CHANGING BRAND EQUITY AND BRAND LOYALTY IN

NATIONALISED BANKS - AN ANALYSIS (WITH SPECIAL

REFERENCE TO AJMER)

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 CHAPTER-I

INTRODUCTION

Introduction:-

"Brands act as a common glue that binds all the business functions, especially in financial
services firms, resulting in greater coherence of strategy, service excellence and sustained
business performance," said Unni Krishnan, MD of Brand Finance India.

In the ever changing world where customers’ preferences and behavior in

making decisions about which product to buy or service to use the selling company has to build and
retain their brand in a way which makes it essential to the customer. Customers respond differently
to company and brand images. In the view of the development of the customer perception in
selection of the banks and their services

A growing body of research from around the world shows that well developed and
inclusive financial systems are associated with faster growth. In today's dynamic scenario
changing market leadership is under constant threat. This milieu of fierce and, at times,
unfair competition, has prompted managements across the world to search for adequate
responses to survive and achieve sustainable growth. So organizations are doing
duffrentiation to improve the company's financial performance, strengthen its long term
competitive position and gain a competitive edge over rivals. Brand management is a
major weapon in this fierce battle. The changing business environment and the infallibility
of some basic truths about marketing in general and brand in particular have prompted this
study on branding in banking sector. Most organizations have come to realize that the
control business is not within the confines of its four walls but outside with the customer.
Whether starting a business or redefining marketing strategy, successful organizations
work on every aspect of the branding process. They develop the name, logo, and tag line
that define their mission at first glance. They carefully position both their bricks and
mortar location and their Web presence for maximum impact. They choose a well-defined
target market and work to fulfill that market's needs. They start establishing partnerships

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with other businesses to increase their visibility and image among consumers. All of these
activities enhance their image and reap many of the benefits of branding for their
organization.

In recent years, the banking industry in every region and country has faced increased
competitive pressures. These pressures have mainly resulted from the deep integration and
globalization of financial markets, and the wider use of e-commerce to deliver services and
create new products (Nellis, McCaffery, and Hutchinson, 2000). Banks in different regions
have responded to these recent developments. In response, a number of major European
banks followed a ―universal banking model by increasing the overall size of their
business operations, and adopted an ultimate goal of striving to become global players
(Nellis et al., 2000).

Indian commercial banks will have to equip themselves to meet the

challenges of competition from within the country as well as from outside. While they
proceed to meet these challenges, they have to ensure that their foundation remain sound
and their attentions do not detract from principles of prudent banking

Branding and brand-based differentiation are powerful means for creating and sustaining
competitive advantage. Prior research has examined differences in how consumers
perceive and evaluate brands, for example, through investigating brand equity (Keller
1993; McQueen, Foley, and Deighton1993), brand personality (Aaker 1997; Plummer
1985) and brand extensions (Aaker and Keller 1990; Nakamoto, McInnis, and Jung 1993).
More recently, researchers have noted that consumers differ not only in how they perceive
brands but also in how they relate to brands (Fournier 1998; Muniz and O’Guinn 2001).
Branding is not an arithmetic or statistical tool or formula to get the desired result on its
application. On the other hand, highly creative and Innovative ways of branding alone can
be of effective use in bringing about desired results.The Indian Banker – (February 2006)

In this changing business scenario, none can be sure of a place in the market or who the
competitors will be. Finding a response is crucial. New conditions call for new ways of
seizing and sustaining competitive advantage.

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But a few business mantras have remained valid even in this tumultous era. Brand is one
such weapon of choice in this fierce battle for survival. Though brands have been central to
marketing for more than a century now from the initial days of P&G, there has been a
renewed interest in understanding why and how certain brands have outlived their
counterparts. In a seemingly crowded marketplace, with the advent of newer technologies
and emerging market trends, which includes a shift in power to primary customers, or the
retailers, the art and science of branding and brand management has much more relevance
than earlier. Marketers all around the globe, with the objective of acquiring and sustaining
a comfortable consumer mind-share for their products and services are reinventing the
marketing mantras of positioning, branding, and differentiation.

Branding is not simply Promotion and Advertisement, which is the normal perception of
people. It is much more than that. To quote, Bernd Schmitt, Professor, Columbia Business
School, Columbia University, ‘‘it is an organizational issue, not even a marketing issue.
Products / services with strong brand image enjoy immediate acceptance and are relatively
price- insensitive to some extent.’’

Do Banks understand brands? Was the title of an article published in the Economic Times,
Brand Equity section of February 26 - March 4, 1997. While the write up mostly deals
with the trends of strategic branding efforts of foreign banks, it gives an indication that
Banks in India are still to make conscious efforts in this direction at that point of time. But
contrary to this, words like Brand, Branding, Brand Equity, Brand Image, Brand
Management etc. are being frequently used in banking circles at present. What exactly do
they mean and how they are relevant tothe business we are in?

Flow chart depicting Branding :- Competition

Differentiation

Branding

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Competition

Competition includes all the potential rival offerings and substitutes that a buyer might
consider. Porter's model is a framework that analyzes the five forces of industry
competition and determines the intrinsic long run attractiveness of a market segment. In
any industry, the rules of competition are embodied in five competitive forces: the threat of
new entrants, the threat of substitutes, the bargaining power of buyers, the bargaining
power of suppliers, and the rivalry among the existing competitors.

Differentiation
Differentiation is a firm's attempt to create a product or service that is perceived by the
consumer and or industry as unique and having superior or attributes or value.
(Elliott,2004; Scott,1998 and Grant,1995 ) It is important to note that the existence of
product or service differentiation lies in the mind of consumer (ibid, Elliott). Two products
may be identical, but they can be presented in such a way to the consumer that the
consumer believes one is superior to the other. Differentiation can be based on a number of
factors including the product itself, and the marketing approach. It may be practiced at the
level of product, services, -channel, personnel and/or image. In a differentiation strategy, a
firm seeks to be unique in its industry along some parameters. In order to create such
distinctions, a firm may use one or all of the seven distinctions

Background

Brand

A brand is a promise that a company makes to its customers wherein it makes some
commitments to them on different aspects:

 Strong brand equity has become a very important factor that influences consumer’s
perceptions of a brand. Success in brand management arises from understanding and
managing brand equity correctly to produce strong attributes that will influence
consumers when making their choices.

 Developing and managing a strong brand in today’s market place is becoming an

increasingly difficult process It is being assumed that this piece of work will no doubt have

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 positive implications on professionals, customers and banking organizations and that
research of this nature will encourage further detailed probes into the vital area of branding

 The primary objective is to analyze the relationship between the practice of strategic
management of Branding and their effects in banking sector

In the ever changing world where customers’ preferences and behavior in making decisions about
which product to buy or service to use the selling company has to build and retain their brand in a
way which makes it essential to the customer. Customers respond differently to company and brand
images. Brand image is defined as perceptions about a brand as reflected by the brand associations
held in consumer memory (Keller, 1993). Brand identity is the way a company aims to identify or
position itself. The brand identity clearly specifies what the brand aspires to stand for and has
multiple roles (Konecnik and Go, 2008). First, it is a set of associations that the brand strategist
seeks to create and maintain. Secondly, it represents a vision of how a particular brand should be
perceived by its target audience. Thirdly, upon its projection the brand identity should help to
establish a relationship between a particular brand and its clientele by generating a value
proposition potentially either involving benefits or providing credibility, which endorses the brand
in question (ibid). An effective identity establishes the offering’s characteristics and value
perceptions, conveys the character in a distinctive way, and delivers an emotional power beyond a
mental image. The identity must be conveyed through every communication vehicle and brand
contact, including symbols, colors, slogans, atmosphere, media and special events (Kotler and
Keller, 2007) Brand does not carry a definite and absolute definition but it is relative. Some
observers would term products or services characteristics, which differentiate it from competitors
as brand, where as some would consider standing of one’s product or services in market as brand.
In all these, value of product or service for what it stands and attributes which identifies them can
be considered as brand.

Branding or Brand is considered important not only for companies but they carry equal importance
for customers or consumers also. From consumer or customer point of view, brand becomes
important for various reason let us explore some of them. Brand for a customer will indicate
commitment towards quality from sellers there by reducing time spent in coming to a purchase
decision. Brand for companies will indicate a sort of benchmark in quality as well as customer
expectation, a point of differentiation from competitors and a steady stream of profit.

Normally we associate branding from point of view common mass; and products or service
displayed in malls and supermarket. However there exists another market where branding is
equally important and that is business to business market. This is referred as corporate branding,

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which is again a challenge as decision making process for purchase order is way different compare
to individual. Here survival of organization as well as individual will be at stake. The key lies in
developing a brand for corporation where in which other business can be confident of.

Modern globalized, technology driven world has thrown new challenges to branding.
Customers/consumers have more access to information than ever before. Internet has
become a strong tool through which product information proliferate raising expectation bar
for companies. Companies have responded to this challenge by improvising in the way
they run their marketing campaigns, by exploring new avenues to showcase their products.
Like for example; sponsorship of events and teams or association with social cause The
challenges for global brands include maintaining the consistency of the bank brand and
customer experience, remaining relevant to local customers‘ specific needs, and overcoming
the image of ―too big to pay attention to me in the eyes of the retail banking customers
(Robinson, 2007). As the banks expanded into new emerging markets as part of their global
branding strategies, they have long suffered from lack of guidance due to a limited number of
published research studies. They have not had a benchmark to compare how well the global
bank brands compete and perform against the local banks in the new markets. Therefore, this
study aims to examine the brand equity in banking industry by comparing the consumer-based
brand equity of domestic and global banks in order to provide insights about the branding
strategies of these banks.

Aaker conceptualized brand equity as a multidimensional concept consisting of brand

awareness, brand associations, perceived quality, brand loyalty (1991, p.15) and organizational
association (Aaker, 1996) that are important from customer perspective.

. The challenges for global brands include maintaining the consistency of the bank brand
and customer experience, remaining relevant to local customer’s specific needs, and
overcoming the image of ―too big to pay attention to me in the eyes of the retail banking
customers (Robinson, 2007). Therefore, this study aims to examine the brand equity in
banking industry by in order to provide insights about the branding strategies of these
banks.

A survey instrument for each type of bank was designed to measure the consumer-based
brand equity. Drawing from the literature, brand equity was measured with brand

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awareness, perceived quality, brand image, brand association, organizational association,
and brand loyalty.

Brand components

A brand consists of various components:

 attributes – for instance, Mercedes cars are considered to be well built

 benefits – makes the customer feel important, for instance, a gold credit card

 values – for instance, a Nikon camera gives a quality image

 culture – an Armani suit makes you look good

 Personality – what does it say about me? For instance, reading the FT implies I
understand commerce.

Brand Management

Brands and their management have occupied the minds and actions of practitioners and
marketing scholars since the latter part of the 19th century and have become a focus point
of marketing strategy in recent years. There has been a great deal of controversy and
discussion regarding what brands are, what they do, how they can be valued, and how they
should be managed (Low and Fullerton 1994; Shocker et.al. 1994). Their future has been
questioned by some authors (Berthon, Hulbert and Pitt 1999; sellers 1993), but other
writers have sought to reaffirm their centrality Ambler 1996; Doyle 1990) by saying that
there is no point in marketing without brands.

Branding is definitely not about stimulating people into irrational buying decisions. Being
such an intangible concept, branding is quite often misunderstood or even disregarded as

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creating the illusion that a product or service is better than it really is (Hague and Jackson,
1994). There is an old saying among marketers: "Nothing kills a bad product faster than
good advertising" (de Legge, 2002). Without great products or services and an
organization that can sustain them, there can be no successful brand; however the potential
for harming shareholder value through inappropriate management of brands is immense.
Research in this area has predominantly drawn attention to the need for developing brand
identities, designing brand portfolios, and managing brand extensions, developing
integrated marketing communication activities and, of course, measuring the value of the
brand (Aaker 1997; Keller 1993; 1999; 2000; Loken and John 1993; Park and Srinvasan
1994; Shocker, Srivastava and Ruekert 1994; Yoo and Donthu 2001). Moreover, there
seems to be a general agreement that successful brand management leads to successful
brands which in turn, contributes to high brand equity

A strong brand allows customers to have a better perception of the intangible product
andservices. Also they lessen customer’s perceived monetary, safety and social risk
inpurchasing services which are hard to ascertain before purchase. Strong brands offer a lot
of advantages such as reduced competition, larger brand loyalty and increase response
toprice adjustment by customers, larger profit and brand extensions to a service firm.

Importance of BRANDING

Although branding has an extensive history and brand management practices have existed
fordecades, brand equity as a central business concept for many organizations has only
really emerged in the past twenty years. Much of that interest was initially driven by the
mergers and acquisitions boom of the 1980’s, where it became apparent that the purchase
price paid for many firms largely reflected the value of their brands (Leone; Rao; Keller;
Luo; McAlister and Srivastava, 2006). Therefore it makes sense to understand that
branding is not about getting your target market to choose you over the competition, but it
is about getting your prospects to see you as the only one that provides a solution to their
problem.

The clear implication of these transactions was that brands were one of the most important
intangible assets of a firm. As a result of that realization, many different academic and

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industry models of branding and brand equity have been proposed in recent years. These
models share certain basic premises about brand equity. The power of a brand lies in the
minds of the consumers and what they have experienced, learned and felt about the brand
over time (Leone et al., 2006).

Mariotti (1999), defines a brand as "a simplified shorthand description of a package of

value upon which consumers and perspective purchasers can rely to be consistently the
same or better over long run periods of time. It distinguishes a product or service from
competitive offerings."

According to the American Marketing Association (AMA), a brand is a "name, term, sign,
symbol or design or a combination of them intended to identify the goods and services of
one seller or group of sellers and to differentiate them from those of competition."

One notable model was created by Aaker (1991) who describe brand equity as a set of
assets such as name awareness, loyal customers, perceived quality and associations that are
linked to the brand and add value to the product or service. The development of brand
equity can create associations that can drive market positions, persist over long time
periods and be capable of resisting aggressive competitors (ibid). While Aaker explains the
issue from the perspective of the firm Keller (1993) mentions and explains the importance
of understanding brand equity from the customer’s perspective. Keller (1993) states that
even though the eventual goal of any marketing program is to increase sales, it is first
necessary to establish knowledge structures for the brand so that customers respond
favorably to the marketing activities for the brand. Ambler et al. (2002) mentions five
dimensions as being of great importance when measuring the consumer mindset. These
are:

1. Brand awareness (recall, recognition)

2. Brand association (strength, favorability, uniqueness of perceived benefits and

attributes)

3. Brand attitude (perceived quality of, and satisfaction with, the brand)

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4. Attachment (or loyalty), and

5. Activity (how much consumers talk about, use, seek out information, promotions, etc.
regarding

the brand).

Figure 2: The brand model (Hägg and Jonsson, 2009)

BRAND AWARENESS

Brand awareness refers to the strength of a brand’s presence in consumers’ minds. It is an

important component of brand equity (Aaker, 1991; Keller, 1993). In particular, brand
name awareness relates to the likelihood that a brand name will come to mind and the ease
withwhich it does so. Brand awareness consists of brand recognition and brand recall
performance (Keller, 1993). People will often buy a familiar brand because they are
comfortable with the familiar (Aaker, 1991). Or there may be an assumption that a brand
that is familiar is probably reliable, in business to stay and of reasonable quality (ibid). The
awareness factor is particularly important in contexts in which the brand must first enter
the consideration set, it must be one of the brands that are evaluated (ibid).

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Aaker’s (1991) figure with four stages of brand awareness and the role of brand equity is
dependent upon both the context and which level of awareness that is

achieved. The lowest level (except unawareness), brand recognition, is based upon aided
recall test. It is especially important when a buyer chooses a brand at the point of purchase.

The second level is brand recall. Brand recall is based upon asking a person to name the
brand in a product class, it is termed “unaided recall” since the respondent is not aided by
having the names provided. The first-named brand in an unaided recall task has achieved
top of- mind awareness, a special position. In a very real sense, it is ahead of the other
brands in a person’s mind. Brand awareness plays an important role in consumer decision
making for three major reasons (Keller, 1993):

• It is important that consumers think of the brand when they think about the product
category. Raising brand awareness increases the likelihood that the brand will be a member
of the consideration set, the handful of brands that receive serious considerations for
purchase.

• It can affect decisions about brands in the consideration set even if there are essentially
no other brand associations. Consumers have been shown to adopt a decision rule to buy
only familiar, well established brands.

• It affects consumer decision making by influencing the formation and strength of the
brand associations in the brand image. A necessary condition for the creation of a brand
image is that a brand node has been established in memory, and the nature of that brand

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node should affect how easily different kinds of information can become attached to the
brand in memory.

Brand awareness might be thought of as a buyer’s ability to identify a brand within a

category in sufficient detail to make a purchase. It is important to remember that sufficient
detail does not always require identification of the brand name. Often it is no more than a
visual image that stimulates a response to the brand. Recall of the name is not necessarily
required because brand awareness may proceed through brand recognition. When a brand
is recognized at point of purchase brand awareness does not require brand recall. This is a
key point in the consideration of brand awareness as a communication objective. Brand
recognition and brand recall are two separate types of brand awareness (Percy and
Rossiter, 1992). The difference among the two is essential, especially in advertising and
creating an advertising strategy. That depends on the communication effect that occurs first
in the buyer’s mind: category need or brand awareness (ibid).

Brand equity

Aaker (1991) stated that brand equity can be referred to as “a set of brand assets and
liabilities linked to a brand, its name and symbol that add to or subtract from the value
provided by a product or service to a firm and/or to that firm’s customers”.

Brand loyalty

Aaker (1991 p.39) defined Brand loyalty as “the attachment that a customer has to a
brand”. It can also be seen as consumer’s preference to purchase a particular brand in a
product class and this could be as a result of the consumer awareness about that particular
brand.

Brand image

Brand image is referred to as consumer perceptions about the brand or how they view it.
According to Keller (1993), brand image is also seen as “a symbolic construct created within
the minds of people and consist of all the information and expectations associated with a
product or service” .

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Benefits of the brand

Benefits of a brand from a customer perspective are:

 Time saving – products not trusted are easily disregarded. This makes repeat
purchase an easier choice
 minimises risk of unhappiness with the purchase

 makes a statement about the customer – for instance, a Rolex watch implies wealth,
while Nike suggests sport and youth

 can lead to a feeling of pleasure in the purchase

 Self-reassurance that the correct decision has been made.

For companies, the benefits of branding include:

 a premium pricing opportunity

 protection from competitors – branding makes it harder for competitors to attack

the product and acts as a barrier to market entry

 building brand loyalty – studies have shown that it costs a factor of seven times
more to attract a new customer than to persuade an existing customer to buy again

 easier communication with customers and potential customers

 ability to advertise a whole range so that promotional cost per product is reduced

 Guaranteed retail stocking where applicable

Building a Powerful Financial Services Brand

Creating and nurturing a financial services brand is a long and investment intensive
process that goes through following steps:
 Defining the role of the brand in the business and outlining the leverage that it
provides across markets.
 Choosing a suitable positioning strategy which clearly defines how the brand is
different from competitor’s brand
 Planning all the brand building programs and communication

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  Organizing to support these brand -building activities
 Constant monitoring and tracking of the brand value
Defining the role of a brand
The first step in the brand building process is to clearly define the role of the brand in the
business. The role of a brand can be to inform customers and to generate awareness about
the product, to communicate product attributes or to create a differentiated position in the
marketplace.
To understand the role of a brand, the marketer should understand how its customers and
employees perceive their brand vis -à-vis the competitor’s brand. For instance, in the case
of a complicated financial product, a well recognized brand serves as a shorthand way of
communicating critical product attributes and helps to present the offering in a simplified
way. On the other hand, brand can also be used for highlighting unique product attributes.
When Citibank launched its Suvidha savings account scheme in India, the Suvidha brand
name was used to highlight its unique attributes that distinguished it from the competition.
Positioning the brand
The primary objective of brand building is to carve a niche for the company in the
marketplace and own a distinctive position in the minds of the customers. When a brand is
built, branding efforts should focus on owning a word in the prospect’s mind. A word that
nobody else owns. Once a brand owns a word, it is almost impossible for a competitor to
take that word away from the brand. For example, Mercedes is strongly associated with
“prestige”, “safety” is owned by Volvo. Now, it would be a Herculean task for any new
competitor in the marketplace to position itself on these attributes.
A brand’s positioning strategy helps it differentiate itself in the marketplace. A brand’s
positioning platform defines the space that it wants to occupy in the customer’s mind. It is
an invisible basis that gives long -termidentity to the brands. A distinctive positioning in
the marketplace helps maintain ‘distance’ and dissimilarity between brands in the
‘perceptual space’ of the prospect.The marketplace realities demand that financial services
firms discard the traditional product based value proposition and compete on the basis of
their core competencies. These core competencies can be a source of differentiation in the
marketplace and can serve as their positioning platform. According to a framework

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suggested by IBM research, financial services firms can adopt any of the following four
business models:
·Customer Centric Model: Building and nurturing customer relationships is the core
competence of the companies embracing this model. These players understand customer
needs very well and generally control the point of interaction with the customer. They
empower the customer through education, knowledge and convenience and fulfill customer
needs by partnering with fulfillment organizations.
Companies can then leverage this core competence and position their brands on superior
customer service and experience.
Production Centric Model: The companies who operate on the basis of this model have
developed competencies in production of financial products or services. They either meet
the customer needs directly or serve as a resource for other business models. These
businesses compete on the basis of price, quality or convenience and they can position
their brands on any or all of these attributes.
Market Centric Model: These businesses offer value added services to both buyers and
sellers.Often they provide a platform for transactions. They can also provide infrastructure,
price discovery mechanism or supply chain support. E-bay, the online auction house
exemplifies this market centric model. It understands the needs of both buyers and sellers
and provides them with a platform to transact. The ability of these businesses to understand
the needs of buyers and sellers
Fulfillment Centric Model: Businesses that are fulfillment centric focus on identifying
and fulfilling the needs of buyers and sellers. Their expertise lies in transaction completion
and settlement. They provide distribution conveniences, fair price relative to the speed of
delivery, reliability and dependability and post fulfillment services.
Planning brand building programs
Once a brand’s positioning platform has been clearly defined, the main challenge before
financial services companies is to communicate this brand to the customers.
Communication involves all points of contact between the brand and the audience,
including product design, new products, and distribution strategy. A product story is
usually communicated through advertisements, publicity and personal selling. It is often
misunderstood that building brands is nothing more than advertising.

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Contempory practices of brand

* Brand delivers benefits customers truly desire

* Brand stays relevant

* Brands pricing strategy is based on consumer perception of value

* Brand is properly positioned

* Brand is consistent

* Brand portfolio and hierarchy make sense

* Branding and Marketing activities are synchronized to build brand equity

* Brand managers understand what the brand means to consumers

* Brand is given proper support and is sustained over the long run.

* Organization monitors brand performance

Source: Compiled from various sources

The process of brand management presents a unique challenge to banking

sector.

How banks can be better

1. Break with your immediate past.

2. Build a light house identity.

3. Assume thought leadership of the category.

4. Create symbols of reevaluation.

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 5. Sacrifice

6. Over commit

7. Use publicity and advertising to enter popular culture

8. Be idea centered, not consumer centered.

Source: Adam Morgan, Eating the big fish, 1999

Branding - Current Challenges and Opportunities

Brands may be very important to consumers and marketers, however Grafting an

effective brand in reality may be extremely difficult. Consumers and business buyers have
become more knowledgeable and more demanding. Consulting firm 'Brand Keys' conducts
annual surveys and has found that consumer expectations of what they want from brands
are, on an average, 13% higher than what they think brands will deliver for them, and the
gap is growing (Kenneth Hein,2005).

The branding environment is also greatly affected by proliferation of new brands and
products. (Berthon, Hulbert & Pitt 1999; Keller, 1998; Richards, Foster and Morgon 1998).
Marketers of brands make an excessive use of line and brand extensions introducing several
new products, which complicates the decisions that customers have to make.

Another important change in the marketing environment is the erosion or

fragmentation of traditional advertising media and the emergence of interactive and non-
traditional media, promotion and other communication alternatives. Marketers have become
disenchanted with traditional ' advertising media, especially network television
(Achenbaum, 1992).

Increased competition and costs is another challenge plaguing brands. The market
place has become more competitive, forcing the use of many financial incentives and
discounts by the marketers. This has been contributed by factors both on the demand and
supply side. On the demand side, several products and services have hit the maturity or

18
decline stage. On the supply side, globalization, low priced competition, brand extensions
and deregulation have led to emergence of new competitors (Keller,2008).

Parallely, the cost of introducing a new product or supporting an existing one has
gone up rapidly (Harvey, Rothe and Lucas 1998). High senior manager turnover (Gail and
John, 2004) and short term profit targets leads to brand personnel's dilemma of having to
make decisions with short term benefits but long term costs such as cutting advertising
expenditure.

Brands are important and valuable assets which are frequently under acknowledged
and misunderstood. The processes of new-brand development and of brand management
are similarly mysterious. Certain important components of the branding process — for
example, design, market research, and advertising are inadequately developed or
unprofessional. Integrating these particular areas of expertise into a systematic and
coherent approach to branding frequently relies mainly on intuition. Furthermore, certain
key parts of the branding process — for instance, brand-name development — have
generally in the past been tackled haphazardly and, at times, illogically.

But these "challenges can be overcome by controlling the factors that shape during
different stages of its life. The five influences on a new brand that shape the brand during
its conception and birth are functional performance, positioning, name, price and
distribution (Peckman, 1978). All have great weight, but most importantly, functional
performance has an influence on virtually all the other factors, and this makes it in effect
the key to successful brand activity (Jones, 1998).
Banking development in the country
The banking system is an integral part of any economy. It is one of the many institutions
that impinges on the economy and affect its performance. Economists have expressed a
variety of opinions on the effectiveness of the banking systems in promoting or facilitating
economic development. As an economic institution, the bank is expected to be more
directly and more positively related to the performance of the economy than most non-
economic institutions. Banks are considered to be the mart of the world, the nerve centre of
economies and finance of a nation and the barometer of its economic perspective. They

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are not merely dealers in money but are in fact dealers in development. Banks are
important agencies for the generation of savings of the community. They are also the main
agents of credit. They divert and employ the funds to make possible fuller utilisation of the
resources of a nation. They transfer funds from regions where it is available in plenty to
where it can be efficiently utilised: the distribution of funds between regions pave the way
for the balanced development of the different regions. They are thus catalytic agents that
create opportunities for the development of the resources to speed up the tempo of
economic development. In the Indian financial system, commercial banks are the major
mobilisers and disbursers of financial resources. They have all pervasive role in the growth
of a developing country like India. The role of banks in accelerating the economic
development of a country like India has been increasingly recognised following the
nationalisation of fourteen major commercial banks in July 1969 and six more banks in
April 1980. With nationalisation, the concept of banking has undergone significant
changes. Banks are no longer viewed as mere lending institutions. They are to serve the
society in a much bigger way with a socio-economic development oriented outlook3. They
are specially called upon to use their resources to attain social upliftment and speedier
economic development. To achieve the varied objectives of nationalisation, the
nationalised banks have introduced innovative schemes in the mobilisation of resources as
well as its disbursement. Nationalisation resulted in a comprehensive programme of branch
expansion, innovations in mobilisation of savings, lending to priority sectors and weaker
sections of the society and so on. The horizon of commercial banking in India that enlarged
with nationalisation has further widened with the implementation of the Banking Sector
Reforms in the year 1992-93 . Banks are now increasingly identifying themselves with
national problems and thereby trying to bring about social and economic transformation in
the country. To quote Bhabha, “Banking is the kingpin of the chariot of economic
progress. As such its role in expanding the economy of a country like India can neither be
underestimated nor overlooked."4

Commercial banking all over the world has undergone lot of changes during the last five
decades. In the case of Indian banking too, there have been innumerable changes during

20
this period and as a matter of fact, the very complexion of India commercial banking has
undergone a thorough change.
From very ancient days, indigenous banking has been organized in the form of family and
individual businesses. The indigenous bankers have been variously called Shroffs, Seths,
Sahukars, Mahajans, Chettis, etc. Despite the predominant role played by indigenous
bankers in India's economic life, they have generally remained outside the pale of
organized banking. Organized banking in India had its birth in 1770 when bank of
Hindustan came into being. By 1875 two Indian banks which are excepting public deposits
of about Rs. 14 crore. Thereafter, innumerable came into existence and many of them saw
their end too. By 1947, number of banks increased to 94 which had 2700 branches and
aggregate deposits of Rs. 928 crore.

During the period from 1900 to 1950, there were series of births of new banks and series of
deaths too. This period can therefore we called the period births and deaths of banks. This
period also saw the birth of reserve bank of India in 1935 and enactment of Banking
Regulation Act, 1949 giving powers to RBI to regulate supervise and develop Banking
system in India. The decades of 1950s and sixties provided real foundation of Indian
banking system. Hence, this period can be called the foundation stage. In this stage, efforts
were directed at laying a proper foundation for a sound banking system in India. This stage
saw the development of necessary legislative framework for facilitating the re-organization
of banking system. Transformation of imperial bank into State Bank of India and
redefinition of its role in the Indian economy took place in this stage. The period from 19 th
July 1969 when 14 major banks with deposits (of each bank) of Rs. 50 crore or more were
nationalized and another 6 banks in 1980 to 1984 was the period of rapid expansion of
Indian banking. Hence this period can called expansion stage. Another major step was the
establishment of Regional Rural Banks in 1975 in different states with equity participation
from commercial banks, central and state governments. Lead Bank Scheme was adopted
and implemented to bring about speedy expansion of branch networks of bank in rural and
semi-urban areas. As a result, average per branch population fell considerably from 63,000
in 1969 to 20,000 in 1980.

21
The fourth stage covering the period from1985 to 1991 was the consolidation stage.
During this period serious efforts were made to address the weakness and defects noticed
as the result of speedy expansion. Profitability and productivity were the areas of focus
during this stage. Annual action plans were adopted and implemented by banks to improve
their overall performance. The RBI closely monitored the performance of banks during this
period.

The next stage was the period of reforms which commenced in the second half of 1991. In
August 1991, Narsimhan Committee was appointed by the government of India to address
the problems of Indian banking system and suggest appropriate remedial measures. Based
on the recommendations of the committee in its report submitted in November 1991,
reforms were initiated. As a matter of fact, the Narsimhan Committee report provided the
blue print for banking reforms in India.

Meanwhile, the onset of liberalization in 1991 saw the clock turn full circle for Indian
Banking. The buzzword was prudential lending, profitability and a clean balance sheet.
The banks were accepted to stand on their own feet and not look at fiscal subsidies for
capital. The mid 1990s saw the RBI opening gates of competition by issuing private banks
licenses to new entrants. In barely five years, this has created a hornet's nest on the Indian
banking turf. Besides the nationalized banks, even the foreign have begun to feel the heart
of competition. The concept of local area banks was taken up in 1996-97. RBI has also
adopted a new bank licensing policy in 2001 as per, which, initial capital for a new bank
should be Rs. 200 crore and within three years of commencement of business, the capital
should be enhanced to Rs. 300 crore. This new entry policy seeks to ensure that new banks
came into being with stronger capital based from the day itself. The above reforms
measures have gone a long way in improving the performance or operational efficiency of
banks. Now all banks, including banks which were considered weak banks, are making
profits. Presently the top 10 banks are as follows:

Contemporary Scenario of Banks in India:

The Indian banking industry, the backbone of the economy, has gained immense
recognition for its strength, particularly in the wake of the global financial crisis, which

22
pushed its global counterparts to the brink of collapse. The Indian banking industry played
a key role in averting the financial crisis from reaching disastrous proportions in the
country.

The sector has a highly intricate multi-tier structure, which enables it to effectively cater
to the diverse consumer demographics. It is broadly divided into commercial banks,
which primarily include scheduled commercial banks and local area banks, and co-
operative credit institutions, including various co-operative banks that provide banking
and financial services to the otherwise neglected sections of the society. Consequently,
there is a wide divide between the network and business size for different types of banks.
As seen in the charts below, although regional rural banks (RRBs) and co-operative banks
form approximately 66% by count, they account for only 5.6% of the total business; as
against this, (SBI and associates, nationalized banks, domestic private banks and foreign
banks) form 34% by number, but account for approximately 94.4% of the total business.

Consolidation in the sector

The Indian banking sector has seen significant transformation through deregulation,
technological advances and globalization. The economic reforms, introduced in the early
1990s, brought about a comprehensive change in the business strategy of the industry,

23
leading to mergers and amalgamations, which enhanced the size, efficiencies, and
competitive strength. The domestic banking industry has increasingly looked at
consolidation to derive greater benefits such as: enhanced synergy; cost take-outs from
economies of scale; organizational efficiency; cost of funding; and risk diversification.
The need for consolidation in the present context is amply highlighted by the heightening
competition, pressure on margins, and the need for scale efficiencies.

Over the years, there has been considerable progress in consolidation in the private banks
space with weak and healthy banks entering into mergers and healthy and well-
functioning banks too becoming involved in the activity. The RBI has been supportive of
such initiatives and there have been no cases so far where such approvals have been
denied. Since 1961, approximately 77 bank amalgamations have been carried out in the
Indian banking system as per the provisions of the Banking Regulation Act 1949. Since
FY05, the RRBs saw heightened consolidation due to policy-driven mergers in pursuance
of the recommendations of the Committee on the “Flow of Credit to Agriculture and
Related Activities”. During FY08, State Bank of Saurashtra was merged with State Bank
of India, and Centurion Bank of Punjab was acquired by HDFC Bank. In FY09, RBI
approved the merger of State Bank of Indore with State Bank of India.

In tune with the changes in economic policies and with the implementation of financial
sector reforms, the service sector in India has undergone a sea change in the last decade.
The service economies reveal that the service sector accounts for more employment,
contribution in GDP and more consumption than manufactured goods.

24
 Total Assets till 2010
Growth Growth
Total Net Total No.
in in Total No. of
Bank Name Income Profit Assets of
Advances Deposits Employees Branches
(` Mn.) (` Mn.) (` Mn.) ATMs
(%) (%)

State Bank of
764792.4 91212.3 9644320.8 30.2 38.1205896 11472 8548
India

Punjab National
222458.6 30908.8 2469186.2 29.5 2654780 4327 2150
Bank

Bank of Baroda 178492.4 22272.3 2274067.3 34.9 26.536838 2915 1179

Bank of India 193992.1 30073.3 2255017.7 25.9 26.540155 2935 500

25
 IDBI Bank
130215.3 8585.3 1724023.2 25.8 5410201 510 900
Limited

Union Bank of
133719.3 17265.5 1609755.1 30 33.529014 2570 1790
India

Indian Overseas
112372.3 13257.9 1210734 24 18.725512 1927 576
Bank

Source RBI,D&B Research

Nationalised Banks in India

Nationalised banks dominate the banking system in India. The history of nationalised
banks in India dates back to mid-20th century, when Imperial Bank of India was
nationalised (under the SBI Act of 1955) and re-christened as State Bank of India (SBI) in
July 1955. Then on 19th July 1960, its seven subsidiaries were also nationalised with
deposits over 200 crores. These subsidiaries of SBI were State Bank of Bikaner and Jaipur
(SBBJ), State Bank of Hyderabad (SBH), State Bank of Indore (SBIR), State Bank of
Mysore (SBM), State Bank of Patiala (SBP), State Bank of Saurashtra (SBS), and State
BankofTravancore
However, the major nationalisation of banks happened in 1969 by the then-Prime Minister
Indira Gandhi. The major objective behind nationalisation was to spread banking
infrastructure in rural areas and make cheap finance available to Indian farmers. The
nationalised 14 major commercial banks were Allahabad Bank, Andhra Bank, Bank of
Baroda, Bank of India, Bank of Maharashtra, Canara Bank, Central Bank of India,
Corporation Bank, Dena Bank, Indian Bank, Indian Overseas Bank, Oriental Bank of

26
Commerce (OBC), Punjab and Sind Bank, Punjab National Bank (PNB), Syndicate Bank,
UCO Bank, Union Bank of India, United Bank of India (UBI), and Vijaya Bank.

In the year 1980, the second phase of nationalisation of Indian banks took place, in which 7
more banks were nationalised with deposits over 200 crores. With this, the Government of
India held a control over 91% of the banking industry in India. After the nationalisation of
banks there was a huge jump in the deposits and advances with the banks. At present, the
State Bank of India is the largest commercial bank of India and is ranked one of the top
five banks worldwide. It serves 90 million customers through a network of 9,000 branches.

BRANDING AND FINANCIAL SERVICES

When several companies are offering rival products they will want to identify and
distinguish their offering. This is called branding .Service industries are playing an
increasingly important role in the overall economy (Cronin and Taylor, 1992). Interest in
the measurement of service quality is thus understandably high and the delivery of higher
levels of service quality is the strategy that is increasingly being offered as a key to service
providers' efforts to position themselves more effectively in the marketplace (ibid).
However, the problem inherent in the implementation of such a strategy has been
expressively identified be several researchers. Service quality is an elusive and abstract
construct that is complicated to define and measure (ibid).

Considering the recent developments in the Financial Services industry, a new trend of
cross-selling and brand extensions has emerged in the industry. With Bancassurance,
Credit Cards, Transaction gateway mapping, Tie-ups, Bonds and Securities in the offering,
the Financial services sector is surely evolving. However, as you would be aware, the
primary factor in Service Marketing for Consumers is trust and experience. Consumers
trust a brand for its services, for its focus, for its caring and for its expertise. In all this
development and innovation, do you see a potential trade-off by the marketers?

When discussing branding in a financial service context the brand is related to the
company pi-corporate brand, which is the highest level in Kellefs brand hierarchy. Product
brands within financial services are relatively few and far between, and the banking and

27
financial services industry has long been characterized by monolithic identities (Debling,
2000). There is also a difficulty of achieving differentiation at the banking product level
since the product attributes in this sector are very easy to copy; this means the service
quality has become an increasingly important factor for success and survival in the banking
sector. Provision of high quality service aids in meeting several requirements such as
customer satisfaction and its consequent loyalty and market share, soliciting new
customers, improved productivity, financial performance and profitability. It has also
become an important research topic because of its important relationship to corporate
marketing and financial performance (Cui, Lewis and Park, 2003).

However, those who have analyzed the "strength" of brands in the financial sector
have concluded that, in the main, they are relatively weak brands when compared with
consumer products (ibid). In particular, the brands have failed to provide a sustainable
source of differentiation and in most instances have only succeeded in achieving awareness
(Debling, 2000; Harris, 2007).

According to Simoes and Dibb (2001 cited in Jones et al, 2002) branding plays a
special role in service companies since strong brands increase customers' trust of the
invisible, enable them to better visualize and understand the intangible and reduce
customers' perceived financial, social or safety risk. They further stress that branding for
services is different than branding for tangible products because it is the company which is
the primary brand (Jones et al, 2002).

The value of the brand, and the effectiveness of marketing activities undertaken to
affect the consumer mindset about a brand, is therefore often measured by evaluating
changes in perceptual responses on advertised attributes (Romaniuk and Nicholls, 2005).

SERVICE MARKETING

The unique characteristics of service marketing which makes which indicate that it is not
necessarily appropriate simply to apply theory developed for other purposes to the
marketing of services (Dibb and Simkin, 1993).

BANK CUSTOMERS

28
 The bank customer today is more demanding than he/she used to be. The
information flow in the society today is faster than ever, and that affects the customer and
the bank. The typical bank customer of today (Angelis et al, 2005):

 Is more demanding on issues of quality, since they possess a higher standard of

living and educational level than previously
 Is more informed since they have access to abundant information allowing
immediate comparison of competitive products
 Finds the differences between competitive products few and insignificant.
 Pursues tailor-made service
 Needs fast and easy service because of limited time
 Is less loyal to a specific bank.
 Is affected much more by the pricing policy of a bank than in the past.

Despite the fact that lots of global and local brandsof different products have been usedto
measure brand equity, survey on brand equity in the service industry have not beenfully
explored. Prasad and Dev. (2000) presented a study that shows that the easiestmethod for
hotels to recognize and distinguish themselves in the mind of their customersis through
branding. Low and Lamb Jr (2000) also stated that in service market, the mainbrand is the
firm’s brand while in packaged goods market, the main brand is seen to bethe product
brand.

Marketing of services and Banking:

Marketing is an important aspect of a corporate unit's strategy of reaching

customers in that it disseminates information to customers about a company and its
products and services thereby enabling them purchase albeit at a price. there are a
numerous definition offered for marketing, one marketer said that marketing's role is to
"deliver a high standard of living" , the social definition serves the purpose by stating that
"Marketing is the social process by which individuals and groups obtain what they need
and want through creating, offering and freely exchanging products and services of value
with others". The managerial definition of marketing describes it as "the art of selling

29
products". But people are surprised when they that the most important part of marketing is
not selling! Selling is only the tip of marketing iceberg.

Peter Drucker, a lending management theorist, puts it this way "there will always,
one can assume, be need for some selling. But the aim of marketing is to make selling
superfluous. The aim of product and services fits him and sells it. Ideally, marketing
should result in a customer who is ready to buy. All that should be needed then is to make
the product and services available. Moreover, as Kotler Philips states "the essence of the
modern marketing concept is that all elements of business are geared towards the
satisfaction of consumers".

Without any doubt, the loyalty of customers is by no means an easy task. Corporate
units will be required to introspect themselves as well as work hard to understand fully the
relevant market in which each is individually anticipating to enter. Thus conducting market
survey's to have a better insight of the customer, his requirements and how he can be
influenced to purchase the company's products becomes a prima facie step in the long
process of building customer loyalty.

Hence the need of equivocally responding by formulating effective market

strategies in order to reach the desired goal is very essential. "Marketers are often
interested in attraction not just brand users, but perhaps more importantly, those who
consistently purchase the company's brand. When these brands loyal buyers are indentified
(assuming they differ on certain characteristic from the non loyal buyers), appropriate
marketing strategies may be developed to attract competitor's buyers who have similar
characteristic or to increase the loyalty rate among current less-loyal buyers. Loyalty
segmentation can also be successfully applied to retail customers".

The marketing concept that we have discussed is valid for both products and
services. The services may be defined in the words of Kotler and Armstrong as "A service
is an activity or benefit that one party can offer to another that is essentially intangible and
does not result in the ownership of anything. Its product may or may not be tied to a
physical product. The growing opportunities of service sector influenced the various

30
service organizations to adopt marketing as a key word to make the entire organization
customer oriented.

The significance of bank marketing in Indian banking system is undeniable if they

have to survive in the competitive environment. A comprehensive definition of bank
marketing by Derk Weyer of Barclays' bank states that it consists of identifying the most
profitable market now and in future by assessing the present and future needs of the
customer. This is done by setting business development goals, making plans to meet them,
managing and promoting the various services to achieve the goal. All this is done in the
context of changing environment in the matter. This explains that the bank marketing is not
just advertising and promoting campaign but a managerial process by which services are
matched with markets. This indicates involving a suitable marketing strategy which suits
the needs of the customer. The major steps in this direction are to blend the marketing
variables to satisfy the requirements of the customer

Review of literature

In this chapter, the researcher has undertaken the review of conceptual and empirical
studies dealing with branding strategy from a generalist point of view followed by focus on
the branding strategy and other issues related to Banking industry.The review of literature
has been undertaken to earmark the problem areas and gaps in literature related to banking
branding strategy as well as to study the different parameters that have been used to study
branding strategy.
Introduction
To appreciate the real significance of branding in India, we need to first understand that
what is branding. It is just not about using advertising to create products that people would
not otherwise buy. A brand is essentially a set of expectations and promises that the
customer and seller exchange with each other.
Brand equity

31
Brand equity is defined as the differential positive (or negative) effect on a brand based on
the recognition the brand has earned over a certain period of time. This then transfers into
higher sales and higher profit margins compared to rival brands (Business Dictionary.com,
2009).
The banking industry has for a long time been focusing on retention which means keeping
their current customers is more important than gaining new ones. Banks strive for loyal
customers which are the ultimate reward of branding (Farrell & Klemperer, 2006).
The banking industry is specific due to its focus on customer retention. Banks in Sweden
are continuously exposing themselves in different media such as newspapers, television,
sponsoring and so on. Because of the fierce competition today it is important for banks to
understand their customers and their behaviour. The need to appeal the right feelings and
project accurate associations is especially high in industries where retention is important
(Farrell & Klemperer, 2006). This means it is important to have strong customer based
brand equity in markets focused on retention, such as the banking industry (Keller, 2001).
The banking industry is very specific due to the general opinion that banks are an
“unpleasant necessity” (Blythe, 2008) and because of the intense focus on retention
(Farrell & Klemperer, 2006). With this in mind several questions arise. How do banks
obtain loyal customers?

According to Jack Welch, Former CEO, General Electric, strategy means laking clear-cut
choices about how to compete. Sharon Oster, Professor, Yale University, defines strategy
as a commitment to undertake one set of actions rather than another. Costas Markides,
Professor, London Business School opines that the process of developing superior
strategies is part planning, part trial and error, until you hit upon something that works
(Thompson et al., 2008). Without a strategy, the organization is like a ship without a
rudder. A company's strategy is the management's action plan for running the business and
conducting operations. The crafting of a strategy represents a managerial commitment to
pursue a particular set of actions in growing the business, attracting and pleasing
customers, competing successfully, conducting operations, and improving the company's
financial market performance. It consists of the competitive moves and business
approaches that managers are employing to grow the business, attract and (lease customers,
compete successfully, conduct operations and achieve the targeted levels of organizational

32
performance. The dynamic process of emulation, implementation, evaluation and control
of strategies to realize organization's strategic intent is strategic management (Kazmi,
2008).
Thus a company's strategy is all about how management intends to grow the
business, how it will build a loyal clientele and outcompete rivals, how each functional
piece of the business (research and development, finance, human resource, production and
operations, supply chain activities, sales and marketing, distribution etc.) will be operated,
how performance will be boosted and how each will contribute towards attainment of
organizational objectives. Strategy gives overall direction to operations and takes priority
over the often diverging interests of the various constituents of the organization.
Aaker (1991) refers to brand loyalty as how attached a customer is to a brand. This
concerns placing a certain value on a brand. This is difficult to achieve but if it is done
successfully, it will be highly rewarding for the company because a loyal customer base
will create very stable sales. Creating brand loyalty can be considered as the heart of brand
equity. Oliver (1997, p.392) states that brand loyalty is
a deeply held commitment to re-buy a preferred product or service consistently in the
future, despite situational influences and marketing efforts having potential to cause
switching behaviour.
Brand loyalty can also be viewed from an attitudinal perspective. Through this perspective
brand loyalty is defined as “the tendency to be loyal to a focal brand, which is
demonstrated by the intention to buy the brand as the primary choice” (Yoo & Donthu,
2001, p.3). There are also two different types of loyalty: calculated loyalty and affectionate
loyalty. Calculated loyalty is loyalty based on economic factors (and not on the brand
itself) and affectionate loyalty is based on feelings and emotions and this is the kind that
loyalty usually refers to (Treffner & Gajland, 2008).
Another issue is Perceived quality which explains how customers perceive the
quality in a brand, for example the status of your brand. Because familiarity with brand is
often what the consumer connects with quality. This also affects the financial performance
of the company. Perceived quality is different from actual quality because it is mainly
about what single customers think about the brand. This opinion is rarely objective and can
be based on different factors, everything from past experiences to individual feelings

33
(Aaker, 1991). Zeithaml (1988, p.3) explained the meaning of perceived quality as “the
customer‟s subjective evaluation of the product”.
Aegis Marketing Inc. (1997) also lists some interesting benefits that brand equity can bring
to a company:

 Strong brand equity allows a company to charge higher price compared to similar
product with less brand equity.
25

34
  When a customer is unsure of which product to purchase a familiar brand is often
what they choose in the end because the customer feels this to be risk reducing.

 Brand equity helps companies to achieve leverage when launching new products.

 A strong brand is often perceived by customers as a sign of quality.

 Customers may want to be associated the image of a successful brand.

 Strong brand equity is often the key to get a loyal customer base.

 A strong brand is probably the most effective way to reduce the risk of being
threatened by competitors (Aegis Marketing Inc., 1997

Figure 2. Building strong brand equity (Keller, 2001, p.7)

As can be seen in figure 2 Keller states that customers view brands in a certain way. In
order to gain strong customer based brand equity, it is important to consider four different
stages. These stages can be seen in figure 2. The first stage is Brand identity which refers
to making sure that people think of your brand in the right situations. Brand identity should
answer the question “who are you?”The second stage is brand meaning and should answer
the question “what are you?” which in short terms explain what the brand can do for the
customers. This stage concerns the physical attributes of a product. The third stage is brand
responses which concerns customers‟ feelings towards the identity and meaning,

35
36
 ensuring they think about the brand in positive ways. This stage answers the
question “What do I think or feel about you?”. The fourth and last part is brand
relationships, which answers the question “What about you and me?”. In this step the
brand responses are transformed to create “intense, active loyalty relationships between
customers and the brand” (Keller, 2001, p. 4). The brand must develop in this specific
order, i.e. a meaning cannot be developed without an identity and responses cannot be
developed without a meaning and so on (Keller, 2001).

37
Figure 3. Dimensions and Sub-dimensions of the brand building blocks (Keller, 2001, p.7-8)

38
 Figure

As figure 3 shows, the foundation of the pyramid is Brand salience (brand identity). This
refers to customers‟ capability to recognize and recall a brand. It concerns how easily and
how often customers think about the brand in different situations. Salience is the initial
building block when developing brand equity. It helps create brand image and meaning by
affecting the strength of brand associations. Brand salience is considered synonymous with
the brand being „top 28

39
40
of mind‟ (mentioned before) when the product category is discussed (Romaniuk, 2004).
The second layer of the pyramid involves how to create a brand image (brand meaning).
Brand image describes what the brand is characterized by and what it stands for in the
customers‟ minds. There are two different types of brand image: Brand performance and
Brand imagery (Keller, 2001). Brand performance focuses on the product and its different
abilities to satisfy customer needs such as financial needs and functional needs. When
discussing Brand performance there are five different attributes and benefits connected to
brand performance:
Primary characteristics and secondary features is one sub-dimension in brand
performance and refer to the fact that customers expect a certain level of characteristics in
the product which need to be met. Sometimes the customers also expect special functions
besides the primary ones, called secondary features. Another sub-dimension is Product
reliability, durability and serviceability. Reliability concerns the products stability in
performance. Durability is the time the product is expected to last. Serviceability explains
how easy it is to repair the product when possible errors occur. Service effectiveness,
efficiency and empathy explains to which extent the brand offers the required services for
their products. Efficiency concerns the speed and the responsiveness of the service while
empathy explains the attitude of the service provider. Another sub-dimension is Style and
design which focuses on the aesthetic attributes of the product. The final sub-dimension of
brand performance is Price and it refers to the price strategy of a brand. It sends signals to
the customers how to categorize the brand (Keller, 2001).
Brand Imagery is the other type of Brand image and focuses on the intangible attributes of
the product. This part concerns emotions and thoughts customers have towards a brand
instead of the physical benefits. In this area there are four main categories:
The first sub-dimension of Brand Imagery is User profiles which describes the person or
the company that uses a specific product. These descriptions involve the

41
basic segmentation variables. Another sub-dimension is Purchase and usage situations.
Purchase describes the different channels, types of stores and how easy it is to purchase the
product. Usage explains under which circumstances the usage of the product comes into
mind. The next sub-dimension is Personality and values which discusses how brands can
take different personalities. These personalities can include a number of different
characteristics such as sincerity, excitement, competence, sophistication and ruggedness.
The final sub-dimension is History, heritage and experience. The history of a brand is
connected with past personal experience and it can create association. Since these
associations are mainly based on personal experiences they are often individual. However,
sometimes there are connections between different people to be found in these associations
(Keller, 2001).
The third layer is called Brand responses and shows how customers respond to the brand,
different thoughts and feelings that customers may have. These feelings can come from
both head and heart, the main criteria is of course that they are positive. Responses are
divided into consumer judgments and consumer feelings. Consumer judgments is all the
different aspects of a product, such as physical attributes and image, put together by the
customer to form a certain opinion. Consumer judgment is further divided into four
subcategories:
Brand quality mainly discusses the perceived quality of a brand, but can also involve value
and satisfaction while Brand credibility explains the credibility of the brand. It is important
to seem competent, trustworthy and likable. The next sub dimension is Brand
consideration and it describes the need of a brand to receive consideration and be deemed
relevant. Customers need to see the brand as something they would buy or use. The final
sub dimension is Brand superiority which concerns the brand being compared to others.
Customers need to consider the brand to offer unique advantages that other brands are
missing. This is a very important part of building relationships with customers (Keller,
2001).
Consumer feelings explain exactly what it sounds like, the feelings that customers have
towards a brand. It can be emotional reactions or influence on part of customers‟ lives, for
example the brand can affect customers‟ feelings about 30

42
themselves or others. Consumer feelings are generally divided into six different categories:
Warmth makes the customer feel peaceful or calm while Fun refers to if the customers are
amused by the brand. Another sub-dimension is Excitement which makes the customers
see the brand as something special. Security refers to the fact that the customers feel safe
and comfortable. The brand removes certain worries customers may have. The next sub-
dimension is Social approval which is when the customers feel that others respond more
positively to them because of the brand. The final sub-dimension is Self-respect. It
describes how customers feel better about themselves because of the brand. They may feel
a sense of pride or success (Keller, 2001).
The fourth and final block is called Consumer brand resonance (Brand relationship). This
stage focus on the relationship that the customer and the brand shares and how high the
level of identification is between the two parts. Examples of brand with high resonance are
Apple and Harley-Davidson. Consumer brand resonance deals with the nature of the
relationship and also how connected customers feel to the brand. Intensity or how deep the
physiological bond between customer and brand is and how high the activity is are the two
main characteristics of Consumer brand resonance. These factors can be divided into four
sub-dimensions: Behavioral loyalty, Attitudinal attachment, Sense of Community and
Active engagement.

Behavioral Loyalty is explained as the level of loyalty a customer has towards a brand and
whether or not they are willing to go out of their way to use it. The sub-dimension
Attitudinal Attachment describes that it is important to remember that loyalty can arise
from very different factors, for example it can arise because of accessibility or low price.
This kind of loyalty is more based on compulsion because the customers do not have many
other options. Attitudinal attachment, on the other hand, is when the customer has a strong,
personal affection towards the brand. This is when the customers have reached a stage
when they see the brand as something they “love” or look forward to a lot. Sense of
community occurs when the brand starts to help customers create new networks, for
example when

43
44
 people find new friends/acquaintances because of their mutual identification with a certain
brand.

The final sub-dimension is Active engagement. Here the most important confirmation of
brand loyalty is probably when the customers choose to invest in the brand more than
necessary. These investments may vary but are usually made up by money, time and
energy. An example could be when customers choose to join different members clubs
connected to a certain brand or to exchange information concerning the brand with other
people. To create active engagement you often need a strong attitudinal attachment and a
strong feeling of community (Keller, 2001)

Brands require a continual development and fostering, in order to meet customer

expectations, and as customers are becoming more refined and markets more intricate, the
positioning of the brand is of utmost importance, in assisting to differentiate the brand
from its many competitors (Andriopoulos and Gotsi, 2000; Uggla, 2006; Melewar and
Bains, 2002; Davis, 2002; Hatch and Schultz, 2003).

Schmitt (1999) said that a brand should not just be an identifier, he went further to saythat
a good image and name is insufficient; delivered experience is also important.Schmitt
(1999) recommended two ways to branding:

• The brand has to be viewed as an identifier where the logo, slogan, names forms a
particular image and awareness for the consumer.

•The brand has to be viewed as an experience provider where the logo, slogan,names,
event and contacts by consumer provides consumers affective, sensory,lifestyle and create
relation with the brand.
 Kotler and Armstrong (2004) also see brand to be beyond an identifier. It represents
consumer’s sensitivity and emotional attachment to the product.
 According to Feldwick, (2002), a brand is a distinguishable symbol of origin and an
assurance of performance

45
Morsing (2006) highlights that branding concentrates on generating an additional
emotional value to the customer, which fundamentally creates imaginative and visual
associations to increase the appeal of products or services. Organizations, as contended by
Hatch and Schultz (2003). have changed marketing importance from product brands to
corporate branding due to the progress of globalization.

Branding as a Strategic Tool

Brand recall relates to consumers’ ability to retrieve the brand when given the product
category, the needs fulfilled by the category, or some other type of probe as a cue. It
requires that consumers correctly generate the brand from memory (Keller, 1993). The role
of brand recall can be crucial for frequently purchased products for which brands decisions
usually are made prior to the store. In some categories there are so many recognized
alternatives that the buyer is overwhelmed (Aaker, 1991). Generally, if a brand does not
achieve recall it will not be included in the consideration set. While recognition, even
based on only a few exposures, persists, recall decays through time (ibid). Recall is
difficult; it requires either an in-depth learning experience or many repetitions. Top-of
mind recall is, of course, even more demanding. Hence, maintaining a strong top-of-mind
awareness through constant exposure can create not only brand awareness but also brand
salience that can inhibit the recall of other brands.

When it comes to recall a category need is experienced first, and then the consumer relies
upon memory to generate possible solutions. In this case consumer must recall a brand
from memory in order to make a decision. As a rule, the first recalled brand (given a
favorable attitude) will get the business. In this case, it is important to see and hear the
brand name repeatedly linked to the category need in advertising (Percy and Rossiter,
1992).

Use of the equity concept in branding

Since the development of brand equity in 1980’s, there have been rapid developments inthe
subject. This is due to the fact that branding has been recognized as an importantfactor for
the success of a firm especially in a very competitive business environment.
In the literatures, different definitions of brand equity have been proposed. According
toPark and Srinivasan (1994), brand equity has no acceptable definition. Farquhar (1989)

46
defined brand equity as the value which the brand adds to the product. Similar
definitionswere provided by researchers such as Aaker 1991, Keller 1993, Leuthesser
1998, Yoo andDonthun 2001.
Keller (1993 p.8) sees brand equity as “the differential effect of a brand knowledge
onconsumer response to the marketing of a brand”. This is based on the assumption that
thepower of a brand lies on what have been learned, heard, seen and felt by the
customerabout the brand over time. Aaker (1991,p.15) provided the most precise definition
ofbrand equity, he defined brand equity “as a set of brand assets and liabilities linked to
abrand, its name and symbol, that add to or subtract from the value provided by a
productor service to a firm and/or to that firm’s customers”.
Simon and Sullivian (1993) used the word “incremental utility” to refer to brand
equity.Park and Srinivasan (1994) refer to brand equity as the distinction between the
overallbrand preference and the multi attribute preference depending on the
objectivelymeasured attribute level. Agarwal and Rao (1996) also refer to brand equity as
the totalquality and choice intention. From the above it is clear that brand equity is viewed
indifferent ways by different researchers.
In other word, brand equity can be said to be any asset or liability connected to a brand
name that adds or subtract value to a product.
The definition of brand equity can be widely classified into three perspectives i.e. it could
be based on financial perspective which stress the value of a brand to a firm,
customeperspective which sees brand equity as the value of a brand to consumers and a
combination of the two.

Our present study will focus on consumers based perception. Consumer based brand equity
can be divided into consumer perception i.e. (brand awareness, perceived quality, brand
association) and consumers behaviours (brand loyalty and willingness to pay a highprice).
From the consumer’s perspective, brand awareness, brand association brandloyalty and
perceived quality are the most important dimension.

Although the exact origins of the term brand equity are unclear, it has been traced back to
the mid-1980s (Feldwick, 1996). Since then definitions of brand equity abound (e.g.

47
Tauber, 1988; Farquhar, 1990; Biel, 1992; Simon and Sullivan, 1993; Keller, 1993), as has
research on this subject. This research has been based on four different perspectives, that
are: consumer-based, financially-based, relationallybased and network-based.
The initial research on brand equity was consumer-based and draws on concepts from
consumer behaviour. It describes equity in terms of the strength of consumers’ attachments
to the brand and their associations and beliefs about the brand. Keller (1993) defines
consumer-based equity as: ‘the differential effect of brand knowledge on consumer
response to the marketing of the brand’. The second stream of research uses a more direct
financial approach, where the emphasis is less on individual consumers and more on the
overall financial value of the brand to the organization. The third emerging stream of
research focuses on the value of relational and experiential aspects of branding. Finally the
fourth stream of research examines brand equity, co-branding, brand alliances, and
networks.

Financially-based brand equity research

A variety of concepts have also been used to develop measures of the overall financial
value of brands to an organization. These range from using share-market prices, indices
based on various brand performance measures, to attempts to directly link brand value to
profitability
Relational brand equity
Much of the initial research on brand equity was in response to the advertising industry’s
need to understand the effects of advertising on building brand image and consumer
loyalty for consumer-packaged goods. Thus the focus was on mass marketing and the one-
way impact of marketing activity (especially advertising) on consumers. However recently
there has been increased interest about the role of branding in other areas such as services,
business-to-business, and electronic marketing. In these situations customers’ interactions
and relationships with the organization providing the goods and services play a more
important role. In contrast to consumer-packaged goods marketing where the product is the
determinant of brand equity, in the relational context the organization is the primary
determinant of brand equity (Berry, 2000; Grönroos, 2000). While the conceptual models
for branding consumer-packaged goods (e.g.Keller 1993) focus on end-customers’ brand

48
awareness and knowledge of the product, the conceptual models for relational brands focus
on the customers’ experience with the organization and how this determines brand
meaning (Berry,2000). What becomes more important is the reputation and identity of the
organization (Balmer, 2001; McDonald et al., 2001). Relational and experiential branding
can also be important for consumer-packaged goods (Fournier, 1998). This aspect of
branding is likely to be more important when the product category is complex and provides
considerable choice, there is a perceived risk choosing and switching between brands, and
where there are high costs from switching between brands (Bhattacharya and Bolton,
2000).
Kevin Lane Keller (2008) states that brand equity should be viewed from a customer based
perspective in which brand knowledge is essential in generating differential effects on
consumers’ responses to marketing actions related to the brand. Keller’s brand equity
model includes two general dimensions – brand awareness and brand image composed of
brand associations, but brand loyalty and market share are seen as fundamental outcomes
of a strong brand.
In contrast to the consumer-based branding research, empirical research about brand equity
for services, business-to-business, and electronic marketing is extremely limited and only
recently has a relational approach been adopted.
The concept of brand loyalty as core dimension of brand equity
The American Marketing Association defines brand loyalty as “the situation in which a
consumer generally buys the same manufacturer-originated product or service repeatedly
over time rather than buying from multiple suppliers within the category” or “the degree to
which a consumer consistently purchases the same brand within a product class”.
Trying to define the term, David A. Aaker (1991) considers that brand loyalty reflects the
probability that a customer will switch to another brand, especially when that brand makes
a change in its marketing mix. In Aaker’s view, brand loyalty represents the core of a
brand’s equity. Moreover, Daryl Travis (2000) considers that brand loyalty represents the
meaning of brand equity.
Brand loyalty can’t be analyzed without considering its relationship to other dimensions of
brand equity like awareness, perceived quality, or associations. Firstly, all the other
descriptive dimensions of brand equity can enhance brand loyalty, as perceived quality,

49
associations and awareness provide reasons to buy and affect satisfaction. Loyalty could
arise from a brand’s perceived quality or associations, but could also occur independently.
Yet, the nature of this relationship is unclear. On the other hand, loyalty can induce a
higher perceived quality (for example, a potential customer has a better evaluation of a
brand if that brand is perceived as having a loyal customer base), stronger associations (the
brand can be associated to elements characterizing its loyal customers), or increase
awareness (loyal customers tend to provide brand exposure to new customers through
“mouth to mouth” communication). Thus, brand loyalty is both an input and an output of
brand equity and it is both influenced by and influences the other descriptive dimensions of
brand equity.
A series of experiments illustrates a learning process that enhances brand equity at the
expense of quality-determining attributes. When the relationship between brand name and
product quality is learned prior to the relationship between product attributes and quality,
inhibition of the latter may occur. The phenomenon is shown to be robust, but its influence
appears sensitive to contextual variations in the learning environment.Consumers ,manya
times ,treat brand name is the strong differentiator in the appareal market(Tong and
Hawley, 2009).Brand association and brand loyalty are influential dimensions of brand
equity. Weak support was found for the perceived quality and brand awareness
dimensions(Tong and Hawley, 2009).
Percieved quality is another component of brand equity (Aaker 1996),Zeithaml(1988) has
defined percived quality as the consumers judgment aabout a products overall excellence
or superiority.It is subjective assessment of quality rather than product based or
manufacturing based approach of objective quality and has beenregarded as consumers'
cognitive response to marketing information and brand knowledge (Kumar et al 2009).
Kumar et al(2009) studied Indian consumers by examining the effects of individual
characteristics (i.e., consumer's need for uniqueness and attitudes toward American
products) and brand-specific variables
Brands, particularly those that are high in brand equity (value of the brand) can be
organizations most powerful assets (Herremans et al., 2000). It allows organizations to
enjoy high brand loyalty, name awareness, perceived quality and strong brand associations

50
with customers (Bristow et al., 2000). Besides building on long term customer loyalty,
organizations with high brand equity can create differential advantage.
Berry (2000) adds that there are two components of brand equity – brand awareness and
brand meaning. Brand meaning is influenced by the customer’s experience with the
organization. Bank factors such as service operation, employees, environment, features,
perceived fees value, self brand image, brand aroused feeling and brand personality are
used to define brand meaning (Berry, 2000). Below is the brief review of these factors:
• Service Operation - The bank services sector is highly interactive and process-driven. In
order to build a positive and lasting brand perception during the interaction, factors of
service quality, such as assurance, responsiveness and empathy must be part and parcel of
the customers’ experience. These factors may lead to customer trust, satisfaction (Zeithaml
et al., 1990; Parasuraman et al., 1991), and loyalty (Lovelock and Weitz, 2006). Lacking
these factors may create high levels of customer dissatisfaction and generate a strong
customer desire to switch to competitor.
• Employees - Successful service brands derived from carefully nurtured relationships
between employees and customers (de Chernatony and Riley 1999). The service provided
by employees play an important role in customers’ evaluations of service performance. In
fact, the interaction will influence customer satisfaction perception of service quality,
future consumption behavior and increase profits for the service organization (Heskett et
al.,1994).
• Environment - An effective way to make brands tangible is to use as many physical
elements as possible that can be associated with the brand. Bitner (1992:62) posits that,
“the service setting can affect customers’ emotional, cognitive, and physiological
responses, which in turn influence their evaluations and behaviors”. Physical environment
such as facility aesthetics, layout accessibility, and cleanliness, seating comfort, electronic
equipment and display (Bitner, 1990, 1992) play a significant effect on customer
satisfaction, perceived service quality, intention to repurchase and willingness to
recommend.
• Features - Functional values such as number of branches, technology and accessibility
are perceived to be more salient than emotional values in customer decision-making and
will be a proxy for branding in relation to bank services (de Chernatony, 2001).

51
• Perceived Fees Value - Price has been identified as an important association in brand
image evaluation and a strong quality indicator (Arora and Stoner, 1996). Price value is
important point in decision making because customer choice of a brand depends on a
perceived balance between the price of a service and its utilities.
• Self-Brand Image - Padgett and Allen (1997: 202) indicate that a service brand image is
made up of “the attributes, functional consequences and symbolic meanings customers
associate with a specific service”. The creation of a good image is considered an intangible
asset to organizations (Aaker, 1997). Thus, a brand needs to possess specific brand assets,
an image and a salient positioning attribute in order to be successful.
• Brand Aroused Feelings - Feelings have been recognized for the role it plays in
customer decision making (Richins, 1997), and have a profound effect on customer
reactions (Boles et al., 2001). In fact, Boles et al.,(2001) assert that feelings aroused within
a services environment, especially in retail, affect perceived value and purchase
intentions.Moreover, past studies on banking services indicate that emotional values or
feeling is more sustainable than functional values (de Chernatony and Riley, 1999; Palmer,
2001).
• Brand Personality - Brand personality refers to the set of human characteristics
associated with a brand (Aaker, 1997). A well established brand personality is said to
heighten emotional ties with the brand, increase preference and patronage, and develop
trust and loyalty (Siguaw and Austin, 1999). Aaker (1997) posits that the dimensions of
human personality could be utilized to measure personality of brands. The author identifies
5 dimensions of ‘brand personality’, sincerity (honest, cheerful), competence (reliable,
successful), sophistication (charming, upper class), excitement (daring, imaginative) and
ruggedness (masculine, tough).
Brand awareness, on the other hand, is the company’s presented brand via advertising,
service facilities, and the appearance of service providers, company name, and logo.
Another source of brand awareness is company’s external brand communications that is
information customers receive about the service, such as word of-mouth communications
and public relations (Berry, 2000). The discussion on them is followed.
• Advertising - Advertising has always been regarded as a common factor to influence
brand equity (Herremans et al., 2000). Moreover, the intangibility of the service requires

52
organizations to promote their brand to their customers. As such, advertising is crucial to
the success of any service marketing strategy.
• Bank brand name - A properly chosen and developed service brand name is a strategy
which cannot be easily neutralized by competition and contribute to a service firm’s
ultimate success (Turley and Moore, 1995). If a customer believes there are true
differences among brand name and becomes an important piece of information in the
purchase decision, reliance on the brand name is likely to increase (Bristow et al., 2000).
• Country-of-origin - Johansson (2003) defines country of origin (COO) as the country
where corporate headquarters of the company marketing the product or service brand is
located. However, as service increases in importance globally, marketers need to be more
aware of the underlying factors considered by customers when evaluating services.
• Word of mouth - Word-of-mouth is defined as the extent to which a customer informs
friends, relatives and colleagues about an event that has created a certain level of
satisfaction (Anderson, 1998). Moreover, with the intangibility and inseparability of
service, customers find it very difficult to evaluate alternatives. Thus, they depend heavily
on personal sources of information such as word of mouth (Brady et al., 2005).
• Public relation - “Public relation is the management of communication between
organization and its public” (Grunig and Hunt, 1984: 481). The definition indicates a
strong link between public relation and brand equity building. Reputation generates from
public relation can be used to differentiate bank services (Balmer and Wilkinson, 1991).
From the above discussion on brand equity, a clear set of values that result in positive
perceptions amongst customers are paramount. These well defined values must be not only
consistently communicated and demonstrated by the organization but also recognized and
appreciated by customers. This is crucial in service industries, such as those in banking
sector, since they are facing tremendous pressure to differentiate in order to survive.

Customer- Based Brand Equity.

The advantage of conceptualizing brand equity from the Customer- based

perspective is that it enables managers to consider specifically how their marketing
programs improves the value of their brands in the minds of consumers.

53
A variety of concepts have been used to develop consumer-based measures of brand
equity. These include consumer preferences, price premiums, consumer perceptions, price
trade-offs, residual intangible value, loyalty, awareness, perceived quality, brand
knowledge, and consumer learning.

Within the marketing literature, operationalization of customer based-brand equity

usually falls into two groups (Cobb-Walgren et al. (1995); Yoo & Donthu (2001)):
consumer perception (brand awareness, brand associations, perceived quality) and
consumer behaviour (brand loyalty, willingness to pay a high price).

Mahajan, Rao, and Srivastava (1991) claimed that customer-based brand equity could be
measured by the level of customer's perception.Also operationalized by Lassar et al. (1995)
as an enhancement of the perceived utility and desirability that a brand name confers on a
product. According to them, costumer- based brand equity indicates only perceptual
dimensions, not including behavioral or attitudinal such as loyalty or usage intention,
which differs from Aaker's (1991) who suggested to measure brand equity including
behavioural and attitudinal dimensions. Farquhar (1990) maintained that brand equity is
reflected by the change of consumer attitude while purchasing a product. Aaker (1991)
incorporated definitions, the four dimensions of brand equity namely brand awareness,
brand association perceived quality, and brand loyalty.

Customer- Based Brand Equity is defined as "a set of Brand assets and liabilities
linked to a brand, its name and symbol that add to or subtract from the value provided by
a product or service to a firm's consumers (Aaker, 1991)".

On the other hand, some researcher related the customer based brand equity with
other construct, e.g. Farquhar and Ijiri (1991) proposed a model by judging the
corporation's marketing efforts on its brand directly. While Lassar et al (1995) focused on
relationship between customer based and financial/ market based brand equity
measurement. Customer-based brand equity in this respect, is the driving force for incremental
financial gains to the firm.

54
Main Concept
contributor

Mahajan Rao Measure customer based brand equity by the level of

(1991) customer's perception

Biel, 1992 Brand image on price premiums for brand

Farquhar -Brand equity is reflected by the change of consumer attitude

(1990) while purchasing a product.

Aaker(1991) Measuring the four dimensions of brand equity: brand

awareness, brand association perceived quality, and brand
loyalty.

Keller(1993) Adopted two basic approaches ( direct and indirect ) to

measure customer- based brand equity emphasizing two
constructs: brand awareness and brand image. The indirect
approach to identify potential sources of costumer- based
brand equities The direct approach focuses on consumer
response to different elements of firm's marketing program.

Swait et al., Brand price trade-offs

1993; Roth,
1994

Farquhar & Judging the corporation's marketing efforts on its brand

Ijiri (1991) directly.

Lassar et al, Relationship between customer based and financial / market

based brand equity measurement. Customer-based brand

55
1995 equity in this respect is the driving force for incremental
financial gains to the firm. Brand performance, value, social
image, trustworthiness,and commitment

Erdem et al., Customer learning and choice models

1999

Keller (2003) stated that Brand awareness can be referred to as the ability of a consumer to
distinguish a brand under various conditions. Keller (2003) also noted that brand
awareness is built and increased by familiarity with the brand as a result of repeated
vulnerability which eventually leads to consumers experience with the brand. Consumer’s
experience of a particular brand could either be by hearing, seeing, or thinking about it and
this will help the brand to stick in their memory.

Developing and managing a strong brand in today’s market place is becoming an

increasingly difficult process. Brand proliferation (Berthon, Hulbert and Pitt 1999; Keller
1998; Richards, Foster and Morgon 1998), media fragmentation (Keller 1998), the influx
of information technology (Berthon, Hulbert and Pitt 1999), increased competition and
costs (Davis 1995;Harvey, Rothe and Lucas 1998; Keller 1998; Richards, Foster and
Morgon 1998), retailer power and changing consumer values (Berthon, Hulbert and Pitt
1999; Harvey, Rothe and Lucas1998; Richards, Foster and Morgon 1998) have all
contributed to the mounting pressures placed on brands and the brand management
system. This feeling of loyalty tends to imply that a person feels an obligation to persevere
with a personal relationship through good and bad times. Reichheld and Sasser (1990)
offer convincing evidence that retaining customers through service quality raises profits
through increased purchases and referrals, price premiums, and reduced operating costs.

The process of branding originated as a means by which a firm could differentiate its
goods or services from those of its competitors (Boyle, 2007). Now, however, brands are
renowned for offering consumers a unique set of perceived benefits not found in other
products (ibid).

56
Branding is generally seen to offer a range of perceived advantages and benefits for both
buyers and sellers including providing images and information on quality, offering
recognition, reassurance, security and exclusivity, contributing to brand image and identity,
market segmentation, the mutual development and strengthening of trading relationships,
and legal protection (Jones, Shears, Hillier and Clarke-Hill, 2002). According to Simoes
and Dibb (2001 cited in Jones et al, 2002) branding plays a special role in service
companies since strong brands increase customers’ trust of the invisible, enable them to
better visualize and understand the intangible and reduce customers’ perceived financial,
social or safety risk. They further stress that branding for services is different than
branding for tangible products because it is the company which is the primary brand (Jones
et al, 2002).

The importance of strong branding is not surprising when the high-risk levels often
associated with service purchase are considered (Dibb and Simkin, 1993). The literature in
this area highlights this level of risk and indicates that buying situations of this type might
cause buyers to undertake additional information searching in an attempt to reduce risk
(ibid). There are usually three sources of information in such circumstances: internal
(buyer’s experience of previous purchase), external word-of-mouth (from individuals who
have experienced a particular service) and external from the selling company’s own efforts
(e.g. advertising). It is essential that service companies promote and reinforce their brands
and thus improve the likelihood of these being promoted in this way (ibid).

When discussing branding in a financial service context the brand is related to the
company or corporate brand, which is the highest level in Keller’s brand hierarchy.
Product brands within financial services are relatively few and far between, and the
banking and financial services industry has long been characterized by monolithic
identities (Debling, 2000). There is also a difficulty of achieving differentiation at the
banking product level since the product attributes in this sector are very easy to copy. This
means the service quality has become an increasingly important factor for success and
survival in the banking sector. Provision of high quality service aids in meeting several
requirements such as customer satisfaction and its consequent loyalty and market share,
soliciting new customers, improved productivity, financial Performance and profitability.

57
It has also become an important research topic because of its important relationship to
corporate marketing and financial performance (Cui, Lewis and Park, 2003).

Branding is not simply Promotion and Advertisement, which is the normal perception of
people. It is much more than that. To quote, Bernd Schmitt, Professor, Columbia Business
School, Columbia University, ‘‘it is an organizational issue, not even a marketing issue.
Products / services with strong brand image enjoy immediate acceptance and are relatively
price- insensitive to some extent.’’.Do Banks understand brands?. was the title of an article
published in .The Economic Times, Brand Equity section of February 26 . March 4, 1997.
While the write up mostly deals with the trends of strategic branding efforts of foreign banks, it
gives an indication that Banks in India are still to make conscious efforts in this direction at
that point of time. But contrary to this, words like Brand, Branding, Brand Equity, Brand
Image, Brand Management etc. are being frequently used in banking circles at present. What
exactly do they mean and how they are relevant to the business we are in.

Some argue that the difficulty in achieving any sustainable or meaningful form of product
differentiation for most financial products meant that branding was a critical issue for the
companies’ concerned (Harris, 2007). However, those who have analyzed the “strength” of
brands in the financial sector have concluded that, in the main, they are relatively weak
brands when compared with consumer products (ibid). In particular, the brands have failed
to provide a sustainable source of differentiation and in most instances have only
succeeded in achieving awareness (Debling, 2000; Harris, 2007).

Marketing activities are undertaken with the goal of changing or reinforcing the consumer
mindset” in some way. This includes thoughts, feelings, experiences, images, perceptions,
beliefs and attitudes towards a brand. According to Aaker (1991) brand equity is a set of
assets and liabilities linked to a brand, its name and symbol that add to or subtract from the
value provided by a product or service to a firm and/or to that firm’s customers. The assets
and liabilities on which brand equity is based will differ from context to context. However,
they can be usefully grouped into five categories:

1. Brand loyalty

2. Name awareness

58
3. Perceived quality

4. Brand associations in addition to perceived quality

5. Other proprietary brand assets – patents, trademarks, channel relationships, etc.

The value of the brand, and the effectiveness of marketing activities undertaken to affect
the consumer mindset about a brand, is therefore often measured by evaluating changes in
perceptual responses on advertised attributes (Romaniuk and Nicholls, 2005)

BRAND RECOGNITION

Brand recognition relates to consumers’ ability to confirm prior exposure to the brand
when given the brand as a cue. It requires that consumers’ correctly distinguish the brand
as having been seen or heard previously (Keller, 1993). In many purchase situations the
brand is quite literally presented to the consumer first, and this is what stimulates the
consumer to consider the relevancy of category need: Do I really need or want this? The
sequence in the buyer’s mind is: recognition of the brand reminds me of category need. It
is important to understand here that a brand may actually fail a recall test, yet be
recognized at the time of the purchase decision and thereby consumed (Percy and Rossiter,
1992).

Brand equity in service industry

According to Bateson and Hoffman (1999), similarity in the characteristics of the
servicebranding has made it bothersome for consumers to differentiate between
differentservices until they have experienced it. They went further to say that as a result of
this,there have been arguments on the fact that there are more perceived risk connected
withpurchasing of services than goods.

Blackwell et al (2001) referred to perceived risk as the confusion faced by consumersabout

the potential positive and negative effect of their purchase decision. William
(2002)highlighted the fact that in order for consumers to reduce the perceived risk
connectedwith purchasing of services, they have resulted in buying brands that they trust
and arefamiliar with.

59
Berry (1999) noted that branding of services enhances customer’s trust of the invisibleand
can also reduce perceived social, monetary and safety risk in purchasing serviceswhich are
hard to ascertain before purchasing. According to Mackay (2001) and Kim etal. (2003),
while there are lots of literatures on the equity of goods, literatures based onservice
branding are limited. Krishnan and Hartline (2001) also stated that while brandequity
connected with tangible goods have gained greater attention in the literatures,fundamental
understanding of the nature of brand equity in service has not yet beendeveloped. They
went further to say that most articles on brand equity for services focuson theoretical and
anecdotal evidence.
Turley and Moore (1995) stated that limitation of service branding in literatures is as
aresult of the fact that few articles that examine correctly the development of servicebrands
are normally inconsistent. Some study which present brand equity of services are:Muller
and woods (1994) for example, talks more on brand management rather thanproduct
management in the restaurant industry; Stressing the need for a clear concept ofthe
restaurant industry, dependability of brand name and building brand image.
Muller and wood (1998) recommended three main issues that a service brand
shouldconcentrate on in order to build a strong brand equity and acquiescence in the
marketplace;
•
Quality product and service.
•
Performance of service delivery.
•
Establishing a symbolic and evocative image

He went further to say that a combination of these three issues in the development of
arestaurant brand will give rise to charging premium price and enhance customer’s
loyalty.Murphy (1990) diagnoses generic brand method in restaurant industry such as
simple,monolithic and endorsed.
Cobb-walgren et al (1995) study used customer based perceptual measure of brandequity.
Their study adopted Aaker (1991) conceptualization as adopted by Keller (1993)i.e. brand
awareness, brand association and perceived quality. Two different type of brandfrom
service category (hotel and house hold cleanser) were used to investigate the effectof brand
equity on consumer’s preference and purchase intention. The result of theirstudy shows
that brand equity increases both consumer’s preference and purchase Intention.

60
Another example of a study which offered a good way of understanding brand equity inthe
service industry is the study of Prasad and dev. (2000). Their study was based on
acustomer centric index of hotel brand equity, seeing customer as a means of profit
andcash flow. They converted customer’s view of brand performance and
customer’sawareness into numerical indicators.
Conclusively, one of the most important benefits of service branding is that it helps
toreduce perceived risk faced by consumers about the potential positive and negative
effectof their purchase decision and it also help to reduce search cost. Brand loyalty

According to Aaker (1991, p39), brand loyalty is “the attachment that a customer has to
abrand”. Yoo and Donthun (2001) also referred to brand loyalty as the tendency to be
loyalto a brand and this can be shown by the intention of the consumer to buy the brand as
aforemost choice.
Oliver (1999, p. 34) also defined brand loyalty as “deeply held commitment to re-buy orre-
patronize a preferred product/service consistently in the future, thereby causingrepetition
ofsame-brand or same brand set purchasing, despite situational influence andmarketing
efforts having the potential to cause switching behaviors”.
Odin et al (2001) stated that brand loyalty can either be behavioral or attitudinal.Behavioral
loyalty comprises of repeated purchases of the brand. According to Dekimpeet al (1997),
one advantage of this is that it measures observable behaviours rather thanself reported
deposition or intention. It is easier and cheaper to measure.
According to Chaudhuri and Holbrooks (2001), attitudinal loyalty can be referred to asthe
extent of dispositional promises with respect to some particular advantages connectedwith
the brand while behavioral loyalty has to do with the intention to repeat a purchase.
Although, the definition of behavioral brand loyalty deals with consumer’s sincereloyalty
to a brand as shown in purchase choice, the definition based on attitudinalperspective
stresses on consumers intention to be loyal to the brand. It is presumed thatconsumers
understanding of quality will be associated with their brand loyalty. As themore loyal a
consumer to a brand, the more he/she is presumed to see the brand as asuperior quality and
vice verse. Also, the more favorable association’s consumers havetowards a brand, the
more their loyalty and vice versa.
Aaker (1991 2002) classified loyalty as follows:

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  Non- customer: these are people who buy the brands of competitors.

 Price switcher: these are the once that are sensitive to price.

 Passive loyal: these once are purchase brand/product as a result of habit rather
that reason.

 Fence sitters: are those that are indifferent between several brands.

 Committed:are those who are honestly loyal to the brand.

Kotler also classified loyalty to include switchers, soft-core, hard-core loyal and shifting
loyal
So far, we have been able to connect the views of various researchers that address theissue
of consumer based-brand equity. From our readings and what we have been able togather,
we will like to state here that consumers base brand equity have influence onconsumers
perception of brand. Favorable perceptions of quality are more presumed to bedeveloped
by consumers who hold a favorable association toward a brand.
Further more, consumers brand awareness is presumed to be high when they have strong
association and perceived quality of the brand and vice versa.
Thus, consumer’s perceptions about the quality of a brand are presumed to be high when
they have strong association with the brand and vice versa

2.3. BRAND ASSOCIATIONS

A brand association is anything linked in memory to a brand (Aaker, 1991). The

association not only exists, but it has a level of strength. A link to a brand will be stronger
when it is based on many experiences or exposures to communications, rather than few. A

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brand image is a set of associations, usually organized in some meaningful way. A well
positioned brand will have a competitively attractive position supported by strong
associations (ibid). Brand image is defined as perceptions about a brand as reflected by the
brand associations held in consumer memory. Brand associations are the other
informational nodes linked to the brand node in memory and contain the meaning of the
brand for consumers. The favorability, strength and uniqueness of brand associations are
the dimensions distinguishing brand knowledge. This plays an important role in
determining the differential response that makes up brand equity, especially in high
involvement decision settings (Keller, 1993).

STRENGTH

The strength of associations depends on how the information enters consumer memory and
how it is maintained as part of the brand image. Strength is a function of both the amount
or quantity of processing the information receives at encoding, how much a person thinks
about the information, and the nature or quality of the processing the information receives
at encoding, the manner in which a person thinks about the information (Keller, 1993).
When a consumer actively thinks about and elaborates on the significance of product or
service information, stronger associations are created in memory. This strength, in turn,
increases both the likelihood that information will be accessible and the ease with which it
can be recalled by “spreading activation” (ibid).

FAVORABILITY

Favorability is reflected in the consumers’ belief that the brand has attributes and benefits
that satisfy their needs and wants such that a positive overall brand attitude is formed
(Keller,1993). Consumers are unlikely to view an attribute or benefit as very good or bad if
they do not also consider it to be very important. Hence, it is difficult to create a favorable
association for an unimportant attribute.

Not all associations for a brand will be relevant or valued in a purchase or consumption
decision. Associations might facilitate brand recognition or awareness or lead to inferences
about product quality, hence it might not always be considered a meaningful factor in a
purchase decision. Moreover, the evaluations of brand associations may be situational or

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context-dependent and vary according to consumers’ particular goals in their purchase or
consumption decisions (Day, Shocker and Srivastava, 1979 cited in Keller, 1993).

UNIQUENESS OF PERCEIVED BENEFITS AND ATTRIBUTES

Attributes are the descriptive features that characterize a product or service.

Attributes are distinguished according to how directly they relate to product or service
performance.

Product-related attributes are defined as the ingredients necessary for performing

the product or service function sought by consumers. Non-product-related attributes are
defined as external aspects of the product or service that relate to its purchase or
consumption. Price is a particularly important attribute association because consumers
often have strong beliefs about the price and value of the brand and may organize their
product category knowledge in terms of the price tiers of different brands (Blattberg and
Wisniewski, 1989).

User and usage imagery attributes can be formed directly from a consumer’s own
experience and contact with brand users or indirectly through the depiction of the target
market as communicated in brand advertising or by some other source of information. User
and usage image attributes can also produce brand personality attributes, which in turn may
reflect emotions or feelings evoked by the brand (Keller, 1993).

Benefits are the personal value consumers attach to the product or service
attributes; this is what consumers think the product or service can do for them. Benefits can
be further distinguished into three categories to the underlying motivations, to which they
relate (Park, Jaworski and MacInnis, 1986):

• Functional benefits are the more intrinsic advantages of product or service consumption
and usually correspond to the product-related attributes. These benefits are often linked to
fairly basic motivations, such as physiological and safety needs

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• Experiential benefits, relate to what it feels like to use the product or service and also
usually correspond to the product-related attributes. These benefits satisfy needs such as
sensory pleasure, variety and cognitive stimulation.

• Symbolic benefits are more extrinsic advantages of product or service consumption.

They usually correspond to non-product-related attributes and relate to underlying needs

for social approval or personal expression and outer-directed self-esteem.

Consumers may value the prestige, exclusivity or fashionability of a brand because of how
it relates to their self-concept (Solomon, 1983 cited in Keller, 1993).

BRAND ATTITUDE

Brand attitudes are important because they often form the basis for consumer behavior.
One widely accepted approach to brand attitudes is based on a multi attribute formulation
in which brand attitudes are a function of the associated attributes and benefits that are
significant for the brand (Keller, 1993). Percy and Rossiter (1992) highlights four
important characteristics to be understood about brand attitude:

1. Brand attitude depends upon the currently relevant motivation. As a result, if a

buyer’s motivation changes, so might the buyer’s evaluation of a brand

2. Brand attitude consists of both a cognitive and affective component. The cognitive
or logical belief, component guides behavior and the affective, or emotional
feeling, component energizes the behavior.

3. The cognitive component may be comprised of a series of specific benefit beliefs.

In and of themselves these are not the attitude, but rather the reasons for the brand
attitude.

4. In almost any product category what one is looking for is the brand that, relatively
speaking, meets the underlying motivation better than alternative brands. As long
as a motivation to behave exists, buyers will choose some brand that best meets that
motivation from the alternatives of which the buyer is aware.

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SATISFACTION WITH THE BRAND

To measure the satisfaction among customers’ the researcher can study the extent to which
the expectations regarding a number of satisfaction criteria have been fulfilled. Customers’
perceived values on the other hand is an average of their assessment of their bank’s
performance on a number of criteria weighted according to the relative importance of those
criteria in the overall bank’s performance (Angelis et al, 2005). Perceived value gives a
measure of the bank customers’ attitude to certain characteristics of the services
provided.Those attitudes should be measured since they perform as behavior formulators
(ibid).

BRAND LOYALTY

Aaker (1991) presented a figure based on five levels of loyalty. The first level contains the
non-loyal buyer who is completely indifferent to the brand. The second level includes
buyers who are satisfied with the product or at least not dissatisfied. Basically, there is no
dimension of dissatisfaction that is sufficient to stimulate a change especially if that change
involves effort. The third level consists of those who are also satisfied, and in addition,
have switching costs: costs in time, money or performance risk associated with switching.
Perhaps there is a risk that another brand may not function as well in a particular use
context. The fourth level consists of consumers that truly like the brand. Their preferences
may be based upon an association such as symbol, a set of use experiences or high
perceived quality. The top level is the committed customers, who have a pride of
discovering and/or being users of a brand. The brand is very important to them either
functionally or as an expression of who they are. Their confidence is such that they will
recommend the brand to others. The value of the committed customer is not so much the
business he/she generates but rather the impact upon others and upon the market itself
(Aaker, 1991).

Loyalty is a core dimension of brand equity. The perceived quality, the associations and
the well-known name can provide reasons to buy and can affect use satisfaction (Aaker,
1991). A loyal customer base represents a barrier to entry, a basis for a price premium,

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time to respond to competitor innovations, and a fortification against harmful price
competition (ibid).

Successful brands achieve higher customer loyalty. Unsuccessful brands or new brands
have to attract customers. The need to do so hits the net margin since it is much more
expensive in advertising, promotion, and selling to win new customers than to hold
existing satisfied ones (Doyle, 1990). Loyalty is of sufficient importance that other
measures, such as perceived quality and associations, can often be evaluated based on their
ability to influence it. A basic indicator of loyalty is the amount a customer will pay for the
brand (price premium) in comparison with another brand offering similar benefits (Aaker,
1996).

Attitudinal loyalty concepts conclude that consumers engage in extensive problem-solving

behavior involving brand and attribute comparisons, leading to strong brand preferences
(Bennet and Rundle-Thiele, 2002). Attitudinal loyalty is strongly connected to the
cognitive school of thought, which emphasize the role of mental processes in building
loyalty (ibid).

Behavioral loyalty is the observable outcome of attitudinal loyalty, without knowledge and
understanding of the attitude towards the act of buying the brand, it is difficult to design
marketing programs to modify behavioral loyalty. This is particularly the case in a non-
stable environment with changing needs or environments (Bennet and Rundle-Thiele,
2002).

Developing a high proportion of loyalty consumers is the ultimate goal for marketing
practitioners.

BEYOND LOYALTY – RELATIONAL CONSUMPTION

Evans et al. (2006) and their description of relationship marketing contains an relationship
targeted consumption identification, specification, initiation, maintenance and (if pertinent)
resolution of a long-running relationship between consumers and brands/organization
through mutual exchange, fulfillment of given promises and insistence of norms which are
connected to the relationship with the purpose to satisfy the goals that the parties has and
improve their experiences. For the consumer such a relational coordination can be very

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fruitful. They might experience closeness to the organization which can strengthen the
consumption behavior.They are treated in a special way and the organization offers them
something special.

Important concepts of such relationships are :

• Trust

• Engagement

• Mutual goals

• Customer satisfaction

• Cooperation

Brand Equity

David Aaker defines Brand Equity as a set of brand assets and liabilities linked to a brand, its
name and symbol that add to or subtract from the value provided by a product or service to a
firm and or to that firm.s customers.
It comprises of .Name or Brand Awareness of a particular product or organisation, say a Bank,
and is measured in terms of:
. Top of the mind Recall
. Unaided Recall
. Cued Recall
. Recognition
Brand image is another important area that talks about common product associations.
In common terms, people say that Brand Image is nothing but reserving our space in the mind-
shelves of people. When we talk in terms of awareness, it should be top of the mind Recall if
anything is stored in the Mind-Shelf of the people and that is one of the prime features of
Brand Image. Brand image is comparable to a halo on the top of the brand conveying
associations, feelings, attitudes, beliefs etc.
Brand Equity also comprises of Brand loyalty in terms of customers with different
levels of brand preferences, number of committed and delighted customers and different levels
of use satisfaction as its components. It can also be interpreted in terms of Repurchases and
Testimonials. A Bank Customer, for instance, purchasing a product/service continues to do so,

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how many more times and for what period. How about his behaviour in terms of other product
offerings of the same Bank? Whether he is inclined to recommend the same service/product to
his acquaintances/friends?
A brand should reflect a set of realistic values which should be promoted over a period
of time. Analysis of brand values adopted by the world.s major Banks reveals strong similarity.
Normally the words like .Big, trustworthy, safe, powerful, professional, reliable, helpful,
customer focused etc. feature in the value statements of banks. Apart from the values etc.,
effective brand management demands highly creative thinking in certain other activities
associated with strategic branding. Brand Logo and Slogan One of the most important activities
of branding is creation
of a symbol or logo. The logo should be created in such a way so as to facilitate quick
identification, recall and attribute a reasonable meaning that can easily be understood by
customers, present as well as prospective and general public. Simultaneously, the slogans
released from time to time should be creative, thought provoking and related to the business we
are in.

Brand Personality:
People involved in Branding activities quite often talk about Brand Personality, sex of a
brand etc. Though a brand is a complex entity in different viewpoints, for understanding what
exactly Brand personality and sex of a brand means, let us examine the statement that .a Brand
is a thought that exists in the minds of different consumers.. It is a perception that occupies the
mind space of different people and target audience. Once a brand personality becomes strongly
associated with a product category, it becomes difficult to extend the same to another
category.Branding Bank.s Services, certain innovative trends banking products and services
[like any other service industry] are intangible and inseparable. Further, they have an element
of fiduciary nature and require continuous flawless delivery systems.Therefore the branding
strategy essentially revolves around the Customers, i.e. Service Receiver and the staff (i.e.)
Service Provider. Hence the Brand building efforts should culminate in value addition to the
customers. Since it is very easy to copy banking products/services and most of the banks have

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similar products/ services range, the entire concentration should be on how best we can
differentiate our offer from that of the competition and adopt appropriate positioning. The
positioning of the brand should be in such a way to effectively communicate with the
customers/prospective customers about the value proposition and make them to experience the
service.
Some banks are following this line of brand building exercise by inducting Amitabh Bachchan,
Hema Malini, Juhi Chavla, Sharu Khan etc. as Service Ambassadors. The Indian Banker -
February 2006 9 Certain new generation Private Sector Banks came out with innovative
strategies by adopting demographic segmentation and targeting youngsters in their twenties.
The ultimate objective is to .Catch them young & retain for Life Value.. This approach
certainly aims at building a longer Brand life for the Bank and its products. When we talk
about branding with special reference to branch banking in India in Rural and Semi-urban
settings, service orientation of certain staff members of the branches and their acceptance by
the public make them icons in that area. We come across number of instances where people
remember the staff members and managers of the branches who excel in their service for quite
a long time even after their leaving the branches and in certain cases the Bank.s branch itself is
referred to as .Mr..... .s Bank. This can be taken as a classic example to prove how iconic
brands or image built up by people tend to improve the brand image of the bank and its
products over a considerable period of time. It is in this backdrop, Self Marketing/Self Selling
assumes a lot of importance wherein the basic aim would be to see that the frontline staff
market themselves first, i.e., get acceptance of those customers/public whom they serve such
that the products and services sold by them automatically get acceptance. This is all the more
important while selling services since they are intangible and also inseparable from the
personwho is rendering them. It is pertinent here to cite the quotation of
Portia Issacson: Unlike the earlier days, the highly competitive market conditions propelled by
rapid expansion of banking industry, entry of new
players led to lot of scientific studies and planning in the areas of Marketing and Branding of
Banking services. International marketing guru Philip Kottler observes, .new age bankers are
looking brand positioning, top of the mind recall, customer segmentation and brand building..
Certain Banks have started patenting the names of their products/services so as to prevent
others from using the same names. Stand-alone Branding vs. Umbrella Branding Traditionally

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banking brands are thought to be very difficult to build. In normal course, it may take around 5
years to build a brand while 5 minutes is enough to lose one. During the last one and a half
decades, starting from 1990, banks started coming out with attractive brand names like .Big
Buy. [SBI], .Humrahi.aishwarya. [Union Bank], .Right Now. [ANZ Grindlays] etc., for their
individual products which precisely can be termed as Stand-alone Branding.. After
painstakingly building up brands for years, banks started dropping stand alone brand names for
their products in favour of what is known as .Umbrella Branding. This major shift in brand
management can be attributed to studies indicating that the single most important factor that
influenced Indian Customers banking decision was trusted, known and reliable bank rather
than a particular product and its features.This is more so with branding deposit products
whereas the movement of credit products depends on certain other parameters also. Umbrella
branding which includes all the products of the
Bank concerned starts with the name of the bank first, followed by the name of the individual
product. For example, Citibank,Union Bank, Corporation Bank etc., now are following
umbrella branding wherein the Bank name in short form will be prefixed to the names of the
their individual products. Umbrella branding is proven to be more beneficial since it
simultaneously promotes the product image and also the corporate image and directly
associates with the brand equity of the concerned banks. This is one of the most effective ways
of developing a financial brand since products can be quite easy to copy whereas it is relatively
difficult to copy a truly differentiated customer experience that can be created by a bank.

It might be pointed out that spending funds on promotional avenues is bound to be

useless if the organization concerned does not understand fully the factors driving a
consumer to purchase a product. In other words, it will be better to have an improved
insight into the buyer's decision making process thus enabling the firm better target its
desired market for maximum sales. However, to do this it is important to comprehend
factors such as customer satisfaction, product worth, improved after sales service, brand
equity and brand loyalty of a product. Without a customer being satisfied, particularly in
banking sector, it will be difficult seeing the product sell in the market.

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Beside, the name of the bank too is found to deteriorate in the eyes of customers. Thus
making the customer happy and satisfied should be a continuing prerogative of any
enterprise. Prior to making an investment, customer consequently looks into factors like
interest rates, time period etc. offered with/by a product.

Every company seeks to have steady group of unwavering customers for its product or
service. Research suggests that an increase in market share related to improved brand
loyalty, marketers are understandably concerned with this element. Thus brands that seek
to improve their market position have to be successful both in getting brand users and in
increasing their loyalty. On the basis of the products studied, it was concluded that the
majority of customers tend to purchase a favourite brand or set of brands. Although the
degree of loyalty varied by product, the percentage of customers exhibiting some brand
loyalty was rather high. A definite relationship was discovered between strength of brands
and nature of the loyalty shown. Loyalty appears to be high for well established products
in which little or no changes have occurred and low where product entries are frequent.
Various other studies have used these and other measures of brand loyalty exists and is a
relatively wide spread phenomenon.

Customer's in today's context "look up" "at brands to guide them through several stages of
their decision making process. This effort on the part of customers may take place a
number of times in the customer's mind and may even range over a period of time if the
product under consideration is an expensive durable. The actual process and the time on
each stage of the process would depend on a lot of factors like the target segment, intensity
of the need, perceived importance of the need, affordability, etc.

As marketers spend a considerable amount of money on developing the equity of brands,

the following aspects may provide some direction on the linkage between brand equity and
customer decision-making:

1. How important is brand equity for customer?

2. When should an organization develop the equity for his brand?
3. Time duration involved in the brand equity development.

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 Brand equity in new concept products marketing the concept is extremely
important during the early stages of marketing. If an existing brand which has a strong
equity launches a new concept product, the brand equity may be useful to address the
perceived risk involved in trying out an unknown brand. The reassurance provided by the
equity of the brand is useful in the purchase base of customer decision making. This has to
be preceded by the efforts of the brand to market the concept which should arouse need by
providing relevant information. A leading brand of product should initially highlight the
utility of the product, its advantages over other and the ways in which the product could be
used apart from general use to market the concept. The dealer interaction during the
purchase phase should highlight the dependability of the brand based on its past success in
other product categories.

Most studies, however, suffer from a lack of comparability because of differing

conceptions of brand loyalty. Until customer behaviour researchers agree on a common
definition, there will continue to be difficulty in synthesizing results.

Substantial liberalization of the financial services has taken place which has led to
increasingly competitive environment in which the market share of the nationalized banks
has been reduced. Customers have not only widened their choices, but also being benefited
from competitive prices and improved services.

Indian commercial banks will have to equip themselves to meet the challenges of
competition from within the country as well as from outside.

While they proceed to meet these challenges, have to ensure that their foundations remain
sound and their attentions do not detract from principles of prudent banking Changes in
Economic Policies and with the implementation of financial sector reforms, the service
sector in India has undergone a sea changes in the last decade.

Business leader have few illusions about the challenges of building a world class brand.
Success full brand builders consciously resist investing everywhere that their brand
touches their customer. Instead they identify and then spend aggressively only on they
know will have the most impact on revenue growth and profitability.

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 The key to success in this changed competitive environment will be one's ability to
reach the clients at his doorstep and meet his requirements of product and services in a
customized manner. This development is indeed welcome as it has immense potential for
growth of banking business in future but it has its own drawback as there could be adverse
selection of customers. Once a bank has won customers it sees as desirable, the challenge
shifts to building relationships and turning them into loyal customers who will generate a
growing revenue stream for the bank in future.

The significance of bank marketing in Indian banking system is undeniable if they

have to survive in the competitive environment. A comprehensive definition of bank
marketing by Derk weyer of Barclays’ bank states that it consists of identifying the most
profitable market now and in future by assessing the present and future needs of the
customer. The major step in this direction is to blend the marketing variables to satisfy the
requirement of the customer.

Many elements are involved in creating long-term customer relationships and loyalty. The
process starts by Identifying and targeting the right customers. All segments are worth
serving, and it may not be realistic to try to retain them. Roger Hallowell, a Harvard
Business School professor, makes this point nicely in a discussion of banking: "A bank's
population of customers undoubtedly contains individuals who either cannot be satisfied,
given the service levels and pricing the bank is capable of offering, or will never be
profitable, given their banking activity their use of resources relative to the revenue they
supply.”

In view of this a humble attempt is being made to highlight the factors that
influence the brand equity and brand loyalty aspects in this new world order. It is being
assumed that this piece of work will no doubt have positive implications on professionals,
customers and banking organizations and that research of this nature will encourage further
detailed probes into the vital area of brand equity and brand loyalty.

RESEARCH METHODOLOGY

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After having a brief preview of the introductory aspects of branding and consumer
behavior in the previous chapter, this chapter attempts to describe the research
methodology adopted in this study under the following heads:

2.1 Presumptive analysis of the problem

2.2 Objectives of the study

2.3 Hypotheses

2.4 Importance of the study

2.5 Scope of the study

2.6 Sources of information

2.7 Method of Survey

2.8 Development of the tools of study

2.9 Sampling

2.10 Sample composition

2.11 Limitations

2.1PRESUMPTIVE ANALYSIS OF THE PROBLEM

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The very basic for any research work is the occurrence of any problem. And in order to
find a solution for the noticed problem a new research is done.Branding strategies of banks
has brought new challenges after libralization. Indeed deregulation, disinvestment,
privatization and free trade has brought unexpected competition among the manufactures
and providers of various goods and services.

The effect to say the least has been very crucial in the banking sector. In this sector, the
major market shareholders are nationalized banks with private sector banks needed to
establish themselves and to survive in this global scenario.

This epoch is beginning to see efforts made from all corners including utilizing the
banking industry by promoting, publicizing and advertising products to influence
consumer behaviour. By the use of various tools for advertisement and promotion, a brand
new chance for more and more outflow on the promotional activities, after sales services
and customer satisfaction has begun in serious. Fresh ideas for publicity of brands are
planned and organized, promotions and stunts are programmed.

But before the liberalization there was absence for the required information available on
consumer purchasing habits, purchase factors, brand awareness, brand quality, their
customer wants and dislike, reasons for attracting towards a brand or changing and existing
brand, etc. it was so because there was shortage of products and services which were
provided by limited number of companies and the products were sold on the choice of the
seller, the market was a vendors market. In case of banking sector to restraint the situation
the banks were nationalized.

But after the liberalization many multi nationals came into the Indian market, and started
marketing and branding their products. This stimulated the need to understand more and
more regarding customer behavior, buying habits, brands, brand loyalty, brand equity and
the associated aspects.

Owing to back of essential information, effective research and developmental work in the
field of consumer behavior is being done. Therefore, nowadays almost every company is
having its own research and development departments to help in collection of this essential

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information. The heaving expenditure in R & D (Research and development) is increasing
day by day, in research for prospective alternative.

The research attempts to evaluate whether branding can be a key strategy for a Nationalize
banks to enjoy competitive advantage. The study also evaluates the impact of 'Brand' on
the organizational performance and growth. This research work has attempted to clarify
some of these issues as well as provide new insights into the salient practices and processes
involved in brand management in Nationalized Banks. Only recently however, has an
attempt been made to integrate all the salient issues of brand management, and a checklist
called the Brand Report Card, developed for managers to assess how well they are doing
on these issues [Keller, 2000). This forms part of the tool used in the underlying study.

There are the number of examples where the big companies and their distributers found
them self in difficulty just because of lack of information in the field of consumer
behavior. To find out a solution and greater information about consumer behavior in the
field of banking sector, this research work is organized.

OBJECTIVES:

The study has following objectives:-

The purpose of the study is to identify the role of brand equity and brand loyalty in
nationalized banks and how a particular customer behave toward particular brand

The Main points which researcher proposes to analyze in this study are:

1.To study how the brand equity of nationalized banks plays a significant role in the eye of
customer.

2.To study how increasing customer satisfaction leads to higher brand loyalty.

3.To know Customer satisfaction will have a direct effect on brand loyalty.

4.To access that how brand equity play an important role in the selection of bank.

5.To know the current strategies of nationalized banks regarding customer satisfaction.

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HYPOTHESES:

The following hypotheses guide the research process:

 H10 Brand equity of nationalized banks does not play a significant role in the eye
of customer.

H11 Brand equity of nationalized banks plays a significant role in the eye of
customer.

 H20 Increasing customer satisfaction does not lead to higher brand loyalty.

H21 Increasing customer satisfaction leads to higher brand loyalty.

 H30 There is no significant effect of customer satisfaction on brand loyalty.

H31 There is significant effect of customer satisfaction on brand loyalty.

 H40 There is no significant effect of brand equity on the selection of bank.

H41 There is a significant of effect brand equity on the selection of bank

IMPORTANCE OF THE STUDY:

It is a known fact that during this era of globalization and liberalization, only the
strongest are going to survive. However, this is not possible without the participation of
consumers, who are the ultimate king of the market, more so in relation to banking sector.
In fact, as pertains to this industry where there is a throat cutting competition, every
organization aspires to capture a major share of the market. Among the other things
investing wisely and heavily on advertisement and promotional activities not to mention on
human resources also. Indeed the prospects of companies that are either not keen on
investing in promotional activities or may not be able to do so because of financial
constraints survival in the long run becomes grim. Hence maintaining on appropriate
budget (preferably) gradually increasing, keeping in mind competition needs becomes a
necessity.

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 It might be pointed out that spending enormous funds on promotional avenues is
bound to be useless if the organization concerned does not understand fully the factors
driving a consumer to purchase a product. In other words, it will be better to have an
improved insight into the buyer's decision making process thus enabling the firm better
target its desired market for maximum sales. However, to do this it is important to
comprehend factors such as customer satisfaction products worth, improved after sales
service, brand equity and brand loyalty of a product. Without the customer being satisfied,
particularly in banking sector, it will be difficult seeing the product sell in the market.
Besides, the name of the bank is too is found to deteriorate in the eyes of customers. Thus
making the customer happy and satisfied should be continuing prerogative of any
enterprise. Prior to making an investment, customer consequently looks into factors like
interest rates, time period etc. offered with/by a product.

Every company seeks to have steady group of unwavering customers for its product
and services. Research suggests that an increase in market share related to improve brand
loyalty; marketers are understandably concerned with this element. Thus brands that seek
to improve their market position have to be successful both in getting brand users and in
increasing their loyalty. On the basis of the products studied, it was concluded that the
majority of customers trend to purchase the favorite brand or set of brands. Although the
degree of loyalty varied by product, the percentage of customers exhibiting some brand
loyalty was rather high. A definite relationship was discovered between strengths of brands
and nature of the loyalty shown. Loyalty appears to be high for well established products
in which little or no change have occurred and low where product entries are frequent.
Various other studies have used these and other measures of brand loyalty exists and is a
relatively wide respectively wide spread phenomenon.

Customer's in today's context search at brands to guide them through several stages of their
decision making process.The actual process and the time on each stage of the process
would depend on a lot of factors like the target segment, intensity of the need, perceived
importance of the need, affordability, etc.

79
As marketers spend a considerable amount of money on developing the equity of brands,
the following aspects may provide some direction on the linkage between brand equity and
consumer decision-making:

1. How important is brand equity for customer regarding financial product and services?

2. Relevance of brand equity for durable product

3.When should to develop the equity for his brand if it is new concept/product that new to
the market?

4. Stages and time perid involve in the development of a product category and its
implication on brand equity development.

Brand equity is new concept products' marketing the concept is tremendously important
during the early stages of marketing. If an existing brand which has strong equity launches
a new concept product, the brand equity may be useful to talk the supposed risk involved
in trying out an unknown brand. The pledge provided by the equity of the brand is useful
in the purchase base of consumer verdict.A prominent brand of product should initially
highlight the utility of the product, its advantages over other and the ways in which the
product could be used apart from general use to market the concept

Most studies, however, suffer from the lack of comparability because of divergent
beginnings of brand loyalty. Until customers behavior researchers agree on a common
definition, there will continue to be difficulty in synthesizing results.

80
 AJM
ER

81
 Ajmer is a historical region in central Rajasthan, a central part of a big
Chauhan empire in 11-12th centuries. The region includes a present day
Ajmer district and is bounded on the west by Marwar, on the northeast by
Dhundhar, on the southeast by Hadoti, and on the south by Mewar regions.

The independent history of the region is closely connected to

Chauhans, who ruled this part from 11 th till 14th centuries. Chauhan clan
was one of the four main Rajput dynasties (Agnivanshis) of that era, the
others being Pratiharas, Paramaras and Chalukyas.

One of the branches of Chauhans established themselves in the salt lake

Sambhar area (in the Dhundhar region). Sakhambari branch remained near
lake Sambhar and married into the ruling Gurjar-Pratihara, who then ruled an
empire in Northern India.

The Chauhans later asserted their independence from the Pratiharas,

and in the early eleventh century, the Sakhambari king Ajaya-Raja founded
the city of Ajayameru (Ajmer) in the southern part of their kingdom, and in
the mid twelfth century, his successor Vigraharaja enlarged the state, captured
Dhilika (the ancient name of Delhi) from the Tomaras and annexed some of
their territory along the Yamuna River, including Haryana and Delhi.

In 12th century the Chauhans dominated Delhi, Ajmer, and

Ranthambhor. They were also prominent at Godwar in the southwest of
Rajputana, and at Hadoti (Bundi and Kota) in the east. Chauhan politics were
largely campaigns against the Chalukyas and the invading Muslim hordes.

The Chauhan kingdom became the leading state and a powerful

kingdom in Northern India under King Prithviraj III (1165-1192), also known

82
as Prithviraj Chauhan or Rai Pithora. Prithviraj III has become famous in folk
tales and historical literature as the Chauhan king of Delhi who resisted the
Muslim attack in the first Battle of Tarain (1191). Armies from other Rajput
kingdoms, including Mewar assisted him. The Chauhan kingdom collapsed
after Prithviraj was defeated by Mohammed of Ghor in 1192 at the Second
Battle of Tarain.

This failure ushered in Muslim rule in North India, the first of the
enlightened Delhi Sultanates, but the Chauhans remained in Ajmer as
feudatories of Mohammed of Ghor and the Sultans of Delhi until 1365, when
Ajmer was captured by the rulers of Mewar.

In 1509 Ajmer became a source of contention between the maharajas of

Mewar and Marwar, and was ultimately conquered by the Marwar ruler in
1532. Ajmer was lost to the Mughal emperor Akbar in 1559. It continued to
be in the hands of the Mughals, with occasional revolts, till 1770, when it was
ceded to the Marathas. From that time up to 1818 Ajmer was the scene of an
ongoing struggle, being seized at different times by the Mewar and the
Marwar maharajas.

In 1818 the Marathas sold Ajmer to the British for 50,000 rupees, and it
became Ajmer-Merwara Province. Since then Ajmer had enjoyed unbroken
peace and stable governance.

The province consisted of the districts of Ajmer and Merwara, which

were physically separated by the territory of Rajputana Agency. Ajmer-
Merwara was administered directly by the British Raj, by a commissioner
who was subordinate to the governor-general's agent for Rajputana. Ajmer-

83
Merwara remained a province of India from independence in 1947 to 1950,
when it became the state of Ajmer.

In 1950, Ajmer state became a "Part C" state, governed by a chief

commissioner appointed by the President of India. Haribhau Upadhyaya, a
noted Congress leader, was the Chief Minister of Ajmer state from 24 March,
1952 to 31 October, 1956. Ajmer state was merged into Rajasthan state on
November 1, 1956. Kishangarh sub-division of erstwhile Jaipur district was
added to it to form Ajmer district. 1

Ajmer, a city located in the Ajmer District in the center of Rajasthan

and well surrounded by the districts of Jaipur & Tonk in the eastern side and
Pali in the western side, which is also known as holy city enfolded in green-
carpet hills.

The city has been sparkling with its many old monuments like Taragarh
Fort, Ahai - Din Ka- Jhonpra since the city discovered in 7th century AD by
Raja Ajay Pal Chauhan.

Ajmer has its important role in the Mughal India map. Historic Ajmer
attracts pilgrims and tourists from India and abroad. The most favorable place
among tourists that can be visited in Ajmer is Muin-ud-Din Chisti's Dargah
that is uniformly reversed by both Hindus & Muslims.

The Ajmer lives up with the traditions of religions and cultures. The
mughal era architectures have added the spice in to this place. Some sites in

1
^ Sharma, Nidhi (2000). Transition from Feudalism to Democracy, Jaipur: Aalekh
Publishers, ISBN 81-87359-04-4, pp.197-201,205-6

84
this town include the lake of Ana Sagar, Daulat Bagh, museum owned by
government, the Nasiyan Jain Temple and of course the above cited tomb of
Sufi Saint.

85
 All those who visited to Ajmer have also visited to Nag Pahar - the
town of Pushkar by the bus journey of half hour.

As mentioned, the Ajmer city has been founded by Raja Ajay Pal
Chauhan in the 7th Century AD, who has established highly regarded
Chauhan dynasty that constantly rule India until the invasions of Muslims
have been ruled out.

The strong hold of Chauhan remained on Ajmer till 1193, until the
Mohammed Ghori, an Afghan ruler defeated the last Chauhan's emperor. The
last Chauhan emperor till that time was Prithviraj Chauhan. Ajmer had faced
chaotic times since the rapidly changing emperors since thereafter.

Finally, in 1556, the mughal emperor Akbar has won the Ajmer and
used Ajmer as the main headquarter for all its campaigns in the state of
Rajasthan. After the Mughals declination, the control of the Ajmer city has
been passed to the Marathas, particularly to the Gwalior' Scindias.
The avowed goals of Indian planning has been to improve the living
conditions of the rural people by providing employment opportunities and
generating income through the process of rural development programmes. For
over fifty nine years of planning, the planners have considered employment
and income generation as effective instruments for poverty alleviation and
improvement in the physical quality of life of the rural people. But there is
still a long way to go in achieving the goal of full employment and urban
facilities in rural areas. However, for rural development of all over India
focused on socio-economic development, through better availability of
resources by banking reforms after 1969.

86
 It is true that banking sector reforms carried out India is one of the very
successful modal appreciated worlds over. It is now realized that such reforms
cannot be sustainable unless there is meaningless transformation of
borrowings units in rural sectors, especially the agricultural sector. The
reform to ensure sustainable growth should be also touch a majority of people
and common economic activities in rural India and reduce poverty.

Bank of Baroda

Bank of Baroda (BoB) (BSE: 532134) (Hindi: बैंक ऑफ़ बड़ौदा) is the
third largest bank in India, after the State Bank of India and the Punjab
National Bank and ahead of ICICI Bank.[1] BoB has total assets in excess of
Rs. 2.27 lakh crores, or Rs. 2,274 billion, a network of over 3,000 branches
and offices, and about 1,100 ATMs. IT plans to open 400 new branches in the
coming year. It offers a wide range of banking products and financial services
to corporate and retail customers through a variety of delivery channels and
through its specialised subsidiaries and affiliates in the areas of investment
banking, credit cards and asset management. Its total business was Rs. 4,402
billion as of June 30.[2]

Sum up
Branding is not an arithmetic or statistical tool or formula to get the desired
result on its application. On the other hand, highly creative and innovative ways
of branding alone can be of effective use in bringing about desired results. The

87
central theme of Ad- Asia 2003, Break the rules is most appropriate in effective
brand building exercise. People quite often refer to .out of box thinking that is
more relevant in this area. The objective of the whole exercise should be to bring
about positive emotional perceptions in the minds of people along with value
additions to the customers and differentiate our services from that of the
competition and create USP, Unique Service Proposition. Branding is not simply
Promotion and Advertisement, which is the normal perception of people. It is
much more than that. To quote, Bernd Schmitt, Professor, Columbia Business
School, Columbia University, it is an organizational issue, not even a marketing
issue. Products / services with strong brand image enjoy immediate acceptance
and are relatively price- insensitive to some extent.!"

References

1. 28 May 2010, 04.34PM IST, ET Now (2010-05-28). "Growth

potential for Bank of Baroda is pretty high: Arihant Capital Markets -
Views/Recommendations - Stocks - Markets - The Economic Times".
Economictimes.indiatimes.com.
http://economictimes.indiatimes.com/Views/Recommendations/articles
how/5985388.cms. Retrieved 2010-08-20.
2. http://www.bankofbaroda.co.in/download/
results_fy01_2010_11.pdf

3. "India's International Bank - About Us". Bank of Baroda.

http://www.bankofbaroda.com/aboutus.asp. Retrieved 2010-07-16.

4. "Contact Us - BOB Capital Markets Ltd".

Bobcapitalmarkets.com. http://www.bobcapitalmarkets.com/contact-
us.asp. Retrieved 2011-02-03.

88
 5. "BOB Capital to begin e-broking by March-end" . Business-
standard.com. 2008-09-09.
http://www.business-standard.com/india/news/bob-capital-to-begin-e-
broking-by-march-end/333805/. Retrieved 2011-02-03.

 Tripathi, Dwijendra and Priti Misra (1985). Towards a New Frontier:

History of the Bank of Baroda, 1908-1983. (New Delhi, India:
Manohar).

 Media related to Bank of Baroda at Wikimedia Commons

 Bank of Baroda website

 BoBCards - Credit card Arm of Bank of Baroda

 BoB Capital markets - Investment Banking Arm of Bank of Baroda

 BoB Mutual Fund - Mutual Fund Arm of Bank of Baroda

 Gramin Bank-Rural Banking Arm of Bank of Baroda

 Banking Arm of Bank of Baroda

 Bank of Baroda IFSC Codes

STATE BANK OF INDIA

The evolution of State Bank of India can be traced back to the first
decade of the 19th century. It began with the establishment of the Bank of
Calcutta in Calcutta, on 2 June 1806. The bank was redesigned as the Bank of
Bengal, three years later, on 2 January 1809. It was the first ever joint-stock
bank of the British India, established under the sponsorship of the
Government of Bengal. Subsequently, the Bank of Bombay (established on

89
15 April 1840) and the Bank of Madras (established on 1 July 1843) followed
the Bank of Bengal. These three banks dominated the modern banking
scenario in India, until when they were amalgamated to form the Imperial
Bank of India, on 27 January 1921.
An important turning point in the history of State Bank of India is the
launch of the first Five Year Plan of independent India, in 1951. The Plan
aimed at serving the Indian economy in general and the rural sector of the
country, in particular. Until the Plan, the commercial banks of the country,
including the Imperial Bank of India, confined their services to the urban
sector. Moreover, they were not equipped to respond to the growing needs of
the economic revival taking shape in the rural areas of the country. Therefore,
in order to serve the economy as a whole and rural sector in particular, the All
India Rural Credit Survey Committee recommended the formation of a state-
partnered and state-sponsored bank.
The All India Rural Credit Survey Committee proposed the take over of
the Imperial Bank of India, and integrating with it, the former state-owned or
state-associate banks. Subsequently, an Act was passed in the Parliament of
India in May 1955. As a result, the State Bank of India (SBI) was established
on 1 July 1955. This resulted in making the State Bank of India more
powerful, because as much as a quarter of the resources of the Indian banking
system were controlled directly by the State. Later on, the State Bank of India
(Subsidiary Banks) Act was passed in 1959. The Act enabled the State Bank
of India to make the eight former State-associated banks as its subsidiaries.
The State Bank of India emerged as a pacesetter, with its operations
carried out by the 480 offices comprising branches, sub offices and three
Local Head Offices, inherited from the Imperial Bank. Instead of serving as
mere repositories of the community's savings and lending to creditworthy

90
parties, the State Bank of India catered to the needs of the customers, by
banking purposefully. The bank served the heterogeneous financial needs of
the planned economic development.

Branches
The corporate center of SBI is located in Mumbai. In order to cater to
different functions, there are several other establishments in and outside
Mumbai, apart from the corporate center. The bank boasts of having as many
as 14 local head offices and 57 Zonal Offices, located at major cities
throughout India. It is recorded that SBI has about 10000 branches, well
networked to cater to its customers throughout India.
ATM Services
SBI provides easy access to money to its customers through more
than 8500 ATMs in India. The Bank also facilitates the free transaction of
money at the ATMs of State Bank Group, which includes the ATMs of State
Bank of India as well as the Associate Banks – State Bank of Bikaner &
Jaipur, State Bank of Hyderabad, State Bank of Indore, etc. You may also
transact money through SBI Commercial and International Bank Ltd by using
the State Bank ATM-cum-Debit (Cash Plus) card.
Subsidiaries
The State Bank Group includes a network of eight banking subsidiaries
and several non-banking subsidiaries. Through the establishments, it offers
various services including merchant banking services, fund management,
factoring services, primary dealership in government securities, credit cards
and insurance.
The eight banking subsidiaries are:
 State Bank of Bikaner and Jaipur (SBBJ)

91
  State Bank of Hyderabad (SBH)

 State Bank of India (SBI)

 State Bank of Indore (SBIR)

 State Bank of Mysore (SBM)

 State Bank of Patiala (SBP)

 State Bank of Saurashtra (SBS)

 State Bank of Travancore (SBT)

Personal Banking
 SBI Term Deposits SBI Loan For Pensioners
 SBI Recurring Deposits Loan Against Mortgage Of Property

 SBI Housing Loan Loan Against Shares & Debentures

 SBI Car Loan Rent Plus Scheme

 SBI Educational Loan Medi-Plus Scheme

Other Services
 Agriculture/Rural Banking
 NRI Services

 ATM Services

 Demat Services

 Corporate Banking

 Internet Banking

92
  Mobile Banking

 International Banking

 Safe Deposit Locker

 RBIEFT

 E-Pay

 E-Rail

 SBI Vishwa Yatra Foreign Travel Card

 Broking Services

 Gift Cheques

Contact
State Bank Of India, Corporate Centre , Madam Cama Road, Mumbai 400
021 India
Website: www.statebankofindia.com

PUNJAB NATIONAL BANK (BSE: 532461, NSE: PNB), is the third

largest bank in India. It was registered on May 19, 1894 under the Indian
Companies Act with its office in Anarkali Bazaar Lahore. Today, the Bank is
the second largest state owned commercial bank in India with about 5000
branches across 764 cities. It serves over 37 million customers. The bank has
been ranked 248th biggest bank in the world by the Bankers Almanac,
London. The bank's total assets for financial year 2007 were about US$60
billion. PNB has a banking subsidiary in the UK, as well as branches in Hong

93
Kong, Dubai and Kabul, and representative offices in Almaty, Dubai, Oslo,
and Shanghai.

Punjab National Bank is one of the Big Four banks of India, along with ICICI
Bank, State Bank of India and HDFC Bank—its main competitors.[1]

History

 1895: PNB commenced its operations in Lahore. PNB has the

distinction of being the first Indian bank to have been started solely
with Indian capital that has survived to the present. (The first entirely
Indian bank, the Oudh Commercial Bank, was established in 1881 in
Faizabad, but failed in 1958.) PNB's founders included several leaders
of the Swadeshi movement such as Dyal Singh Majithia and Lala
HarKishen Lal,[2] Lala Lalchand, Shri Kali Prosanna Roy, Shri E.C.
Jessawala, Shri Prabhu Dayal, Bakshi Jaishi Ram, and Lala Dholan
Dass. Lala Lajpat Rai was actively associated with the management of
the Bank in its early years.

 1904: PNB established branches in Karachi and Peshawar.

 1940: PNB absorbed Bhagwan Dass Bank, a scheduled bank located in

Delhi Circle.

 1947: Partition of India and Pakistan at Independence. PNB lost its

premises in Lahore, but continued to operate in Pakistan. PNB had
already shifted its registered office from Lahore to Delhi in June 1947
— even before the announcement of the Partition.

94
 1951: PNB acquired the 39 branches of Bharat Bank (est. 1942); Bharat
Bank became Bharat Nidhi Ltd.

 1961: PNB acquired Universal Bank of India.

 1963: The Government of Burma nationalized PNB's branch in

Rangoon (Yangon).

 September 1965: After the Indo-Pak war the government of Pakistan

seized all the offices in Pakistan of Indian banks, including PNB's
headoffice, which may have moved to Karachi. PNB also had one or
more branches in East Pakistan (Bangladesh).

 1960s: PNB amalgamated Indo Commercial Bank (est. 1933) in a

rescue.

 1969: The Government of India (GOI) nationalized PNB and 13 other

major commercial banks, on July 19, 1969.

 1976 or 1978: PNB opened a branch in London.

 1986 The Reserve Bank of India required PNB to transfer its London
branch to State Bank of India after the branch was involved in a fraud
scandal.

 1986: PNB acquired Hindustan Commercial Bank (est. 1943) in a

rescue. The acquisition added Hindustan's 142 branches to PNB's
network.

 1993: PNB acquired New Bank of India, which the GOI had
nationalized in 1980.

 1998: PNB set up a representative office in Almaty, Kazakhstan.

95
  2003: PNB took over Nedungadi Bank, the oldest private sector bank in
Kerala. At the time of the merger with PNB, Nedungadi Bank's shares
had zero value, with the result that its shareholders received no
payment for their shares.

PNB also opened a representative office in London.

 2004: PNB established a branch in Kabul, Afghanistan.

PNB also opened a representative office in Shanghai.

PNB established an alliance with Everest Bank in Nepal that permits
migrants to transfer funds easily between India and Everest Bank's 12
branches in Nepal.

 2005: PNB opened a representative office in Dubai.

 2007: PNB established PNBIL - Punjab National Bank (International) -
in the UK, with two offices, one in London, and one in South Hall.
Since then it has opened a third branch in Leicester, and is planning a
fourth in Birmingham.

 2008: PNB opened a branch in Hong Kong.

 2009: PNB opened a representative office in Oslo, Norway, and a

second branch in Hong Kong, this in Kowloon.

 2010: PNB received permission to upgrade its representative office in

the Dubai International Financial Centre to a branch.

PNB has had he privilege of maintaining accounts of national leaders such

as Mahatma Gandhi, Shri Jawahar Lal Nehru, Shri Lal Bahadur Shastri,

96
Shrimati Indira Gandhi, as well as the account of the famous Jalianwala Bagh
Committee.

Forbes Global 2000 Ranking

Punjab National Bank was ranked 1243 in the Forbes Global 2000.[3][4]

Union Bank of India (UBI) is one of India's largest state-owned banks (the
government owns 55.43% of its share capital), is listed on the Forbes 2000. It
has assets of USD 13.45 billion and all the bank's branches have been
networked with its 1135 ATMs. Its online Telebanking facility are available
to all its Core Banking Customers - individual as well as corporate. It has
representative offices in Abu Dhabi, United Arab Emirates, and Shanghai,
Peoples Republic of China, and a branch in Hong Kong.

Because of its acronym UBI, the public sometimes confuses it with United
Bank of India.

History

 1919 UBI was registered on 11 November 1919 as a limited company

in Mumbai. It was inaugurated by Mahatma Gandhi.
 1947 UBI had only 4 branches - 3 in Mumbai and 1 in Saurashtra, all
concentrated in key trade centres.

 1969 The Government nationalized UBI. At the time of its

nationalization, UBI had 240 branches in 28 states.

After nationalization, UBI merged in Belgaum Bank, a private sector

bank established in 1930.

97
  1985 UBI merged in Miraj State Bank, established in 1929.
 1999 UBI acquired Sikkim Bank in a rescue at the request of the
Reserve Bank of India after the discovery of extensive irregularities at
the non-scheduled bank. Sikkim Bank had eight branches located in the
North-east, which was attractive to UBI.

 2007 UBI opened representative offices in Abu Dhabi, United Arab

Emirates, and Shanghai, Peoples Republic of China.

 2008 UBI opened a branch in Hong Kong, its first branch outside India.

 Dec 2009 UBI opened a representative office in Sydney

References

http://www.bseindia.com/bseplus/StockReach/AdvanceStockReach.aspx?
scripcode=532477

Corporation Bank(Kannada: ಕಾರ್ಪೊರೇಶನ್ ಬ್ಯಾಂಕ್), founded in 1906 in

Udupi, Karnataka state, India, is one of the Indian banks in Public Sector
Undertaking. The bank was founded with an initial capital of Rs. 5000 (USD
100), and first day’s canvassed resources of less than one USD 1, has
currently (31 March 2004) 12,724 full time employees, and operates from
several branches in India.

The Bank is a Public Sector Unit with 57.17% of Share Capital held by the
Government of India. The Bank came out with its Initial Public Offer (IPO) in
October 1997 and 37.87% of Share Capital is presently held by the Public and
Financial Institutions. The Bank’s Net Worth stood at Rs.3,054.92 crores as
on 31 March 2005.

98
The bank has the distinction of the first Indian bank to publish its financial
results (1998-99) conforming to US GAAP.

Contents

[hide]

 1 History
 2 100 years of banking

 3 Ratings

 4 Awards won

 5 Major recognitions

 6 External links

 7 References

[edit] History

Corporation Bank, the oldest banking institution in the erstwhile undivided

Dakshina Kannada(Mangalore) District of Karnataka and one of the oldest
banks in India, was founded in 12th March 1906 in the Temple Town of
Udupi, by a small group of philanthropists led by Khan Bahadur Haji Abdulla
Haji Kasim Saheb Bahadur. The need to start this bank was felt because there
was no such facility at Udupi, an important trading centre next to Mangalore
in D.K. District. The indigenous banking was largely in the hands of a few
rich private individuals and something had to be done to provide relief to the
common man from the clutches of the money lenders who held full sway. The
first branch of a modern bank established in the district was the Bank of

99
Madras, one of the three Presidency Banks, which set up its office in
Mangalore in 1868 largely to cater to the business needs of a few British
firms dealing in export of plantation products. Its agent used to visit Udupi
once a fortnight or so, to do banking. Money remittances had to be made only
through postal medium.

To overcome these drawbacks and also to provide banking facilities for Udupi
in particular and the district in general, a cosmopolitan group of
philanthropists led by Haji Abdulla Saheb made a bold venture to start this
institution. What inspired the founding fathers was the fervour of
Swadeshism. For promoting the Bank , the Founder President made an appeal
saying , " The primary object in forming the ‘Corporation' is not only to
cultivate habits of thrift amongst all classes of people , without distinction of
caste or creed, but also habits of co-operation amongst all classes. This is
‘swadeshism', pure and simple and every lover of the country is expected to
come forward and co-operate in achieving the end in view." They rightly
defined Swadeshism as institution-building to aid economic activity through
co-operation of all, shorn of distinction of caste and creed

"The Canara Banking Corporation (Udupi) Ltd.", as the institution was called
then, started functioning as a ‘Nidhi' with a humble beginning. The initial
capital was Rs.5000/- and at the end of the first day, its resources stood at 38
Rupees - 13 Annas and 2 Pies.

The setting up of the Canara Banking Corporation Ltd. seems to have given a
fillip to co-operative Banking and also to regular banking elsewhere in the
district. Between 1909 and 1917, six co-operative banks came into being and
during the decade immediately after the First World War (1914-18) South

100
Kanara gave birth to as many as eight banks. It is to the credit of this Bank
that despite two world wars, economic depression and stiff competition, the
Bank not only quite survived, but also made satisfactory progress.

Having been started at Udupi, the Bank first branched out by opening a
branch at Kundapur in 1923. The second branch of the Bank was opened in
Mangalore at Car Street in 1926. The Bank stepped into Kodagu District in
1934 by opening its seventh branch in Madikeri. In 1937, the Bank was
included in the second schedule of Reserve Bank of India Act, 1934. In 1939,
the Bank's name changed from "Canara Banking Corporation (Udupi) Ltd." to
"Canara Banking Corporation Ltd." The Bank graduated into a Regional Bank
in 1945 when the total number of its branches stood at 28. In the year 1961, it
took over ‘Bank of Citizens, Belgaum.' In the same year, the Bank's
Administration Office shifted from Udupi to Mangalore.

The second change in the name of the Bank occurred in 1972, from ‘Canara
Banking Corporation Ltd'. to ‘Corporation Bank Limited.' The Bank was
nationalised in 1980 along with 5 other private sector banks. After
nationalisation, the pace of growth of the Bank accelerated and it made all-
round progress. Started as a common man's bank, it changed with the times to
meet the aspirations of the people but never swerved from its motto- "Sarve
Janah Sukhino Bhavantu" meaning Prosperity for All. It endeavoured and
succeeded in striking a right balance between traditional values and
innovative approach, personalised service and professional outlook and
commercial considerations and public concern. One of the unique
achievements of the Bank is that it has been paying dividend continuously for
the last 98 years since its inception. Today, with the most modern technology-
driven products and services and nationwide branches & ATMs, Corporation
101
Bank stands tall among the Public Sector Banks in the country and is hailed
as one among the well-managed Public Sector Banks with excellent track
record in all the key parameters of banking. The Bank has the second largest
ATM network in the public sector.

Corporation Bank had the honour of playing host to many a distinguished

personality. During the Bank's Platinum Jubilee Celebrations in 1976, the new
Administrative Office Building at Pandeshwar Mangalore was opened by Shri
B.D.Jatti, the then Vice-President of India. The bronze statue of Pt.
Jawaharlal Nehru installed by the Bank at the Traffic Island in front of its
Corporate Office at Pandeshwar Mangalore, was unveiled by Mr. Justice E.S.
Venkataramaiah, the then Chief Justice of India. In 1992, His Excellency Shri
R. Venkataraman, the then President of India, visited the Bank to inaugurate
its 85th anniversary celebrations and 60th anniversary of the Bank's
commencement of operation in Tamil Nadu state. In the year 1996, Mr.
Justice A.M.Ahmadi, the then Chief Justice of India, visited the Bank to
deliver the 90th year commemorative lecture. ‘Corporation Bank House', the
new premises of the Bank's Car Street Mangalore branch, was inaugurated by
Dr. Manmohan Singh, who was then the Union Finance Minister. Dr. C.
Rangarajan, the then Governor of Reserve Bank of India, launched the
prestigious deposit product Corp Classic during his visit to the Bank's
Corporate Office in 1997. The Bank's new Millennium Building was
inaugurated by the then Union Minister of State for Finance Shri Vikhe Patil
in the year 2000. In the same year, Shri Yashwant Sinha, who was the Hon'ble
Union Finance Minister at that time, launched the Bank's CorpFast product at
the Corporate Office.

102
 First Public Sector Bank(other than SBI Ascociates) to achieve 100%
CBS developed and implemented by Laser Soft Infosystems
Limited,Chennai.

100 years of banking

Corporation Bank completed 100 years of existence on 12 March 2006.

The Centenary celebrations were launched by Shri V. Leeladhar, Deputy
Governor, Reserve Bank of India with the Bank's Foundation Day lecture on
12 March 2005.

As a part of the Bank's centenary celebrations, a number of

programmes and projects were planned and executed. As a first step, the Bank
has launched the Corp Kissan Card - debit card tied up with VISA
international,, to enable the farmers make timely purchases for agricultural
operations.at Yeshwantpur-Malur in Kolar District on 13 March 2005. A
modern public library was dedicated to the citizens of Mangalore in DK
District, the birth place of the Bank by Shri P. Chidambaram, Hon'ble Union
Finance Minister on 2 March 2006. The library building also houses a
Numismatic Museum and a multi purpose hall for intellectual activities. The
Bank has also set up libraries in 25 villages and given away scholarship to
100 meritorious students of such villages for the pursuit of their higher
education. Such libraries will be set up in 75 more villages in a phased
manner. Corporation Bank - A Corporate Journey , the history of the Bank
and Haji Abdullah Saheb a biography of the Bank's Founder President have
been published on the occasion of the valedictory function of the Bank's
Centenary Celebrations.

103
Ratings

CRISIL has re-affirmed the following programmes of Corporation Bank:

 Rs.2 billion Bond issue AAA

 Certificate of Deposits Programme P1+

 Fixed Deposit Programme FAAA

Awards won

 National Award for Assistance to Exporters from the President of India

(1976-77)
 Gem & Jewellery Export Promotion Council Award successively for 5
years from 1981 to 1985

 Shiromani Award 1992 for Banking from Union Minister for

Commerce

 Best Bank Award for Excellence in Banking Technology from Institute

for Development & Research in Banking Technology (IDRBT),
Hyderabad (2001)

 Best Bank Award for Innovative Usage and Application on INFINET

(Indian Financial Network) from Institute for Development and
Research in Banking Technology (IDRBT), Hyderabad (2002)

 Best Bank Award for Delivery Channels from Institute for

Development and Research in Banking Technology (IDRBT),
Hyderabad (2003)

104
  Runner-up Awards in the “Best Online and Multi-channel Banking
Team” and “Outstanding achiever of the year-corporate” categories in
recognition of outstanding achievement in Banking Technology for
2004, instituted under the aegis of Indian Banks Association and Trade
Fairs & Conferences International.[5]

Major recognitions

 One of the Best 200 companies worldover outside the US having a

turnover under a billion US$ - Forbes Global, Hong Kong, issue dated
27 October 2003
 India’s Best Public Sector Bank - Business Today - KPMG Survey
dated 7 December, 2003

 India’s Strongest and Asia’s Second Strongest - The Asian Banker,

Singapore dated 15 December 2003

 India’s Best Public Sector Bank - Outlook Money , 15 March 2004

 One among the Best 200/100 companies in Asia/Pacific and Europe

having turnover under a billion US $ - Forbes Global, Hong Kong
dated 1 November 2004

 One among India’s Best Public Sector Banks - Business Today, 26

February 2006[6]

External links

 Corporation Bank website

 Corporation Bank IFSC Codes

105
 Indian Bank, established in 1907, is a major Indian Commercial Bank
headquartered in Chennai (Madras), India. It has 22,000 employees, 1,657
branches and is one of the big public sector banks of India. It has overseas
branches in Colombo, Sri Lanka, Singapore, and 229 correspondent banks
in 69 countries. The Government of India nationalized the bank, along with
13 other major commercial banks, on 19 July 1969.

History

Indian bank was founded by Annamalai and Ramaswami Chettiar in 1907.

This was in response to the financial crash faced by two leading trading
companies in Madras, Arbuthnot's and Binny's.[1]

 1907: Established on 15 August

 1932: Indian Bank opened a branch in Colombo.

 1935: IB opened a branch in Jaffna.

 1939: IB closed the Jaffna branch.

 1940: IB opened a branch in Rangoon (Yangon).

 1941: IB closed the Rangoon branch but opened branches in Singapore

(where future branch manager KB Pisharody(1915–1998) started his
career in the same year), and in Kuala Lumpur, Ipoh, and Penang. The
rapid advance of the Japanese Army forced IB to close all its branches
in Malaya and Singapore.

 1942: IB closed the Colombo branch.

 Post-WWII: IB reopened its Malayan and Singapore branches.

106
 1948: IB reopened its branch in Colombo.

 1960s: IB acquired Mannargudi Bank (est. 1932) and Salem Bank (est.
1925).

 1969: The Government of India nationalized 14 top banks, including

Indian Bank.

 1973: Indian Overseas Bank, Indian Bank and United Commercial

Bank established United Asian Bank Berhad in which IOB held
16.67% of the paid up capital, as a result of a new banking law in
Malaysia that prohibited foreign government banks from operating in
the country.

 1978: IB became a technical adviser to P T Bank Rama in Indonesia,

the result of the merger of P T Bank Masyarakat and P T Bank
Ramayana.

 1980: IB, Bank of Baroda, and Union Bank of India established IUB
International Finance, a licensed deposit taker in Hong Kong. Each of
the three banks took an equal share in the joint venture.

 1987: IB acquired Bank of Tanjore (Bank of Thanjavur) in Tamil Nadu

in a rescue.

 1998: Bank of Baroda bought out its partners in IUB Intl. Fin. in Hong
Kong. Apparently this was a response to regulatory changes following
Hong Kong’s reversion. IUB became Bank of Baroda (Hong Kong), a
restricted license bank.

 2007: IB celebrated its centenary year.

107
Diversified banking activities - 3 Subsidiary companies

 Indbank Merchant Banking Services Ltd

 IndBank Housing Ltd.

 IndFund Management Ltd

Bank of India was founded on September 7, 1906 by a group of

eminent businessmen from Mumbai. In July 1969 Bank of India was
nationalized along with 13 other banks.

Beginning with a paid-up capital of Rs.50 lakh and 50 employees, the

Bank has made a rapid growth over the years. It has evolved into a mighty
institution with a strong national presence and sizable international
operations. In business volume, Bank of India occupies a premier position
among the nationalized banks.

Presently, Bank of India has 2609 branches in India spread over all
states/ union territories including 93 specialized branches. These branches are
controlled through 48 Zonal Offices.

Bank of India has several firsts to its credit. The Bank has been the first
among the nationalised banks to establish a fully computerised branch and
ATM facility at the Mahalaxmi Branch at Mumbai way back in 1989. It
pioneered the introduction of the Health Code System in 1982, for evaluating/
rating its credit portfolio. Bank of India was the first Indian Bank to open a
branch outside the country, at London, in 1946, and also the first to open a
branch in Europe, Paris in 1974. The Bank has sizable presence abroad, with
a network of 23 branches (including three representative office) at key

108
banking and financial centres viz. London, New York, Paris, Tokyo, Hong-
Kong, and Singapore.

The Industrial Development Bank of India Limited, now more popularly

known as IDBI Bank, was established as a wholly-owned subsidiary of
Reserve Bank of India. The foundation of the bank was laid down under an
Act of Parliament, in July 1964. The main aim behind the setting up of IDBI
was to provide credit and other facilities for the Indian industry, which was
still in the initial stages of growth and development. In February 1976, the
ownership of IDBI was transferred to Government of India.
After the transfer of its ownership, IDBI became the main institution,
through which the institutes engaged in financing, promoting and developing
industry were to be coordinated. In January 1992, IDBI accessed domestic
retail debt market for the first time, with innovative Deep Discount Bonds,
and registered path-breaking success. The following year, it set up the IDBI
Capital Market Services Ltd., as its wholly-owned subsidiary, to offer a broad
range of financial services, including Bond Trading, Equity Broking, Client
Asset Management and Depository Services.
In September 1994, in response to RBI's policy of opening up domestic
banking sector to private participation, IDBI set up IDBI Bank Ltd., in
association with SIDBI. In July 1995, public issue of the bank was taken out,
after which the Government's shareholding came down (though it still retains
majority of the shareholding in the bank). In September 2003, IDBI took over
Tata Home Finance Ltd, renamed ‘IDBI Home finance Limited’, thus
diversifying its business domain and entering the arena of retail finance
sector.

109
 The year 2005 witnessed the merger of IDBI Bank with the Industrial
Development Bank of India Ltd. The new entity continued to its development
finance role, while providing an array of wholesale and retail banking
products (and does so till date). The following year, IDBI Bank acquired
United Western Bank (which, at that time, had 230 branches spread over 47
districts, in 9 states). In the financial year of 2008, IDBI Bank had a net
income of Rs 9415.9 crores and total assets of Rs 120,601 crores.
The Present
Today, IDBI Bank is counted amongst the leading public sector banks
of India, apart from claiming the distinction of being the 4th largest bank, in
overall ratings. It is presently regarded as the tenth largest development bank
in the world, mainly in terms of reach. This is because of its wide network of
509 branches, 900 ATMs and 319 centers. Apart from being involved in
banking services, IDBI has set up institutions like The National Stock
Exchange of India (NSE), The National Securities Depository Services Ltd.
(NSDL) and the Stock Holding Corporation of India (SHCIL).
Products & Services
Personal Banking
 Deposits
 Loans

 Payments - Tax Payments, Stamp Duty Payments, Easy Fill, Bill

Payment, Card to Card Money Transfer, PayMate, Online Payments

 Mutual Fund

 Demat Account

 IPO

110
  Insurance - FamilyCare, Weathsurance

 Cards - Debit Card, Credit Card, Cash Card, Gift Card, International
Debit-cum-ATM Card, World Currency Card

 Institutional Banking

 Lockers

 India Post

 NRI Services

 Phone Banking

 SMS Banking

 Account Alerts

 Internet Banking

Corporate Banking
 Project Finance
 Infrastructure Finance

 Syndication, Underwriting & Advisory Services

 Carbon Credits Business

 Working Capital

 Cash Management Services

 Trade Finance

 Tax Payments

111
  Derivatives

 Technology Upgradation Fund Scheme (TUFS)

 Film Financing Scheme

 Direct Discounting Bills

 Rehabilitation Finance

Others
 SME Finance
 Agri-business Products

Head Office
IDBI Tower, WTC Complex, Cuffe Parade, Colaba, Mumbai - 400005
References
1. Stanley A. Cochanek. Business and Politics in India. University of
California Press. pp. 152.
2. Seshadri, R.K. 1982. A swadeshi bank from south India. Madras:
Indian Bank.

3. http://en.wikipedia.org/wiki/Big_Four_(banks)

4. Chapter "The Nations Bankers", Madan Gopal ISBN 81-230-0119-3

5. http://www.pnbindia.com

6. The Forbes 2000 - Forbes.com

7. Tandon, Parkash Lal (1989) Banking century: a short history of

banking in India & the pioneer, Punjab National Bank. (New Delhi,
India: Penguin; New York: Viking).

112
8. Website: www.idbi.com

9. Timeline ==http://en.wikipedia.org/wiki/Mughal_Empire

10. http://www.thehindubusinessline.com/2006/04/27/stories/
2006042703600100.htm"

11. "History". http://www.corpbank.com/asp/0100text.asp?

presentID=84&headID=47. Retrieved 2006-08-14.

12. "100yrs". http://www.corpbank.com/asp/0100text.asp?

presentID=84&headID=47. Retrieved 2006-08-14.

13. "Ratings".http://www.corpbank.com/asp/0100text.asp?
presentID=238&headID=84. Retrieved 2006-08-14.

14. "Awards Won".http://www.corpbank.com/asp/ 0100text.asp?

presentID=238&headID=84. Retrieved 2006-08-14.

15. "Major Recognitions".http://www.corpbank.com/asp/ 0100text.asp?

presentID=238&headID=84. Retrieved 2006-08-14.

113
 CHAPTER 2

REVIEW OF LITERATURE

A brief resume on the review of the work already done on the related
aspects of the subject is being assessed here.

According to D. A. Aaker (1991) brand equity can be defined as ‘A

set of assets (and liabilities) linked to a brand’s name and symbol that adds to
(or subtracts form) the value of a product or service for a firm and/or that
particular firm’s customers.

Sailesh Sood (1996) in his research entitled, "Effect of product

sampling by established brands" studied the effect of product sampling by
established brands. While the last decade witnessed phenomenal growth in the
use of coupons, the falling redemption rate and the controversy about the long
term effects of such promotions on brand equity has forced managers to
explore non-price promotional tools.

Umasakar Saha (1998) in his article ‘Accounting for brand value an

emergence issue’ intrigued on the question why the companies should go in
for managing by brand equity vis-à-vis brand accounting and disclosure. He
observed that there is a genuine need for harmonizing accounting for brand
equity. He concluded that the accounting profession should device an
acceptable method of valuing brands.

V. Balakrishnan (1999) in his abstract entitled 'Brand valuation'

underscored the various methods of valuing brands. He stressed the

114
importance of intangible assets in the business. In conclusion, he subscribed
to the earning multiple model of valuing brand.

A.M. Tybout and G. Carpenter (1999) in their article entitled

"Meeting the challenges of the post-modem function" published in Financial
Times Mastering Marketing on brand strategies noted that brands have
undergone numerous stages of growth since the Second World War. He
categorized the growth in three major stages. Stage one is the classic brands,
stage two contemporary brands and lastly the modern brands. He concluded
that the changes with branding are with reference to the ever changing needs
of the customers.

M. J. Xavier (2000) in his papers titled 'Brand Positioning in e-world';

discussed in detail branding practices in the e-world, he noted and identified
ten reasons for declining and rainfall in branding. They included value
seeking behaviour of customers, brand proliferation, raising retailers power,
declining TV audience, emergence of e-commerce, mass customization, i.e.
one to one marketing, shift from brand management to category management
a common practice adopted by MNC s, emergence of hyper-active media,
brand building without advertising and communization of products (for
example expiry of patent rights and emergence of more product category). He
introduced a new concept he called 'Business Equity' which is a combination
of three factors namely brand equity, value equity and customer equity
working in unison.

Shunnu Sen (2000) in his article 'What is a brand worth" argued that
understanding the value of brand is not just a financial exercise but also a
business imperative. He went further and queried why investment in brand

115
development is viewed as a waste of resource. He concluded by challenging
the management, accountants and marketing professionals on the need to
invest and evaluate value of brand.

Manipadma Datta (2001) in his article titled ‘Brand Equity, a

paradigm shift in firm valuation’ stressed that firm valuation is not only an
exercise of knowing the net worth of a firm rather it is more important to
compute and know the market worth. In that respect, he noted that brand is
the firm identity into the competitive environment. He concluded that a
properly valued brand can have a far reaching benefit to a firm. For instance,
improving and innovating newer attributes in brands and easing the scope of
quality costing as brands are treated as profit or investment centers.

Ambresh Murly (2002) as associate vice president marketing and

customer service ICICI in his article titled ‘Brand building – The key’
discussed in depth key role of branding in financial sector in the Indian
economy’.

P. Shashikala and B. M. Chaturvedi (2003) in their paper titled

‘Brand valuation’ discussed in detail the various valuation models for brands.
They divided the models into three main parameters; Business Finance
oriented models, behavioural oriented model, and composite model. They
defined business finance oriented model to include capital market oriented
valuation, cost oriented valuation brand valuation based on enterprise value,
earning capacity, license based and consumer oriented based valuation model.

Lovelock Christopher, Writz J., (2004) Customers are loyal to

several brands (2004) while spurning others sometimes described as
‘polygamous loyalty’ not to be confused with variety seeking which results in

116
customers experience high brand fitting butterfly like from brand to brand,
without any fixed allegiance at all.

Verhoef Langerak, and Donkers, (2007) If a customer judge a

particular brand a being strong, unique, and desirable, they experience high
brand equity.

Kumar Mishra Jitendra, (2007) Satisfaction of the customers is

invaluable asset for the modern organizations, providing unmatched
competitive edge. It helps in building long is term relationship as well as
brand equity. The best approach to customer retention is to deliver high level
of customer satisfaction that result in, strong customer loyalty. Satisfaction
being a judgment, that a product or service feature or the product or service
itself, provides a pleasurable level on consumption is dynamic in nature.

Agriculture still forms the base and backbone of India. It contributes to

Gross Domestic Product (GDP) nearly 178 per cent in 2007-08 and to
employment about two-thirds. It was neglected during the British rule (1757-
1947). With the launching of the First Five Year Plan in 1951, farm economy
received the highest priority. In the late sixties major technological
innovations led to the Green Revolution. Most of the inputs, used in the new
technology package are non-farm produce and capital reliant. The demand
curve for non-farm inputs (such as fertilizers, pesticides, and diesel, electricity
and farm machinery) shifted upward reflecting increased outlays on various
inputs. On the other hand, inadequate, untimely and unsuitable institutional
credit supply scuttled the adoption of the new technology which stood in the
way of realizing a higher level of output and enhanced productivity.

OBJECTIVES

117
 The purpose of the study is to identify the role of brand equity and
brand loyalty in nationalized banks and how a particular customer behave
toward particular brand

The Main points which researcher proposes to analyze in this study are:
1 To study how the brand equity of nationalized banks plays a significant
role in the eye of customer.
2 To study how increasing customer satisfaction leads to higher brand
loyalty.
3 To know Customer satisfaction will have a direct effect on brand
loyalty.
4 To access that how brand equity play an important role in the selection
of bank.
5 To know the current strategies of nationalized banks regarding
customer satisfaction.
MAJOR HYPOTHESIS

The following hypotheses guide the research process:

H1o Brand equity of nationalized banks does not play a significant role
in the eye of customer.

H11 Brand equity of nationalized banks plays a significant role in the

eye of customer.

H20 Increasing customer satisfaction does not lead to higher brand

loyalty.

H21 Increasing customer satisfaction leads to higher brand loyalty.

118
 H3o There is no significant effect of customer satisfaction on brand
loyalty.

H31 There is significant effect of customer satisfaction on brand

loyalty.

H4o There is no significant effect of brand equity on the selection of

bank.

H41 There is a significant of effect brand equity on the selection of

bank

RESEARCH METHODOLOGY

The Population

The population under investigation in this study will include all the
nationalized banks of Ajmer district.

The Sample Frame

The Sampling frame under investigation in this study will be customers

and employees of sample banks regarding brand equity and brand loyalty.
The study will include nationalized banks in Ajmer city

Sampling Technique to be used

The study will employ simple random sampling. The research literature
agrees that although not the most efficient, simple random sampling remains
the most relevant as it ensures that every member of the sampling frame has
equal chance of being selected and has high external validity.

119
Sample Size

Samples of different categories of respondents for the primary survey

will be selected purposively after stratification of the population so as to make
the samples representatives of the respective population.

At the first stage following nationalized banks would be considered for

purpose of research.

120
 1 Bank of Baroda 5 Corporation Bank

2 State Bank of India 6 Indian Bank

3 Punjab National Bank 7 Bank of India

4 Union Bank of India 8 IDBI Bank

At the second stage the employees and customers will be

selected from the selected banks and those respondents would be varied
in age, gender, education, occupation, marital status and income. The
number of respondents in each category will include:-

 Bank executives 10 from each bank

 Bank employees 10 from each bank

 Bank customer 30 from each bank

Source of Information

To fulfill the objectives and to test the hypothesis of the research,

the information has been sought from primary as well as secondary
sources of gathering data

 Primary sources:- The Primary source will include:-

(a) Survey of the selected banks.

(b) Survey of the executives and employees of

selected banks.

121
 (c) Survey of the selected customer of selected banks.

 Secondary sources:-The secondary source will include:-

(a) Monthly bulletins of the various banks
(b) Periodicals & journals
(c) Daily news papers
(d) Internet
(e) Published literature of the banks

Research Instruments
The research instrument will include separate questionnaires for
respondents .The structured questionnaires will include both open and
close ended questions.

Tool for Analysis

Various statistical tools like ANOVA, Co-relation, regression,
etc., will be used to analyzing the data collection from both the sources.

CHAPTER WISE DETAILS OF PROPOSED RESEARCH

Chapter 1 : Introduction:
This chapter will detail meaning of brand equity and brand
loyalty and introduction of banking system and evolution of banks. It
will also include importance of brand in context of bank.

Chapter 2: Review of Literature and Research methodology:

This chapter will throw light on the work that has already been
done in this field. It will also lie out then research methodology.

122
Chapter 3: Marketing Mix and banks
In this chapter we will throw light on concept of marketing mix
of different categories of nationalized bank and their recent changes,
their customer acceptability and awareness.

Chapter 4: Brand Equity and banks

This chapter will be in context of concept of brand equity,
organization in product specific brand equities, basis of brand equity,
factors affecting brand equity and segment wise variation in brand
equity.

Chapter 5: Brand loyalty of customers and banks

Concept of brand loyalty Brand loyalty in services marketing
Brand loyalty among bank customers Product wise brand loyalty
Factors affecting brand loyalty Measure of loyalty.

Chapter 6: Findings, Conclusion and Recommendations

This chapter will summarize the conclusions interpreted from the
analysis of data and make the necessary recommendations. This chapter
will show the result of the study analyzed using the appropriate tools
and techniques. Various hypotheses framed for the study would be
tested and the result would be discussed. Findings and result will be
presented using various statistical tools.

123
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University, 1986, pp. 71-72. Bank Finance and Rural Development

24.Goyal, R.P. : ‘Financing of Weaker sections’, State Bank of India

Monthly Review, December, 1978, January 1985, pp.21-23.

25.Rao, V.G and Paramjit Malya, Agricultural Finance by Commercial

Banks", 1980, p. 211.

126
26.Naseem, A. Zaidi, ‘Has TRDP Helped to Alleviate Poverty?”
Yojana, Vol.XXIX No.18, October 1-15,1985, p.9

27.Nagbhushana Rao, E. and Krishnamurthy, B., "Five Years of

Regional Rural Banks, A Study", Kurukshetra, 1981, pp. 19-27.

28.Nilakanta Rath, "Garibi Hatao: Can IRDP Do It?", Economic and

Political Weekly, Vol. XX, No.6, February 9, 1985, p. 243.

127
CHAPTER II

Marketing Mix and banks

The banking industry is a powerful weapon in the armory of the

government for bringing about desired economic transformation. It is a
widely recognized fact that banks play a major role in the economic
development process. The banking system is the key agency on whose
efficient functioning the progress of a country’s economy depends.
Banking Regulation Act, 1949 defines banking as “Banking means the
accepting for the purpose of lending investment of deposits of money
from the public, repayable on demand or otherwise and with draw able by
cheque, drafts, order or otherwise” the object of bank is “Performance of
services relating to money”.

The origin of banking in India is very ancient. Historians say that

banking activities were in prevalence during the Vedic period between
2000 and 1400 B.C. During the Ramayana and Mahabharata eras money
lending flourished. According to Hindu law giver, Manu, banking
functions like accepting deposits, granting loans, against pledges and
acting as the treasures or bankers to the king were being carried on during
the second and third century B.C. There are records to prove that during
the Vedic period transactions covering loans and advances used to take
place and surplus gold in the hand of rich people passed to the persons
who needed it most. Manu who laid down the Hindu law, enunciated rules
relating to pledge deposits later on Kautilya, who was minister of
128
Chandra Gupta the Maurya, in 3rd B.C. wrote on his political economy
‘Arthshastra’ on the just rate of interest. It is said that Hundies which are
still used to settle business transactions, originated during the days of
Mahabharata. Private bankers whom we call “Seth’s Sahukhars’ Shroffs
and Chettiars” have their ancestors who did good banking business in the
dim past. It is because they enjoyed confidence of people and their main
business was accepting deposits from the public, money lending, safe
keeping of valuables and changing money of one state into that of
another.

Between 1197 and 1247 A.D. the Jain bankers from Ahemdabad
financed the construction of famous “Dilwara Temples” near Mount Abu
in Rajasthan by accepting hundies. The famous French travelers J.B.
Tavernier, who came here in the times of “Shahjehan” during the 17th
century A.D., has paid glowing tributed to shroffs, who existed in almost
every village acting as moneychangers and issuing hundies. He also refers
to financing to foreign trade in India through drawing of bill in Surat. The
Mughuls gave encouragement to indigenous bankers and conferred titles
of “Seth” and “Jagat Seth” on them. These Jagat Seth used to act as
collection agents for state revenue and as state financers in time of need.

During the Muslim period these private bankers used to finance

traders and Merchants. They used to lend gold hoards to the kings and
emperors helping them to make coins and for this reasons some of them
became the treasurer of the government Emperor Aurangzeb honored an
eminent banker, Manekchand with the title of “Seth” as an appreciation of
his banking business. His nephew Jagat Seth played an important role of

129
financier of the East India Company. For this privilege he had a strong
influence of the rulers.

Money changing business was lost when whole of India gradually

came under the British rule and the independent Indian chiefs disappeared
with their separate currency systems. During the British rule large scale
manufacturing of the factory type emerged and overseas trade increased in
volume. There was a great need for finance which the indigenous by the
British merchants appeared to finance traders and manufacturers in big
cities and ports. The main advantage of these banks was they had good
volume of liquid resources at their disposal. They lent money to the
British merchants, specially engaged in import and export business.
Afterwards many Indian banks grew up but their activity until recently
was confined in big towns and ports. The indigenous bankers were
successful to maintain their existence and even now do good volume of
business in the rural sector. On the other hand many foreign exchange
banks, which started doing business towards the close of the nineteenth
century, still exist and do a good volume of foreign exchange business.
They brought with them up-to-date banking technique which was
gradually introduced in our country.

In the early days of East India Company the European merchants in

Calcutta felt a great need for credit to undertake greater volume of foreign
trade. As a result many agency houses came forward to supply credit to
the merchants as the indigenous bankers did not take part in financing
foreign trade done by European merchants. One agency house started a
bank, which failed when the agency houses closed its doors.

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 Banking on European lines started in India, when British managing
agency houses, namely Ferguson and company and Alexander and
company set up three banks. The first Joint Stock Bank was established in
1786 A.D. in the name of “General Bank of India” later the ‘Bank of
Hindustan’ and the ‘Bengal Bank’ were established. The ‘Bank of
Hindustan’ could continue only up to 1806 while the other two banks had
failed earlier then came the era of ‘Presidency Banks’ with the sanction of
the British Parliament, the ‘Bank of Bengal’ was established in 1809 as
the first Presidency bank. One fifth of its capital was contributed by the
state and the rest by the East India Company. This was followed by the
establishment of the ‘Bank of Bombay’ in 1840 and the ‘Bank of Madras’
in 1843 as Presidency Banks bringing their total number of three.

The origin and growth of Central Banking in India is at the outset at

the initiative of the government. The need for the Central Bank in India
dates back to 1773. However, till 1926 no various efforts were made. The
Hillon-Young commission recommended in 1926 the establishment of a
Central Banks. To this effect the government introduced a Bill in the
legislative Assembly in January 1927. The Reserve Bank of India Bill
was dropped “after acrimonious and kaleidoscopic discussions” as the late
Sir James Tavlor put it. The legislative Assembly was divided on the
point of the constitution of the Board, wherein the Muslim and the
minority communities insisted on safeguards to protect the minorities
which was guaranteed in the Assembly. Thereafter it took seven years to
pass the Central Bank Act in 1934 as a share-holders bank.

The Calcutta money market came into existence with the

establishment of General Bank and Bank of Bengal. The General Bank
131
had the privilege to become the banker of the government but afterwards
the government support was withdrawn and the government account with
the General Bank was closed. Towards the close of 18th century a
monetary crises took place and brought rain to the two Banks.

The presidency banks didn’t make much headway in the sphere of

banking in India. The stalwarts of the “Swadesh Movement” in India like
Lala Lajpat Rai, Purshottam Das Tondon and Sardar Dayal Singh worked
intensively for establishment by Indian people. The “Punjab National
Bank” was established in 1895 by the effort of the aforesaid personalities.
During the boom period of 1906-13 same more eminent banks came into
existence namely “The Bank of India” “Central Bank of India” “The Bank
of Baroda” and “People Bank of India”. These Indian banks had to face
tough competition from their English counterparts. Although the Swadesh
movement of 1906 gave a Philip to the establishment of more and more
Indian banks the world was first doomed the Indian banking to failure
during the period of 1953-1787 banks failed.

As a result of growing demand for unification of the presidency

banks the Imperial Bank of India into existence by merger of three
presidency banks. Though the Imperial Bank of India had no right to issue
notes, it acted like banker of government and managed clearing housing in
many important cities in addition to commercial banking business later
on; the imperial bank was nationalized by virtue of the state bank of India
Act of 1955. Now the bank functions as the largest commercial bank in
India with a net-work of branches throughout the country. It also acts as
an agent of the Reserve Bank of India in places where the State Bank has
its branches and the Reserve Bank is not established.
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 Until 1934 there was no full-fledged central bank of the country
and the finance department of the government of India issued notes and
the Imperial Banks now State Bank used to manage public debts and
financed the government. In 1934 the Reserve bank was established under
public ownership by virtue of the Reserve Bank of India Amendment Act
of 1948. Now it has exclusive right to issue notes and hold the country’s
gold and foreign currency reserves. It acts as banker of the government
and lender of the last resort of the commercial banks. It has been endowed
with instrument of credit control, such as right to change bank rate,
undertake open market operations and issue directives to the company
banks. By changing bank rate it control cost of borrowing and change
volume of money supply by buying and selling securities. Under the
foreign exchange Regulation Act and the banking company Act it has
been given greater power over the whole banking structure.

It is obvious from the short history of the development of the

banking business in India that our banking law and practices are molded
by the customs and practices of the Indian merchants as well as the impact
of the west. In the early phase the banks mostly opened by the British
Pioneers used to follow the rules and regulations then prevailing in
England. Afterwards when the commercial laws were passed to set the
norm of business transactions enactment followed the mode of the
English law with a few deviation in conformity with the Indian customs
and widely accepted practices. The courts in their turn decided many
cases pertaining to dispute other business transactions paying due regard
to the customs prevailing among the merchants.

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 During the period also the banks contained to fail between 1913-80
banks failed. This could be attributed to the inexperience of Indian
bankers, unsound management and malpractices. The second world was
again bestowed a boom period on the Indian banking. Between June 1936
and June 1946 the number of scheduled banks nearly doubled. A lot of
new banks established one of them was the ‘United Commercial Bank’
established in 1943. But the ill-conceived partition of the country in 1947
again gave a jolt and created heaps of problems for the bankers, and the
masses as well as the time of independence India inherited 604 banks of
which 96 were scheduled banks.

Till independence most of Joint Stock banks were established under

the provision of the Indian Companies Act 1913 amended in 1934.
Keeping in view the public opinion in favor of a separate legislation and
the complaints rose against and drawbacks painted out in the existing
legislation, the government of India passed a Banking Companies Act
1949 (later named as Banking Regulation Act 1949) and enforced it from
the 16th March 1949.

The post independence era has seen addition of several new

chapters and attainment of several milestones in the field of Indian
banking. First of all in 1948 ‘The Reserve Bank of India’ was nationalized
from 1st July 1955’ the ‘Imperial Bank of India’ rechristened as the ‘State
Bank of India’ which became the first public sector commercial bank of
the country. Eight bank set-up the erstwhile princely states of Bikaner,
Jaipur, Indore, Mysore, Pariala, Travancore, Hyderabad and Saurashtra
joined the S.B.I. group in 1959 as its subsidiaries.

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 The government of India has takes great responsibility to maintain
high standard of banking business by introducing deposit insurance
scheme and by nationalizing 14 leading Indian banks in order to increase
bank advances to agriculture and small scale industries as well as to the
priority sectors. It is important to note in this context that the government
of India appointed in 1969 the Banking commission to look into structural
changes, modernization and operational problems of the entire banking
system. The commission classified banks into three categories, National
banks, Co-operative banks, and Rural banks and recommended that in
rural sector the primary credit society should be strengthened to become
rural banks for providing adequate credit and raising banking habits
among the rural people.

Again on 15th April 1980, 6 major banks having deposits of more

than 200 crores each were nationalized. Now public sector banking
conversed 92 per cent of total banking business in India. Besides
establishment of RRBs (Regional Rural Banks), co-operative sector
banks, land development banks, industrial development bank and am
Import-Export Bank have added new dimensions in the banking industry.
The RBI is well co-ordination the banking business activities and
regulating the currency and credit according to the economic and financial
needs of the country.

The bringing of fourteen major banks and subsequently six major

ones of the remaining banks under state ownership have together been a
unique experiment in the history of bank nationalization. The objective
was to control the heights of the economy and to meet progressively and
serve better the needs of development of the economy in conformity with
135
national policy and objectives. It is now being realized that banks are an
effective and potent instrument in achieving the social-economic aims of
the country.

REFORM OF BANKING INDUSTRY

The Indian Banking Industry can be broadly classified into two

major categories, non-scheduled banks and scheduled banks. Scheduled
banks comprise commercial banks and the co-operative banks. In terms of
ownership, commercial banks can be further grouped into nationalized
banks, the State Bank of India and its group banks, regional rural banks
and private sector banks (the old/new domestic and foreign). These banks
have over 67000 branches spread across the country.

The first phase of financial reforms resulted in the nationalization

of 14 major banks in 1969 and resulted in a shift from class banking to
Mass banking. This in turn resulted in a significant growth in the
geographical coverage of banks. Every bank had to earmark a minimum
percentage of their loan portfolio to sectors identified as “Priority
Sectors”. The next wave of reforms saw the nationalization of 6 more
commercial banks in 1980. Since then the number of scheduled
commercial banks increased four-fold and the number of bank branches
increased eight-fold.

After the second phase of financial sector reforms and liberalization

of the sector in the early nineties, the Public Sector Banks (PSB)s found it
extremely difficult to compete with the new private sector banks and the
foreign banks. The new private sector banks first made their appearance
after the guidelines permitting them were issued in January 1993. Eight
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new private sector banks are presently in operation. These banks due to
their late start have access to state-of-the-art technology, which in turn
helps them to save on manpower costs and provide better services.

During the year 2000 the State Bank of India (SBI) and its 7
associates accounted for a 25 percent share in deposits and 28.1 percent
share in credit. The 20 nationalized banks accounted for 53.2 percent of
the deposits and 47.5 percent of credit during the same period. The share
of foreign banks (numbering 42), regional rural banks and other scheduled
commercial banks accounted for 5.7 percent, 3.9 percent and 12.2 percent
respectively in deposits and 8.41 percent, 3.14 percent and 12.85 percent
respectively in credit during the year 2000.

CURRENT SCENARIO

The industry is currently in a transition phase. On the one hand, the

PSBs, which are the mainstay of the Indian Banking System, are in the
process of shedding their flab in terms of excessive manpower, excessive
nonperforming Assets (NPAs) and excessive governmental equity, while
on the other hand the private sector banks are consolidating themselves
through mergers and acquisitions.

PSBs, which currently account for more than 78 percent of total

banking industry assets are saddled with NPAs falling revenues from
traditional sources, lack of modern technology and a massive workforce
while the new private sector banks are forging ahead and rewriting the
traditional banking business model by way of their sheer innovation and
service. The PSBs are of course currently working out challenging

137
strategies even as 20 percent of their massive employee strength has
dwindled in the wake of the successful VRS scheme.

As per RBI, at the end of the year 2003, total 66436 banking
Branches are working in India with a deposit of Rs. 1278667 crores and
advances of Rs. 759210 crores. Out of above 32,244 banking branches
are working in rural area with deposit of Rs. 176268 crores which is 14
per cent of total deposits. Advances to rural areas, stood at Rs. 74776
crore which is 9.85 per cent of total advances. This shows that in the
present scenario banks are paying more attention in rural areas.

Rapid economic development pre-supposes rapid expansion of

commercial banks. Initially, the banks were conservative and opened
branches mainly in metropolitan cities and other major cities. Branch
expansion gained momentum after the nationalization of major
commercial banks and the introduction of the Lead Bank Scheme. It
helped in the opening of thousands of new branches by the different
banks, mostly in the small towns and rural areas. The next table shows the
progress of branch expansion of commercial banks after bank
nationalization in 1969.

Table 1

Branch expansion of all commercial banks 1969-2003

As on June Total No. of Rural Rural branches Population

30 branches branches as percentage per bank

of the total office

1969 8,260 1,860 22 63,800

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1991 60,650 32,750 54 14,150

2003 66,640 32,270 48 15,000

From the above table, it is clear that in 33 years, after bank

nationalization, there was over 800 per cent increase in the number of
branches, but the most spectacular progress was in rural branches. Its
increase was from about 1,860 to nearly 32,270 bank offices. The
important feature of the post nationalization-banking scene is the rapidity
with which the branch network has multiplied itself. The rate of branch
expansion has been unparalleled in the developed and developing
countries in the world. With the progress of branch expansion
programmes, the national average of population per bank office has
progressively declined from 64,000 to 15,000. A rural branch office
frequently serves 15 to 25 villages within a radius of 16 kms. Some banks
have started mobile offices and satellite offices. Rapid expansion of
branches of commercial banks after nationalization has led to the
integration of rural and urban areas economic activities as well as
integration of organized and unorganized money markets in India.

The massive branch banking, significant though it is, shows the

magnitude of the problem before the commercialized banking system: at
present only about 32,270 villages out of over 586465 inhabited villages
are covered by commercial banks. Expansion of bank facilities in rural
and backward areas and provision of bank credit to weaker sections,
139
farmers and rural artisans at concessional rates of interest -largely depends
on the government supports.

There has been a substantial increase in the deposits of scheduled

commercial banks in the post-nationalization period. At the end of June
1969, deposits of these banks aggregated to only Rs.4646 crore. In March
2004, this amount increased to Rs.15,17,378 crore. Deposit amount with
public sector banks was Rs.3,871 crore in June 1969. At the end of
March, 2004, this amount stood at Rs.11,75,439 crore. The huge deposits
mobilized by the banks are utilized for :

(i) loans and advances,

(ii) investments in government and other approved securities in

fulfillment of the liquidity stipulations, and

(iii) Investment in commercial paper, shares, debentures, etc., up to a

stipulated ceiling.

There has been a significant increase in the investments of banks in

government and other approved securities from Rs.1,361 crore in June,
1969 to nearly Rs. 6,72,317 crore (provisional) at the end of March, 2004.
The Bank Credits of scheduled commercial banks have grown from
Rs.3,599 crore in June 1969 to Rs.8,56,685 crore (provisional) at the end
of March, 2004.

PRIORITY SECTOR LENDING

Priority sector includes those activities, which assume national

importance and have been assigned priority for development. The
Government of India through the instrument of Reserve Bank of India

140
(RBI) mandates certain type of lending on the Banks operating in India
irrespective of their origin. RBI sets targets in terms of percentage of total
money lent by the Banks to be lent to certain sectors, which in RBI's
perception would not have had access to organized lending market or
could not afford to pay the interest at the commercial rate. This type of
lending is called Priority Sector Lending. Financing of Small Scale
Industry, Small business, Housing, Motor-driven small transformation,
Agricultural Activities and Export activities fall under this category. This
is also called directed credit in Indian Banking systems.

The priority sector has been classified as:

Primary sector : This constitutes agriculture and allied activities -

dairy farming, poultry farming, goat rearing, pisci-culture, fisheries etc.

Secondary sector : This sector constitutes small scale industries,

ancillary industries, village and cottage industries, tiny industries and
small scale service and business enterprises.

Tertiary sector : In this sector are small road and water supply
operator, professional and self employed, retail trade, small business,
education, housing, state sponsored corporations for SC/ST. Loan
sanctioned to State Sponsored Organizations for SC and ST for specific
purposes for the beneficiaries of these organizations are covered under the
priority sector. Each bank decides terms and conditions for these loans.

TARGETS OF PRIORITY SECTOR

The Reserve Bank of India appointed the First Working Group on

priority sector lending and the role of banks in it in1980. It was asked to
examine and report on the modalities of implementation of the above
141
programme under the Chairmanship of Dr. K.S. Krishnaswamy. Another
Working Group appointed by the Reserve Bank of India in March 1982
under the Chairmanship of A. Ghosh, Deputy Governor, and Reserve
Bank of India again reviewed it. Both Groups have recommended certain
norms in the field of social banking for the banks (Commercial and
RRBs). For the first time these Groups have recommended social banking
norms. On the basis of their recommendations, the Reserve Bank of India
advised the banks to deploy their resources to meet the following
requirements and also advised them to achieve the following targets:

Banks should aim at raising proportion of their total advances to

priority sector to 40 per cent by 1985. Within the overall target, a
significant proportion would be allocated to the beneficiaries of the 20-
point programme.

Out of the advances to priority sector, at least 40 per cent should be

extended to agricultural sector. Credit for direct finance to agriculture and
allied activities should reach 16 per cent of the total advances by 1985 and
18 per cent by March, 1990.

The advances to weaker sections should reach a level of 25 per

cent of priority sector advances or 10 per cent of the total bank credit; the
credit deposit ratio of banks at their rural and semi-urban branches
separately should not be less than 60 per cent.

A target of 1 per cent of the outstanding advances as at the end of

the previous year has been fixed for DRI advances at an interest rate of 4
per cent and ensure that not less than 40 per cent of such advances should

142
be given to scheduled castes/scheduled tribes and not less than two third
of the advances should be routed through rural and semi-urban branches.

In 2004 it was decided that 40 per cent of the total net bank credit at
the end of the financial year should go towards priority sector lending.
This share is bifurcated as less than 1/4th of priority sector advances or 10
per cent of the total advances should be for weaker sections. They are
people below the poverty line assisted under government sponsored
schemes like differential rate of interest scheme, SLRS etc., rural artisans,
SC/STs, small/marginal farmers, land less labourers, etc. with lending
amount up to Rs.50,000/-

The present banking policy is for 18 per cent of the total net bank
credit is to be financed to agriculture whether direct or indirect. A
maximum of 1/4th of total agricultural advances could be in indirect
agricultural area. 1.5 per cent of incremental deposits to be lent to housing
sector.

Extension of credit to small borrowers has been one of the key

tasks assigned to the public sector banks in the post-nationalization
period. To achieve this objective, banks have drawn up schemes to extend
credit to small borrowers in sectors such as agriculture, small scale
industry, road and water transport, retail trade and small business which
traditionally had very little share in the credit extended by banks. Taking
into account the need to provide financial resources through bank credit to
weaker sections for specific needs, consumption credit (with certain
limits) has been included in priority sector. Similarly, housing loans upto
Rs.10 lakh per unit in rural/semi-urban areas/urban/metropolitan areas are

143
also classified as priority sector advances. Amount outstanding under
priority sector lending by public sector banks during the period June,
1969 to September, 2003 increased from Rs.441 crore to Rs.2,13,597
crore and accounted for 44.54 per cent of their net bank credit.

The bank credit is freely available to well-established houses of

industry and trade without much difficulty while the tiny and small
businessmen really find it difficult to get credit from banks. At present,
some powerful but unscrupulous speculators are able to use bank funds to
corner shares and acquire control over companies. They have opined that
social banking policy was not economically suitable for banks as 'poor are
not bankable, and that banks would cater to these section only if they were
'mandated to do so.'

With a view to augmenting credit flow to small and poor

borrowers, commercial banks were advised by the Reserve Bank of India
time and again to provide at least 10 per cent of their net bank credit or
25 per cent of their priority sector advances to weaker sections
comprising small and marginal farmers, landless laborers, tenant farmers
and share croppers, artisans, village and cottage industries where
individual credit limits do not exceed Rs.50,000, The beneficiaries of
Government sponsored schemes such as the Swarnajayanti Gram
Swarojgar Yojana (SGSY) for rural poverty, Swarna Jayanti Shahari
Rozgar Yojana (SISRY) and the Scheme of Liberation and Rehabilitation
of Scavengers (SLRS), beneficiaries of the Differential Rate of Interest
(DRI) scheme and SCs and STs.9 In March 2003, the amount of
outstanding advances extended by public sector banks to the weaker
sections under the priority sector amounted to Rs.34,398 crore and
144
accounted for only 7.17 per cent of their net bank credit, against the
policy of 10 per cent credit.

In recent years, banking has moved away from the traditional pulls
into new directions. The concept of banking has widened from mere
acceptance of deposits and loaning of funds to development-oriented
banking Banks are increasingly catering to the needs of industrial and
agricultural sectors. From short term financing, banks have been gradually
shifting in medium and even long-term lending. From well-established
large industrial and business houses, banks are positively assisting small
and weak industrial units, small farmers, artisans and other hither to
neglected groups in the country.

By far, the most significant aspect of the new awareness and

involvement in development effort since nationalization is the adoption of
the lead bank scheme under which all the districts of the country are
allotted to some bank or the other. The lead bank of a district is actively
engaged in :

Opening bank offices in all the important localities; Providing

maximum credit facilities for development in the district, and Mobilizing
the savings of the people in the district.

The achievement of the lead bank judged by improving

productivity or creating employment opportunities which are expected to
become catalysts of development of the district. Since February 1988
commercial banks had adopted the 'Service Area Approach' under which
each semi-urban and rural branch of a commercial bank was assigned a
specific area comprising a cluster of villages for economic growth.
145
 People belonging to the SCs and STs have been recognized as the
most vulnerable sectarians. Banks have been asked to make special efforts
to assist them with adequate credit to enable them to undertake self-
employment ventures to acquire income- generating capital assets so as to
improve their standard of living. In September 2003, the total outstanding
credit extended to SCs/STs by public sector banks under priority sector
lending was Rs.14,166 crore in 67.10 lakh borrower accounts.

The Government of India has used the public sector banks to

finance many of its pet programmes of poverty reduction and poverty
alleviation. Despite many adverse criticisms and even clear
recommendations against such schemes being financed through banks, the
Government of India has persisted in using bank funds to finance various
social sector schemes for employment generation and poverty alleviation.

The Government of India introduced the scheme of differential

interest rates from April 1972 covering 162 districts. Later the scheme
was extended to the whole country. Under the scheme, the public sector
banks (PSBs) give loans at concessional interest rate of 4 per cent to the
weaker sections of the community who have no tangible security to offer
but who can improve their economic condition through financial
assistance from PSBs. This scheme showed a marked increase in number
of accounts and the beneficiaries. The relative success of the scheme was
attributable to the compulsion imposed on the PSBs to step up leading at
concessional rates to the weaker sections. This is due to the carefulness of
banks to select the really deserving ones.

146
 1. INTEGRATED RURAL DEVELOPMENT PROGRAMME
(IRDPS) :

This is a pioneering and ambitious programme to rectify

imbalances in rural economy and also for all-round progress and
prosperity of the rural masses. Under the programme banks had assisted
nearly 3 million people, out of whom 1.5 million were SC/ST
beneficiaries. The mid-term appraisal of the Tenth Plan (2002-07) with
special emphasis given on promotion of public investment in rural areas
based o the possibility for absorbing labour for asset creation banks are
advised by the Planning Commission of India to advance loans to the
distressed urban poor.

2. SMALL INDUSTRIES DEVELOPMENT BANK OF INDIA

The Small Industries Development Bank of India (SIDBI) was

established as a wholly owned subsidiary of the Industrial Development
Bank of India (IDBI) as the principal financial institution for promotion,
financing and development of industries in the small-scale sector. SIDBI
started its operations from 2 April1990 and is engaged in providing
assistance to the small-scale industrial sector in the country through other
institutions like State Financial Corporations, Commercial Banks and
State Industrial Development Corporation. The Financial assistance
sanctioned and disbursed aggregated to Rs.8,224 crore and Rs.4,413
crore, respectively, during 2003-04. In April 2004, the RBI introduced
new instruments for promoting rural industry and improving flow of
credit to rural artisans, industries and rural entrepreneurs.

(i) NABARD
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 The National Bank for Agriculture and Rural Development
(NABARD) came into existence on 12 July, 1982. It was established for
providing credit for promotion of agriculture, small-scale industries,
cottage and village industries, handicrafts and other allied economic
activities in rural areas with a view to promoting integrated rural
development and securing prosperity of rural areas. Now NABARD has
been asked to advise District Level Technical Committee to review the
scales of finance to meet the realistic credit needs of farmers. Nearly 15
per cent of the net bank credit (NBC) of public sector and private sector
was in agriculture in 2004. Private sector bank has only given 1.3 per
cent of advances to weaker sections. In the context of public sector Banks
(PSB) it was 2.6 per cent. In 2003-04 the target set for them was 10 per
cent of the total lending. This situation almost remained unchanged in
2004-05. The RBI has been taking initiatives in the problem of declining
credit flow to the social sector, but positive results are not visible.

(ii) Assistance to Scheduled Castes Development Corporation

(SCDCs)

The Centrally Sponsored Scheme for participating in the share

capital contribution of the Scheduled Castes Development Corporation
(SCDCs) in the ratio of 49:51 between the Centre and the States is one of
the instruments for the development of Scheduled Castes. At present,
SCDCs are functioning in 26 States/UTs, which includes 9 SCDCs
exclusively for the SCs, 6 for SCs and STs and another 11 for serving
OBCs, SCs and STs. The main functions of the SCDCs include
identification of eligible SC/ST/OBC families and motivating them to
take up projects for economic development, sponsoring the projects to
148
financial institutions for credit support, providing financial assistance in
the form of margin money at reduced rate of interest and subsidy.

The SCDCs finance employment-oriented schemes covering : (i)

agriculture and allied activities including minor irrigation, (ii) small scale
industry, (iii) transport and (iv) trade and service sector. The SCDCs
finance projects by dovetailing the loan component from
NSFDC/banks/NSKFDC with margin money from their own funds and
subsidy sourced from Special Central Assistance (SCA) funds.

(iii) National Scheduled Castes Finance and Development

Corporation

The National Scheduled Castes and Scheduled Tribes Finance and

Development Corporation (NSFDC) was set up in 1989 as a Company
'not for profit', under Section 25 of the Companies Act, 1956 with the
objective of financing income-generating activities of SC and ST
beneficiaries who are living below double the poverty line limits
(presently income of Rs.40,000/- p.a. for rural areas and Rs.55,000/- p.a.
for urban areas). Consequent upon bifurcation of the Corporation, the
NSFDC is serving only SC beneficiaries, upto March, 2004, the
Government of India had contributed Rs.324.20 crore as equity to the
Corporation, against the authorized share capital of Rs.1000 crore.

NSKFDC provides loans to the Safai Karamcharis and their

dependents through State Channelizing Agencies so nominated by the
State Channelizing Agencies. The State Governments guarantee
149
repayment of the loans extended to the SCA. The target groups of the
Corporation are 'Scavengers' which means persons wholly or partially
employed in disposal of human waste and their dependents and 'Safai
Karamcharis' which means persons engaged in or employed for any
sanitation work and their dependents.14 For their economic development
a number of financing programmes have been started, namely :

i) Term Loan :

Assistance is provided for projects costing more than Rs.25,000/-

and up to Rs.5 lakh. However, for sanitation-related economic activities,
assistance for

projects up to Rs.20 lakh is provided. Besides, full working capital

support can be part of the total project cost. The NSKFDC finances up to
90 per cent of the project cost. A standard unit cost for a project is
worked out and the number of units is sanctioned to the SCA based on the
number of beneficiaries.

ii) Education Loan

Term loan assistance to a student for pursuing professional and

technical education at graduation and higher levels is provided up to a
maximum of Rs.3 lakh or Rs.75,000/- per annum.

iii) Micro Credit Finance

Micro Credit Finance (Regular) : MCF for small and petty

trade/business and sundry income-generating activities is provided for
projects costing upto Rs.5 lakh restricted to Rs.25,000 per borrower.

(iv) Mahila Samridhi Yojana (MCF for women) :

150
 Term loan under Mahila Samridhi Yojana is provided with lower
interest to women who are Safai Karamcharis or Scavengers and the
dependent daughters of Safai Karamcharis and Scavengers for the same
purpose and with financial limit as in the case of the regular MCF
programme.

NBCFDC assists a wide range of income-generating activities

which include agricultural and allied activities, artisan and traditional
occupations, technical trades, self employment, small scale and tiny
industry, small business, transport services, etc., The Government of India
has contributed Rs.406.63 crore to the Corporation as equity towards the
authorized share capital of Rs.700 crore in 2003. The Corporation has
disbursed Rs.898.58 crore for 548042 beneficiaries. The Corporation
has also achieved more than 100 per cent growth in the IX Plan period
over the VIII Five Year Plan in respect of disbursement, recoveries and
number of beneficiaries assisted.

In order to implement the NBCFDC's schemes at grassroots level

and to promote and support micro credit scheme for improvement of
credit facilities for the target group especially for women beneficiaries,
the Corporation has adopted micro financing through the State
Channelizing Agencies (SCA's) which SCA's can implement the scheme
either directly or through Self Help Groups in their States. The
Corporation has also introduced the Mahila Samridhi Yojana with effect
from 1.10.2003 under Micro Finance Scheme in which loans are provided
@ 1 per cent to SCA(s) for further disbursement by the State
Governments to the women beneficiaries @ 4 per cent.

151
 The Corporation has also been implementing the new Swarnima
Scheme started in 2001-02 for women belonging to Backward Classes
living below the poverty line. Under the scheme, the financial assistance
to the extent of Rs.50,000/- per beneficiary is provided at concessional
rate of interest of 4 per cent per annum. With a view to identifying the
system's deficiencies and taking corrective measures towards bringing
about transparency in its operations, the Corporation has asked the SCs to
get at least one major scheme evaluated in the States through accredited
institutions.

(v) Other Backward Classes and Banks

To ensure that the OBCs are able to achieve economic development

and self-reliance through promoting entrepreneurship amongst themselves
in diverse fields, steps are taken by the government to support self-
employment and income generating ventures. The National Backward
Classes Finance and Development Corporation (NBCFDC) started
individual and strengthened scheme of Grant-in-aid to Voluntary
Organizations also in order to encourage the social and economic
upliftment of OBCs. The functioning of the existing NBCFDC is to
extend necessary support for financially viable schemes/projects and to
upgrade the technical and entrepreneurial skills of individuals and groups
belonging to OBCs to enable them to initiate self-employment
/entrepreneurial ventures.

As majority of OBCs have been traditionally engaged in

occupations like, dairy, handloom weaving, pottery, metal work,
152
artisanship, fishing, stone cutting etc., a special thrust is laid on upgrading
their traditional skills especially those of women and to provide financial
support and marketing facilities in developing entrepreneurship, either in
groups or as individuals. Efforts are also made to encourage occupational
mobility for those OBCs, especially the youth, who intend to discontinue
their traditional industries, by providing facilities for appropriate
educational and vocational training in modern and upcoming
technologies, supplemented with financial and other assistance to enable
them to enter successfully into new economic ventures.

(i) Minorities and Banks

In 1993 the Government of India declared Muslims, Christians,

Sikhs, Buddhists and Parses as minority communities. According to 2001
census, they were 189.5 million and 15.42 per cent of the total population
of India. Priority given to economic development amongst the Minorities
through strengthening the institutional set-up at various levels to support
self-employment and income generation activities, especially amongst
women and occupational groups by supporting micro and small-scale
enterprises. The National Minorities Development and Finance
Corporation are being encouraged to promote self-employment activities
among the minorities and to provide upgraded entrepreneurial and
technical skills, specially focusing on the development of the backward
sections viz., women, traditional artisans and occupational groups.

While planning for the economic betterment of the Minorities, the

Tenth Plan accords special recognition to the traditional craftsmen and
153
artisans' skills vested in them for generations. A large number of families
belonging to the Minorities especially women still continue to be
dependent upon the household/traditional industry of handicrafts such as
embroidery, chikan-kaari, zari work, lace-making, tailoring, dyeing etc. In
order to promote the handicraft sector as a viable and sustainable self-
employment and income generation source for these families, efforts are
made to provide apprenticeship training, revive the dying arts and crafts,
extend modern technological support, upgrade the skills to meet the
changing fashions and the marketing demands both within and outside the
country. In fact, special efforts are made to encourage export-oriented
handicrafts in view of the increasing demand outside the country. The
Minority Finance Development Corporation both at the Central and the
State levels are being encouraged to extend financial and other technical
support likes provision of machinery, expertise, training, market linkages
etc.

Handloom is another sector, which has been an important

traditional occupation for a large segment of the Minorities. These
traditional weavers are supported with necessary financial and material
support to revive the languishing industry as a sustainable venture. In this
direction modernization of handloom operations through appropriate
apprenticeship and training has been started, in the Ninth Plan. To
preserve their rare traditional skills, they are encouraged to form into self-
help groups/cooperatives for which financial assistance is extended along
with managerial and marketing services through various banks.

A sizeable population in India belonging to the Socially

Disadvantaged Groups of SCs, STs, OBCs and Minorities living under
154
extreme poverty, mobilization of adequate financial and social support
needed to free them from the clutches of poverty. The adoption and
implementation of the New Economic Policies warrant watchful and
protective attention towards the weaker sections because of the
commitment to bring about comprehensive improvement in their living
conditions. Therefore, the efforts in the Tenth Plan are synchronize
empowerment of these weaker sections with the national developmental
policies and programmes. The private and the corporate sectors are
motivated to invest on the welfare and development of the weaker
sections as they form a potential force in the country's human resources.

Special measures will also be taken to sensitize and motivate the

financial institutions to pay special attention to these priority groups and
extend loans to them at differential rates of interest. Sensitization
programmes to inculcate a positive attitude towards these disadvantaged
and neglected sections will also form part of the economic development
package. The youth and women amongst these Groups will be given
special attention as they are the most important potential and productive
'human resource', by setting up small scale and cottage industries, village
crafts, weaving and other occupations/enterprises with effective market
linkages.

Efforts will also be made to simplify the lending and other

procedures of banks and other financial institutions as the procedures
followed by them appear to be too complicated for the poor illiterate,
ignorant and desperate weaker sections to avail themselves of the loan.
Since the majority of the population belonging to these Groups depends
upon agriculture and allied activities for their livelihood, steps will be
155
taken to ensure that loans are given on a priority basis to these Groups for
agricultural purposes.

The banks should take responsibility for providing equal

opportunities for the development of national resources and
potentialities.17 It should sensitize and motivate the officials to pay
special attention to these priority groups and extend loans on differential
rates of interest.

In this direction, along with the Banks, the National and State level
Apex bodies viz., the National SC and the ST Finance Development
Corporations (NSFDC), National Minorities Finance and Development
Corporation (NMFDC) and National Backward Classes Finance and
Development Corporation (NBCDC) and the State Scheduled Castes
Development Corporation (SCDCs) are working as a leading and a
catalytic role in promoting employment-cum-income generation
opportunities. As most of the SCs, STs, OBCs and Minorities living in
rural areas, continue to depend upon the low income and less productive
informal/unorganized sectors of agriculture, dairying, animal husbandry,
fisheries, handlooms, handicrafts including other
craftsmanship/artisanship. Attempt must be made through various training
programmes to upgrade their traditional skills, equip them with modern
technology and extend both 'backward' and 'forward' linkages of bank
credit and marketing facilities.18 Thus banks are doing commendable
work in bringing about social justice among the marginalized social
sections. The banks are granting various loans essential for development
of large population and rural base of our economy. Now the competition
emerging from the liberalization of the economy and monetary limits may
156
put obstacle in social justice oriented programme and policies. Now India
needs longer time inclusive financial system that brings social justice for
the poor in terms of economic justice.

To conclude it is useful to include Rawls20 discussion of the

"Economic Justice in fact requires four branches of government : an
allocation branch to 'keep the price system workably competitive and to
prevent the formation of unreasonable market power ; a stabilization
branch to maintain full employment and so, with the allocative branch, to
help maintain the efficiency of the market economy, a transfer branch
responsible for dealing with the provision of a social minimum, and a
distribution branch to 'preserve an approximate justice in distributive
shares by means of taxation and the necessary adjustments in the rights of
property.

157
REFERENCES

1. Annual Report 2003-2004, 2004. Ministry of Social Justice and

Empowerment, Government of India, New Delhi. p.6.

2. Basu, Priya, 2005. 'A Financial system for India's Poor : Economic
and Political Weekly (hereafter EPW) , Bombay September 10, p.
4008.

3. Bhalchandra Mungekar. 2004. India's Economic Reforms and the

Dalits. An Ambedkar Perspective Mumbai, p.38.

4. EPW, Mumbai, October 22, p.4647.

5. National Sample Survey organisation, 2005, Indebtedness of

Farmer Households, 59th Round, January - December, 2003, New
Delhi

6. Pallavi, Chavan, 2005, How 'Inclusive' Are Banks under Financial

liberalisation?

7. Prakash Louis, Affirmative Action in Private sector, EPW, August

14, 2004, p.3691.

8. Radhakrishnan, 'Sensitising officials on Dalits and Reservation

EPW February 16, 2002, p.653.

9. Rao, K.G.K.Suba, 2005, A Financial System for India's Poor,'

EPW, October 22, p.4650.

10. Rawls, John 1971, A Theory of Justice Oxford, Oxford University

Press p.276-77

158
11. Report of the Steering Committee on Empowerment of the
Scheduled Castes (SCs), Other Backward Classes (OBC's) and
Minorities for the Tenth Five Year Plan (2002-2007),
2002,Planning Commission, Government of India, New Delhi.

12. Reserve Bank of India Annual Report, 2004-05, 2005, RBI,

Mumbai

13. Sen, Amartya,1992 Inequality re-examined, Delhi, OUP, p.102

14. Singh S. N. 2005, 'Reservation for Scheduled Castes : Public to

Private, '

15. Singh, S. N. 1995 'Reservation Policy for Backward classes , Rawat

Jaipur 1992, p.15

16. Singh, S. N. 2004, Emergence of OBC's in India, 2004,

Contemporary India July September, Nehru Memorial Library,
New Delhi

17. Singh, S.N. 2005. 'Caste, Tribe and Religion in Indian Politics', Sai,
New Delhi.

18. South Asian Journal Of Social Political Studies', Kollam, June,

p.57.

19. Tenth Five Year Plan (2002-2007), 2003. 'Planning Commission,

Government of India, New Delhi, p. 407.

20. The Economic Survey 2004-05, 2005 Taxman, New Delhi, p.30.

21. Thorat, S.K. 'Social security in Unorganised sector in India : How

secure are the Scheduled Castes? Indian Journal of Labour
Economics, July September, 1999, p.,2560.
159
22. World Bank, 2004. 2004 India : Scaling up Access to Finance for
India's Rural poor'. Report No.30740-In World Bank Washington
DC.

160
Banking Sector Reforms in India

Soon after the 1991 reforms, serious attempts were made to give
the highest priority to efficiency, financial viability and competitiveness
in the banking system. It was intended to create a climate of freedom of
action within and competition among different banks while protecting the
interests of all concerned to bring transparency, strengthening of the
system with the help of Debt Recovery Tribunals and minimizing the
distinction between banking and non-banking financial institutions. The
integration of Indian financial sector with its global counterpart meant
coming in contact with and being required to use modem technology
being prepared for competitive efficiency and getting the maximum out of
the opportunities in the global area.

Beginning with 1992-93, the banking sector in India has undergone

several reforms. The objectives have been:

(A) to replace restrictions based on control and coercion of banks to the

use of market based incentives, so that bank management and staff are
free to use their intelligence and commercial initiatives,

(B) to have the necessary prudential regulations needed to protect the

depositors and the banking system, and

(C) to create an environment in which the banks compete with each

other to provide the best service to depositors, borrowers and other
clients.

161
The central aim underlying these changes has been to develop a banking
system which is operationally efficient, financially viable and capable of
bearing unforeseen risks of different types as well as meets out the
requirements of a more competitive and opens economy.

Strengths of the Banking Sector -

Over the last five decades, the strong points of Indian banking
system are:

(a) its vast geographical and functional reach and institutional

diversity.

(b) meeting the needs of the deficit sector,

(c) the share of loans to agriculture, small industry and small business
enterprises in total bank credit has risen remarkably. Banking is
within the reach of a vast majority of Indian population.

(d) the banking sector has demonstrated its ability for mobiling
financial savings.

(e) the banking system has been a progressive force in widening the
entrepreneurial base of the country.

(f) new areas of service are gaining wider acceptability like credit
cards, merchant banking, lease finance, mutual funds, venture
capital funds, financial advisory services, rating agencies, housing
finance, factory outfits etc. have come into existence, and

(g) Because of increasing monetisation in rural and semi-urban areas

their share in the growth of deposits is going to be more than the
present.
162
 Indian banking industry caters much more than their global
counterparts to service which do not fall necessarily in the banking core
area. To narrate a few payments of taxes, electricity, telephone bills,
tuition fee, pensions, examination and college fee etc, at a marginal or no
cost. Bank's creditable record in branch expansion, encouragement of
saving and service to the weak and the neglected has its own merit.

Weakness of the Banking Sector -

It is clear that the banking system has been over-regulated and

under governed but the major deficiencies of the banking sector are:

(a) Credit management within banks had weakened due to deficient

credit appraisals and supervision. This was also the result of an
environment in which some bankers did not resist external
pressures for loans to influential parties.

(b) Banking sector's low profitability and the consequent inability of

several banks to provide adequately for loan losses and to build
their capital.

(c) Banks were also directed to provide their lendable resources, at

concessional rate of interest to the priority sectors, namely,
agriculture, small and tiny industries, small business and weaker
sections of society.

(d) As official policy discouraged closure of large and medium sick

industrial units, banks continued financing them including even
many non-viable units, under repetitive rehabilitation programmes.

163
(e) The growing borrowing need of the centre and the states have also
been met by directing banks, through an increasing statutory
liquidity ratio to invest in government and government guaranteed
securities carrying below-market coupon rates.

(f) It has not been easy for banks to recover their dues through courts
litigation is time-consuming and frequently court decrees obtained
after years of efforts cannot be effectively executed due to erosion
in the value of collateral and the restrictive laws about land use.

(g) To compensate bank for the strain associated with directed

investments and loans, bank deposit rates were depressed and
interest on larger loans to industry and trade ended to be
excessively high.

An overview of Banking Sector Reform -

The Indian economy today is in a transitional stage so as to

facilitate rapid integration with global economic system. Rapid reforms in
various segments of economy are under-way. Financial sector reforms
thus have many dimensions. The past 20 years in fact, have seen
important changes in the areas of removing external constraints in their
operations, improving their financial health and imparting greater
competitiveness. These changes are by no means insignificant. In the
more recent period, banks have been given more operational freedom
through the relaxation of lending norms and lending arrangements. While
some of these changes are already in operation, some others are in the
process of being implemented. In order to broaden the competitive base of
the financial system, now there is room for both public and private sector
164
banks sub serving the underlying goals, including the development
objectives of the financial sector reforms. Nevertheless with a view to
protecting the long term viability of nationalized banks, government of
India had been providing support by infusing capital since 1985. Bank has
made specific commitments to the RBI to ensure that capitalization
exercise is carried out on a sustainable basis. This will force banks to
design clear cut policy stance for imparting greater financial discipline
and provide a direction into the bank’s balance sheet performance. Banks
have also been asked to design strategies for restructuring of bad debts,
improving recovery and reducing non-performing assets.

Main challenges -

However, despite comprehensive financial and banking sector

reform, we have not achieved the goal in a positive manner so far:

(a) There is no alternative to an efficient risk management system

covering all aspects of risk for the healthy growth.

(b) Proper valuation of an asset or group of assets in a precursor to any

restructuring exercise.

(c) Lack of financial discipline, deliberate management with the

intention to defraud and downturn in business condition has been
identified as the main causes of sickness.

(d) The cash-Deposit ratio of Indian banks have been showing a

declining trend due to high growth of NPAs and b

anks have been seeking alternate revenue streams like-free based income.

165
(e) There is long non-relationship between deposits and investments
and between investments and credit but deposits and loans tend to
drift open.

(f) There is no alternative to technology up gradation coupled with the

implementation of efficient risk management and security
procedures for the future of Indian banking in a de-regulated
environment.

(g) The massive planning exercise is considered waste of resources

under the service area approach as it rarely matched the regional
needs.

Other Challenges facing Banking industry in India

The banking industry in India is undergoing a major transformation

due to changes in economic conditions and continuous deregulation.
These multiple changes happening one after the other has a ripple effect
on a bank trying to graduate from completely regulated seller market to
completed deregulated customers market.

Deregulation:

This continuous deregulation has made the Banking market

extremely competitive with greater autonomy, operational flexibility and
decontrolled interest rate and liberalized norms for foreign exchange. The
deregulation of the industry coupled with decontrol in interest rates has
led to entry of a number of players in the banking industry.

Misaligned mindset:
166
 These changes are creating challenges, as employees are made to
adapt to changing conditions. There is resistance to change from
employees and the Seller market mindset is yet to be changed coupled
with Fear of uncertainty and Control orientation. Acceptance of
technology is slowly creeping in but the utilization is not maximized.

Competency Gap:

Placing the right skill at the right place will determine success. The
competency gap needs to be addressed simultaneously otherwise there
will be missed opportunities. The focus of people will be on doing work
but not providing solutions, on escalating problems rather than solving
them and on disposing customers instead of using the opportunity to cross
sell..

Implementing organization wide initiatives involving people,

process and technology to reduce the fixed costs and cost per transaction.

Focusing on fee based income to compensate for squeezed spread, (e.g.

CMS, trade services)

We at ECS have vast experience in partnering with leading players

in bank in for addressing these challenges in a holistic manner. Our
expertise is reflected in our product offerings for addressing the key
challenges. A select few are outlined below:

Banking Strategies in the New Millennium

In view of these dynamic changes, the time is ripe enough to

visualize the role of the banking sector in accordance with the imperatives
of the new millennium and to spell out the strategic preparations so that

167
the Indian banking sector can perform itself effectively. Intelligent
anticipation should be made so that new avenues will have to be explored
and old ones will have to be adapted to the new needs.

Against this background, the present paper attempts to portray

Indian banking system by the next millennium. It is divided into two
parts. The first part presents a synoptic view of the Indian banking system
as it stands on the threshold of the new millennium. The second part
spells out in specific terms the strategies that need to be adopted by Indian
banks so as to become spearhead market players in the financial system of
the new millennium.

A Synoptic view of Indian Banking

The doors of the banking sector are now thrown open to private
sector and foreign banks along with the freedom to close down
uneconomic branches. At present public, private and foreign banks
operating number are given below table.

168
REFERENCES:

1. Akerlof, George A. and Robert J. Shiller (2009), "Animal Spirits:

How human psychology drives the economy, and why it matters for
the global capitalism", Princeton University Press.

2. Bandi Ram Prasad, Indian Banking: An overview, Chartered

Financial Analyst, December 1998, Page 46-47.

3. Batra, Ravi (2005), "Greenspan's Fraud: How two decades of his

policies have undermined the global economy", Macmillan.

4. Fleckenstein. William A (2008), "Greenspan Bubbles: The Age of

Ignorance at the Federal Reserve" , McGraw Hill.

5. Government of India (1998) : Report of The Committee on

Banking Sector Reforms (Narasimham Committee-II) Ministry of
Finance, New Delhi.

6. Greenspan. Alan (2009), www.central banking.com (Central

Banking News Desk. 09.09.09).

7. IMF (2007), Global Financial Stability Report, April 2007.

8. International Monetary Fund, Websites of respective central banks

and the Economist.

9. Keynes, John Maynard (1936), "The General Theory of

Employment, Interest and Money", London and New York.

10. Landau. Jean-Pierre (2009), "Complexity and the Financial Crisis",

Deputy Governor of the Bank of France, Speech delivered at the

169
 Conference organized by Bank of France and the Deutsche
Bundesbank on June 08, 2009.

11. Machiraju, H.R. (1998), Indian Financial System, Vikas Publishing

House, New Delhi.

12. Mian, Atif R and Amir Sufi (2009), "House Prices, home equity
based borrowing, and the US household leverage crisis", Chicago
Booth Research Paper No.09-20, July 5.

13. Morel Philippectal (2007) of the subprime Crisis: Do not ignore the
Risk, The Boston Consulting Group.

14. Report on Trend and Progress of Banking in India 2007-2008,

R.B.I., Jaipur

15. Reserve Bank of India (1991), Report of the Committee on the

Financial System, RBI, Bombay.

16. Reserve Bank of India Bulletin 2007, Jaipur

17. Sahoo, R.K. (2002) : "WTO and Trade in Services: Implications for
India: Page 12-23.

18. Sarma R.H., Indian Banking: Challenges Ahead, Chartered

Financial Analyst Dec. 2001, Page 42-43.

19. Smaghi, Lorenzo Bini (2008), '''Financial Stability and Monetary

Policy Challenges in the Current Turmoil", Speech delivered at the
ECB, CEPS joint event with Harvard law school on the ED-US
Financial System at New York on April 04, 2008.

20. Subbarao, D. (2009), "Global financial crisis-questing the

questions", JRD Tata Memorial Lecture at the meeting of The
170
 Associated Chambers of Commerce and Industry of India at New
Delhi on July 31, 2009.

21. World Bank (2002) "Building Institutions for Market." Wodd

Development Report 2002 to 2006. The World Bank.

22. World Economic Outlook, April 2008.

171
CHAPTER IV

MANAGEMENT OF BANKING

The banking industry is a powerful weapon in the armory of the

government for bringing about desired economic reinforcement. It is a
widely recognized fact that banks play a major role in the economic
development process. The banking system is the key agency on whose
efficient functioning the progress of a country’s economy depends. The
bringing of fourteen major banks and subsequently six major ones of the
remaining banks under state ownership have together been a unique
experiment in the history of bank nationalization. The objective was, “To
control the heights of the economy and to meet progressively and serve
better the needs of development of the economy in conformity with
national policy and objectives.’’ It is now being realized that banks (the
Banking Company Acquisition and Transfer of Undertaking Act 1970)
are an effective and potent instrument in achieving the socio-economic
aims of the country.

1. Concept of banking

The banking service was available at all stages of human progress,

though under different names. India had her ‘sahukars’, Rome her
Argentaru and Britain her goldsmiths. But the object of all these were the
same i.e. the performance of services relating to money. The word
‘’bank’’ is generally considered to be derived from the Indian word banco
“a bench” and took its origin from the bankers whom the Jews in
Lembardy used in carrying on their banking operation. Which were
172
limited to money changing? The derivation is incorrect and has been
criticized on the ground, that our present bankers is neither a
moneychanger nor a moneylender alone, but performs many others
services.

Banking Regulation Act, 1949 defines banking as under “banking

means the accepting for the purpose of landing investment of deposits of
money from the public, repayable on demand or otherwise and withdraw -
able by cheque draft, order or otherwise.”

In simple words banking may be said to be a system in which an

institution (called banks) accepts deposits from public, repayable on
demand and advances loans to those who require money.

Today we have in India two sectors of banking. One is the

unorganized sectors i.e. “classical banking “which consists of
moneylenders and the indigenous bankers. The moneylenders are found in
villages and towns. They do not accept deposits, but land money at a very
high rate of interest. The indigenous bankers conduct their business in
traditional way the shroffs, the Marwaris and the Multains belong to
these sectors. The others is the organized sectors i.e. “modern banking”,
on the model of western countries. The joint stock bank, the rural banks,
and the state banks belong to the organized sector.

Function and Commercial Banks:

Commercial banks are discharging there role and a catalyst of socio

-economic change with the effusion of the time. The expectations from
banking industry have been mounting high apart from normal banking
functions are banks how have several obligations to meet, various
173
challenges to face and a lot of questions to answers. At present main
functions and, commercial banks are as under: -

1)Primary Functions :

The two essential functions of commercial banks are borrowing and

lending. Bank collects money from those who have it to spare or
who are saving of their income, and it lends money out to those
who require it. They borrow money by accepting deposits in
current accounts, fixed deposit accounts or saving accounts thus we
see that a banker receives deposits which he has to repay according
to his promise and makes them available to those people who are in
need of them.

2) The commercial banks provide facilities for both domestic and

foreign remittances through MT, TT and any other devices.

3) A bank acts as an agent, attorney, corresponds etc. of other banks

and institutions for their own clients.

4) Facilities are also furnished for the safe keeping of securities and
other valuables in safe deposit values or lockers.

5) Collection and payment of cheques, bills, promissory notes,

dividends, warrants etc.

6) Foreign exchange services such as financing to imports and exports

of trade and services.

“To sum up, the services rendered by a modern commercial banks

is of inestimable value of mobilizes the scattered savings of the
community and redistributes them into more useful channels to enables
174
the large payment to be made over long distances with maximum safety
and minimum expenses it constitutes the very life blood of an advanced
economic society”.

Origin of Banking in India

In the early stages of human civilization, while the rest of the word
was having almost a barbaric life India has a developed banking business
our ‘Veda’, “Manusmriti”, and Kautilya’s ‘Arthashastra bear good
testimonies to the existence of banking in India reference in the
“Ramayan about the institution of money lending is also available. When
the British’s came to India, they could not make use of Indigenous banker
due to difference of language and style. Therefore, English agency
houses started banking business in Calcutta and Bombay. Due to warfare
charges on the basis of India’s trade, gradual expansion of English
banking system, indigenous banking declined to a considerable extent.
They are still working mainly in rural areas the attitude of indigenous
bankers were concerned only with the granting of credit to the
agriculturist, artisans and traders and did not finance foreign trade which
was the main business of the Europeans to overcome these difficulties
European banks were developed. “The year 1860 marks a new era in
the histo5ry of public banks in India because it was in the year that the
principle of limited liability was first applied to Joint stock Banks ”From
1860 till the end of 19th century several Joint stock Banks come into
being. The Allahabad Bank, Punjab National bank, Oudh commercial
bank the Amritsar bank were started during this period. The Swadeshi
movement of 1905 gave a stimulus to starting of Indian banks. Many

175
banks were started by the enterprising Indian businessmen and among the
banks started, during the period. The following were important.

1. Bank of India (1906)

2. Indian bank (1907)

3. The Central Bank of India (1911)

4. Bank of Baroda (1908)

5. Bank of Mysore (1913)

During the crisis of 1913.-1917 several banks failed. There were

several factors responsible for the bank failure-first, the Indian money
market was unorganized and its different components were pulling
indifferent direction, components were pulling in different directions;
secondary. Indians did not have sufficient knowledge and experience of
banking principles and practices, and large funds and unsecured loans
were granted to the directors and the concerns in which the directors were
interested. Thirdly, these banks did not have adequate capital and
reserves” fourthly, there were no central banks to look after and control
the working of the commercial banks.

The banking scene in India changed completely after independence,

The Change Regulation Act 1949. Imperial Bank of India was formed in
1921, after amalgamating presidency banks. After the establishment of
Reserve Bank of India, the imperial bank ceased to act as government
banker and Banks banker. In 1949 Reserve Bank of India was
nationalized. It was equipped with a variety of powers to regulate and
control the commercial banking system to ensure its orderly growth and

176
check its operations from being detrimental to the interests of the
depositors.

On 1st July 1955 the imperial Bank of India was converted into the
state bank was converted into the state bank of India with the
establishment of the state bank of India, a new Chapter of state ownership
opened in the history of commercial banking. In 1962, the “Deposit
Insurance Corporation” was started by the Reserve Bank of India to
implement a system of deposit insurance with a view to develop banking
habits by providing safety to customer deposits.

Social control over Commercial Banks.

Banking system made tremendous growth after independence. The

growth appeared inadequate and defective in many ways.

There were complains that major part of bank advances was

directed large and medium sized industries while the priority sector such
as agriculture, small scale industries and exports are net receiving their
due store. Consequently, a new policy called “Social control of Banks”
was initiated in e social ends that nationalization could secure without
talki1967. The basic goal in imposing social control was to achieve thing
over the banks into public ownership. The scheme of social control was a
turning point in the history of Indian banking and it paved the way for
nationalization.

Nationalization of commercial Banks

The working of social control during the short period did not
contribute to the attainment of its goals. The lending policy did not show
any phenomenal change. The crisis of social control was short lived and
177
considered inadequate. Hence the 14 major Indian banks having deposits
of more than Rs.50 crores were nationalized on 19th July 1969.
Consequently, the Banking companies (Acquisition and Transfer of
Undertaking Act of 1969) was erected. The 14 nationalized banks are.

1. Central Bank of India

2. Bank of India

3. Punjab National Bank,

4. Bank of Baroda

5. United Commercial Bank.

6. Canara Bank.

7. Union Bank of India

8. Dena Bank

9. Union Bank of India

10.Allahabad Bank

11.Syndicate bank

12.Indian overseas bank

13.Indian bank

14.Bank of Maharastra

Second Phase of Banks Nationalization, 1980

Nationalization of six other commercial banks took place on 15th

April 1980. When the government of India acquired those private sector
commercial banks took place on 15th April 1980. When the government
178
of India acquired those private sector commercial banks of which demand
and term liabilities where Rs. 200 crores as on 14th, March 1980. The six
nationalized are:-

1. Andhra Bank limited

2. Corporation Bank Limited

3. New Bank of India Limited

4. Oriental Bank of Commerce Limited

5. Punjab and Sind bank limited

6. Vijaya bank limited.

“The objective was to enhance the ability of banking system to

meet effectively the needs of the development of the economy to promote
welfare of the people more adequately.”

“With the nationalization of the above six banks the number of

pubic sector banks are increased to 28(comprising the state bank of India
and its seven subsidiaries and twenty nationalized banks) exclusive of
regional rural banks. These banks accounted for 91 per cent of the total
deposits and credits of commercial bank in April, 1980”.

Objectives of Nationalization

The basic objective of nationalization has been to ensure that banks

were converted instruments of social development and well being. It also
aimed at securing a wider diffusion of economic power and to check
certain imbalances that existed in the development of banking before
nationalization. More specifically the objects are.”

179
 The removal of control by a few:

 Provision of adequate credit for agriculture, small industry, and

exports,

 The giving of professional bent to bank management”

 The encouragement of new classes of entrepreneurs; and The

provision for adequate training as well as reasonable terms of
service for bank staff and the like.

Pre Nationalization role of commercial banks (before July, 1969)

Prior to the Nationalization of major commercial banks in the

country, these banks used to operate on the basis of astute commercial
lines, with the object of profit maximization and used to serve the interest
of that sector of economy, which was financially sound. The back word
and less development regions, which did not offer any profitable venture,
were utterly neglected. This discriminating making difference poli8ay of
the banks led to glaring disparities between the relatively advanced and
back word areas of the economy. Thus, the vast agriculture sector, small
scale and cottage industries, self-employed sector, professionals, artisans
and weaker section of society etc. were mostly excluded to debar from the
area of its operation.

Before nationalization, indigenous bankers and private banks

largely met the financial requirements of small scale and other
commercial and non-commercial institutions. These sources of finance
were inadequate both in their capacity to lend and in their geographical
coverage through organizational net work. Moreover, these sources of

180
industrial and non-industrial finance were indifferent to the history of
State Bank of India and its subsidiaries. Commercial banking received
new direction, guidance and encouragement from the pioneering working
and leadership of the state Bank of India and its seven subsidiaries.

The OBC was one, out of six, which were nationalized, in second
phase of nationalization on 15th April 1980. It has 899 branches situated
in all over India on march 1998-99 the total deposits of the bank were
Rs.16,805 crores and advances were Rs.7708 crores 21st In a period of
20years the Oriental Bank has shown excellent achievement in all fronts.

Its head office is in New Delhi there is no provision of zonal office

in the organizational set up of this bank, regional offices are working as
final offices. The functioning of Regional office is the same as that of
tonal office of other selected banks. The bank has 21 regional offices and
899 branches and 76 Extension counters and 17 satellite offices in India.

Present Scene of Indian Banking

Banking in India has undergone a tremendous change in the yeast

two decades the activities of banks have been increased manifold in
volume variety and geographical coverage, and all are related to the need
of national development. Highlights of banking in recent years have been
greater stress on district credit planning revamping on branch expansion
policy intensive hunt for deposit mobilization and introduction of schemes
and programmes like lead Bank scheme differential Rate of Interest
Scheme, 20 point Economic programme, IRDP, and Scheme for Educated
Unemployed Youth.

181
 However, everything is not viewed in positive terms, because on
one hand banks have expanded their role in socially desired manner and
on the other hand they have miserably failed on quality fronts. The
deterring customer service, declining profitability, mounting overdue are
some problem which if not tackled by banks are likely to hamper the
progress already achieved.

Some special features which dominate working of our banks,

Organisational obesity and wide network of branches. Little use of
computerization and minimum use of mechanization: A Union philosophy
of rights which includes minimum responsibility and an unhelpful work
ethos. A general lack of involvement sense of belonging and institutional
loyalty. A cold attitude of official recognition of the needs for profits.
Mounting losses due to sick Units and Little use of negative motivators
due to strong Unions.

Productivity Indicators in selected Banks

Productivity set comprising norms of deposit mobilization,

advances, branch expansion and two qualitative aspects like customer
satisfaction and promptness in dealing are in our study considered
appropriate for the bank in the Indian context.

Deposits

Deposits are the lifeblood of banking industry other activities of

banks is chiefly depends on deposits, a banks existence growth and
development depends on its deposits. Quantum and development
mobilized by the banks is undoubtedly the main indication of the

182
performance trend of the industry the Banking Regulation Act 1949
defines deposits as follows.

“Deposits are acceptance of money from the public repayable on

demand or otherwise and withdrawal by cheque draft order or otherwise”

Broad classifications of deposits are

a. Times deposits are those that are deposited with bank for a
certain period of time.

b. Current deposits are most liquid because no interest is

payable to current depositors.

c. The objectives of a saving deposit is to mobilize saving of

public Interest is paid on it.

The ability of commercial banks to help assist the economic

activities of the country largely depends on the volume of their deposits
the strategy of these banks for mobilizing deposits is to open more and
more banks offices and motivate people by bringing in certain attractive
types of deposits. A number of schemes in addition to traditional types of
deposits were introduced in the past by commercial banks to attract
deposits the schemes are tailored to special needs and preferences both as
regards manner of collection and payment.

Advances

Performance of the bank in terms of advances is of crucial

importance as the survival and development of the Bank is equally
influenced by the credit created and granted by the bank.

183
 Lending of funds is considered one of the most important functions
of modern banking. This on one hand provides income to banks in the
form of interest and discount and on the other hand promotes economic
development by meeting financial needs of industries and commercial
establishment Banks are primary suppliers of credit.” The commercial
banks are the critical resources center and the engines of economic
growth”.

The lending function of banks is closely associated with the volume

of deposit and the rate of return on advances. A bank may increase
advances only out of increased deposits as well as an increased rate of
return. Thus deposits and advances influence each other increased
deposits help to increase advances and this in turn along with some other
factors help to increase deposits in this way. A beneficent circle of deposit
advances deposit gets firmly established increase lending depends upon
increased deposits which manifests that both are positively correlated. The
money lending also influences the level of deposit in a considerable
manner but it is not necessary that every advance may be turned up into
bank deposits.

Both the CRR and SLR is the heavy loss of income to the banks
upward revision in CRR and SLR may result in more or less zero earnings
on a certain portion of the bank assets. The immediate impact of upward
revision in the CRR and SLR is loss of income for the Bank on account of
resources blocked low yielding assets which otherwise would have been
used by the bank for expending credit.

184
 These banks provide loans and advances in both priority sectors.
Performance of these banks in providing credit in the last decade is under:

STRATEGIES

Some technology-based strategies need to be explored for taking

banking activity to rural areas. Here are some of the strategies being
practised by banks to use information technology in rural areas.

Banks entering into this area have to look at the infrastructure

available in rural areas, before putting strategies into action.

First, banks plan providing services in those villages where there are a
few households.

Some banks have already started using a local villager, identified

by the manager of the nearest branch, as business correspondent. This
correspondent carries the job of a bank through IT- enabled simple
gadgets. With this strategy, the banks can think of using the bio-metric-
enabled technology for providing service in such areas.

Second, some banks have entered into tie ups with SHGs using the
business correspondent model in those regions with better SHG network.

Third, banks, using the better telecommunication connectivity

available in some villages, are setting up - IT-enabled kiosks with
facilities to provide the services.

Fourth, banks are aiming at leveraging the strong network of PACs

and post offices to provide a better service to the local populace. It may be

185
mentioned here that State Bank of India has "already tied up with
Department of Posts in this regard.

Telecom operators can play a vital role in taking forward the

financial inclusion programme, as telecommunication facility is the basic
infrastructure needed for carrying out banking activity through simple IT
gadgets. In such a situation, both banks and telecom operators can mull
alliances for their mutual benefits.

On the technology front, technology developers need to have a

unified IT system for rural banking that is simple, convenient and
accessible in remote places with minimum requirements.

186
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Raendra Singh and his work (Article) Manushi, No.123, Mar-April,
2001, p.4-16.

68.Gena, H.C., ‘Rural gender integration through communityland

management in Western India: IFFDC’s experience in Rajasthan
(Article), Political Economy Jounal of India, VBol.15, No.1-2, Jan-
June, 2006, 80-90.

69.Reddy, Y. Gangi, Swarnjayanti Gram Swarojgar Yojana (SGSY) in

Rajasthan : A few observations (Article) IASSI Quarterly, Vol.19,
No.1, July-Sept., 2000, p.38-57.

70.Althusser, L. Essays in Self criticism (trans.) 1976, p.175

71.Annual Report 2003-2004, 2004. Ministry of Social Justice and

Empowerment, Government of India, New Delhi. p.6.

72.Bailson, Bernard and Gary A. Steiner, Human Behaviour : An

Inventory of Scientific Findings, Harcourt Brace and World, Inc.
New York, 1964 p.240.

73.Banerjee, M. Organisational Behavioural Allied Publishers Pvt.

Ltd., Bombay 1984 p.38

74.Basu, Priya, 2005. 'A Financial system for India's Poor : Economic
and Political Weekly (hereafter EPW) , Bombay September 10, p.
4008.

75.Bateille, Andre (1974), Studies in Agrarian Social Structure,

Oxford, Delhi
198
 76.Batellle, A., Studies in Agrarian social structure, Delhi, 1974 p.126.

77.Bhalchandra Mungekar. 2004. India's Economic Reforms and the

Dalits. An Ambedkar Perspective Mumbai, p.38.

C. PERIODICALS AND JOURNALS

1 All India Cooperative Review

2 Agricultural Situation in India

3 Agricultural Development income distribution and social change,

Orissa Economic Journal, Vol.XIV (1), 1981.

4 Bank of India Bulletin

5 Commerce, Weekly Annual Numbers Monthly pamphlets.

6 Capital

7 Cooperative News Digest

8 Distribution of Agricultural Credit and Concentration of Over dues

in Punjab Financing Agriculture, Vol. XIII(2), 1981.

WEBSITE VISITED

www.nseindia.com
www.bseindia.com
www.nsdl.co.in
www.cdslindia.com
www. incometax india.gov.in
www.rbi.org.in
www.shcil.com.
199
www.ncdex.com
www.mcxindia.com.
www.karvycomtrade.com
www.traderji.com
www.g oogle.com
www.investor words.com
www.tinnsdl.com
www.jajo investor.com.

200
Annexure -I

Advances of Public Sector Banks to Agriculture

(Amount in Rs. Crore)

S.No. Name of the Bank Total March, March, March,

Agricultural 2007 per 2008 per 2009 per
Advances cent to cent to cent to
ANBC as ANBC as ANBC as
against against against
the target the target the target
of 18 per of 18 per of 18 per
cent of cent of cent of
ANBC or ANBC or ANBC or
credit credit credit
equivalent equivalent equivalent
of OBE of OBE of OBE
whichever whichever whichever
is higher is higher is higher
1 2 3 4 5 6 7
Public Sector Banks
Central Bank of
1 India 9,251.89 15.8 11104.1 17.6 13,63
2 Corporation Bank 2,621.74 9.2 3529.79 10 4,330
3 Dena Bank 3,344.70 15.2 2764.64 14.7 3,851
4 Indian Bank 5,656.08 21 6214.87 22.1 7,618

201
 Indian Overseas
5 Bank 7,890.22 18.7 8688.9 18.9 10,57
Oriental Bank of
6 Commerce 5,732.28 11.1 6592 12.3 8,565
Punjab National
7 Bank 18,571.00 18.9 19946.4 18.9 23,80
Punjab and Sind
8 Bank 2,502.12 16 2438.22 17.9 2,969
9 Syndicate Bank 8,049.60 17.4 9331.81 19.9 10,79
10 Union Bank of India 10,674.76 16.8 11392.9 17.2 13,23
United Bank of
11 India 2,713.00 12 3172 13.2 3,869
12 UCO Bank 6,154.00 13.9 7948 16.2 11,03
13 Vijaya Bank 3,230.63 12.4 3942.16 12.9 4,513
14 IDBI Bank Ltd. 1,377.98 2.2 4526 6.7 8,311
State Bank Group
15 State Bank of India 41,661.32 14.5 56432 18.6 69,27
State Bank of
16 Bikaner and Jaipur 3,754.59 18.3 4589.58 22.1 4,828
State Bank of
17 Hyderabad 3,798.65 13.7 5147.71 18.1 6,932
18 State Bank of Indore 2,644.56 17.2 3018.47 19.1 3,343
State Bank of
19 Mysore 2,180.94 13.8 2911.36 18.1 3,571
20 State Bank of Patiala 4,491.00 15.8 4573.71 15.7 5,040
21 State Bank of 1,936.61 18.1 2194.76 19.5 2,953
202
 Travancore

Notes:
1. Data are provisional.
2. ANBC- Adjusted net bank creditor credit equivalent amount of off-
balance sheet exposure, whichever is higher, with effect
fromApril30, 2007.
3. Indirect agriculture is reckoned up to 4.5 per cent of ANBC for
calculation of percentage for Agriculture.
4. Priority sector lending target/sub-targets are linked to adjusted net
bank creditor credit equivalent amount of off balance sheet
exposures, whichever is higher, with effect from April 30, 2007

Source: RBI, Reports on Trends and Progress.

203
ANNEXURE-2

Name of the Public, Private and Foreign Banks

Public Sector Banks

S.No. Name of the Banks

1 Allahabad Bank

2 Syndicate Bank

3 Andhra Bank

4 UCO Bank

5 Bank of Baroda

6 Union Bank of India

7 Bank of India

8 United Bank of India

9 Bank of Maharashtra

10 Vijaya Bank

11 Canara Bank

12 State Bank of India

13 Central Bank of India

14 State Bank of Bikaner and Jaipur

204
15 Corporation Bank

16 State Bank of Hyderabad

17 Dena Bank

18 State Bank of Indore

19 Indian Bank

20 State Bank of Mysore

21 Indian Overseas Bank

22 State Bank of Patiala

23 Oriental Bank of Commerce

24 State Bank of Saurashtra

25 Punjab and Sind Bank

26 State Bank of Travanc Qre

27 Punjab National Bank

Private Sector Banks

28 The Bank of Rajasthan Ltd.

29 The Catholic Syrian Bank Ltd.

30 The Benaras State Bank Ltd.

31 City Union Bank Ltd.

205
32 Bharat Overseas Bank

33 Development Credit Bank Ltd.

34 Dhanalakshmi Bank Ltd.

35 The Sangli Bank Ltd.

36 The Federal Bank Ltd. 20. The South Indian Bank Ltd.

37 TheGaneshBankofKlU1.U1dwadLtd

38 Tamilnad Mercantile Bank Ltd.

39 The Jammu and Kashmir Bank Ltd.

40 The United Western Bank Ltd.

41 The Karnataka Bank Ltd.

42 The Vysya Bank Ltd.

43 The Karur Vysya Bank Ltd.

44 Bank of Punjab Ltd.

45 Lakshmi Vilas Bank Ltd.

46 Centurian Bank Ltd.

47 Lord Krishna Bank Ltd.

48 Global Trust Bank

49 The Nainital Bank Ltd.

206
50 HDFC Bank

51 The Nedungadi Bank Ltd.

52 ICICI Bank

53 The Ratnakar Bank Ltd.

54 IDBI Bank

55 SBI Commercial and International Bank Ltd.

56 Indusland Bank Ltd.

57 UTI Bank Ltd.

Foreign Banks

1. ABN-AMRO Bank N.V.

2. The Fauji Bank Ltd.

3. Abu Dhabi Commercial Banks

4. HSBC Ltd.

5. American Express Bank Ltd.

6. ING Bank N.V.

7. Standard Chartered Grindlays Bank Ltd.

8. Krung Th

9. ai Bank Public Co. Ltd.

207
10. Mashreq Bank psc

11. Arab Bangladesh Bank Ltd.

12. Morgan Cuaranty Trust Co. NewYork

13. Bank International Indonesia

14. Oman International Bank S.A.O.G.

15. Bank of America N.A. 30. Oversea-Chinese- Banking

16. Bank of Bahain and Kuwait B.Sc. Corporation Ltd.

17. Bank of Ceylon

18. The Siam Commercial Bank

19. Bank Muscat S.A.O.G.

20. Societe Generale

21. BNP Paribas

22. Sonali Bank

23. Barclays Bank PLC

24. Standard Chartered Bank

25. The Chase Manhattan Bank

26. State Bank of Mauritius Ltd.

27. Chinatrust Commercial Bank

208
 28. The Sumitomo Bank Ltd.

29. Cho Hung Bank

30. The Bank of Nova Scotia

31. Citi Bank

32. The Bank of Tokyo-Mitsubishi Ltd.

33. Commerz bank

34. Development Bank of Singapore Ltd.

35. Credit Agricole Indosuez

36. Credit Lyonnais

37. The Sakura Bank Ltd.

38. The Sanwa Bank Ltd.

39. Deutsche Bank AG

40. The Toronto-Domonion Bank

41. Dresdner Banka AG

At end-June 2008, 18 Indian banks, 13 public sector banks and five

private sector banks had presence abroad with a network of 203 offices
(131 branches, 43 representative offices, seven joint ventures and 22
subsidiaries) in 51countries.

209
ABBREVIATIONS

ACRC Agricultural Credit Review Committee

ARDB Agriculture and Rural Development Bank
BIRD Bankers Institute of Rural Development
BLBC Block Level Bankers’ Committee
BPL Below Poverty Line
BR Act Banking Regulation Act
CAB College of Agricultural Banking
CAMELS Capital Adequacy, Asset Quality, Management, Earnings,
Liquidity and Systems
CAPART Council for Advancement of People’s Action and Rural
Technology
CEO Chief Executive Officer
CRR Cash Reserve Ratio
DAP Development Action Plan
DCC District Consultative Committee
DCCB District Central Cooperative Bank
DICGC Deposit Insurance and Credit Guarantee Corporation
DLCC District Level Consultative Committee
DPAP Drought Prone Area Programme
DRDA District Rural Development Agency
DRIP District Rural Industries Project
DWCRA Development of Women and Children in Rural Areas
DWDAs District Women Development Agencies
FSS Farmers Service Society/ies
211
GCF Gross Capital Formation
GDP Gross Domestic Product
GLC Ground Level Credit
GoI Government of India
GoR Government of Rajasthan
HRD Human Resources Development
HYV High Yielding Variety/ies
IBA Indian Banks Association
ICAR Indian Council of Agricultural Research
IOCM Institute of Cooperative Management
ICRISAT International Crop Research Institute for Semi-Arid Tropics
IGWDP Indo-German Watershed Development Programme
IRDP Integrated Rural Development Programme
KCC Kisan Credit Card
KIW Kreditanstalt fur Wiederaufbau
KVIC Khadi and Village Industries Commission
KWH Kilo Watt Hour
LAB Local Area Bank
MFAL Marginal Farmers and Agricultural Labourers Development
Agency
Mfi Micro-Finance Institution
Mi Minor irrigation
Mis Management Information System
MNREGA Mahatma Gandhi Rashtriya Gramin Rozgar Guarantee Act
NREGA National Rural Employment Guarantee Act
MNAO Massive National Assistance Programme
212
MoU Memorandum of Understanding
NABARD National Bank for Agriculture and Rural Development
NBFC Non-Banking Financial Companies
NCAP National Centre for Agrticultural Econmomics and Policy
Research
NCCT National Council for Cooperative Training
NCDC National Cooperative Development Corporation
NCUI National Cooperative Union of India
NDTL Net Demand and Time Liabilities
NFS Non-Farm Sector
NGO Non-Governmental Organisation
NHB National Housing Bank
NPOA Non-Performing Assets
NSS National Sample Survey
NWDPRA National Watershed Development Programme for Rainfed
Areas
ODI Organisation Development Intervention
PACS Primary Agricultural Credit Societies
PCARDB Primary Co-operative Agriculture and Rural Development
Bank
PLR Prime Lending Rate
RD Research and Development
RBI Reserve Bank of India
RCS Registrar of Co-operative Societies
RFI Rural Financial Institutions
RICM Regional Institute of Cooperative Management
213
RIDF Rural Infrastructure Development Fund
RLEGP Rural Landless Employment Guarantee Programme
RMK Rashtriya Mahila Kosh
RNFS Rural Non-Farm Sector
RRB Regional Rural Bank
RTC Regional Training College
RUDSETI Rural Development and Self Employment Training Institute
SCACP Special Agricultural Credit Programme
SAMIS Service Area Monitoring and Information System
SAO Seasonal Agricultural Operations
SAP Service Area Plan
SBA Small Borrowal Accounts
SC/ST Scheduled Castes/Scheduled Tribe
SCARDB State Cooperative Agriculture and Rural Development Bank
SCB State Co-operative Bank
SDC Swiss Agency for Development and Cooperation
SEWA Self-Employed Women’s Association
SFDA Small Farmers Development Agency
SFDC State Forest Development Corporation
SGSY Swarnajayanti Gram Swarojgar Yojana
SHG Self-Help Group
SHPI Self-Help Promoting Institution
SIDBI Small Industries Development Bank in India
SKY Samriddha Krishak Yojana
SLBC State Level Bankers Committee
SLR Statutory Liquidity Ratio
214
SSI Small-Scale Industry
UCB Urban Co-operative Banks
VAMNICOM Vaikunth Mehta National Instituet for Cooperative
Management
WDF Watershed Development Fund
WOTR Watershed Organisation Trust
WTO World Trade Organisation.

215
MAHARSHI DAYANAND SARASWATI UNIVERSITY, AJMER

Prof. B.P. Saraswat

Director, Centre for ESBM

CERTIFICATE

It is certified that the :

Thesis entitled : CHANGING BRAND EQUITY AND BRAND

LOYALTY IN NATIONALISED BANKS – AN ANALYSIS (WITH
SPECIAL REFERENCE TO AJMER)

jk"Vªh;d`r cSadksa esa czkaM lerk ,oa czkaM fu"Bk esa cnyko % ,d
fo’ys"k.k ¼ vtesj ds fo’ks"k lanHkZ esa ½

Submitteed by : Mrs. Nidhika Joshi is an original piece of

research work carried out by the candidate under my supervision.

(2) Literary presentation is satisfactory and the thesis is in a form

suitable for publication.

(3) Work evidence the capacity of the candidate for critical

examination and independent judgement.

(iv) Candidate has put in at least 200 days of attendance every year.

Signature of Supervisor with date

216
217
PREFACE

It gives me immense pleasure to express my profound sense of

gratitude and indebtedness to the following learned scholars and
professors, who have helped me to complete my research project
successfully. It is true that field experience in this study adds an extensive
knowledge and exposure to the individual.

The practical exposure makes the individual learn about the actual
fieldwork, it makes him realize that not only the theory but also the
knowledge of the rural areas is as important as the former. The experience
is valuable for the researcher and plays a leading and an important role in
his carrier. I also tried to understand the Marketing of financial services,
how to sell those financial issues and how to build rural economic system.
It was totally a new and different experience for me. The overall
experience and exposure knowledge were a great satisfaction for me. I
realized that there is no other way to learn the things in a Realistic
Manner.

It is almost inevitable to incur indebtness to all who generously

helped by sharing their invaluable time and experience with me, without
which this study would never have been accomplished.

In the beginning I would like to convey my sincere thanks to my

Ph. D. supervisor Prof. B.P.Saraswat, Director, Centre for ESBM,
M.D.S.University, Ajmer who gave me the opportunity to work in this
area and provided me motivation and affection were guiding light during
the entire research work.

218
 I would also like to express my deep sense of gratitude to other
faculty members, colleagues of Centre for ESBM and Library of MDS
University, Ajmer who was the initiating source of inspiration for me for
this consistent guidance, warmly affection, positive attitude and keen
sense of confidence shown towards me. The valuable advice and kind
cooperation was an encouragement to me in the preparation of this
project. I also have to acknowledge my indebtness to all the faculty
members and Librarian of M.D.S. University, Rajasthan University,
Jaipur, IDS Jaipur for their guidance and support.

Last but not the least I would like to express my deep sense of
gratitude to my father, mother, brother, sisters and other family members
for their moral support.

My husband Shri Arvinder Sharma for their towering presence

instilled in me the carving tool to work harder and complete the daunting
task timely with a sufficient degree of the in depth study. I am greatly
indebted to Shri ............ for their consistent encouragement and moral
support. In the end I would like to bone in front of almighty, without
whose blessings this summer training report could not have seen the light
of the day.

I am thankful to the Government officials of Ajmer Headquarters’s.

Respondents of my research work who borrowed money from the
different banks in the village of Goverdhanpura, Raghunathpura,
Kutubpur and Jhagarbash where vary supporting to me I am deeply
thankful to them.

219
 I am also grateful to all officials of various banks for their precious
cooperation without which the scheme of data collection would have been
difficult. To conclude, I feel that this work is of immense magnitude and
import and has relevance in the contemporary rural transformation, where
farmers are at cross-roads are under tremendous stress and strain,
vulnerable to depression anxiety and frustration, leading to violent
behaviour, vandalism and physical and mental and social disorders.

Ajmer

Dated …. 2011 (Nidhika Joshi)

220
CONTENT

CHAPTER-I

INTRODUCTION AND METHOD

1. Rural development and planning

2. Problem of a study

3. Importance of institutional credit

4. Selection of the present study

5. Main objectives of research work

6. Major hypotheses

7. Review of work already done on the subject

8. Rationale of the present study

9. Methodology

10. Limitations-

1. Field work

2. Case studies

12. Data analysis

13. Chapter design

References

CHAPTER II
221
ORIGIN OF BANKING INDUSTRY

1 Development of banking in India

2 Reform of banking industry

3 Current scenario

4 priority sector lending

5 Targets of priority sector

6 National scheduled castes finance and development corporation

7 References

CHAPTER III

RURAL BANKING AND RURAL DEVELOPMENT IN RAJASTHAN

1 Living conditions in rural India

2 Agrarian changes

3 Stages of agricultural development

4 Commercilisation

5 Institutional innovation

6 Relation of caste and class

7 Inclusive society through banks in India

8 Disadvantaged section

9 Financial inclusion and empowerment of rural poor foreign

investment steel recast

10 Protecting the peasantry banking sector reforms in india

222
11 Strengths of the banking sector

12 Weakness of the banking sector

13 An overview of banking sector reform

14 Main challenges

15 Other challenges facing banking industry in India

16 Deregulation

17 Misaligned mindset

18 Competency gap

19 Management: an essential tool of Indian rural banking

20 Banking strategies in the new millennium

21 A synoptic view of Indian banking

22 References

CHAPTER IV

MANAGEMENT OF BANKING

1. Concept of banking function and commercial banks

2. Primary functions : origin of banking in India

3. Social control over commercial banks

4. Nationalization of commercial banks

5. Second phase of banks nationalization, 1980

6. Objectives of nationalization

7. Pre nationalization role of commercial banks (before july, 1969)

223
8. Present scene of Indian banking

9. Productivity indicators in selected banks

10. Deposits

11. Advances

12. Credit deposit ratio

13. Priority sector advances

14. Net profit

15. Recovery of banks advances

16. Branch expansion

17. Sponsored rural banks

18. Purpose-wise borrowing determinants of accessibility to credit

variation in the amounts of loans borrower’s impression on credit
agencies reasons for not borrowing from commercial banks

19. Adequacy of loan and delays in their sanctioning

20. Delays in sanctioning of loans

21. Delay across land-holding categories and purposes of loans

22. Delays in crop loans

23. Term loans

24. Pattern of subsidy distribution

25. Transaction costs

26. Transaction costs across farmers

224
27. Purpose-wise analysis of transaction costs

28. Crop loans

29. Term loans

30. Diversion of loan amount

31. Concept of default and overdue

32. Modes of micro finance spending

33. Strategies

34. Incentives

35. New tech tools for rural banking

36. Smartcard

37. Rural indebtedness : the burning issue :

38. Causes for suicides

39. Suggested measures

40. New tools to promote rural banking remittance product

41. Complaints regarding loan waivers

42. Micro enterprises in rural areas need credit oxygen

43. Potent tool for job creation

44. Definition changed

45. Bankers' risk perception

46. Government mulls micro-credit for poor

47. Financial inclusion the new mantra

225
48. The achievements of agricultural credit flow vis-a-vis annual
targets for 2006-07, 2007-08, 2008-09 and 2009-10

49. Rural areas

50. Urban areas

51. Caste and class relations

BIBLIOGRAPHY

ANNEXURES

a. Advances of public sector banks to agriculture (amount in Rs.

Crore)

b. Name of the public, private and foreign banks

c. Promises under national common minimum programme (NCMP)

national commission on farmers

d. Abbreviations

e. Questionnaire

f. Government reports

226
7.1 Table showing area, number of households and total
population (including institutional and houseless population)

9.1 Table Showing Comparison as Per Education Level in Villages

of Sample Districts

9.2 Table Showing Comparison as Per Education Level in Villages

of Sample Districts

9.3 Table Showing Comparison as per Profession in Villages of

Sample Districts

9.4 Table Showing Comparison as per Caste/Category in Villages

of Sample Districts

9.5 Table Showing Comparison as per Age in Villages of Sample

Districts

9.6 Table Showing Comparison as per Size of family In Villages of

Sample Districts

9.7 Table Showing Comparison as per Sex in Villages of Sample

Districts

9.8 Table Showing Comparison as Per Employed Persons in Family

in Villages of Sample Districts

9.9 Table Showing Comparison as Per Social Background in

Villages of Sample Districts

9.10 Table Showing Comparison as Per Lender Banks In Villages of

Sample Districts

227
9.11 Table Showing Comparison as Per Loan Amount Taken In
Villages of Sample Districts

9.12 Table Showing Comparison as Per the Basis of Loan Purpose in

Villages of Sample Districts

9.13 Table Showing Comparison as Per Loan Repayment Period in

Years in Villages of Sample Districts

9.14 Table Showing Comparison as Per Installment (Per Year) In

Villages of Sample Districts

9.15 Table Showing Comparison as Per Rate of Interest on Loan in

Villages of Sample Districts

9.16 Table Showing Comparison as per Repaid Loan Amount in

Villages of Sample Districts

9.17 Table Showing Comparison as Per Loan Outstanding In

Villages of Sample Districts

9.18 Table Showing Comparison as Per Defaulter in Repayment of

Loan in Villages of Sample Districts

9.19 Table Showing Comparison as per Adequate Loan amount in

Villages of Sample Districts

9.20 Table Showing Comparison As Per Major Impediments And

Obstacles In The Process Of Getting Loans In Villages Of
Sample Districts

9.21 Table Showing Comparison as Per Loan Raised Was Used For
Self and Wage Employment in Villages of Sample Districts

228
9.22 Table Showing Comparison as Per Whether the loan was utilized
for machinery/equipment which was used in employment and
Income Generation in Villages of Sample Districts

9.23 Table Showing Comparison as Per Whether the loaner was asked
to contribute to deposits in the Bank at the time of sanction of loan
In Villages of Sample Districts

229