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1. Introduction to Banking
6. Terminologies
8. Data Collection
11. suggestions
12. Conclusion
13. Questionnaire
NAME-MUWAHID MUNSHI
INTRODUCTION TO BANKING:
Banking is nothing but a service. Banks are business organizations selling
banking services. Banks continuously reassess how a customer views bank
services, what are new and emerging customer aspirations and how these can be
satisfied.
ORIGIN:
Since the banking activities were started in different periods in different
countries, there is no unanimous view regarding the origin of the word bank.
The word bank is derived from the French word ‘Banc’ or ‘Bancus’, which
means a bench. In fact the early Jews in Lombardy transacted their banking
business sitting on benches. When the business ailed, the benches were broken
and hence the word bankrupt came in to vogue.
DEFINITION:
The Indian Banking Companies Act, 1949 section 5(b), defines banking as
“accepting for purpose of lending or investing of deposits from the public,
repayable on demand or otherwise and withdrawals by cheque, drafts, and
orders or otherwise”.
Banks are backbone of our society. A bank must meet the financial needs of a
customer, by acting as a custodian of his assets, providing credit facilities and
assisting him to speedily put through financial transaction of one type or
another. Banking when you come to think of its people. It is not figures, files
and ledgers. Bank services needs considerable improvement on an emergent
basis. The time has come for banks to look inward to find out what is the nature
and quality of the products they sell, what is the product demanded by the
customer.
It would be unrealistic today to believe that banks are mere financial
institutions, working for profit. Banks essentially are now social organizations,
regarding financial services to sub serving the socio-economic objectives of the
society.
IN INDIA:
India has a system of indigenous banking from very early times, though it was
not similar to banking of modern times. There is evidence to show that money
lending existed even during the Vedic period. With the advent of the English
traders in the seventeenth century and the establishment of trading centers by
the East India Company encouraged the establishment of what were known as
the agency houses? The trading firms which undertook banking operations for
the benefit of their constituents. Some of the houses established during the
period were Alexander and Co. and Ferguson & Co. There were also Presidency
Banks, Joint stock banks and Exchange banks which took up gradually one after
the other.
IMPERIAL BANK:
The Presidency Banks referred to above were amalgamated into the Imperial
Bank of India, which was brought into existence on 27th January 1921 by the
Imperial Bank of India Act 1920. This Act, however, gave the bank no power to
issue notes and this left out without control over the currency of the country. But
it was allowed to hold Government balances and to manage public debt and
clearing houses till the establishment of Reserve Bank Of India in 1935 which
apart from taking over all these functions from the Imperial Bank of India, was
given the privilege of acting as an agent of the latter in places where it had no
branches.
COMMERCIAL BANKS:
Amongst the banking institutions in the organized sector, the commercial banks
initially were established as corporate bodies with shareholdings by private
individuals, but subsequently there has been a drift towards central ownership
and control. Today 27 banks constitute the strong public sectors in Indian
Commercial Banking. Up to late 60’s Commercial Banks are mainly engaged in
financing organized trade, commerce &industry, since then they are actively
participating in financing agriculture, small-scale business and small borrowers
also.
FUNCTIONS OF COMMERCIAL BANKS:
Commercial banks perform several crucial functions, which may be classified
into two categories:
(a) Primary functions
(b) Secondary functions
➢ PRIMARY FUNCTIONS:
Primary banking functions of the commercial banks include:
▪ Acceptance of deposits from public.
▪ Lending funds.
▪ Use of cheque system and
▪ Remittance of funds.
➢ SECONDARY FUNCTIONS:
Commercial banks perform a multitude of other non-banking functions, which
may be classified as:
▪ Agency service.
▪ General utility services.
The Central Bank of India called the Reserve Bank of India was constituted
under the Reserve Bank of India Act, 1934 to regulate the issue of bank notes
and keeping of reserves with a view to securing monetary stability in India and
generally to operate the currency and credit system of India to its advantage.
Amongst its multifarious functions affecting the Indian Financial System, the
RBI regulates and prohibits the issue of prospectus or advertisement soliciting
deposits of money, regulates the functioning of non-banking institutions and
transacts Government business. Its regulatory involvement in the Indian Capital
Markets is primarily of debt management through primary dealers, foreign
exchange control and liquidity support to market participants. The RBI regulates
participants in the securities markets when a foreign transaction is involved.
Transactions that include Indian issuers issuing of security outside India, such
as GDRs and ADRs, and Financial Institutional Investors (FIIs) or Foreign
Brokers selling, buying or dealing in Indian Securities need the permission of
RBI.
As the central banking authority of India, the Reserve Bank of India performs
the following traditional functions of the central bank:
▪ It provides currency and operates as the clearing system for the banks.
▪ It formulates and implements monetary and credit policies.
▪ It functions as the banker’s bank.
▪ It supervises the operations of credit institutions.
▪ It regulates foreign exchange transactions.
▪ It moderates the fluctuations in the exchange value of the rupee.
In addition to the traditional function of the central banking authority, the
Reserve Bank of India performs several functions aimed at developing the
Indian financial system:
➢ It seeks to integrate the unorganized financial sector with the organized
financial sector.
➢ It encourages the extension of the commercial banking system in the
rural areas.
➢ It influences the allocation of credit.
➢ It promotes the development of new institutions.
Banking sector reforms have brought about considerable shift in the progress of
different banks. Credit has once again gained importance. Technology has
brought banking to the very doorstep of customers. With the coming of foreign
banks, competition has increased and they are models for the other banks in
terms of service level, banking convenience technology and staff productivity.
In order to keep them alive in the race for survival and in order to increase
profitability, banks have been forced to become active in offering services to
customer. In fact globally the dominance of internet and cyber banking has
changed the banking scenario.
BANKING SCENARIO:
During the year 2005-2006, the reserve bank of India took several initiatives
aimed at improving the prudential regulation. These include stipulating higher
provisioning requirement for NPAs included under “doubtful for more than
three years” category effective from March 31, 2006, prohibiting banks from
investing in unrelated non-SLR securities, advising banks to maintain capital
charge for market risk etc. Further several initiatives were also taken during the
year aimed at improving the credit delivery to the agricultural and SSI sector.
The govt. announced a comprehensive policy envisaging a 30% increase in
agriculture credit in 2005-06 and doubling the credit flow to the agriculture
sector in three years.
INTRODUCTION TO J&K BANK:-
COMPANY PROFILE
Type : Public.
Traded as : NSE: J&KBANK, BSE: 532209.
Industry : Banking, Financial services.
Founded : October 1, 1938.
Headquarters : Srinagar, Jammu and Kashmir, India.
Key people : Sh Baldev Prakash (Chairman & CEO).
Products : Credit cards, Consumer banking, corporate banking,
finance and insurance, mortgage loans, private banking,
wealth management ,investment banking
Revenue : 12051 crores INR , Mar 2024
Operating income : ₹6,029.17 crore, Mar 2024
Net income : 1767 crore, Mar 2024
Total assets : ₹1,54,526.59 crore. Mar 2024
OWNER : Government of Jammu and Kashmir (68.18%)
Website : www.jkbank.com
Banks new IDentity:
The new identity for J&K Bank is a visual representation of the banks
philosophy and business strategy. The three colored squares represent the three
regions of J&K namely Jammu, Kashmir and Ladakh. The counter form created
by the interactions of the squares is a falcon with outstretched wings-a symbol
of power and empowerment.
➢ VISION
“To catalyse economic transformation and capitalise on growth.”
Our vision is to engender and catalyse economic transformation of Jammu and
Kashmir and capitalise from the growth induced financial prosperity thus
engineered. The Bank aspires to make Jammu and Kashmir the most prosperous
state in the country, by helping to create a new financial architecture for the
J&K economy, at the centre of which will be the J&K Bank.
MISSION
Our mission is two-fold: To provide the people of J&K international quality
financial service and solutions and to be a super-specialist bank in the rest of the
country. The two together will make us the most profitable Bank in the country.
Jammu and Kashmir bank was incorporated on 1st October, 1938 and
commenced business in July, 1939. From a small beginning the bank has grown
to become a giant with a network of 520 branches spread over the length and
breadth of the country.
The J & K Bank is the first state owned bank of the country and 53% of equity
is held by the government of Jammu and Kashmir. The bank has a consistent
track record of growth and profitability. It has a unique distinction of being
banker to the Jammu and Kashmir state government and has also been
appointed by RBI as its agency in J & K, responsible for carrying general
banking business of the Central government and collection of taxes pertaining
to the Central Board of Direct Taxes.
J & K Bank has over the past few years been reporting sustained excellent
performance in all the vital areas of business and achieving record-breaking
levels in profit generation. However what I feel is more reassuring is that bank
is quietly working on a much larger objective of setting a strong foundation that
will serve as a launching pad to support the aggressive growth plans in the
future. J & K Bank has today acquired significant financial strengths on key
bench marks that will give it great confidence in the journey forward.
Today the bank has a status of value driven organization and is always working
towards building trust with shareholders, employees, customers, borrowers,
regulators and other diverse stakeholders. It has adopted a strategy directed to
developing a sound foundation of relationship and trust aimed at achieving
excellence which of course comes from the womb of good corporate
governance. Good governance is a source of competitive advantage and a
critical input for achieving excellence in all pursuits. J & K Bank considers
good corporate governance as the sine qua non of a good banking system and
has adopted a policy based on all four pillars of good governance –transparency,
disclosures, accountability and value, enabling it to practice trusteeship,
transparency, fairness and control, leading to stakeholders delight, enhanced
shareholder value and ethical corporate citizenship. It also ensures that bank is
managed by an independent and highly qualified Board following best globally
accepted practices, transparent disclosure and empowerment of shareholders,
besides ensuring to meet shareholder aspirations and societal expectations
following the principals of management executive freedom to drive the bank
forward without undue restraints but within the framework of effective
accountability. The excellence achieved by the bank in its operations stemming
from the roots of voluntary good governance has not gone unrecognized and
bank has recently bagged three very prestigious award for following fair
business practices and commitment to social obligations
Branch/ATM Network
New branches were established there by taking the number of branches to 938
spread over 20 states and one union territory. The area-wise breakup of the
branch network (excluding extension counters/ mobile branches and Service
branches) on the basis of census 2011 is as under:
AREA Branches
METRO 172
URBAN 108
SEMI-URBAN 155
RURAL 503
TOTAL 938
INNOVATIVE PRODUCTS:
▪ Investment banking.
Market basket analysis is a data mining technique that analyzes patterns of co-
occurrence and determines the strength of the link between products purchased
together. We also refer to it as frequent itemset mining or association analysis. It
leverages these patterns recognized in any retail setting to understand the
behavior of the customer by identifying the relationships between the items
bought by them. To put it simply, market basket analysis helps the retailers
know about the products frequently bought together so as to keep those items
always available in their inventory.
The source from which these patterns are found is the vast amount of data that
is continually collected and stored. With frequent mining of the item set, it
becomes easy to discover the correlation between items in huge relational or
transactional datasets. It considerably helps in decision-making processes
related to cross-marketing, catalog design, and consumer shopping analytics.
You may better comprehend this idea by using the following example.
When people buy green tea, it is evident that they may also buy honey with it.
This relationship is depicted as a conditional algorithm, as given below.
IF {green tea} THEN {honey}
It represents that items stated on the right are more likely to be ordered with the
items on the left side. Market basket analysis in data mining helps us understand
that relationship and how helpful it would be to alter our decisions based on the
analysis.
Machine learning engineers develop data-driven strategies based on detailed
market basket analysis that further help retailers improve their revenues in the
following ways.
• They offer discounts on one of the associated products only.
• The associated products are placed near to each other so that when the
customer buys one item, they would be inclined to buy the other item too.
This type of market basket analysis offers actionable insights based on historical
data. It is a frequently used approach that does not make any predictions but
rates the association using statistical techniques between the products. We also
refer to it as unsupervised learning based on the way it is modeled.
2. Predictive market basket analysis
Source: Smartbridge
STEP 2: Next, each transaction is aggregated across records into a single record
as an array that converts the data set to an R transaction. Check out the below
image that depicts the result of the aggregation process.
STEP 3: Lastly, the Apriori logic is implemented in the transactions. Check the
below-given image for the result set.
The above image clearly depicts the number of strong consequent combinations
in which soda is a keystone product category. Leveraging this information, the
store manager can drive sales volume by keeping the price and margins low on
soda.
Another eye-opening yet interesting result depicts that all the rules with ice
cream illustrate the confidence of one with a significant lift. Thus, the store
manager can further promote ice cream with the belief that other items can be
purchased by the customers with it at the same time.
The popularity of market basket analysis machine learning extends beyond the
boundaries of the retail industry. We have listed some other areas where it is
doing wonders below.
• Finance/Criminology: Market basket analysis finds great application in
detecting fraud related to credit card usage data.
• Manufacturing: The predictive market basket analysis helps in predicting
the failure of the equipment.
• Bioinformatics/Pharmaceutical: Market basket analysis helps in
discovering the co-occurrence relationship among the pharmaceutically
active ingredients and diagnosis that is prescribed to different groups of
patients.
• Customer behavior: Using socio-economic and demographic data, market
basket analysis helps in determining associated purchases.
• Medicine: Market basket analysis finds great use in determining symptom
analysis and comorbid conditions in the medical field. It also helps in
identifying the hereditary traits and genes that are associated with local
environmental effects.
• Telecom: The telecom companies increasing attention to customer
services is eased with market basket analysis. For instance, the companies
in the telecom sector have started to deliver TV and internet packages
together apart from the other discounted online services to eliminate
churn.
• IBFS: IBFS organization leverages market basket analysis to trace the
credit card history of a consumer. Based on the data received, such
companies lower potential customers with attractive discounts on the go
by employing sales professionals at shopping malls.
DATA COLLECTION
Interpretation
Association Rules
• Rule 2: Customers who answered "Yes" to question 116 ("Do you use
our credit card services?") and question 241 ("Do you currently have a
loan with us?") are likely to answer "Yes" to question 201 ("Do you plan
to open a fixed deposit account within the next year?").
o Support: 0.10 (10% of customers exhibit this behavior)
o Confidence: 81.63% (81.63% of customers who use credit cards
and have a loan also plan to open a fixed deposit account)
o Lift: 1.48 (The intention to open a fixed deposit account is 48%
higher than random chance)
Interpretation: This rule suggests a strong relationship between the
usage of credit card services, holding a loan, and planning to open a fixed
deposit account. Customers who are already utilizing credit cards and
loans are more inclined to invest further by opening fixed deposit
accounts, presenting a cross-selling opportunity for the bank.
Strategy:
Background: Customers who use credit card services and have existing
loans are more likely to be interested in fixed deposit accounts. This
insight presents a significant opportunity for cross-selling.
Strategy:
Strategy:
Strategy:
Strategy:
In summary, the analysis suggests that the bank can significantly enhance
customer satisfaction and loyalty by focusing on improving the mobile
banking experience, effectively cross-selling related products, leveraging
customer referrals, offering comprehensive financial solutions, and
executing targeted marketing campaigns. By implementing these
strategies, the bank can strengthen its customer relationships, increase
product penetration, and ultimately, drive long-term growth
Conclusion
The internship at J&K Bank provided a comprehensive opportunity to explore
the application of Market Basket Analysis (MBA) within the banking sector.
The primary objective was to identify relationships between different banking
products based on customer behavior and preferences, thereby providing
actionable insights for strategic decision-making.
Through the analysis of hypothetical data gathered from 400 customers, several
key associations were identified. These insights revealed that customers who
use certain banking products are more likely to engage with others, offering a
significant opportunity for cross-selling and upselling. For example, customers
satisfied with their credit card services are more likely to use savings accounts,
and those aware of additional products are inclined to learn more, underscoring
the potential for targeted marketing and product bundling.
The project also highlighted the importance of enhancing the mobile banking
experience, as a significant portion of customer satisfaction is linked to the
usability and features of the bank's digital platforms. Additionally, the referral
behavior of highly engaged customers presented an avenue for organic growth
through customer advocacy.
In conclusion, the Market Basket Analysis conducted during this internship has
demonstrated the value of data-driven decision-making in the banking industry.
The insights derived from customer behavior can be leveraged to develop more
personalized and effective marketing strategies, ultimately leading to better
customer engagement and business growth. This internship experience has
provided a solid foundation in applying analytical techniques to real-world
business challenges, equipping me with valuable skills and knowledge that will
be beneficial in my future career endeavors.
QUESTIONNAIRE