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 BANKS
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
 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 lead to
an increase in the rate of switching by customers.

Suresh Chandra Bihari and Shovita Mahapatra (2016)

In their study found that a customer gives highest impotence to reliability dimension, second
to the responsiveness and third to assurance dimension. Tangibility is the least focused
dimension for the customers. Their study revealed that the attributes, such as promptness of
service, interest of the bank employee in serving the customers, care and concern, operating
hours, service charges & interest rates of the bank are the most important key factors to be
considered in achieving high-end customer satisfaction.
Pratap Chandra Mandal (2015)
The study attempts to reviews the literature with respect to finding the dimensions affecting
customer satisfaction in retail banking. It concludes that the generation of items and
subsequently, dimensions affecting customer satisfaction in retail banking need to be done
starting from the definitions of customer satisfaction.
Hayan Dib and Samaan Al-Msallam (2015)
The study was undertaken to explore the effects of three customer perceptions (perceived
quality, brand image, price fairness) on customer satisfaction and Brand loyalty. The study
reveals that customer satisfaction significantly affects customer loyalty. Also, the factors of
perceived quality, brand image and price fairness affect Brand loyalty. Customer perception
of perceived quality, brand image and price fairness are almost equally to build up the
satisfaction.

Adisak Suvittawat (2015)

The study reveals that the variables that showed the highest service quality results were:
Customers perceive high safety and security, Bank has a secure customer information
protection system, Bank employees are courteous, Bank employees are knowledgeable and
skilled, and Bank shows an interest in customer problem-solving. The variables that showed
the lowest service quality results were: Bank employees provide quick service, Bank has a
good layout for customer service, Bank has modern equipment such as bank book updates,
Bank offers customers drinking water or coffee, and the Bank has enough parking. This
means the bank needs to make improvements in these areas to improve its competitiveness
advantage.
R. Prakash Babu et al (2014)
The study reveals that banks should use new technology to improvise on operational
efficiency and introduce automation for reducing unproductive and costly operations. The
banks should make every effort to enhance customer satisfaction. Banks should try to
improve quality of service through effective staff training, service monitoring, orientation and
recognition programmes.
Jayaraman Munusamy et al (2010)
This study found that there exists a positive relationship between reliability with customer
satisfaction, the other attributes, such as; assurances, tangibles, empathy and responsiveness
all have positive relationship with customer satisfaction
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

INTERPRETATION: As per the above graph, out of 50 respondent 66% respondents falls
under the age category of below30, 28% comes under the category of 30-40 and 6% comes
under the category of 40-50.

INTERPRETATION: As per the above graph, out of 50 respondent 62% respondents are
Male and 38% are Female.
INTERPRETATION: As per the above graph, out of 50 respondent 56% respondents falls
under the category of other Income, 24% comes under the category of Salaried, 16% comes
under the category of Professional and 4% respondent comes under the category of Business.

INTERPRETATION: 56% respondents are school, 34% are Graduate, 6% are Post graduate
and 4% have a Professional Degree.
INTERPRETATION: As per the above graph, out of 50 respondent 66% respondents falls
under the Annual Income upto Below 250000 Indian rupees, 20% comes under the Income
of 250000-500000 and 8% comes under the Income of 500000-1000000 and 6% respondent
comes under the Income of Above 1000000.

BRANCH BANKING

INTERPRETATION:- This question is formed to know that people are how many time
utilizes their banking services provided by their bank.
The above fig. show that 26% respondent are