INTRODUCTION

INTRODUCTION

The business of banking around the globe is changing due to integration of

global financial markets, development of new technologies, universalization of
banking operations and diversification in non-banking activities. Due to all these
movements, the boundaries that have kept various financial services separate from
each other have vanished. The coming together of different financial services has
provided synergies in operations and development of new concepts. One of these
is bancassurance.

Bancassurance simply means selling of insurance products by banks. In

this arrangement, insurance companies and banks undergo a tie-up, thereby
allowing banks to sell the insurance products to its customers. This is a system in
which a bank has a corporate agency with one insurance company to sell its
products. By selling insurance policies bank earns a revenue stream apart from
interest. It is called as fee-based income. This income is purely risk free for the
bank since the bank simply plays the role of an intermediary for sourcing business
to the insurance company.

It has its genesis decades ago in France, where this channel today is the
predominant source of insurance business. It has grown at different places and
taken shapes and forms in different countries depending upon demography,
economic and legislative prescription in that country. In some countries,
bancassurance is still largely prohibited, but it was recently legalized in countries
such as the United States, when the Glass-Steagall Act was repealed after the
passage of the Gramm-Leach-Bliley Act.

Bancassurance is a new buzzword. It originated in India in the year 2000.

Following the recommendations of First Narasimham Committee, the
contemporary financial landscape has been reshaped. Thus, present-day banks
have become far more diversified than ever before. Therefore, their entering into
insurance business is only a natural corollary and is fully justified too as
‘insurance’ is another financial product required by the bank customers.

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From the view point of insurance industry also the importance of

bancassurance was felt necessary. With the increased pressures in combating
competition, companies are forced to come up with innovative techniques to
market their products and services. At this juncture, banking sector with it's far
and wide reach, was thought of as a potential distribution channel, useful for the
insurance companies. That’s where the bancassurance came into existence. Thus,
bancassurance is poised to become a key determinator / differentiating factor in
the Insurance industry as well.

Given India’s size as a continent it has, however, a very low insurance

penetration and low insurance density. The penetration level of life insurance in
the Indian market is abysmally low at 2.3% of GDP with only 8% of the total
population currently insured. As opposed to this, India has a well-entrenched wide
branch network of banking system, which only few countries in the world could
match with. It is predicted by experts also that in future 90% of share of premium
will come from Bancassurance business only. And almost half of the population
likely to be in the 'wage earner' bracket by 2010 that there is every reason to be
optimistic that bancassurance in India will play a long inning.

Currently there are more and more exchange of wedding rings between
banks and Insurance Company for better business prospect in future. With the
enoromous benefits for banks like increase in revenue, return on asset, customer
retention, better reputation etc., the bancassurance is going to be a big revolution
in the banking industry. It is against this backdrop an attempt is made to analyse
the financial performance of the AXIS bank in bancassurance so far and to find
out the areas where they can make use of and still need to focus in order to make
AXIS bank to play a vital role in the bancassurance industry.

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1.1 MEANING, DEFINITION AND CONCEPT

MEANING:

Bancassurance is a combination of two words ‘Banc’ and ‘assurance’

signifying that both banking and insurance products and service are provided by
one common corporate entity or by banking company with collaboration with any
particular Insurance company. In concrete terms bancassurance, which is also
known as Allfinanz - describes a package of financial services that can fulfill
both banking and insurance needs at the same time.

It is the provision of insurance (assurance) products by a bank. The

usage of the word picked up as banks and insurance companies merged and banks
sought to provide insurance, especially in markets that have been liberalized
recently. In its simplest form, Bancassurance is the distribution of insurance
products through the Bank’s distribution network.. It is a phenomenon wherein
insurance products are offered through the distribution channels of the banking
services along with a complete range of banking and investment products and
services. Bancassurance tries to exploit synergies between both the insurance
companies and banks.

DEFINITION:

The term first appeared in France in 1980, to define the sale of insurance
products through banks’distribution channels (SCOR 2003).

The Life Insurance Marketing and Research Association’s (LIMRA’s)

insurance dictionary defines bancassurance as “the provision of Life insurance
services by banks and building societies”.

According to IRDA, ‘bancassurance’ refers to banks acting as corporate

agents for insurers to distribute insurance products.” Literature on bancassurance
does not differentiate if the bancassurance refers to selling of life insurance

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products or non-life insurance products.Accordingly, ‘bancassurance’ is defined

to mean banks dealing in insurance products of both life and non-life type in any
forms.But in this research the focus is entirely concentrated towards life
insurance. It is also important to clarify that the term bancassurance does not
just refer specifically to distribution alone. Other features, such as legal, fiscal,
cultural and/or behavioural aspects also form an integral part of the concept
of bancassurance (SCOR 2003).

There are many definitions of bancassurance and, in essence it does depend

upon the model used, and the stage of development. However, the definition of a
fully developed model that is most commonly used is: “'Manufacturing and
distributing cost effectively banking and insurance products to a common
customer base”.

CONCEPT:
This concept gained importance in the growing global insurance
industry and its search for new channels of distribution.However, the
evolution of bancassurance as a concept and its practical implementation
in various parts of the world, have thrown up a number of opportunities
and challenges.
Bancassurance is a relatively new concept in the global stage. Unlike banks
and insurers which have been around in one form or another for centuries,
bancassurance has only been around for a few decades. The concept of
bancassurance was emerged in the western world when banks began to get
involved in marketing of insurance business. From a purely historical perspective,
many regard Barclay’s Life, set up in 1965 in the UK as an insurance subsidiary
of the eponymous bank, as the pioneer of bancassurance. But the term
bancassurance came into existence in France after 1980 to define the sale of
insurance through an intermediary bank.

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It has reared its head in France in the late 1970’s,motivated by among other
things changing customer needs due to an inadequate pension scheme that existed
at that time. As the governments can no longer maintain the funding that people
have begun to take a more active role in their future entitlements by looking at
alternatives to pensions. Bancassurance provides not only provides an alternative
to pensions but also caters to the current taste of customers, which is no longer
satisfied by the traditional products offered by the insurers. As bancassurance
allowed the banks to move away from income generated by the interest spreads it
is viewed as a solution to alleviate the problem of poor consumer savings,
squeezed margins. Thus lackluster pension schemes, poor consumer savings,
squeezed margins, the need for one stop shop delivery for all financial services
among the consumers, increasing importance of strategic alliance has all led to the
growth of bancassurance in Europe. With the success of bancassurance model in
Europe, the bancassurance, which was only a European phenomenon, is becoming
popular in other continents also

Bancassurance seems to have made the greatest impact in France. Almost

100% of the banks in France are selling insurance products. It is claimed that the
55% to 60% of the life insurance business in France had come through banks. In
Portugal and Spain it was over 70%. In U.K it is about 30%. In Argentina,
Brazil, Chile, Colombia and Mexico also the bancassurance is becoming popular.
Hardly 20 % of the United states banks are selling insurance products as only
recently the Glass steagell act was repealed which has prohibited the banks from
entering into the financial services. In Asia: Singapore, Taiwan and Hong Kong
have surged ahead in Bancassurance then that with India and China taking
tentative step forward towards it. In Middle East, only Saudi Arabia has made
some feeble attempts that even failed to really take off or make any change in the
system.

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RELEVANCE OF BANCASSURANCE IN THE INDIAN FINANCIAL

SECTOR

i)) Integration of the financial service industry in terms of banking, securities

business and insurance is a growing worldwide phenomenon. The Universal
Banking concept is evolving on these lines in India.

ii) Banks are the key pillars of India’s financial system. Public have immense
faith in banks.

iii) Share of bank deposits in the total financial assets of households has been
steadily rising.

iv) Indian Banks have immense reach to households. Total of 65700 branches of
commercial banks, each branch serving an average of 15,000 people.

v) Banks enjoy considerable goodwill and access in the rural regions.There are
32600 branches in rural India (about 50% of total), and 14400 semi-urban
branches, where insurance growth has been most buoyant.196 exclusive Regional
Rural Banks in deep hinterland.

vi) Banks have enormous retail customer base.Share of ‘individuals’ as a category

in bank accounts is steadily increasing.Rural and semi urban bank accounts
constitiute close to 60% in terms of number of accounts,indicating the number of
potential lives that could be covered by insurance with the upfront involvement of
banks.

vii) Banks world over have realized that offering value-added services such as
insurance, helps to meet client expectations. Competition in the Personal
Financial Services area is getting `hot’ in India that Banks can retain customer
loyalty by offering them a vastly expanded and more sophisticated range of
products. Insurance distribution can also help the bank to increase the fee-based
earnings to a large extent.

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viii) Fee-based selling helps to enhance the levels of staff productivity in banks.
This is vitally important to bring higher motivation levels in banks in India.

ix) Banks can put their energies into the small-commission customers’ that
insurance agents would tend to avoid. Banks’ entry in distribution can help to
enlarge the insurance customer base rapidly. This helps to popularize insurance as
an important financial protection product.

x) Bancassurance helps to lower the distribution costs of insurers. Acquisition

cost of insurance customer through bank is low. Selling insurance to existing
mass market banking customers is far less expensive than selling to a group of
unknown customers. Experience in Europe has shown that bancassurance firms
have a lower expense ratio. This benefit could go to the insured public by way of
lower premiums.

xi) Banks have an important role to play in the pension sector when
deregulated.Low cost of collecting pension contributions is the key element in the
success of developing the pension sector. Money transfer costs in Indian banking
is low by international standards.Portability of pension accounts is a vital
requirement which banks can fulfill, in a credible framework.

REASONS FOR BANKS TO ENTER INTO BANCASSURANCE

The main reasons why banks have decided to enter the insurance industry
area are the following:

 Intense competition between banks, against a

background of shrinking interest margins, has led to an
increase in the administrative and marketing costs and
limited the profit margins of the traditional banking
products. New products could substantially enhance the
profitability andincrease productivity.

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 Financial benefits to a bank performance can flow in a

number of ways, as briefly outlined below:
- Increased income generated, in the form of
commissions and/or profits from the business
(depending upon the relationship)
- Reduction of the effect of the bank fixed costs, as they
are now also spread over the life insurance relationship.
- Opportunity to increase the productivity of staff, as
they now have the chance to offer a wider range of
services to clients

 Customer preferences regarding investments are

changing. For medium-term and long-term investments there
is a trend away from deposits and toward insurance products
and mutual funds where the return is usually higher than the
return on traditional deposit accounts.This shift in
investment preferences has led to a reduction in the share
of personal savings held as deposits, traditionally the core
element of profitability for a bank which manages clients
money. Banks have sought to offset some of the losses by
entering life insurance business.Life insurance is also
frequently supported by favourable tax treatment to encourage
private provision for protection or retirement planning. This
preferential treatment makes insurance products more
attractive to customers and banks see an opportunity for
profitable sales of such products.
 Analysis of available information on the customer
financial and social situation can be of great help in
discovering customer needs and promoting or manufacturing
new products or services.Banks believe that the quality of
their client information gives them an advantage in

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distributing products profitably, compared with other

distributors (e.g. insurance companies).
 The realization that joint bank and insurance products can
be better for the customer as they provide more complete
solutions than traditional standalone banking or insurance
products.
 Banks are experiencing the increased mobility of their
customers, who to a great extent tend to have accounts with
more than one bank. Therefore there is a strong need for
customer loyalty to an organization to be enhanced.
 Client relationship management has become a key
strategy. To build and maintain client relationships,banks and
insurers are forming partnerships to provide their clients with
a wide range of bank and insurance products from one source.
 It is believed that as the number of products that a
customer purchases from an organization increases the
chance of losing that specific customer to a competitor
decreases.

WHY IS BANCASSURANCE MORE SUITED TO LIFE INSURANCE

PRODUCTS?

Traditionally, much fewer non-life insurance products are distributed

through bancassurance than life insurance products. There are several reasons for
this:

✔ The main reason may be the complementary nature of life insurance and
banking products: bank employees are already familiar with financial products
and quickly adapt to selling insurance-based savings or pension products;

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✔ On the other hand, the non-life market requires special management and selling
skills, which are not necessarily prevalent in bancassurance. In addition, such
competencies require significant investment in training and motivation, and
therefore additional costs;

✔ Life insurance products are generally long-term products, which require

customers to have complete confidence in the institution that invests their money.
And we now know that, in many countries, banks have a better image and are
more trusted than insurance companies;

✔ Bank advisers can use their knowledge of their customers’ finances to target
their advice towards specific needs. This is a major advantage in life insurance
and less important in personal injury insurance;

✔ Some professionals also refer to the claims management aspect of personal

injury insurance, which could have a negative impact on brand image. This would
seem to explain why for a long time bancassurance operators hesitated to offer
these types of product.

ADVANTAGES OF BANCASSURANCE:

Everybody is a winner in bancassurance. For banks it mainly acts as a

means of product diversification and additional fee income; for insurance
company it acts as a tool for increasing their market penetration and premium
turnover and for customer it acts as a bonanza in terms of reduced price, high
quality products and delivery to doorsteps. Hence it is a win-win solution for
everyone who involved.

To the bankers:

 In a situation of constant asset base the bank can increases Return on

Assets (ROA)by increasing their income, by selling insurance products
through their own channel. It can cover operating expenses and make

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operating expenses profitable by leveraging their distribution and

processing capabilities
 Can leverage on face-to-face contacts and awareness about the financial
conditions of customers to sell insurance products.
 By acting as a one stop shop for all financial services, they can
improve overall customer satisfaction resulting in higher customer
retention levels
 Banks enjoy significant brand awareness within their geographical
region providing for a lower per lead cost when advertising through
print, radio and television. The advantage of a bank over traditional
distributors is the lower cost per sales lead made possible by their
sizeable loyal customer base.
 Can establish sales oriented culture among the employees

To the customers:

 Comprehensive financial advisory services under one roof. i.e.,

insurance services along with other financial services such as banking,
mutual funds, personal loans etc.
 Enhanced convenience on the part of the insured
 Easy access for claims, as banks is a regular go.
 Innovative and better product ranges

To the insurers:

 Insurers can exploit the banks' wide network of branches for

distribution of products. The penetration of banks' branches into the
rural areas can be utilized to sell products in those areas.
 Customer database like customers' financial standing, spending habits,
investment and purchase capability can be used to customize products
and sell accordingly.

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 Since banks have already established relationship with customers,

conversion ratio of leads to sales is likely to be high. Further service
aspect can also be tackled easily.

Factors that appear to be critical for the success of bancassurance

are

 Strategies consistent with the bank's vision, knowledge of target

customers' needs, defined sales process for introducing insurance services,
simple yet complete product offerings, strong service delivery mechanism,
quality administration, synchronized planning across all business lines and
subsidiaries, complete integration of insurance with other bank products
and services
 Another point is the handling of customers. With customer awareness
levels increasing, they are demanding greater convenience in financial
services.
 The emergence of remote distribution channels, such as PC-banking
and Internet-banking, would hamper the distribution of insurance
products through banks.
 The emergence of newer distribution channels seeking a market share
in the network.

Bancassurance training for bank employees:

The bank employees will need to be trained in the following aspects of the
insurance business:
 Features of the insurance products sold
 How to identify and approach a potential customer
 Basic insurance needs
 Handling basic objections
 Other distribution channels and products
 Expected roles

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 Procedures
 Remuneration and incentive schemes
 Cultures
 Customer service
Continuous training and supervision:

Apart from initial training, there should be further training to

support the development of the agent or employee. Some ways in which this can
be done are:
 Agency meetings
 Bank branch meetings
 Area banking meetings
 In-house magazine
 Training circulars
 Area sales seminars
 Company library
 Video tapes
 Certified courses
 Lectures
 Training material booklets

Remuneration of bank employees:

Any commission payable by the insurance company is, as a principle, to

be credited to the bank profit center for the bancassurance operation. The bank
management sets the commission level for each manager and employee engaged
in the bancassurance operation.
 Selling in the bank branches (by employees or by financial
advisers): For simple packaged products: employees could be
rewarded with gifts and/or salary increments based on their selling
performance in promoting both banking and insurance products.
Such performance could be quantified via the use of a points

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system where by the various products are allocated as a number of

points.
 Warm leads: In return for providing warm leads, the bank will get
a share, say 50%, of the normal first year commissions.

A basis is needed for allocating this amount between branch staff (who
provide the warm leads) and the bank owners. A possible basis would be:
25% 25% 50%.

The structure shown above generates benefits as follows:

 Financial rewards for employees who generate warm leads
 Financial rewards for managers and other staff of the bank branch
who have supported bank activities while the assurance business
was being generated.
Group awards or bonuses are more desirable when the contribution of
the individual employee is either difficult to distinguish or depends on group
cooperation.

1.2 A) NEED FOR THE STUDY

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INTRODUCTION

Today’s banking business is not the one we have seen in the past. It has
become much more diversified. With the shift in the customer preferences from
deposits to investments, intense competition etc., the banks saw their profit
margin declining. Thus it has become imperative for the banks to retain the
customer by providing more value added services under one roof as well as to
find alternative ways to generate more income. As bancassurance provides the
best possible solution to all these, most of the banks nowadays have started selling
insurance products to its customers. AXIS bank is also having a tie up with Bajaj
Allianz Life Insurance for selling Life insurance products to its retail customers.
Hence there is a need for the study to know whether AXIS bank has been
benefited out of bancassurance by way of financial analysis and to suggest the
areas where they can make use of and converge the attention of the bank if any, is
required.

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1.2 B) STATEMENT OF THE PROBLEM

To understand the financial impact of bancassurance in AXIS bank

and to suggest the ways and means to improve the existing performance by way
of collecting responses from the customers.

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C) BENEFITS TO THE ORGANIZATION

• Through the study the bank can know its financial performance in
bancassurance and whether it is contributing to the overall progress
of the bank or not.
• The study would enable AXIS bank to know the general opinion of
customers about insurance and bancassurance so as to know
whether any awareness need to be created about the same.
• The study would enable AXIS bank to know how far their
initiatives in promoting Bajaj Allianz life Insurance products have
reached its customers.
• It would also enable the bank to know whether they have
established a strong relationship with the customers, as it is
important for bancassurance.
• It would also enable the bank to know the number of persons who
are planning to take a life insurance policy in their near future so
that it can take the advantage of the same.
• The bank can also know the willingness of the customers in
accepting AXIS bank as their distribution channel in case of
obtaining Bajaj Allianz Life Insurance policy in future.
• Finally, it provides the opportunity for the bank to know the areas
where they need to give much emphasis and uplift themselves in
order to occupy a key role in the area of bancassurance.

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1.2 D) SCOPE OF THE STUDY

 The study focuses on the financial performance of AXIS bank in

bancassurance and its contribution to the overall progress of the bank with
respect to life insurance alone.

 The study analyses the awareness of the customer and the viewpoints of the
customer about insurance as well as bancassurance.

 The study also measures the initiatives taken by AXIS bank in endorsing Bajaj
Allianz Life insurance products.

 The study also throws light on the relationship building by AXIS bank with its
customers, as it is the deciding factor for considering the bank as a one-stop
shop for all their financial solutions.

 It also indicates the persons who are willing to take life insurance policy in the
immediate future and the reasons for taking the same.

 It also pinpoints the willingness of the customer in accepting AXIS Bank, as

their distribution channel, in case of their choice is Bajaj Allianz Life
Insurance for obtaining a policy

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1.2 OBJECTIVES OF THE STUDY

Primary objective:
It is to make an analysis on the financial performance of
AXIS bank in bancassurance with specific reference to life insurance and to
suggest the ways and means to improve the existing performance by way of
collecting responses from the customers.

Secondary Objectives:
.
 To analyze the financial performance of AXIS bank in bancassurance
and its contribution to the overall progress of the bank using ratio
analysis.
 To analyze the initiatives taken by the AXIS bank in endorsing the
Bajaj Allianz Life Insurance products.
 To assess the relationship building factors of AXIS bank, which is
significant for bancassurance.
 To know the customer preferences in selecting AXIS bank as a
distribution channel in case of their willingness to obtain Bajaj Allianz
Life Insurance policy in future.

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1 .4 LIMITATIONS OF THE STUDY

 Time has played a biggest constraint that the research could not be
carried
out comprehensively as the duration of the study was only 3 months.

 As the research contains the Secondary data for making a financial

analysis the accuracy and reliability of the analysis depends on
reliability of figures derived from financial statements.

 The sample size for collecting the primary data was meager as it
includes only 100 respondents, hence the conclusion would not be a
universal one.

 Personal biases and prejudices of the customers may also affect the
study.

Inspite of the limitations, the study was effective in analyzing the

performance of AXIS bank in bancassurance with specific reference to life
insurance.

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1.5 A) INDUSTRY PROFILE

Banks are among the main participants of the financial system in India.
Banks in India can be categorized into non-scheduled banks and scheduled
banks. Scheduled banks constitute of commercial banks and 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).

During the first phase of financial reforms, there was a nationalization of

14 major banks in 1969. This crucial step led to a shift from Class banking to
Mass banking. Since then the growth of the banking industry in India has been
a continuous process. It has become an important tool to facilitate the
development of the Indian economy.

During the second phase of reforms, in the early 1990s, the then
Narasimha Rao government embarked on a policy of liberalisation and gave
licences to a small number of private banks, which came to be known as New
Generation tech-savvy banks, which included banks such as UTI Bank(now re-
named as Axis Bank) (the first of such new generation banks to be set up), AXIS
Bank andICICI Bank. This move, along with the rapid growth in the economy of
India, kickstarted the banking sector in India, which has seen rapid growth with
strong contribution from private banks and foreign banks.

Currently, India has 88 scheduled commercial banks (SCBs) - 28 public

sector banks (that is with the Government of India holding a stake), 29 private

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banks (these do not have government stake; they may be publicly listed and
traded on stock exchanges) and 31 foreign banks. They have a combined network
of over 53,000 branches and 17,000 ATMs. According to a report by ICRA
Limited, a rating agency, 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. There are 70324 bank offices in India and each bank
office serves around 16000 people. It’s a huge banking infrastructure and
among best banking network in world.

Current scenario:

As far as the present scenario is concerned the banking industry is in a

transition phase. The Public Sector Banks, which are the mainstay of the Indian
Banking system account, are unfortunately burdened with excessive Non
Performing assets massive manpower and lack of modern technology. while on
the other hand the private sector banks are consolidating themselves through
mergers and acquisitions.

On the other hand the Private Sector Banks in India are witnessing
immense progress They have pioneered Internet banking, mobile banking, phone
banking, ATMs. etc., They are forging ahead and rewriting the traditional banking
business model by way of their sheer innovation and service.

The banks today are more market driven and market responsive. The
top concern in the mind of every bank's CEO is increasing or at least
maintaining the market share in every line of business against the backdrop of
heightened competition. With the entry of new players and multiple channels,
customers have become more discerning and less "loyal" to banks. This makes
it imperative that banks provide best possible products and services to ensure
customer satisfaction. To address the challenge of retention of customers, there
have been active efforts in the banking circles to switch over to customer-
centric business model. The success of such a model depends upon the approach

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adopted by banks with respect to customer data management and customer

relationship management.

There has been an increase in the bank focus on retail segment with the
economic slow down. Retail banking has become the new mantra for banking
industry. Banks are now realizing that one of their best assets for building
profitable customer relationships especially in a developing country like India is
the branch. Branches are in fact a key channel for customer retention and profit
growth in rural and semi-urban set up.. Branches could also be used to inform and
educate customers about other, more efficient channels, to advise on and sell new
financial instruments like consumer loans, insurance products, mutual fund
products, etc.

Thus, all the above led to the practice of bancassurance. The Reserve
Bank of India being the regulatory authority of the banking system, with the
reorganization of the need for banks to diversify their activities at the right time,
permitted them to enter into insurance sector as well. It has issued a set of
detailed guidelines setting out various ways for a bank in India to enter into
insurance sector.

IRDA has also felt the necessity of introducing an additional channel of

distribution, which is the Bancassurance to reach out more people. It started
picking up after Insurance Regulatory and Development Authority (IRDA) passed
a notification in October 2002 on 'Corporate Agency' regulations.

Legal Requirements: In India, the banking and insurance sectors are regulated
by two different entities (banking by RBI and insurance by IRDA) and
bancassurance being the combinations of two sectors comes under the purview of
both the regulators. Each of the regulators has given out detailed guidelines for
banks getting into insurance sector. Highlights of the guidelines are reproduced
below:

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RBI guideline for banks entering into insurance sector provides three options for
banks. They are:

 Joint ventures will be allowed for financially strong banks wishing to

undertake insurance business with risk participation;
 For banks which are not eligible for this joint-venture option, an
investment option of up to 10% of the net worth of the bank or Rs.50
crores, whichever is lower, is available;
 Finally, any commercial bank will be allowed to undertake insurance
business as agent of insurance companies. This will be on a fee basis with
no-risk participation.

The Insurance Regulatory and Development Authority (IRDA) guidelines for the
bancassurance are:

 Each bank that sells insurance must have a chief insurance executive to
handle all the insurance activities.
 All the people involved in selling should under-go mandatory training at
an institute accredited by IRDA and pass the examination conducted by
the authority.
 Commercial banks, including cooperative banks and regional rural banks,
may become corporate agents for one insurance company.
 Banks cannot become insurance brokers.

Currently there has been an increase in the number of tie-ups with banks and
insurance companies. Some of the models practiced by the banks in India are I)
Referral model ii) Corporate agency model iii) Insurance as a fully integrated
model etc.,

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Some of the Bancassurance tie-ups in India are as follows:

TABLE 1.1: SOME OF THE BANCASSURANCE TIE-UPS IN INDIA

Insurance Company Bank
Bank of Rajasthan, Andhra Bank, Bank of Muscat,
Birla Sun Life Insurance Co. Ltd. Development Credit Bank, Deutsche Bank and Catholic
Syrian Bank
Dabur CGU Life Insurance Canara Bank, Lakshmi Vilas Bank, American Express
Company Pvt. Ltd Bank and ABN AMRO Bank
HDFC Standard Life Insurance Co.
HDFC bank, Union Bank of India, saraswat bank.
Ltd.
Lord Krishna Bank, ICICI Bank, Bank of India,
ICICI Prudential Life Insurance Co
Citibank, Allahabad Bank, Federal Bank, South Indian
Ltd.
Bank, and Punjab and Maharashtra Co-operative Bank.
Corporation Bank, Indian Overseas Bank, Centurion
Bank, Satara District Central Co-operative Bank, Janata
Life Insurance Corporation of India
Urban Co-operative Bank, Yeotmal Mahila Sahkari
Bank, Vijaya Bank, Oriental Bank of commerce.
Met Life India Insurance Co. Ltd. Karnataka Bank, Dhanalakshmi Bank and J&K Bank
SBI Life Insurance Company Ltd. State Bank of India
Bajaj Allianz General Insurance Co.
Karur Vysya Bank and Lord Krishna Bank
Ltd.
Royal Sundaram General Insurance Standard Chartered Bank, ABN AMRO Bank, Citibank,
Company Amex and Repco Bank.
United India Insurance Co. Ltd. South Indian Bank

Thus, the present day banks are more diversified than ever before. They
cannot restrict themselves to traditional banking. As bancassurance prospects in
India are brighter that banks in India can make use of the situation to gain
profitable business venture.

25
INTRODUCTION

1.5 (B) COMPANY PROFILE

About AXIS BANK:

Axis Bank was established in 1993 and was the first private sector
bank to start operations after the Government of India allowed entry of private
banks. Previously called UTI Bank, Axis Bank was promoted by Unit Trust of
India (UTI-I), Life Insurance corporation of India (LIC), General Insurance
Corporation (GIC) and its four subsidiaries, New India Assurance Company,
Oriental Insurance Corporation, National Insurance Company and United
Insurance Company. The name of the Bank was changed in 2007 as there was
brand confusion because many unrelated shareholder entities such as UTI
Securities, UTI Technological Service and UTI Investor Services were also
sharing the UTI brand. Moreover, the name was changed to connote stability and
solidarity as well as was in line with the bank’s expanding operations across
geographical boundaries. Staring with one branch in Ahmedabad in 1994, the
bank now has 835 branches including extension networks (31st March 2009)
across 30 States and 4 Union Territories. The bank also has overseas offices in
Singapore, China, Hongkong and Dubai.

The bank's broad products and services include consumer banking, NRI business,
retail loans, corporate banking, treasury, capital markets and financial advisory
services. It divides its business into five segments viz. large corporates, SMEs,
agri-business, channel financing and structured products. The bank's retail assets
constituted 23 per cent of total advances at the end of March 2008. Housing loans
accounted for 57 per cent of total retail assets. Auto loans constituted 7 per cent of
its retail loans

The bank divides its advances into three focus areas i.e. agricultural, mid--
corporate and SMEs. During 2007--08, the bank's agricultural advances grew by

26
INTRODUCTION

35 per cent to Rs.5,507 crore. Its advances to SMEs reported a whopping 74 per
cent growth to Rs.11,536 crore.

The bank maintains a healthy asset quality with 81 per cent of its corporate
advances having a rating of at least `A' as at the end of March 2008. The bank
pruned its net stressed assets consistently from 1.92 per cent in 2002--03 to 0.36
per cent by end of 2007--08.

Axis Bank Ltd.

Subsidiaries Axis Private Equity Ltd.
Axis Sales Ltd.
Axis Trustee Services Ltd.

Consistent growth: The bank’s net profit has grown by over 30% YoY in 36 out
of the last 38 quarters. Also the two quarters in which the profit did not grow was
on account of write-off of extraordinary items (G-Sec valued on mark to market
basis). The net profit has grown by over 60% YoY in each of the last eight
quarters. The important performance indicators such as ROA, CAR, NPA and
NIM have remained strong over the last five years. Axis Bank comes very near to
HDFC Bank in terms of important efficiency parameters. As can be from the table
above, the share of current account saving account deposits in the total deposits
(CASA) is higher in case of HDFC Bank. Also HDFC Bank scores higher in
terms of margins (NIM). However, looking at the returns generated on networth
(ROE) and the growth in advances and deposits, Axis Bank appears to be gearing
up well to reduce the gap existing in the margins as well as the total balance sheet
size.

Expanding footprint, expanding balance sheet: The bank has continued to

expand its geographical coverage across the country. Over the last five years, the
total number of branches including extension centers of the bank has increased
from 339 in FY05 to 835 in FY09 whereas ATMs have increased from 1,599 to
3,595. Also during Q1FY10, the bank added 26 new branches including extension

27
INTRODUCTION

centers and 128 ATMs. This has helped the bank particularly in the acquisition of
low cost retail deposits, retail assets, lending to agriculture, SME and mid-
corporates as also the sale of third-party products. The bank’s balance sheet has
increased at a CAGR of 43.65% over the last five years

Key Positives

• Market leadership position in the travel card segment

• Market leader in the prepaid cards segment
• Second largest merchant acquirer in the country
• Leadership position in private placement of bonds and debentures till 31st
December 2008
• High quality of its assets
• The Bank’s Non-Performing Assets (NPAs) are among the lowest in the
industry.

Post its rebranding exercise in 2007 the bank has continued to do well and the
change in name has not affected the bank’s business. In fact in FY2008 it saw its
customer acquisition grow at a robust rate of 67% over the last year to over 9.9
million customer accounts

The above business groups are supported by the following groups:

 Audit & Compliance

 Credit & Market Risk
 Finance, Administration & Legal
 Human Resources
 Information Technology
 Operations

28
 2.0 REVIEW OF LITERATURE

2.1 Bancassurance - A Global Breakdown:

It is important to outline the impact that bancassurance has had on
differing regions around the world, as well as looking at the major regulations that
impact the further growth of bancassurance. Below, is provided with a brief
synopsis of bancassurance markets in certain key areas.

EUROPE:
Bancassurance is a construct of Europe (France in particular) and this
perhaps helps explain why it is such a phenomenal success within certain
European markets. Largely the 1989 Second Banking Coordination Directive
motivated the large influx of banks into insurance within Europe in recent years.
Currently, the penetration levels are fairly stable in Europe, since bancassurance
in the majority of Western European countries (France, Netherlands, Portugal and
Spain) has reached what studies such as Swiss Re. (2002) argue to be maturity.
These penetration levels will only pick up once bancassurance manages to fully
infiltrate Central and Eastern European countries such as Hungary and Poland,
and the Baltic nations. Currently, the final major hurdle for bancassurance in
Western Europe seems to lie in the U.K. where a predominantly strong insurance
board still attempts to resist the bancassurance trend even in the face of
widespread deregulations.

FRANCE:
In France, the success of bancassurance is mitigated by a favorable tax
treatment on life insurance products, lack of competition within the insurance
industry, and an inadequate pension scheme (Bonnet and Arnal (2000). The
pioneer of bancassurance in France is argued to be Credit Mutual, which created
its own life and non-life subsidiaries in the early 1970’s (Sakr (2001)).

29
Bancassurance has seen the most success in the life insurance market, something
that is true for every nation, increasing from 52% in 1995 to account for 69% of
life insurance business n 2000 (Durand (2003), and Turner (1998)). However, as
of late, the banking networks market share of the life insurance market has
remained fairly stagnant, actually dropping over the years to 66% market share in
2001 and 61% in 2003 (Falautona and Marsiglia (2003), Datamonitor (2003)).
This resulted from a combination of falling stock market prices and the banking
network bearing the brunt of lower transfer prices according to Benoist (2002).

This means that banking and insurance companies are overseen separately
within the country. For a conglomerate, the regulator will depend on who is the
parent of the two.

UNITED KINGDOM:
Bancassurers have faced a tougher time in trying to penetrate the U.K.
market, thanks in large to a combination of restrictive regulations and a powerful
insurance governing body. The first move for bancassurers came in 1985 when
Standard Life purchased a stake in the Bank of Scotland. Changes in legislation
soon followed in 1986 and 1988, which made it legal for banks to market
insurance products and set up their own insurance subsidiaries (Sakr (2001)).
Even then, the main type of union between the two was a joint venture, since the
banks placed an emphasis on maintaining the knowledge of the insurer. Twenty
years later, researchers argue that bancassurance is still in its infancy within the
U.K., currently accounting for 15% of new insurance premiums issued (Benoist
(2002),

It is argued that restrictive regulations were detrimental to the growth of

bancassurance within the country and that due to the lack of experience the
correct model for the U.K. is still to be found (Hubbard (spring 2001)). Two
benefits of the regulatory system in the U.K. are firstly, that it is based on one
almighty regulator that overseas the different factors of the financial services

40
industry (the financial Services Authority). This leads to more streamlined
regulations than in other countries that employ functional form regulatory
systems.

SPAIN:
Spain has one of the most developed markets in bancassurance
(Datamonitor (2003)). Current penetration of bancassurers is over 75% of life
insurance business and an ever-increasing proportion of the non-life business. In
Spain, the evolution of the bancassurance market is fostered by the phenomenal
growth within the insurance services industry (life insurance alone has seen 30%
growth per annum over the past 15 years (Durand (2003)). The development of
bancassurance in the Spanish market was facilitated by the well-established
network of regional building societies, and also the cultural mentality that it is
correct to take on risks (Goddard (1999)).

BRAZIL:
In Brazil the laws are in the bancassurers favor, and the banks within the
country control more than 65% of the insurance market (Nigh and Saunders
(2003)), a size that rivals the leading bancassurers in Europe. Furthermore, in
Brazil, bancassurers are assisted by regulations that ban the development of agent
networks (Benoist (2002)).

NORTH AMERICA:
The North American financial services market is the largest in the world
and bancassurance has developed in a differing manner in this region depending
on the country in question. In Canada, there has been consolidated regulation for
more than 15 years and banks are legally allowed to own insurance companies,
but limitations are placed on the products that can be provided (Dorval (2002)).
While in Mexico, bancassurance has been a flourishing industry due largely to the
role played by banks in the creation of pension funds since the 1997 pension
reforms.

41
 Bancassurance in the U.S. has, in contrast, faced a very tight regulatory
and legislative environment for many decades. The formation of financial
conglomerates was greatly hindered by the Banking Act of 1933 (Glass-Stegall
Act) and the Bank Holding Company Act of 1956. Only in 1999 did laws become
more favorable to banks offering insurance products, with the passing of the
Gramm-Leach Bliely Act. However, due to the divergence between the state and
federal laws regarding banks offering insurance products, bancassurers still face a
hard time ahead in relation to regulations and attempting to overcome powerful
lobbies that aim to maintain existing hierarchies (Boot (2003)). Currently, only
around 7% of Americans purchase their insurance products through bank
branches (Thomson (summer 2002b)). However, with the ever-continuing
regulatory changes such as the demutualization of insurance companies coupled
with an ageing population, it is widely believed that there will be strong growth
potentials for bancassurers in a mature market such as the U.S.

ASIA AND THE PACIFIC:

Bancassurance in the Asian region has been relatively slow to take off,
with the exception of countries such as Australia, Hong Kong and Singapore
where regulations have been considerable lenient (Swiss Re. (2002)). The trend in
the majority of mainland Asian countries has been for a bank to form ties with a
foreign insurer in order to begin bancassurance operations with around 80% of
these being life insurers, and the financial structure of the operation tends to be in
the form of a distributional agreement. Since bancassurance is still in its infancy
in most Asian countries, it is very susceptible to global changes
Most countries within Asia have only recently begun allowing the
formation of bancassurance operations with the main players listed below. Certain
countries within the region are still holding out against the onslaught of the
bancassurance trend. Vietnam still restricts banks from offering life insurance
products, while South Korea has made certain rules that make it difficult to begin
a bancassurance operation within the country

42
 2.2 Quantitative works of major Researchers related to
bancassurance
Compared to the vast amount of descriptive work that has been published
in the field of bancassurance, there is only a limited amount of empirical
studies conducted on the effects that bancassurance actually has on the
company once implemented. This was largely due to the lack of information that
resulted from poor company disclosure statements and inadequate collections of
national statistics. As these problems are being rectified, researchers into the
bancassurance practice are making more and more empirical research;
nevertheless, it is still in its early stages. The following aims at highlighting the
major quantitative findings of certain researchers that have performed
research into the union of banks and insurers.

The majority of past studies have focused mainly on the risk and
profitability effects resulting from the union of a banking and non-banking
firm. One of the earliest studies in this area was performed by Boyd and Graham
(1986). They conducted a risk-of-failure analysis and looked at two periods
around a new Federal Reserve policy (1974s go-slow policy). they found that
bank holding companies (BHCs) involvement in non-banking activities is
significantly positively correlated with the risk of failure over the period 1971-
1977, while the period 1978-1983 showed no significance, thus indicating that
the new policy had a considerable impact on bank holding company (BHC)
expansion into non-banking activities. Boyd and Graham (1988) followed their
1986 study with a paper that used a simulation approach, whereby they simulated
possible mergers between banking and non-banking companies which were then
compared to existing BHCs in order to determine whether the risk of bankruptcy
will increase of decrease should expansion be allowed in to the non-banking
industry, and also to determine the concurrent effect on company profitability.
Their main finding was that the risk of bankruptcy only declined should the BHC
expand into the life insurance practice. Brewers (1989) study finds similar risk
reduction benefits existing however cannot specify whether they originate as a

43
result of diversification, regulation or efficiency gains. Boyd, Graham and
Hewitt (1993) build on Boyd et al. (1988) by conducting a simulation study.
They once again conclude that mergers of BHCs with insurance companies
may reduce risk, whereas those with securities or real-estate firms will not.
Saunders and Walter (1994) and Lown, Osler, Strahan and Sufi (2000) use a
similar method to Boyd and Graham (1988) and obtain similar results with more
current data. Estrella (2001) examines diversification benefits for banks by
using proforma mergers. In contrast to previous studies that incorporate
accounting data, Estrella uses market data and a measure of the likelihood of
failure that is derived through the application of option pricing theory to the
valuation of the firm. the findings indicate that banking and insurance
companies are likely to experience gains on both sides in the majority of the
cases.

The other major series of studies on banks expansion into non-banking

activities focus on the wealth effects of such a move. Cybo-Ottone and Murgia
(2000) analyzed the stock market valuations of mergers and acquisitions in the
European banking industry over the period 1988-1997, and found the existence
of significant positive abnormal returns associated with the announcement of
product diversification of banks into insurance. Furthermore, they found that
country effects do not significantly affect their overall results, suggesting a
homogeneous stock market valuation and institutional framework across Europe.
Carow (2001) looked at the abnormal returns of bank and insurance companies
following the changing legislation brought about as a result of the Citicorp-
Travelers Group merger, and discovered that investors expect large banks and
insurance companies to gain significantly from the legislation removing
barriers to bancassurance. In an event study released later in the same year,
Carow (Mar 2001) found in support the contestable market theory that insurance
companies became worse off and banks had no long-term gains following
legislations further supporting bancassurance within the U.S.Cowan, Howell and
Power (2002) conducted a similar event study surrounding four separate court

44
rulings and discovered that on average only larger, riskier BHCs with fee-based
income gain the most, while smaller, riskier insurers sustain the highest wealth
losses. Fields, Fraser and Kolari (2005) find that bancassurance mergers are
positive wealth creating events by examining abnormal return data. They
further deduced that scale and scope economies were a contributing factor in
these results.

As always, the opponents are there. Amel, Barnes, Panetta and Salleo
(2004) and Strioh (2004) found that consolidation in the financial sector is
beneficial up to a relatively small size in order to reap economies of sale, and that
there is no clear evidence supporting cost reductions stemming from
improvements in managerial efficiencies. Strioh (2004) finds non-banking income
volatile and that there is little evidence of diversification benefits existing. But,
the majority of the past studies have found risk reduction and wealth creating
benefits associated with the expansion of banks into the insurance industry.

Article 2.3

Title: INSURERS UPBEAT ON BANCASSURANCE CHANNEL

Bancassurance is likely to generate approximately 35% of private

insurers’ premium income by 2008, according to an analysis of India’s
bancassurance sector by Watson Wyatt Worldwide, a leading global
insurance consulting firm.
‘India Bancassurance Benchmarking Study- 2006/7’ is the first of its kind
survey in the Indian market, and part of an Asia-wide analysis focused on
bancassurance distribution. It sets out to define bancassurance performance
standards and benchmarks against a cross section of industry practices, processes
and productivity indicators. Watson Wyatt has analyzed the bancassurance
channel from the perspective of banks, life insurers and non-life insurers
separately in the report.

45
 Mr. Graham Morris, Director, Watson Wyatt Worldwide said: “the
purpose of the survey was to focus and understand how banks and insurers
develop strategies for selling life and non-life insurance products through the
vast network of bank branches in India and the practical issues they face in
implementing the sales process”. Watson Wyatt had chosen India as the first
country in Asia to do the Benchmarking Survey considering the vibrant growth
of this alternative channel in the country compared to the other Asian markets.
A total of 25 banks covering PSU, Private, and Foreign banks had
participated in the Survey, along with almost all private life and general insurers
licensed in the country.
Nearly 90% of interviewed life insurers are expecting an increase of
over 75% in new business premium income for the current financial year from
the bancassurance channel, despite the fact that they consider lack of sales
culture on the part of bank’s branch staff as a key issue in the success of
bancassurance. The lack of a clear bancassurance vision on the part of the bank
partner is the most visible reason for the slow progress in cross selling of
insurance, despite the bank partners having impressive branch networks or large
customer bases.
The quality of bank customer data is frequently poor and the absence of
simple CRM tools in most banks makes it difficult to launch specific initiatives
to cross sell insurance products. Public sector banks in the country, which control
more than 90% of the total customers, are seem to be inefficient in recording
basic data about customers and managing available information.
“Growth in bancassurance in India will fall short of its potential unless
the perceived lack of sales culture and vision begin to get addressed by the
banks. An understanding of theses differences will facilitate the mutual goal of
increasing bancassurance as the leading channel in insurance distribution in
India,” said Mr. R.Krishnamurthy, Managing Director, Distribution Practice,
Watson Wyatt Insurance Consulting of the India office.
Banks’ have overwhelmingly expressed a leaning towards insurers with
bancassurance expertise and showing evidence of their commitment. On product

46
design and development, they seem to demand more attention from insurers to
involve the bank management team.

The brand image of the bank partner, its willingness to bring about a
cultural change and involving the entire branch network are the vital factors that
life insurers consider when entering into a bancassurance tie-up. While
developing their bancassurance strategy, general insurers consider increasing
new business and tapping new markets as the key factors. 100% of respondents
ranked gaining support and commitment from the bank’s management as the
critical factor in building successful bancassurance operations.
Both bankers and insurers are bullish about the future outlook of
bancassurance with nearly a quarter of respondents predicting that the overall
share of bancassurance would be about 50% or more in the life segment in the
year 2010.
About 30% of the life insurers have indicated that by the year 2010,
rural insurance business would constitute between 16-20% of their total
bancassurance new business premium.
Life insurers have also expressed overwhelming support to innovative
changes in the bancassurance channel, such as banks having multiple insurer
relationships, exclusive bancassurance products for deepening insurance
penetration and simpler training requirements for the bank staff to qualify as
insurance salespersons.
There is no doubt that bancassurance in India will play a major role as
the insurance sector develops. India has the unique experience of drawing strong
regulatory support for this channel. Coupled with the growing awareness of
banks to leverage on their branch network and customer strengths, the insurance
selling opportunities would get widely tapped at bank branches in the years
ahead.

Source: “Business line” dated Wednesday, 19 December 2008,

47
 3.0 RESEARCH METHODOLOGY

INTRODUCTION:
Research is an academic activity and as such the term should be used
in technical sense. According to Clifford Woody research comprises defining and
redefining problems, formulating hypothesis or suggested solutions, collecting,
organizing and evaluating data; making deduction and reaching conclusion; and at
last care fully testing the conclusions to determine whether they fit the
formulating hypothesis.

The main aim of the research is to find out the truth which is hidden
and which has not been discovered as yet.

OBJECTIVES OF RESEARCH:
1. To gain familiarity with a phenomenon or to achieve new insights into
it.
2. To portray accurately the characteristics of a particular individual,
situation or group
3. To determine the frequency with which something occurs or with
which it is associated with something else
4. To test a hypothesis of a casual relationship between variables

RESEARCH DESIGN:
Research design is the arrangement of conditions for collection and
analysis of data in manner that aims to combine relevance to the research purpose
with economy in procedure of data. It is a blue print specifying every stage of
action in the course of research.
The research design adopted in this study for secondary data, is
exploratory and analytical in nature. Exploratory research aims to gain familiarity

48
and new insights into any phenomenon while analytical research aims at
analyzing the current scenario and thereby using that to project the future

49
RESEARCH METHODLOGY

performance. This research aims at studying the historical performance of the

company in bancassurance and it also evaluates the future prospects of the
company
Descriptive research design is used for collecting primary data.
It is concerned with the research studies with a focus on the portrayal of the
characteristics of a group or individual or a situation. The main objective of such
studies is to acquire knowledge. The major purpose of Descriptive research is
description of the state of affairs, as it exists at present.

SAMPLING:

Sampling may be defined as a selection of some part of an aggregate

or totality on the basis of which a judgment or inference about the aggregate or
totality is made.

SAMPLING DESIGN:

A sampling design is a definite plan for obtaining a sample given

population. There are different methods of sampling. Here Convenience
sampling technique has been used.

CONVENIENCE SAMPLING:

This method of sampling involves selecting the sample elements using

some convenient method without going through the rigor of sampling method.
The researcher may make use of any convenient base to select the required
number of samples.Accordingly, the area selected for the study was kilpauk,
chennai.

50
RESEARCH METHODLOGY

SAMPLE SIZE:
Sample size refers to the number of items to be selected for the universe
to constitute a sample. The total sample size was taken to be 100.

METHODS OF DATA COLLECTION:

NATURE OF DATA: There are two types of data namely primary and secondary
data.
PRIMARY DATA: Primary data is the data collected for the first time through
field survey. This has been used to collect the data for the purpose of this study.

METHOD OF PRIMARY DATA COLLECTION

The method followed in obtaining the primary data was through the
structured questionnaire.

The researcher had used a Questionnaire for obtaining the primary

data for analysis. A questionnaire is a form prepared and distributed to secure
responses to certain questions. Here a well-structured questionnaire has been
prepared with all the important details regarding bancassurance. It has both open
ended and close-ended questions.

PILOT STUDY:
Before a questionnaire is finalized it should be field-tested. As such, pilot
study has been done. That is after the questionnaire was drafted, to decide
whether it is comprehensive or not, it is used with a few (10) respondents Their
responses are studied and it has been helpful in changing the questionnaire like
giving more instructions to the respondents for filling up, re-sequencing the
questions, addition and deletion of questions etc.,

51
RESEARCH METHODLOGY

SECONDARY DATA: It refers to the information or facts already collected.

Such data are collected with the objective of understanding the past status of any
variable. Here, secondary data has been used for making a financial analysis.

METHOD OF SECONDARY DATA COLLECTION:

 Annual reports
 Journals and Magazines
 Internet

Annual reports of AXIS bank have been used for making an analysis
on the financial performance of AXIS bank in bancassurance. And the data
pertinent to bancassurance like articles, previous researches, etc., has been
collected from journals & magazines as well as Internet.

RATING SCALES:

Summated rating scale: In this method, the attitude of people is classified into
specific points with approximately equal attitude value. The respondents to
questions indicate the degree of agreement or disagreement through their
response. Based on the response of all the questions, the attitude of the
respondents is determined. This scale has been used for the following question no:
10,15,17,18,21.

TOOLS USED: As the research contains both primary and secondary data it
includes both financial statement analysis and statistical analysis.

1. FINANCIAL STATEMENT ANALYSIS: Financial statements refer to

the formal and original statements prepared by a business concern to
disclose its financial information. They are useful only when they are
analyzed and interpreted. The basis for financial planning, analysis and

52
RESEARCH METHODLOGY

decision-making is the financial information. Financial information is

needed to predict, compare and evaluate the firm’s earnings ability. In this
research, financial statements like annual reports of AXIS bank from the
year 2003-2006 has been used for making an analysis on the financial
performance of AXIS bank in bancassurance and its contribution to the
overall progress of the bank.
Ratio analysis, one of the most important techniques of financial
statement analysis has been used in this research.

 RATIO ANALYSIS: An analysis of financial statements based

on ratios is known as ratio analysis. Ratio analysis is the process
of computing, determining and presenting the relationship of
items. Some of the ratios used in this research are:

Business ratios: They are used for comparing changes in the business from
period to period. With the help of this, one can pinpoint improvements in
performance or developing business areas. Some of the ratios used in this study
are:

 Non-interest income as a percentage of total revenue: Non

interest income is the revenue earned by the bank apart from the
interest income. Hence, calculation of this ratio would reveal the
contribution of non-interest income to the total revenue of the
bank. It can be find out by using the formula:
Non-interest income
Total revenue
 Non-interest income as a percentage of operating profit: This
would reveal the percentage of non-interest income contribution
to the operating profit.It can be find out by using the formula:
Non-interest income
Operating profit

53
RESEARCH METHODLOGY

 Non-interest income as a percentage of working funds: This

would indicate the percentage of non-interest income
contribution to the working funds. It can be calculated by using
the formula:
Non-interest income
Working funds
 Return On Assets (Average): This ratio is calculated to
measure the productivity of assets. A comparison of net income
and average total assets, the ROA ratio reveals how much
income management has been able to squeeze from each rupee’s
worth of a company's assets

Return On Assets (Average) = Net Income

Average total assets
 Business per employee: This is used to find out the productivity
of the employees. This is calculated based on the average
employee numbers. And business is the total of net advances and
deposits. (Net of inter bank deposits)
Business per employee = Total of net advances and deposits
Average employee numbers

 Profit per employee: This is also used to find out the

productivity of the employees in terms of profit. This is also
calculated based on the average employee numbers.

 Percentage of net non-performing assets to customer assets:

This is used to find out the percentage of net non-performing
assets to customer assets. This can be obtained by using the
formula:
Net Non Performing Assets
Customer Assets

54
RESEARCH METHODLOGY

 Percentage of net non-performing assets to gross advances:

This is used to find out the percentage of net NPA’s to gross
advances. This can be obtained by using the formula:
Net Non Performing Assets
Gross advances
Capital Adequacy Ratio: Capital adequacy ratios are a measure of the amount of
a bank's capital expressed as a percentage of its risk weighted credit exposures. It
is also called as Capital to Risk Weighted Assets Ratio (CRAR) .It determines the
capacity of the bank in terms of meeting the time liabilities and other risk such as
credit risk, operational risk, etc. In the most simple formulation, a bank's capital is
the "cushion" for potential losses, which protect the bank's depositors or other
lenders..

Capital Adequacy Ratio = Total capital funds

Risk weighted assets and contingents

STATISTICAL TOOLS USED:

This constitutes an integral part of research analysis. Hence any analysis of
data compiled should be subjected to relevant analysis so that meaningful
conclusions could be arrived at.
The statistical tools applied in this research are:
 Correlation co-efficient
 Chi-square test
 Percentage analysis.

CORRELATION COEFFICIENT In a bivariate study distribution we may be

interested to find out if there is any correlation or co-variance between the two
variables under study. If the change in one variable affects a change in the other
variable, the variables are said to be correlated. If the two variables deviate in the
same direction i.e. if the increase (or decrease) in one results in a corresponding
increase (or decrease) in the other, correlation is said to be direct or positive. But

55
RESEARCH METHODLOGY

if they constantly deviate in opposite directions i.e., if increase (or decrease in one
results in corresponding decrease (or increase) in the other, correlation is said to
be negative.
∑xy/n - (∑x/n) (∑y/n)
Correlation coefficient = ……………………………………..
√∑x²/n-(∑x/n)² √∑y²/n-(∑y/n)²

CHI-SQUARE TEST:

When certain observed values of a variable are to be compared with the expected
value the test static,
Ψ² = (O - E) 2
E
Where Oi = observed frequency
Ei = Expected frequency
For more accuracy, Yates correction is used and the formula used is given below:
Ψ² = (O - E) 2
E
Power of association test: When the calculated value in the test is greater than
the tabulated value, we accept the alternative hypothesis Hi. In this case, power of
association test is applied in order to show the strength of association, where N =
sample size. Based on the power of Association Test, the value indicates the fair
relationship between the variable.

PERCENTAGE ANALYSIS: These are the measures of central tendency. It is

used to describe relationships. It can be used to compare the relative terms, the
distribution of 2 or more series of data, since the percentage reduces everything to
a common base and thereby to allow meaningful comparison to be made.

Percentage Analysis = No. Of respondents * 100

Total No. Of respondents

56
DATA ANALYSIS AND INTERPRETATION

4.0 DATAANALYSIS AND INTERPRETATION

4.1 Secondary data analysis:

Secondary data analysis, the imperative part of this study has been
undertaken to analyse the performance of AXIS bank in bancassurance so far and
the contribution of bancassurance to the progress of the bank in the form of
increase in ROA, revenue etc., using ratio analysis. Since AXIS bank has started
earning revenue for the sale of insurance policies from 2005 that the analysis
includes from the year 2005-2008.
TABLE 4.1.1
AXIS BANK’S EARNINGS FOR THE SALE OF BAJAJ ALLIANZ LIFE
INSURANCE POLICIES FROM 2005-2008
Year 2005 –06 2006 -07 2007- 08
Revenue earned 16,99 lacs 88,14 lacs 112,09 lacs
for the sale of
insurance policies

CHART 4.1.1

Revenue earned for the sale of insurance policies

120
112.09
100 88.14
80
60 Revenue (in lacs)
40
16.99
20
0
2004-05 2005-06 2006-07

INFERENCE: From the above, it can be seen that there has been an impressive
growth in the revenue over the years for the sale of Bajaj Allianz life insurance
policies by AXIS bank.
TABLE 4.1.2

57
DATA ANALYSIS AND INTERPRETATION

RETAIL SEGMENT PROFIT FROM THE YEAR 2007 TO 2008:

Retail banking segment is undertaking bancassurance. And it is the fastest
growing banking business segment. One of the reasons being the bank’s dealing
with the sale of insurance policies to its retail customers. It has been mentioned
even in the director report of AXIS bank. Thus a glimpse at its profit would be
imperative.

Year 2005-06 2006-07 2007-08

Profit earned by 520,64 lacs 701,67 lacs 875,71 lacs
the retail segment
of AXIS bank

CHART 4.1.2:

INFERENCE: From the above, it can be observed that there has been a
phenomenal increase in the profit of retail segment from 2005-2008, which
symbolizes the bancassurance contribution.

TABLE 4.1.3

RETAIL SEGMENT ASSETS FROM THE YEAR 2005 TO 2008:

58
DATA ANALYSIS AND INTERPRETATION

Retail segment asset can also be increased by way of bancassurance

operation. Let us take a look at its asset position from the year 2005-06 to 2007-08.
Year 2005 –06 2006 -07 2007- 08

Retail assets 24,469,93 38,571,09 50,100,34

CHART 4.1.3

INFERENCE: From the above, we can infer that there has been a phenomenal
increase in the growth of retail assets over the years that it indicates the
contribution of bancassurance to it.

TABLE 4.1.4:
OPERATING EXPENSES FROM THE YEAR 2005 TO 2008:
Bancassurance will lead to a reduction in the operating expenses of the bank
as it can have the opportunity of economies of scale. Thus let us took a look at the
operating expenses of AXIS bank from the year 2005-06 to 2007-08.
Year 2005 –06 2006 -07 2007- 08
Operating expenses 1,085,40 1,691,09 2,420,80

CHART 4.1.4:

59
DATA ANALYSIS AND INTERPRETATION

INFERENCE: From the chart, we can observe that there has been an increase in
the operating expenses of the bank. Since, AXIS bank is only in its infant stage in
bancassurance, it can perform more to reduce the same in the long run.

TABLE 4.1.5:
NON-INTEREST INCOME AS A PERCENTAGE OF TOTAL REVENUE:
As bancassurance revenue leads to an increase in the non-interest income, the non-
interest income as a % of total revenue from the year 2005-2007 is as follows:

Year 2005-06 2006-07 2007-08

Non interest 651,34 1,123,98 1,516,23

income
Total revenue 3,744,83 5,599,32 8,405,25
Ratio 17.39 20.07 18.03

Chart 4.1.5:

60
DATA ANALYSIS AND INTERPRETATION

INFERENCE: From the above, it can be observed that non-interest income as a

% of total revenue though increased in the year 2005,it has been decreased
in the year 2006.

TABLE 4.1.6:

NON-INTEREST INCOME AS A % OF OPERATING PROFIT:

Non-interest income as a contribution to the % of operating
profit from the year 2005-2008 is shown as below:

Year 2005-06 2006-07 2007-08

Non-interest 651,34 1,123,98 1,516,23
income
Operating 1,156,02 1,733,84 2,562,86
profit
Ratio 56.34% 64.82% 59.16%

Chart 4.1.6:

61
DATA ANALYSIS AND INTERPRETATION

INFERENCE: From the above, it can be observed that non-interest income as a

% percentage of operating profit has been increasing from 2005 to
2006.But it has been decreased in the year 2007-08.

Note: Operating profit = (interest income + other income – interest expense –

operating expense –amortization of premia on investments - profit/(loss) on sale
of fixed assets).

Business ratios (As per the director’s report of AXIS

bank)

TABLE 4.1.7:

NON – INTEREST INCOME AS A % OF WORKING FUNDS:

Non-interest income as a % of working funds is shown as below:

Year 2005-06 2006-07 2007-08

Non interest income 1.44% 1.79% 1.76%
as a % of working
funds

Chart 4.1.7:

62
DATA ANALYSIS AND INTERPRETATION

INFERENCE: From the chart it can be observed that non-interest income as a%

percentage of working funds though increased in the year 2006,it has been
decreased in the year 2008.

TABLE 4.1.8:
RETURN ON ASSETS (AVERAGE):
The best opportunity for the banks, which undertakes bancassurance
operation is that, it can increase its return on assets. Hence, the return on assets of
the bank from 2005-2008 is as follows:

Year 2005-06 2006-07 2007-08

Return on Assets 1.47% 1.38% 1.33%
(Average)

Chart 4.1.8:

63
DATA ANALYSIS AND INTERPRETATION

INFERENCE: From the above, it can be observed that the return on assets of the
bank has been decreased from the year 2005 – 2008.

TABLE 4.1.9;
BUSINESS PER EMPLOYEE:
The business per employee from 2005-2008 is as follows:
Year 2005-06 2006-07 2007-08
Business Per Employee 806 758 607

Chart 4.1.9:

INFERENCE: From the above, it is clear that the business per employee of the
bank over the years has been on the decreasing trend.

64
DATA ANALYSIS AND INTERPRETATION

TABLE 4.1.10
PROFIT PER EMPLOYEE:
Profit per employee from 2005-2008 is as follows:
Year 2005-06 2006-07 2007-08
Profit per employee 8.80 7.39 6.13

Chart 4.1.10:

INFERENCE: From the above, it can be observed that profit per employee of the
bank over the years has been on the decreasing trend.

RBI guidelines: As per the RBI guidelines for the banks to enter into the
insurance sector, The CRAR of the bank should not be less than 10 per cent,
and the level of Non Performing Assets (NPAs) should be reasonable. Hence,
analysis of such ratios is also important.

Capital adequacy ratio:

Capital adequacy ratio from the year 2005-2008 can be shown as follows:
(As the total capital includes tier-1 and tier-2, it can be viewed separately.)

65
DATA ANALYSIS AND INTERPRETATION

TABLE 4.1.11 Tier 1 capital:

Year 2005-06 2006-07 2007-08

Tier 1 capital 3,96,216 5,149,91 6,352,71

Risk weighted assets

and contingents 41,27,103 60,217,62 74,081,92
Ratio 9.60% 8.55% 8.57%

TABLE 4.1.12 Tier 2 capital:

Year 2005-06 2006-07 2007-08

Tier 2 capital 1,054,73 1,720,71 3,339,99

Risk weighted assets

and contingents 41,27,103 60,217,62 74,081,92
Ratio 2.56% 2.86% 4.51%

Where,

Tier –1 capital includes paid up capital, statutory reserve, general reserve,

balance in profit and loss account and amalgamation reserve. From this,
outstanding deferred tax asset, if any, is deducted.
Tier– 2 capital includes general loan loss reserves, investment fluctuation
reserve and subordinated debt.

TABLE 4.1.13 Total Capital:

Year 2005-06 2006-07 2007-08

Total capital 5,016,89 6,870,62 9,692,70

Risk weighted assets

and contingents 41,27,103 60,217,62 74,081,92

66
DATA ANALYSIS AND INTERPRETATION

Ratio 12.16% 11.41% 13.08%

Chart 4.1.11:

INFERENCE: From the above, it can be seen that the capital adequacy ratio
though decreased in the year 2006,it has been increased in the year 2007-08.

TABLE 4.1.14:
PERCENTAGE OF NET NON PERFORMING ASSETS TO CUSTOMER
ASSETS:
The percentage of net non-performing assets to customer assets is shown
as below from the year 2005-2008:

Year 2005-06 2006-07 2007-08

Percentage of net non performing 0.20% 0.36% 0.38%
assets to customer assets
Chart 4.1.12:

67
DATA ANALYSIS AND INTERPRETATION

INFERENCE: From the above, it is clear that the percentage of net non-
performing assets to customer assets has been increasing from the year 2005-2008

TABLE 4.1.15
PERCENTAGE OF NET NON-PERFORMING ASSETS TO NET
ADVANCES: The percentage of net non-performing assets to net advances from
the year 2005-2008 are shown as follows:
Year 2005-06 2006-07 2007-08
Percentage of net non 0.24% 0.44% 0.43%
performing assets to net
advances

Chart 4.1.13:

68
DATA ANALYSIS AND INTERPRETATION

INFERENCE: From the above, it can be observed that the percentage of net
non-performing assets to net advances has been increased from the year 2005 to
2006 and it has been decreased in the year 2008.

TABLE 4.1.16

PERCENTAGE OF GROSS NON-PERFORMING ASSETS TO GROSS

ADVANCES: The percentage of gross non-performing assets to gross advances
from the year 2004- 2006 are shown as follows:

Year 2005-06 2006-07 2007-08

Percentage of 1.69% 1.32% 1.32%

gross non
performing assets
to gross advances

Chart 4.1.14:

INFERENCE: From the above, it can be observed that the percentage of gross
non-performing assets to gross advances has been decreasing from the year 2005
–2008.

69
DATA ANALYSIS AND INTERPRETATION

4.2 PRIMARY DATA ANALYSIS:

Based on the objective, a well-structured questionnaire was framed and

the following clearly represents all the related data and their interpretations in a
detailed form with statistically proven inferences.
TABLE 4.2.1

AGE FACTOR:

AGE LIMIT NO. OF PERCENTAGE

RESPONDENTS
20-25 12 12
25-30 20 20
30-35 24 24
35-40 26 26
Above 40 18 18
TOTAL 100 100

INFERENCE:
From the above table it can be inferred that 12% of the respondents belongs to 20-
25 Age limit, 20% of the respondents belongs to 25-30 Age limit, 24%
of the respondents belongs to 30-35 Age limit, 26% of the respondents
belong to 35-40 Age limit and the remaining 18% of the respondents
belongs to above age 40. Hence the majority of the respondents fall in to
the category of 35-40 Age limit.
TABLE 4.2.2

70
DATA ANALYSIS AND INTERPRETATION

GENDER:
GENDER NO. OF PERCENTAGE
RESPONDENTS
Male 76 76
Female 24 24
TOTAL 100 100

INFERENCE: From the above table it can be observed that 76% of the
respondents are Male and 24% of the respondents are female. Hence the majority
of the respondents are Male.
TABLE 4.2.3

OCCUPATION:

OCCUPATION NO. OF PERCENTAGE

RESPON
DENTS
Salaried 49 49
Businessman 34 34
Retired 15 15
Others 2 2
TOTAL 100 100

INFERENCE:

From the above table it is observed that 49% of the respondents are
salaried, 34% of the respondents are involved in business, and 14% of the
respondents retired and a less percentage of 2 have fallen into the category of
others includes professionals. Thus, majority of the respondents are Salaried.

71
DATA ANALYSIS AND INTERPRETATION

TABLE 4.2.4

MARITAL STATUS:

MARITAL NO. OF PERCENTAGE

RESPONDENTS
STAT
US
Single 28 28
Married 72 72
TOTAL 100 100

INFERENCE:

From the above table, it can be seen that 28% of the respondents are single
and 72% of the respondents are married. Hence the majority of the respondents
are married.

TABLE 4.2.5

NO. OF CHILDREN:

NO. OF CHILDREN NO. OF RESPONDENTS PERCENTAGE

Yes 68 68
No 4 4
N/A 28 28
TOTAL 100 100

INFERENCE:
From the above table it can be seen that 68% of the respondents
who have got married are having children and 4% of the respondents are
not having so far .

TABLE 4.2.6
ANNUAL INCOME:

72
DATA ANALYSIS AND INTERPRETATION

ANNUAL INCOME NO. OF RESPONDENTS PERCENTAGE

<2 LAKHS 22 22
2-4 LAKHS 43 43
4-6 LAKHS 27 27
Above 6 LAKHS 8 8
TOTAL 100 100

INFERENCE:
From the above table it can be seen that 22% of the respondents
are earning less than 2 lakhs p.a., 43% of the respondents are earning 2-4
lakhs p.a., which is the major percentage, 27% of the respondents are
earning 4-6 lakhs and the remaining respondents are earning above 6
lakhs p.a.,

TABLE 4.2.7

ACCOUNT HOLDER OF AXIS BANK:

ACCOUNT HOLDER NO. OF RESPONDENTS PERCENTAGE

OF AXIS BANK
Yes 86 86
No 14 14
TOTAL 100 100

INFERENCE : From the above table it is found that 86% of the respondents,
which is a majority, are holding Account in AXIS Bank and 14% of the
respondents are Non-Account Holders of AXIS bank. Non-a/c holders include
borrowers, credit card holders and the persons dealing with investments.

TABLE 4.2.8
TYPE OF ACCOUNT:

73
DATA ANALYSIS AND INTERPRETATION

TYPE OF ACCOUNT NO. OF RESPONDENTS PERCENTAGE

Savings A/C 57 57
Current A/C 11 11
Both 18 18
N/A 14 14
TOTAL 100 100

INFERENCE: From the above table it can be seen that 57% of the respondents
are Saving A/C holders and 11 % of the respondents are Current A/C holders.
And 18% people own both the type of accounts. And for 14% of the people this
question is not applicable as they are not the account holders of AXIS bank.

TABLE 4.2.9:
NO. OF YEARS ASSOCIATIED WITH AXIS BANK:

NO. OF YEARS NO. OF RESPONDENTS PERCENTAGE

<1 Yr. 24 24
1-3 Yrs 39 39
3-5 Yrs 33 33
5-7 Yrs 4 4
> 7 Yrs 0 0
TOTAL 100 100

INFERENCE: From the above, it is found that 24% of the respondents are
having less than 1 year associability with AXIS Bank where as a major 39% of
the customers have 1-3 years of relationship. 33% of the respondents are having
3-5 years relationship 4% of the respondents are having greater than 5 but less
than 7 years of relationship. No customer among the respondents is having greater
than 7 years relationship with AXIS Bank.

74
DATA ANALYSIS AND INTERPRETATION

TABLE 4.2.10
PERSONAL VIEWS ABOUT INSURANCE:

PERSONAL VIEWS Strongly Agree Neutral Disagree Strongly Total

ABOUT Agree Disagree
INSURANCE
A) Insurance provides
protection to you and 32 37 19 12 0 100
your family
B) Insurance is an
absolute necessity for 10 30 38 19 3 100
an individual/family
C) Insurance is one of
the best Investment 9 20 42 21 8 100
options

CHART 4.2.1

PERSONAL VIEWS
No.of respondents(in %)

100
80 Strongly Agree
Agree
60
Neutral
40
Disagree
20
Strongly Disagree
0
A B C
PERSONAL VIEWS ABOUT
INSURANCE

INFERENCE: From the above, it can be observed that

75
DATA ANALYSIS AND INTERPRETATION

(A) 32% of the respondents Strongly agree that Insurance provides protection
to their family and 37%, which is a majority, agree to the same. But 19%
of the respondents remained Neutral and 12% disagree the same. No one
Strongly disagreed the view.
(B) 10% of the respondents Strongly agree that Insurance is an absolute
necessity for an Individual/family and 30% agree to this. 38% stayed
Neutral and 19% of the respondents disagreed the view. A less percentage
of 3 strongly disagreed the view.
(C) 9% of the respondents Strongly agree that Insurance is one of the best
investment options and 20% agree to this. 42%, that is a majority,
remained neutral whereas 21% disagreed the point. Also 8% of the
respondents Strongly disagreed.

TABLE 4.2.11

LIFE INSURANCE POLICY HOLDER

LIFE INSURANCE NO. OF RESPONDENTS PERCENTAGE

POLICY HOLDER
Yes 47 47
No 53 53
TOTAL 100 100
CHART 4.2.2:

LIFE INSURANCE POLICY HOLDER

YES
47%
53% NO

76
DATA ANALYSIS AND INTERPRETATION

INFERENCE: From the above, it can be noticed that 47% of the respondents are
holding a Life Insurance policy currently and the big rest 53% are not holding any
Life Insurance policy.

TABLE 4.2.12
AWARENESS ABOUT BAJAJ ALLIANZ LIFE INSURANCE
CHART 4.2.3
AWARE OF BAJAJ NO. OF RESPONDENTS PERCENTAGE
ALLIANZ LIFE
INSURANCE
Yes 72 72
No 28 28
TOTAL 100 100

INFERENCE:

From the above table, it can be observed that a vital part of the
respondents, which is 72% are aware about AXIS Life insurance and 28% do not
have the same.

TABLE 4.2.13

SOURCE TO KNOW ABOUT AXIS LIFE INSURANCE

SOURCE No. of respondents Percentage

AXIS Bank 28 39
Advertisement 44 61
Friends & Relatives 0 Nil
Others 0 Nil

77
DATA ANALYSIS AND INTERPRETATION

N/A 28 28
Total 100 100

CHART 4.2.4:

INFERENCE:

From the above we can understand that the major Source to Know
about AXIS Life Insurance is Advertisement, which is conveyed by 61% of the
respondents. Whereas AXIS Bank owns 39%.

TABLE 4.2.14

AWARE OF BANKS CROSS-SELL INSURANCE PRODUCTS (in %)

AWARE OF BANKS NO. OF RESPONDENTS PERCENTAGE

CROSS-SELL
INSURANCE PRODUCTS
Yes 48 48
No 52 52
TOTAL 100 100

CHART 4.2.5

78
DATA ANALYSIS AND INTERPRETATION

AWARE OF BANKS CROSS SELLING INSURANCE PRODUCTS

YES
48% NO
52%

INFERENCE:

From the above, it can be noticed that 48% of the respondents are
aware of Banks cross-selling Insurance products but 52% of the respondents
which is a majority are not aware of the same.

TABLE 4.2.15

ADVANTAGES IN BUYING THE INSURANCE POLICIES

THROUGH BANKS

ADVANTAGES Strongly Agree Neutral Disagree Strongly Total

Agree Disagree

A) Expert 17 28 26 22 7 100
advice
B) Convenience 20 44 24 12 0 100

C) Easy 12 41 35 8 4 100
accessibility

CHART 4.2.6:

79
DATA ANALYSIS AND INTERPRETATION

ADVANTAGE IN BUYING INSURANCE POLICIES THROUGH

BANKS

No. of Respondents (in

Strongly Agree
100
80 Agree
%)
60
40 Neutral
20
0 Disagree
A B C
Strongly
Disagree

INFERENCE: From the above, it can be observed that,

A) 17% of the respondents strongly agree with the advantage of
expert advice in buying through banks and the same is agreed
by 28 %. 26% of the respondents remained neutral and 22%,
7% of the respondents strongly disagree and disagree
respectively.
B) 20% of the respondents felt convenience in buying insurance
policies through banks and they strongly agree to that. Also
44% agree the same. But 24% stayed neutral whereas 12%
disagreed this point. No one strongly disagreed the same.
C) 12% of the respondents strongly agree and 41% agree with the
advantage of easy accessibility.35% remains neutral. Only 8%
disagree and 4% strongly disagree to this view.
Thus, majority of the respondents agree with the advantages in
buying the insurance policies through banks.

TABLE 4.2.16

AWARE OF OBTAINING BAJAJ ALLIANZ LIFE POLICY FROM

AXIS BANK

AWARE OF OBTAINING NO. OF RESPONDENTS PERCENTAGE

POLICY
FROM AXIS BANK
Yes 46 46
80
No 54 54
TOTAL 100 100
DATA ANALYSIS AND INTERPRETATION

CHART 4.2.7

INFERENCE:
From the above, it can be noticed that 46% of the respondents
know well that Bajaj Allianz life insurance policy can be bought from AXIS bank
branches. But 54% of the respondents, which is a majority, don’t know the same.
TABLE 4.2.17

FAMILIARITY WITH THE POLICIES OFFERED BY BAJAJ ALLIANZ

LIFE INSURANCE
FAMILIAR WIH THE TYPES No. of respondents Percentage
OF POLICIES OFFERED BY
BAJAJ ALLIANZ LIFE
INSURANCE
Strongly Agree 11 11
Agree 26 26
Neutral 14 14
Disagree 37 37
Strongly Disagree 12 12
Total 100 100

CHART 4.2.8

81
 DATA ANALYSIS AND INTERPRETATION

INFERENCE: From the above, it can be seen that 11% of the respondents are
familiar with the different types of policies offered by Bajaj Allianz Life
insurance which they have strongly agree and 26% agree to it. Whereas 14%
remained neutral. 37% disagreed and 12% of the respondents strongly disagreed
the view. Thus, majority of the respondents are not familiar with the different
types of policies offered by Bajaj Allianz Life Insurance.

TABLE 4.2.18
INITIATIVES TAKEN BY AXIS BANK TO PROMOTE BAJAJ ALLAINZ
LIFE INSURANCE PRODUCTS

INITIATIVES TAKEN Strongly Agree Neutral Disagree Strongly Total

BY AXIS BANK Agree Disagree

You have often noticed 12 22 18 33 15 100

the displays regarding
Bajaj Allianz Life
Insurance in AXIS Bank
You have come across 10 22 13 34 21 100
advertisements/links
etc., regarding Bajaj
Allianz Life Insurance in
AXIS Bank Web Site

82
 DATA ANALYSIS AND INTERPRETATION

AXIS Bank Employees 14 27 12 35 12 100

have explained you
about the policies of
Bajaj Allianz life
insurance (through
phone calls/direct
contact)

CHART 4.2.9:

INFERENCE: From the above, it can be observed that

(a) 12% of the respondents strongly agree that they have noticed the
displays of Bajaj Allianz life Insurance in AXIS Bank. Also 22%
support them by agreeing to it. 18% remain unbiased and 33%
disagree the statement. And 15% of the respondents have strongly
disagreed the same.
(b) 10% of the respondents strongly agree that they have come across
the links/ads concerning Bajaj Allianz life insurance in the web
site of AXIS Bank. 22% agree to this point and 13% replied
neutral. But 34% disagree to this and 21% strongly disagree the
same.
(c) 14% of the respondents strongly agree that the Employees of
AXIS bank has explained them about Bajaj Allianz life insurance

83
DATA ANALYSIS AND INTERPRETATION

products. And the same has been agreed by 27% of the

respondents. 12% of the respondents didn’t take either side.
Whereas 35% disagree the statement and 12% of the respondent’s
have strongly disagreed.
TABLE 4.2.19

SATISFACTION OF CUSTOMER SERVICES

CUSTOMER SERIVICE No. of respondents Percentage

Highly Satisfied 13 13
Satisfied 43 43
Moderately satisfied 28 28
Dissatisfied 13 13
Highly dissatisfied 3 3
Total 100 100

CHART 4.2.10:

S ATIS FACTION OF CUS TOMER S ERVICES

3% 13%
13%
Highly S atisfied
S atisfied
Moderately satisfied
28%
Dissatisfied
43%
Highly dissatisfied

84
 DATA ANALYSIS AND INTERPRETATION

INFERENCE: From the above, it can be observed that 13% of the respondents
replied that they are highly satisfied with the customer service
provided by AXIS bank. And good percentage of 43 answered
that they are satisfied with the customer service. Also, 28% of the
respondents say that they are moderately satisfied but 18%
declared that they are dissatisfied with the customer service. A
less number of 3% also claim that they are highly dissatisfied
with the same. Overall, most of the respondents are satisfied with
the customer services.

TABLE 4.2.20

FACTORS THAT BUILD A STRONG RELATIONSHIP WITH

CUSTOMERS

RELATIONSHIP Strongly Agree Neutral Disagree Strongly Total

BUILDING Agree Disagree
FACTORS

Reliability 37 42 12 7 2 100
Easy and advantageous 15 21 24 36 4 100
banking over other
banks
Wide range of 13 24 32 28 3 100
Products and Schemes
Better understanding 15 23 33 26 3 100
of customer needs
and provide expert
advice
CHART 4.2.11:

85
DATA ANALYSIS AND INTERPRETATION

RELATIONSHIP BUILDING FACTORS

100 Strongly Agree

80
Agree
No of 60
respondents Neutral
40
(in %)
20 Disagree
0
A B C D
Strongly
Factors Disagree

INFERENCE: From the above, it can be observed that

(a) 37% of the respondents strongly agree with the Reliability factor. Also
42% of the respondents agree to it. 12% stayed neutral.7% of the
respondents have disagreed and 2% strongly disagreed to it.
(b) 15% of the respondents strongly agree to the fact that there exists an
easy and advantageous banking over other banks. Also 21% of the
respondents agreed the same. 24% stayed neutral. A typical 36% of the
respondents disagree the view and 4% strongly disagree the same.
(c) 13% of the respondents strongly agree to the factor of wide range of
products and schemes. The same is also agreed by 24%. 32% of the
respondents remained neutral.28% of the respondents disagreed this
view and a less percentage of 3 also strongly disagree to this.
(d) 15% of the respondents strongly agree to the factor of better
understanding of customer needs and Expert advice and 22% agree to
the view.33% stayed neutral. Whereas 26% of the respondents have
disagreed and 34% have strongly disagreed.
TABLE 4.2.21
AXIS BANK AS A ONE-SHOP STOP FOR ALL FINANCIAL NEEDS

86
DATA ANALYSIS AND INTERPRETATION

AXIS Bank as a one stop No. of respondents Percentage

Shop
Strongly Agree 12 12
Agree 22 22
Neutral 36 36
Disagree 22 22
Strongly Disagree 8 8
Total 100 100

CHART 4.2.12

INFERENCE: From the above, it can be seen that 12% of the respondents
strongly agree that they will prefer AXIS Bank as a one-stop shop for all their
financial needs. 22% of the respondents replied that they agreed and 36% of the
respondents, which is a majority, remain neutral about this. But 22%have denied
the same. And 8% have strongly disagreed to it.
TABLE: 4.2.22
PLAN TO TAKE ANY LIFE INSURANCE POLICY IN THE NEAR
FUTURE

PLANNING TO TAKE ANY NO. OF PERCENTAGE

LIFE INSURANCE POLICY RESPONDENTS
Yes 42 42
No 58 58
TOTAL 100 100
CHART 4.2.13

87
 DATA ANALYSIS AND INTERPRETATION

FUTURE PLAN TO TAKE ANY LIFE INSURANC E PO LIC Y

42% YES NO

58%

INFERENCE:

From the above table it can be observed that 42% of the respondents
have a plan to take a life insurance policy in the near future but 58% of the
respondents, which is a majority, have no such idea.

TABLE: 4.2.23

REASONS FOR TAKING A LIFE INSURANCE POLICY IN THE NEAR

FUTURE

REASONS FOR Highly Essential Least Not N/A Total

TAKING A LIFE Not
INSURANCE Essential Essential Essential Essential
POLICY At All
Post retirement 4 4 10 13 11 58 100
income
Invest in child’s 5 8 12 8 9 58 100
dreams
Give Protection 3 3 11 12 13 58 100
and safety to the
family in case of
unfortunate
occurrences
Tax Benefits 19 11 3 6 3 58 100
Better returns in 11 16 6 3 6 58 100
terms of
investment

CHART 4.2.14

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DATA ANALYSIS AND INTERPRETATION

REAS ONS FOR TAKING A LIFE INS URANCE POLICY

100 HIGHLY ESSENTIAL

No.of respondents(in %)
80

60
ESSENTIAL

40 LEAST ESSENTIAL
20
NOT ESSENTIAL
0
A B C D E
NOT ESSENTIAL AT
REASO NS
ALL

INFERENCE: From the above, it can be observed that, out of 42 respondents, 19

respondents i.e., 45% ranked Tax Benefits as a Highly Essential one for taking a
policy in the near future. And 16 respondents i.e., 38% ranked Better returns as an
essential one. 12 respondents i.e., 28% ranked Invest in Child dreams as Least
Essential.13 respondents i.e., 31% ranked Post retirement income as Not
Essential. The reason for taking the policy to protect the family in case of
unexpected occurrences has been ranked as Not Essential at all by 13
respondents,i.e., 31%.

TABLE: 4.2.24
CHOOSING BAJAJ ALLIANZ LIFE INSURANCE TO TAKE A
POLICY IN FUTURE

CHOOSING BAJAJ No. of respondents Percentage

ALLIANZ LIFE
INSURANCE
Yes 47 47
No 53 53
Total 100 100
CHART 4.2.15

INFERENCE:

89
DATA ANALYSIS AND INTERPRETATION

From the above table it can be seen that 47% of the respondents replied
that their choice will be Bajaj Allianz Life Insurance and 53% denied the same.
Note that 58 respondents who are not having the idea of taking any life insurance
policy in the near future have been told to assume if they take a life insurance
policy in distant future to respond to this question.
TABLE: 4.2.25
CHANNEL TO OBTAIN BAJAJ ALLIANZ LIFE INSURANCE POLICY

CHANNEL TO OBTAIN NO. OF PERCENTAGE

BAJAJ ALLIANZ LIFE RESPONDENTS
INSURANCE
AXIS Bank 40 40
Financial Consultants /Agents 7 7
Others 0 0
N/A 53 53
Total 100 100

CHART 4.2.16

INFERENCE:
From the above, it can be inferred that a majority of the respondents i.e.,
40 are willing to obtain Bajaj Allianz Life Insurance policy from AXIS bank
itself. And 7 respondents want to buy from financial consultants/Agents. And for
the remaining 53% of the respondents this question is not applicable.

STATISTICAL ANALYSIS

90
DATA ANALYSIS AND INTERPRETATION

In this section the researcher has used statistical tools in order to

analytically prove the study that has been undertaken. The tests had been used on
selected question as they prove in-depth significance of the research brought out.

Co-efficient of correlation:
Correlation is used to find out if there is any correlation or co-variance
between the two variables under the study.
It has been used here to analyze the relationship between familiarity
among the customers about different types of Bajaj Allianz life insurance policies
and the various initiatives taken by AXIS bank to promote Bajaj Allianz life
products.
Q.17 Familiarity of the different types of Bajaj Allianz life policies (X)
Q.18 a) Frequent Notice of displays regarding Bajaj Allianz life products
inside AXIS bank(Y)

Q.17 Strongly Agree =11, Agree = 26,Neutral =14,Disagree =37,Strongly

Disagree=12.
Q.18 a) Strongly Agree =12, Agree = 22,Neutral =18,Disagree =33,Strongly
Disagree=15.
∑X = 313 ∑ x2 = 1133 ∑y = 317 ∑y2 = 1165 ∑xy = 1142 n(Sample Size) =100

Where Correlation
Co-efficient (r) = ∑xy/n - (∑x/n) (∑y/n)
___________
____________
√∑x²/n- (∑x/n)√∑y²/n-(∑y/n)²

r = 11.42 – (3.13) (3.17)

√11.33-9.7969
√11.65– 10.0489

= 11.42 – 9.9221

1.2381*1.2653

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DATA ANALYSIS AND INTERPRETATION

= 1.4979

1.5554

= 0.963

r : 96.3%

INFERENCE: Hence it can be inferred from the above that there is a very strong
relationship (96.3%) between the familiarity of different types of Bajaj Allianz
Life policies and the frequent notice of displays regarding the Bajaj Allianz Life
policies inside AXIS bank.

Q.17 Familiarity of the different types of Bajaj Allianz life policies (X)
Q.18 b) Come across Bajaj Allianz life insurance most of the times in AXIS
bank website.(Y)
Q.17 Strongly Agree =11, Agree = 26, Neutral =14, Disagree =37, Strongly
Disagree=12.
Q.18 b) Strongly Agree =10, Agree = 22,Neutral =13, Disagree =34,Strongly
Disagree=21

∑X = 313 ∑ x2= 1133 ∑y = 334 ∑y2= 1284 ∑xy = 1178 n =100

Where Correlation
Co-efficient (r) = ∑xy/n - (∑x/n) (∑y/n)
___________
____________
√∑x²/n- (∑x/n)² √∑y²/n-(∑y/n)²

r = 11.78 – (3.13) (3.34)

√11.33-9.7969
√12.34 – 11.1556

= 11.78 - 10.4542
1.2381*1.2978

= 1.3258

92
DATA ANALYSIS AND INTERPRETATION

1.6068

= 0.825

r : 82.5%

INFERENCE: Thus it can be observed that there is a strong (82.5%) of

correlation between the familiarity of different types of Bajaj Allianz life policies
among customers and come across Bajaj Allianz life products in AXIS bank
website.

Q.17 Familiarity of the different types of Bajaj Allianz life policies (X)
Q.18 c)Explanation of Bajaj Allianz life policies by AXIS bank employees
through phone calls/direct contact (Y)

Q.17 Strongly Agree =11, Agree = 26,Neutral =14,Disagree =37,Strongly

Disagree=12.

Q.18 c)Strongly Agree =14, Agree = 27,Neutral =12,Disagree =35,Strongly

Disagree=12
∑X = 313 ∑ x2= 1133 ∑y = 304 ∑y2= 1090 ∑xy = 1090 n =100

Where Correlation
Co-efficient (r) = ∑xy/n - (∑x/n) (∑y/n)
___________
____________
√∑x²/n- (∑x/n)² √∑y²/n-(∑y/n)²

r = 10.9 – (3.13) (3.04)

√11.33-9.7969 √10.9-
9.2416

= 10.9 – 9.5152

1.238 * 1.2877

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DATA ANALYSIS AND INTERPRETATION

= 1.3848

1.5942

= 0.868

r : 86.8%
INFERENCE: Thus there is a strong
(87 %) correlation between the familiarity among the customers about different
types of Bajaj Allianz life policies and the explanation of AXIS bank employees
about Bajaj Allianz life insurance through phone calls or direct contact.

2.Co-efficient of correlation: It has been used here to analyze the relationship

between considering AXIS Bank as a one-stop shop for all the financial needs of a
customer and the factors that builds a strong relationship with customers.

Q.21 Prefer AXIS bank as a one shop for all the financial needs (X)
Q.20 a) Reliability factor in AXIS bank (Y)

Q.21 Strongly Agree =12, Agree = 22, Neutral =36, Disagree =22, Strongly
Disagree=8

Q.20 a) Strongly Agree =37, Agree = 42,Neutral =12,Disagree =7,Strongly

Disagree=2

∑X = 308 ∑ x2= 1072 ∑y = 405 ∑y2= 1735 ∑xy = 1323 n =100

Where Correlation
Co-efficient (r) = ∑xy/n - (∑x/n) (∑y/n)
___________
____________
√∑x²/n- (∑x/n)² √∑y²/n-(∑y/n)²

r = 13.23 – (3.08) (4.05)

√10.72-9.4864
√17.35 -16.40

94
DATA ANALYSIS AND INTERPRETATION

= 13.23 – 12.474

1.11067 * 0.9745

= 0.756

1.082
= 0.699%

r : 69.9%
INFERENCE: Thus there is a 70% of
correlation between the existence of the factor reliability in AXIS bank and
acceptance of AXIS bank as a one-stop for all the financial needs.

Q.21.Prefer AXIS bank as a one shop for all the financial needs (X)
Q.20 b) Easy and advantageous banking over other banks in AXIS bank (Y)

Q.21 Strongly Agree =12, Agree = 22,Neutral =36,Disagree =22,Strongly

Disagree=8

Q.20 b) Strongly Agree =15, Agree = 21,Neutral =24,Disagree =36,Strongly

Disagree=4
∑X = 308 ∑ x2= 1072 ∑y = 307 ∑y2= 1075 ∑xy = 1060 n =100

Where Correlation
Co-efficient (r) = ∑xy/n - (∑x/n) (∑y/n)
___________
____________
√∑x²/n- (∑x/n)² √∑y²/n-(∑y/n)²

r = 10.60 – (3.08) (3.07)

√10.72-9.486 √10.75-
9.424

= 10.60 – 9.4556

1.11067 * 1.15113

= 1.1444

1.278532

95
DATA ANALYSIS AND INTERPRETATION

= 0.895%

r : 89.5%
INFERENCE: Thus there is a strong
(90%) correlation between existence of the factor easy and advantageous banking
over other banks and acceptance of AXIS bank as a one-stop for all the financial
needs.

Q.21.Prefer AXIS bank as a one shop for all the financial needs (X)
Q.20 c) Wide range of products and schemes (Y)

Q.21 Strongly Agree =12, Agree = 22,Neutral =36,Disagree =22,Strongly

Disagree=8

Q.20 c) Strongly Agree =13, Agree = 24,Neutral =32,Disagree =28,Strongly

Disagree=3
∑X = 308 ∑ x2= 1072 ∑y = 316 ∑y2= 1112 ∑xy = 1055 n =100
Where Correlation

Co-efficient (r) = ∑xy/n - (∑x/n) (∑y/n)

___________
____________
√∑x²/n- (∑x/n)² √∑y²/n-(∑y/n)²

r = 10.55 – (3.08) (3.16)

√10.72-9.486 √11.12-
9.985

= 10.60 – 9.7328

1.11067 * 1.0650

= 0.8172

1.182961

= 0.691%

r : 69.1%

96
DATA ANALYSIS AND INTERPRETATION

INFERENCE: Thus there is a 69% of correlation between existence of the factor

wide range of products & schemes and acceptance of AXIS bank as a one-stop for
all the financial needs.

Q.21.Prefer AXIS bank as a one shop for all the financial needs (X)
Q.20 d) Better understanding of customer needs and provide expert advice.(Y)

Q.21 Strongly Agree =12, Agree = 22,Neutral =36,Disagree =22,Strongly

Disagree=8

Q.20 d) Strongly Agree =15, Agree = 23,Neutral =33,Disagree =26,Strongly

Disagree=3
∑X = 308 ; ∑ x2= 1072 ; ∑y = 321 ; ∑y2= 1147 ; ∑xy = 1093 ; n =100
Where Correlation
Co-efficient (r) = ∑xy/n - (∑x/n) (∑y/n)
___________
_________
√∑x²/n- (∑x/n)² √∑y²/n-(∑y/n)²

r = 10.93 – (3.08) (3.21)

√10.72-9.486 √11.47-
10.30
= 10.93 – 9.8868

1.11067 * 1.0797

= 1.0432

1.199272

= 0.869%

r : 86.9%
INFERENCE: Thus there is an 87%
of correlation, which is very strong, between acceptance of AXIS bank as a one-
stop for all the financial needs and existence of the factor better understanding of
customer needs and provide expert advice in AXIS bank

97
DATA ANALYSIS AND INTERPRETATION

3.Chi-square test: When certain observed values of a variable are to be

compared with the expected value, the test static
Ψ² = (O - E) 2
E
Where Oi = observed frequency
Ei = Expected frequency
For more accuracy, Yates correction is used and the formula used is given below:
Ψ² = (O - E) 2
E
Here, Chi-square test has been applied as a goodness of fit, in order
to know the association between the persons who are planning to take insurance
policy in the future and the persons who prefer Bajaj Allianz life for obtaining a
policy in the future.

Null hypothesis:
There is no association between the persons who are planning to take
an insurance policy in future and the persons who prefer Bajaj Allianz life
insurance to buy an insurance policy in the future.
Alternative hypothesis:
There is an association between the persons who are planning to take
an insurance policy in future and the persons who prefer Bajaj Allianz life
insurance to buy an insurance policy in the future.
Calculation:
Planning to take any life insurance policy in future.

Yes No Row Total

Will Bajaj Allianz
Yes 30 17 47
Life insurance be
your choice for No 12 41 53
obtaining the policy
Column 42 58 100
in future.
Total 42% 58% 100%

98
DATA ANALYSIS AND INTERPRETATION

Expected frequencies are given in the table:

42 *47 /100 = 19.74 58* 47/100 = 27.26 47

42 * 53/100= 22.26 58 * 53/100 = 30.74 53

42 58 100

Calculation of Ψ²:

Observed Frequency Expected Frequency (O – E) ² (O – E) ²

(O) (E) E

30 19.74 105.26 5.33

17 27.26 105.26 3.86
12 22.26 105.26 4.72
41 30.74 105.26 3.42
17.33

Ψ² calculated value = ∑ (O – E) ² = 17.33

E

Calculated chi-square value is 17.33

Tabulated value:

Degrees of freedom: d.f. = (r - 1) (c – 1) = (2 – 1) (2 – 1) = 1

Where r= No. of rows and c= No.of columns.
Tabulated Ψ² value for 1 degrees of freedom at 5% level of
significance is = 3.841
Since calculated Ψ² > tabulated Ψ² null hypothesis (Ho) is rejected.
And alternative hypothesis has been accepted.

99
DATA ANALYSIS AND INTERPRETATION

INFERENCE: Thus, there is an association between the persons who are

planning to take an insurance policy in future and the persons who prefer
Bajaj Allianz Life Insurance to buy an insurance policy in the future.

4.PERCENTAGE ANALYSIS: This has been used here to calculate the number
of persons who wants AXIS bank to be their distribution channel in case of their
willingness to buy Bajaj Allianz Life Insurance.

Percentage Analysis: No. of respondents

Total no. of respondents
Out of 100 respondents, 47 respondents choice would be Bajaj
Allianz Life Insurance. Out of which, 40 respondents are preferring to buy from
AXIS bank itself. The percentage can be thus calculated as follows:

Percentage Analysis: 40 * 100 = 85%

47

INFERENCE: Thus it can be observed that 85% of the respondents are willing
to buy from AXIS bank in case of their choice will be Bajaj Allianz life insurance.
for obtaining a policy in the future.

100
FINDINGS, RECOMMENDATIONS AND CONCLUSION

5.1 FINDINGS

 The increase in the revenue for the sale of insurance policies by AXIS bank
and the increase in the retail segment’s profit and assets indicates that the
financial performance of the AXIS bank in bancassurance has been good and
the bancassurance has also contributed well to the retail segment.

 Though non-interest income as a % to operating profit,total revenue and

working funds were increased from 2004 to 2005,i.e., after the year they
started earning revenue from bancassurance,it has been decreased in the year
2006-07.With the increase in performance in bancassurance,the same can be
overcome.

 It is desirable also that the bank can improve its existing performance to
increase its return on assets and to reduce the operating expenses of the bank.

 Business per employee and profit per employee of the bank are decreasing
over the years that it can affect the sale of insurance policies that the bank’s
immediate attention is required.

 Capital adequacy ratio has been found satisfactory, as it has been above the
prescribed norms of RBI that it reveals the potentiality of AXIS Bank to
perform bancassurance operations. The other prescribed norm, which is NPA,
also looks reasonable. But, steps can be taken to reduce the same, as its % to
customer assets has been increasing over the years.

 Thus, it is quite clear that AXIS Bank is expected to take still more initiatives
to improve its existing performance in bancassurance. To analyse the ways
and means for it, responses are collected from the customers. It also indicates
the necessity of further initiatives and the areas where they need to focus and
FINDINGS, RECOMMENDATIONS AND CONCLUSION

can cash in on the situation for better prospects. Following are the
justifications from the primary data:

 Though general opinion about insurance is pretty good among the people,
most of the respondents are uncertain about insurance as an investment option.

 Though most of the respondents are aware of Bajaj Allianz life, awareness
needs to be created about the fact that AXIS bank is cross-selling Bajaj
Allianz Life Policies.

 Most of the respondents are not cognizant enough with the Bajaj Allianz Life
Insurance policies as the initiatives taken by AXIS Bank have been
inadequate. This is also proved statistically through correlation analysis.

 Though the other relationship building factors are found satisfactory among
most of the customers, emphasis is needed in the area of Easy and
advantageous banking over other banks since it is denied by majority of the
respondents. As these factors, especially the easy and advantageous banking
determines the mindset of the customer in considering the bank as an
integrated financial solutions, this requires immense attention by AXIS bank.
The same is also proved statistically through correlation analysis.

 Majority of the respondents are satisfied with the customer services provided
by AXIS bank that it is a positive sign for bancassurance.

 53% of the respondents are not holding any life insurance policy so far that it
is clear that there are still lot of untapped source which the bank can explore
and reap the harvest.

 47% of the respondents choice would be Bajaj Allianz life insurance for
obtaining a policy. Out of which, 30 respondents are planning to take an

102
FINDINGS, RECOMMENDATIONS AND CONCLUSION

insurance policy in the immediate future .The association between this two is
also proved through Chi-square test. Tax benefits, better returns, invest in
child dreams, post retirement income, protecting the family in case of
unfortunate occurrences are the increasing order of preference in terms of
essentiality among most of the respondents in the near future for taking a
policy

 And out of 47 respondents who are in favour of Bajaj Allianz Life 40

respondents i.e., 85% of the respondents prefer AXIS bank to be their
distribution channel. This clearly indicates the advantage the bank can make
use of and if taken more initiatives it can even make more customers to buy
Bajaj Allianz life insurance policies from AXIS bank

103
FINDINGS, RECOMMENDATIONS AND CONCLUSION

5.2 RECOMMENDATIONS

 To strengthen the initiatives that are much needed to reach out more public
and to improve its existing performance, the following can be done;

 The display case can be located on the place where the customers can have a
100% chance of looking into it like cash counters, entrance etc., The number
of display cases can also be increased and catchy slogans can be given.

 To reach out more customers via website, AXIS bank can educate the
customer by sending frequent e-mails with attractive synopsis to the e-mail ids
of the customer about Bajaj Allianz life insurance policies with the link
carrying them to the AXIS bank website. More pop-ups window, frequent
playing of graphical displays, can also attract more customers who are visiting
AXIS bank website.

 Employees of the AXIS bank can also be given more training about Bajaj
Allianz Life policies, as this will help them to explain and guide the customers
better. Motivation, immediate rewards and better incentive packages can also
help them to do better. This type of enabling sales oriented culture among the
employees is the best possible way to increase the productivity among the
employees that it assumes greater significance. Consequently the business per
employee and profit per employee can also be increased which is currently
decreasing over the years.

 Emphasis can also be given to promote insurance as an investment option as

most of the respondents are uncertain about it. This will also help them to
reach more customers.

 Most of the respondents are satisfied with the customer services that it is a
positive sign. But, since customer satisfaction is no customer loyalty, they will

104
FINDINGS, RECOMMENDATIONS AND CONCLUSION

prefer to accept more products with the same bank only if they find it
advantageous. As most of the customers denied the easy and advantageous
banking in AXIS over other banks, it is important for the bank to find out
more ways to promote the same. This will definitely help the bank to convince
more customers to prefer AXIS bank as their one stop shop for all their
financial solutions.

 Most of the customers prefer to buy insurance policy for tax benefits and
better returns that the target customers can be identified.

 As many of the respondents who wish to buy Bajaj Allianz Life Insurance
Policy also have opted AXIS bank as their channel, the bank can make use of
it and retain its customers.

 Thus by doing all this, the bank can increase its fee-based income, Return on
assets as well as the non-interest income, which leads to much progress of the
bank.

105
FINDINGS, RECOMMENDATIONS AND CONCLUSION

5.3 CONCLUSION

The study thus points out that the financial performance of AXIS
bank in bancassurance has been good and it also provides a helping hand to the
overall progress of the bank. The prospect for bancassurance is also bright as
AXIS bank is found to be a preferable distribution channel among the customers
who wish to buy Bajaj Allianz life policy. With more initiatives and focus in the
specified areas the bank can even have the potentially of making more customers
to buy Bajaj Allianz Life policy from AXIS bank. With the merger of centurion
bank, it can also take the advantage of more customer base and can become more
competitive. Thus with its increase in the existing performance, in the upcoming
years, AXIS bank will definitely play a predominant role in the bancassurance
industry and there by can contribute more to the upliftment of the bank.

106
 SCOPE FOR FURTHER RESEARCH

 As this study focuses only on the limited areas of chennai, it can be extended
to other areas for an in-depth analysis.

 This study concentrates only on the life insurance segment that it can be
broaden by including non life insurance.

 Comparative analysis can also be done among the performance of banks,

which undertakes bancassurance as this study focuses on the performance of
AXIS bank alone

.
108
 BIBLIOGRAPHY & WEBLIOGRAPHY

BIBLIOGRAPHY:

BOOKS:

• Reddy, T.S. & Hariprasad Reddy.Y,“Management Accounting”

Margham Publications, Chennai, 2005.
• Lochanan Ravi .P “ Research Methodology” Margham Publications,
Chennai, Second Edition, 2003.
JOURNALS:

• Amel Dean Barnes colleen, Panetta Fabio & Sallen Carmelo

“Consolidation and Efficiency in the financial sector: A review of the
international evidence”, Journal of banking and Finance Volume
No: 28, March 2000,Page numbers: 2493-2519
• Browne M.J & Kim.K- “An international analysis of Life insurance
Demand”, Journal of Risk and Insurance Volume No:60,January
1993,Page numbers: 616-634
• Carow Kenneth. A “Challenging Barriers between banking and
Insurance”, Journal of Banking and Finance Volume No: 25,April
2001.Page numbers: 1553-1571

WEBLIOGRAPHY:

www.google.co.in

www.Axisbank.com

www.Axisinsurance.com

www.insureegypt.com

www.insuremagic.com

www.watsonwyatt.com