CUSTOMER RELATIONSHIP MANAGAMENT

PRODUCTS AND OVERVIEW

VISHWA MAHESH PATEL

HPGD/JL20/1550

IT PROJECT MANAGMENT

WELINGKAR INSTITUTE OF MANAGEMENT

DEVELOPMENT AND RESEARCH MAY 2022

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 ACKNOWLEDGEMENT

I take the opportunity to thank WELINGKAR INSTITUTE OF MANAGEMENT

DEVELOPMENT & RESEARCH for letting us this opportunity along with selecting the topic,
giving brief knowledge about it and for support throughout it.

I sincerely acknowledge all the Professors for their valuable time, knowledge, and patience.
Professors have been more important in the pursuit and provided me best guidance and advice.

I am also grateful to all my friends & family members, who had directly or indirectly given their
kind co-operation and encouragement. I admit that co-operation and morality are keywords to
success.

VISHWA MAHESH PATEL

Place: Mumbai

Date: 24 May, 2022

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3|Page
 INDEX
SR.NO PARTICULARS PAGE NO
1 CHAPTER I 1-46
INTRODUCTION
1.1 Introduction
1.2 Meaning of CRM
1.3 Goals of CRM
1.4 CRM Architecture
1.5 CRM – A Powerful
Tool
1.6 CRM in Banks
1.7 Need of CRM in Banks
1.8 Importance of CRM
1.9 Implementation
1.10 CRM Strategies
1.11 CRM Principals
1.12 History
1.13 Activities of CBI
1.14 Roles and
Responsibilities
2 CHAPTER II 47-48
RESEARCH METHODOLOGY
2.1 Objectives
2.2 Research Design
2.3 Source of Data
3 CHAPTER III 49-56
LITERTURE REVIEW
3.1 Review of Literature
4 CHAPTER IV 57-66
DATA ANALYSIS
4.1 Data Analysis
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 5 Recommendation 67
6 Conclusion 68
7 Bibliography 69
8 Annexure 70-73

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 CHAPTER I
INTRODUCTION TO CRM
1.1 INTRODUCTION

CRM, or Customer relationship management, is a number of strategies and technologies that are
used to build stronger relationships between companies and their customers. A company will
store information that is related to their customers, and they will spend time analyzing it so that it
can be used for this purpose. Some of the methods connected with CRM are automated, and the
purpose of this is to create marketing strategies which are targeted towards specific customers.
The strategies used will be dependent on the information that is contained within the system.
Customer relationship management is commonly used by corporations, and they will focus on
maintaining a strong relationship with their clients.
There are a number of reasons why CRM has become so important in the last 10 years. The
competition in the global market has become highly competitive, and it has become easier for
customers to switch companies if they are not happy with the service they receive. One of the
primary goals of CRM is to maintain clients. When it is used effectively, a company will be able
to build a relationship with their customers that can last a lifetime. Customer relationship
management tools will generally come in the form of software. Each software program may vary
in the way it approaches CRM. It is important to realize that CRM is more than just a
technology. Customer relationship management could be better defined as being a methodology,
an approach that a company will use to achieve their goals. It should be directly connected to the
philosophy of the company. It must guide all of its policies, and it must be an important part of
customer service and marketing. If this is not done, the CRM system will become a failure.
There are a number of things the ideal CRM system should have. It should allow the company to

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find the factors that interest their customers the most. A company must realize that it is
impossible for them to succeed if they do not cater to the desires and needs of their customers.
Customer relationship management is a powerful system that will allow them to do this.
It is also important for the CRM system to foster a philosophy that is oriented towards the
customers. While this may sound like common sense, there are a sizeable number of companies
that have failed to do it, and their businesses suffered as a result. With CRM, the customer is
always right, and they are the most important factor in the success of the company. It is also
important for the company to use measures that are dependent on their customers. This will
greatly tip the odds of success in their favor. While CRM should not be viewed as a technology,
it is important to realize that there are end to end processes that must be created so that customers
can be properly served. In many cases, these processes will use computers and software.
Customer support is directly connected to CRM. If a company fails to provide quality customer
support, they have also failed with their CRM system. When a customer makes complaints, they
must be handled quickly and efficiently. The company should also seek to make sure those
mistakes are not repeated. When sales are made, they should be tracked so that the company can
analyze them from various aspects. It is also important to understand the architecture of
Customer relationship management. The architecture of CRM can be broken down into three
categories, and these are collaborative, operational, and analytical. The collaborative aspect of
CRM deals with communication between companies and their clients. The operational aspect of
the architecture deals with the concept of making certain processes automated. The analytical
aspect of CRM architecture deals with analyzing customer information and using if for business
intelligence purposes. Each one of these elements are critical for the success of a CRM system. A
company must learn how to use all three properly, and when they do this proficiently, they will
be able to build strong customer relationships and ensure their profits for a long period of time.
As more businesses continue to compete on a global level, it will become more important for
them to use successful Customer relationship management techniques.

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CRM OVERVIEW

1.2 MEANING OF CRM

Customer Relationship Management is the establishment, development, maintenance and
optimization of long-term mutually valuable relationships between consumers and the
organizations. Successful customer relationship management focuses on understanding the needs
and desires of the customers and is achieved by placing these needs at the heart of the business
by integrating them with the organization's strategy, people, technology and business processes.

At the heart of a perfect CRM strategy is the creation of mutual value for all the parties involved
in the business process. It is about creating a sustainable competitive advantage by being the best

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at understanding, communicating, and delivering, and developing existing customer relationships
in addition to creating and keeping new customers.

DEFINITION OF CRM

“Customer Relationship Management (CRM) is a co-ordinate approach to the selling process

allowing the various operational, customer contact and sales promotional functions of an
organization to function as a whole.”

1.3 GOALS OF CRM

Implementing customer relationship management can be a costly undertaking.
Organizations spend a lot of money scrutinizing vendors, buying the right CRM software, hiring,
consultant, training employees, etc. The only way in which a company can actually measure its
success is if it establishes CRM goals prior to the implementation as in this way it is able to
determine whether or not it has successfully implemented CRM. Despite the fact that industries
have different business aspects they share some common CRM goals.

Some of the Commonly Established CRM Objectives are as follows:

1) Increase in Customer Service :
Establishing customer loyalty as one of your top CRM goals is absolutely fundamental to
CRM successful implementation .For this task it is essential that the whole organization realize
that they play a part in this goal. This objective cannot be achieved with the help of a few
employees only. Customers need to feel that they have received excellent service. This ensures
their continued patronage. This is by far one of the most essential goals of customer relationship
management. Customer retention and brand loyalty is absolutely essential to ensure success.
Undoubtedly it is far harder to gain a new customer than to actually keep one. Customer service
is the pivotal point around which CRM revolves.

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2) Increasing Efficiency:
One of the most important goals of CRM is the increase in organization efficiency and
effectiveness. This is almost always adopted by every organization. It is necessitated by the fact
that increase in efficiency is required to boost success. CRM achieves this through cost reduction
and customer retention. Adequate CRM training achieves this goal.
3) Lowering Operating Costs:
CRM goals also include the reduction of costs of operation. This goal should be clearly
established and conveyed to all those involved in the CRM implementation process. CRM
manages to reduce operating costs through a workforce management system. This helps to
maximize skills and thus reduce cost. These reduced costs enable an organization to achieve
greater efficiency. If cost reduction is management's objective then the CRM implementation
should be carried out in such a way that this is achieved. Throughout the process maximum
reduction in costs should be adhered to in order to meet this particular CRM goal.
4) Aiding the Marketing Department:
Another goal of CRM is generally aiding the marketing department in all its efforts. This
includes marketing campaigns, sales promotions etc. If this is fixated as one of the goals of
CRM, then it should be communicated to those involved. This goal is fundamental as it boosts
sales indirectly thereby increasing the profitability.
1.4 CRM ARCHITECTURE
Customer Relationship Management (CRM) is an information industry term for
methodologies, software, and usually Internet capabilities that help an enterprise manage
customer relationships in an organized and efficient manner. In many cases, an enterprise builds
a database about its customers. This database describes relationships in sufficient detail so that
management, salespeople, and customer service reps can access information; match customer
needs with product plans and offerings; remind customers of service requirements; know what
other products a customer had purchased; etc

The Customer relationship management architecture can be broken down into three
categories, and these are operational, collaborative, and analytical. Each plays an important
role in Customer relationship management and a company that wants to success must understand
the importance of using these three components successfully.

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 OPERATIONAL CRM
Operational CRM deals with the automation of certain business processes. Examples of
business processes that are connected to operational CRM are marketing and sales. When a
connection is made to a customer, the information related to this interaction will be automatically
stored in a database, and the company can pull up specific information on that customer when it
is needed.
Operational CRM can further be broken down into three components. These components
are Enterprise marketing automation, Customer service automation, and Sale force automation.
The Enterprise marketing automation will give the company information about the business
climate, and it will also provide them with crucial data on their competitors, as will as trends
within the industry and other important variables.

As the name implies, Enterprise marketing automation deals with strategies a company
can use to strengthen their marketing tactics. Customer service and support will automate
specific processes that are connected to service. An example of this could be item returns or
customer complaints. Sales force automation will be responsible for automating some of the
company's sales task
An example of tasks that SFA would automate is demographics, customer needs, and
accounting management. A number of corporations will use call centers to store data on their
customers. Once the customer makes a call, the customer service representative can provide
them with relevant information. Many companies will also automate processes such as allowing
customers to access their accounts.

 ANALYTICAL CRM
The next important part of CRM architecture is Analytical CRM. As the name suggests,
Analytical CRM deals with analyzing data that is collected by the company. This data will be
analyzed so that the company can enhance its customer service capabilities. By enhancing its
customer service capability, a company will build a stronger relationship with its customers.
There are a number of common ways that Analytical CRM is used to achieve this. A
number of companies will use the data they've collected and analyzed to cross-sell products to
their customers, as well as retaining customers that may normally switch to another company.

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 Analytical CRM can also be used to provide important information to customers within a
short period of time. In addition to building stronger relationships with customers, Analytical
CRM can be an important tool for fraud prevention and detection. It can analyze the patterns of
sales, inventory, and profits in order to find any patterns that are not consistent.

Analytical CRM is also important when it comes to both product development and risk
management. It is important to realize that Analytical CRM is an ongoing process. The company
may need to alter its strategies or methods based on the information that is analyzed through this
process.

 COLLABORATIVE CRM
The third important aspect of CRM architecture is Collaborative CRM. Collaborative
CRM is important because it places an emphasis on the interactions that a company will make
with its customers. These interactions could be personal, or they could come through mediums
such as the telephone or the Internet. Collaborative CRM will give companies a powerful form of
communication that will utilize multiple technologies.
It will also be responsible for providing services over the Internet so that the costs of the
service can be reduced. When interactions are made with customers, Collaborative CRM will
allow the company to provide them with useful information. At the highest level, CRM should
be an important part of all interactions that a company makes with its customers.

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CRM ARCHITECTURE

BANKS

Today, customers have more power in deciding their bank of choice. Consequently, keeping
existing customers, as well as attracting new ones, is a critical concern for banks. Customer
satisfaction is an important variable in evaluation and control in a bank marketing management.
Poor customer satisfaction will lead to a decline in customer loyalty, and given the extended
offerings from the competitors, customers can easily switch banks. Banks need to leverage
effectively on their customer relationships and make better use of customer information across
the institution. Competition in the financial services industry has intensified in recent years,
owing to events such as technology changes and financial industry deregulation. Conventional

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banking distribution has been gradually supplemented by the emerging use of electronic banking.
Many bank customers prefer using ATMs or a website rather than visiting a branch, while
technology has also reduced barriers to entry for new customers.

1.5 CRM--A POWERFUL TOOL

CRM is a powerful management tool that can be used to exploit sales potential and maximize the
value of the customer to the bank. Generally, CRM integrates various components of a business
such as sales, marketing, IT and accounting. This strategy may not increase a business's profit
today or tomorrow, but it will add customer loyalty to the business. In the long term, CRM
produces continuous scrutiny of the bank's business relationship with the customer, thereby
increasing the value of the Customer’s business. Although CRM is known to be a relatively new
method in managing customer loyalty, it has been used previously by retail businesses for many
years. The core objective of modern CRM methodology is to help businesses to use technology
and human resources to gain a better view of customer behavior. With this, a business can hope
to achieve better customer service, make call centres more efficient, cross-sell products more
effectively, simplify marketing and sales processes, identify new customers and increase
customer revenues. As an example, banks may keep track of a customer's life stages in order to
market appropriate banking products, such as mortgages or credit cards to their customers at the
appropriate time. The next stage is to look into the different methods customers' information are
gathered, where and how this data is stored and how it is currently being used. For instance,
banks may interact with customers in a countless ways via mails, emails, call centres, marketing
and advertising. The collected data may flow between operational systems (such as sales and
stock systems) and analytical systems that can help sort through these records to identify
patterns. Business analysts can then browse through the data to obtain an in-depth view of each
customer and identify areas where better services are required.
1.6 CRM AND BANKS
One of the banks' greatest assets is their knowledge of their customers. Banks can use this asset
and turn it into key competitive advantage by retaining those customers who represent the
highest lifetime value and profitability. Banks can develop customer relationships across a broad
spectrum of touch points such as at bank branches, kiosks, ATMs, internet, electronic banking
and call centres. CRM is not a new phenomenon in the industry. Over the years, banks have

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invested heavily in CRM, especially in developing call centres, which, in the past, were designed
to improve the process of inbound calls. In future, call centres will evolve to encompass more
than just cost reduction and improved efficiency. According to Gartner Group, more than 80 per
cent of all US banks will develop their call centres as alternative delivery channels and revenue
centres, to be used for the delivery of existing products and services.But to be successful, a bank
needs more than the ability to handle customer service calls. It needs a comprehensive CRM
strategy in which all departments within the bank are integrated.
The CRM processes should fully support the basic steps of customer life cycle. The basic steps
are:
 Attracting present and new customers
 Acquiring new customers
 Serving the customers
 Finally, retaining the customers
In today's increasingly competitive environment, maximizing organic growth through sales
momentum has become a priority for Banks and Financial institutions. To build this momentum
banks are focusing on Customer relationship management initiatives to improve
 Customer satisfaction and loyalty
 Customer insight/ 360º view of customer
 Speed to market for products and service
 Increase products-to-customer ratio
 Improve up sales and cross sales
 Capitalizing on New market opportunities

The idea of CRM is that it helps businesses use technology and human resources gain
insight into the behavior of customers and the value of those customers. If it works as hoped, a
business can: provide better customer service, make call centers more efficient , cross sell
products more effectively, help sales staff close deals faster, simplify marketing and sales
processes, discover new customers, and increase customer revenues .It doesn't happen by simply
buying software and installing it. For CRM to be truly effective, an organization must first
decide what kind of customer information it is looking for and it must decide what it intends to
do with that information.

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For example, many financial institutions keep track of customers' life stages in order to market
appropriate banking products like mortgages or IRAs to them at the right time to fit their needs.
Next, the organization must look into all of the different ways information about customers
comes into a business, where and how this data is stored and how it is currently used.
One company, for instance, may interact with customers in a myriad of different ways including
mail campaigns, Web sites, brick-and-mortar stores, call centers, mobile sales force staff and
marketing and advertising efforts. Solid CRM systems link up each of these points. This
collected data flows between operational systems (like sales and inventory systems) and
analytical systems that can help sort through these records for patterns. Company analysts can
then comb through the data to obtain a holistic view of each customer and pinpoint areas where
better services are needed.
In CRM projects, following data should be collected to run process engine:
1) Responses to campaigns,
2) Shipping and fulfillment dates,
3) Sales and purchase data,
4) Account information,
5) Web registration data,
6) Service and support records,
7) Demographic data,
8) Web sales data.
1.7 NEED OF CRM IN BANKS
Bank merely an organization it accepts deposits and lends money to the needy persons, but
banking is the process associated with the activities of banks. It includes issuance of cheque and
cards, monthly statements, timely announcement of new services, helping the customers to avail
online and mobile banking etc. Huge growth of customer relationship management is predicted
in the banking sector over the next few years.
Banks are aiming to increase customer profitability with any customer retention. This paper deals
with the role of CRM in banking sector and the need for it is to increase customer value by using
some analytical methods in CRM applications. It is a sound business strategy to identify the
bank’s most profitable customers and prospects, and devotes time and attention to expanding

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account relationships with those customers through individualized marketing, pricing,
discretionary decision making.
In banking sector, relationship management could be defined as having and acting upon deeper
knowledge about the customer, ensure that the customer such as how to fund the customer, get to
know the customer, keep in tough with the customer, ensure that the customer gets what he
wishes from service provider and understand when they are not satisfied and might leave the
service provider and act accordingly.
CRM in banking industry entirely different from other sectors, because banking industry purely
related to financial services, which needs to create the trust among the people. Establishing
customer care support during on and off official hours, making timely information about interest
payments, maturity of time deposit, issuing credit and debit cum ATM card, creating awareness
regarding online and e-banking, adopting mobile request etc are required to keep regular
relationship with customers. The present day CRM includes developing customer base. The bank
has to pay adequate attention to increase customer base by all means, it is possible if the
performance is at satisfactory level, the existing clients can recommend others to have banking
connection with the bank he is operating.  Hence asking reference from the existing customers
can develop theirclient base. If the base increased, the profitability is also increase. Hence the
bank has to implement lot of innovative CRM to capture and retain the customers. There is a
shift from bank centric activities to customer centric activities are opted. The private sector
banks in India deployed much innovative strategies to attract new customers and to retain
existing customers. CRM in banking sector is still in evolutionary stage, it is the time for taking
ideas from customers to enrich its service. The use of CRM in banking has gained importance
with the aggressive strategies for customer acquisition and retention being employed by the bank
in today’s competitive milieu. This has resulted in the adoption of various CRM initiatives by
these banks.
STEP TO FOLLOW
The following steps minimize the work regarding adoption of CRM strategy. These are:
 Identification of proper CRM initiatives
 Implementing adequate technologies in order to assist CRM initiative
 Setting standards (targets) for each initiative and each person involved in that circle
 Evaluating actual performance with the standard or benchmark

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 Taking corrective actions to improve deviations, if any
Customer Relationship Management is concerned with attracting, maintaining and enhancing
customer relationship in multi service organizations. CRM goes beyond the transactional
exchange and enables the marketer to estimate the customer’s sentiments and buying intentions
so that the customer can be provided with products and services before the starts demanding.
Customers are the backbone of any kind of business activities, maintaining relationship with
them yield better result.
1.8 IMPORTANCE OF CRM IN INDIAN BANK

For long, Indian banks had presumed that their operations were customer-centric, simply because
they had customers. These banks ruled the roost, protected by regulations that did not allow free
entry into the sector. And to their credit, when the banking sector was opened up, they survived
by adapting quickly to the new rules of the game. Many managed to post profits. For them an
unexpected bonanza came from government bonds in which most were hugely invested.
Ironically, the Reserve Bank of India's moves to cut aggressively the interest rates after 1999,
pushed up the prices of bonds. So banks had a windfall doing almost nothing. The bond profits,
like manna from heaven, improved the balance-sheets of all banks irrespective of their core
performance. However, the era of lazy banking is soon to end. The mesh of rules that propped up
the Indian banking industry is now being dismantled rapidly.

According to a RBI road-map, India will have a competitive banking market after 2009. As
one of the most attractive emerging market destinations, India will see foreign banks come in,
what with more freedom to come in, grow and acquire. Therefore, it is imperative that Indian
banks wake up to this reality and re-focus on their core asset — the customer. A greater focus on
Customer Relationship Management (CRM) is the only way the banking industry can protect its
market share and boost growth. CRM would also make Indian bankers realize that the purpose
of their business is to "create and keep a customer" and to "view the entire business process as
consisting of a tightly integrated effort to discover, create, and satisfy customer needs."
What is CRM, and what will it deliver to the banks? CRM is, probably, one of the least clearly
defined business acronyms, as there is no single definition for it. It is probably easier to say what
CRM is not. Unfortunately, CRM has also become a misnomer for a range of solutions from IT
vendors, each providing its own spin on the idea. CRM is variously misunderstood as a fancy

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sales strategy, an expensive software product, or even a new method of data collection. It is none
of these. Customer Relationship Management (CRM) in the Indian banking system is
fundamental to building a customer-centric organization. CRM systems link customer data into a
single and logical customer repository. CRM in banking is a key element that allows a bank to
develop its customer base and sales capacity. The goal of CRM is to manage all aspects of
customer interactions in a manner that enables banks to maximize profitability from every
customer. Increasing competition, deregulation, and the internet have all contributed to the
increase in customer power. Customers, faced with an increasing array of banking products and
services, are expecting more from banks in terms of customized offerings, attractive returns, ease
of access, and transparency in dealings. Retaining customers is a major concern for banking
institutions which underscores the importance of CRM. Banks can turn customer relationship
into a key competitive advantage through strategic development across a broad spectrum. This
book examines issues related to changing banking industry in India and the challenges in CRM.
CRM is a simple philosophy that places the customer at the heart of a business organization’s
processes, activities and culture to improve his satisfaction of service and, in turn, maximize the
profits for the organization. A successful CRM strategy aims at understanding the needs of the
customer and integrating them with the organization’s strategy, people, and technology and
business process. Therefore, one of the best ways of launching a CRM initiative is to start with
what the organization is doing now and working out what should be done to improve its interface
with its customers. Then and only then, should it link to an IT solution. While this may
sound quite straightforward, for large organizations it can be a mammoth task unless a gradual
step-by-step process is adopted. It does not happen simply by buying the software and installing
it. For CRM to be truly effective, it requires a well-thought-out initiative involving strategy,
people, technology, and processes. Above all, it requires the realization that the CRM philosophy
of doing business should be adopted incrementally with an iterative approach to learn at every
stage of development.

1.9 IMPLEMENTATION OF CRM IN INDIAN BANKS

Although CRM as a concept is of recent origin its tenets have been around for sometime. Field
officers in the banks have always promoted close relation-ship with customers, but the focus on
customer orientation rather than product orientation as a commitment has been on the Indian

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banking scene for nearly a decade. But the fact remains that implementing customer relationship
management is not easy. There are really very few organizations that are actually optimizing
customer experiences at all points of contacts. It is necessary to understand who customers are
and what they value, select customer carefully, design products and services that deliver the
desired value, design effective sales channels and customer touch points, recruit and equip
employees to deliver and increase customer value, and constantly refine your value proposition
to ensure customer loyalty and retention (Forsytyh 1997 and Goldenberg 1998). With the
advancement of banking technology and computerization and networking of bank branches,
banking customers are becoming more and more dynamic and less loyal in their behaviour. The
development of the Internet is further adding to this trend and the whole market becomes trans-
parent and customers are in a position to move easily from one bank to another. In such a
situation, customer satisfaction is the key to bank marketing, which aims at retention of the old
customers and their bringing in new customers. CRM deserves differential treatment to different
class of customers at times. Service can be given to customers either personally through
individuals such as customer service manager or the process can be automated by using
computers. These different approaches are adopted depending on the value of relationship with
the customer. Personal management of relationship is extended to business customers and high
value personal customers and automated relationship management to lower margin mass- market
segments. CRM system can open up new channels of delivery, which are most cost effective. We
can cite example of the Internet and call centers. According to an estimate, cost per transac-tion
through these modes can be reduced by 90 per cent when compared to cost of transaction at
branch. To offer better and extended services to custom-ers new technology platforms are being
created through huge investment in Information Technology in banking sector. The recent
development in this field is the introduction of CBS (Core Banking Solutions). A CBS helps in
centralizing the transactions of branches and different banking channels and the customers start
banking with the bank instead of at different branches. This is the only way to offer seamless
transactions across different channels (branches, the Internet, the telephone and Automated
Teller Machines or ATMs). As such nowadays a customer is called a customer of the bank rather
than of a branch. Another problem generally faced by a bank in implementing CRM is
resistance to change. The banking industry is passing through a radical transformation, from a
sellers market to a customers market, a regulated economy to a more liberalized and open

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economy, advancement in technology and a lot of other developments. These complex changes
are forcing the banks to change the way they do business. A change denotes making things in a
different manner. It should be planned properly, proactive and goal oriented. It requires two
things: Firstly, the ability of the organization to adapt changes in the business environment is to
be increased. Secondly, the mindset of the employees has got to be changed in the development
of right attitude, skills, expectations, perceptions and behaviour. Implementation of CRM in
Indian banking is still in its initial stage and has to go a long way to develop and raise it to the
global standards. But the Indian banks including the public sector banks are coming in a big way
to address this issue to remain competitive with their counterparts—the foreign and private
sector banks.

1.10 CRM STRATEGIES

This is a new way of thinking for many banks with thousands, even millions of customers.
Managing customer relationships successfully means learning about the habits and needs of your
customers, anticipating future buying patterns and finding new opportunities to add value to the
relationship.
Customer Behavior Patterns
For example, in the financial sector, early beneficiaries of successful CRM strategies have been
the banks. These organizations use data warehousing and data mining technologies to learn from
the millions of transactions and interactions with their customers, and to anticipate their needs.

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The patterns of customer behavior and attitude derived from this information enable the banks to
effectively segment customers on pre-determined criteria.
Detailed customer data can provide answers to the following questions:
 Which communication channel do they prefer?
 What would be the risk of leaving the bank to go to the competition?
 What is the probability the customer will buy a service or product?
This knowledge assists financial institutions with CRM solutions in place to develop marketing
programs that respond to each customer segment, support cross-selling and customer retention
programs and enables the staff to understand how to maximize the value of each customer’s
interaction. CRM applications provide functionality to enhance customer interactions. Banks
known for its high level of customer service might use this characteristic as a starting point for
implementing a CRM application. Another company may be very good at targeting profitable
customers. Each bank should seek a niche on which to develop its CRM strategy.
Customer Data
A common problem many organizations share is integrating customer information. When
information is disparate and fragmented, it is difficult to know who the customers are, and the
nature of their associations or relationships. This also makes it difficult to capitalize on
opportunities to increase customer service, loyalty and profitability. For example, knowing that
other family members are also customers provides an opportunity to up-sell or cross-sell
products or services, or knowing that a customer uses several sources of interaction with a
supplier can also provide opportunities to enhance the relationship.
The creation and execution of a successful CRM strategy depends on close examination and
rationalization of the relationship between an organization’s vision and business
strategy.Building toward a CRM solution and evaluating the use of customer data requires
analysis and alignment of the following core capabilities:
 Customer value management
 Prospecting
 Selling
 Collection and use of customer intelligence
 Customer development (up-selling and cross-selling)
 Customer service and retention

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  Protection of customer privacy
Successful CRM implementations result from the capability of the organization and its
employees to integrate human resources, business processes and technology, to create
differentiation and excellence in service to customers, and to perform all of these functions better
than its competitors. The current economic context and financial crisis has most probably led
many financial services institutions to refocus their CRM strategies with the customer
relationship being more than ever the key to profitability of a retail activity. These institutions
have to design a new approach to regain and reassure customers. Even if they have only started
building a “how to win back trust" strategy, there is a general movement towards “refocusing on
he customer” for the “post-financial” crisis phase. Here are some global banking institutions that
have deployed CRM Customer Relationship Management systems, their CRM strategy and their
goals.
Global Banks CRM Strategy Goal
Bank of America Provide service representatives with 360- Improve customer
degree view of customer relationship for experience, retention
corporate and retail banking
FleetBoston Segment customer base into six different Attain cross-sell
groups based on demographics and revenues, maximum
banking behavior lifetime value
BNP Paribas Deploy CRM system across branch Improve customer
network, integrating with central office, experience, cross-sell
link multiple customer databases
Societe Generale Integrate call center, branch, and central Improve customer
office; link 80 banking applications to experience, support
support unified view of customers consistent message
Irrespective of whether it is a public sector bank or a private sector bank; a regional rural bank or
a foreign bank all banks commonly store details of tens of thousands of customers and prospects
- both in a corporate database and in discrete documents on the desktops of individual bank staff.
Retrieving customer data to support targeted marketing activities in this environment has
traditionally involved sorting hard copy by hand, which is time-consuming, inaccurate, and
increasingly cost-prohibitive.

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 Hence the banks devise software, which would mitigate
this task of customer relationship management solution,
to take full advantage of their valuable customer data. It
also provides a way to quantify a campaign's success and
aids in planning future marketing strategies, better work
flow tracking and management, considerable increase in
the speed of the marketing campaign planning process,
greater cost efficiency with improved ROI, easy
monitoring of multiple marketing campaigns and
improved workflow management.
CRM IN INDIANBANKS
In recent years, the banking industry around the world
has been undergoing a rapid transformation. In India
also, the wave
of deregulation of early 1990s has created heightened competition and greater risk for banks and
other financial intermediaries. The
cross-border flows and entry of new players
and products have forced banks to adjust the product-mix and undertake rapid changes in
their processes and operations to remain competitive. The deepening of technology
has facilitated better tracking and fulfillment of commitments, multiple delivery channels for
customers and faster resolution of miscoordinations. Unlike in the past, the banks today are
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 (both
corporate and retail) 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 adopted by banks with respect to customer data management
and customer relationship management.

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 Over the years, Indian banks have expanded to cover a large geographic & functional
area to meet the developmental needs. They have been managing a world of information about
customers - their profiles, location, etc. They have a close relationship with their customers and a
good knowledge of their needs, requirements and cash positions. Though this offers them a
unique advantage, they face a fundamental problem. During the period of planned economic
development, the bank products were bought in India and not sold. What our banks, especially
those in the public sector lack are the marketing attitude. Marketing is a customer-oriented
operation. What is needed is the effort on their part to improve their service image and exploit
their large customer information base effectively to communicate product availability. Achieving
customer focus requires leveraging existing customer information to gain a deeper insight into
the relationship a customer has with the institution, and improving customer service-related
processes so that the services are quick, error free and convenient for the customers.
Furthermore, banks need to have very strong in-house research and market intelligence units in
order to face the future challenges of competition, especially customer retention. Marketing is a
question of demand (customers) and supply (financial products & services, customer services
through various delivery channels). Both demand and supply have to be understood in the
context of geographic locations and competitor analysis to undertake focused marketing
(advertising) efforts. Focusing on region-specific campaigns rather than national media
campaigns would be a better strategy for a diverse country like India. Customer-centricity also
implies increasing investment in technology. Throughout much of the last decade, banks world-
over have re-engineered their organizations to improve efficiency and move customers to lower
cost, automated channels, such as ATMs and online banking. But this need not be the case.
As is proved by the experience, 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. However, to maximize the value of this resource, our banks need to transform their
branches from transaction processing centers into customer-centric service centers. This
transformation would help them achieve bottom line business benefits by retaining the most
profitable customers. 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. There is a growing realization among Indian

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banks that it no longer pays to have a "transaction-based" operating model. There are active
efforts to develop a relationship-oriented model of operations focusing on customer-centric
services. The biggest challenge our banks face today is to establish customer intimacy without
which all other efforts towards operational excellence are meaningless. The banks need to ensure
through their services that the customers come back to them. This is because a major chunk of
income for most of the banks comes from existing customers, rather than from new customers.
Customer relationship management (CRM) solutions, if implemented and integrated correctly,
can help significantly in improving customer satisfaction levels. Data warehousing can help in
providing better transaction experiences for customers over different transaction channels. This
is because data warehousing helps bring all the transactions coming from different channels
under the same roof. Data mining helps banks analyses and measure customer transaction
patterns and behavior. This can help a lot in improving service levels and finding new business
opportunities.
It must be noted, however, that customer-centric banking also involves many risks. The banking
industry world over is being thrust into a wild new world of privacy controversy. The banks need
to set up serious governance systems for privacy risk management. It must be remembered that
customer privacy issues threaten to compromise the use of information technology which is at
the very center of e-commerce and customer relationship management - two areas which are
crucial for banks' future. The critical issue for banks is that they will not be able to safeguard
customer privacy completely without undermining the most exciting innovations in banking.
These innovations promise huge benefits, both for customers and providers. But to capture them,
financial services companies and their customers will have to make some critical tradeoffs.
Customers Relationship Management– A new mantra in Indian banking

Nowadays banks have to work keeping in mind the position of the financial market and
anticipate change in the market place and prepare themselves accordingly. They have to make
new resolutions to build further on their own strengths to explore new avenues of Customers
Relationship Management. This is the only strategic weapon to be pursued for excellence in the
pursuit of performance and achievement. Both the retention of old business as well as to search
for new business, CRM is the only choice. CRM, being the essence of modern banking, a sound
understanding of the key principles, its theories and practices should be revisited and redefined
to provide a road map to new ideas and techniques in the field. Over the years, banking

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institutions have been feeling the pressing need of putting up greater thrust on this initiative for
improving their operations and appearances.

The FOCUS ON CRM

The profitability of a bank depends to a large extent on its ability to deploy its fund in high
yielding loan portfolios of their customers. But with the increasing competition of lowering
interest rates by different banks, interest spread is touching the low ebb every day. The demand
for credit from the corporate sector is diminishing due to more efficient management of working
capital, availability of cheaper funds from other routes etc. According to the Centre for
Monitoring Indian Economy (CMIE), during 2000-01, the working capital cycle of
manufacturing companies fell to 21 days compared to 60 days a year ago. In the year 2001- 02,
the cycle further reduced to 14 days and became negative during 2002-03. Taking as a
percentage on sales, working capital ratio had dropped to three per cent from a level of 13 per
cent over the last five years in case of 4,000 selected manufacturing industries. The demand for
working capital will be in the declining stage in the years to come. Further, there is lack of
investment demand in the market. These developments have led the banks to go in search of new
business opportunities where they can put their resources and earn a reasonable margin to add to
their bottom lines. After a lot of exercise and considerable thought, they identify the retail sector
and commit for considerable retail lending as a means to serve their ends.

Driving forces for retail lending

There are several driving forces to support this move. Firstly, for years together, the Indian retail
market was largely untapped. With retail lending at levels far below those prevailing in other

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Asian countries, the opportunities for exploring the possibility of lending in this segment
continues to be immense and all banks, more or less tried to capture this huge market. Secondly,
India, being a poor country, it is a matter of realization that the bottom 75 per cent of the
consumer pyramid basically relates to the retail sector customers, and if one is looking at a
growth opportunity, it must focus its attention with tailor made products and services to meet
their needs. Banking is no exception to this reality.Thirdly, in an attempt to market tailor-made
innovative products, consumers are being supplied with abundant information through paper
advertisement, TV advertisement, cell phone calls, personal counseling to make them aware of
the facilities and opportunities available in the market. This endeavor on the part of the banks is
leading the customers in their process of information abundance and thereby acting as customer
leader. Customer leadership is a concept to project the product or service of the firm the
benchmark for the market (customers), which visualize all competitive stimuli in term of
benchmark product or service. But there is another side to the coin. With the entry of several
players in the field, particularly foreign banks and private sector banks, the customers today has
a wide array of choices which is increasing day by day with the rapid and exponential
development of communication technology. With this increased knowledge base and better
information they are demanding more and more satisfaction and choosing to optimize the value
of their money for goods and services. This had added momentum to the competition. Then, of
late, there has been a tremendous improvement in Non-Performing Assets (NPAs) due to
introduction of certain new methodologies such as new foreclosure law, the CDR mechanism,
the Debt Recovery Tribunals and the provision of one time settlement. The establishment of
ARC (Assets Reconstruction Committee) and enactment of Securitization Act have helped in a
big way to liquidate a huge amount of unmoved loan being carried forward for years together.
Now a clear message has been ventilated in the community that bank loans are not for charity,
but are to be repaid and the bank management is there to recover it. Under the changed scenario
of NPA management, Bank managers are not hesitating in disbursing new loans. Also, another
major force behind this retail revolution is technology involved in today’s banking. Technology
has developed to such an extent that the customers are in a position to take advantage of “AAA”
banking. (Any time, Any where and Any how) banking through ATM, the Internet, CBS
(Centralised Banking Solution) etc. In addition, there is enough scope in the case of mortgage
loan. According to a study, Indian mortgage market grew from around 15,000 crore in 1997 to

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60,000 crore at the end of 2002 or at a compound annual growth rate (CAGR) of 32 per cent. It
will not be out of place to mention here that at the same time China’s mortgage grew by a CAGR
of 113 per cent.Further more, retail loans are considered to be safe and according to the
managers of some eminent banks there is less risk involved in managing a fat retail portfolio.
Besides, in the case of small and medium enterprises (SME) and farmers in many cases such
loans have been roped in big companies to back them in
default

1.11 CRM PRINCIPLES

The main principles of CRM can be grouped into seven

guiding factors:

1. Customer focus

The first and foremost important guiding principle

in CRM is customer focus. Who is a customer? This
question is very fundamental. A customer is a person or
group of persons who receives the product or service—the
final output of a process or group of processes. A customer is the final arbiter of quality, value
and price of a product or service. A satisfied customer only assigns value to a service, on the
contrary, to a dissatisfied customer a product or service has no value, even if the concerned
service or product has been designed with lot of effort, energy and cost after a thorough
planning. A satisfied customer motivates his fellow members to go in for the service or
product that he has already acquired. But a dissatisfied customer always counsels his friends,
and fellow members not to go to banks where his experience proved to be wrong or other-
wise. So customer’s delight or customer’s satisfaction is the essence of any CRM program. As
a part of this focus on customers, banks should ensure that clients are identified; their
requirements are determined, understood and met enhancing customers’ satisfaction. The
main thrust of CRM is to improve an organization’s efficiency, economy and effectiveness
through reduction of sales cycle times and selling costs, identification of new markets and
channels for expansion, improvement of customer value, satisfaction, retention and thereby
increasing profitability and market share of the enterprise. Successful CRM focuses on

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 understanding the needs and desires of the customers and is achieved by placing these needs
at the heart of the business by integrating them with the organization’s strategy, people,
technology and business processes. (Heygate, 1999). There must be total commitment for the
enterprise towards this end.

2. Leadership

Persuasion, judgment and decision-making abilities are the main attributes of quality
leadership. When there is a slight chance of getting a business but the client is hesitating or in
a fix, or not in a position to decide properly, it should be followed up by the relationship
manager by patient hearing, mild counseling and to stand by the side of the prospective client
to help clear his doubts and to make him feel happy by realizing that he is going in the right
direction and he is very right in choosing his requirements.

The following points may be found helpful in this regard:

(a) It is to be communicated to all employees that all customers should be given a proper
hearing and it should be supported from all levels.

(b) Ways and means should be identified and practiced of getting and staying closer to
customers.

(c) Proper respect should be extended to the customers. All relevant information should be
collected from them with humble and polite approach. Proper value should be given to their
feedback.

(d) There should be proper re-action to the information and feedback provided by the
customers in designing, developing and providing desired products at afford-able cost.

3. Process approach

A process transforms an input into desired output by the use of resources, energies and time.
In producing an output there may one single process or a group of inter-related processes. In
case of inter-related processes, often the output from one process directly forms the input to
the next. For effective functioning of an organization, it has to identify and manage numerous
linked activities with the help of different processes for accomplishing its goal.

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 Proper attention should be given to the following points:

(a) All processes should be de-signed keeping in view the requirements and desires of the
customers, within the policy, resource availability, strategy of the company.

(b) All processes should meet the legal and statutory requirements to perform the activity or
deliver the product or service.

(c) Time involved in processing should be minimum with least waiting time to the customers.
If required delegation of authority and assignment of account-ability at various executive
levels should be addressed, revised and fine-tuned to meet the requirements.

(d) All the processes should be properly integrated to meet the goal congruence and should
not function at cross-purpose.

(e) There should be in built control mechanism for ease of measuring, reviewing and taking
corrective action.

4. System approach

Customer’s requirement is one level of commitment. That level implies a system that is
reactive and provides to customers what they want but the target should be to achieve more
and to exceed the customer’s expectation to accommodate future requirement and to build a
cushion against the competitors’ attributes. CRM denotes the management of the entire
system and is not confined to only one or the other sub-systems or functional departments.
CRM is based on a system approach to management. Its primary objective is to increase value
to customers on a continuous basis by designing and improving organizational processes and
systems on a ongoing basis. Meeting Each sub-system may have its own goal but the goal and
objectives of all sub-systems are to be integrated to achieve the overall goal. There may be
one sub-system to acknowledge the customer’s order, a separate one to deliver the product
within the delivery schedule, another sub-system to comply with the complaints of the
customers etc, but all directed to accomplish the goal—value to the customers. The total
system as a whole should decide what product to make or what service to offer, what should
be the quality involved, what should be the price, what markets and customers to target upon
and similar other issues.

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 5. Involvement of people

The fundamentals of CRM bear the genes of customer relationship through involvement of
people, i.e., the work-force at the disposal of the organization. The whole gamut of CRM is
for the people, of the people and by the people. People involvement at all levels is essential
for the success of a CRM program. The bank managers and staff must be in a position to
exploit the concept of customer relationship completely. Customer relation may be defined as
that dimension of relationship marketing that seeks and ensures customer loyalty by fulfilling
promises and continuing to satisfy customer’s wants and needs so that defection is zero. It
comprises of three levels of relationships; financial relationship, social relationship and
structural relationship. The main focus of financial relationship is frequency marketing
programs based on financial incentives such as reduction of processing fees, lower rate of
commitment charges, organization of loan mela on special occasions etc. A social relationship
program revolves round a social bonding between company and its customers and establish
brand loyalty. Bankers, nowadays, make house calls, offer different services outside their for-
mal activities, share the feelings and emotions of clients and even send clients flowers on
birthdays and anniversaries. A marketing relation with the middleman and interested groups is
developed in an in-side-out manner mainly based on software, which would help in data
warehousing, data mining and data analysis. The optimization of structural relationship lies in
the replacement of physical resources by total service replacement. Drawing of money
through ATMs instead of physical presence in the branch for withdrawal of cash through
cheques or withdrawal forms may be sited as example. To obtain the full benefits of people
involvement, the human resource management should focus on employee empowerment,
productivity linked reward, zero defeat service oriented train-ing and total quality
management.

6. Mutually beneficial customer relationship

The relationship with the customer should be based on a mutually beneficial relation-ship. A
bank should not concentrate its attention towards earning of profits only, but focus should be
directed to the customers’ wealth creation or value enhancement with the motto of earning
through service. As an example we can talk of a savings account that’s ‘fixed up’ to give you
more interest. It ensures that any balance in your savings account above a certain amount, say,

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 Rs 3,000 automatically gets transferred to a fixed deposit to give you higher returns, which
will be swept back into your savings account, when you need it. Sometimes, other benefits are
also extended, such as, free personal accident insurance coverage along with fixed deposit
scheme above a certain amount and above a certain term. Banks are no more restricting their
activities to deposit and advances; rather they work with the mot-to of offering ‘Integrated
Total Package Solutions to all needs of a customer. Banks have gone to the extent of booking
cinema tickets, paying utility bills, school fees etc. for the ease of their clients who are very
busy and do not find time for such work. Many of such activities are not profitable in terms of
time and efforts spend by the bank. But banks are carrying out such services for mutual
benefits, which pays in the long run. Wealthy individuals are in the habit of placing all sorts of
demands on their private bankers and a bank has to respond to such requests not merely for
income generation but as a gesture of goodwill and at times such activities add a consider-able
percentage to a bank’s fee based income. According to an estimate, a bank can earn Rs 35,000
to Rs 100,000 per an-num for a good customer. But generally it is found that earnings start
after the first two- three years of dealing with the customer. In a mature relation-ship, such
fee-based income is a regular feature and is very much crucial in today’s banking where
interest spread is getting reduced due to competition and fee based income can increase the
bottom line. But in many instances, the expenses in terms of time, effort, recognizing
individual needs and offering a customized investment solution are high.

7. Continual improvement

Another objective of CRM is the efforts towards continuous improvement in the customer
relationship through the provision of value added ser-vices at favorable cost. Business
processes in the areas of finance, system integration, human resource management etc. are to
be automated and optimized with an aim to increase the efficiency and effectiveness of
operations. The most effective way of improvement lies in innovation and change
management. Today’s successful organizations must stimulate and foster innovation and
master the art of change. Organizations that maintain their flexibility, spontaneity and
unpredictability, continually improve their quality and, beat their competitors to the market
place with a constant stream of innovative products and services, will be the winners.

The major areas to be targeted are:

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 (i) Improving the effectiveness of marketing.
(ii) Implementing multichannel trigger driven marketing.
(iii) Implementing a strategic analysis capability to support strategic decision making.
(iv) The ability to deliver the increasing levels service demanded by customers.
(v) Building a transparent communication system and employee participation to better
define the needs of the customers and deliver the right services and products

1.12 HISTORY OF THE CENTRAL BANK OF INDIA

The Bank of India was started on 21 st December 1911 under the name of the Central Bank of
India by it’s under Shrwashrio Sir Soharabji Pochhandwala. This bank suffered great State Bank
in year 1913-1914 due to 1st World War or its effect on a monetary system.
It is really a pleasure to note “The Central Bank of India is the only bank with first
manages which was established by Indian management. Then again in the year 1925-29 Bank
had suffered another set back by its enemy & specially the English cruel. Customer of his bank
started with drawing the deposits and again it was Sir Pochhandwala personally set on the
counters and paid the deposits to the customer by managing the funds by his own Personal
Prestige. The banks payment counters were kept open for 24 hours throughout the country and
payment were made continuously. This very bold step of Sir Pochhandwala Sahib created new
faith amongst of the customers of the bank once again proved that this mighty Bank is the only
bank of the Common people of India.
In Gujarat Central Bank first branch was opened at Gandhi Road, Ahmedabad. During
year 1930 to the date of nationalization of the banking industries, this bank stood as number one
in all India during Nationalization of the Bank on dated 19 th July 1969. As on 1st February the
total branches of the Central Bank of India through out of country is 2848 out of which 1397
branches are rural whereas 644 branches are in semi urban and 419 branches are functioning at
urban center and 621 branches are spread over in metro.
The total deposits of the bank as on above dated was Rs. 9932 Crore out of which 2036
Crore are in current a/c, 2714 are in saving and 5172 are in time deposits.
A number of innovative and unique banking activities have been launched by Central
Bank of India and a brief mention of some of its pioneering services are as under:

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 1911 First Indian Bank in True sense-established
1921 Introduction to the home saving safe deposit scheme to build saving / thrift habit
in all section of the society.
1923 Advance to industry by allotting shares, commercial banking stated of initial
stage.
1924 Landing Section introduced encourages habit to save money by ladies.
1926 First ever in India safe deposit vault started at Head Office Bomaby.
1927 Cheque system stated in home saving.
1929 To own and to assist the bank Tally Executive of Trusty Co. Ltd. Established.
1931 First ever by any Indian banker-Overseas Branch at London opened. Three years
cash certificates issued. Travelers’ cheque system in rupee currency started.
Indian banker sent abroad to study advance banking.
1932 To reserve deposits rights deposit benefits insurance co. Ltd. Started.
1970 Recurring deposit scheme established.

Subsequently even after the nationalization of the Bank in the year 1969, Central Bank
continued to introduce a number of innovative banking services as under:-
1976 The Merchant Banking Cell was established.
1978 New facility for Customer Deposit Cash in any of 14 selected after of the
country.
1980 Central card, the credit card of the Bank was introduced.
1985 For speedy Customers Services Automex Started. All Regional Officer
connected with the by own Secret-national debtor too.
1986 Platinum deposit special scheme in Platinum Jubilee Year for Long Term
Deposit started. Central Card Scheme expanded which crossed the territorial
boundary of the country central card which is a boon for Indians going abroad.
1989 The housing subsidiary Cent Bank Home Finance Ltd. was started with it does
headquarter at Bhopal in Madhya Pradesh.
1994 Quick Cheque Collection Service (QCC) & Express Service was set up to enable
speedy collection of outstation cheques.

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 Further in line with the guidelines from Reserve Bank of India as also the Government of
India, Central Bank has been playing an increasingly active role in promoting the key thrust
areas of agriculture, small scale industries as also medium and large industries. The Bank also
introduced a number of Self Employment Schemes to promote employment among the educated
youth.

Among the Public Sector Banks, Central Bank of India can be truly described as an All
India Bank, due to distribution of its large network in 27 out of 28 States as also in 4 out of 7
Union Territories in India. Central Bank of India holds a very prominent place among the Public
Sector Banks on account of its network of 3541 branches and 218 extension counters at various
centres throughout the length and breadth of the country.

In view of its large network of branches as also number of savings and other innovative
services offered, the total customer base of the Bank at over 25 million account holders is one of
the largest in the banking industry.

Customers' confidence in Central Bank of India's wide ranging services can very well be
judged from the list of major corporate clients such as ICICI, IDBI, UTI, LIC, HDFC as also
almost all major corporate houses in the country
HEAD OFFICE OR REGISTERED OFFICE OF CBI:
Chandar Mukh,
Narimpoint,
Mumbai-400021
ZONAL OFFICE OF CBI IN GUJARAT:
Zonal office,
Central Bank Building,
Lal Darwaza, Ahmedabad-390 001
Phone: - 5503586 Fax:- 5505995
Website: www.Centralbankofindia.co.in,
Email: - centralzonead1@sancharnet.in

BRANCHES OF THE CBI IN GUJARAT:

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City Name Computerized Non-Computerized Total No of
Branches Branches Branches
Ahmedabad 42 16 58
Anand 24 13 37
Baroda 19 14 33
Jamnagar 28 6 34
Rajkot 17 10 27

1.13 ACTIVITIES OF THE CBI

The various banking products and services on offer at Central Bank include:
DEPOSITS
The various banking products and services on offer at Central Bank include:
(2.3.a) DEPOSITS

 Money Multiplier Deposit Certificate (MMDC): In this the interest keeps adding to the
principal amount giving you an added advantage to increase your deposits exponentially
 Monthly/Quarterly Interest Deposit Receipt (MIDR/QIDR): The interest is added
monthly/Quarterly. An account can be opened for duration of 12 months to 120 months
with a minimum balance of Rs. 5000.
 Cent Uttam Scheme: This deposit scheme by Central Bank offers you easy liquidity with
high returns that allows you to withdraw a part of the deposit whenever required.
 Other Special Savings Accounts: These include Senior Citizens Savings Account, Tax
Saving Deposit Schemes, Smart Deposit Schemes, Super Deposit Schemes and Special
Cent Bachat Khata
(2.3.b) CARDS

 Centralcard Electronics: This Central Bank Credit Card is accepted in all master card
electronic terminals in India and Nepal. This can be both domestic and global.
 Centralcard: This card offers you the freedom of shopping at all the merchant
establishments in the country. The internationally acceptable one is the International
Central Master Card.

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  Debit Card: Its the most safe and secure way of accessing your account globally 24-hours
a day at over 5.3 million merchant establishments and 6 million ATM's

(2.3.c) LOANS

Housing Loans
Home Renovation Loan
Computer Loan
Personal Loan (Corporate and Non-Corporate)
Education Loans
Special Educational Loans
Finance For Trade
Car Loans
Loans For Commercial Vehicles
Agricultural Loans
Personal Loans For Pensioners And Teachers

(2.3.d) OTHER SERVICES

 raveler's Cheques: Issued in the denominations of Rs. 100, Rs. 500, Rs. 1000, Rs. 2500,
and Rs. 5000 at a nominal charge of Re.1 per Rs.100.
 Gift Cheques: Available in denominations of Rs.11, Rs. 25, Rs. 51 and Rs. 101 free of
cost and payable at any Central Bank of India branch.
 Cash Management Services: These include collections that can be Central's Cent QCC,
Local Cheque collection and bulk cheque collection services and payment products that
include Demand Drafts (DD), Dividend and Interest Warrants, Bank Telegraphic Transfer
(TT).
 Cent Bill Pay: This facility by Central Bank allows you to pay your bills through the
Internet. It is currently available in Mumbai and is soon going to be launched in New
Delhi, Pune, Ahmedabad, Bangalore, Chennai, Hyderabad and Kolkata branches.
 Special Services: These include Insurance, Mutual Funds and Demat Account services.
(2.3.e) INTERNATIONAL BANKING

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  NRI Banking: Special NRI Savings Accounts, facilities to NRI's Returning to India and
Foreign Exchange services along with Remittance Services are included in this
 Other Specialized Services: These include Repatriable and Non-Repatriable services
along with facilities for importers and exporters.

(2.3.f) Central Bank of India Net Banking

Central Bank of India provides net banking facility to its customers, all you have to do is login to
your Internet Banking Account and access the banking service you desire. The official website of
Central Bank gives you information about the public issue, issue price, share price, share value
and stock price along with news on the shares. Any enquiry about the IPO refund, allotment
status, registrar address, money control, listing or the recruitment procedure is entertained on the
Central Bank site.

(2.3.g) Central Bank Website

An online branch and ATM locator is also available on the official website of Central Bank of
India. You can get the exact address and location of your nearest Central Bank branches and
ATM's/ also you get full information on the ongoing interest rates on the various credit and
deposit schemes along with the service charges for the services provided at Central Bank. Some
addresses are provided below.
RATE OF INTEREST ON DEPOSIT

In the central bank of India the interest rate of the deposit on Fixed Deposit applicable from
dated 1st May 2000, this is show in the following table:
Maturity Up to Above Rs.1 Crore and above
Period Rs.15 lacs Rs.15 lacs
to less than
Rs.1 Crore
11.11.2009 11.11.2009 Existing Revised
Rate rate
11.11.2009 21.12.2009
7 days-14 days 2.50 2.50 2.00 2.00

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 15 days to 45 days 3.25 3.50 2.50 2.50
46 days to 90 days 3.75 4.00 3.00 3.00
91 days to 179 days 5.00 5.00 3.50 3.50
180 days to 269 days 5.75 5.50 4.50 4.50
270 days to 364 days 6.25 6.00 5.00 5.50
1 year to less than 2 years 6.50 6.25 5.50 6.00
2 years to less than 3 years 6.75 6.50 5.50 6.00
3 years to less than 5 years 7.00 6.50 5.50 6.00
5 years and above 7.25 7.25 5.50
RATE OF INTEREST ON LOANS

LOANS
BPLR (w.e.f. 01.04.2009) 12.00% p.a.
Direct Housing Finance Scheme - Rate of Interest Processing Charges*
w.e.f. 10.11.2008
Floating Category Upto Rs. Above Rs.
30 Lakhs 30 Lakhs
Upto 5 Yrs 9.00% 10.25% 1% of Loan Amount,
minimum Rs.1000/-
Over 5 Yrs & Less than 10 Yrs. 9.50% 10.75% 1% of Loan Amount,
minimum Rs.1000/-
10 Yrs. & above 10.00% 11.25% 1% of Loan Amount,
minimum Rs.1000/-
Fixed Category Upto Rs. Above Rs. Processing Charges
30 Lakhs 30 Lakhs
Upto 5 Yrs 10.00% 11.25% 1% of Loan Amount,
minimum Rs.1000/-
Over 5 Yrs & Less than 10 Yrs. -NA- -NA- 1% of Loan Amount,
minimum Rs.1000/-
10 Yrs. & above -NA- -NA- 1% of Loan Amount,
minimum Rs.1000/-

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*- For changing from fixed Rate of Interest to Floating Rate of Interest, 1% Service Charges on
the balance outstanding as on the date of change over.
- For changing from floating Rate of Interest to Fixed Rate of Interest, 1% Service Charges on
the balance outstanding as on the date of change over.

Personal Loan Rate of Interest Processing Charges

Consumer Durable Loan BPLR - 0.25% Rs. 200/- per proposal
(Cent Buy)
Senior Citizen - Loan to Pensioner BPLR NIL

For General Pensioners and for ex-

staff of Central Bank of India
drawing pension
Senior Citizen - Cent Swabhimaan 10.00% Upfront Fees: 0.15% of loan amount
(Reverse Mortgage Loan) subject to minimum of Rs. 500/- and
maximum of Rs.10,000/-  
Personal Loan - Loan to corporate BPLR Rs. 500/- per proposal
employees
Personal Loan - Loan to Non- BPLR + 1.00% Rs. 500/- per proposal
Corporate Employees
Personal Loan - Loan to teachers & BPLR - 1.25% Rs. 500/- per proposal
Employees of Educational Institute
Personal Loan - Loan to LIC BPLR 1% of loan amount, minimum Rs.
Agents 250/-

Vehicle Loan Rate of Interest Processing Charges

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 Two wheeler Loan
For new vehicles repayable upto 36 months BPLR - 2.00% Rs. 500/- per proposal
For new vehicles repayable beyond 36 months BPLR - 1.00% Rs. 500/- per proposal
For second hand vehicles BPLR Rs. 500/- per proposal
Four wheeler Loan
For new vehicles repayable upto 36 months BPLR - 2.00% Rs. 2000/- per proposal
For new vehicles repayable beyond 36 months BPLR - 1.00% Rs. 2000/- per proposal
For second hand vehicles BPLR Rs. 2000/- per proposal

Cent Vidyarthi - Education Loan Rate of Interest Processing

(Irrespective of Amount of Loan and Place of Normal IIT/ IIM Charges
study i.e. India or Abroad) Student Students
Male BPLR - BPLR - Nil
2.00% 2.50%
Female BPLR - BPLR - Nil
2.50% 3.00%
SC, ST, & Minority Community Student BPLR - BPLR - Nil
(Female & Male) 2.50% 3.00%

Name of Rate of Interest Processing Charges

Scheme
Scheme for BPLR Rs.10,000/- lump sum.
Financing
Executive Interest to be compounded monthly.
MBA Concession of 50 basis points is
given if Employers Undertaking is
available.
Further concession of 50 basis
points in RoI may be given if
interest is serviced regularly during

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 the study period.
Cent Trade BPLR - 1% -Upto Rs. 25,000/- : NIL

-More than Rs. 25,000/- upto Rs. 2

Lakh: Rs. 250/- per proposal.

-More than Rs. 2 lakh upto Rs. 50

lakh: 0.5% of loan amount
Cent Vyapari BPLR - 1% Rs. 1000/- per proposal
Cent Rental BPLR + 1.00% for loan upto 3 1% of the loan amount subject to
years minimum of Rs.5,000/- and maximum
of Rs.2.00 lakh.
BPLR + 2.00% for loan above 3
years
Cent Computer BPLR Rs. 100/- per proposal
Cent Liquid BPLR 1% of loan amount, minimum Rs.
500/-
Cent School BPLR - 1% NIL
Cent Jewel 10.00% Rs. 500/- per proposal
Cent Vivah 10.00% NIL
Cent Safar BPLR Rs. 1000/- per proposal
Cent Suvidha BPLR NIL

Cent Home 1% higher than Housing Loan Rate Rs. 500/- per proposal
Loan Plus

Challenges Ahead
(i) Improving Profitability:

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The most direct result of the above changes is increasing competition and narrowing of spreads
and its impact on the profitability of banks. The challenge for banks is how to manage with
thinning margins while at the same time working to improve productivity which remains low in
relation to global standards. This is particularly important because with dilution in banks’equity,
analysts and shareholders now closely track their performance. Thus, with falling spreads, rising
provision for NPAs and falling interest rates, greater attention will need to be paid to reducing
transaction costs. This will require tremendous efforts in the area of technology and for banks to
build capabilities to handle much bigger volumes.
S(ii) Reinforcing Technology:
Technology has thus become a strategic and integral part of banking, driving banks to acquire
and implement world class systems that enable them to provide products and services in large
volumes at a competitive cost with better risk management practices.The pressure to undertake
extensive computerisation is very real as banks that adopt the latest in technology have anedge
over others. Customers have become very demanding and banks have to deliver customised
products throughmultiple channels, allowing customers access to the bank round the clock.
(iii) Risk Management:
The deregulated environment brings in its wake risks along with profitable opportunities, and
technology plays a crucial role in managing these risks. In addition to being exposed to credit
risk, market risk and operational risk, the business of banks would be susceptible to country risk,
which will be heightened as controls on the movement of capital are eased. In this context, banks
are upgrading their credit assessment and risk management skills and retraining staff, developing
a cadre of specialists and introducing technology driven management information systems.
(iv) Sharpening Skills:
The far-reaching changes in the banking and financial sector entail a fundamental shift in the set
of skills required in banking. To meet increased competition and manage risks, the demand for
specialised banking functions, using IT as a competitive tool is set to go up.Special skills in retail
banking, treasury, risk management, foreign exchange, development banking, etc., will need to
be carefully nurtured and built. Thus, the twin pillars of the banking sector i.e. human resources
and IT will have to be strengthened.
(v) Greater Customer Orientation:

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In today’s competitive environment, banks will have to strive to attract and retain customers by
introducing innovative products, enhancing the quality of customer service and marketing a
variety of products through diverse channels targeted at specific customer groups.
(vi) Corporate Governance:
Besides using their strengths and strategic initiatives for creating shareholder value, banks have
to be conscious of their responsibilities towards corporate governance. Following financial
liberalisation, as the ownership of banks gets broadbased, the importance of institutional and
individual shareholders will increase.In such a scenario, banks will need to put in place a code
for corporate governance for benefiting all stakeholders of a corporate entity.
(vii) International Standards:
Introducing internationally followed best practices and observing universally acceptable
standards and codes is necessary for strengthening the domestic financial architecture. This
includes best practices in the area of corporate governance along with full transparency in
disclosures. In today’s globalised world, focusing on the observance of standards will help
smooth integration with world financial markets
Organization’s Profile
Name of organization : Punjab National Bank
Head Office : Bhikaji Cama Place, New Delhi

Origin of the Organization

Established in 1895 at Lahore, undivided India, Punjab National Bank (PNB) has the distinction
of being the first Indian bank to have been started solely with Indian capital.The bank was
nationalised in July 1969 along with 13 other banks. From its modest beginning, the bank has
grown in size and stature to become a front-line banking institution in India at present.
 A professionally managed bank with a successful track record of over
110 years.

 Largest branch network in India - 4525 Offices including 432 Extension

Counters spread throughout the country.

 Strategic business area covers the large Indo-Gangetic belt and the
metropolitan centres.

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  Ranked as 248th biggest bank in the world by Bankers Almanac ,
London.
 Strong correspondent banking relationships with more than 217
international banks of the world.
 More than 50 renowned international banks maintain their Rupee
Accounts with PNB.
 Well equipped dealing rooms; 20 different foreign currency accounts are
maintained at major centres all over the globe.
 Rupee drawing arrangements with M/s UAE Exchange Centre, UAE, M/s
Al Fardan Exchange Co. Doha, Qatar,M/s Bahrain Exchange Co,
Kuwait, M/s Bahrain Finance Co, Bahrain,M/s Thomas Cook Al
Rostamani Exchange Co. Dubai,UAE, and M/s Musandam Exchange,
Ruwi, Sultanate of Oman.

Growth and Development

With over 38 million satisfied customers and 4668 offices, PNB has continued to retain its
leadership position among the nationalized banks. The bank enjoys strong fundamentals, large
franchise value and good brand image. Besides being ranked as one of India's top service brands,
PNB has remained fully committed to its guiding principles of sound and prudent banking. Apart
from offering banking products, the bank has also entered the credit card & debit card business;
bullion business; life and non-life insurance business; Gold coins & asset management business,
etc. Since its humble beginning in 1895 with the distinction of being the first Indian bank to
have been started with Indian capital, PNB has achieved significant growth in business which at
the end of March 2009 amounted to Rs 3,64,463 crore. Today, with assets of more than Rs
2,46,900 crore, PNB is ranked as the 3rd largest bank in the country (after SBI and ICICI Bank)
and has the 2nd largest network of branches (4668 including 238 extension counters and 3
overseas offices).During the FY 2008-09, with 39% share of low cost deposits, the bank
achieved a net profit of Rs 3,091 crore, maintaining its number ONE position amongst
nationalized banks. Bank has a strong capital base with capital adequacy ratio as per Basel II at
14.03% with Tier I and Tier II capital ratio at 8.98% and 5.05% respectively as on March’09. As
on March’09, the Bank has the Gross and Net NPA ratio of only 1.77% and 0.17% respectively.

46 | P a g e
During the FY 2008-09, its’ ratio of priority sector credit to adjusted net bank credit at 41.53% &
agriculture credit to adjusted net bank credit at 19.72% was also higher than the respective
national goals of 40% & 18%.

Present Status of the Organization

PNB has always looked at technology as a key facilitator to provide better customer service and
ensured that its ‘IT strategy’ follows the ‘Business strategy’ so as to arrive at “Best Fit”. The
bank has made rapid strides in this direction. Alongwith the achievement of 100% branch
computerization, one of the major achievements of the Bank is covering all the branches of the
Bank under Core Banking Solution (CBS), thus covering 100% of it’s business and providing
‘Anytime Anywhere’ banking facility to all customers including customers of more than 2000
rural branches. The bank has also been offering Internet banking services to the customers of
CBS branches like booking of tickets, payment of bills of utilities, purchase of airline tickets
etc.Towards developing a cost effective alternative channels of delivery, the bank with more than
2150 ATMs has the largest ATM network amongst Nationalised Banks.
With the help of advanced technology, the Bank has been a frontrunner in the industry so far as
the initiatives for Financial Inclusion is concerned. With it’s policy of inclusive growth in the
Indo-Gangetic belt, the Bank’s mission is “Banking for Unbanked”. The Bank has launched a
drive for biometric smart card based technology enabled Financial Inclusion with the help of
Business Correspondents/Business Facilitators (BC/BF) so as to reach out to the last mile
customer. The BC/BF will address the outreach issue while technology will provide cost
effective and transparent services. The Bank has started several innovative initiatives for
marginal groups like rickshaw pullers, vegetable vendors, diary farmers, construction workers,
etc. The Bank has already achieved 100% financial inclusion in 21,408 villages.
Backed by strong domestic performance, the bank is planning to realize its global aspirations. In
order to increase its international presence, the Bank continues its selective foray in international
markets with presence in Hongkong, Dubai, Kazakhstan, UK, Shanghai, Singapore, Kabul and
Norway. A second branch in Hongkong at Kowloon was opened in the first week of April’09.
Bank is also in the process of establishing its presence in China, Bhutan, DIFC Dubai, Canada
and Singapore. The bank also has a joint venture with Everest Bank Ltd. (EBL), Nepal.
Future Expansion of the Organization

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Under the long term vision, Bank proposes to start its operation in Fiji Island, Australia and
Indonesia. Bank continues with its goal to become a household brand with global expertise.
Amongst Top 1000 Banks in the World, ‘The Banker’ listed PNB at 250th place. Further, PNB is
at the 1166th position among 48 Indian firms making it to a list of the world’s biggest companies
compiled by the US magazine ‘Forbes’.
Parameters Mar'07 Mar'08 Mar'09 CRAR
Operating Profit* 3617 4006 5744 26.02
Net Profit* 1540 2049 3091 41.67
Deposit 139860 166457 209760 22.47
Advance 96597 119502 154703 26.55
Total Business 236456 285959 364463 24.15

(Rs. In Crores)

* Respective figure for the corresponding financial year

Departments of The Organization

The bank has following organization

Finance

Personal Administration

Human Source

Sales & Marketing

Retailing

Treasury Management

Information Technology

Product Profile of the Organization

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Saving Account
 PNB Prudent Sweep
 Total Freedom Salary Account
 PNB Vidyarthi Salary Account
 PNB Mitra SF Account
Current Accounts
 Smart Romer
 PNB Vaibhav
 PNB Gaurav
Fixed Deposit Accounts
 Spectrum fixed deposit scheme
 Anupam account
 Multi benefit deposit scheme
 Special fixed deposit scheme
 Recurring deposit scheme
 PNB swecha jama yojna/flexi rd
Credit schemes
 Housing loan
 Car finanace
 Personal loan
 Professional loan
 Educational loan scheme
 Loan against mortgage of property
 PNB financial basket scheme
 Personal loan scheme for pensioners
 Privilege card scheme
 Other credit scheme
Social Banking
 Farmers
 Krishi card
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  Agriculture credit scheme
 PNB farmers welfare trust
Women
 Scheme for house wife and other women
 Mahila udhyam nidhi scheme
1.14 ROLES AND RESPONSIBILITIES
 Opening of accounts of customer.
 Opening of accounts of students.
 Filling the forms of the customers.
 Help customers to learn how to fill different types of vouchers.
 Receiving the cheques.
 Ascertain progress regarding student accounts in various branches.
 Deposited the cheques of the customers.
 Made transfer entries on the computer.
 Entries of the cheques in the computer.
 Checking of records in the locker room.
 Made reminders for customers so that they can know rather they have paid their rent
for the locker.
 Went to schools so that help them to open the student accounts.
 Entries of cash vouchers and evaluation of entries of the Fixed deposit from one ledger
to another.
DESCRIPTION OF EXPERIENCES
 Uneducated customers were not abling to fill their Forms properly
 Due to the lack of the employees’ ledger were not in good condition.
 Recording of the data was incomplete and due to which they were not able to clarify
the dues.
 But due to the computer the job of the employees is simpler.
 Now they have to pass simple entries and all records is maintained easily without any
confusion.
 There job is much simpler than before now they can make changes, add, modify at

50 | P a g e
 the same time in a easy manner that is an achievement for bank
 I learnt many things in the bank but the most interesting thing I like there is the
Environment of the bank the employees help each other rather they the job of other
or not but they help each other.
 Conflicts arise between them because of the lack of the customers they add wrong
information in their cheques or vouchers that cannot be passed.
 I learnt many things I have good and bad experiences both over their before I I was
not aware of anything in the bank now I know many things.
 I can say that while working over their no employee leaves its work pending for net
day because if they let it pending than they can not end their day and by hook or
crook they have to finish it.
 My experience says that working in bank is not as easy as we think because
Managing each and every thing is not easy task.
They have to interact with differ rent types of people so it’s very tough

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 CHAPTER II
RESEARCH METHODOLOGY
2.1 OBJECTIVES
CRM, the technology, along with human resources of the banks, enables the banks to analyze the
behavior of customers and their value. The main areas of focus are as the name suggests:
customer, relationship, and the management of relationship and the main objectives to
implement CRM in the business strategy are:
 To simplify marketing and sales process
 To make call centers more efficient
 To provide better customer service
 To discover new customers and increase customer revenue
 To cross sell products more effectively
2.2 RESEARCH DESIGN:

Exploratory design

This study is exploratory in nature. It provides a description of contemporary satisfaction

parameter in the Indian banking sector. Exploratory research provides insights into and
comprehension of an issue or situation. Exploratory research helps to determine the best research
design, data collection method and selection of subjects.

2.3 SOURCES OF DATA-

There are many sources of data collection, such as secondary data collection and Primary data
collection.

Primary data--

There are various ways to undertake the gathering of primary data, including conducting surveys
to create market data or using other research instruments such as questionnaire.

Sample size- 100

Sample techniques- Convenience sampling

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Secondary data

This involves information that already exists somewhere, such as in studies already undertaken
on this area as well as published books, articles in journals, articles on the internet and other
sources.

Relationship marketing dimensions were identified by conducting a customer satisfaction survey

of five banks in India. The research process involved the following steps.

First, a literature review was undertaken to identify what parameters to consider in research. It
outlines the previous research with respect to customer satisfaction in the banking industry.

Second, in-depth interview were held with customers to establish the evaluation criteria and
factors which results in customer satisfaction.

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 CHAPTER III

3.1 Literature Review

 Cho (1998) points out the reasons for which reforms were made in Indian capital market
stating the after reform developments. Shah (1999) describes the financial sector reforms
in India as an attempt at developing financial markets as an alternative vehicle
determining the allocation of capital in the economy.
 Shah and Thomas (2003) review the changes which took place on India’s equity and
debt markets in the decade of the 1990s. This has focused on the importance of crises as
a mechanism for obtaining reforms.
 Mohan (2004) provides the rationale of financial sector reforms in India, policy reforms
in the financial sector, and the outcomes of the financial sector reform process in some
detail.
 Shirai (2004) examines the impact of financial and capital market reforms on corporate
finance in India. India’s financial and capital market reforms since the early 1990s have
had a positive impact on both the banking sector and capital markets. Nevertheless, the
capital markets remain shallow, particularly when it comes to differentiating high-quality
firms from low-quality ones (and thus lowering capital costs for the former compared
with the latter). While some high-quality firms (e.g., large firms) have substituted bond
finance for bank loans, this has not occurred to any significant degree for many other
types of firms (e.g., old, export-oriented and commercial paper-issuing ones). This
reflects the fact that most bonds are privately placed, exempting issuers from the
stringent accounting and disclosure requirements necessary for public issues. As a result,
banks remain major financiers for both high-and low-quality firms. The paper argues that
India should build an infrastructure that will foster sound capital markets and strengthen
banks’ incentives for better risk management.
 Chakrabarti and Mohanty (2005) discuss how capital market in India is evolved in the
reform period. Thomas (2005) explains the financial sector reforms in India with stories
of success as well as failure.
 Bajpai (2006) concludes that the capital market in India has gone through various stages
of liberalization, bringing about fundamental and structural changes in the market design
and operation, resulting in broader investment choices, drastic reduction in transaction

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 costs, and efficiency, transparency and safety as also increased integration with the
global markets. The opening up of the economy for investment and trade, the dismantling
of administered interest and exchange rates regimes and setting up of sound regulatory
institutions have enabled time.
 Gurumurthy (2006) arrives at the conclusion that the achievements in the financial
sector indicate that the financial sector could become competitive without involving
unhealthy competition, within the constraints imposed by the macro-economic policy
stance.
 Mohan (2007) reviews India’s approach to financial sector reforms that set in process
since early 1990s. Allen, Chakrabarti, and De (2007) concludes that with recent growth
rates among large countries second only to China’s, India has experienced nothing short
of an economic transformation since the liberalisation process began in the early 1990s.
 Chhaochharia (2008) arrives at the conclusion that India has a more modern financial
and banking system than China that allocates capital in a more efficient manner.
However, the study is skeptical about who would emerge with the stronger capital
market, as both the country is facing challenges regarding their capital markets.
 Prasad and Rajan (2008) argues that the time has come to make a more coAGHAIed
push toward the next generation of financial reforms. The study advocates that a growing
and increasingly complex market-oriented economy and its greater integration with
global trade and finance will require deeper, more efficient, and well-regulated financial
markets. The survey and review of literature about the financial sector reforms in India
reveals that the reforms have been pursued vigorously and the results of the reforms have
brought about improved efficiency and transparency in the financial sector. The reforms
also brought into inter-linkage of financial markets across the globe leading to new
product development and sophisticated risk management tools. Derivatives in general
perform as an instrument to hedge the risk arising from movement in prices not only in
commodity markets but also in securities market.
 Bose, Suchismita conducted research on (2006) found that Derivatives products
provide certain important economic benefits such as risk management or redistribution of
risk away from risk-averse investors towards those more willing and able to bear risk.
Derivatives also help price discovery, i.e. the process of determining the price level for

55 | P a g e
 any asset based on supply and demand. These functions of derivatives help in efficient
capital allocation in the economy. At the same time their misuse also poses threat to the
stability of the financial sector and the overall economy.
 Routledge, Bryan and Zin, Stanley E of Carnegie Mellon University conducted
research on “Model UAGHAIainty and Liquidity” in year 2001. Extreme market
outcomes are often followed by a lack of liquidity and a lack of trade. This market
collapse seems particularly acute for markets where traders rely heavily on a specific
empirical model such as in derivative markets.
 Sen Shankar Som and Ghosh Santanu Kumar (2006) studied the relationship between
stock market liquidity and volatility and risk. The paper also deals with time series data
by applying “Cochrane Orchutt two step procedures”. An effort has been made to
establish a relation between liquidity and volatility in their paper. It has been found that
there is a statistically significant negative relationship between risk and stock market
liquidity. Finally it is concluded that there is no significant relationship between liquidity
and trading activity in terms of turnover.
 Debasish (2003), in his research paper titled, “Prime Discriminants of Profitability in the
Indian Commercial Banks” tried to develop a discriminant function for bank profitability
using the most significant ratios/parameters. The validity of the model was assessed by
calculating the analysis sample (78 banks). The hit ratio for analysis sample was 49/78 =
62.82 per cent. The efficiency was judged on four major parameters: Liquidity of the
bank, Return performance, Expense parameters, and Operational efficiency. As per step-
wise discriminant analysis, out of various measures, i.e., smallest Ratio, Mahalnobis
Distance, and Wilk Lambda, the study employs Wilk Lambda with minimum value
required for entry as 3.84 and maximum value for removal of the independent variable as
2.71. At each step the variable that minimizes the overall Wilk Lambda is entered. The
computation ends when any further entry of variables fails to minimize the Wilk Lambda.
 Krishana et al. (2003), in their research paper, “Performance of Regional Rural
Banks in Karnataka − An Application of Principal Components and Discriminant
Function Analysis” tried to identify the important discriminating characteristics of the
two identified groups of Regional Rural Banks in the state of Karnataka. They used the
discriminate function approach and sought to obtain linear discriminate coefficient, such

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 that the squared difference between the mean Z-score for the one group and the mean Z-
score for the other group was as large as possible in relation to the variation of scores
within the groups. They concluded that the number of employees per branch had
maximum discriminating power to the extent of 55%, followed by amount of
borrowings (18%), credit deposit ratio (14%) and income to expenditure ratio (13%).
 Nair (2004) in his paper titled, “Village Co-operatives − A Century of Service to the
Nation” observed that by 2004, the formal institutionalized co-operative sector completed
a century of its service to the nation. Analysing the progress of Primary Agricultural Co-
operative Societies, he observed that during the half century spread over 1951-2001, the
PACs made rapid strides in membership, owned funds, deposits, and channelising
production credit for farmers. They were versatile in the sense; they can take up any type
of rural financing and rural service activity at short notice and at lowest transaction cost.
But besides excelling on all fronts, the co-operatives are feeling handicapped due to
mounting NPAs. The overdue loans of PACs increased to `95,899.60 million in 2000-01
as compared to `63.79 million indicated in 1950-51, thereby subjecting them to a
sustained and systematic process of reviews, reorganisation and restructuring.
 Carlos et al. (2015) studied productivity changes in European co- operative banks and
concluded that an effective use of technology between 1996 and 2003 had increased
productivity for majority of the European co-operative banks under study. An appropriate
policy recommendation by the researchers was for larger or centralized co-operative
banks to develop and franchise technology to smaller co-operatives.
 NABARD (2015) conducted a study “Development in Co-operative Banking”, to
evaluate the financial performance of 1872 urban co-operative banks and 1, 06,919 rural
co-operative credit institutions. The findings of the study revealed that in all financial
institutions in the rural sector (SCBs, DCCBs, SCARDBS, and PCARDBS), percentage
of NPAs in the substandard category declined, while it had increased in doubtful
category. NABARD was worried about deterioration in asset quality of these banks.
However, all the institutions were able to meet the necessary provisioning
requirements. It further highlighted that NPAs ratio in DCCBs varied significantly
across the states from 5% to 68% at the end March 2004. Only in four
states(Haryana, Himachal Pradesh, Punjab and Uttranchal), the NPA ratio was less than

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 10%. NABARD suggested that co-operative banks should implement One Time
Settlement system (OTS) and refer small value advances to Lok Adalats and high value
advances to Debt Recovery Tribunals (DRTS). Further, State Governments were
requested to help co-operative banks in reducing NPAs by taking special recovery
derives.
 Mr. Joseph (2015) studied the performance of Lead Bank Scheme in Kerala, the
mobilisation of bank deposits in Kerala by commercial Banks. He observed that
competition from co-operative and other institutions was the main obstacles to achieving
the deposit mobilisation target. The popularity of private financial institutions was due to
their personal relations with local people. 56.4 percent of the customers (self employed)
surveyed had their first percent dealing with banks for taking loans.
 Mr. Laurent (2006) studied the perception of customers on five competing banks in a
medium size city in UK for private deposits. He observed that these five banks differed
from each other as a result of oligopolistic market situation only on seven attributes
i.e., friendliness, quality of service, community spirit, modem facilities, convenience,
range of services and ownership. These seven attributes accounted for 91 percent of the
overall differences between the five banks. The study revealed that on the basis of
perception of overall image of the five banks relative to each other, there existed the
different market segments.
 K. Avadhani (2007) studied the performance of rural branches of some commercial
banks in order to identify the factors influencing deposit mobilisation in rural areas in
different states. He came out with the opinion that there existed sufficient relationship
between the deposits of a rural branch and its age. The growth of deposits is at a faster
rate in the first six years and tapers off subsequently. The growth rate in deposits of
commercial banks cannot be explained in terms of price differentials as co-operatives
offer high rates of interest. Therefore product differentials would offer a better
explanation of the disparate growth rates in deposits.
 Mr. Nag and Mr. Shivaswamy (2008) studied the comparative performance of foreign
and Indian banks and observed that there was a distinct preference of bank customers to
bank with foreign banks notwithstanding the fact that foreign banks stipulate relatively
high levels of minimum amounts to be maintained as deposits and charge relatively high

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 interest rates and service costs. In respect of deposit supplies, their strategy had been to
procure from a segmented part of the total supplies of deposits of large size from a
relatively small number of depositors. Large accretion of non-resident deposits with
foreign banks was mainly because of the familiarity of the names of foreign banks
operating in India to banks abroad.
 Raju (2009) studiedthe levels of savings and the manner of their distribution among
different physical and financial assets of household sector in Kerala and identified the
factors influencing their savings behaviour. He found that major portions of the savings
of households in Kerala were in the form of financial savings and that too in the form of
bank deposits.
 Subramanian (2010) analyzedthe empirical analysis on dis-intermediation from the
household sectors portfolio preferences point of view based on demand model of five
assets including bank deposits The study revealed that the household sectors
preferences between bank deposits and lending to private corporate sector tended to be
in favour of the latter and against the former.
 Nalini (2011) studied on the impact of mutual funds on the deposit mobilisationof
commercial banks examined the awareness level and adoption level of mutual funds
among household investors in Thiruvananthapuram district. She found that the advent of
mutual funds has brought in expected changes in the growth of bank deposits and their
ownership pattern, but the changes were not of a significant magnitude.

 Satyanarayane (1996) studied productivity beyond per employee business, and

suggested a model to measure overall efficiency of the banks. He emphasised that the
size of the bank should be squared off while measuring efficiency of bank. According to
him, Productivity of bank = (Average index market share of all the output
factors/Average index market share of all the input factors) X 100 where, output factors
were deposits, non-deposit working funds, loans & advances, investments, interest
spread, non-interest income and the net profit. The input factors were network of
branches, numb of staff, wage bill, non-wage operating expenses, etc. In order to
facilitate comparison of one bank with the other, irrespective of size, the market share of
each factor in percentage terms has to be taken into account instead of absolute levels.

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  Niranjanraj and Chitanbaram (2000), in their study titled, “Measuring the
Performance of DCCBs” observed that suitable models should be developed to
evaluate the performance of co-operative banks. They considered 23 parameters
falling into four major groups for measuring the performance of District Central Co-
operative Banks and assigned appropriate weights to each parameter. They ranked 14
District Central Co-operative Banks of Kerala based on composite marks. They
suggested that performance of co-operative banks should not be measured in terms of
financial/ economic achievements only but their performance as co-operative
organizations (social achievements) should also be evaluated.

 Satyasai and Badatya (2000) conducted a study regarding restructuring Rural Credit
Co-operative Institutions. They analysed performance of rural co-operative credit
institutions on the basis of borrowings and lending operations, cost structure, financial
viability, etc. and found that co-operative system, in general, had failed to perform its
functions properly. They advised the co-operative banks to diversify their business
and also to overcome internal (rising transaction cost, declining business level,
mismanagement of overdues) and external (excessive bureaucratization,
politicization) weaknesses.

 Verma and Reddy (2000), conducted a study analyzing the causes Overdues in Co-
operatives under SWOOD, to assess recovery and NPAs position in these banks. Policy
distortions in liberalized economy and inefficient management were identified as main
reasons for poor recovery. Misutilisation of credit, political interference at every
level, successive crop failures, non-remunerative prices of agriculture produce,
inadequate income and natural calamities, were some other factors, which affect the
working culture of co-operative banks considerably. To improve the working of these
banks, the study suggested that available credit size should be need based and production-
oriented. Effective supervision of loans to minimize misutilisation and close social
relations with loanee members were two other suggestions to improve the profitability
and productivity of these banks.

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  Das (2001) in his study titled, “A Study on the Repayment Behaviour of Sample
Borrowers of Arunachal Pradesh State Co-operative Apex Bank Limited”, examined the
repayment behaviour of loanees, covering a period of 1994-95 to 1998-99. On the basis
of primary data collected, researchers concluded that incidence of default was highest
among borrowers for agriculture allied activities loans. Agriculture loanees, horticulture
loanees, small business loanees and service sector loanees were ranked 2nd, 3rd, 4th and 5th
in a descending order on the basis of percentage defaulters. Study further revealed that
the number of defaulter loanees was highest in government sponsored schemes.

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 CHAPTER IV

Finding & Analysis

1. What is your assessment of your readiness for the new Basel proposals with respect to
capital requirements?
CREDIT RISK MARKET RISK OPERATIONAL RISK
FULLY 50 50 50
PREPARED
PARTIALLY 30 30 30
PREPARED
NOT YET 20 20 20
PREPARED
60%

50% 50% 50%

50%

40%

30% 30% 30% Credit Risk

30%
Market Risk
Operational Risk
20% 20% 20%
20%

10%

0%
Fully Prepared Partially Prepared Not Yet Prepared

Explanation:-

From the above graph we analyze 50% of respondent are Fully Prepared for Credit Risk, Market
Risk and Operational Risk. While 20% of respondent are Partially Prepared for Credit Risk,
Market Risk and Operational Risk. There are also 30% of respondent who are not yet Prepared
for Credit Risk, Market Risk and Operational Risk.

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 2. Have you done a gap analysis between current risk management practice and new capital
requirements?

CREDIT RISK MARKET RISK OPERATIONAL RISK

YES 80 80 80
NO 20 20 20

90%
80% 80% 80%
80%

70%

60%

50%
Yes
40% No

30%
20% 20% 20%
20%

10%

0%
Credit Risk Market Risk Operational Risk

Explanation:-

From the above graph we analyze 80% of respondent have done Gap analyze between for Credit
Risk, Market Risk and Operational Risk. While 20% of respondent have not done Gap analyze
between for Credit Risk, Market Risk and Operational Risk.

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 3. Do you have assigned Credit risk, Market risk and Operational risk manager in your
bank?

CREDIT RISK MARKET RISK OPERATIONAL RISK

YES 50 50 50
NO 50 50 50

60%

50% 50% 50% 50% 50% 50%

50%

40%

Credit Risk
30%
Market Risk
Operational Risk
20%

10%

0%
Yes No

Explanation:-

From the above graph we analyze 50% of Banks aasigned for Credit Risk, Market Risk and
Operational Risk. While 50% of Banks are not Assigned for Creidt Risk, Market Risk and
Operational Risk.

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 4. What is the assigned manager’s time dedicated to this activity?

CREDIT RISK MARKET RISK OPERATIONAL RISK

0-20% 60 60 60
20-50% 40 40 40
>50% 70 70 70

80%
70% 70% 70%
70%
60% 60% 60%
60%

50%
40% 40% 40% CREDIT RISK
40%
MARKET RISK
OPERATIONALRISK
30%

20%

10%

0%
0-20% 20-50% >50%

Explanation:-

From the above graph we analyze 50% of Bank Managers are assigned for Credit Risk, Market
Risk and Operational Risk of 0-20%. While 40% of respondent are Partially Prepared for Credit
Risk, Market Risk and Operational Risk of 20-50%. There are also 60% of respondent who are
not yet Prepared for Credit Risk, Market Risk and Operational Risk not more than > 50%

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 5. How many people work in this department?

CREDIT RISK MARKET RISK OPERATIONAL RISK

1-3 50 50 50
3-5 50 50 50
5-10 50 50 50
>10 50 50 50

70%

60% 60%
60%

50%50%50% 50%50%50% 50%

50%

40%40%40%
40%
CREDIT RISK
MARKET RISK
30% OPERATIONAL RISK

20%

10%

0%
1 BY 3 3 BY 5 5 BY 10 > 10

Explanation:-

From the above graph we analyze 50% of People work in this Department for Credit Risk,
Market Risk and Operational Risk of 1-3. While 50% of People are Work in this Department for
Credit Risk, Market Risk and Operational Risk of 3-5. There are also 50% of People who are
Work in the Department for Credit Risk, Market Risk and Operational Risk 5-10.

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 6. Do you have a Risk Committee?

CREDIT RISK MARKET RISK OPERATIONAL RISK

YES 50 50 50
NO 60 60 60

70%

60% 60% 60%

60%

50% 50% 50%

50%

40%
CREDIT RISK
MARKET RISK
30% OPERATIONAL RISK

20%

10%

0%
YES NO

Explanation:-

From the above graph we analyze 50% of Respondent are having Risk Committee for Credit
Risk, Market Risk and Operational Risk. While 60% of respondent are not Having Risk
Committee for Credit Risk, Market Risk and Operational Risk.

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 7. Are you produce reporting for

CREDIT RISK MARKET RISK OPERATIONAL RISK

REGULATORY 50 50 50
PURPOSE
MONITORING 40 40 40
DECISION 60 60 60
MAKING
PURPOSE

70%

60%
60%

50% 50% 50% 50% 50% 50%

50%

40% 40%
40%
CREDIT RISK
30% MARKET RISK
OPERATIONAL RISK

20%

10%

0%
REGULATORY PURPOSE MONITORING DECSION MAKING
PURPOSE

Explanation:-

From the above graph we analyze 50% of Respondent Producing Report for Regulatory Purpose
in Credit Risk, Market Risk and Operational Risk. While 50% of Respondent Producing Report
for Monitoring Work in Credit Risk, Market Risk and Operational Risk There is also 60% of
Respondent who produce Reporting in Decision Making Purpose in Credit Risk, Market Risk
and Operational Risk

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8. Does external reporting drive your internal reporting?

CREDIT RISK MARKET RISK OPERATIONAL RISK

VERY 60 60 60
SIGNIFICANTLY
SIGNIFICANTLY 40 40 40
NOT AT ALL 50 50 50
SIGNIFICANTLY

70%

60% 60% 60%

60%

50% 50% 50%

50%

40% 40% 40%

40%
CREDIT RISK
MARKET RISK
30% OPERATIONAL RISK

20%

10%

0%
VERY SIGNIFICANTLY SIGINFICANTLY NOT AT ALL

Explanation:-

From the above graph we analyze 50% of Respondent Having Internal Reporting Very
Significantly in Credit Risk, Market Risk and Operational Risk. While 50% of Respondent
Having Internal Reporting Significantly in Credit Risk, Market Risk and Operational Risk
There is also 60% of Respondent Having Internal Reporting Not at all in Credit Risk, Market
Risk and Operational Risk

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9. Will you develop an IT solution for Risk Management?

CREDIT RISK MARKET RISK OPERATIONAL RISK

YES 50 50 50
NO 40 40 40

70%

60%
60%

50% 50% 50%

50%

40% 40%
40%
CREDIT RISK
MARKET RISK
30% OPERATIONAL RISK

20%

10%

0%
YES NO

Explanation:-

From the above graph we analyze 50% of Respondent are in Solution In Risk Management
Department for Credit Risk, Market Risk and Operational Risk. While 50% of Respondent are
not in IT Solution in Credit Risk, Market Risk and Operational Risk.

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 10. What difficulties do you foresee?

CREDIT RISK MARKET RISK OPERATIONAL RISK

INTEGRATION 60 60 60
CAPABILITIES
DATABASE DESIGN 40 40 40
MODELS 30 30 30
BUDGET 20 20 20
DATA GATHERING 10 10 10
HUMAN RESOURCE 10 10 10
OTHER (SPECIFY) 10 10 10

70%
60%
60%
60%
60%

50%
40%
40%
40%
40%
30%
30%
30%
30%
CREDIT RISK
20%
20%
20% MARKET RISK
20%
OPERATIONAL RISK
10%
10%
10%
10% 5%5%5%
0%
E S T E
N
AS EL GE NG RC
A TIO B OD D ERI U
R TA M BU TH SO
EGE DA GA RE
IN
T
TA AR
M
DA HU

Explanation:-

From the above graph we analyze 50% of Respondent Facing Difficulties in Integreation
Capabilites in Credit Risk, Market Risk and Operational Risk. While 50% Respondent Facing
Database in Credit Risk, Market Risk and Operational Risk There is also 60% Respondent
Facing Difficulties in Budget in Credit Risk, Market Risk and Operational Risk

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 RECOMMENDATION

Customer Relationship Management (CRM), the most exciting strategies that emerged from
networking technology revolution of the nineties, is today fast emerging s one of the most
important cooperates strategies. A well-executed Customer Relationship Strategies can result in
number of quantitative benefits, including greater ability to sell and cross sell, improved
retention besides cost of services. Customer Relationship Management is do-able. However the
following must take into consideration before embarking upon its implementation. All aspects of
customer relationship management, including technology solution, must be fully explored
effectively deliver the competencies required to realize the business benefits.

1. Tackling any one competence alone will lead to a dysfunctional business. One competence
does not customer relationship management make.
2. Take pragmatic steps with a clear view on delivery of all the components in the medium
term, rather than piecemeal in the short term.
3. Successful mass customization is crucial to reducing customer acquisition cost and
improving the cross selling capacity.
4. Channels are a delivery mechanism. The effectiveness of the mechanism is achieved when it
is faultless!

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 CONCLUSION

Banking can be mysterious for consumers and how they interact with their finances can be a
complex matter. The challenges faced by banks and their customers are many but the trick lies in
de-mystifying complex financial relationships.

Technical solutions deployed by banks today are flexible, user-friendly and meant to facilitate
specific workflow and requirements in implementation processes. In order to simplify lives,
banks have begun to implement end-to-end technologies through all departments with the
intention of removing human error from processes. Previously existing manual environments
could not have been adequate for future visions, growth plans and strategies.

In this day and age, customers enjoy complete luxury in terms of customized technical solutions
and banks use the same to cement long-term, mutually-beneficial relationships. For a bank to
succeed in adopting a CRM philosophy of doing business, bank management must first
understand CRM as a holistic concept that involves multiple, interlocking disciplines, including
market knowledge, strategic planning, business process improvement, product design and pricing
analysis, technology implementation, human resources management, customer retention, and
sales management and training.

Turning the business strategy into actionable items is a difficult undertaking. For which Customer
Relationship Management works a magic wand.

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 BIBLIOGRAHPHY

 Customer Relationship Management-Mohamed HP

 Marketing Management-Philip Kotler

NEWSPAPERS

 Times of India

 Hindustan Times

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ANNEXURE

1. Name of your bank:

2.Please indicate the name of the Name:

contact
Qualification:
Person for this questionnaire and his/her
Position:
position in the Bank.

3.To which of the following types of o Public sector

Banks o Private sector
o Foreign Bank
Does your bank belong?

4.Where is your parent/head office located?

8. What is your assessment of your readiness for the new Basel proposals with respect to
capital requirements?

CREDIT RISK MARKET RISK OPERATIONAL RISK

FULLY
PREPARED
PARTIALLY
PREPARED

NOT YET
PREPARED

75 | P a g e
2. Have you done a gap analysis between current risk management practice and new capital
requirements?

CREDIT RISK MARKET RISK OPERATIONAL RISK

YES
NO

3. Do you have assigned Credit risk, Market risk and Operational risk manager in your bank?

CREDIT RISK MARKET RISK OPERATIONAL RISK

YES
NO

4. What is the assigned manager’s time dedicated to this activity?

CREDIT RISK MARKET RISK OPERATIONAL RISK

0-20%
20-50%
>50%

5. How many people work in these department?

CREDIT RISK MARKET RISK OPERATIONAL RISK

1-3
3-5
5-10
>10

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6. Do you have a Risk Committee?

CREDIT RISK MARKET RISK OPERATIONAL RISK

YES
NO

7. Are you produce reporting for

CREDIT RISK MARKET RISK OPERATIONAL RISK

REGULATORY
PURPOSE
MONITORING
DECISION
MAKING
PURPOSE

8. Does external reporting drive your internal reporting?

CREDIT RISK MARKET RISK OPERATIONAL RISK

VERY
SIGNIFICANTLY
SIGNIFICANTLY
NOT AT ALL
SIGNIFICANTLY

9. Will you develop an IT solution for Risk Management?

CREDIT RISK MARKET RISK OPERATIONAL
RISK
YES
NO

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10. What difficulties do you foresee?
CREDIT RISK MARKET RISK OPERATIONAL
RISK
INTEGRATION
CAPABILITIES
DATABASE DESIGN
MODELS
BUDGET
DATA GATHERING
HUMAN RESOURCE
OTHER (SPECIFY)

PLACE:
_____________________

DATE: SIGNATURE

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