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The report "Analyzing the Gap between Management Perception and Customer Perception With Respect To the Services Offered In Retail Banking" aims to assimilate data about the various aspects of Retail banking services, to analyze the perceptions of the management and the customers regarding the services offered in Retail banking and to find out whether any gaps do exist between the services offered and the customer expectations.

We have taken 6 Banks which represent the Nationalized, Private and Multinational Banks of the Banking Industry in India-


• Corporation Bank

• HDFC Bank

• ICICI Bank

• Citibank

• Standard Chartered Bank

The criteria for selecting these banks were their deposit base. We have limited our Service Category to the core services in Retail Banking and a few specialized services.

The report is a mixture of Secondary and Primary data, with Questionnaires being our major instrument to collect primary data.

Major topics we have attempted to cover in this project are to:

• Explore the services and products offered by the banks to individual customers.

• Understand the perception of the management with respect to services offered by banks.

• Understand the perception of the customers with respect to services offered by banks.

• Analyze whether there is a gap between the customer and management perceptions about the services offered by the banks.

• Conclude and enumerate the recommendations that might help to reduce the gaps that exist and foster the relationship of the customer more with the bank.

The new game requires new strategies with an accent on innovation for organizational transformation and to achieve world-class competitiveness through improved efficiency and reduced operational cost.

An organization-centric agenda, policy, program accelerating interventions need to strengthen core competencies of Indian banks; while exploring seeding options for future growth.

Thrust on innovation is important particularly in the present context of consolidation and convergence both within and across segments of the financial system. Objectives of the Study

There has been an honest attempt to:

• Explore the services and products offered by the banks to individual customers.

• Understand the perception of the customers and the management with respect to services offered by banks.

• Generate additional information to analyze the gap between the customer and management perceptions about the services offered by banks.

• Conclude and enumerate the innovations required to reduce the gap and increase the customer base of banks.

Descriptive research, also known as statistical research, describes data and characteristics about the population or phenomenon being studied. Descriptive research answers the questions who, what, where, when and how. Although the data description is factual, accurate and systematic, the research cannot describe what caused a situation. Thus, descriptive research cannot be used to create a causal relationship, where one variable affects another. In other words, descriptive research can be said to have a low requirement for internal validity. The description is used for frequencies, averages and other statistical calculations. Often the best approach, prior to writing descriptive research, is to conduct a survey investigation. Qualitative research often has the aim of description and researchers may follow-up with examinations

The study required the understanding of the concept of Retail Banking and of the various products associated with it. The method used was that of secondary research and primary research. Under secondary research a detailed study was done from the various books, journals, magazines written on the subject of banking ad retail banking to obtain the required information and to have a precise idea of the services of retail banking.

In order to have a proper understanding of the sector of Retail Banking a depth study was done from the various sources such as Books like Marketing channel by Anne Coughlan and Service marketing by Valarie A Zeithaml, Magazines like Retail Banking and Business Today. A lot of data is also collected from the official websites of the banks and the articles from various search engines like Google, yahoo search and

The primary data was collected by means of a survey. Questionnaires were prepared and customers of the banks at various branches were approached to fill up the questionnaires. The questionnaire contains 15 questions which reflect on the type and quality of services provided by the banks to the customers. The response of the customer and the managers is recorded on a grade scale of 1 to 5 for each question. The filled up information was later analyzed to obtain the required interpretation and the findings.

Challenges the Indian Banks Face

India is one of the fastest growing economies in the world. Evidence from across the world suggests that a sound and evolved banking system is required for sustained economic development. India has a better banking system in place vis a vis other developing countries, but there are several issues that need to be ironed out.

The challenges that the banking sector in India faces are:


Interest rate risk can be defined as exposure of bank's net interest income to adverse movements in interest rates. A bank's balance sheet consists mainly of rupee assets and liabilities. Any movement in domestic interest rate is the main source of interest rate risk.

Now as yields go up (with the rise in inflation, bond yields go up and bond prices fall as the debt market starts factoring a possible interest rate hike), the banks will have to set aside funds to mark to market their investment.

This will make it difficult to show huge profits from treasury operations. This concern becomes much stronger because a substantial percentage of bank deposits remain invested in government bonds.


The best indicator of the health of the banking industry in a country is its level of NPAs. Given this fact, Indian banks seem to be better placed than they were in the past. A few banks have even managed to reduce their net NPAs to less than one percent (before the merger of Global Trust Bank into Oriental Bank of Commerce, OBC was a zero NPA bank). But as the bond yields start to rise the chances are the net NPAs will also start to go up. This will happen because the banks have been making huge provisions against the money they made on their bond portfolios in a scenario where bond yields were falling.


The entry of new generation private sector banks has changed the entire scenario. Earlier the household savings went into banks and the banks then lent out money to corporates. Now they need to sell banking. The retail segment, which was earlier ignored, is now the most important of the lot, with the banks jumping over one another to give out loans. The consumer has never been so lucky with so many banks offering so many products to choose from. With supply far exceeding demand it has been a race to the bottom, with the banks undercutting one another. A lot of foreign banks have already burnt their fingers in the retail game and have now decided to get out of a few retail segments completely.


In the recent past there has been a lot of talk about Indian Banks lacking in scale and size. The State Bank of India is the only bank from India to make it to the list of Top 100 banks, globally. Most of the PSBs are either looking to pick up a smaller bank or waiting to be picked up by a larger bank.

The central government also seems to be game about the issue and is seen to be encouraging PSBs to merge or acquire other banks. Global evidence seems to suggest that even though there is great enthusiasm when companies merge or get acquired, majority of the mergers/acquisitions do not really work.


Banking is a commodity business. The margins on the products that banks offer to its customers are extremely thin vis a vis other businesses. As a result, for banks to earn an adequate return of equity and compete for capital along with other industries, they need to be highly leveraged. The primary function of the bank's capital is to absorb any losses a bank suffers (which can be written off against bank's capital). Norms set in the Swiss town of Basel determine the ground rules for the way banks around the world account for loans they give out. These rules were formulated by the Bank for International Settlements in 1988.

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