CHAPTER – 1

INTRODUCTION

ABOUT THE TOPIC:-

Banks are the important component of any financial system. They play a very important role
in every sector of economy. In recent years, amidst a dynamic banking environment
characterized by technological advancement, changing customer preferences and intensified
competition, the focus on customer satisfaction has become high priority for public sector
banks. Customer satisfaction serve as a barometer of a bank’s performance, reflecting its
ability to meet the diverse needs and expectation of its clients.
This survey delves into the performance of public sector banks concerning customer
satisfaction, aiming to provide insight into the strength, challenges, and opportunities within
the domain. India also play a vital role in the process of economics growth and development.
Indian banking, which was operating in a highly comfortable environment till the beginning
of the 1990s, has been pushed into the choppy water of intense competition. The modern
banking activities is marked by itineraries into un-chartered horizons mingled with risk and
heavy competition.
Immediately after nationalization, the public sector banks spreads their branches to remotes
areas at a rapid pace their main objective was to act on behalf of the government to fulfill
economics obligations toward the common man. The social responsibility that was entrusted
upon the public sector bank digresses them from the profit motive. On the other hand private
and foreign bank did not make such moves.
In 1992 the RBI launched banking sector reforms, as per recommendations made by the
Narasimham Committee on financial reforms to create a more profitable, efficient, and sound
banking system. Domestic private sector banks are divided into two categories old banks
which existed with the public sector banks before the entry deregulation and the new banks
that came into existence after the reforms of 1992. The old banks are smaller in size and are
regional. In contrast the new private sector banks are much larger in size, operate primarily in
metros and are technologically superior. However, most of the new private sector banks , in
India are promoted by the government owned financial institutions.
In the organized segment banking system occupies an important place in nation’s economy.
It play a pivotal role in the economic development of a country and forms the core of the
money market in an advanced country. The commercial bank in India comprises of both
public sector as well as private sector banks. Banks have to deal with many customers
everyday and render various types of services to its customer. It’s a well known fact that no
business can exist without customers.
Emergence of public sector banks
After independence, the government of India started the nationalization of the Imperial Bank
of India in 1995 to enter the banking business. The Reserve Bank of India took 60% of the
share and renamed it the State Bank of India. The seven other banks became the subsidiaries
of the new bank when nationalized on 19 July 1960. The next major nationalization of banks
took place in 1969 when the government of India , under prime minister Indira Gandhi
nationalized an additional 14 major bank. The total deposits in the banks nationalized in 1969
amounted to 50 crores. This moves increased the presence of nationalized bank in India, with
84% of the total branches coming under the government control.
In 1980, 6 more private banks are nationalized. The total deposit of these banks are amounted
to around 200 crores.
The objectives behind nationalization where:-
 To break the ownership and control of banks by a few business families,
 To prevent the concentration of wealth and economic power,
 To mobilize savings from masses from all parts of the country,
 To cater the need of the priority sectors

Public sector banks before the economic liberalization

The share of the bank sector held by the public banks continued to grow through the 1980s,
and by 1991 public sector banks accounted for 90% of the banking sector. A year later, in
March, 1992, the combined total of branches held by public sector banks was 60,646 across
India, and deposits accounted for ₹1,10,000 crore. The majority of these banks was
profitable, with only one out of the 21 public sector banks reporting a loss.
Public sector bank after reforms
The nationalised banks reported a combined loss of ₹1160 crores. However, the early 2000s
saw a reversal of this trend, such that in 2002-03 a profit of ₹7780 crores by the public sector
banks: a trend that continued throughout the decade, with a ₹16856 crore profit in 2008–
2009.

Classification of Banks:-
Banks are classified in India-under two broad categories
1. SCHEDULED
2. NON-SCHEDULED BANKS.
Scheduled Banks :-
Scheduled banks are covered under the 2nd Schedule of the Reserve Bank of India Act, 1934.
To qualify as a scheduled bank, the bank should conform to the following conditions: A bank
that has a paid-up capital of rupees 5Lakh and above qualifies for the schedule bank category.
A bank requires to satisfy the central bank that its affairs are not carried out in a way that
causes harm to the interest of the depositors. A bank should be a corporation rather than a
sole-proprietorship or partnership firm. Scheduled Commercial Banks in India are
categorised in 5 different groups according to their ownership / nature of operation. These
bank groups are: (i) State Bank of India (ii) Nationalised Banks, (iii) Regional Rural Banks,
(iv) Foreign Banks (v) Other Indian Scheduled Commercial Banks (in the private sector).
Every Scheduled Banks enjoys following facilities:
1. Scheduled Banks are eligible for obtaining debts/loans on bank rate from the RBI.
2. Scheduled Banks automatically acquires the membership of the clearing house.
3. Scheduled Banks get the facility of the rediscount of first class exchange bills from RBI.
This facility is provided by the RBI only if the Scheduled Banks deposit average daily cash
with the RBI which is decided by the RBI itself and presents the recurring statements under
the provision of RBI Act, 1934 and Banking Regulation Act, 1949.
Non- Scheduled Banks: The banks which are not included in the list of the scheduled banks
are called the Non-Scheduled Banks. Non- Scheduled Banks have to follow CRR conditions.
These banks can have CRR fund with themselves as no compulsion has been made by the
RBI to deposit it in the RBI. Non- Scheduled Banks are also not eligible for having loans
from the RBI for day to day activities but under the emergency conditions RBI can grant loan
to them. Example: All local area banks are called the Non-scheduled banks.

List of public sector bank in India

BANK NAME GOVERNMENT Established Headquarter
SHAREHOLDING
1. Bank of Baroda 63.97% 1908 Vadodara, Gujarat
2. Bank of India 81.41% 1906 Mumbai,
Maharashtra
3. Bank of Maharashtra 90.90% 1935 Pune, Maharashtra
4. Canara Bank 62.93% 1906 Bengaluru,
Maharashtra
5. Central Bank of India 93.08% 1911 Mumbai,
Maharashtra
6. Indian Bank 79.86% 1907 Chennai, Tamil
Nadu
7. Indian Overseas Bank 96.38% 1937 Chennai, Tamil
Nadu
8. Punjab and Sind Bank 98.25% 1908 New Delhi
9. Punjab National Bank 73.15% 1894 Dwarka, New Delhi
10. State Bank of India 57.59% 1955 Mumbai,
Maharashtra
11. UCO Bank 95.39% 1943 Kolkata, West
Bengal
12. Union Bank of India 76.99% 1919 Mumbai,
Maharashtra
 CUSTOMER SATISFACTION
Customer satisfaction, a business term, is a measure of how products and services supplied by
a company meet or surpass customer expectation. It is seen as a key performance indicator
within business and is part of the four perspectives of a Balanced Scorecard. Customer
satisfaction is an abstract concept and the actual manifestation of the state of satisfaction will
vary from person to person and product/service to product/service. The state of satisfaction
depends on a number of both psychological and physical variables which correlate with
satisfaction behaviours such as return and recommend rate. The level of satisfaction can also
vary depending on other factors the customer, such as other products against which the
customer can compare the organization's products. Satisfaction with banking services is an
area of growing interest to researchers and managers. The commercial banking industry like
many other financial service industries is facing rapidly changing market. New technologies,
economic uncertainties, fierce competition and more demanding customers and the changing
climate have presented an unprecedented set of challenges. Intangible assets, particularly
brands and customers, are critical to any organization and in today's competitive environment
relationship marketing is critical to banking corporate success.
The banking industry like many other financial service industries is facing a rapidly changing
market, new technologies, economic uncertainties, fierce competition and more demanding
customers and the changing climate has presented an unprecedented set of challenges.
 CHAPTER-2
LITERATURE REVIEW

Customer satisfaction is an important theoretical as well as practical issue for most marketers
and consumer researchers. Customer satisfaction can be considered the essence of success in
today's highly competitive world of business. Thus the significance of customer satisfaction
and customer retention in strategy development for a market oriented and customer focused
firm cannot be overstated. Consequently, customer satisfaction is increasingly becoming a
corporate goal as more and more companies strive for quality in their product and services.
Customer satisfaction is the feeling or attitude of a customer towards a product or services
after it has been used and is generally described as a full meeting of one's expectations.
Customer satisfaction is a major outcome of marketing activity whereby it serves as a link
between the various stages of consumer buying behaviour. For instance, if customers are
satisfied with particular service offering after its use, then they are likely to engage in repeat
purchase and try line extensions A study conducted by Levesque and McDougall confirmed
and reinforced the idea that unsatisfactory customer service leads to a drop in customer
satisfaction and willingness to recommend the service to a friend. This would in turn lea d to
an increase in the rate of switching by customers.

1. Service Quality and Customer Satisfaction:

Numerous studies have established a positive relationship between service quality and
customer satisfaction in public sector banks (Singh & Chauhan, 2019; Gupta & Gupta, 2020).
Service quality dimensions such as reliability, responsiveness, assurance, empathy, and
tangibles significantly impact customer perceptions and satisfaction levels (Parasuraman et
al., 1988).

2. Technological Advancements and Customer Satisfaction:

The advent of digital banking technologies has transformed customer interactions with
banks (Jayaraj & Reddy, 2018). Studies highlight the positive influence of digital channels,
such as online banking and mobile apps, on customer satisfaction by providing greater
convenience, accessibility, and efficiency (Liu & Yang, 2020).

3. Transparency and Trust:

Transparency in banking operations and communication fosters trust and confidence among
customers (Kumar & Dash, 2018). Public sector banks are increasingly emphasizing
transparency in fee structures, loan processes, and account management to enhance customer
trust and satisfaction (Haque et al., 2017).
 4. Customer Service and Complaint Resolution:
Efficient and responsive customer service is a critical determinant of customer satisfaction
(Chen & Cheng, 2019). Studies emphasize the importance of timely complaint resolution and
personalized service in enhancing overall customer experiences and satisfaction levels
(Kumar & Prakash, 2017).

5. Customer Loyalty and Advocacy:

Satisfied customers are more likely to exhibit loyalty and advocate for the bank's services
(Oliver, 1999). Building strong customer relationships, providing value-added services, and
offering rewards and incentives contribute to fostering customer loyalty and advocacy in
public sector banks (Kaur & Kaur, 2020).

6. Regulatory Environment and Compliance:

The regulatory environment significantly influences customer satisfaction perceptions in
the banking sector (Kaur & Kaur, 2020). Compliance with regulatory requirements, such as
data security and consumer protection measures, is essential for maintaining customer trust
and satisfaction (Chopra et al., 2018).

In summary, the literature underscores the multifaceted nature of customer satisfaction in

public sector banks, highlighting the importance of service quality, technological innovation,
transparency, customer service excellence, loyalty-building strategies, and regulatory
compliance in shaping customer perceptions and experiences. Understanding these factors is
crucial for public sector banks to devise effective strategies aimed at enhancing customer
satisfaction and maintaining a competitive edge in the banking industry.
 CHAPTER – 3
RESEARCH MATHODOLOGY

This study employs a quantitative research approach to investigate the performance of public
sector banks regarding customer satisfaction. The methodology is designed to gather
systematic and structured data from a representative sample of bank customers, allowing for
statistical analysis and inference.
Research methodology deal with a systematic and scientific method that can be adopted to
solve the research problem. Methodology is a crucial step in any research or survey because it
directly influence the whole research and findings. The methodology involves the systematic
collection and analysis of numerical data to understand customer perception and experiences.

Research Design:
A cross-sectional survey design is utilized to collect data from bank customers at a specific
point in time. This design allows for the examination of customer satisfaction levels in public
sector banks within a defined timeframe.

Data Sources:
The primary data source for this study is bank customers who have experience with public
sector banks. Participants are selected using a convenience sampling technique, where
individuals who are accessible and willing to participate are included in the survey. The
survey is conducted electronically through Google Forms, providing a convenient and
efficient method for data collection.

Data Collection Process:

1. Development of Questionnaire: A structured questionnaire is designed to capture
information on various dimensions of customer satisfaction, including service quality,
accessibility, transparency, and responsiveness.

2. Distribution of Questionnaire: The questionnaire is distributed to bank customers

via email, social media platforms, and other online channels. Participants are provided
with instructions on how to access and complete the questionnaire using the Google
Forms platform.

3. Data Collection: Participants complete the questionnaire electronically by responding

to the survey items presented in the Google Form. Responses are automatically
recorded and stored in a Google Sheets spreadsheet for further analysis.
Data Analysis:

1. Descriptive Analysis: Descriptive statistics, such as frequencies, percentages, means,

and standard deviations, are calculated to summarize the responses to each survey
question. This provides an overview of customer satisfaction levels across different
dimensions.

2. Inferential Analysis: Inferential statistics, including correlation analysis and

hypothesis testing, may be conducted to examine relationships between variables and
test for significant differences in customer satisfaction levels based on demographic
or other factors.

3. Data Visualization: Survey findings are presented using charts, graphs, and tables to
enhance data interpretation and facilitate understanding of key trends and patterns.

By employing a structured research methodology and utilizing Google Forms for data
collection, this study aims to provide valuable insights into the performance of public sector
banks regarding customer satisfaction, ultimately informing strategies for improving
customer experiences and loyalty in the banking sector.
 CHAPTER-4
DATA ANALYSIS AND INTERPRETATION