National Awards by Gem & Jewellery Export
Promotion Council for excellent performance in Export Promotion
1998
Cash Management Services, & commissioning of VSAT. Golden Peacock Award - for the best HR
Practices by Institute of Directors. Rated as Best Domestic Bank in India by Global Finance
(International Financial Journal - June 1998)
2000State -of - the -art Date Centre at ITPL, Bangalore.
RBI clears setting up of ING Vysya Life Insurance Company
2001 ING-Vysya commenced life insurance business.
2002
The Bank launched a range of products & services like the Vys Vyapar Plus, the range of loan
schemes for traders, ATM services, Smartserv, personal assistant service, Save & Secure, an account
that provides accident hospitalization and insurance cover, Sambandh, the International Debit Card
and the mi-b@nk net banking service.
2002 ING takes over the Management of the Bank from October 7th , 2002
2002 RBI clears the new name of the Bank as ING Vysya Bank Ltd, vide their letter of 17.12.02
2003Introduced customer friendly products like Orange Savings, Orange Current and Protected Home
Loans
2004 Introduced Protected Home Loans - a housing loan product
2005 Introduced Solo - My Own Account for youth and Customer Service Line Phone Banking Service
2006
Bank has networked all the branches to facilitate AAA transactions i.e. Anywhere, Anytime &
Anyhow Banking
-
7/27/2019 Project on Customer Atitude
31/58
ING VYSYA BANK
CORPORATE STATEMENT
[Type text] Page 31
-
7/27/2019 Project on Customer Atitude
32/58
ING VYSYA BANK
AWARDS AND RECOGNISATION
THE NEW IDENTITY
The immediate benefit to the bank, ING Vysya Bank, has been the pride of having become a
Member of the global financial giant ING. As at the end of the year December 2008, ING's
total assets exceeded 13.31 billion euros, employed over 125000 people, served over 85
million customers, across 50 countries. This global identity coupled with the back up of a
financial power house and the status of being the first Indian International Bank, would also
[Type text] Page 32
-
7/27/2019 Project on Customer Atitude
33/58
ING VYSYA BANK
help to enhance productivity, profitability, to result in improved performance of the bank, for
the benefit of all the stake holders.
Some facts about ING-Vysya bank
ING-Vysya bank branches works on profit centre
Around 500 branches in India and 13 in Uttar-
Pradesh.
MAJOR PLAYERS
State Bank of India
o HDFC Bank
o ICICI Bank
o HSBC Bank
o IDBI Bank
o Citi Bank
o Axis Bank
o Punjab national Bank
o ING Vysya Bank
o Union Bank of India
FINANCIAL INCLUSION
Rural India accounts for roughly 70% of the population located in 6, 37,000 villages across
the country. Out of the 89.30 million farmer households 45.9 million do not have access to
credit either from the institutional or non institutional sources (NSSO 2008). Though the
banking industry has shown tremendous growth during the last few decades in all areas
relating to financial viability, profitability and competiveness, there are concerns that banks
have not been able to include certain segments of the population, especially the under-
privileged sections of society, into the fold of basic banking services. The financially
excluded sections of society also include the urban slum dwellers and migrant workers in
urban areas. This has been an area of concern and focus of the Government .
Several initiatives have been underway to empower the marginalized sections through
[Type text] Page 33
-
7/27/2019 Project on Customer Atitude
34/58
ING VYSYA BANK
awareness and education and access to basic banking services such as savings, credit and
insurance. However data collated through various surveys indicate that for every 100 adult
persons there are only 17 credit accounts and 54 savings accounts with all the financial
institutions put together (June 2007), thereby highlighting the need for more concerted efforts
The term 'Financial inclusion' (FI) is defined as including the excluded sections of
disadvantaged and low income groups into the formal financial sectors by delivery of
banking services at an affordable cost. The services offered under FI constitute 'no frills'
accounts, access to savings products, providing easy and right quantum of credit at affordable
Our bank has drawn a three year plan to achieve Financial Inclusion objectives and has taken
up several steps in this regard. The highlights of these are
1)As on September 2010, the Bank has opened 84000 No Frill accounts.
2)Covered 6.27 lac persons under Financial inclusion
3)Bank provides banking facilities to 12000 SHGs with credit facilities of Rs.100 crores.
4)Our bank has been associated with Basaveswara Vidya Vardhaka Sangha, a registered
5)Society with over 100 years of existence. Sangha has a chain of institutes numbering over
120 covering all fields of education and established RUDSETI at Bagalkot with objective to
identify, orient, train, counsel, assist young people and to motivate and empower them to
take up self-employment venture by providing all the needed assistance. Since inception
13000 candidates have been trained, out of which 8000 were women and 10,000 candidates
were settled / linked with finance by various banks in the district
6)Bank has also devised various products for financial inclusion, namely:
REVIEW OF LITERATURE
Attitudes are a predisposed response to an object and are a crucial concept in studying
consumer behavior. Customers may have various attitudes towards objects which are
mportant for marketers. Attitudes can be used as a theoretical summary of a customers
evaluation of an object. It can also give indication of positive and negative feelings and
behavioral tendencies. However the attitude-behavior link may not always be accurate as
there are other variables which may affect behavior. In accordance to the expectancy-value
model within psychological conceptualization, an individuals attitude toward an object
[Type text] Page 34
-
7/27/2019 Project on Customer Atitude
35/58
ING VYSYA BANK
represents a summary conception or evaluation based on their perception or beliefs. Each
belief associates the object with a particular attribute, thus a persons general attitude is
determined by the subjective values of each attribute, merged with the strength of their belief
that links the attribute with the object.
According to psychology, we are told that attitudes can change and that such changes have
implications for behavior. The canonical tri-component model of attitudes suggests that
changes in beliefs about an object may cause a person to attribute new feelings towards it.
Subsequently this causes changes in choice and preferences. For example, if a person obtains
information about a product that causes her to have more positive beliefs about it, such as that
a car gets better gas mileage than she had previously thought, she will feel more positively
disposed toward it and will be more likely to buy it. Therefore when we consider agents
inclinations with regards to economic actions, we must keep in mind that we stand on shifting
ground which is constantly changing.
A customer attitude toward a product or service is influenced by a match of the product or
service user image with the customer self-concept (Ekinci and Riley, 2003; Sirgy et al., 1992;
Wang and Heitmeyer, 2005). Since, usually attitude develops over time through a learning
process which is affected by reference group influences, past experience, and personality
(Assael, 1981), or it is a general assessment about something, liking or disliking, and the
strength of the feelings.
Traditionally used to describe fidelity and enthusiastic devotion to a country, a cause, or
individual. More recently, it has been used in a business context, to describe a customers
willingness to continue patronizing a firm over the long term, preferably on an exclusive
basis, and recommending the firms products to friends and associates. Customer loyalty
extends beyond behavior and includes preference, liking, and future intentions. Loyal
customer can be a consistent source of revenue over a period n therefore active management
of the customer base and customer loyalty is required which often refersto Customer Asset
Management.Today, in a marketing context,the term defection is used to describe customers
who drop off a companys radarscreen and transfer their brand loyalty to another supplier.
Reichheld and Sasser popularized the term zero defections, which they describe as keeping
every customer the companycan serve profitably. Not only does a rising defection rate
indicate that something is wrong with quality (or that competitors offer better value), it may
[Type text] Page 35
-
7/27/2019 Project on Customer Atitude
36/58
ING VYSYA BANK
also be a leading indicator signaling a fall in profits. Big customers dont necessarily
disappear overnight; they often may signal their mounting dissatisfaction by steadily reducing
their purchases and shifting part of their business elsewhere. Service quality is an array of
factors or determinants comprising of five dimensions of service i.e., quality, namely,
tangibles, reliability, responsiveness, assurance and empathy and use these as the basis for
their service quality measurement instrument, result was development of the SERVQUAL
instrument, based on the gap model. The central idea in this model is that service quality is a
function of the difference scores or gaps between expectations and perceptions. An important
advantage of the SERVQUAL instrument is that it has been proven valid and reliable across a
large range of service contexts. However, while the SERVQUAL instrument has been widely
used, it has been subjected to certain criticisms as well.The contention that service quality
consists of five basic dimensions (Parasuramanet al., 1988) is according to some researchers
questionable and they have suggestedthat SERVQUAL's dimensions are contextual and not
universally applicable ( Ekinci and Riley, 1999; Brown et al., 1993; Cronin and Taylor, 1992;
Teas, 1993; Bouman and Van der Wiele, 1992; Gagliano and Hathcote, 1994). Instead, the
number and composition of the service quality dimensions are probably dependant on the
service setting (Brown et al., 1993; Carman, 1990). It has been suggested that for some
services the SERVQUAL instrument needs considerable adaptation (Dabholkaret al.,1996)
and that items used to measure service quality should reflect the specific service setting under
investigation, and that it is necessary in this regard to modify some of the items and add or
delete items as required (Carman, 1990).
Moreover, research suggests that culture may play a fundamental role in determining how
consumers perceive what constitutes service quality. Szymanski et al. (2001)explored that
satisfaction influences repeat purchase(both volume and frequency) behavior and price
sensitivity. The biggest advantages that a loyal customer gives arerepeat business and
promotion of thecompany through word of mouth. But customer loyalty is much more
thanrepeat purchases or increased volume of purchases. While it has been argued that loyalty
does not mean anyone who buys repeatedly from the same company,Reichheld (2003)
contradicted that not purchasing frequently can be due to changed circumstances or customer
may have reduced his or her requirements for the companys products and services. Going by
this logic, repeat purchases or increased numbers of purchases may not be true indications of
customer loyalty. Reinartz and Kumar (2002) opined that positive word of mouth publicity
generated by loyal customers can be one of the ways of advocating a companys offerings to
[Type text] Page 36
-
7/27/2019 Project on Customer Atitude
37/58
ING VYSYA BANK
friends, colleagues and family. A customer puts his own reputation at stake when he
recommends a company; this act of recommendation should be considered the best indicator
of customer loyalty. They further suggested that loyal customers are considered as the key to
survival and success in many service businesses, especially in the hospitality, insurance and
financial sectors.
According to Pullman and Gross (2003), a slight change in the percentage of loyal customers
can bring about a huge change in profits and the overall value of the firm.Heskettet al.,
(1990) narrated that companys path to profit and growth may lie in its ability to make its
loyal customers market it. Many researchers feel that competitive differentiation can no
longer be achieved along the traditional dimensions of corporate performance.
Ascommoditisation of many service offerings continues, a new source of competitive
differentiation/advantage will come from focusing on the management of customer
experiences. Loyalty is so very important to the survival and profitable growth of a company,
thus measuring customer loyalty is the prime concern (Pine and Gilmore, 1998)
RATIONALE
Research on service quality has been in the developed countries (Herbig and Genestre, 1996),
even though services are among the fastest growing sectors in emerging countries
(Malhotraet al, 1993).In fact, the bulk of the research on service quality in banks has been in
the context of US and European banking institutions. Today, Madhya Pradesh in general and
Indore in particular has become the face of central India and the long stopped development
has triggered. The importance of the study at this juncture, it is important to also study
branches of banking institutions based in developing cities. As branches in such cities in
India provide mature, lessons may be learned from their experiences in developing cities.
Banking has becomes more and more globally integrated. Thus, there exists a service gap on
how consumers evaluate service quality in contexts and cultures very different from the
developed countries, and no prior research has attempted to explore this area.
Evaluation of Salient Beliefs:
[Type text] Page 37
-
7/27/2019 Project on Customer Atitude
38/58
ING VYSYA BANK
Evaluations are affective responses, usually at relatively low levels of intensity and arousal.
This evaluation can be created by both the affective and cognitive systems. The affective
system automatically produces affective responses - which includes feelings, emotions,
moods and attitudes or evaluations - as instant and direct responses to certain stimuli. These
favorable or unfavorable affective responses are generated without conscious, cognitive
processing of information about the product or service. Then, through classical conditioning
process, these evaluations may become associated with a product or brand, thus creating an
attitude.
RESEARCH METHODOLOGY
The service quality model developed by Zeithamal, Parsuraman and Berry (1988) has been
used in the present study. The main assumption of the model is that service quality is
multidimensional concept. These dimensions contribute to the assessment of the service
quality in any setting. A construct SERVPERF based upon the model has been used to
ascertain the service quality in different banks under study.
The statements in the construct are one-dimensional and performance based, which
incorporate the statements of SERVQUAL model that can be used as measurement (Cronin
Jr. & Taylor, 1992). The statements have been grouped under five dimensions mentioned
earlier. In order to ascertain the perceptions of service quality, Likerts 5-point scale has been
used for its suitability to estimate the range and variations in the perceptions. The scale 1 5
represents 5 as mostly agree and 1 as mostly disagree.
Factors Affecting Attitude:
Attitudes can be influenced by various factors beyond product attributes. These include social
and cultural environment, as well as psychographic, demographic and geographic conditions.
All or any of these factors can shape and impact upon consumer behavior. Unlike personality;
attitudes are expected to change as a function of experience. The term attitude is commonly
used in popular culture. For example, when asked, What is your attitude toward abortion? a
parent might retort, Young man, I dont like your attitude. Some bars even refer to Happy
Hour as an attitude adjustment period. For our convenience however, attitude is anenduring, general evaluation of people, object, advertisements or issues. Anything towards
[Type text] Page 38
-
7/27/2019 Project on Customer Atitude
39/58
ING VYSYA BANK
which one has an attitude is termed as an attitude object. An attitude is lasting because it
tends to endure over a certain period of time. It is general because it extends to more than a
momentary event such as hearing a loud noise, though one might over time to develop a
negative attitude toward all loud noises. Consumers have attitudes toward a wide range of
attitude objects, from very product specific behaviors (e.g. drinking Evian rather than Volvic
mineral water) to more general consumption related behavior (e.g. how many glasses of
water should one drink daily). Attitudes help to determine whom a person chooses to be
friends with, what films he or she watches, whether he or she will recycle or discard
aluminum cans, or what he or she chooses to do for a living.
Forming Attitudes:
We all have many different of attitudes and we dont usually question how we got them. For
example, a person isnt born with the opinion that Coke is better than Pepsi, or that editation
calms the soul. Where do these attitudes come from? An attitude can be created in several
different ways, depending on the particular hierarchy of effects in operation and the method
by which the attitude is learned. It can occur because of classical conditioning, in which an
attitude object such as the Pepsi name is repeatedly paired with a catchy jingle (you are in
Pepsi generation). It can also be formed through instrumental conditioning, where the
ttitude is reinforced by consumption of the object (e.g. Pepsi quenches ones thirst). The
learning of an attitude can also be the result of a complex cognitive process. For instance, a
teenager may come to model the behavior of friends and media endorsers like Beyonc
Knowles who drink Pepsi because they believe that this will allow them to fit in which the
desirable lifestyle portrayed in Pepsi commercials. It is thus important to distinguish among
types of attitudes, because not all are formed the same way. For example, a brand-loyal
consumer like Rafael, the tennis fan, has a long-standing and strongly held positive attitude
toward an attitude object, and this involvement will be difficult to weaken. However, another
consumer like Andy may be a more fickle consumer: he may have a mildly positive attitude
toward a product but quite willing to abandon it when something better comes along.
Importance of Attitude in Service Marketing:
In the area of service marketing customers attitude plays an important role for the marketers.
It is one of the important determinants in buying behavior. Marketers should always be
[Type text] Page 39
-
7/27/2019 Project on Customer Atitude
40/58
ING VYSYA BANK
concerned about the service related issues which directly affects the customers attitude. A
savvy marketer can build a model for prospecting new consumers from the attributes of a
satisfied customer. Direct marketing companies create higher response rates by using look-
alike modeling based on existing customersindividuals with a positive attitude. Marketing
spans many disciplines including mathematics, and psychology. Math plays an important role
is predicting consumer behavior. Understanding the reasons behind consumer behavior
requires knowledge of several theories of psychology. These two disciplines combine to aid
in the complete rationalization of consumer behavior. Attitudes are easily formed, but
difficult to change. Consumer behavior is the study of how a consumer thinks, feels, and
selects between competing products. Moreover, the study of attitudes is critical to
understanding the motivation and decision strategies employed by consumers. The
combination of beliefs, attitudes, and behaviors influence how a consumer reacts to a product
or service. Marketers develop relative, compelling marketing messages using the same
combination of information, and ultimately influence consumer behavior.
Factors Affecting Customers Attitudes in Banking Industry:
Banking industry is one of the industries where consumers attitudes play an important role.
People deposit their money into the banks and banks on the other hand lend it to different
organizations. In a country there exists many financial organizations and different people
choose different banks based on their attitudes and preferences. Some people may look for
high interestrate and other may look for smooth services. Consumers attitude towards the
banking services depends on several factors. First of all the location of a bank can have
different attitudes on peoples mind. People may choose a bank which is very near to their
home. Some people may choose their financial institutions based on its internal environment.
The behavior of the employees plays an important attitude in developing customers attitude.
Here employees should be very much friendly giving much emphasis on customers
preference. Degree of complexity in terms of transactions is another important factor in
developing customers attitude. Some banks have introduced with modern technology which
helps to develop positive customers attitude.
[Type text] Page 40
-
7/27/2019 Project on Customer Atitude
41/58
ING VYSYA BANK
Some banks are providing unique services e.g. night banking, online banking which is also
helpful to develop positive customers attitude. Some customers prefer to be given individual
care and attention from their financial institution and if they do not receive this, it may have a
negative impact on the customers attitude. Another important factor is customers always
want to feel relax about the safety of their deposits. Deposits are the main asset of a bank.
Therefore banks should keep customers informed that their deposits are safe which will help
to develop a positive attitude to their banks. If a well reputed bank fails to meet customers
expectation, this might negatively affect the brand image of that bank. In addition to this
there are some other factors e.g. reliability and credibility, services charge, Objection
handling, hospitality (inviting decoration, waiting time hospitality), delivering services as
promised, variety of products, internal environment, employees skill etc. which are
responsible for developing positive or negative attitude of customer to the banking sectors.
Therefore marketer should always be careful in delivering services so that customers can
have a positive attitude toward their services.
Relevant Researches:
Attitude is determined indirectly. Scientists, examining consumer behavior, frequently
evaluate attitude asking certain questions and drawing particular conclusions about consumer
behavior.The interpretation of words and actions of a consumer can be used to give an
indirect definition of attitude. In an article The Determination of the Application of the
Fishbein Model of Attitudes in Ascertaining the Attitudes toward Science Held by High
School Students, by Hartman and Dean Devere (1972), University Microfilms, 300 North
Zeeb Road, Ann Arbor, Michigan, explained that they undertook the study to determine the
applicability of the Fishbein model of attitudes in ascertaining the attitudes toward science
held by high school students. The model proposed that attitudes involve both cognitive and
affective components. In this study, the acceptability of the psychometric properties of an
instrument was the criterion for judging applicability. This was mainly based on the
guidelines currently available for achievement tests.The psychometric properties of the final
instrument were calculated by data collected from a selected group of 505 selected high
school students. The outcome of this study indicated that the Fishbein model of attitudes was
applicable to the measurement of attitudes toward science held by high school students.
However, the validity of the instrument for predicting the choice of a student to enroll or not
to enroll in an elective science course could not be established. In an article Attitudes
[Type text] Page 41
-
7/27/2019 Project on Customer Atitude
42/58
ING VYSYA BANK
Toward Imported and domestic Apparel Among College Students: The Fishbein Model and
External Variables by Soyeon Shim and et al. Department of Apparel, Interior design and
Merchandising, Colorado State University, Fort Collins, explained that the purpose of this
study was to test the role of external variables on attitudes toward imported and domestic
apparel among college students by utilizing Fishbein's Attitude Model. External variables
included demographics, clothing attitudes, students' self-perceptions, and level of fashion
involvement. Data were obtained from a questionnaire that was completed by 741 students
enrolled in randomly selected classes at a major Western university. The attitude toward
imported clothing was influenced by the level of fashion involvement, the prestige
clothingattitude, the social activities clothing attitude, and social acceptance, in that order of
importance.
The attitude toward domestic clothing was influenced by the level of fashion involvement,
social acceptance, the social activities clothing attitude, and the garment styling clothing
attitude, in that order of importance. Overall, students indicated a more favorable attitude
toward domestic apparel than imported apparel. Those who preferred imported apparel and
those who preferred domestic apparel were identified. The prestige clothing attitude, age,
race, and major appeared as discriminate variables between attitude toward imported clothing
and attitude toward domestic clothing. They successfully applied the Fishbein Model in
explaining the attitudes and the reasons behind it. In a research article Nature and operation
of attitudes by Icek Azen, Department of Psychology, University of Massachusetts, 2001, he
covered the conceptualization of attitude, attitude formation and activation, attitude structure
and function, and the attitude behaviour relation. He considered research regarding the
expectancy-value model of attitude, as are the roles of accessible beliefs and affective versus
cognitive processes in the formation of attitudes. His survey looked at research on attitude
strength and its precursors and consequences.
It also reviewed the progress made on the assessment and effects of attitudinal ambivalence.
In addition, he considered research on automatic attitude activation, attitude functions and the
relation of attitudes to broader values. In his research paper he also discussed attitude objects,
explaining that attitudes are dispositions to evaluate psychological objects. This appears to
imply that we hold a singular attitude toward any given object or issue, and when attitudes
change, the new attitude overrides but does not necessarily replace the old attitude. In his
report he explained that attitude can be formed automatically and can be moderated through
familiarization with the attitude object. Evaluation of attitude is influenced by both cognition
[Type text] Page 42
-
7/27/2019 Project on Customer Atitude
43/58
ING VYSYA BANK
and affect. Strong attitudes are thought to have a number of interesting qualities; such as
being relatively stable over time,being resistant to persuasion, and to predict manifest
behavior. He also put forward the view that if attitudes contribute a variety of functions for
the individual, they are likely to create bias in judgments and memory.
In research paper The Extended Fishbein Model: Additional Insights and Problems, by
Micheal J. Ryan and E. H. Bonfield, the University of Alabama, the explained that the model
was derived from Dulany's theory of propositional control as a means of studying
relationships among attitude, behavior, and other variables. Behavioral intention is seen as a
mediator between behavior and attitude and social influence. Theoretical development and
research testing the model were reviewed in the article. The article shows support for the
model, as well as highlighting methodological shortcomings. Particularly mentioned were
selection of attitude and social influence measures and use of single item measures.
According to them the measures which appeared to furnish the best statistical fit might not
provide the greatest diagnostic power.
A re-conceptualization of the model indicating causal links was proposed providing a
possibility for both best fit and high diagnostic power by the researchers. According to the
researchers validation of attitude and social influence measures are needed. The body of
research based on the extended Fishbein model was considerable and the results of tests
suggested that the model had value for the understanding of a wide range of purchase
behavior and behavioral intentions. Besides the feasible avenues of research pointed out,
replications are necessary and the range of purchase behavior and subject and respondent
groups needs to be expanded.
SOURCES OF INFORMATION:
Primary sources: This study focuses on primary data. A primary survey has been conducted
to discover the factors which are instrumental to the customer in forming attitudes. Therefore
several important attributes have been found and customers are surveyed based on those
attributes.
Secondary Sources: As secondary source, a lot of journals, books and reports related to
attitude measurement were used.
[Type text] Page 43